Exhibit 10.6
Commercial Banking Centre
Central Ontario West Region
[LETTERHEAD OF NATIONAL BANK OF CANADA]
July 30, 1997
Rosedale Wallcoverings and Fabrics Inc.
214 Cortland Avenue
Concord, Ontario
L4K 4L3
ATTENTION: Mr. Alan Fine, President.
Dear Sirs:
We are pleased to advise you that the National Bank of Canada has authorized the
following credit facilities subject to the ensuing terms and conditions.
BORROWER: Rosedale Wallcoverings and Fabrics Inc. (the "Borrower").
LENDER: National Bank of Canada (the "Bank").
AMOUNT: A. $3,500,000 Cdn. by way of an Operating Loan and/or
Letters of Credit on a revolving demand loan agreement.
B. $250,000 Cdn. by way of an Operating Loan Bulge.
C. $1,750,000 Cdn. by way of a Foreign Exchange Forward
Contract limit with net risk of 10% on U.S. dollar
contracts. At any time total foreign exchange forward
contracts may not exceed the Cdn. equivalent of
$17,500,000 for U.S. dollar contracts.
D. $110,000 Cdn. by way of a Standby Letter of Credit.
E. $25,000 Cdn. by way of Business Mastercard.
PURPOSE: A. To finance day to day operations.
B. To assist with repayment of postponed Borden trade debt;
available for the period November 1, 1997 to January 3l,
1998.
C. To purchase U.S. dollar foreign exchange forward
contracts. Applicable terms will be from a minimum of 1
day to a maximum of 1 year.
D. To facilitate issuance of a standby letter of credit to
Laurentian Bank.
E. To facilitate issuance of business cards to management
personnel.
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INTEREST RATE: A. Prime Rate of National Bank of Canada plus 1.50%, that
is 6.55% as at July 30,1997, calculated daily and paid
monthly in arrears. Prime Rate is defined as the rate as
established from time to time by the Bank for Canadian
dollar loans in Canada.
The interest rate shall reduce to Prime plus 1.0% upon
the Borrower achieving a Debt to Equity ratio of 2.50:1
or better as evidenced by an audited year end financial
statement.
B. Prime Rate of National Bank of Canada plus 2.0%, that is
6.75% as at July 30, 1997, calculated daily and paid
monthly in arrears. Prime Rate is defined as the rate as
established from time to time by the Bank for Canadian
dollar loans in Canada.
C. As quoted by International Department, National Bank of
Canada at date of booking.
D. 1.50% per annum.
E. Standard Business Mastercard rates.
REPAYMENT: On demand.
A. To revolve in multiples of $50,000.
B. To revolve in multiples of $50,000; repayment in full by
January 31, 1998.
C. According to specified maturity dates.
D. In the event of drawdown by way of debit to the
Borrower's current account.
E. As stipulated in the cardholder agreement.
DEMAND NATURE OF
THE FACILITIES: The Borrower and the Guarantors acknowledge and agree that
notwithstanding anything contained herein to the contrary
these facilities constitute Demand Loans and as such, are due
and payable at any time at the sole discretion of the Bank.
MARGIN
AVAILABILITY: Operating advances (Facilities A and B) and Letters of Credit
(Facility D) shall be limited to the lesser of $3,860,000 or
the aggregate of the following:
(a) 75% of good quality wade accounts receivable (Cdn. and
U.S.) excluding contra accounts, and intercompany
accounts, doubtful accounts, and those aged 90 days past
invoice date and over; plus
(b) 75% of good quality accounts receivable relating to the
sale of sample books excluding those aged 120 days past
invoice date and over; plus
(c) 50% of trade accounts receivable due from Ontario Paint
& Wallpaper Limited excluding those aged 90 days past
invoice date and over capped at a maximum margin
availability of $400,000; plus
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(d) 50% of finished goods inventory located in Canada capped
at an overall maximum of $1,250,000; less
(e) all claims which rank prior to the Bank's security (i.e.
deductions at source, GST, etc).
SECURITY: All legal and other documentation to be in a form and content
satisfactory to the Bank and its solicitors and is to be
supported by all usual representations and opinions to confirm
its enforceability. To include but not limited to:
"In Place"
1. Assignment of Life Insurance in the amount of $1,000,000
on the life of Alan Fine.
2. Assignment of Life Insurance in the amount of $1,000,000
on the life of Sidney Ackerman.
3. General Assignment of Book Debts and UCC filings
registered in all applicable jurisdictions providing a
first charge over accounts and edict receivables.
4. Pledge of Inventory under Section 427 of the Bank Act
and UCC filings providing a first charge over inventory.
5. Assignment of sufficient fire insurance to protect the
Bank's interest.
6. General Security Agreement providing a free floating
charge over all assets of the Borrower.
7. $750,000 Guarantee from Alan Fine. The guarantee will be
reduced to $250,000 upon the Borrower achieving a Debt
to Equity ratio of 2.50:1 or better as evidenced by an
audited year end financial Maternal together with
compliance to all other terms, conditions and covenants
of the credit facility.
8. Subordination and Postponement of Claim from Alan Fine.
9. $750,000 Guarantee from Sidney Ackerman. The guarantee
will be reduced to $250,000 upon the Borrower achieving
a Debt to Equity ratio of 2.50:1 or better as evidenced
by an audited year end financial statement together with
compliance to all other terms, conditions and covenants
of the credit facility.
10. Subordination and Postponement of Claim from Sidney
Ackerman.
11. $750,000 Guarantee from Ontario Paint & Wallpaper
Limited. The guarantee will be eligible for release
beginning December 31, 1997. Release will be subject to
the Borrower achieving each of the following as
evidenced by an audited year end financial statement:
(i) Earnings before taxes and bonus (retained) of not
less than $300,000 for two consecutive fiscal
periods.
(ii) Debt to Equity ration of 2.50:1 or better.
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(iii) Compliance to all terms, conditions and covenants
of the credit facility.
12. $1,000,000 Guarantee from 521305 Ontario Inc.
13. Subordination and Postponement of Claim from 521305
Ontario Inc.
FINANCIAL
COVENANTS: The Borrower agrees to the following covenants which shall be
calculated as indicated below, maintained at all times and
tested monthly except where otherwise indicated:
1. Current Ratio: The ratio of Current Assets to Current
Liabilities will not be less than 1.10:1 at anytime.
Current Assets shall exclude any intercompany advances,
deferred costs, or any other assets of doubtful or
intangible nature.
2. Debt to Equity Ratio: The ratio of Debt to Equity will
not be more than 3.50:1 at any time. Furthermore, Debt
to Equity will not be more than 3.0:1 at December 31,
1997 and anytime thereafter. Debt shall be defined as
total liabilities less any loans postponed to the Bank,
less deferred income taxes. Equity shall be defined as
Share Capital plus Retained Earning plus any loans
postponed to the Bank, less any deferred expenditures,
loans to officers, directors, or shareholders, or
intercompany advances and any other assets of doubtful
value.
3. Capital Expenditures: The Borrower agrees that annual
capital expenditures shall not exceed Cash Flow from
Operating Activities. Cash Flow from Operating
Activities shall be defined as Income After Tax plus
deferred taxes; depreciation and amortization; and any
other non-cash expenses; less dividends and all debt
principal payments.
REPORTING
CONDITIONS: 1. Within 25 days of each month-end, the Borrower shall
provide the following information on Bank documents,
signed by the appropriate authorized officer of the
Borrower:
(a) monthly accounts payable listing classified
according to age;
(b) monthly accounts receivable listing classified
according to age;
(c) inventory declaration;
(d) prior claims declaration;
(e) internally prepared income statement and balance
sheet.
2. The Borrower agrees to submit to the Bank its annual
audited financial statements within 90 days of the end
of its fiscal year.
3. The Borrower agrees to submit to the Bank its annual
budget including budgeted monthly balance sheet, income
statement, and cashflow within 90 days of its fiscal
year end.
4. The Borrower agrees to submit to the Bank the annual
financial statements of 521305 Ontario Inc. and Ontario
Paint & Wallpaper Limited.
5. Updated personal net worth statements from each of Alan
Fine and Sidney Ackerman are to be provided annually.
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OTHER CONDITIONS: 1. The Borrower agrees to quarterly reviews of current
assets and internal financial reporting systems by the
Bank.
2. All legal and registration fees incurred to prepare,
execute and maintain legal documents will be assumed by
the Borrower.
3. The cost of all appraisals and environmental reports
requested by the Bank are the responsibility of the
Borrower.
4. The ownership structure of the company shall not be
altered without the Bank's prior written consent which
shall not be unreasonably withheld.
5. The nature of the Borrower's business shall not be
substantially changed without the Bank's prior written
consent which shall not be unreasonably withheld.
6. If a major change judged unfavorable by the Bank occurs
in the nature of the risk before the date the funds are
advanced, the Bank can retain that advance and cancel
this Offer to Finance.
FEES: 1. Renewal fee of $5,000.
2. $200 monthly management fee.
ENVIRONMENTAL
MATTERS: 1. The Borrower and the Guarantors represent and warrant
that the owner of the subject property has complied and
is complying in all respects with all applicable laws
relating to the environment, that no contaminants,
pollutants or other hazardous substances (including,
without limitation, asbestos, products containing urea
formaldehyde or polychlorinated biphenyl or any
radioactive substances) have been or are now stored or
located at the subject property, that no order,
approval, direction or other governmental or regulatory
notice relating to the environment has been threatened
against, is pending or has been issued with respect to
the subject property or the operations of the business
being conducted at the subject property, and that none
of them is aware of any pending or threatened action,
suit or proceedings relating to any actual or alleged
environmental violation from or at the subject property.
2. The Borrower and Guarantors agree to comply with and
respect any and all environmental laws and regulations.
3. The Borrower and Guarantors agree to indemnify the Bank
for all decontamination costs or for damages incurred by
the Bank or its agents as a result of such
contamination.
ACKNOWLEDGEMENT
OF NON MERGER: The terms and conditions contained in this Offer to Finance
shall not merge upon the execution and delivery of the
security documentation referred to herein but shall at all
times remain in full force and effect.
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CREDIT REPORTING: The Borrower and the Guarantors consent to the obtaining from
any credit reporting agency or from any person such
information as the Bank may require at any time, and consent
to the disclosure at any time of the information concerning
the Borrower and the Guarantor to any credit grantor with whom
the Borrower and the Guarantor have financial relations or to
any credit reporting agency.
REPRESENTATIONS
AND WARRANTIES: The Borrower and the Guarantor represent and warrant that the
information given in respect of applying for the credit
facilities is correct and complete, and acknowledge that the
Bank is relying on said representations and warranties.
ANNUAL REVIEW: To be reviewed at least annually, and in any event not later
than April 30, 1998.
OTHER: The Borrower agrees to keep the contents of this Letter
strictly confidential.
If these conditions are acceptable to you, please indicate your acceptance
thereof by signing and returning a copy of this letter to the Bank before August
11, 1997, after which time this offer is null and void.
Yours truly,
/s/ Steven L. Matheson /s/ R.A. Garrard
Steven L. Matheson R.A. Garrard
Senior Account Manager Senior Manager
ACCEPTANCE:
WE ACCEPT THE TERMS AND CONDITIONS OUTLINED HEREIN THIS 31 DAY OF JULY, 1997
ROSEDALE WALLCOVERINGS AND FABRIC INC. ("Borrower")
Per: /s/ Alan Fine
---------------------
Title: President
AS GUARANTORS:
/s/ Alan Fine
- ---------------------
Alan Fine
/s/ Sidney Ackerman
- ---------------------
Sidney Ackerman
ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ Sidney Ackerman
---------------------
Title:
521305 ONTARIO INC.
Per: /s/ Alan Fine
---------------------
Title: President
DOCUMENT INDEX
- --------------------------------------------------------------------------------
ROSEDALE WALLCOVERINGS AND FABRICS INC.
NATIONAL BANK FINANCING
DOCUMENT INDEX
TAB DOCUMENT
- --- --------
1 Reporting Letter
2 Offer to Finance dated August 8, 1996
3 Acknowledgment of debt regarding
$3,500,000.00 revolving line of credit
4 General Security Agreement
5 General Assignment of Book Debts
6 Application for Credit and Promise to give
Security under the Bank Act
7 Notice of Intention to Give Security under
the Bank Act
8 Agreement Respecting Security under the
Bank Act
9 Bank Act Security
10 Security with Regard to General Accident
Insurance Policy CLD 3643532
11 Security with Regard to Prudential
Insurance Policy JR112754
12 Security with Regard to Prudential
Insurance Policy JR112753
13 Undertaking of Rosedale Wallcoverings &
Fabric Inc. re: assignment of proceeds of
life insurance policy JR112753
14 Priorities Agreement
15 Corporate Certificate of Rosedale
16 Guarantee of 521305 Ontario Inc. regarding
the indebtedness of Rosedale Wallcoverings
and Fabric Inc.
DOCUMENT INDEX
- --------------------------------------------------------------------------------
17 Certified Copy of a Resolution of the Board
of Directors of 521305 Ontario Inc.
authorizing the Guarantee of the
indebtedness of Rosedale
18 Subordination Agreement executed by 521305
Ontario Inc.
19 Certified Copy of a Resolution of the Board
of Directors of 521305 Ontario Inc.
authorizing the Subordination Agreement
20 Certified Copy of a Resolution of the Board
of Directors of Rosedale Wallcoverings and
Fabrics Inc. authorizing the Subordination
Agreement of 521305 Ontario Inc.
21 Corporate Certificate of 521305 Ontario
Inc.
22 Guarantee of Ontario Paint & Wallpaper
Limited regarding the indebtedness of
Rosedale Wallcovering and Fabric Inc.
23 Certified Copy of a Resolution of the Board
of Directors of Ontario Paint & Wallpaper
Limited authorizing the Guarantee of the
indebtedness of Rosedale Wallcoverings and
Fabric Inc.
24 Guarantee of Sidney Ackerman regarding the
indebtedness of Rosedale Wallcovering and
Fabric Inc.
25 Subordination Agreement Executed by Sidney
Ackerman
26 Certified Copy of a Resolution of the Board
of Directors of Rosedale Wallcoverings and
Fabrics Inc. authorizing the Subordination
Agreement of Sidney Ackerman
27 Statutory Declaration of Sidney Ackerman
28 Guarantee of Alan Fine regarding the
indebtedness of Rosedale Wallcovering and
Fabric Inc.
29 Subordination Agreement Executed by Alan
Fine
30 Certified Copy of a Resolution of the Board
of Directors of Rosedale Wallcoverings and
Fabrics Inc. authorizing the Subordination
Agreement of Alan Fine
31 Statutory Declaration of Alan Fine
32 Acknowledgment of Alan Fine regarding
Receipt of PPSA Verification Statements
33 Acknowledgment of Sidney Ackerman regarding
Receipt of PPSA Verification Statements
DOCUMENT INDEX
- --------------------------------------------------------------------------------
34 Acknowledgment of 521305 Ontario Inc.
regarding Receipt of PPSA Verification
Statements
35 Acknowledgment of Rosedale Wallcoverings &
Fabrics Inc. regarding Receipt of PPSA
Verification Statements
36 Solvency Certificate of Ontario Paint &
Wallpaper Limited
37 Direction re: funds
38 Authorization to insert dates
39 Legal Opinion of Torkin, Manes, Cohen &
Arbus re: National Bank loan to Rosedale
Wallcoverings & Fabric Inc.
40 Legal Opinion of Torkin, Manes, Cohen &
Arbus Guarantee of 521305 Ontario Inc. of
National Bank loan to Rosedale
Wallcoverings & Fabric Inc.
41 Legal Opinion of Torkin, Manes, Cohen &
Arbus re: Guarantee of Ontario Paint &
Wallpaper Limited regarding National Bank
loan to Rosedale Wallcoverings & Fabric
Inc.
ROSEDALE WALLCOVERINGS
AND FABRICS INC.
NATIONAL BANK FINANCING
ROSEDALE WALLCOVERINGS AND FABRICS INC.
NATIONAL BANK FINANCING
Torkin, Manes, Cohen & Arbus
151 Yonge Street
Toronto, Ontario
M5C 2W7
[LETTERHEAD OF TORKIN, MANES, COHEN & ARBUS]
November 26, 1996
PERSONAL AND CONFIDENTIAL
Alan Fine
Rosedale Wallcoverings & Fabrics Inc.
214 Courtland Avenue
Concord, Ontario
L4K 4L3
Dear Sir:
Re: National Bank Financing
Most of the matters in connection with the above-noted transaction have now been
completed and we are pleased to be in a position to report to you in respect
thereof.
I OFFER TO FINANCE
Pursuant to the Offer to Finance dated August 8,1996, the National Bank of
Canada authorized the following credit facilities (the "National Bank
Financing") to Rosedale Wallcoverings & Fabric Inc. ("Rosedale"), subject to the
terms and conditions contained in the Offers to Finance:
o $3,500,000.00 by way of a revolving demand operating loan;
o $200,000.00 by way of Foreign Exchange Forward Contract; and
o $25,000.00 by way of a business Mastercard.
The interest rate for the Rosedale revolving demand operating loan is the Prime
Rate of the National Bank plus 1.5 %. For the Mastercard credit facility, the
interest rate is determined by the standard rate charged by National Bank
Business Mastercard. The financing is payable on demand, which means that the
Bank may demand repayment at any time, according to the Bank's discretion.
$3,5000,000.00 is the maximum amount available under the credit facility. The
actual amount that will be available to Rosedale at any one time is specified
according to a formula set out in the Offer to Finance. This formula is based on
the total of:
1. 75% of Rosedale's trade accounts receivable;
2. 75% of Rosedale's accounts receivable relating to the sale of sample books;
3. 50% of trade accounts due from Ontario Paint & Wallpaper ("OPW"); and
Page 2
4. 50% of finished goods inventory located in Canada capped at an overall
maximum of $1,250,000.00.
LESS
5. all claims which rank in priority of the Bank's Security (i.e. deductions at
source, GST, etc.).
Rosedale has further agreed to provide to the Bank a detailed financial report
within 25 days of the end of each month. The required contents of these reports
are set out in the Offer to Finance. Rosedale is also required to submit to the
Bank its audited financial statements within 90 days of the end of its fiscal
year.
Please note that this is just a summary of the Offer to Finance, and you should
refer to the Offer itself for further details and qualifications relating to the
financing.
II. SECURITY
Pursuant to the Offer to Finance, the following security was given by Rosedale:
1. General Security Agreement ("GSA"):
As security for the financing, Rosedale executed a General Security Agreement in
favour of the National Bank, which was registered in the Ontario Personal
Property Security Act Register as File No. 824305932. Pursuant to the terms of
this Agreement, Rosedale granted as collateral for the credit facility its
accounts receivable, goods (including, but not limited to equipment, inventory,
furniture, fixtures, and machinery), contractual rights and interests in
copyrights and patents, securities and commercial paper, and the proceeds
therefrom. You should review the terms of the GSA carefully, and, in particular,
you should note that any default under the GSA will entitle the National Bank to
take possession of any of the property specifically referred to in the
agreement. As well, you should be aware that the collateral under the GSA also
includes goods and rights that Rosedale has not yet acquired, but will acquire
in the future.
2. Assignment of Book Debts ("Assignment"):
Rosedale executed an Assignment of Book Debts granting the National Bank the
right to any debts that are owed by any party to Rosedale for any reason,
including the right to sue debtors and the right to pursue any legal actions
that Rosedale may have against any party.
3. Bank Act Security:
In addition to the security set out above, Rosedale gave the National Bank a
security interest under s. 427 of the Bank Act. The documents relating to this
security are enclosed in the document book at tabs 6,7,8 and 9. This security
assigns to the National Bank goods, wares and merchandise belonging to Rosedale,
including, but not limited to, paint, wallcoverings, borders, fabric, sample
books, home decorating hardware, and accessories. Although this property would
fall under the definition of "collateral" under the GSA, the Bank Act security
was required by the Bank to protect the priority of the Bank's right to the
property of Rosedale if there is a conflict among creditors at a future date.
Page 3
In the event of a default under the Offer to Finance, the Bank will have the
right to take possession of the property specified in the Bank Act Security in
priority to other creditors, including other secured creditors.
4. Security With Respect to Insurance Policies:
In order to protect its position as a creditor in the event of the death or
incapacity of Alan Fine or Sidney Ackerman, the National Bank required that it
was to be designated as the beneficiary of the following insurance policies:
1. Policy Number JR112754 on the life of Sidney Ackerman issued by the
Prudential Life Insurance Company (Canada); and
2. Policy Number JR112753 on the life of Alan Fine issued by the Prudential Life
Insurance Company (Canada);
Also assigned to the National Bank were the sums payable under the above
policies up to a maximum of $1,000,000.00 plus interest at the rate of interest
as set out therein.
The terms of these policies, including the amount and payment of premiums are
otherwise unchanged. You should refer to the policies themselves for further
details.
As part of the security respecting these insurance policies, Rosedale executed
an undertaking in relation to Policy No. JR112754. According to the terms of
this undertaking, Rosedale guarantees that a minimum of $2,000,000.00 of the
death benefit under the Policy will be available at all times in respect of
Rosedale's obligations to the Bank, and that the Bank will unconditionally
receive a death benefit of $1,000,000.00 on account of the assignment of
Rosedale's interest as a beneficiary under the Policy and an additional
$1,000,000.00 on account of the assignment of OPW's interest as a beneficiary
under the Policy.
III. GUARANTEES
On closing, the following guarantees were provided by the various parties to the
transaction:
1. The indebtedness of Rosedale under the credit facility was guaranteed by Alan
Fine personally up to $750,000.00. This guarantee will be reduced to $250,000.00
upon Rosedale achieving a debt to equity ratio of 2.5:1 or better as evidenced
by an audited year end financial statement;
2. Sidney Ackerman guaranteed the repayment of this debt up to $750,000.00 under
the same terms and conditions as the guarantee given by Alan Fine;
3. Repayment of the Rosedale debt was guaranteed by OPW up to a maximum of
$750,000.00. This guarantee will be eligible for release beginning December 31,
1997, provided that the earnings of Rosedale before taxes and retained bonuses
amount to not less than $300,000.00 for two consecutive fiscal periods and that
Rosedale achieves a debt to equity ratio of 2.5:1 or better as evidenced by an
audited year-end financial statement; and
Page 4
4. 521305 Ontario Inc. guaranteed the Rosedale indebtedness up to $1,000,000.00.
You should review the terms of the guarantees carefully, as personal liability
for both yourself and Sydney Ackerman will be incurred should Rosedale default
on repayment of the National Bank credit facility. In the event that Rosedale
does default on the repayment of the loan, the Bank may call upon either one or
any combination of the guarantors to repay the outstanding balance owed up to
the maximum amount of the guarantee.
3. Subordination Agreements:
Alan Fine, Sidney Ackerman, and 523105 Ontario Inc. each signed agreements with
the National Bank to the effect that payment of any debts presently due, or that
become due in the future from Rosedale to these parties can only be made after
any amounts due to the Bank at the time have been paid.
IV. PRIORITIES AGREEMENT
Prior to the closing of this transaction, Laurentian Bank of Canada
("Laurentian") held prior-existing security against the assets of Rosedale. This
security relates to two loans made by the North American Trust Company (now
Laurentian Bank) in 1990 to both Rosedale and OPW, and a third loan made in 1995
to Rosedale only. These loans and the accompanying security were subsequently
assigned to Laurentian. The two Priorities Agreements, executed by Rosedale,
OPW, National Bank and Laurentian, define the priority of the rights of the
National Bank and Laurentian to the assets of Rosedale and OPW respectively.
According to the terms of these Agreements, the National Bank security will take
priority over the Laurentian security in all respects with the exception of
certain specified assets. Specifically, Laurentian will have priority over the
National Bank to the proceeds of the following life insurance policies:
1. Life Insurance Policy No. JR112753 on the life of Alan Fine issued by the
Prudential of America Life Insurance Company (Canada) in favour of Rosedale; and
2. Life Insurance Policy No. JR119547 on the life of Rosalyn T. Fine issued by
the Prudential of America Life Insurance Company (Canada) in favour of Rosedale.
V. CORPORATE RESOLUTIONS
The appropriate resolutions authorizing each of the transactions noted above
were passed by the boards of directors of each of the corporate entities
involved.
Specifically, the board of directors of 523105 Ontario Inc. authorized that
corporation to enter into the guarantee regarding the Rosedale debt, and to
enter into the subordination agreement signed on its behalf.
With respect to the credit facility established in favour of Ontario Paint by
National Bank, which is reported separately, Rosedale was authorized by its
board of directors to sign the guarantee of the debt of OPW to the National
Bank. The subordination agreement was also authorized by a specific
Page 5
resolution of the board of directors of Rosedale.
VI. LEGAL OPINIONS
Torkin, Manes, Cohen & Arbus ("TMCA") provided its legal opinion to the National
Bank and its solicitors in this transaction, Pallett Valo relating to the
validity and enforceability of the loans to Rosedale. Briefly, the Rosedale
opinion states that Rosedale is a validly subsisting Ontario corporation, that
the company has the power to own and lease property in Ontario, that Rosedale
has the power to borrow as contemplated by the Offer to Finance, and that
Rosedale has the power and is authorized to enter into the security agreements
required and to execute all of the various secondary documents necessitated by
the transaction. The opinions do not certify that Rosedale owns the property
charged under the GSA or assignment of book debts, nor has TMCA confirmed the
rank or priority of any of the security instruments contained herein.
VII. OTHER CLOSING DOCUMENTS
In order to facilitate the closing of the transaction, several ancillary
documents were signed. These documents include:
1. Authorization to insert the dates into certain specified documents;
2. Solvency certificates for Rosedale;
3. Acknowledgments signed by each debtor and guarantor to the effect that each
debtor and guarantor has received a verification of the registration of the
securities involved in this transaction in the Personal Property Security
Register;
4. A direction re: funds signed on behalf of Rosedale directing the National
Bank to pay out of the proceeds of the loan the moneys owed by Rosedale to the
Hong Kong Bank of Canada and the legal fees of Pallett Valo.
CONCLUSION
We are enclosing copies of the documents referred to herein and wish to point
out that this reporting letter is merely a brief synopsis of some of the main
features of the documents referred to. In the event that any questions arise,
recourse should be made to the exact wording of the document in question.
If you have any questions, please do not hesitate to contact us. It has been a
pleasure acting for you in this transaction.
Yours very truly,
TORKIN, MANES, COHEN & ARBUS
[LETTERHEAD OF NATIONAL BANK OF CANADA]
Commercial Banking Centre
August 8, 1996
Rosedale Wallcoverings and Fabrics Inc.
214 Courtland Avenue
Concord, Ontario
L4K 4L3
ATTENTION: Mr. Alan Fine, President.
Dear Sirs:
OFFER TO FINANCE
We are pleased to advise you that the National Bank of Canada has authorized the
following credit facilities subject to the ensuing terms and conditions.
BORROWER: Rosedale Wallcoverings and Fabrics Inc. ("the
Borrower").
LENDER: National Bank of Canada (the "Bank").
AMOUNT: A. $3,500,000 Cdn. by way of an Operating Loan and/or
Letters of Credit on a revolving demand loan
agreement.
B. $200,000 Cdn. by way of Foreign Exchange Forward
Contract limit with net risk of 10% on U.S. dollar
contracts. At any time total foreign exchange
forward contracts may not exceed the Cdn.
equivalent of $2,000,000 for U.S. dollar
contracts,
C. $25,000 Cdn. by way of Business Mastercard.
PURPOSE: A. To finance day to day operations.
B. To purchase U.S. dollar foreign exchange forward
contracts. Applicable terms will be from a minimum
of 1 day to a maximum of 1 year.
C. To facilitate issuance of business cards to
management personnel.
INTEREST RATE: A. Prime Rate of National Bank of Canada plus 1.50%,
that is 7.75% as at August 8,1996, calculated
daily and paid monthly in arrears. Prime Rate is
defined as the rate as established from time to
time by the Bank for Canadian dollar loans in
Canada.
The interest rate shall reduce to Prime plus 1.0%
upon the Borrower achieving a Debt to Equity ratio
of 2.50:1 or better as evidenced by an audited
year end financial statement.
B. As quoted by International Department, National
Bank of Canada at date of booking.
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C. Standard Business Mastercard rates.
REPAYMENT: On demand.
A. To revolve in multiples of $50,000.
B. According to specified maturity dates.
C. As stipulated in the cardholder agreement.
DEMAND NATURE OF
THE FACILITIES: The Borrower and the Guarantors acknowledge and agree
that notwithstanding anything contained herein to the
contrary these facilities constitute Demand Loans and as
such, are due and payable at any time at the sole
discretion of the Bank.
MARGIN AVAILABILITY: Operating advances and Letters of Credit shall be
limited to the lesser of $3,500,000 or the aggregate of
the following:
(a) 75% of good quality trade accounts receivable
(Cdn. and U.S.) excluding contra accounts and
intercompany accounts, doubtful accounts, and
those aged 90 days past invoice date and over;
plus
(b) 75% of good quality accounts receivable relating
to the sale of sample books excluding those aged
120 days past invoice dare and over; plus
(c) 50% of trade accounts receivable due from Ontario
Paint & Wallpaper Limited excluding those aged 90
days past invoice date and over capped at a
maximum margin availability of $400,000: plus
(d) 50% of finished goods inventory located in Canada
capped at an overall maximum of $l,250,000; less;
(e) all claims which rank prior to the Bank's security
(i.e. deductions at source, GST, etc).
SECURITY: All legal and other documentation to be in a form and
content satisfactory to the Bank and its solicitors and
is to be supported by all usual representations and
opinions to confirm its enforceability. To include but
not limited to:
1. Assignment of Life Insurance in the amount of
$1,000,000 on the life of Alan Fine.
2. Assignment of Life Insurance in the amount of
$1,000,000 on the life of Sidney Ackerman.
3. General Assignment of Book Debts and UCC filings
registered in all applicable jurisdictions
providing a first charge over accounts and other
receivables.
4. Pledge of Inventory under Section 427 of the Bank
Act and UCC filings providing a first charge over
inventory.
5. Assignment of sufficient fire insurance to protect
the Bank's interest.
3
6. General Security Agreement providing a first
floating charge over all assets of the Borrower.
7. $750,000 Guarantee from Alan Fine. The guarantee
will be reduced to $250,000 upon the Borrower
achieving a Debt to Equity ratio of 2.50:1 or
better as evidenced by an audited year end
financial statement together with compliance to
all other terms, conditions and covenants of the
credit facility.
8. Subordination and Postponement of Claim from Alan
Fine.
9. $750,000 Guarantee from Sidney Ackerman. The
guarantee will be reduced to $250,000 upon the
Borrower achieving a Debt to Equity ratio of
2.50:1 or better as evidenced by an audited year
end financial statement together with compliance
to all other terms, conditions and covenants of
the credit facility.
10. Subordination and Postponement of Claim from
Sidney Ackerman.
11. $750,000 Guarantee from Ontario Paint & Wallpaper
Limited. The guarantee will be eligible for
release beginning December 31, 1997. Release will
be subject to the Borrower achieving each of the
following as evidenced by an audited year end
financial statement:
(i) Earnings before taxes and bonus (retained)
of no less than $300,000 for two consecutive
fiscal periods.
(ii) Debt to Equity ratio of 2.50:1 or better.
(iii) Compliance to all terms, conditions and
covenants of the credit facility.
12. $1,000,000 Guarantee from 521305 Ontario Inc.
13. Subordination and Postponement of Claim from
521305 Ontario Inc.
CONDITIONS PRECEDENT: The following information/documentation satisfactory to
the Bank is to be provided prior to the advance of
funds:
1. Satisfactory report from the Bank's consultant
with respect to a review or current assets and the
internal financial reporting system. Consultants
cost is to the account of the Borrower, and is
estimated at $250.00.
2. Completion of the Bank's environmental
questionnaire evidencing satisfactory results.
3. Personal financial statements from each of Sid
Ackerman and Alan Fine on the Bank's standard
form. Evidence of all material assets is to be
provided.
4. A copy of the Laurentian Bank loan agreement re:
$5,000,000 loan to purchase life insurance policy,
5. All legal and security documents to be in a form
and content satisfactory to
4
the Bank and its solicitors and is to be
supported by all usual representations and
opinions to confirm its enforceability.
6. Any other important information.
FINANCIAL CONVEYANTS: The Borrower agrees to the following covenants which
shall be calculated as indicated below, maintained at
all times and tested monthly except where otherwise
indicated:
1. Current Ratio: The ratio of Current Assets to
Current Liabilities will not be less than 1.10:1
at anytime. Current Assets shall exclude any
intercompany advances, deferred costs, or any
other assets of doubtful or intangible nature.
2. Debt to Equity Ratio: The ratio of Debt to Equity
will not be note than 3.50:1 at any time.
Furthermore, Debt to Equity will not be more than
3.0:1 at December 3 1, 1997 and anytime
thereafter, Debt shall be defined as total
liabilities less any loans postponed to the Bank,
less deferred income taxes. Equity shall be
defined as Share Capital plus Retained Earnings
plus any loans postponed to the Bank, less any
deferred expenditures, loans to officers,
directors, or shareholders, or intercompany
advances and any other assets of doubtful value.
3. Capital Expenditures: The Borrower agrees that
annual capital expenditures shall not exceed Cash
Flow from Operating Activities. Cash Flow from
Operating Activities shall be defined as Income
After Tax plus deferred taxes; depreciation and
amortization; and any other non-cash expenses;
less dividends and all debt principal payments,
REPORTING CONDITIONS: 1. Within 25 days of each month-end, the Borrower
shall provide the following information on Bank
documents, signed by the appropriate authorized
officer of the Borrower:
(a) monthly accounts payable listing classified
according to age;
(b) monthly accounts receivable listing
classified according to age;
(c) inventory declaration;
(d) prior claims declaration;
(e) internally prepared income statement and
balance sheet.
2. The Borrower agrees to submit to the Bank its
annual audited financial statements within 90 days
of the end of its fiscal year.
3. The Borrower agrees to submit to the Bank its
annual budget including budgeted monthly balance
sheet, income statement, and cashflow within 90
days of its fiscal year end.
4. The Borrower agrees to submit to the Bank the
annual financial statements of 521305 Ontario Inc.
and Ontario Paint & Wallpaper Limited.
5
5. Updated personal net worth statements from each of
Alan Fine and Sidney Ackerman are to be provided
annually.
OTHER CONDITIONS: 1. The Borrower agrees to quarterly reviews of
current assets and internal financial reporting
systems by the Bank.
2. All legal and registration fees incurred to
prepare, execute and maintain legal documents will
be assumed by the Borrower.
3. The cost of all appraisals and environmental
reports requested by time Bank are the
responsibility of the Borrower.
4. The ownership structure of the company shall not
be altered without the Bank's prior written
consent which shall not be unreasonably withheld.
5. The nature of time Borrower's business shall not
be substantially changed without the Bank's prior
written consent which shall not be unreasonably
withheld.
6. If a major change judged unfavourable by the Bank
occurs in the nature of the risk before the date
the funds are advanced, the Bank can retain that
advance and cancel this Offer to Finance.
FEES: 1. Transaction fee of $5,000 of which:
(a) $2,500 has been paid and;
(b) $2,500 payback upon acceptance of this Offer
to Finance. If the Borrower does not proceed
with financing any fees paid to the Bank
shall be retained.
2. $200 monthly management fee.
ENVIRONMENTAL
MATTERS: 1. The Borrower and the Guarantors represent and
warrant that the owner of the subject property has
complied and is complying in all respects with all
applicable laws relating to the environment, that
no contaminants, pollutants or other hazardous
substances (including, without limitation,
asbestos, products containing urea formaldehyde or
polychlorinated biphenyl or any radioactive
substances) have been or are now stored or located
at the subject property, that no order, approval,
direction or ocher governmental or regulatory
notice relating to the environment has been
threatened against, is pending or has been issued
with respect to the subject property or the
operations of the business being conducted at the
subject property, and that none of them is aware
of any pending or threatened action, suit or
proceedings relating to any actual or alleged
environmental violation from or at the subject
property.
2. The Borrower and Guarantors agree to comply with
and respect any and all environmental laws and
regulations.
3. The Borrower and Guarantors agree to indemnify the
Bank for all decontamination costs or for damages
incurred by the Bank or its agents us a result of
such contamination.
6
ACKNOWLEDGMENT
OF NON MERGER: The terms and conditions contained in this Offer to
Finance shall not merge upon the execution and delivery
of the security documentation referred to herein but
shall at all times remain in full force and effect.
CREDIT REPORTING: The Borrower and the Guarantors consent to the obtaining
from any credit reporting agency or from any person such
information as the Bank may require at any time, and
consent to the disclosure at any time of the information
concerning the Borrower and the Guarantor to any credit
grantor with whom the Borrower and the Guarantor have
financial relations or to any credit reporting agency.
REPRESENTATIONS AND
WARRANTIES: The Borrower and the Guarantors represent and warrant
that the information given in respect of applying for
the credit facilities is correct and complete, and
acknowledge that the Bank is relying on said
representations and warranties.
ANNUAL REVIEW: To be reviewed at least annually and in any event not
later than April 30, 1997.
OTHER: The Borrower agrees to keep the contents of this Letter
strictly confidential.
If these conditions are acceptable to you, please indicate your acceptance
thereof by signing and returning a copy of this letter to the Bank before August
15, 1996, after which time this offer is null and void.
Yours truly
/s/ Steven L Matheson
Steven L Matheson
Senior Account Manager
/s/ J.A. Marshall
J.A. Marshall
Regional Manager
ACCEPTANCE:
WE ACCEPT THE TERMS AND CONDITIONS OUTLINED HEREIN THIS 12 DAY OF AUGUST, 1996
ROSEDALE WALLCOVERINGS AND FABRIC INC. ("Borrower")
Per: /s/ [ILLEGIBLE]
--------------------------------------------
Title: President
AS GUARANTORS:
/s/ Alan Fine
- ------------------------------------------------
Alan Fine
/s/ Sidney Ackerman
- ------------------------------------------------
Sidney Ackerman
ONTARIO PAINT AND WALLPAPER LIMITED
Per: /s/ Sidney Ackerman
--------------------------------------------
Title: President
521305 ONTARIO INC.
Per: /s/ Alan Fine
--------------------------------------------
Title: President
[LOGO] NATIONAL BANK OF CANADA
ACKNOWLEDGEMENT OF DEBT
REVOLVING DEMAND CREDIT
In consideration of the National Bank of Canada (hereinafter called the "Bank")
providing the undersigned (hereinafter called the "Customer") with a revolving
demand loan facility (hereinafter called the "Loan Facility") in the aggregate
principal amount not exceeding $3,500,000.00, THREE MILLION AND FIVE HUNDRED
THOUSAND dollars (|X| CDN; |_| CDN or US equivalent; |_| US) the Customer agrees
with the Bank as follows:
1. TERM OF CREDIT
The Customer promises to pay to the Bank, on demand, all amounts
outstanding under this Loan Facility including, without limitation,
principal, interest, fees and accessories.
2. INTEREST RATE
|X| 2.1 Advances In CDN$
Advances in CDN$ shall bear interest, until payment in full, at the
Canadian Prime Rate of the Bank plus One and One-half (1.50%) per cent,
calculated daily and payable monthly, with a minimum charge of $10.00. At
the date hereof the Canadian Prime Rate of the Bank is 5.00 per cent per
annum.
|_| 2.2 Advances in US$
Advances in US$ shall bear interest, until payment in full, at the US Base
Rate of the Bank plus per cent, calculated daily and payable monthly, with
a minimum charge of $ _____________________________________________ . At
the date hereof the US Base Rate of the Bank is _______________ per cent
per annum.
3. FINANCING CONDITIONS
3.1 The Customer authorizes the Bank, but the Bank is not obliged, to
debit from time to time his Account with the amount of interest
accrued and unpaid by the Customer.
3.2 Provided that the Bank has not demanded payment of any amount
outstanding under this Loan Facility, or has not terminated this
Agreement, the Customer may, at the Bank's discretion, borrow, repay
and reborrow up to the amount available under this Loan Facility at
any time and from time to time in the following manner:
3.2.1 The Customer authorizes the Bank, daily or otherwise as and
when determined by the Bank from time to time, to ascertain
the position or net position (as the case may be) between the
Customer and the Bank in respect to the deposit account or, if
more than one, the deposit accounts maintained by the Customer
with the Bank (herein called the "Account") and that
3.2.1.1 if such position or net position is a credit in favour
of the Customer, the Bank may apply the amount of such
credit or any part thereof, rounded to the nearest
$50,000.00 as a repayment of the Loan Facility, and
the Bank will debit the Account with the amount of
such repayment; and
3.2.1.2 if such position or net position is a debit in favour
of the Bank, the Bank will make an advance under the
Loan Facility of such amount, rounded to the nearest
50,000.00 as is required to place the Account in such
credit or net credit position as has been agreed
between the Customer and the Bank from time to time,
and the Bank may increase the unpaid balance owing
under the Loan Facility, and credit the Account with
the amount of such advance; provided that at no time
shall the balance owing exceed the amount of the Loan
Facility.
3.3 The Customer agrees to maintain an average monthly minimum credit
balance in the Account, which may include compensating balances to
cover service charges, reserves and debit float. Such balance shall
be the amount agreed to in writing between the Customer and the Bank
from time to time.
3.4 The Bank shall maintain on the books of its unit of account,
accounts and records evidencing the outstanding principal amount of
the loan of the Bank to the Customer under this Loan Facility
together with any interest in respect thereof. The Bank shall
maintain a record or computerized data of the amount of the balance,
each advance, and each payment of principal and interest on account
of the loan. The Bank's accounts and records constitute in the
absence of manifest error prima facie evidence of the indebtedness
of the Customer to the Bank under this Loan Facility.
4. CONSOLIDATION
Both dates must be the same
4.1 The Customer acknowledges that the outstanding principal balance owing to
the Bank under existing credit facilities which will be replaced by this Loan
Facility is $_______________________, __________________________________________
(figures) (words)
dollars, as at the close of business on _____________________________ 19__. The
initial outstanding principal balance under this Loan Facility will be adjusted
to reflect transactions under the existing credit facility occurring between
________________________________ 19__ and the date of execution of this
agreement. The Customer acknowledges and declares that the security previously
granted to the Bank by the Customer remains in full force and effect, the Bank
hereby reserving all of its right, title and interest to and in the rights,
hypothecs and privileges granted to the Bank under the terms of the said
security.
5. SECTION 427 OF THE BANK ACT
5.1 This Agreement is given pursuant to the application for credit and
promise to give security made by the undersigned to the Bank and
dated the 10th day of October, 1996, and any supplemental
application for credit and promise to give security. The Customer
promises to give the Bank from time to time warehouse receipts
and/or bills of lading covering the property described in such
application(s) for credit and promise(s) to give security or any
part thereof which is now or may hereafter be covered by warehouse
receipts or bills of lading, as security for this Loan Facility. No
such security shall be merged in any subsequent security or be taken
to be substituted for any security previously acquired. This section
applies only to loans granted under the provisions of the Bank Act.
6. INTERPRETATION
6.1 Definitions
For the purposes hereof, the following words and phrases shall have
the following meaning:
"Canadian Dollars" "CDN$": means lawful money of Canada.
"Canadian Prime Rate": means the annual variable rate of interest
announced from time to time by the Bank and used to determine the
interest rates on Canadian dollar commercial loans granted by the
Bank in Canada.
"Debt", "indebtedness" or "total indebtedness": means the aggregate
amount of principal, interest and accessories due by the Customer
hereunder.
"Floating Rate": means the interest rate applicable to floating rate
advances made hereunder in Canadian or U.S. dollars, as the case may
be.
"U.S. Base Rate": means the annual variable rate of interest
announced from time to time by the Bank and used to determine the
interest rates on U.S. dollar commercial loans granted by the Bank
in Canada.
"U.S. Dollars" "US$": means lawful money of the United States of
America.
6.2 Conversion to U.S. or Canadian dollars
Each time an amount in Canadian dollars must be converted or
expressed in U.S. dollars, or the equivalent in U.S. dollars (or
inversely) must be determined, such calculation shall be made, on
the appropriate date, in accordance with the cash purchase rate of
the Bank at about 10:30 a.m.
6.3 Other Agreements
The Customer acknowledges that the terms of this agreement are in
addition to and not in substitution for any terms and conditions of
any other agreements between the Customer and the Bank.
7. GENERAL TERMS AND CONDITIONS OF REPAYMENT
7.1 Currency and place of payment
All amounts due by the Customer under the terms hereof shall be paid
by the Customer to the Bank in Canadian dollars in the case of a
financing granted in Canadian dollars, or in U.S. dollars in the
case of a financing granted in U.S. dollars.
Should the amount of principal of the debt owing to the Bank exceed
the credit limit effectively granted hereunder, the Customer shall
reimburse the Bank, on demand, an amount equal to such excess
amount.
7.2 Judgment rendered in a currency other than the currency in which the
financing granted was due.
Should a judgment be obtained against the Customer for an amount
owed by it, in a currency other than the one in which the said
amount was owing hereunder, the Customer shall pay the Bank, as
applicable, on the judgment payment date, such additional amount as
is equal to the excess of the amount that was due hereunder and
converted into the other currency, on the judgment payment date,
with respect to the judgment amount. The exchange rate applicable
for the purposes of obtaining the judgment and for calculating said
conversion shall be the rate at which the Bank is able, on the
appropriate date, in Montreal to sell the currency applicable to
this agreement to purchase the other currency.
Any additional amount owing under this clause shall be due as a
separate debt from that which gave rise to the judgment, which
judgment shall not constitute res judicata.
8. LANGUAGE
(For Quebec only)
The Customer has expressly requested that this document be drawn up and
executed in the English language. Le client a expressement demande que ce
document soit redige et signe en langue anglaise.
EXECUTED AT Mississauga THIS 30th DAY OF October 1996
NATIONAL BANK OF CANADA
Per: /s/ Steven Matheson
-------------------------------------------------
Signature (Bank)
ROSEDALE WALLCOVERINGS & FABRICS INC.
Per: /s/ Alan Fine c/s
-------------------------------------------------
Signature (Customer) ALAN FINE - President
Per: /s/ Sidney Ackerman
-------------------------------------------------
SIGNATURE (Customer) SIDNEY ACKERMAN - Secretary
GENERAL SECURITY AGREEMENT
TO: NATIONAL BANK OF CANADA
350 Burnhamthorpe Road West, Mississauga, Ont. L5B 3J1 hereinafter called
the "BANK",
(BRANCH ADDRESS)
GRANTED BY: ROSEDALE WALLCOVERINGS & FABRICS INC.
(FULL NAME)
214 Courtland Avenue, Concord, Ontario, L4K 4L3 hereinafter called the
"DEBTOR".
(ADDRESS)
1. GRANT OF SECURITY INTEREST
As a general and continuing Security for the payment of all
obligations, indebtedness and liabilities of the Debtor to the Bank whether
incurred prior to, at the time of or subsequent to the execution hereof,
including extensions or renewals, and all other present and future liabilities
of the Debtor to the Bank, direct or indirect, wheresoever and howsoever
incurred and any ultimate unpaid balance thereof, including, without restricting
the generality of the foregoing, advances to the Debtor under fixed or revolving
credits established from time to time; letters of credit, whether or not drawn
upon, issued by the Bank with respect to the Debtor; and the obligation and
liability of the Debtor under any contract of guarantee now or hereafter in
existence whereby the Debtor guarantees payment of the debts, liabilities and
obligations of a third party to the Bank; (herein called "Obligations") the
Debtor hereby grants to the Bank a continuing security interest in, and
mortgages, charges and assigns to the Bank as and by way of a fixed and specific
mortgage and charge, all of the Debtor's present and after-acquired property,
assets, and undertaking described in paragraph 2 hereof (hereinafter
collectively called the "Collateral").
2. DESCRIPTION OF COLLATERAL
(a) Accounts Receivable or Accounts
All debts, Accounts, claims, moneys and choses in action which now
are or which may at any time hereafter be due or owing to or owned
by the Debtor and also all securities, mortgages, bills, notes and
other documents now held or owned or which may be hereafter taken,
held or owned by or on behalf of the Debtor in respect of the said
debts, Accounts, claims, moneys and choses in action, or any part
thereof, and also all books, documents and papers recording,
evidencing or relating to the said debts, Accounts, claims, moneys
and choses in action, or any part thereof. All of which are
hereinafter called "Accounts Receivable" or "Accounts".
(b) Goods
All Goods (including all parts, accessories, attachments, additions
and accessions thereto) now owned or hereafter owned or acquired by
the Debtor including, without limitation, all equipment, inventory,
machinery, tools, apparatus, plant, furniture, fixtures, and Serial
Numbered Goods now owned or hereafter acquired by the Debtor. All of
which are hereinafter called "Goods".
(c) Intangibles
All Intangibles now owned or hereafter acquired by the Debtor and
which are not included in sub-paragraph (a) above, including,
without limitation, all contractual rights, goodwill, patents, trade
marks, trade names, copyrights, permits and quotas, and other
industrial property now owned or hereafter acquired by the Debtor
and the undertaking of the Debtor. All of which are hereinafter
called "Intangibles".
(d) Other Personal Property
All Securities (including without limitation shares, stocks,
warrants, bonds and debentures), Instruments (including without
limitation cheques, notes, bills of exchange, letters of credit and
advices of credit), Chattel Paper (including without limitation
chattel mortgages, conditional sale contracts, lease-option
agreements and leases), Documents of Title (including without
limitation warehouse receipts and bills of lading) and Money now
owned or hereafter acquired by the Debtor. All of which are
hereinafter respectively called "Securities", "Instruments",
"Chattel Paper", "Documents of Title" and "Money".
(e) Leaseholds, Real and Immovable Property
All real and immovable property, both freehold and leasehold, and
any interests therein, now owned or hereafter acquired by the
Debtor, together with all buildings, erections, improvements and
fixtures situate thereupon or used in connection therewith and
including the property set forth and described in Schedule "A" which
forms part hereof, including any lease, verbal or written or any
agreement therefor, provided, however, the last day of any term of
any such lease, verbal or written, or any agreement therefor, is
excepted out of the property charged by this security agreement, but
the Debtor shall stand possessed of any such reversion upon trust to
assign and dispose thereof as the Bank may direct.
(f) Proceeds
All property in any form derived directly or indirectly from any
dealing with the aforementioned undertaking and property of the
Debtor or proceeds, including property that indemnities or
compensates for property destroyed or damaged. All of which property
is hereinafter called "Proceeds".
Unless otherwise limited herein, the terms "Goods", "Accounts",
"Chattel Paper", "Documents of Title", "Instruments", "Money", "Securities",
"Proceeds" and "Accession" whenever used herein shall be interpreted pursuant to
their respective meanings when used in the Personal Property Security Act of the
province referred to in paragraph 24, as amended or replaced from time to time,
which Act including amendments thereto and any Act substituted therefor and
amendments thereto is herein referred to as the "PPSA". Any reference herein to
"Collateral" shall, unless the context otherwise requires, be deemed a reference
to "Collateral or any part thereof", PROVIDED THAT the Collateral will not
include any "Consumer Goods" of the Debtor as that term is defined in the PPSA.
"Serial Numbered Goods" means motor vehicles, trailers, mobile homes, aircraft,
boats and outboard motors.
Time of Attachment - The Debtor acknowledges that value has been given and
that the parties have not agreed to postpone the time for attachment of the
mortgages, charges, assignments and security interests provided for in this
security agreement.
3. SECURITIES
If the Collateral at any time includes Securities, the Debtor
authorizes the Bank to transfer the same or any part thereof into its own name
or that of its nominee(s) so that the Bank or its nominee(s) may appear of
record as the sole owner thereof; provided that, until default, the Bank shall
deliver promptly to the Debtor all notices or other communications received by
it or its nominee(s) as such registered owner and, upon demand and receipt of
payment of any necessary expenses thereof, shall issue to the Debtor or its
order a proxy to vote and take all action with respect to such Securities. After
default, the Debtor waives all rights to receive any notices or communications
received by the Bank or its nominee(s) as such registered owner and agrees that
no proxy issued by the Bank to the Debtor or its order as aforesaid shall
thereafter be effective.
4. SERIAL NUMBERED GOODS
The Debtor confirms and warrants that all Serial Numbered Goods
owned by the Debtor and used as equipment are fully and accurately described in
Schedule "A", and the Debtor covenants to advise the Bank promptly, in writing,
of the acquisition by the Debtor of any further Serial Numbered Goods that are
not inventory or the commencement by the Debtor to use any Serial Numbered Goods
in its inventory for non-inventory purposes and to provide the Bank with full
and complete descriptions of such Serial Numbered Goods, setting forth each
make, model, year of manufacture and serial number.
5. GENERAL WARRANTIES AND COVENANTS OF THE DEBTOR
The Debtor hereby warrants and covenants with the Bank that it:
(a) owns the Collateral free of all security interests or other
encumbrances except for the permitted encumbrances described in
paragraph 30 hereof or hereafter approved in writing by the Bank
prior to their creation or assumption and that none of the Goods
which are subject to the security interest hereof have been affixed
to real property or to other Goods except as has been disclosed to
the Bank in writing;
(b) shall pay all costs and expenses (including legal fees on a
solicitor and his own client basis) of the Bank incurred with
respect to the preparation, execution and filing of or in respect of
this security agreement and the taking, recovering or possessing of
the Collateral and in any other proceedings taken for the purpose of
enforcing the remedies provided herein, or otherwise in relation to
the Collateral, including the Bank's costs of complying with any
provision of the PPSA or by reason of non-payment of the Obligations
hereby secured;
(c) shall keep the Collateral in good order, condition and repair, and
shall not use the Collateral in violation of the provisions of this
security agreement and shall prevent the Collateral from being or
becoming affixed to real property without the prior written consent
of the Bank;
(d) shall pay all rents, taxes, rates, levies, assessments and other
charges of every nature which may be lawfully levied, assessed or
imposed against or in respect of the Debtor or Collateral as and
when the same shall become due and payable;
(e) shall notify the Bank promptly of:
(i) any change in the information contained herein or in the
Schedule hereto relating to Debtor, Debtor's business or
Collateral;
(ii) the details of any significant acquisition of Collateral;
(iii) the details of any claims or litigation affecting the Debtor
or Collateral;
(iv) any loss of or damage to Collateral;
(v) any default by any Account Debtor (as defined in the PPSA) in
payment or other performance of his obligations with respect
to the Collateral; and
(vi) the return to or repossession by Debtor of Collateral;
(f) shall observe and perform all its obligations under all leases,
licenses and other agreements to which it is a party in order to
preserve and protect the Collateral and shall comply with all of its
other covenants and agreements with the Bank (e.g.those set forth in
a commitment letter);
(g) shall permit a representative of the Bank at any time to inspect its
plant, machinery, equipment, inventory, stock-in-trade and
operations and for that purpose to enter the Debtor's premises and
any other location where the Collateral may be situated and shall
pay the expenses of the Bank incurred thereby including, without
limitation, the reasonable remuneration and expenses of any person
engaged by the Bank for such purpose;
(h) shall keep proper books of account and records covering all its
business and affairs on a current basis; shall permit a
representative of the Bank at any time to inspect the Debtor's books
of account, records and documents, to make copies and summaries
thereof and to make enquiries and tests for the purpose of
verification thereof, and shall pay the expenses of the Bank
incurred thereby including, without limitation, the reasonable
remuneration and expenses of any person engaged by the Bank for such
purposes; and
(i) shall deliver to the Bank from time to time promptly upon request:
(i) any Documents of Title, Instruments, Securities and Chattel
Paper constituting, representing or relating to Collateral;
(ii) all books of account and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and
other writings relating to Collateral for the purpose of
inspecting, auditing or copying the same;
(iii) all financial statements prepared by or for Debtor regarding
Debtor's business;
(iv) all policies and certificates of insurance relating to
Collateral; and
(v) such information concerning Collateral, the Debtor, and
Debtor's business and affairs as the Bank may reasonably
request.
6. CONTINUING SECURITY
This security agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter held
by the Bank, and is intended to be a continuing security agreement and shall
remain in full force and effect until the Manager or Acting Manager from time to
time of the abovementioned branch of the Bank shall actually receive written
notice of its discontinuance, and, notwithstanding such notice, shall remain in
full force and effect thereafter until all Obligations contracted for or created
before the receipt of such notice by the Bank, and any extensions or renewals
thereof (whether made before or after receipt of such notice) together with
interest accruing thereon after such notice, shall be paid and satisfied in
full. It is contemplated that balances owing from time to time by the Debtor may
be reduced or paid in full and that further advances may be made to the Debtor
on the basis of this security agreement.
7. RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL
(a) Except as hereinafter provided, the Debtor shall not, without the
written consent of the Bank:
(i) sell, lease or otherwise dispose of the Collateral or any part
thereof;
(ii) release, surrender or abandon possession of the Collateral or
any part thereof; or
(iii) move or transfer the Collateral or any part thereof from its
present location.
(b) Until the Debtor receives notice from the Bank to the contrary, the
Debtor may:
(i) dispose of Inventory and collect Accounts by any method of
disposition or collection that is in the ordinary course of
the Debtor's business and for the purpose of carrying on the
same; and
(ii) at any time, apply for the prior written consent of the Bank,
before selling or otherwise disposing of such part of its
equipment which is not necessary to or useful in connection
with its business and undertaking or which has become worn out
or damaged or otherwise unsuitable for its purposes PROVIDED
THAT the Bank shall have an unfettered discretion in approving
or disapproving of such applications and, as a matter of
principle, will not approve of any application unless the
Debtor substitutes for the equipment being disposed of, and
subjects to the charge of this security agreement, free from
liens or charges, equipment of at least equal value so that
the security of the Bank hereunder shall not thereby be in any
way reduced or impaired. The Debtor shall provide the Bank
from time to time with such further assurances and written
evidence of the extension of the charges of this security
agreement to all such substitute equipment as the Bank may
reasonably require.
(c) The Bank may, at its discretion, at any time release from the charge
contained herein any part or parts of the Collateral, or any other
security or surety for the Obligations either with or without
sufficient consideration therefor, without responsibility therefor,
and without thereby releasing any other part of the Collateral or
any person from this security agreement or from any of the covenants
herein contained. Every part of the Collateral into which the
Collateral is or may hereafter be divided does and shall stand
charged with payment of the Obligations and no person shall have the
right to require the Obligations to be apportioned. The Bank shall
not be accountable to the Debtor for the value of any property or
security released except for any moneys actually received by the
Bank.
8. NEGATIVE COVENANTS
The Debtor shall not, without the prior written consent of the Bank:
(a) create, permit, assume, have outstanding or suffer to exist, any
security interest in or any charge or encumbrance on the Collateral,
or any part thereof, ranking or purporting to rank prior to or pari
passu with the security interest created by this security agreement,
other than permitted encumbrances as described in paragraph 30
hereof, and Purchase-Money Security Interests permitted under
paragraph 8(d);
(b) permit any subsidiary to mortgage, charge or otherwise encumber any
of its property or assets or issue any bonds, debentures, shares or
other securities except to the Debtor or the Bank;
(c) issue any trust deeds or similar instruments which would permit the
Debtor to file for protection under the Companies' Creditors
Arrangement Act;
(d) create any Purchase-Money Security Interest ("PMSI") in favour of
any person; provided however, that the Debtor may create a PMSI in
favour of any vendor of equipment, up to 75% of the purchase price;
nor
(e) amend or terminate, or accept any prepayment in respect of, any
Account, Intangible, Instrument or Chattel Paper except in good
faith in the ordinary course of business.
9. FAILURE TO PERFORM COVENANTS
If the Debtor shall fail to perform any covenant on its part herein
contained, the Bank may, in its absolute discretion, but without being bound to
do so, perform any such covenant capable of being performed by it. If any such
covenant requires the payment of money or if the Collateral shall become subject
to any lien or charge ranking in whole or in part in priority to the charge
created by this security agreement, the Bank may make such payment or pay or
discharge the said lien or charge, but shall be under no obligation to do so.
All sums so paid by the Bank shall immediately be payable by the Debtor to the
Bank, shall bear interest at the highest rate borne by any of the Obligations
until paid, and shall be secured by this security agreement. No such performance
or payment shall relieve the Debtor from any default under this security
agreement or any consequences of such default.
10. INSURANCE
(a) The Debtor shall insure and keep insured the Collateral against loss
or damage by fire and such other risks, as the Bank may reasonably
require, in the amount of not less than the full insurable value of
the Collateral in lawful money of Canada with insurance companies
authorized to do business in Canada.
(b) The Debtor shall insure itself against public liability for a
reasonable amount considering the nature of the business carried on
by the Debtor.
(c) The loss under all policies of insurance, other than public
liability, shall be payable to the Bank and the Debtor shall arrange
to have the entitlement of the Bank to the loss payable recorded on
each policy of insurance. In any event, the production of this
security agreement shall be sufficient authority for, and the
insurer is hereby directed thereupon, to pay the loss to the Bank.
All policies of insurance, including renewals, shall be lodged with
the Bank and the Debtor shall pay all premiums as the same become
payable in respect of such insurance.
(d) In the event of loss, the Bank, at its option, may apply the
insurance proceeds against the balance owing by the Debtor, release
the said proceeds to the Debtor, or arrange for the said proceeds,
or any part thereof, to be used to repair, replace or rebuild the
damaged property, or any combination of such applications. Where the
insurance proceeds are released to the Debtor, or used for the
purpose of repairing, replacing, or rebuilding the damaged property,
the receipt of the insurance proceeds shall not operate as payment
or novation or in any way affect the security herein or any other
security for the Obligations.
11. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall
constitute default hereunder and thereupon the security hereby constituted shall
become enforceable:
(a) The non-payment when due, whether by acceleration or otherwise, of
any principal or interest forming part of the Obligations or the
failure of the Debtor to perform any term, condition, obligation, or
covenant in favour of the Bank, whether or not contained herein,
including default in making any payment referred to herein, or if
any of the warranties contained herein are, or shall become,
materially untrue;
(b) The Debtor, if an individual, dies or is declared incompetent by a
Court of competent jurisdiction or the Debtor, if a partnership, is
dissolved or wound up, or the Debtor, if a corporation, enters into
any reconstruction, reorganization, amalgamation, merger or any
other similar arrangement;
(c) If any order shall be made or a resolution passed for the winding-up
of the Debtor (if the Debtor is a corporation), or if a petition
shall be filed under the Bankruptcy and Insolvency Act by or against
the Debtor or an authorized assignment made by it or a receiver or
agent appointed under the Bankruptcy and Insolvency Act or by or on
behalf of a secured creditor of the Debtor or an application made
under the companies' Creditors Arrangement Act (if the Debtor is a
corporation) or any other relief is sought under any similar
legislation in any jurisdiction or a proposal is made by the Debtor
to its creditors under the Bankruptcy and Insolvency Act or the
Debtor files a Notice of Intention to file such a proposal;
(d) The institution by or against the Debtor of any formal or informal
proceeding for the dissolution or liquidation of, settlement of
claims against or winding up of affairs of the Debtor;
(e) If an encumbrancer, whether permitted or otherwise, shall take
possession of any part of the Collateral, or if any process of a
Court, execution, or distress becomes enforceable or is enforced
against any of the Collateral;
(f) If the Debtor ceases or threatens to cease to carry on business,
makes or agrees to make a bulk sale of assets without complying with
applicable law or commits an act of bankruptcy, or otherwise
acknowledges its insolvency;
(g) If any execution, sequestration, extent or other process of any
court become enforceable against the Debtor or if a distress or
analogous process is levied upon the Collateral or any part thereof;
(h) If any certificate, statement, representation, warranty or audit
report heretofore or hereafter furnished by or on behalf of the
Debtor pursuant to or in connection with this security agreement, or
otherwise (including, without limitation, the representations and
warranties contained herein) or as an inducement to the Bank to
extend any credit to or to enter into this or any other agreement
with the Debtor, proves to have been false in any material respect
at the time as of which the facts therein set forth were stated or
certified, or proves to have omitted any substantial contingent or
unliquidated liability or claim against the Debtor; or if upon the
date of execution of this security agreement, there shall have been
any material adverse change in any of the facts disclosed by any
such certificate, representation, statement, warranty or audit
report, which change shalt not have been disclosed to the Bank at or
prior to the time of such execution;
(i) If the Bank in good faith believes, and has commercially reasonable
grounds for believing, that the prospect of payment or performance
of the Obligations is or is about to be impaired or that the
Collateral is or is about to be placed in jeopardy;
(j) If the Debtor or any guarantor or affiliate defaults under any
agreement with respect to any indebtedness or other obligation to
any person other than the Bank if such default has resulted in, or
may result, with notice or lapse of time or both, in the
acceleration of any such indebtedness or obligation or the right of
such person to realize upon any Collateral; or
(k) If any of the property of the Debtor, or any guarantor, is seized by
or on behalf of a creditor pursuant to security or otherwise.
12. REMEDIES UPON DEFAULT
At any time after the happening of any default, the Bank may declare
any or all of the Obligations not payable on demand to become immediately due
and payable and the security hereby constituted will immediately become
enforceable. To enforce and realize on the security hereby constituted, the Bank
may exercise any one or more of the following rights and powers:
(a) to enter upon any premises of the Debtor and to take possession of
all or any part of the Collateral with power to exclude the Debtor,
its agents and servants therefrom;
(b) to preserve and maintain the Collateral and make such replacements
thereof and additions thereto as it shall deem advisable;
(c) to enjoy and exercise all powers necessary to the performance of all
functions provided for in this security agreement, including,
without limitation, the power to purchase on credit, the power to
borrow in the Debtor's name or in its own name and to advance its
own money to the Debtor at such rates of interest as it may deem
reasonable;
(d) to sell, lease or otherwise dispose of all or any part of the
Collateral whether by public or private sale or lease or otherwise
in such manner and on such terms (including as to deferred payment)
as to it may seem commercially reasonable, provided always that it
shall not be incumbent on the Bank to sell, lease or dispose of the
Collateral but that it shall be lawful for the Bank peaceably and
quietly to take, hold, use, occupy, possess and enjoy the Collateral
in the manner and to the extent it shall deem advisable without
molestation, eviction, hindrance, or interruption of the Debtor, or
any other person or persons whomsoever, and to convey, transfer and
assign to a purchaser or purchasers the title to any of the
Collateral sold; and
(e) to appoint by instrument in writing a receiver, receiver-manager, or
receiver and manager (herein called the "Receiver") of the
Collateral, with or without bond, and may from time to time remove
the Receiver and appoint another in his stead.
13. RECEIVER
A Receiver appointed by the Bank as aforesaid will be deemed to be
the agent of the Debtor and not of the Bank, and the Debtor shall be solely
responsible for the Receiver's acts or defaults and the Bank shall not be in any
way responsible therefor, and the Bank shall not be liable to the Receiver for
his remuneration, costs. charges or expenses. It is further specifically
understood and agreed that the Receiver appointed pursuant to the provisions of
this security agreement by the Bank shall have, subject to any limitations in
the instrument in writing or any order of a court of competent jurisdiction
appointing him, all of the rights and powers of the Bank hereunder and the
following additional rights and powers:
(a) to carry on or concur in carrying on all or any part of the business
of the Debtor; and
(b) to borrow money, upon the security of the whole or any part of the
Collateral for the purpose of carrying on all or any part of the
business of the Debtor and for the preservation and realization of
the Collateral, or to maintain the whole or any part of the
Collateral in a manner that will be sufficient to obtain the amounts
from time to time required in the opinion of the Receiver, and in so
doing the Receiver may issue certificates (each herein called a
"Receiver's Certificate") that may be payable as the Receiver
considers expedient and bear interest as stated therein, and the
amounts from time to time payable under any Receiver's Certificate
shall charge the Collateral in priority to this security agreement
and the Debtor hereby charges the Collateral with debts, if any,
owing from time to lime under any Receiver's Certificate.
In exercising his powers hereunder, any Receiver will be free to
deal with the Collateral and any assets of the Debtor related thereto in such
order or manner as he may be directed by the Bank, any rule of law or equity to
the contrary notwithstanding, including, without limitation, the equitable
principle or doctrine of marshalling.
14. ADDITIONAL POWERS UPON DEFAULT
In addition to the foregoing rights and powers, the Bank, any
authorized agent of the Bank, and the Receiver shall each have all the rights
and remedies of a secured party or mortgagee under the PPSA, or otherwise at law
or in equity, and for greater certainty, shall each have the following rights
and powers if the security hereby constituted becomes enforceable:
(a) dispose of any of the Collateral in the condition in which it was at
the date possession of it was taken, or after any commercially
reasonable repair, processing or preparation for disposition;
(b) sell, lease or otherwise dispose of any part of the Collateral
without giving any notice whatever except as may be required by
applicable statute law;
(c) at its option, provided notice is given to the Debtor in the manner
required by the PPSA, the Bank may elect to retain all or any part
of the Collateral in satisfaction of the Obligations to it of the
Debtor;
(d) the Bank may terminate any outstanding credit facilities granted to
the Debtor, immediately or without any prior notice and in addition,
without limitation, may dishonour cheques and apply the Debtor's
credit balances against the Obligations;
(e) the Bank may demand, sue for and receive any Accounts Receivable,
Chattel Paper, Instruments or Securities, give effectual receipts
and discharges therefor, compromise any such Collateral which may
seem bad or doubtful to the Bank and give time for payment thereof
with or without security;
(f) pay any or all debts and liabilities in connection with the
Collateral;
(g) make any arrangements or compromises which the Receiver considers
expedient; and
(h) institute and prosecute all suits, proceedings and actions which it
considers necessary or advisable for the purpose of protecting,
seizing collecting, realizing or obtaining possession or payment of
any part of the Collateral, and defend all suits, proceedings and
actions against the Debtor, the Bank or the Receiver, appear in and
conduct the prosecution and defence of any suit, proceeding or
action then pending or thereafter instituted, and appeal any suit,
proceeding or action.
The Bank, any authorized agent of the Bank, and the Receiver may
realize on various securities and any part thereof in any order that the Bank
may consider advisable and any realization, whether by foreclosure or sale, on
any security or securities shall not bar realization on any other security or
securities. Each remedy of the Bank, any authorized agent of the Bank, and the
Receiver may be enforced before or concurrently with or subsequent to any other
remedy or remedies of the Bank, its agent or the Receiver.
15. APPLICATION OF PROCEEDS OF DISPOSITION OF COLLATERAL
The net revenue received from the Collateral and the net proceeds of
sale of the Collateral or any part thereof shall be applied by the Receiver,
subject to the claims of creditors, if any, ranking in priority to this security
agreement, as follows:
(a) firstly, in payment of all costs, charges and expenses of and
incidental to the appointment of the Receiver and the exercise by
him of all or any of the powers aforesaid including the reasonable
remuneration of the Receiver and all amounts properly payable to
him;
(b) secondly, in payment to the Bank of all costs and charges owing
hereunder and interest and arrears of interest remaining unpaid
hereunder;
(c) thirdly, in payment to the Bank of the Obligations owing hereunder;
and
(d) fourthly, subject to the rights of any other creditors, any surplus
shall be paid to the Debtor;
PROVIDED THAT in the event any party claims a charge against all or
a portion of the surplus, the Receiver shall make such disposition
of all or any portion of the surplus as the Receiver deems
appropriate in the circumstances.
16. APPOINTMENT OF CONSULTANT
The Debtor hereby agrees that at all times the Bank shall be
entitled to appoint a Consultant to provide such services and advice as the Bank
may determine in its sole discretion, with power to enter the Debtor's premises,
to inspect and evaluate the Collateral, to make copies of the Debtor's records
at the Debtor's expense, to review the Debtor's business plans and projections,
to assess the viability of the Debtor's business, to monitor the conduct of the
Debtor's affairs, to prepare written reports on the Debtor s affairs and to
distribute such reports to the Bank or to other such persons as the Bank may
direct.
The Debtor acknowledges that the Consultant is an agent for the Bank
and owes no duty to the Debtor. The Consultant is to have no managerial or
advisory capacity and will have no decision making responsibility. The Debtor
authorizes the Bank to provide confidential information to the Consultant. All
fees in connection with the engagement of a Consultant are for the account of
the Debtor and are payable on demand by the Bank.
17. PROCEEDS HELD IN TRUST; APPLICATION OF MONIES
All proceeds collected or received by the Debtor from the
disposition of Collateral or otherwise shalt be received in trust for the Bank
and shall upon request be forthwith paid to the Bank. Subject to applicable law,
any and all payments made in respect of the Obligations from time to time, and
monies realized from any security held therefor (including monies collected in
accordance with or realized on any enforcement of this security agreement), may
be applied to such parts of the Obligations as the Bank may from time to time
see fit or, at the option of the Bank, such payments and monies may be held
unappropriated in a collateral account or released to the Debtor, all without
prejudice to the liability of the Debtor or to the rights of the Bank hereunder.
The Bank may also hold as additional security any increases or profits
(including dividends) in respect of Collateral.
I8. WAIVER BY THE BANK
Any breach by the Debtor of any of the provisions contained in this
security agreement and any default by the Debtor in the observance or
performanceof any covenant or condition required to be observed or performed by
the Debtor hereunder, may only be waived by the Bank in writing, provided that
no such waiver by the Bank shall extend to or be taken in any manner to affect
any subsequent breach or default or the rights resulting therefrom.
19. BANK NOT RESPONSIBLE
The Bank shall not be liable or accountable for any failure to
seize, collect, realize, sell or obtain payment of the Collateral or any part
thereof and shall not be bound to institute proceedings for the purpose of
seizing, collecting, realizing or obtaining possession or payment of the same or
the purpose of preserving any rights of the Bank, the Debtor or any other party
in respect of the same.
The Bank may grant extensions of time and other indulgences, take
and give up securities, accept compositions, grant releases and discharges,
release any part of the Collateral to third parties, and otherwise deal with the
Debtor, debtors of the Debtor, sureties and others and with the Collateral and
other securities as the Bank may see fit without prejudice to the Obligations or
the Bank's right to hold and realize the Collateral.
The Bank will not be responsible for any debts contracted by it, for
damages to persons or property, or for salaries or non-fulfilment of contracts,
during an period when the Bank manages Collateral upon entry, as herein
provided; nor will the Bank be responsible for any misconduct, negligence or
non-feasance on the part of any Receiver or the agents or employees thereof; nor
will the Bank or any Receiver be liable to account as a mortgagee in possession
or for any loss on realization or for any default or omission for which a
mortgagee in possession may be liable; nor will the Bank be obligated to keep
Collateral identifiable; nor will the Bank be obligated to take necessary steps
to preserve rights against other Persons with respect to Securities, Instruments
or Chattel Paper included in the Collateral; nor will the Bank be obligated to
inquire into the right of any Person purporting to be entitled under the PPSA to
information and materials from the Bank by making a demand upon the Bank for
such information and materials, and the Bank will entitled to comply with any
such demand, and will not be liable for having so complied, notwithstanding that
such person may in fact not be entitled to make such demand.
20. RESTRICTION ON DEBTOR
Upon the Debtor receiving notice from the Bank of the Bank taking
possession of the Collateral or the appointment of a Receiver, all the powers,
functions, rights and privileges of the Debtor and of each officer, director,
servant, and agent of the Debtor with respect to the Collateral, shall be
suspended unless specifically :ontinued by the written consent of the Bank.
21. BANK APPOINTED ATTORNEY
The Debtor hereby irrevocably appoints the Bank to be the attorney
of the Debtor for and in the name of the Debtor to execute and do any deeds,
documents, transfers, demands, assignments, assurances, consents and things
which the Debtor is obliged to sign, execute or do hereunder and generally to
use the name of the Debtor in the exercise of all or any of the powers hereby
conferred on the Bank and any Receiver appointed.
22. COSTS; DEFICIENCY
The Debtor shall pay to the Bank on demand any and all costs,
charges and expenses, including without limitation legal costs on a solicitor
and his own client basis, incurred or paid by the Bank in protecting or
enforcing its rights upon or under Collateral. After the payment of the expenses
of retaking and disposing of the Collateral, the Debtor shall remain liable to
the Bank for any deficiency remaining to be paid on moneys owing under this
security agreement after the application of the proceeds of disposition of the
Collateral.
23. NO OBLIGATION TO ADVANCE
Neither execution nor delivery of this security agreement shall
obligate the Bank to advance any moneys to the Debtor. None of the preparation,
execution, perfection or registration of this security agreement nor the making
of any advance will bind the Bank to grant, continue, extend time for payment
of, or accept anything, which constitutes or would constitute an Obligation.
24. GOVERNING LAW; SEVERABILITY
This security agreement shall be governed by and construed in
accordance with the law of the jurisdiction where the Bank has the branch
referred to on the first page hereof, as the same may from time to time be in
effect, including, where applicable, the Personal Property Security Act, as
amended or replaced from time to time. Any provision hereof prohibited by such
law shall be ineffective to the extent of such prohibition without invalidating
the remaining provisions hereof.
25. NOTICE
Any demand or notice to the Debtor in connection with this security
agreement shall be deemed to be made or given if either:
(a) mailed by prepaid post addressed to the Debtor at its last known
address, in which case it shall be conclusively deemed to have been
received by the Debtor on the third (3rd) business day following the
date of such mailing; or
(b) personally served upon, or dispatched by facsimile transmission to,
the Debtor, or any director, officer, servant, employee or partner
of the Debtor, in which case it shall be deemed to have been made
and given to the Debtor at the time of such service or dispatch.
26. WAIVER BY DEBTOR
Where any provision or remedy contained or referred to in this
security agreement is prohibited, modified or altered by the laws of any
Province or Territory of Canada which governs that aspect of the security
agreement and the provision or remedies may be waived or excluded by the Debtor
in whole or in part, the Debtor hereby waives and/or excludes such provision to
the extent permissible by law. Without limiting the generality of the foregoing,
the Debtor agrees to waive those provisions of the PPSA which are contrary to
any provision of this security agreement and which may be waived under the PPSA.
27. NON-APPLICABLE LAW
To the fullest extent permitted by law, the Debtor waives all of the
rights, benefits and protections given by the provisions of any existing or
future statute which imposes limitations upon the powers, rights or remedies of
a secured party or upon the methods of realization of security, including any
seize or sue or anti-deficiency statute or any similar provisions of any other
statute. In particular, the Debtor (if a corporation) agrees that the
Limitation of Civil Rights Act of the Province of Saskatchewan shall not apply
to this security agreement or any of the rights, remedies or powers of the Bank
or any Receiver hereunder.
28. FURTHER ASSURANCES
The Debtor shall from time to time forthwith on the Bank's request
do, make and execute all such Financing Statements, Financing Change Statements,
further assignments, documents, acts, matters and things as may be required by
the Bank of or with respect to the Collateral or any part thereof or as may be
required to give effect to these presents.
29. BINDING EFFECT
This security agreement and all its provisions shall enure to the
benefit of the Bank, its successors and assigns, and shall be binding upon the
Debtor, its heirs, executors, administrators, successors and assigns.
30. DESCRIPTION OF PERMITTED ENCUMBRANCES
For the purposes of this security agreement, "Permitted
Encumbrances" means any of the following:-
(a) liens for taxes, assessments, governmental charges or levies which
are not overdue;
(b) rights reserved to or vested in any municipality or government or
other public authority by the terms of any lease, licence,
franchise, grant or permit, or by any statutory provision, to
terminate the same or to require annual or periodic payments as a
condition to the continuance thereof;
(c) any lien or encumbrance, the validity of which is contested by the
Debtor in good faith, in respect of which there shall have been
deposited with the Bank cash in an amount sufficient to satisfy the
same, or the Bank shall otherwise be satisfied that its interests
are not prejudiced thereby; or
(d) any security given by the Debtor to the Bank.
31. HAZARDOUS MATERIALS
The Debtor's operations and places of business are and will be kept
in compliance with all Hazardous Materials Laws (as defined below). No Hazardous
Materials (as defined below) have at any time been transported to or from the
Debtor's places of business, or used, generated, manufactured or disposed of on,
under or about the Debtor's places of business, and the Debtor will not permit
any such activity except in compliance with all Hazardous Materials Laws. For
the purposes of this paragraph: Hazardous Materials" means any oil, flammable
substances, explosives, radioactive materials, hazardous wastes or substances,
asbestos which is or could become friable, urea formaldehyde foam insulation,
toxic wastes or substances, or other wastes, materials or pollutants which pose
a hazard to the Debtor's operations or places of business or which cause the
same to be in violation of any Hazardous Materials Laws; and "Hazardous
Materials Laws" means any federal, provincial or local laws, bylaws, rules,
ordinances, regulations, notices, approvals, orders, standards, guidelines or
policies relating to the environment, health, safety, or any "Hazardous
Materials".
32. CURRENCY
All sums of money payable under this security agreement shall be paid in
Canadian dollars. If, for the purposes of obtaining or enforcing judgement in
any Court in any jurisdiction, it becomes necessary to convert into the currency
of the country giving such judgement (the "Judgement Currency") an amount due
hereunder in Canadian dollars (the "Agreed Currency"), then the date on which
the rate of exchange for conversion is selected by that Court is referred to
herein as the "Conversion Date". If there is a change in the rate of exchange
between the Judgement Currency and the Agreed Currency between the Conversion
Date and the actual receipt by the Bank of the amount due hereunder or under
such judgement, the Debtor will, notwithstanding such judgement, pay all such
additional amounts as may be necessary to ensure that the amount received by the
Bank in the Judgement Currency, when converted at the rate of exchange
prevailing on the date of receipt, will produce the amount due in the Agreed
Currency. The Debtor's liability hereunder constitutes a separate and
independent liability which shall not merge with any judgement or any partial
payment or enforcement of payment of sums due herein. The term "rate of
exchange", as used herein, includes any premiums or costs payable in connection
with the currency conversion then being effected.
33. ENTIRE AGREEMENT IN WRITING
This security agreement and all schedules hereto represent the entire
agreement between the parties with respect to the granting of the security
interest herein contained and all prior negotiations relating to it are
suspended. There are no collateral understandings between the parties relating
to this security agreement and the rights of the parties hereunder. This
agreement may only be amended by a document signed by the party against whom
enforcement of the amendment is sought.
34. DISCHARGE
The Debtor will be entitled to a discharge of this agreement upon written
request by the Debtor and full payment, performance and satisfaction of the
Obligations, or the securing of the Obligations to the satisfaction of the Bank.
No discharge will be effective unless in writing and executed by the Bank.
35. JOINT AND SEVERAL
If more than one person executes this agreement as the Debtor, all
representations and agreements of the Debtor will be joint and several, the
Obligations will include those of all such persons or any one or more of them
and the Collateral will include Collateral of all such persons or any one or
more of them.
36. INCLUDED WORDS
Where the context requires, the singular will be read as if the plural
were expressed and vice versa, and the provisions hereof will be read with all
necessary grammatical changes dependent upon the person referred to being a
male, female or artificial body.
37. HEADINGS
All headings have been inserted for convenience of reference only and are
not to affect the interpretation of the agreement.
38. RECEIPT OF COPY OF SECURITY AGREEMENT
The Debtor hereby acknowledges having received a copy of this security
agreement and waives all rights to receive from the Bank a copy of any Financing
Statement, Financing Change Statement, or Verification Statement, filed or
issued at any time in respect of this security agreement.
39. LANGUAGE
The Debtor and the Bank have expressly required that this security
agreement and all documents and notices relating hereto be drafted in English.
Les parties aux presentes ont expressement exige que la presente convention de
surete et tous les documents et avis qui y sont afferents soient rediges en
anglais.
40. NAME ETC. OF DEBTOR
The full, true and correct legal name and address of the Debtor and, where
applicable, birth date and sex of the Debtor is hereby declared by the Debtor to
be as follows:
INDIVIDUAL DEBTOR
Surname (Last Name) First Name Second Name Birth Date Y M D Sex
|_| M |_| F
- --------------------------------------------------------------------
Address City Province Postal Code
- --------------------------------------------------------------------------------
Surname (Last Name) First Name Second Name Birth Date Y M D Sex
|_| M |_| F
- --------------------------------------------------------------------
Address City Province Postal Code
- --------------------------------------------------------------------------------
BUSINESS DEBTOR
Name
ROSEDALE WALLCOVERINGS & FABRICS INC.
- --------------------------------------------------------------------------------
Address City Province Postal Code
214 Courtland Avenue, Concord, Ontario L4K4L3
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address City Province Postal Code
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF the undersigned Debtor has executed this security
agreement this 20th day of September 1996.
-----------------------------------------------------
(Signature of debtor(s)s, if individual)
-----------------------------------------------------
ROSEDALE WALLCOVERINGS & FABRICS INC.
-----------------------------------------------------
(Name of Debtor, If Corporation or Partnership)
By: /s/ Alan Fine c/s
-------------------------------------------------
ALAN FINE - President
By: /s/ Sidney Ackerman
-------------------------------------------------
(If Corporation have signed by authorized officers(s)
if Owner or Partner, state which)
SIDNEY ACKERMAN -- Secretary
SCHEDULE "A"
1) LOCATIONS OF COLLATERAL AND RECORDS RELATING TO COLLATERAL:
214 Courtland Avenue, Concord, Ontario.
- --------------------------------------------------------------------------------
(Street) (Town/City) (Province)
2) DESCRIPTION OF SERIAL NUMBERED GOODS
QUANTITY DESCRIPTION SERIAL NUMBER
CORPORATE AUTHORIZING RESOLUTION
"WHEREAS it is in the interests of the Corporation to enter into a General
Security Agreement with National Bank of Canada (the "Bank") as security for the
Corporation's present and future obligations to the Bank and therein to
mortgage, charge, assign and otherwise transfer and encumber and grant security
interests in all its present and future property and assets;
NOW THEREFORE BE IT RESOLVED THAT:
1. The Corporation mortgage, charge, assign and otherwise transfer and
encumber and grant security interests in all its present and future undertaking,
property and assets as security for its present and future obligations to the
Bank, all as provided in the General Security Agreement.
2. Any two officers or directors be and are hereby authorized for and on
behalf of the Corporation to execute and deliver to the Bank a General Security
Agreement substantially in the form of the General Security Agreement presented
to the directors, with such alterations, amendments, deletions or additions as
may be approved by the persons executing the same, and execution accordingly
shall be conclusive evidence of such approval and the General Security Agreement
so executed is the General Security Agreement authorized by this resolution.
3. Any officer or director be and is hereby authorized to execute and
deliver on behalf of the Corporation all such other documents and writings and
to do such other acts and things as may be necessary or desirable for fulfilling
the Corporations obligations under the General Security Agreement."
The undersigned Secretary of ROSEDALE WALLCOVERINGS & FABRICS INC.
- --------------------------------------------------------------------------------
(Name of Corporation)
DOES HEREBY CERTIFY THAT:
1. the foregoing is a true copy of a resolution duly and properly passed or
consented to by the board of directors of the Corporation on the 20th day of
September 1996 ; and
2. the attached General Security Agreement is the General Security Agreement
referred to in the resolution and has been duty and properly executed by the
proper officers of the Corporation.
/s/ Sidney Ackerman
----------------------------
SIDNEY ACKERMAN -- Secretary
GENERAL ASSIGNMENT OF BOOK DEBTS
1. FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, the
undersigned Debtor
ROSEDALE WALLCOVERINGS & FABRICS INC.
--------------------------------------------------------------------------
(Full name of Assignor)
of 214 Courtland Avenue, Concord,
-----------------------------------------------------------------------
(Full address of Assignor)
in the Province of Ontario, hereby assign(s) transfer(s) and grant(s) to
NATIONAL BANK OF CANADA, a Chartered Bank having its Head Office at the
City of Montreal in the Province of Quebec and having a branch office at
350 Burnhamthorpe Road West, Mississauga, in the Province of Ontario,
(hereinafter called the "Bank") a continuing and specific security
interest in all debts proceeds, accounts, claims, money and choses in
action which now are or which may at any time hereafter be due or owing to
or owned by the undersigned and also all deeds, documents, writings,
papers and books relating to or being records of goods or their proceeds,
or by which goods or their proceeds are or may hereafter be secured,
evidenced, acknowledged or made payable including Documents of Title, (and
remaining debt instruments) Chattel Paper, Securities and Instruments, and
all contractual rights and insurance claims relating to collateral
(hereinafter called the "Collateral")
2. The undersigned agrees that the Collateral shall be held by the Bank as a
general and continuing collateral security for the payment of all
obligations, indebtedness and liabilities, present or future, direct or
indirect, absolute or contingent, matured or not, of the undersigned to
the Bank, wheresoever and howsoever incurred, and any ultimate unpaid
balance thereof, and as a first and prior claim upon the Collateral.
3. The undersigned covenants at all times to notify the Bank in writing
promptly of any change in the information contained herein relating to the
undersigned (including the name and location of the chief executive
office, sole place of business or residence, as the case may be, of the
undersigned aforesaid) and of any material default by any person in
payment or other performance of obligations to the undersigned with
respect to any of the Collateral,
4. So long as this assignment remains in effect, the undersigned covenants
not to sell, or further assign or encumber the Collateral without the
prior written consent of the Bank. The undersigned represents and warrants
that the Collateral is genuine and owned by the undersigned free of all
security interests or other encumbrances.
5. The Bank may collect, realize, sell or otherwise deal with the Collateral
or any part thereof in such manner, upon such terms and conditions and at
such time or times, whether before or after default, as may seem to it
advisable and without notice to the undersigned. All moneys collected or
received by the undersigned in respect of the Collateral shall be received
as trustee for the Bank, and shall be forthwith paid over to the Bank by
the undersigned.
6. The Bank shall not be bound to do, observe or perform or see to the
observance or performance by the undersigned of any obligations or
covenants imposed upon the undersigned nor shall the Bank be obliged to
preserve rights against other persons in respect of any Securities or
Records in its possession.
7. The Bank may apply the amounts collected or received by it on account of
such parts of the indebtedness and liabilities of the undersigned to the
Bank as to the Bank seems best or hold the same in a separate collateral
account for such time as it may see fit and then apply the same as
aforesaid, the whole without prejudice to its claim for any deficiency.
8. The Bank may compound, compromise, grant extensions of time and other
indulgences, take and give up securities, accept compositions, grant
releases and discharges and otherwise deal with the debtors of the
undersigned, the undersigned and others, and with the Collateral and other
securities as the Bank may see fit, without prejudice to the liability of
the undersigned or the Bank's right to hold and realize this security.
9. The Bank shall not be liable or accountable for any failure to collect,
realize or obtain payment of the Collateral or any part thereof and the
Bank shall not be bound to institute proceedings for the purpose of
collecting, realizing or obtaining payment of the same or for the purpose
of preserving any rights of the Bank, the undersigned or any other person,
firm or corporation in respect of the same, and the Bank shall not be
responsible for any loss or damage which may occur in consequence of the
negligence of any officer, agent or solicitor employed in the collection
or realization thereof.
10. The Bank may charge on its own behalf and also pay to others reasonable
sums for expenses incurred and for services rendered (expressly including
legal advices and services) in or in connection with collecting, realizing
and/or obtaining payment of the Collateral or any part thereof and may add
the amount of such sums to the indebtedness of the undersigned.
11. So long as this assignment remains in effect, the undersigned covenants
and agrees to deliver to the Bank from time to time promptly upon request
any Documents of Title (and remaining debt instruments), Instruments,
Securities and Chattel Papers constituting, representing or relating to
the Collateral; all books of account and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other writings
relating to the Collateral for the purpose of inspecting, auditing or
copying the same; all financial statements prepared by or for the
undersigned regarding the undersigned's business; all policies and
certificates of insurance relating to the Collateral, and such information
concerning the Collateral, the undersigned, the undersigned's business and
affairs as the Bank may reasonably request.
10530 E. (Rev 01-91) (All Provinces except Quebec)
12. The undersigned shall from time to time forthwith on the Bank's request
do, make and execute all such financing statements, further assignments,
documents acts, matters and things as may be required by the Bank of or
with respect to the Collateral or any part thereof or as may be required
to give effect to these presents, and the undersigned hereby constitutes
and appoints the Manager or Acting Manager for the time being of the above
mentioned branch of the Bank the true and lawful attorney of the
undersigned irrevocable with full power of substitution to do, make and
execute all such statements, assignments, documents, acts, matters or
things with the right to use the name of the undersigned whenever and
wherever it may be deemed necessary or expedient.
13. This agreement shall be a continuing agreement in every respect, and shall
be binding upon the heirs, executors, administrators successors and
assigns of the parties hereto. No remedy for the enforcement of the rights
of the Bank hereunder shall be exclusive of or dependent on any other such
remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination. The security interest created
or provided for by this agreement is intended to attach when this
agreement is signed by the undersigned and delivered to the Bank. The
undersigned acknowledges and confirms that there has been no agreement
between the Bank and the undersigned to postpone the time for attachment
of the security interest hereby attached.
14. Nothing in this assignment contained shall or shall be deemed to restrict
the rights and remedies at law or in equity or under any applicable
personal property security legislation or otherwise, of the Bank against
the undersigned and the Collateral, it being hereby agreed by the
undersigned that the Bank has and shall have all such rights and remedies
as if the same were herein at length set forth and by this reference the
same are incorporated in and form a part hereof.
15. Should the undersigned be entitled to a release or discharge or amendment
to any financing statement registered by the Bank relating to this
assignment, then the undersigned will pay to the Bank all costs, charges,
expenses and lawyer's fees and disbursements (as between a solicitor and
his own client on a full indemnity basis) incurred by the Bank in
connection with such release, discharge or amendment.
16. For greater certainty it is declared that any and all future loans,
advances or other value which the Bank may in its discretion make or
extend to or for the account of the undersigned shall be secured by this
agreement. If more than one person executes this agreement their
obligations hereunder shall be joint and several.
17. This assignment shall be governed by and construed in accordance with the
law of the jurisdiction where it has been executed by the undersigned, as
the same may from time to time be in effect, including, where applicable,
the Personal Property Security Act.
18. The undersigned hereby acknowledges receiving a copy of this assignment
and waives all rights to receive from the Bank a copy of any financing
statement, financing change statement or verification statement filed or
issued at any time in respect of this assignment.
19. NAME, ETC. OF DEBTOR
The full, true and correct legal name and address of Debtor and, where
applicable, birth date and sex of Debtor is hereby declared by Debtor to
be as follows:
INDIVIDUAL DEBTOR
SURNAME (LAST NAME) FIRST NAME SECOND NAME BIRTH DATE Y M D SEX
|_| M |_| F
- --------------------------------------------------------------------
ADDRESS CITY PROVINCE POSTAL CODE
- --------------------------------------------------------------------------------
SURNAME (LAST NAME) FIRST NAME SECOND NAME BIRTH DATE Y M D SEX
|_| M |_| F
- --------------------------------------------------------------------
ADDRESS CITY PROVINCE POSTAL CODE
- --------------------------------------------------------------------------------
BUSINESS DEBTOR
NAME OF BUSINESS DEBTOR
ROSEDALE WALLCOVERINGS & FABRICS INC.
- --------------------------------------------------------------------------------
ADDRESS OF BUSINESS DEBTOR CITY PROVINCE POSTAL CODE
214 Courtland Avenue, Concord, Ontario L4K4L3
- --------------------------------------------------------------------------------
NAME
- --------------------------------------------------------------------------------
ADDRESS CITY PROVINCE POSTAL CODE
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned Debtor has executed this Assignment this
20th day of September 1996.
----------------------------------------------------
(Signature of Debtor(s) if individual)
ROSEDALE WALLCOVERINGS & FABRICS INC.
----------------------------------------------------
(Name of Debtor if Corporation or Partnership)
BY /s/ Alan Fine c/s
-------------------------------------------------
TITLE ALAN FINE - President
----------------------------------------------
(If corporation have signed by authorized officer(s)
If Owner or Partner state which)
BY /s/ Sidney Ackerman
-------------------------------------------------
SIDNEY ACKERMAN - Secretary
AFFIDAVIT OF BONA FIDES
(To be completed when assignment to be registered in Atlantic Provinces)
CANADA I,
---------------------------------------------
of the of
------------------- ------------------
Province of in the Province of an employee
------------------- ----------------
County of at
--------------------- ---------------------------------------------
of the National Bank of Canada the Assignee
named in the Assignment of Book Debts
TO WIT: hereto annexed make oath and say:
1. That I am an employee of the NATIONAL BANK OF CANADA at
----------------
in the Province of
-------------------------------------------------.
2. That I am aware of the circumstances connected with the said Assignment
of Book Debts and have a personal knowledge of the facts herein deposed to.
3. That the said Assignment of Book Debts hereto annexed was executed in
good faith and for valuable consideration and not for the mere purpose of
protecting the book debts therein mentioned against the creditors of
- --------------------------------------------------------------------------------
the Assignor, or for the purpose of preventing such creditors from recovering
any claims which they have against the said Assignor.
SWORN before me at the
--------------------------
of in the Province
-------------------------------
of this
--------------------- ---------------------
day of A.D. 19 .
---------------------- -- -----------------------------
- ------------------------------------------------
A commissioner, etc., or a Notary Public.
(When assignment to be registered in New Brunswick,
affidavit on next page to be completed in case of
Incorporated Companies.)
AFFIDAVIT OF EXECUTION BY INDIVIDUAL OR PARTNERSHIP
(To be completed when assignment to be registered in Atlantic Provinces)
CANADA I,
--------------------------------------------
Province of of the
--------------------- ----------------------------------------
County of in the Province of
----------------------- ----------------------------
TO WIT: by occupation , make oath and say:
-------------
+ Insert "one" or
"two" or as the
case requires)
1. That I was personally present and did see the Assignment of Book Debts
hereto annexed duly signed, sealed and delivered by + of the parties
----------
thereto and that the name
-------------------------------------------------------
set and subscribed as a witness to the execution thereof is of the proper
handwriting of me this deponent and that the same was executed
at the of in the Province
----------------------------- ----------------------------
of on the day of 19 .
------------------------- ----- --------------------------- ------
2. That I know the said and he is in my
-----------------------------------
opinion of the full age of years.
--------------------
SWORN before me at the
------------------
of in the Province)
-----------------------
of this
----------------- -----------------
day of A.D. 19 .
----------------------- ---- -------------------------------------
- ----------------------------------------
A Commissioner, etc., or a Notary Public.
AFFIDAVIT BY OFFICER OF INCORPORATED COMPANY
(To be completed when assignment to be registered in New Brunswick)
CANADA I,
--------------------------------------------
Province of of the
--------------------- ----------------------------------------
County of in the Province of
----------------------- ----------------------------
TO WIT: by occupation , make oath and say:
-------------
1. That the paper-writing hereunto annexed is the Assignment of Book
Accounts and of every schedule or inventory thereto annexed, or therein referred
to, and of every attestation of the execution thereof, as made, given and
executed by the
-----------------------------------------------------------------
(Name of incorporated company)
hereinafter referred to as the Assignor.
2. That the Assignment of Book Accounts was made and given by the said
Assignor on the day of 19 .
---------------------- ------------- ----
3. That I as
---------------------------- -----------------------------------
(Full name) (Name of office)
of the said Assignor being duly authorized so to do did affix the seal of the
said Assignor to the said Assignment of Book Accounts, did sign the said
Assignment of Book Accounts as of the said Assignor
------------------------------
(Name of office)
and did duly deliver the said Assignment of Book Accounts as the act and deed of
the said Assignor on the day of 19 .
------------------- ---------------------- ------
4. That the head office or chief place of business of the said Assignor in
New Brunswick is the situated at
------------------------------------------------
(Number, street and name of place)
in the said Province
SUBSCRIBED to and sworn before me at the
- -------------------------------------------
of in the
-----------------------------------
Province of
-------------------------------- ---------------------------------
this day of
-------------- -------------------
A.D. 19 .
----
- -------------------------------------------
A commissioner, etc., or a Notary Public.
NATIONAL
[LOGO] BANK APPLICATION FOR CREDIT AND PROMISE
OF CANADA TO GIVE SECURITY UNDER THE BANK ACT
- --------------------------------------------------------------------------------
The NATIONAL BANK OF CANADA, hereinafter called the "Bank", is hereby requested
to lend money and make advances to the undersigned on the security of property
which the undersigned now owns or may hereafter own.
In order to secure payment to the Bank of the amounts which shall become due and
payable to it under such loans and advances, the undersigned promises to give
the Bank security on said property pursuant to section 427 of the Bank Act.
For the same purposes and as security for any other obligation of the
undersigned to the Bank, the undersigned further promises to assign to the Bank
bills of lading and warehouse receipts covering such property.
Unless otherwise agreed between the Bank and the undersigned, all loans and
advances to be made by the Bank to the undersigned shall be deemed to have been
made pursuant to this promise.
Any security granted to the Bank pursuant to this promise shall be in addition
to and not in substitution for, any other security held by the Bank.
For the purposes hereof and any security granted to the Bank under the Bank Act,
the Bank is deemed to be lending money or making an advance if it accepts any
bill of exchange not payable on demand or if it pays any such bill of exchange,
provides funds for the payment of same, issues a guarantee or promises in any
other manner to effect a payment.
Dated at , this day of ,1996.
--------------- ---------- -------------
ROSEDALE WALLCOVERINGS &
FABRICS INC.
Witness Signature
Per: /s/ Alan Fine c/s
- ----------------------------- -----------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
-------------------------------
SIDNEY ACKERMAN -- Secretary
10014 E. (Rev. 11-93)
[LOGO] NATIONAL BANK OF CANADA 03241 - 006
----- ---
Transit
Notice of intention to give security under section 427 of the Bank Act.
To whom it may concern:
ROSEDALE WALLCOVERINGS & FABRICS INC.
214 Courtland Avenue, Concord, Ontario, L4K 4L3
- --------------------------------------------------------------------------------
(Name of Person, Firm or Company) (P.O. Address)
hereby gives notice that it is my/our intention to give security under Section
427 of the Bank Act, to the NATIONAL BANK OF CANADA.
Dated at Toronto the 20th day of September, 1996
ROSEDALE WALLCOVERINGS & FABRICS INC.
Per: /s/ Alan Fine c/s
---------------------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
----------------------------------------
SIDNEY ACKERMAN -- Secretary
10029 E. (Rev. 06-92)
NATIONAL
[LOGO] BANK AGREEMENT RESPECTING SECURITY
OF CANADA GIVEN BY THE CUSTOMER
- --------------------------------------------------------------------------------
1. Scope of Agreement. The undersigned ROSEDALE WALLCOVERINGS & FABRICS INC.
(the "Customer") hereby agrees with National Bank of Canada (the "Bank")
that the following provisions shall apply to the security given or to be
given to the Bank by the Customer under the Bank Act, and to the extent
permitted by applicable law, to any other security which the Customer has
given or may hereafter give to the Bank.
2. Remedies of the Bank. If the Customer fails to pay any sum when due by him
to the Bank, if he is otherwise in default to the Bank or if he becomes
insolvent, the Bank is authorized, but not bound, to realize on all or any
part of the security given by the Customer, to take possession of all or
any part of the property covered by such security (the "Property") and to
sell same. The sale may be carried out as, and when, and where the Bank
shall deem appropriate, without any notice to the Customer other than that
required by law, if any, without any formality and without advertisement
or without having to sell at a public auction, The Bank shall have the
choice of how the proceeds from the realization of the security shall be
applied and it may deduct, from such proceeds, the expenses related to the
realization of the security.
3. Proceeds from the Sale of Property. In the event of the sale of the
Property in whole or in part by the Customer, the proceeds of any such
sale, including the negotiable instruments, instruments of payment, bank
notes and evidences of indebtedness delivered as consideration, as well as
the claims against any purchaser shall be the property of the Bank and
shall be paid or delivered to the Bank, and until so paid or delivered,
shall be held by the Customer as trustee and depositary for the Bank.
Execution by the Customer of an assignment or hypothecation of debts shall
be deemed to be in execution of this Agreement and shall not constitute an
acknowledgement by the Bank of any rights of the Customer to such proceeds
and claims.
4. Trust. If the Bank delivers to the Customer any of the security it holds
for the purpose of enabling the Customer to obtain possession of the
Property, the Customer shall receive possession of such security and the
Property thereby covered as trustee and depositary for the Bank.
5. Insurance. The Customer shall cause the Property to be insured for its
full insurable value against fire, theft and all other risks against which
a prudent administrator would insure it. The Bank is hereby designated as
the beneficiary of the indemnities payable under the policies in respect
of the Property and the Customer shall cause such designation to be
inscribed in the policies; the Customer may not revoke such designation
without the prior written consent of the Bank. The Customer shall deliver
a copy of each policy to the Bank and at least fifteen (15) days prior to
the expiry date of a policy, the Customer shall deliver to the Bank an
evidence of the renewal thereof. Should the Customer fail to comply with
the above, the Bank may cause the Property to be insured for such amount
as it sees fit, without however being bound to do so, and in such case the
premiums paid by the Bank shall be deemed to be an advance made to the
Customer and shall be repayable on demand with interest at the Bank's
prime rate plus three percent (3%).
6. Prior Claims. The Customer shall pay and discharge at maturity any debt
which could confer rights to the Property ranking prior to the Bank's
rights and shall provide an evidence thereof to the Bank. From time to
time, the Bank may inspect the Property and the Customer's books of
account and invoices at the Customer's expense, and the Customer shall
therefore give the Bank access to the premises where the Property as well
as such books of account and invoices are located. At the Bank's request,
the Customer shall deliver to the Bank each month a Statement of the value
of the Property and provide the Bank with any other information it may
request regarding the Property.
7. Powers of the Bank. In order to realize on the security given by the
Customer, the Bank may, without any notice or demand, enter into the
premises occupied by the Customer in connection with the Property; it may
occupy them to the exclusion of others, including the Customer, and use
them free of charge until it has disposed of the Property. It may appoint
a receiver or an agent to exercise the rights granted to the Bank
hereunder. Such receiver or agent shall further be entitled to act on the
Customer's behalf and at the Customer's expense to complete the processing
of the Property, to ship some and to do all things which may be necessary
therefor.
8. Mandate. The Customer shall sign or endorse any document, which in the
Bank's opinion, should be signed or endorsed in order to perform this
Agreement or perfect the Bank's title to the Property or the proceeds
therefrom. For such purpose, the Customer constitutes and appoints the
Bank his attorney, with power of substitution, in order to sign or endorse
any such documents in his name. Such power of attorney shall remain in
effect notwithstanding the death or a change in the capacity of the
Customer and it may not be terminated as long as the Customer remains
indebted to the Bank.
9. Settlement. The Bank may compromise, deal with or grant discharges in
respect of the security, the Property or the proceeds therefrom.
10. Expenses. The words "expenses related to the realization of the security"
used herein include all charges, expenses and fees paid or incurred by the
Bank to take possession of the Property, to do an inventory thereof, to
protect and preserve it, to complete the processing thereof and sell it,
as well as to collect the proceeds or claims resulting from the sale of
such Property; such expenses shall be deemed to be an advance made by the
Bank to the Customer and shall be repayable on demand with interest at the
Bank's prime rate plus three percent (3%).
11. Scope of the Bank's Rights. The rights granted to the Bank hereunder shall
be in addition to its legal rights and its rights under any other
agreement. Such rights shall enure to the benefit of any successor of the
Bank, including any entity which has become the successor of the Bank as
a result of amalgamation or otherwise.
12. Notice. Any notice to the Customer may be given by regular mail sent to
his address last known to the Bank.
EXECUTED at , this day of ,19 .
------------------------- ----- ------------------- ---
Witness Customer
ROSEDALE WALLCOVERINGS &
FABRICS INC.
Per: /s/ Alan Fine c/s
- ---------------------------------- ----------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
-----------------------------
SIDNEY ACKERMAN -- Secretary
NATIONAL
[LOGO] BANK SECURITY UNDER SECTION 427
OF CANADA OF THE BANK ACT
- --------------------------------------------------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, the undersigned hereby assigns to the
NATIONAL BANK OF CANADA (hereinafter called the "Bank") as continuing security
for the payment of all loans and advances that have been or may be made by the
Bank to the undersigned and any renewals thereof or substitutions therefor, as
well as the interest thereon, the following property of which the undersigned is
now or may hereafter become the owner, namely:
DESCRIPTION OF PROPERTY (1)
All products of agriculture, products of aquaculture, products of the
- --------------------------------------------------------------------------------
forest, products of the quarry and mine, or products of the sea, lakes and
- --------------------------------------------------------------------------------
rivers and all goods, wares and merchandise which, without limiting the
- --------------------------------------------------------------------------------
generality of the foregoing, include: wallcoverings, borders, fabrics,
- --------------------------------------------------------------------------------
sample books, and the goods, wares and merchandise used in or procured for
- --------------------------------------------------------------------------------
the packing of such products or goods, wares and merchandise;
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
and that is now or may hereafter be in the place or places hereinafter
designated, namely:
DESCRIPTION OF PLACE OR PLACES (2)
214 Courtland Avenue, Concord, Ontario,
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
or at any other place or in transit.
This security is given under section 427 of the Bank Act and pursuant to the
promise to give security delivered by the undersigned to the Bank on the
day of , 19 .
- ---------------------------------------- ---------------------- ----
(Indicate date of the F.10014 relating to this security)
as well as any other promise of the same nature made by the undersigned to
the Bank.
The property now owned by the undersigned and hereby assigned is free from any
mortgage, lien or charge thereon, other than the previous assignments, if any,
to the Bank, and the undersigned warrants that the property that may hereafter
be acquired by the undersigned and which is hereby assigned shall be free from
any mortgage, lien or charge thereon, other than the previous assignments, if
any, to the Bank.
Dated at ,this day of 19 ,
---------------------------- ------ ---------- -----
ROSEDALE WALLCOVERINGS & FABRICS, INC.
Per: /s/ Alan Fine c/s
----------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
----------------------------------
SIDNEY ACKERMAN - Secretary
(1) If more space is needed, indicate "Continued overleaf" and continue the
Description of Property on the back of the form.
(2) If more space is needed, indicate "Continued overleaf" and continue the
Description of Place or Places on the back of the form.
NATIONAL
[LOGO] BANK
OF CANADA SECURITY WITH RESPECT TO AN INSURANCE POLICY
- --------------------------------------------------------------------------------
1. Designation of Beneficiary. The undersigned hereby designates National Bank
of Canada (the "Bank") as the beneficiary of Insurance Policy No. CLD 3643532
issued, by General Accident in respect of the assets of the undersigned and
further designates the Bank as the beneficiary of any and all renewals thereof
or substitutions therefor (such policies and the amendments thereto are
hereinafter collectively called the "Policies"). The undersigned may not revoke
the beneficiary hereby designated without the Bank's written consent.
This limit
applies to
Quebec
only.
2. Hypothec and Assignment. The undersigned also hypothecates and assigns to the
Bank the sums payable under the Policies up to the amount of $ *,
----------------
together with interest as of the date hereof at the rate of twenty-five percent
(25%) per annum.
3. Obligations Secured. The security constituted hereunder shall secure:
3.1 all the obligations of ROSEDALE WALWOVERINGS & FABRICS INC. (the "Customer")
to the Bank arising from the following credit facility or guarantee and all
amendments thereto, renewals thereof or substitutions therefor: loans and credit
facilities extended by the Bank to the Customer pursuant to an Offer of Finance
dated August 8, 1996;
3.2 and all other present and future, direct and indirect obligations of the
Customer to the Bank.
4. Possession of Policies. The undersigned shall deliver the Policies to the
Bank and inform it of any and all events which could result in payment of the
sums payable thereunder.
5. Premiums. The undersigned shall pay the premiums for the Policies at least
ten (10) days before the expiry date thereof and shall deliver to the Bank
evidence of such payment. If the undersigned fails to pay such premiums, the
Bank may pay them for the undersigned, without however being bound to do so.
6. Rights of the Bank. The Bank may, without however being bound to do so,
collect any and all sums payable under the Policies and exercise all rights
arising from the Policies, including any right to cancel the Policies and to
cash the surrender value thereof. All sums collected by the Bank may, at its
discretion, be remitted to the undersigned, or they may be held by the Bank as
security for the obligations referred to in section 3, or applied to the payment
of such obligations, whether or not due. The Bank shall have the choice of how
any such sums collected shall be applied.
7. Remedies of the Bank. The Bank may exercise its rights and recourses without
being required to exercise same against the undersigned or any other person, or
to realize on any other security.
8. Expenses. The undersigned shall pay all the expenses incurred by the Bank in
connection herewith as well as the expenses arising from the exercise of the
Bank's rights, including any premiums which the Bank may pay. The designation of
the beneficiary, and the security granted herein shall also secure the payment
of such expenses.
9. Mandate. The undersigned constitutes and appoints the Bank its irrevocable
attorney, with power of substitution, in order to perform all acts and to sign
all documents necessary or expedient for the exercise of the rights conferred on
the Bank hereunder, including to endorse all cheques or payment orders made to
the order of the undersigned.
10. Liability of the Bank. The Bank shall only be required to exercise
reasonable care in the exercise of its rights and the performance of its
obligations, and it shall be liable only for its intentional fault or gross
negligence.
11. Additional Security. The rights conferred on the Bank hereunder shall be in
addition to and not in substitution for any other security held by the Bank. The
Bank may, however, waive any other security without affecting its rights
hereunder.
12. Successor of the Bank. This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Undersigned
ROSEDALE WALLCOVERINGS & FABRICS INC.
Per: /s/ Alan Fine c/s
--------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
--------------------------------
SIDNEY ACKERMAN - Secretary
NATIONAL
[LOGO] BANK
OF CANADA SECURITY WITH RESPECT TO AN INSURANCE POLICY
- --------------------------------------------------------------------------------
1. Designation of Beneficiary. The undersigned hereby designates National Bank
of Canada (the "Bank") as the beneficiary of Insurance Policy No. JR112754
issued, by THE PRUDENTIAL OF AMERICA LIFE INSURANCE COMPANY (CANADA) in respect
of life insurance for SIDNEY A. ACKERMAN and further designates the Bank as the
beneficiary of any and all renewals thereof or substitutions therefor (such
policies and the amendments thereto are hereinafter collectively called the
"Policies"). The undersigned may not revoke the beneficiary hereby designated
without the Bank's written consent.
2. Hypothec and Assignment. The undersigned also hypothecates and assigns to the
Bank the sums payable under the Policies up to the amount of $ 1,000,000.00 (ONE
MILLION DOLLARS)*, together with interest as of the date hereof at the rate of
twenty-five percent (25%) per annum.
3. Obligations Secured. The security constituted hereunder shall secure:
3.1 all the obligations of ROSEDALE WALLCOVERINGS & FABRICS INC. (the
"Customer") to the Bank arising from the following credit facility or
guarantee and all amendments thereto, renewals thereof or substitutions
therefor: loans and credit facilities extended by the Bank to the Customer
pursuant to an Offer of Finance dated August 8, 1996;
3.2 and all other present and future, direct and indirect obligations of the
Customer to the Bank.
4. Possession of Policies. The undersigned shall deliver the Policies to the
Bank and inform it of any and all events which could result in payment of the
sums payable thereunder.
5. Premiums. The undersigned shall pay the premiums for the Policies at least
ten (10) days before the expiry date thereof and shall deliver to the Bank
evidence of such payment. If the undersigned fails to pay such premiums, the
Bank may pay them for the undersigned, without however being bound to do so.
6. Rights of the Bank. The Bank may, without however being bound to do so,
collect any and all sums payable under the Policies and exercise all rights
arising from the Policies, including any right to cancel the Policies and to
cash the surrender value thereof. All sums collected by the Bank may, at its
discretion, be remitted to the undersigned, or they may be held by the Bank as
security for the obligations referred to in section 3, or applied to the payment
of such obligations, whether or not due. The Bank shall have the choice of how
any such sums collected shall be applied.
7. Remedies of the Bank. The Bank may exercise its rights and recourses without
being required to exercise same against the undersigned or any other person, or
to realize on any other security.
8. Expenses. The undersigned shall pay all the expenses incurred by the Bank in
connection herewith as well as the expenses arising from the exercise of the
Bank's rights, including any premiums which the Bank may pay. The designation of
the beneficiary, and the security granted herein shall also secure the payment
of such expenses.
9. Mandate. The undersigned constitutes and appoints the Bank its irrevocable
attorney, with power of substitution, in order to perform all acts and to sign
all documents necessary or expedient for the exercise of the rights conferred on
the Bank hereunder, including to endorse all cheques or payment orders made to
the order of the undersigned.
10. Liability of the Bank. The Bank shall only be required to exercise
reasonable care in the exercise of its rights and the performance of its
obligations, and it shall be liable only for its intentional fault or gross
negligence.
11. Additional Security. The rights conferred on the Bank hereunder shall be in
addition to and not in substitution for any other security held by the Bank. The
Bank may, however, waive any other security without affecting its rights
hereunder.
12. Successor of the Bank. This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto this 20th day of September, 1996.
Undersigned:
/s/ Sara Fay Sulley /s/ Sidney Ackerman
- ------------------------------------- -------------------------------------
Name of witness: SIDNEY A. ACKERMAN
ROSEDALE WALLCOVERINGS & FABRICS INC. ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ Alan Fine c/s Per: /s/ Sidney Ackerman
--------------------------------- ---------------------------------
ALAN FINE - President SIDNEY ACKERMAN - Secretary
Per: /s/ Sidney Ackerman Per: /s/ Alan Fine c/s
--------------------------------- ---------------------------------
SIDNEY ACKERMAN - Secretary ALAN FINE - President
CONSENT OF BENEFICIARIES
We, the undersigned ROSEDALE WALLCOVERINGS & FABRICS INC. and ONTARIO PAINT &
WALLPAPER LIMITED, being the beneficiaries of the policy described above, hereby
consent and agree to the designation of beneficiary, hypothec and assignment
contained above in favour of the Bank, and we acknowledge that the rights of the
Bank shall have priority over our rights.
DATED at Toronto this 20th day of September, 1996.
Beneficiaries:
ROSEDALE WALLCOVERINGS & FABRICS INC. ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ Alan Fine c/s Per: /s/ Sidney Ackerman
--------------------------------- ---------------------------------
ALAN FINE - President SIDNEY ACKERMAN - Secretary
Per: /s/ Sidney Ackerman Per: /s/ Alan Fine c/s
--------------------------------- ---------------------------------
SIDNEY ACKERMAN - Secretary ALAN FINE - President
NATIONAL
[LOGO] BANK
OF CANADA SECURITY WITH RESPECT TO AN INSURANCE POLICY
- --------------------------------------------------------------------------------
1. Designation of Beneficiary. The undersigned hereby designates National Bank
of Canada (the "Bank") as the beneficiary of Insurance Policy No. JR112753
issued, by THE PRUDENTIAL OF AMERICA LIFE INSURANCE COMPANY (CANADA) in respect
of life insurance for ALAN I. FINE and further designates the Bank as the
beneficiary of any and all renewals thereof or substitutions therefor (such
policies and the amendments thereto are hereinafter collectively called the
"Policies"). The undersigned may not revoke the beneficiary hereby designated
without the Bank's written consent.
2. Hypothec and Assignment. The undersigned also hypothecates and assigns to the
Bank the sums payable under the Policies up to the amount of $ 1,000,000.00 (ONE
MILLION DOLLARS), together with interest as of the date hereof at the rate of
twenty-five percent (25%) per annum.
3. Obligations Secured. The security constituted hereunder shall secure:
3.1 all the obligations of ROSEDALE WALLCOVERINGS & FABRICS INC. (the
"Customer") to the Bank arising from the following credit facility or
guarantee and all amendments thereto, renewals thereof or substitutions
therefor: loans and credit facilities extended by the Bank to the Customer
pursuant to an Offer of Finance dated August 8, 1996;
3.2 and all other present and future, direct and indirect obligations of the
Customer to the Bank.
4. Possession of Policies. The undersigned shall deliver the Policies to the
Bank and inform it of any and all events which could result in payment of the
sums payable thereunder.
5. Premiums. The undersigned shall pay the premiums for the Policies at least
ten (10) days before the expiry date thereof and shall deliver to the Bank
evidence of such payment. If the undersigned fails to pay such premiums, the
Bank may pay them for the undersigned, without however being bound to do so.
6. Rights of the Bank. The Bank may, without however being bound to do so,
collect any and all sums payable under the Policies and exercise all rights
arising from the Policies, including any right to cancel the Policies and to
cash the surrender value thereof. All sums collected by the Bank may, at its
discretion, be remitted to the undersigned, or they may be held by the Bank as
security for the obligations referred to in section 3, or applied to the payment
of such obligations, whether or not due. The Bank shall have the choice of how
any such sums collected shall be applied.
7. Remedies of the Bank. The Bank may exercise its rights and recourses without
being required to exercise same against the undersigned or any other person, or
to realize on any other security.
8. Expenses. The undersigned shall pay all the expenses incurred by the Bank in
connection herewith as well as the expenses arising from the exercise of the
Bank's rights, including any premiums which the Bank may pay. The designation of
the beneficiary, and the security granted herein shall also secure the payment
of such expenses.
9. Mandate. The undersigned constitutes and appoints the Bank its irrevocable
attorney, with power of substitution, in order to perform all acts and to sign
all documents necessary or expedient for the exercise of the rights conferred on
the Bank hereunder, including to endorse all cheques or payment orders made to
the order of the undersigned.
10. Liability of the Bank. The Bank shall only be required to exercise
reasonable care in the exercise of its rights and the performance of its
obligations, and it shall be liable only for its intentional fault or gross
negligence.
11. Additional Security. The rights conferred on the Bank hereunder shall be in
addition to and not in substitution for any other security held by the Bank. The
Bank may, however, waive any other security without affecting its rights
hereunder.
12. Successor of the Bank. This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Undersigned:
/s/ Sara Fay Sulley /s/ Alan Fine
- ------------------------------------- -------------------------------------
Name of witness: ALAN FINE
ROSEDALE WALLCOVERINGS & FABRICS INC. ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ Alan Fine c/s Per: /s/ Sidney Ackerman
--------------------------------- ---------------------------------
ALAN FINE - President SIDNEY ACKERMAN - Secretary
Per: /s/ Sidney Ackerman Per:
--------------------------------- ---------------------------------
SIDNEY ACKERMAN - Secretary ALAN FINE - President
CONSENT OF BENEFICIARIES
We, the undersigned ROSEDALE WALLCOVERINGS & FABRICS INC. and ONTARIO PAINT &
WALLPAPER LIMITED, being the beneficiaries of the policy described above, hereby
consent and agree to the designation of beneficiary, hypothec and assignment
contained above in favour of the Bank, and we acknowledge that the rights of the
Bank shall have priority over our rights.
DATED at Toronto this 20th day of September, 1996.
Beneficiaries:
ROSEDALE WALLCOVERINGS & FABRICS INC. ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ Alan Fine c/s Per: /s/ Sidney Ackerman
--------------------------------- ---------------------------------
ALAN FINE - President SIDNEY ACKERMAN - Secretary
Per: /s/ Sidney Ackerman Per: /s/ Alan Fine c/s
--------------------------------- ---------------------------------
SIDNEY ACKERMAN - Secretary ALAN FINE - President
UNDERTAKING
TO: NATIONAL BANK OF CANADA (the "Bank")
RE: Credit facilities to Rosedale Wallcoverings & Fabrics Inc. ("Rosedale")
and Ontario Paint & Wallpaper Limited ("Ontario Paint")
- and -
Life Insurance Policy No. JR112753 issued by The Prudential of America
Life Insurance Company (Canada) to Rosedale on the life of Alan I. Fine
(the "Insured") in the initial face amount of $10,000,000.00 (the
"Policy")
- --------------------------------------------------------------------------------
WHEREAS Rosedale has assigned the proceeds of the Policy to Laurentian
Bank of Canada ("Laurentian") as security for its indebtedness to Laurentian;
AND WHEREAS Rosedale has assigned to the Bank $1,000,000.00 of the death
benefit under the Policy pursuant to Security with Respect to an Insurance
Policy dated September 20, 1996, as partial security for the indebtedness of
Rosedale to the Bank (the "Rosedale Assignment");
AND WHEREAS Rosedale has assigned to the Bank a further $1,000,000.00 of
the death benefit under the Policy pursuant to Security with Respect to an
Insurance Policy dated September 20, 1996, as partial security for the
indebtedness of Ontario Paint to the Bank (the "Ontario Assignment");
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Rosedale undertakes, covenants and
agrees as follows:
1. Rosedale shall take all actions necessary to ensure that not less than an
aggregate $2,000,000.00 of the death benefit under the Policy is available
at all times in respect of Rosedale's obligations to the Bank under the
Rosedale Assignment and the Ontario Assignment, such that, in the event of
the death of the Insured, the Bank will unconditionally receive a death
benefit equal to not less than $1,000,000.00 on account of the Rosedale
Assignment and a second death benefit equal to not less than $1,000,000.00
on account of the Ontario Assignment. In particular, and without limiting
the generality of the foregoing, Rosedale shall take all actions necessary
to ensure that, at all times, the death benefit payable under the Policy
exceeds the total indebtedness of Rosedale to Laurentian by not less than
$2,000,000.00;
2. on an annual basis, Rosedale shall provide to the Bank such documentary
evidence as the Bank may in its sole discretion require, confirming and
verifying that the requirements of paragraph 1 of this Undertaking have
been satisfied; and
2
3. If Rosedale defaults in the performance of its undertakings and agreements
pursuant to either paragraph 1 or 2 of this Undertaking, Rosedale shall
immediately arrange for and obtain a new policy of life insurance on the
life of the Insured, in an amount of not less than $2,000,000.00 and
containing such terms and conditions as may be satisfactory to the Bank in
its sole discretion, and shall immediately assign such new policy to the
Bank, in substitution for the Policy, the Rosedale Assignment and the
Ontario Assignment; and
4. In the event that paragraph 3 of this Undertaking becomes applicable, the
Insured undertakes and agrees to sign such documents, attend for such
medical examinations and provide such information and co-operations as may
be required in connection with the placing or maintaining of the insurance
referred to in paragraph 3.
DATED: October 29th, 1996.
ROSEDALE WALLCOVERINGS &
FABRICS INC.
Per: /s/ Alan I. Fine c/s
-------------------------------
Alan I. Fine - President
Per: /s/ Sidney A. Ackerman
-------------------------------
Sidney A. Ackerman - Secretary
SIGNED, SEALED and DELIVERED )
in the presence of: )
)
)
/s/ [Illegible] ) /s/ Alan I. Fine
- ---------------------------- ) ------------------------------------
ALAN I. FINE
PRIORITIES AGREEMENT
National Bank of Canada
loan to Rosedale Wallcoverings & Fabrics Inc.
THIS AGREEMENT made the 29th day of October, 1996.
AMONG:
LAURENTIAN BANK OF CANADA
("Laurentian")
- and -
NATIONAL BANK OF CANADA
("National")
- and -
ROSEDALE WALLCOVERINGS & FABRICS INC.
("Rosedale")
- and -
ONTARIO PAINT & WALLPAPER LIMITED
("Ontario Paint")
WHEREAS:
A. Rosedale, the former name of which was "Rosedale Wallcoverings Inc.",
is or will be indebted or liable to each of Laurentian and National;
B. Rosedale has provided or will provide certain security to each of
Laurentian and National to secure its respective liabilities to Laurentian and
National;
C. Laurentian and National have agreed to enter into this Agreement to
establish the
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-2-
relative rights and priorities of their respective security and the indebtedness
secured thereby and Rosedale and Ontario Paint agreed to enter into this
Agreement to consent to the priority and other arrangements set forth in this
Agreement.
NOW THEREFORE for valuable consideration, the receipt and sufficiency of which
are acknowledged by each of the parties to the Agreement, the parties to this
Agreement agree as follows:
1. Definitions
The following terms set out herein with initial capital letters shall have
the meanings assigned below:
"Demand" means the action whereby one of Laurentian or National either
demands payment of the Laurentian Indebtedness or the National
Indebtedness, as the case may be, or takes any steps to enforce its rights
pursuant to the Laurentian Security of the National Security, as the case
may be, whether directly or indirectly, whether by way of realization of
the Laurentian Security of the National Security, as the case may be, or
otherwise.
"Laurentian Indebtedness" means all debts, liabilities and obligations of
Rosedale to Laurentian from time to time outstanding whether direct or
indirect and wheresoever or howsoever incurred including, without
limitation, all debts, liabilities and obligations arising under and/or
pursuant to the Laurentian Offer of Finance.
"Laurentian Offer of Finance" means the offers of finance issued by North
American in favour of Rosedale, one dated November 30, 1994 and the other
dated January 27, 1995, and subsequently assigned to Laurentian, as
amended, restated and replaced from time to time.
"Laurentian Priority Assets" means the Life Insurance Policy and the
proceeds thereof.
"Laurentian Security" means all security documents granted by Rosedale to
North American and assigned to Laurentian, and all security documents
granted by Rosedale to Laurentian, to secure payment and/or performance of
all debts, liabilities and obligations of Rosedale to Laurentian together
with any and all security hereafter granted by Rosedale to Laurentian,
including, without limitation, the Agreements Re Assignment of Life
Insurance Policies, one dated December 5, 1994 and the other dated March
28, 1995, and made among Rosedale, North American, Ontario Paint and
Rosedale, as beneficiaries, and The Prudential of America Life Insurance
Company (Canada);
"Lenders" means National and Laurentian and "Lender" means either one of
them.
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-3-
"Life Insurance Policy" means both of (i) life insurance policy number
JR112753 on the life of Alan Fine issued by The Prudential of America Life
Insurance Company (Canada) in favour of Rosedale, as owner, and under
which policy Rosedale and Ontario Paint have been designated
beneficiaries; and (ii) life insurance policy number JR119547 on the life
of Rosalyn T. Fine issued by The Prudential of America Life Insurance
Company (Canada) in favour of Rosedale, as owner, and under which policy
Rosedale and Ontario Paint have been designated beneficiaries.
"National Indebtedness" means all debts, liabilities and obligations of
Rosedale to National from time to time outstanding, whether direct or
indirect and wheresoever or howsoever incurred including, without
limitation, all debts, liabilities and obligations arising under and/or
pursuant to the National Offer of Finance.
"National Offer of Finance" means the offer of finance issued by National
in favour of Rosedale dated August 8, 1996, as amended, restated and
replaced from time to time.
"National Priority Assets" means all assets, property and undertaking of
Rosedale and the proceeds of all such assets, property and undertaking,
but excluding the Laurentian Priority Assets.
"National Security" means all security documents granted by Rosedale to
National to secure payment and/or performance of all debts, liabilities
and obligations of Rosedale to National together with any and all security
hereafter granted by Rosedale to National.
"North American" means North American Trust Company.
"Realization Proceeds" shall have the meaning ascribed to such term in
section 10 hereof.
"Security" means the National Security or the Laurentian Security, as the
context requires.
2. Consent
Notwithstanding any other term or provision in the National Security,
National consents to the creation, execution, delivery, registration, filing
and/or perfection of the Laurentian Security. Notwithstanding any other term or
provision of the Laurentian Security, Laurentian consents to the creation,
execution, delivery, registration, filing and/or perfection of the National
Security.
3. Assets over which Laurentian has Priority
Subject to section 10 of this Agreement, the Laurentian Security and the
mortgages, charges and security interests created thereby shall, with respect to
the Laurentian Priority Assets, rank and
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-4-
be enforceable in all respects and for all purposes in priority to the National
Security and the mortgages, charges and security interests created thereby.
4. Assets over which National has Priority
Subject to section 10 of this Agreement, the National Security and the
mortgages, charges and security interests created thereby shall, with respect to
the National Priority Assets, rank and be enforceable in all respects and for
all purposes in priority to the Laurentian Security and the mortgages, charges
and security interests created thereby.
5. Mutual Subordination and Postponement
Each of Laurentian and National hereby postpones and subordinates its
Security to and in favour of the other Lender's Security to the extent necessary
to give effect to the priorities referred to in this Agreement.
6. No Effect on Priority
The respective priorities of the National Security and the Laurentian
Security established hereby, and all other rights established in, altered by or
specified in this Agreement are applicable, irrespective of:
(a) the time or order of creation, execution, delivery, attachment or
perfection of the Laurentian Security of the National Security;
(b) the method of perfection of the National Security or the Laurentian
Security;
(c) the time or order of registration or filing of financing statements,
real estate charges or other recording of the National Security or
the Laurentian Security;
(d) the date or dates of any existing or future loan or any existing or
future advance or advances made by either of Laurentian or National
to Rosedale;
(e) the date or dates of any default by Rosedale under the National
Security or the Laurentian Security;
(f) the date of crystallization of any floating charge contained in the
National Security or the Laurentian Security; or
(g) the date of commencement of enforcement proceedings under the
National Security or the Laurentian Security.
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-5-
7. Limitation on Rights to Proceed
Nothing in this Agreement shall be construed so as to entitle a Lender to
receive any proceeds of realization upon any assets of Rosedale in respect of
which such Lender does not have Security or in respect of which such Lender's
Security is invalid, ineffective or unenforceable against third parties
including, without limitation, Rosedale. Laurentian and National agree that they
shall not challenge the other Lender's Security on the ground that it is
invalid, ineffective or unenforceable.
8. Notice of Enforcement by National
National shall provide to Laurentian a copy of any written demand for
payment of or any notice of the acceleration of the National Indebtedness or the
National Security, forthwith after delivery of such demand or notice to
Rosedale, provided that any failure to give the notice required hereby shall not
affect the priorities established by this Agreement or give rise to any
liability on the part of National.
9. Notice of Enforcement by Laurentian
Laurentian shall provide to National a copy of any written demand for
payment of or any notice of the acceleration of the Laurentian Indebtedness or
the Laurentian Security, forthwith after delivery of such demand or notice to
Rosedale, provided that any failure to give the notice required hereby shall not
affect the priorities established by this Agreement or give rise to any
liability on the part of Laurentian.
10. Proceeds of Realization
Notwithstanding any provision of the National Security or the Laurentian
Security to the contrary, all payments, proceeds and amounts received by either
the Lenders from Rosedale after one of the Lenders has made a Demand or upon the
liquidation of the assets of Rosedale due to the bankruptcy or insolvency of
Rosedale or otherwise (collectively, "Realization Proceeds") shall be applied
and distributed as follows:
(a) Realization Proceeds in respect of the National Priority Assets
shall be applied:
(i) firstly, on account of the costs and expenses of the sale,
collection and realization of the National Security including
the costs and expenses incurred by agents of National or any
receiver or receiver and manager appointed by National or of
National itself and including any legal fees and disbursements
incurred by National or any agent or receiver or receiver and
manager appointed by National;
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-6-
(ii) secondly, on account of the principal, interest and other
amounts due to National in respect of the National
Indebtedness to the extent of the National Indebtedness;
(iii) thirdly, on account of the principal, interest and other
amounts due to Laurentian in respect of the Laurentian
Indebtedness, to the extent of the Laurentian Indebtedness;
and
(iv) fourthly, to Rosedale.
(b) Realization Proceeds in respect of the Laurentian Priority Assets
shall be applied:
(i) firstly, on account of the costs and expenses of the sale,
collection and realization of the Laurentian Security
including the costs and expenses incurred by agents of
Laurentian or any receiver or receiver and manager appointed
by Laurentian or of Laurentian itself and including any legal
fees and disbursements incurred by Laurentian or any agent or
receiver and manager appointed by Laurentian;
(ii) secondly, on account of the principal, interest and other
amounts due to Laurentian in respect of the Laurentian
Indebtedness to the extent of the Laurentian Indebtedness;
(iii) thirdly, on account of the principal, interest and other
amounts due to National in respect of the National
Indebtedness, to the extent of the National Indebtedness; and
(iv) fourthly, to Rosedale.
11. Proceeds of Insurance and Disposition
If any of the assets of Rosedale are disposed of, dealt with, lost or
damaged so as to give rise to proceeds (including amounts payable under
insurance policies), such proceeds shall be deemed to be Realization Proceeds
for the purposes of the Agreement and the priority of claims of the Lenders
against such proceeds shall be determined in accordance with section 10.
12. Trust Funds
Subject to sections 13 and 14 hereof, Laurentian and National agree that
to the extent that they receive Realization Proceeds which are payable to the
other Lender pursuant to the terms and provisions of this Agreement, the amount
of such Realization Proceeds shall be deemed to be
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-7-
received or held by it in trust for the other Lender and shall be paid over to
the other Lender pursuant to the terms and provisions of this Agreement
forthwith after determination of the Lenders' respective entitlements thereto.
13. Payments to Laurentian
Nothing in this Agreement shall prevent Laurentian from receiving any
payments of principal or interest or any other payment provided for in the
Laurentian Offer of Finance on account of the Laurentian Indebtedness at any
time prior to Demand or prior to receipt of notice by National given pursuant to
section 9 hereof or prior to delivery by National of written notice pursuant to
section 8 hereof.
14. Payments to National
Nothing in this Agreement shall prevent National from receiving any
payments of principal or interest or any other payment provided for in the
National Offer of Finance on account of the National Indebtedness at any time
prior to Demand or prior to receipt of notice by Laurentian given pursuant to
section 8 hereof or prior to delivery by Laurentian of written notice pursuant
to section 9 hereof.
15. Rights of Rosedale
Nothing in this Agreement shall be construed so as to:
(a) entitle any party not listed as a signatory to this Agreement, other
than a permitted assignee of either of Laurentian or National, to
receive any Realization Proceeds of any of the assets of Rosedale;
or
(b) confer any rights upon Rosedale or any person not a party to this
Agreement.
If any person other than Laurentian or National shall have any valid claim to
the proceeds of realization of the assets of Rosedale in priority to or in
parity with either of Laurentian or National then this Agreement shall not apply
so as to diminish the rights (as such rights would have been but for this
Agreement) of Laurentian or National to the Realization Proceeds of such
property or assets.
16. Compulsory Enforcement
Nothing in this Agreement shall require or obligate any of the Lenders to
enforce its Security or realize upon the assets of Rosedale.
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-10-
or such other address as the party to whom such notice is given shall have
previously, by notice in writing given in the manner aforesaid, provided to the
remaining parties any such notice given hereunder shall be deemed to have been
given and to become effective on the day of delivery if delivered or, in the
case of notice by mail, on the fourth business day following its deposit in a
government post office, provided that if the party giving the notice becomes
aware of an actual or threatened postal disruption, notice shall be given only
by personal delivery.
22. Termination
This Agreement shall continue in full force and effect until the earlier
of (i) the date on which it is terminated by the mutual consent of the Lenders
and (ii) the date on which payment in full is made of either of the Laurentian
Indebtedness or the National Indebtedness, provided that the obligations of the
Lenders to distribute Realization Proceeds in accordance with section 10 hereof
shall not terminate until such time as the Realization Proceeds are distributed
in accordance with the provisions of section 10 hereof.
23. Entire Agreement
This Agreement constitutes the entire agreement among the parties hereto
in respect of its subject matter and supersedes any prior agreements,
undertakings, declarations or representations, written or oral, in respect
thereof. The parties hereto acknowledge that certain additional documents may be
required to register notice of this Agreement where required. To the extent that
there is any inconsistency in the provisions of this Agreement and the
provisions of any such supplementary documents, the provisions of this Agreement
shall be paramount and prevail.
24. Enurement
This Agreement shall be binding upon and enure to the benefit of all
parties hereto and their respective successors and assigns. Neither Laurentian
nor National shall assign all or any part of their respective Security without
providing the assignee thereof with notice of this Agreement and a copy of this
Agreement. Immediately following any such assignment, the assignor of its
Security shall provide written notice of such assignment to the remaining
Lender.
25. Counterparts
This Agreement may be executed in any number of counterparts or by
facsimile, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument, and it
shall not be necessary in making proof of the Agreement to produce or account
for more than once such counterpart.
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-11-
26. Exchange of Information
From time to time upon request therefor, each of the Lenders shall advise
the other Lender in writing of particulars of the indebtedness and liability of
Rosedale to such lender and of all Security provided by Rosedale with respect
thereto. Rosedale consents to the disclosure of information contemplated hereby.
27. Receipt of Copy by Rosedale
Rosedale acknowledges receipt of an executed copy of this Agreement and
agrees to the terms thereof and agrees that it shall stand possessed of its
assets and undertaking for Laurentian and National in accordance with the
priorities set out above.
28. Receipt of Copy by Ontario Paint
Ontario Paint acknowledges receipt of an executed copy of the Agreement
and agrees to the terms thereof and agrees that it shall stand possessed of the
Life Insurance Policy for Laurentian and National in accordance with the
priorities set out above.
29. Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
Nevertheless, it is acknowledged and agreed that the provisions of the Agreement
shall apply to all property and assets of Rosedale wherever situate or located.
IN WITNESS WHEREOF the parties have executed this Agreement on the day,
month and year first above written.
LAURENTIAN BANK OF CANADA
Per: /s/ Giles H. le Riche
------------------------------
Name: Giles H. le Riche
Title: Manager, Commercial Banking
Per: /s/ W. A. Galbraith
------------------------------
Name: W. A. Galbraith
Title: A.V.P., Commercial Banking
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
-12-
NATIONAL BANK OF CANADA
Per: /s/ GLEN McLEOD
------------------------------------
Name: GLEN McLEOD
Title: Manager, Credit
Per: /s/ STEVEN L. MATHESON
------------------------------------
Name: STEVEN L. MATHESON
Title: SENIOR ACCOUNT MANAGER
COMMERCIAL BANKING
ROSEDALE WALLCOVERINGS & FABRICS
INC.
Per: /s/ ALAN FINE /s/ SIDNEY ACKERMAN
------------------------------------
ALAN FINE SIDNEY ACKERMAN
President Secretary
[SEAL]
ONTARIO PAINT & WALLPAPER LIMITED
Per: /s/ SIDNEY ACKERMAN /s/ ALAN FINE
------------------------------------
SIDNEY ACKERMAN ALAN FINE
President Secretary
[SEAL]
Laurentian / National Bank
Rosedale & Ontario Paint
Priorities Agmt
CORPORATE CERTIFICATE
TO: NATIONAL BANK OF CANADA (the "Lender")
RE: Loan to Rosedale Wallcoverings & Fabrics Inc. (the "Corporation") pursuant
to Offer of Finance dated August 8, 1996
I, A DULY APPOINTED OFFICER of the Corporation, do hereby certify for and
on behalf of the Corporation, as follows:
1. The Corporation was incorporated under the laws of the Province of
Ontario. Attached hereto as Schedule A is a true copy of all of the
articles of the Corporation. No proceedings have been taken or are pending
to amend, surrender or cancel the said articles.
2. The central billing office of the Corporation is at: 214 Courtland Avenue,
Concord, Ontario.
3. The financial year end of the Corporation is on December 31 of each
calendar year.
4. The following persons are duly elected or appointed as qualified officers
and directors of the Corporation and hold the offices indicated opposite
their respective names and the signatures appearing opposite their names
are the signatures of those persons:
Officers:
NAME TITLE SIGNATURE
Alan Fine President /s/ Alan Fine
-------------------------------
Secretary-
Sidney Ackerman Treasurer /s/ Sidney Ackerman
-------------------------------
Directors:
Alan Fine
Sidney Ackerman
Rosedale Wallcoverings & Fabrics Inc.
corporate cert
-2-
5. The following are the holders of all of the issued and outstanding shares
of the Corporation and the number and class of shares which they hold:
Name of Shareholder No. & Class of Shares Held
------------------- --------------------------
521305 Ontario Inc. 200 common
6. There are no provisions in the articles of the Corporation or any
amendments thereto, the bylaws of the Corporation or in any unanimous
shareholder agreement which would restrict, limit or regulate in any way
the powers of the Corporation or of its directors, to borrow money upon
the credit of the Corporation, to give a guarantee on behalf of the
Corporation to secure the performance of an obligation of any person, to
issue, reissue, sell or pledge debt obligations of the Corporation, or to
mortgage, hypothecate, pledge or otherwise create a security interest in
all or any of the property of the Corporation, owned or subsequently
acquired, to secure any obligation of the Corporation, or to delegate any
of the said powers to a director, officer or committee of directors.
7. Attached hereto as Schedule B is a true copy of a resolution of the board
of directors of the Corporation authorizing the execution and delivery of
the security documents relating to the above-noted matter, which
resolution was duly passed on September 20, 1996, and remains in full
force and effect, unamended and unrescinded, at the date hereof.
8. The by-laws of the Corporation permit the board of directors of the
Corporation from time to time to direct the manner in which the person or
persons by whom any particular instrument or class of instruments may or
shall be signed.
THIS CERTIFICATE shall remain in full force and effect and be
binding upon the Corporation and may be acted upon by Lender until notice to the
contrary or of any change in this Certificate has been given in writing to the
Lender.
DATED this 20th day of September, 1996.
/s/ SIDNEY ACKERMAN c/s
---------------------------------------
SIDNEY ACKERMAN
Secretary
Rosedale Wallcoverings & Fabrics Inc.
corporate cert
LETTER OF GUARANTEE
TO: NATIONAL BANK OF CANADA
1. In consideration of the National Bank of Canada (hereinafter referred to as
the "Bank") dealing with ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
referred to as the "Customer"), the undersigned and each of them, if more than
one, hereby jointly and severally guarantee payment to the Bank of all present
and future debts and liabilities (direct or indirect, absolute or contingent,
matured or otherwise), now or at any time and from time to time hereafter due or
owing to the Bank whether incurred by the Customer alone or jointly with any
corporation, person or persons, or otherwise howsoever, including all costs and
disbursements incurred by the Bank in view of recovering or attempting to
recover said debts and liabilities. Provided, however, that the liability of the
undersigned, and of each of the undersigned herein, is limited to ONE MILLION
00/100 Dollars ($1,000,000.00), with interest thereon from the date of demand
of payment, at the rate agreed upon, between the Bank and the Customer.
2. In this guarantee, the word "Guarantor" shall mean the undersigned and if
there is more than one, it shall mean each of them.
3. This guarantee shall not be affected by the death or loss or diminution of
capacity of the Customer or of the Guarantor or by any change in the name of the
Customer in the membership of the firm of the Customer through the death or
retirement of one or more partners or the introduction of one or more other
partners or otherwise, or by the acquisition of the business of the Customer by
a corporation, firm or person, or by any change whatsoever in the objects,
capital structure or constitution of the Customer, or by the Customer or the
business of the Customer being amalgamated with a firm or corporation but shall,
notwithstanding the happening of any such event, continue to exist and apply to
the full extent as if such event has not happened. The Guarantor agrees to
monitor changes in the financial position of the Customer and hereby releases
the Bank from any liability resulting therefrom.
4. All monies, advances renewals and credits in fact borrowed or obtained from
the Bank shall be deemed to form part of the debts and liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any irregularity,
defect or informality in the borrowing or obtaining of such monies, advances,
renewals or credits, the whole whether known to the Bank or not; and any sum
which may not be recoverable from the Guarantor on the footing of a guarantee
shall be recoverable from the Guarantor as sole and principal debtor in respect
thereof and shall be paid to the Bank on demand with interest and accessories as
herein provided.
5. This guarantee shall continue and be enforceable notwithstanding any
amalgamation of the Bank with any other bank(s), financial institution(s) or
other corporation(s), and any further amalgamation, in which event this
guarantee shall also extend to all debts and liabilities then or thereafter owed
by the Customer to the amalgamated bank. Furthermore, all security, real or
personal, moveable or immoveable, which have been or will be given by the
Guarantor for the said debts and liabilities shall be valid in the hands of the
Bank, as well as its successors and assigns.
6. It is further agreed that this shall be a continuing guarantee, and shall
cover and secure any ultimate balance owing to the Bank.
7. This guarantee shall bind the Guarantor together with his heirs, successors,
executors, administrators, legal representatives and assigns until termination
thereof by notice in writing to the manager of the branch of the Bank at which
the account of the Customer is kept, but such termination by any of the
guarantors or their respective heirs, successors, executors, administrators,
legal representatives or assigns shall not prevent the continuance of the
liability hereunder of any other guarantor. Such termination shall apply only to
those debts or liabilities of the Customer incurred or arising after reception
of the notice by the Bank, but not in respect of any prior debts or liabilities,
matured or not. The notice of termination shall have no effect on those debts or
liabilities incurred after reception of said notice which will result from
express or implied commitments made prior to reception.
8. This guarantee will not be diminished or modified on account of any act on
the part of the Bank which would prevent subrogation from operating in favour of
the Guarantor. It is further agreed that the Bank, without exonerating in whole
or in part the Guarantor, may grant time, renewals, extensions, indulgences,
releases and discharges to, may take security from, and give up or release any
or part of the security held, may abstain from taking, perfecting, registering
or renewing security or from realizing on security, may accept compositions and
otherwise deal with the Customer and with any other person or persons, including
any of the guarantors, and dispose of any security held by the Bank as it may
see fit, and that all dividends and monies received by the Bank from the
Customer or from any other person, capable of being applied by the Bank in
reduction of the debts and liabilities hereby guaranteed, shall be considered
for all purposes as payment in gross which the Bank shall have the right to
apply as it may see fit, not being bound by the law of imputation, and the Bank
shall be entitled to prove against the estate of the Customer upon any
insolvency or winding up, in respect of the whole said debts and liabilities.
The Guarantor shall have no right to be subrogated to the Bank until the Bank
shall have received payment in full of its claims against the Customer with
interest and costs.
9. If any circumstances arise necessitating the Bank to file its claim against
the estate of the Customer and to value its security, it will be entitled to
place such valuation as the Bank may in its discretion see fit, and the filing
of such claim and the valuation of its security shall in no way prejudice or
restrict its rights against the Guarantor.
10. The Bank shall not be obliged to exhaust its recourse against the Customer
or other persons or the security it may hold before being entitled to payment
from the Guarantor of each and every of the debts and liabilities hereby
guaranteed and it shall not be obliged to offer or deliver its security before
its whole claim has been paid. The Guarantor waives all benefits of discussion
and division.
11. All indebtedness and liability, present and future of the Customer to the
Guarantor are hereby assigned to the Bank and postponed to the present and
future debts and liabilities of the Customer to the Bank. All monies received
from the Customer or on his behalf by the Guarantor shall be held as in his
capacity as agent, mandatary and trustee for the Bank and shall be paid over to
the Bank forthwith. This provision will remain in full force and effect,
notwithstanding the termination of the guarantee pursuant to the provisions of
paragraph 7 in which event it will terminate when the debts and liabilities of
the Customer to the Bank covered by this guarantee pursuant to paragraph 7
hereof have been paid in full.
12. This guarantee is in addition to and not in substitution for any other
guarantee, by whomsoever given, at any time held by the Bank, and without
prejudice to any other security by whomsoever given held at any time by the Bank
and the Bank shall be under no obligation to marshall in favour of the Guarantor
any such security or any of the funds or assets the Bank may be entitled to
receive or have a claim upon.
13. The Guarantor shall be bound by any account settled between the Bank and the
Customer and, if no such account has been so settled any account stated by the
Bank shall be accepted by the Guarantor as conclusive evidence of the amount
which at the date of the account so stated is due by the Customer to the Bank.
14. The Guarantor shall make payment to the Bank of the amount of his liability
forthwith after demand therefor is made in writing. Such demand shall be deemed
to have been effectually made when an envelope containing it addressed to the
Guarantor at his last address known to the Bank is deposited postage prepaid in
the Post Office. The liability of the Guarantor shall bear interest from the
date of such demand at the rate or rates then applicable to the debts and
liabilities of the Customer to the Bank.
15. This guarantee and agreement shall be operative and binding upon every
signatory thereof notwithstanding the non-execution thereof by any other
proposed signatory or signatories, and possession of this instrument by the Bank
shall be conclusive evidence against the Guarantor that this instrument was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any condition has been complied with. None of the parties shall be bound
by any representation or promise made by any person relative thereto which is
not embodied herein. The liability of the Guarantor hereunder begins on the date
of his signature on this letter of guarantee.
16. This guarantee shall be binding upon the undersigned and any of them, if
more than one, jointly and severally between them and with the Customer and also
upon the heirs, executors, administrators and successors of the Guarantor and
will extend to and enure to the benefit of the successors and assigns of the
Bank. Each and every provision hereof is severable and should any provision
hereof be illegal or not enforceable for any reason whatsoever, such illegality
or invalidity shall not affect the other provisions hereof which shall remain in
force and be binding on the parties hereto.
17. The Guarantor acknowledges having read and taken cognizance of the present
Letter or Guarantee before signing it and declares that he understands perfectly
the terms, conditions and undertakings contained therein.
18. This Letter of Guarantee shall be construed in accordance with the laws of
the Province of Ontario and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this Letter of Guarantee may be
instituted in the courts of such province, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts, and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit the Bank's right to bring proceedings against the
Guarantor elsewhere.
AS WITNESS the hand and seal of the Guarantor, at Toronto this 20th day of
September 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF Signature
521305 ONTARIO INC.
- ------------------------------ ------------------------------------
(Please print)
Per: /s/ ALAN FINE c/s
- ------------------------------ ------------------------------------
(Please print) ALAN FINE - President
- ------------------------------ ------------------------------------
(Please print)
Per: /s/ SIDNEY ACKERMAN
- ------------------------------ ------------------------------------
(Please print) SIDNEY ACKERMAN - Secretary
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
I (we) hereby acknowledge that a copy of this Letter of Guarantee was handed
over to me (us) on the date hereof.
Signature of Guarantor(s).
521305 ONTARIO INC.
- ------------------------------------
Per: /s/ ALAN FINE
- ------------------------------------
ALAN FINE - President
- ------------------------------------
Per: /s/ SIDNEY ACKERMAN
- ------------------------------------
SIDNEY ACKERMAN - Secretary
- ------------------------------------
- ------------------------------------
- --------------------------------------------------------------------------------
[LOGO] NATIONAL
BANK RESOLUTION RE: GUARANTEE
OF CANADA
- --------------------------------------------------------------------------------
RESOLUTION
OF THE BOARD OF DIRECTORS OF
521305 ONTARIO INC.
--------------------------
(Name of Corporation)
In consideration of the loans and advances of money granted or
which may be granted by National Bank of Canada (the "Bank") to its Customer,
ROSEDALE WALLCOVERINGS & FABRICS INC., for the purpose of its business, and
generally, in consideration of the business relations between the Bank and its
Customer as well as the business relations between the said Customer and this
Corporation, and whereas the financial assistance provided to the said Customer
in the manner hereinafter referred to is in the best interests of this
Corporation;
Now therefore be it resolved:
That this Corporation be and is hereby authorized to guarantee the
payment of all sums of money, which ROSEDALE WALLCOVERINGS & FABRICS INC., the
Customer owes or in the future may owe to the Bank up to a principal amount of
ONE MILLION DOLLARS ($1,000,000.00) together with interest, costs and
accessories. Such guarantee shall bind this Corporation jointly and severally
with the Customer and shall be subject to all the terms and conditions set out
on the form used at the Bank, entitled "Letter of Guarantee", a copy of which is
attached hereto after having been submitted to the Directors and that Mr. Alan
Fine and Mr. Sidney Ackerman, respectively the President and the Secretary, be
authorized and instructed to jointly sign and execute the said guarantee for and
on behalf and in the name of the Corporation and that the financial assistance
provided by this Corporation to the said Customer in the said guarantee and any
security required from time to time by the Bank in connection with the said
guarantee is in the best interests of this Corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of 521305 ONTARIO INC. duly passed on the 20th day of
September, 1996, which remains in full force and effect.
DATED at Toronto this 20th day of September, 1996.
/s/ SIDNEY ACKERMAN c/s
---------------------------------------
SIDNEY ACKERMAN
Secretary
LETTER OF GUARANTEE
TO: NATIONAL BANK OF CANADA
1. In consideration of the National Bank of Canada (hereinafter referred to as
the "Bank") dealing with ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
referred to as the "Customer"), the undersigned and each of them, if more than
one, hereby jointly and severally guarantee payment to the Bank of all present
and future debts and liabilities (direct or indirect, absolute or contingent,
matured or otherwise), now or at any time and from time to time hereafter due or
owing to the Bank whether incurred by the Customer alone or jointly with any
corporation, person or persons, or otherwise howsoever, including all costs and
disbursements incurred by the Bank in view of recovering or attempting to
recover said debts and liabilities. Provided, however, that the liability of the
undersigned, and of each of the undersigned herein, is limited to ONE MILLION
00/100 Dollars ($1,000,000.00), with interest thereon from the date of demand
of payment, at the rate agreed upon, between the Bank and the Customer.
2. In this guarantee, the word "Guarantor" shall mean the undersigned and if
there is more than one, it shall mean each of them.
3. This guarantee shall not be affected by the death or loss or diminution of
capacity of the Customer or of the Guarantor or by any change in the name of the
Customer in the membership of the firm of the Customer through the death or
retirement of one or more partners or the introduction of one or more other
partners or otherwise, or by the acquisition of the business of the Customer by
a corporation, firm or person, or by any change whatsoever in the objects,
capital structure or constitution of the Customer, or by the Customer or the
business of the Customer being amalgamated with a firm or corporation but shall,
notwithstanding the happening of any such event, continue to exist and apply to
the full extent as if such event has not happened. The Guarantor agrees to
monitor changes in the financial position of the Customer and hereby releases
the Bank from any liability resulting therefrom.
4. All monies, advances renewals and credits in fact borrowed or obtained from
the Bank shall be deemed to form part of the debts and liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any irregularity,
defect or informality in the borrowing or obtaining of such monies, advances,
renewals or credits, the whole whether known to the Bank or not; and any sum
which may not be recoverable from the Guarantor on the footing of a guarantee
shall be recoverable from the Guarantor as sole and principal debtor in respect
thereof and shall be paid to the Bank on demand with interest and accessories as
herein provided.
5. This guarantee shall continue and be enforceable notwithstanding any
amalgamation of the Bank with any other bank(s), financial institution(s) or
other corporation(s), and any further amalgamation, in which event this
guarantee shall also extend to all debts and liabilities then or thereafter owed
by the Customer to the amalgamated bank. Furthermore, all security, real or
personal, moveable or immoveable, which have been or will be given by the
Guarantor for the said debts and liabilities shall be valid in the hands of the
Bank, as well as its successors and assigns.
6. It is further agreed that this shall be a continuing guarantee, and shall
cover and secure any ultimate balance owing to the Bank.
7. This guarantee shall bind the Guarantor together with his heirs, successors,
executors, administrators, legal representatives and assigns until termination
thereof by notice in writing to the manager of the branch of the Bank at which
the account of the Customer is kept, but such termination by any of the
guarantors or their respective heirs, successors, executors, administrators,
legal representatives or assigns shall not prevent the continuance of the
liability hereunder of any other guarantor. Such termination shall apply only to
those debts or liabilities of the Customer incurred or arising after reception
of the notice by the Bank, but not in respect of any prior debts or liabilities,
matured or not. The notice of termination shall have no effect on those debts or
liabilities incurred after reception of said notice which will result from
express or implied commitments made prior to reception.
8. This guarantee will not be diminished or modified on account of any act on
the part of the Bank which would prevent subrogation from operating in favour of
the Guarantor. It is further agreed that the Bank, without exonerating in whole
or in part the Guarantor, may grant time, renewals, extensions, indulgences,
releases and discharges to, may take security from, and give up or release any
or part of the security held, may abstain from taking, perfecting, registering
or renewing security or from realizing on security, may accept compositions and
otherwise deal with the Customer and with any other person or persons, including
any of the guarantors, and dispose of any security held by the Bank as it may
see fit, and that all dividends and monies received by the Bank from the
Customer or from any other person, capable of being applied by the Bank in
reduction of the debts and liabilities hereby guaranteed, shall be considered
for all purposes as payment in gross which the Bank shall have the right to
apply as it may see fit, not being bound by the law of imputation, and the Bank
shall be entitled to prove against the estate of the Customer upon any
insolvency or winding up, in respect of the whole said debts and liabilities.
The Guarantor shall have no right to be subrogated to the Bank until the Bank
shall have received payment in full of its claims against the Customer with
interest and costs.
9. If any circumstances arise necessitating the Bank to file its claim against
the estate of the Customer and to value its security, it will be entitled to
place such valuation as the Bank may in its discretion see fit, and the filing
of such claim and the valuation of its security shall in no way prejudice or
restrict its rights against the Guarantor.
10. The Bank shall not be obliged to exhaust its recourse against the Customer
or other persons or the security it may hold before being entitled to payment
from the Guarantor of each and every of the debts and liabilities hereby
guaranteed and it shall not be obliged to offer or deliver its security before
its whole claim has been paid. The Guarantor waives all benefits of discussion
and division.
11. All indebtedness and liability, present and future of the Customer to the
Guarantor are hereby assigned to the Bank and postponed to the present and
future debts and liabilities of the Customer to the Bank. All monies received
from the Customer or on his behalf by the Guarantor shall be held as in his
capacity as agent, mandatary and trustee for the Bank and shall be paid over to
the Bank forthwith. This provision will remain in full force and effect,
notwithstanding the termination of the guarantee pursuant to the provisions of
paragraph 7 in which event it will terminate when the debts and liabilities of
the Customer to the Bank covered by this guarantee pursuant to paragraph 7
hereof have been paid in full.
12. This guarantee is in addition to and not in substitution for any other
guarantee, by whomsoever given, at any time held by the Bank, and without
prejudice to any other security by whomsoever given held at any time by the Bank
and the Bank shall be under no obligation to marshall in favour of the Guarantor
any such security or any of the funds or assets the Bank may be entitled to
receive or have a claim upon.
13. The Guarantor shall be bound by any account settled between the Bank and the
Customer and, if no such account has been so settled any account stated by the
Bank shall be accepted by the Guarantor as conclusive evidence of the amount
which at the date of the account so stated is due by the Customer to the Bank.
14. The Guarantor shall make payment to the Bank of the amount of his liability
forthwith after demand therefor is made in writing. Such demand shall be deemed
to have been effectually made when an envelope containing it addressed to the
Guarantor at his last address known to the Bank is deposited postage prepaid in
the Post Office. The liability of the Guarantor shall bear interest from the
date of such demand at the rate or rates then applicable to the debts and
liabilities of the Customer to the Bank.
15. This guarantee and agreement shall be operative and binding upon every
signatory thereof notwithstanding the non-execution thereof by any other
proposed signatory or signatories, and possession of this instrument by the Bank
shall be conclusive evidence against the Guarantor that this instrument was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any condition has been complied with. None of the parties shall be bound
by any representation or promise made by any person relative thereto which is
not embodied herein. The liability of the Guarantor hereunder begins on the date
of his signature on this letter of guarantee.
16. This guarantee shall be binding upon the undersigned and any of them, if
more than one, jointly and severally between them and with the Customer and also
upon the heirs, executors, administrators and successors of the Guarantor and
will extend to and enure to the benefit of the successors and assigns of the
Bank. Each and every provision hereof is severable and should any provision
hereof be illegal or not enforceable for any reason whatsoever, such illegality
or invalidity shall not affect the other provisions hereof which shall remain in
force and be binding on the parties hereto.
17. The Guarantor acknowledges having read and taken cognizance of the present
Letter or Guarantee before signing it and declares that he understands perfectly
the terms, conditions and undertakings contained therein.
18. This Letter of Guarantee shall be construed in accordance with the laws of
the Province of Ontario and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this Letter of Guarantee may be
instituted in the courts of such province, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts, and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit the Bank's right to bring proceedings against the
Guarantor elsewhere.
AS WITNESS the hand and seal of the Guarantor, at ________________________
this ______________ day of _______________________________________________ 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF Signature
521305 ONTARIO INC.
- ------------------------------ ------------------------------------
(Please print)
Per: c/s
- ------------------------------ ------------------------------------
(Please print) ALAN FINE - President
- ------------------------------ ------------------------------------
(Please print)
Per:
- ------------------------------ ------------------------------------
(Please print) SIDNEY ACKERMAN - Secretary
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
I (we) hereby acknowledge that a copy of this Letter of Guarantee was handed
over to me (us) on the date hereof.
Signature of Guarantor(s).
521305 ONTARIO INC.
- ------------------------------------
Per:
- ------------------------------------
ALAN FINE - President
- ------------------------------------
Per:
- ------------------------------------
SIDNEY ACKERMAN - Secretary
- ------------------------------------
- ------------------------------------
- --------------------------------------------------------------------------------
[LOGO] NATIONAL
BANK SUBORDINATION AGREEMENT
OF CANADA
- --------------------------------------------------------------------------------
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS INC. (the
"Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
Called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums
of money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
521305 ONTARIO INC.
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Per: /s/ ALAN FINE c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per: /s/ SIDNEY ACKERMAN
--------------------------------------
SIDNEY ACKERMAN - Secretary
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees
to comply therewith.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS, INC.
- ------------------------------ --------------------------------------
Per: /s/ ALAN FINE c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per: /s/ SIDNEY ACKERMAN
--------------------------------------
SIDNEY ACKERMAN - Secretary
(RESOLUTION OF CREDITOR CORPORATION
RE SUBORDINATION AGREEMENT)
RESOLUTION
OF THE BOARD OF DIRECTORS OF
521305 ONTARIO INC.
In consideration of leases, loans and advances made or to be made
by National Bank of Canada to ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
called the "Customer"), and in consideration of business dealings between the
said Bank and the Customer as well as business dealings between the said
Customer and the corporation.
Now therefore be it resolved
That the payment of all debts, demands and choses in action which
are now due or which may hereafter become due to the corporation by the Customer
be postponed to payment in full of all present and future indebtedness and other
liabilities of the Customer towards the National Bank of Canada, and this in
conformity with and subject to all the clauses and conditions appearing in the
form in use by the said Bank and entitled "Subordination Agreement" No. 11221, a
copy of which is annexed to the present resolution after having been submitted
to the directors, and that Alan Fine and Sidney Ackerman, respectively the
President and the Secretary, be and are hereby authorized and instructed to
jointly sign and execute the aforesaid subordination agreement for and on behalf
and in the name of the corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of 521305 ONTARIO INC. duly adopted on the 20th day of
September, 1996.
Dated at Toronto this 20th day of September, 1996.
/s/ SIDNEY ACKERMAN c/s
-------------------------------------
SIDNEY ACKERMAN
Secretary
- --------------------------------------------------------------------------------
[LOGO] NATIONAL
BANK SUBORDINATION AGREEMENT
OF CANADA
- --------------------------------------------------------------------------------
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS INC. (the
"Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
Called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums
of money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at __________________________, this _______ day of _____________, 1996.
Witness Signature(s)
521305 ONTARIO INC.
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Per: c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per:
--------------------------------------
SIDNEY ACKERMAN - Secretary
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees
to comply therewith.
Executed at __________________________, this _______ day of _____________, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS, INC.
- ------------------------------ --------------------------------------
Per: c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per:
--------------------------------------
SIDNEY ACKERMAN - Secretary
RESOLUTION OF DEBTOR CORPORATION
RE SUBORDINATION AGREEMENT
RESOLUTION
OF THE BOARD OF DIRECTORS OF
ROSEDALE WALLCOVERINGS & FABRICS INC.
In consideration of loans and advances made or to be made by
National Bank of Canada to the corporation and generally in consideration of
business dealings between the said Bank and the corporation as well as business
dealings between the corporation and 521305 ONTARIO INC.,
Now therefore be it resolved
That the corporation acknowledge receipt of the notice of the
subordination agreement made on form No. 11221 a copy of which is annexed to the
present resolution after having been submitted to the directors and that the
corporation accept the assignment and transfer in favour of National Bank of
Canada included in the said agreement and that Mr. Alan Fine, President of the
corporation, and Mr. Sidney Ackerman, Secretary of the corporation, be and are
hereby authorized and instructed to jointly sign the acknowledgment and
acceptance on the aforesaid subordination agreement for and on behalf and in the
name of the corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of ROSEDALE WALLCOVERINGS & FABRICS INC. duly adopted on the
20th day of September, 1996.
Dated at Toronto this 20th day of September, 1996.
/s/ SIDNEY ACKERMAN c/s
-------------------------------------
SIDNEY ACKERMAN
Secretary
- --------------------------------------------------------------------------------
[LOGO] NATIONAL
BANK SUBORDINATION AGREEMENT
OF CANADA
- --------------------------------------------------------------------------------
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS INC. (the
"Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
Called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums
of money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at __________________________, this _______ day of _____________, 1996.
Witness Signature(s)
521305 ONTARIO INC.
- ------------------------------ --------------------------------------
Per: c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per:
--------------------------------------
SIDNEY ACKERMAN - Secretary
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees
to comply therewith.
Executed at __________________________, this _______ day of _____________, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS, INC.
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Per: c/s
--------------------------------------
ALAN FINE - President
--------------------------------------
Per:
--------------------------------------
SIDNEY ACKERMAN - Secretary
CORPORATE CERTIFICATE
TO: NATIONAL BANK OF CANADA (the "Lender")
RE: National Bank of Canada credit facilities to Rosedale Wallcoverings &
Fabrics Inc. - Guarantee and Subordination by 521305 Ontario Inc. (the
"Corporation")
- --------------------------------------------------------------------------------
I, A DULY APPOINTED OFFICER of the Corporation, do hereby certify
for and on behalf of the Corporation, as follows:
1. The Corporation was incorporated under the laws of the Province of
Ontario. Attached hereto as Schedule A is a true copy of all of the
articles of the Corporation. No proceedings have been taken or are pending
to amend, surrender or cancel the said articles.
2. The following persons are duly elected or appointed as qualified officers
and directors of the Corporation and hold the offices indicated opposite
their respective names and the signatures appearing opposite their names
are the signatures of those persons:
Officers:
NAME TITLE SIGNATURE
Alan Fine President /s/ Alan Fine
---------------------------
Sidney Ackerman Secretary /s/ Sidney Ackerman
---------------------------
Directors:
Alan Fine
Sidney Ackerman
3. There are no provisions in the articles of the Corporation or any
amendments thereto, the bylaws of the Corporation or in any unanimous
shareholder agreement which would restrict, limit or regulate in any way
the powers of the Corporation or of its directors, to borrow money upon
the credit of the Corporation, to give a guarantee on behalf of the
Corporation to secure the performance of an obligation of any person, to
issue, reissue, sell or pledge debt
-2-
obligations of the Corporation, or to mortgage, hypothecate, pledge or
otherwise create a security interest in all or any of the property of the
Corporation, owned or subsequently acquired, to secure any obligation of
the Corporation, or to delegate any of the said powers to a director,
officer or committee of directors.
4. Attached hereto as Schedule B is a true copy of a resolution of the board
of directors of the Corporation authorizing the execution and delivery of
the security documents relating to the above-noted matter, which
resolution was duly passed on September 20, 1996, and remains in full
force and effect, unamended and unrescinded, at the date hereof.
5. The by-laws of the Corporation permit the board of directors of the
Corporation from time to time to direct the manner in which the person or
persons by whom any particular instrument or class of instruments may or
shall be signed.
6. I have read the provisions of section 20 of the Business Corporations Act
(Ontario) and have had the said provisions explained to me by legal
counsel. The execution and delivery of the guarantee by the Corporation to
the Lender and the performance by the Corporation of its obligations
pursuant to the guarantee do not contravene the said section 20 for the
following reason:
The Corporation is a holding body corporate of the corporation the
debts of which are guaranteed pursuant to the guarantee.
I have made such investigations and inquiries as I have deemed necessary
for the purpose of making the foregoing statements.
THIS CERTIFICATE shall remain in full force and effect and be
binding upon the Corporation and may be acted upon by the Lender until notice to
the contrary or of any change in this certificate has been given in writing to
the Lender.
DATED this 20th day of September, 1996.
/s/ SIDNEY ACKERMAN c/s
-------------------------------------
SIDNEY ACKERMAN
Secretary
LETTER OF GUARANTEE
TO: NATIONAL BANK OF CANADA
1. In consideration of the National Bank of Canada (hereinafter referred to as
the "Bank") dealing with ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
referred to as the "Customer"), the undersigned and each of them, if more than
one, hereby jointly and severally guarantee payment to the Bank of all present
and future debts and liabilities (direct or indirect, absolute or contingent,
matured or otherwise), now or at any time and from time to time hereafter due or
owing to the Bank whether incurred by the Customer alone or jointly with any
corporation, person or persons, or otherwise howsoever, including all costs and
disbursements incurred by the Bank in view of recovering or attempting to
recover said debts and liabilities. Provided, however, that the liability of the
undersigned, and of each of the undersigned herein, is limited to SEVEN HUNDRED
AND FIFTY THOUSAND 00/100 Dollars ($ 750,000.00 ), with interest thereon from
the date of demand of payment, at the rate agreed upon, between the Bank and the
Customer.
2. In this guarantee, the word "Guarantor" shall mean the undersigned and if
there is more than one, it shall mean each of them.
3. This guarantee shall not be affected by the death or loss or diminution of
capacity of the Customer or of the Guarantor or by any change in the name of the
Customer in the membership of the firm of the Customer through the death or
retirement of one or more partners or the introduction of one or more other
partners or otherwise, or by the acquisition of the business of the Customer by
a corporation, firm or person, or by any change whatsoever in the objects,
capital structure or constitution of the Customer, or by the Customer or the
business of the Customer being amalgamated with a firm or corporation but shall,
notwithstanding the happening of any such event, continue to exist and apply to
the full extent as if such event has not happened. The Guarantor agrees to
monitor changes in the financial position of the Customer and hereby releases
the Bank from any liability resulting therefrom.
4. All monies, advances renewals and credits in fact borrowed or obtained from
the Bank shall be deemed to form part of the debts and liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any irregularity,
defect or informality in the borrowing or obtaining of such monies, advances,
renewals or credits, the whole whether known to the Bank or not; and any sum
which may not be recoverable from the Guarantor on the footing of a guarantee
shall be recoverable from the Guarantor as sole and principal debtor in respect
thereof and shall be paid to the Bank on demand with interest and accessories as
herein provided.
5. This guarantee shall continue and be enforceable notwithstanding any
amalgamation of the Bank with any other bank(s), financial institution(s) or
other corporation(s), and any further amalgamation, in which event this
guarantee shall also extend to all debts and liabilities then or thereafter owed
by the Customer to the amalgamated bank. Furthermore, all security, real or
personal, moveable or immoveable, which have been or will be given by the
Guarantor for the said debts and liabilities shall be valid in the hands of the
Bank, as well as its successors and assigns.
6. It is further agreed that this shall be a continuing guarantee, and shall
cover and secure any ultimate balance owing to the Bank.
7. This guarantee shall bind the Guarantor together with his heirs, successors,
executors, administrators, legal representatives and assigns until termination
thereof by notice in writing to the manager of the branch of the Bank at which
the account of the Customer is kept, but such termination by any of the
guarantors or their respective heirs, successors, executors, administrators,
legal representatives or assigns shall not prevent the continuance of the
liability hereunder of any other guarantor. Such termination shall apply only to
those debts or liabilities of the Customer incurred or arising after reception
of the notice by the Bank, but not in respect of any prior debts or liabilities,
matured or not. The notice of termination shall have no effect on those debts or
liabilities incurred after reception of said notice which will result from
express or implied commitments made prior to reception.
8. This guarantee will not be diminished or modified on account of any act on
the part of the Bank which would prevent subrogation from operating in favour of
the Guarantor. It is further agreed that the Bank, without exonerating in whole
or in part the Guarantor, may grant time, renewals, extensions, indulgences,
releases and discharges to, may take security from, and give up or release any
or part of the security held, may abstain from taking, perfecting, registering
or renewing security or from realizing on security, may accept compositions and
otherwise deal with the Customer and with any other person or persons, including
any of the guarantors, and dispose of any security held by the Bank as it may
see fit, and that all dividends and monies received by the Bank from the
Customer or from any other person, capable of being applied by the Bank in
reduction of the debts and liabilities hereby guaranteed, shall be considered
for all purposes as payment in gross which the Bank shall have the right to
apply as it may see fit, not being bound by the law of imputation, and the Bank
shall be entitled to prove against the estate of the Customer upon any
insolvency or winding up, in respect of the whole said debts and liabilities.
The Guarantor shall have no right to be subrogated to the Bank until the Bank
shall have received payment in full of its claims against the Customer with
interest and costs.
9. If any circumstances arise necessitating the Bank to file its claim against
the estate of the Customer and to value its security, it will be entitled to
place such valuation as the Bank may in its discretion see fit, and the filing
of such claim and the valuation of its security shall in no way prejudice or
restrict its rights against the Guarantor.
10. The Bank shall not be obliged to exhaust its recourse against the Customer
or other persons or the security it may hold before being entitled to payment
from the Guarantor of each and every of the debts and liabilities hereby
guaranteed and it shall not be obliged to offer or deliver its security before
its whole claim has been paid. The Guarantor waives all benefits of discussion
and division.
11. All indebtedness and liability, present and future of the Customer to the
Guarantor are hereby assigned to the Bank and postponed to the present and
future debts and liabilities of the Customer to the Bank. All monies received
from the Customer or on his behalf by the Guarantor shall be held as in his
capacity as agent, mandatary and trustee for the Bank and shall be paid over to
the Bank forthwith. This provision will remain in full force and effect,
notwithstanding the termination of the guarantee pursuant to the provisions of
paragraph 7 in which event it will terminate when the debts and liabilities of
the Customer to the Bank covered by this guarantee pursuant to paragraph 7
hereof have been paid in full.
12. This guarantee is in addition to and not in substitution for any other
guarantee, by whomsoever given, at any time held by the Bank, and without
prejudice to any other security by whomsoever given held at any time by the Bank
and the Bank shall be under no obligation to marshall in favour of the Guarantor
any such security or any of the funds or assets the Bank may be entitled to
receive or have a claim upon.
13. The Guarantor shall be bound by any account settled between the Bank and the
Customer and, if no such account has been so settled any account stated by the
Bank shall be accepted by the Guarantor as conclusive evidence of the amount
which at the date of the account so stated is due by the Customer to the Bank.
14. The Guarantor shall make payment to the Bank of the amount of his liability
forthwith after demand therefor is made in writing. Such demand shall be deemed
to have been effectually made when an envelope containing it addressed to the
Guarantor at his last address known to the Bank is deposited postage prepaid in
the Post Office. The liability of the Guarantor shall bear interest from the
date of such demand at the rate or rates then applicable to the debts and
liabilities of the Customer to the Bank.
15. This guarantee and agreement shall be operative and binding upon every
signatory thereof notwithstanding the non-execution thereof by any other
proposed signatory or signatories, and possession of this instrument by the Bank
shall be conclusive evidence against the Guarantor that this instrument was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any condition has been complied with. None of the parties shall be bound
by any representation or promise made by any person relative thereto which is
not embodied herein. The liability of the Guarantor hereunder begins on the date
of his signature on this letter of guarantee.
16. This guarantee shall be binding upon the undersigned and any of them, if
more than one, jointly and severally between them and with the Customer and also
upon the heirs, executors, administrators and successors of the Guarantor and
will extend to and enure to the benefit of the successors and assigns of the
Bank. Each and every provision hereof is severable and should any provision
hereof be illegal or not enforceable for any reason whatsoever, such illegality
or invalidity shall not affect the other provisions hereof which shall remain in
force and be binding on the parties hereto.
17. The Guarantor acknowledges having read and taken cognizance of the present
Letter or Guarantee before signing it and declares that he understands perfectly
the terms, conditions and undertakings contained therein.
18. This Letter of Guarantee shall be construed in accordance with the laws of
the Province of Ontario and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this Letter of Guarantee may be
instituted in the courts of such province, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts, and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit the Bank's right to bring proceedings against the
Guarantor elsewhere.
AS WITNESS the hand and seal of the Guarantor, at Toronto this 20th day of
September, 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF Signature
ONTARIO PAINT & WALLPAPER LIMITED
- ------------------------------ ------------------------------------
(Please print)
Per: /s/ SIDNEY ACKERMAN c/s
- ------------------------------ ------------------------------------
(Please print) SIDNEY ACKERMAN - President
- ------------------------------ ------------------------------------
(Please print)
Per: /s/ ALAN FINE
- ------------------------------ ------------------------------------
(Please print) ALAN FINE - Secretary
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
- ------------------------------ ------------------------------------
(Please print)
I (we) hereby acknowledge that a copy of this Letter of Guarantee was handed
over to me (us) on the date hereof.
Signature of Guarantor(s).
ONTARIO PAINT & WALLPAPER LIMITED
- ------------------------------------
Per: /s/ SIDNEY ACKERMAN
- ------------------------------------
SIDNEY ACKERMAN - President
- ------------------------------------
Per: /s/ ALAN FINE
- ------------------------------------
ALAN FINE - Secretary
- ------------------------------------
- ------------------------------------
- --------------------------------------------------------------------------------
[LOGO] NATIONAL
BANK RESOLUTION RE: GUARANTEE
OF CANADA
- --------------------------------------------------------------------------------
RESOLUTION
OF THE BOARD OF DIRECTORS OF
ONTARIO PAINT & WALLPAPER LIMITED
------------------------
(Name of Corporation)
In consideration of the loans and advances of money granted or
which may be granted by National Bank of Canada (the "Bank") to its Customer,
ROSEDALE WALLCOVERINGS & FABRICS INC., for the purpose of its business, and
generally, in consideration of the business relations between the Bank and its
Customer as well as the business relations between the said Customer and this
Corporation, and whereas the financial assistance provided to the said Customer
in the manner hereinafter referred to is in the best interests of this
Corporation;
Now therefore be it resolved:
That this Corporation be and is hereby authorized to guarantee the
payment of all sums of money, which ROSEDALE WALLCOVERINGS & FABRICS INC., the
Customer owes or in the future may owe to the Bank up to a principal amount of
[amount crossed through on original] together with interest, costs and
accessories. Such guarantee shall bind this Corporation jointly and severally
with the Customer and shall be subject to all the terms and conditions set out
on the form used at the Bank, entitled "Letter of Guarantee", a copy of which is
attached hereto after having been submitted to the Directors and that Mr. Sidney
Ackerman and Mr. Alan Fine, respectively the President and the Secretary, be
authorized and instructed to jointly sign and execute the said guarantee for and
on behalf and in the name of the Corporation and that the financial assistance
provided by this Corporation to the said Customer in the said guarantee and any
security required from time to time by the Bank in connection with the said
guarantee is in the best interests of this Corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of ONTARIO PAINT & WALLPAPER LIMITED duly passed on the 20th
day of September 1996, which remains in full force and effect.
Dated at Toronto this 20th day of September, 1996.
/s/ ALAN FINE c/s
----------------------------------------
ALAN FINE
Secretary
LETTER OF GUARANTEE
TO: NATIONAL BANK OF CANADA
1. In consideration of the National Bank of Canada (hereinafter referred to as
the "Bank") dealing with ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
referred to as the "Customer"), the undersigned and each of them, if more than
one, hereby jointly and severally guarantee payment to the Bank of all present
and future debts and liabilities (direct or indirect, absolute or contingent,
matured or otherwise), now or at any time and from time to time hereafter due or
owing to the Bank whether incurred by the Customer alone or jointly with any
corporation, person or persons, or otherwise howsoever, including all costs and
disbursements incurred by the Bank in view of recovering or attempting to
recover said debts and liabilities. Provided, however, that the liability of the
undersigned, and of each of the undersigned herein, is limited to SEVEN HUNDRED
AND FIFTY THOUSAND 00/100 Dollars ($750,000.00), with interest thereon from the
date of demand of payment, at the rate agreed upon, between the Bank and the
Customer.
2. In this guarantee, the word "Guarantor" shall mean the undersigned and if
there is more than one, it shall mean each of them.
3. This guarantee shall not be affected by the death or loss or diminution of
capacity of the Customer or of the Guarantor or by any change in the name of the
Customer in the membership of the firm of the Customer through the death or
retirement of one or more partners or the introduction of one or more other
partners or otherwise, or by the acquisition of the business of the Customer by
a corporation, firm or person, or by any change whatsoever in the objects,
capital structure or constitution of the Customer, or by the Customer or the
business of the Customer being amalgamated with a firm or corporation but shall,
notwithstanding the happening of any such event, continue to exist and apply to
the full extent as if such event has not happened. The Guarantor agrees to
monitor changes in the financial position of the Customer and hereby releases
the Bank from any liability resulting therefrom.
4. All monies, advances renewals and credits in fact borrowed or obtained from
the Bank shall be deemed to form part of the debts and liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any irregularity,
defect or informality in the borrowing or obtaining of such monies, advances,
renewals or credits, the whole whether known to the Bank or not; and any sum
which may not be recoverable from the Guarantor on the footing of a guarantee
shall be recoverable from the Guarantor as sole and principal debtor in respect
thereof and shall be paid to the Bank on demand with interest and accessories as
herein provided.
5. This guarantee shall continue and be enforceable notwithstanding any
amalgamation of the Bank with any other bank(s), financial institution(s) or
other corporation(s), and any further amalgamation, in which event this
guarantee shall also extend to all debts and liabilities then or thereafter owed
by the Customer to the amalgamated bank. Furthermore, all security, real or
personal, moveable or immoveable, which have been or will be given by the
Guarantor for the said debts and liabilities shall be valid in the hands of the
Bank, as well as its successors and assigns.
6. It is further agreed that this shall be a continuing guarantee, and shall
cover and secure any ultimate balance owing to the Bank.
7. This guarantee shall bind the Guarantor together with his heirs, successors,
executors, administrators, legal representatives and assigns until termination
thereof by notice in writing to the manager of the branch of the Bank at which
the account of the Customer is kept, but such termination by any of the
guarantors or their respective heirs, successors, executors, administrators,
legal representatives or assigns shall not prevent the continuance of the
liability hereunder of any other guarantor. Such termination shall apply only to
those debts or liabilities of the Customer incurred or arising after reception
of the notice by the Bank, but not in respect of any prior debts or liabilities,
matured or not. The notice of termination shall have no effect on those debts or
liabilities incurred after reception of said notice which will result from
express or implied commitments made prior to reception.
8. This guarantee will not be diminished or modified on account of any act on
the part of the Bank which would prevent subrogation from operating in favour of
the Guarantor. It is further agreed that the Bank, without exonerating in whole
or in part the Guarantor, may grant time, renewals, extensions, indulgences,
releases and discharges to, may take security from, and give up or release any
or part of the security held, may abstain from taking, perfecting, registering
or renewing security or from realizing on security, may accept compositions and
otherwise deal with the Customer and with any other person or persons, including
any of the guarantors, and dispose of any security held by the Bank as it may
see fit, and that all dividends and monies received by the Bank from the
Customer or from any other person, capable of being applied by the Bank in
reduction of the debts and liabilities hereby guaranteed, shall be considered
for all purposes as payment in gross which the Bank shall have the right to
apply as it may see fit, not being bound by the law of imputation, and the Bank
shall be entitled to prove against the estate of the Customer upon any
insolvency or winding up, in respect of the whole said debts and liabilities.
The Guarantor shall have no right to be subrogated to the Bank until the Bank
shall have received payment in full of its claims against the Customer with
interest and costs.
9. If any circumstances arise necessitating the Bank to file its claim against
the estate of the Customer and to value its security, it will be entitled to
place such valuation as the Bank may in its discretion see fit, and the filing
of such claim and the valuation of its security shall in no way prejudice or
restrict its rights against the Guarantor.
10. The Bank shall not be obliged to exhaust its recourse against the Customer
or other persons or the security it may hold before being entitled to payment
from the Guarantor of each and every of the debts and liabilities hereby
guaranteed and it shall not be obliged to offer or deliver its security before
its whole claim has been paid. The Guarantor waives all benefits of discussion
and division.
11. All indebtedness and liability, present and future of the Customer to the
Guarantor are hereby assigned to the Bank and postponed to the present and
future debts and liabilities of the Customer to the Bank. All monies received
from the Customer or on his behalf by the Guarantor shall be held as in his
capacity as agent, mandatary and trustee for the Bank and shall be paid over to
the Bank forthwith. This provision will remain in full force and effect,
notwithstanding the termination of the guarantee pursuant to the provisions of
paragraph 7 in which event it will terminate when the debts and liabilities of
the Customer to the Bank covered by this guarantee pursuant to paragraph 7
hereof have been paid in full.
12. This guarantee is in addition to and not in substitution for any other
guarantee, by whomsoever given, at any time held by the Bank, and without
prejudice to any other security by whomsoever given held at any time by the Bank
and the Bank shall be under no obligation to marshall in favour of the Guarantor
any such security or any of the funds or assets the Bank may be entitled to
receive or have a claim upon.
13. The Guarantor shall be bound by any account settled between the Bank and the
Customer and, if no such account has been so settled any account stated by the
Bank shall be accepted by the Guarantor as conclusive evidence of the amount
which at the date of the account so stated is due by the Customer to the Bank.
14. The Guarantor shall make payment to the Bank of the amount of his liability
forthwith after demand therefor is made in writing. Such demand shall be deemed
to have been effectually made when an envelope containing it addressed to the
Guarantor at his last address known to the Bank is deposited postage prepaid in
the Post Office. The liability of the Guarantor shall bear interest from the
date of such demand at the rate or rates then applicable to the debts and
liabilities of the Customer to the Bank.
15. This guarantee and agreement shall be operative and binding upon every
signatory thereof notwithstanding the non-execution thereof by any other
proposed signatory or signatories, and possession of this instrument by the Bank
shall be conclusive evidence against the Guarantor that this instrument was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any condition has been complied with. None of the parties shall be bound
by any representation or promise made by any person relative thereto which is
not embodied herein. The liability of the Guarantor hereunder begins on the date
of his signature on this letter of guarantee.
16. This guarantee shall be binding upon the undersigned and any of them, if
more than one, jointly and severally between them and with the Customer and also
upon the heirs, executors, administrators and successors of the Guarantor and
will extend to and enure to the benefit of the successors and assigns of the
Bank. Each and every provision hereof is severable and should any provision
hereof be illegal or not enforceable for any reason whatsoever, such illegality
or invalidity shall not affect the other provisions hereof which shall remain in
force and be binding on the parties hereto.
17. The Guarantor acknowledges having read and taken cognizance of the present
Letter or Guarantee before signing it and declares that he understands perfectly
the terms, conditions and undertakings contained therein.
18. This Letter of Guarantee shall be construed in accordance with the laws of
the Province of Ontario and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this Letter of Guarantee may be
instituted in the courts of such province, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts, and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit the Bank's right to bring proceedings against the
Guarantor elsewhere.
AS WITNESS the hand and seal of the Guarantor, at Toronto this 20th day of
September 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF Signature
/s/ Sara Fay Sulley /s/ Sidney Ackerman
- -------------------------------- -------------------------------
(Please print) SIDNEY ACKERMAN
Name:
Address:
- -------------------------------- -------------------------------
(Please print)
- -------------------------------- -------------------------------
(Please print)
- -------------------------------- -------------------------------
(Please print)
- -------------------------------- -------------------------------
(Please print)
- -------------------------------- -------------------------------
(Please print)
- -------------------------------- -------------------------------
(Please print)
I (we) hereby acknowledge that a copy of this Letter of Guarantee was handed
over to me (us) on the date hereof.
Signature of Guarantor(s).
/s/ Sidney Ackerman
- -------------------------------
SIDNEY ACKERMAN
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
[LOGO]
NATIONAL SUBORDINATION AGREEMENT
BANK
OF CANADA
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS INC.
------------------------------------------
(the "Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums of
money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
/s/ Sidney Ackerman
- ------------------------------ -----------------------------
Name: SIDNEY ACKERMAN
Address:
-----------------------------
-----------------------------
-----------------------------
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees to
comply therewith.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS INC.
- ------------------------------ -----------------------------
Per: /s/ Alan Fine c/s
-----------------------------
ALAN FINE - President
-----------------------------
Per: /s/ Sidney Ackerman
-----------------------------
SIDNEY ACKERMAN - Secretary
RESOLUTION OF DEBTOR CORPORATION
RE SUBORDINATION AGREEMENT
RESOLUTION
OF THE BOARD OF DIRECTORS OF
ROSEDALE WALLCOVERINGS & FABRICS INC.
In consideration of loans and advances made or to be made by
National Bank of Canada to the corporation and generally in consideration of
business dealings between the said Bank and the corporation as well as business
dealings between the corporation and SIDNEY ACKERMAN;
Now therefore be it resolved
That the corporation acknowledge receipt of the notice of the
subordination agreement made on form No. 11221 a copy of which is annexed to the
present resolution after having been submitted to the directors and that the
corporation accept the assignment and transfer in favour of National Bank of
Canada included in the said agreement and that Mr. Alan Fine, President of the
corporation, and Mr. Sidney Ackerman, Secretary of the corporation, be and are
hereby authorized and instructed to jointly sign the acknowledgment and
acceptance on the aforesaid subordination agreement for and on behalf and in the
name of the corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of ROSEDALE WALLCOVERINGS & FABRICS INC. duly adopted on the
20th day of September, 1996.
Dated at Toronto this 20th day of September, 1996.
/s/ Sidney Ackerman c/s
---------------------------------
SIDNEY ACKERMAN
Secretary
[LOGO]
NATIONAL SUBORDINATION AGREEMENT
BANK
OF CANADA
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS INC.
------------------------------------------
(the "Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums of
money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
/s/ Sidney Ackerman
- ------------------------------ -----------------------------
Name: SIDNEY ACKERMAN
Address:
-----------------------------
-----------------------------
-----------------------------
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees to
comply therewith.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS INC.
- ------------------------------ -----------------------------
Per: /s/ Alan Fine c/s
-----------------------------
ALAN FINE - President
-----------------------------
Per: /s/ Sidney Ackerman
-----------------------------
SIDNEY ACKERMAN - Secretary
STATUTORY DECLARATION
CANADA ) IN THE MATTER OF a guarantee and a
) subordination agreement given by
PROVINCE OF ONTARIO ) Sidney Ackerman to National Bank of
) Canada (the "Bank") in support of
TO WIT: ) loans and credit facilities given
) by the Bank to Rosedale Wallcoverings
) & Fabrics Inc.;
)
) AND IN THE MATTER OF a registration
) under the Personal Property Security Act.
I, SIDNEY ALVIN ACKERMAN, of the City of Toronto, in the
Municipality of Metropolitan Toronto, Province of Ontario, SOLEMNLY DECLARE
THAT:
1. My legal name is Sidney Alvin Ackerman. I am not, and have not been,
known by any other name or names;
2. I am not in the process of obtaining a change of all or part of my name
pursuant to the Change of Name Act (Ontario);
3. My date of birth is August 2, 1945;
4. My residence address is 359 Lytton Boulevard, Toronto, Ontario, M5N 1R9;
5. A true copy of each of my Canadian citizenship certificate and my Ontario
drivers licence are attached to this declaration as Exhibits "A" and "B"
respectively, to evidence my name, date of birth and residence address.
AND I MAKE THIS SOLEMN DECLARATION conscientiously, believing it to
be true and knowing that it is of the same force and effect as if made under
oath.
DECLARED BEFORE ME at )
the City of Toronto )
in the Municipality )
of Metropo1itan Toronto ) /s/ Sidney Ackerman
this 20th day of September, ) ----------------------------------
1996. ) SIDNEY ALVIN ACKERMAN
/S/ S F Sulley
A Commissioner, etc.
This is Exhibit "A" referred to in the Statutory
Declaration of Sidney Alvin Ackerman, sworn
before me, this 20th day of September, 1996.
/s/ S F Sulley
...............................................
A Commissioner for Taking Affidavits
- --------------------------------------------------------------------------------
3 No TD535269
- --------------------------------------------------------------------------------
ENDORSEMENTS AND LIMITATIONS MENTIONS ET RESTRICTIONS
This passport is valid for all Ce passeport est vaiable pour tous les pays,
countries unless otherwise souf indication contraire. (Le titulaire doit
endorsed (subject to any visa egalament se conformer suz formalites d'entree
or other entry regulations of des pays ou il a l'intention de se rendre.)
countries to be visited.)
- --------------------------------------------------------------------------------
> /s/ Sidney Ackerman
- ----------------------------------------------------
(Signature of bearer - Signature du titulaire)
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED - PASSPORT]
This is Exhibit "B" referred to in the
Statutory Declaration of Sidney Alvin
Ackerman, sworn before me, this 20th day of
September, 1996.
/s/ S F Sulley
......................................
A Commissioner for Taking Affidavits
[GRAPHIC OMITTED - ONTARIO DRIVER'S LICENSE]
|2| See reverse side for instructions about changes to your Drivers Licence
Voir au verso les instructions concernant les changements apportes a votre
permis de conduire
LETTER OF GUARANTEE
TO: NATIONAL BANK OF CANADA
1. In consideration of the National Bank of Canada (hereinafter referred to as
the "Bank") dealing with ROSEDALE WALLCOVERINGS & FABRICS INC. (hereinafter
referred to as the "Customer"), the undersigned and each of them, if more than
one, hereby jointly and severally guarantee payment to the Bank of all present
and future debts and liabilities (direct or indirect, absolute or contingent,
matured or otherwise), now or at any time and from time to time hereafter due or
owing to the Bank whether incurred by the Customer alone or jointly with any
corporation, person or persons, or otherwise howsoever, including all costs and
disbursements incurred by the Bank in view of recovering or attempting to
recover said debts and liabilities. Provided, however, that the liability of the
undersigned, and of each of the undersigned herein, is limited to SEVEN HUNDRED
AND FIFTY THOUSAND 00/100 Dollars ($750,000.00 )with interest thereon from the
date of demand of payment, at the rate agreed upon, between the Bank and
Customer.
2. In this guarantee, the word "Guarantor" shall mean the undersigned and if
there is more than one, it shall mean each of them.
3. This guarantee shall not be affected by the death or loss or diminution of
capacity of the Customer or of the Guarantor or by any change in the name of the
Customer in the membership of the firm of the Customer through the death or
retirement of one or more partners or the introduction of one or more other
partners or otherwise, or by the acquisition of the business of the Customer by
a corporation, firm or person, or by any change whatsoever in the objects,
capital structure or constitution of the Customer, or by the Customer or the
business of the Customer being amalgamated with a firm or corporation but shall,
notwithstanding the happening of any such event, continue to exist and apply to
the full extent as if such event has not happened. The Guarantor agrees to
monitor changes in the financial position of the Customer and hereby releases
the Bank from any liability resulting therefrom.
4. All monies, advances renewals and credits in fact borrowed or obtained from
the Bank shall be deemed to form part of the debts and liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any irregularity,
defect or informality in the borrowing or obtaining of such monies, advances,
renewals or credits, the whole whether known to the Bank or not; and any sum
which may not be recoverable from the Guarantor on the footing of a guarantee
shall be recoverable from the Guarantor as sole and principal debtor in respect
thereof and shall be paid to the Bank on demand with interest and accessories as
herein provided.
5. This guarantee shall continue and be enforceable notwithstanding any
amalgamation of the Bank with any other bank(s), financial institution(s) or
other corporation(s), and any further amalgamation, in which event this
guarantee shall also extend to all debts and liabilities then or thereafter owed
by the Customer to the amalgamated bank. Furthermore, all security, real or
personal, moveable or immoveable, which have been or will be given by the
Guarantor for the said debts and liabilities shall be valid in the hands of the
Bank, as well as its successors and assigns.
6. It is further agreed that this shall be a continuing guarantee, and shall
cover and secure any ultimate balance owing to the Bank.
7. This guarantee shall bind the Guarantor together with his heirs, successors,
executors, administrators, legal representatives and assigns until termination
thereof by notice in writing to the manager of the branch of the Bank at which
the account of the Customer is kept, but such termination by any of the
guarantors or their respective heirs, successors, executors, administrators,
legal representatives or assigns shall not prevent the continuance of the
liability hereunder of any other guarantor. Such termination shall apply only to
those debts or liabilities of the Customer incurred or arising after reception
of the notice by the Bank, but not in respect of any prior debts or liabilities,
matured or not. The notice of termination shall have no effect on those debts or
liabilities incurred after reception of said notice which will result from
express or implied commitments made prior to reception.
8. This guarantee will not be diminished or modified on account of any act on
the part of the Bank which would prevent subrogation from operating in favour of
the Guarantor. It is further agreed that the Bank, without exonerating in whole
or in part the Guarantor, may grant time, renewals, extensions, indulgences,
releases and discharges to, may take security from, and give up or release any
or part of the security held, may abstain from taking, perfecting, registering
or renewing security or from realizing on security, may accept compositions and
otherwise deal with the Customer and with any other person or persons, including
any of the guarantors, and dispose of any security held by the Bank as it may
see fit, and that all dividends and monies received by the Bank from the
Customer or from any other person, capable of being applied by the Bank in
reduction of the debts and liabilities hereby guaranteed, shall be considered
for all purposes as payment in gross which the Bank shall have the right to
apply as it may see fit, not being bound by the law of imputation, and the Bank
shall be entitled to prove against the estate of the Customer upon any
insolvency or winding up, in respect of the whole said debts and liabilities.
The Guarantor shall have no right to be subrogated to the Bank until the Bank
shall have received payment in full of its claims against the Customer with
interest and costs.
9. If any circumstances arise necessitating the Bank to file its claim against
the estate of the Customer and to value its security, it will be entitled to
place such valuation as the Bank may in its discretion see fit, and the filing
of such claim and the valuation of its security shall in no way prejudice or
restrict its rights against the Guarantor.
10. The Bank shall not be obliged to exhaust its recourse against the Customer
or other persons or the security it may hold before being entitled to payment
from the Guarantor of each and every of the debts and liabilities hereby
guaranteed and it shall not be obliged to offer or deliver its security before
its whole claim has been paid. The Guarantor waives all benefits of discussion
and division.
11. All indebtedness and liability, present and future of the Customer to the
Guarantor are hereby assigned to the Bank and postponed to the present and
future debts and liabilities of the Customer to the Bank. All monies received
from the Customer or on his behalf by the Guarantor shall be held as in his
capacity as agent, mandatary and trustee for the Bank and shall be paid over to
the Bank forthwith. This provision will remain in full force and effect,
notwithstanding the termination of the guarantee pursuant to the provisions of
paragraph 7 in which event it will terminate when the debts and liabilities of
the Customer to the Bank covered by this guarantee pursuant to paragraph 7
hereof have been paid in full.
12. This guarantee is in addition to and not in substitution for any other
guarantee, by whomsoever given, at any time held by the Bank, and without
prejudice to any other security by whomsoever given held at any time by the Bank
and the Bank shall be under no obligation to marshall in favour of the Guarantor
any such security or any of the funds or assets the Bank may be entitled to
receive or have a claim upon.
13. The Guarantor shall be bound by any account settled between the Bank and the
Customer and, if no such account has been so settled any account stated by the
Bank shall be accepted by the Guarantor as conclusive evidence of the amount
which at the date of the account so stated is due by the Customer to the Bank.
14. The Guarantor shall make payment to the Bank of the amount of his liability
forthwith after demand therefor is made in writing. Such demand shall be deemed
to have been effectually made when an envelope containing it addressed to the
Guarantor at his last address known to the Bank is deposited postage prepaid in
the Post Office. The liability of the Guarantor shall bear interest from the
date of such demand at the rate or rates then applicable to the debts and
liabilities of the Customer to the Bank.
15. This guarantee and agreement shall be operative and binding upon every
signatory thereof notwithstanding the non-execution thereof by any other
proposed signatory or signatories, and possession of this instrument by the Bank
shall be conclusive evidence against the Guarantor that this instrument was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any condition has been complied with. None of the parties shall be bound
by any representation or promise made by any person relative thereto which is
not embodied herein. The liability of the Guarantor hereunder begins on the date
of his signature on this letter of guarantee.
16. This guarantee shall be binding upon the undersigned and any of them, if
more than one, jointly and severally between them and with the Customer and also
upon the heirs, executors, administrators and successors of the Guarantor and
will extend to and enure to the benefit of the successors and assigns of the
Bank. Each and every provision hereof is severable and should any provision
hereof be illegal or not enforceable for any reason whatsoever, such illegality
or invalidity shall not affect the other provisions hereof which shall remain in
force and be binding on the parties hereto.
17. The Guarantor acknowledges having read and taken cognizance of the present
Letter or Guarantee before signing it and declares that he understands perfectly
the terms, conditions and undertakings contained therein.
18. This Letter of Guarantee shall be construed in accordance with the laws of
the Province of Ontario and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to this Letter of Guarantee may be
instituted in the courts of such province, and the Guarantor hereby accepts and
irrevocably submits to the jurisdiction of the said courts, and acknowledges
their competence and agrees to be bound by any judgment thereof, provided that
nothing herein shall limit the Bank's right to bring proceedings against the
Guarantor elsewhere.
AS WITNESS the hand and seal of the Guarantor, at Toronto this 20th day
of September 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF Signature
/s/ Sara Fay Sulley /s/ Alan Fine
- ----------------------------- -------------------------------
(Please print) ALAN FINE
Name:
Address:
- ----------------------------- -------------------------------
(Please print)
- ----------------------------- -------------------------------
(Please print)
- ----------------------------- -------------------------------
(Please print)
- ----------------------------- -------------------------------
(Please print)
- ----------------------------- -------------------------------
(Please print)
- ----------------------------- -------------------------------
(Please print)
I (we) hereby acknowledge that a copy of this Letter of Guarantee was handed
over to me (us) on the date hereof.
Signature of Guarantor(s).
/s/ Alan Fine
- ----------------------------
ALAN FINE
- ----------------------------
- ----------------------------
- ----------------------------
- ----------------------------
- ----------------------------
[LOGO]
NATIONAL
BANK
OF CANADA SUBORDINATION AGREEMENT
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS, INC. (the
"Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums of
money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
/s/ Alan Fine
- --------------------------------- -------------------------------
Name: ALAN FINE
Address
-------------------------------
-------------------------------
-------------------------------
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees to
comply therewith.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS INC.
- ----------------------------------- ---------------------------------------
Per: /s/ Alan Fine c/s
---------------------------------------
ALAN FINE - President
---------------------------------------
Per: Sidney Ackerman
---------------------------------------
SIDNEY ACKERMAN - Secretary
RESOLUTION OF DEBTOR CORPORATION
RE SUBORDINATION AGREEMENT
RESOLUTION
OF THE BOARD OF DIRECTORS OF
ROSEDALE WALLCOVERINGS & FABRICS INC.
In consideration of loans and advances made or to be made by
National Bank of Canada to the corporation and generally in consideration of
business dealings between the said Bank and the corporation as well as business
dealings between the corporation and ALAN FINE;
Now therefore be it resolved
That the corporation acknowledge receipt of the notice of the
subordination agreement made on form No. 11221 a copy of which is annexed to the
present resolution after having been submitted to the directors and that the
corporation accept the assignment and transfer in favour of National Bank of
Canada included in the said agreement and that Mr. Alan Fine, President of the
corporation, and Mr. Sidney Ackerman, Secretary of the corporation, be and are
hereby authorized and instructed to jointly sign the acknowledgment and
acceptance on the aforesaid subordination agreement for and on behalf and in the
name of the corporation.
The foregoing is certified to be a true copy of a Resolution of the
Board of Directors of ROSEDALE WALLCOVERINGS & FABRICS INC. duly adopted on the
20th day of September, 1996.
Dated at Toronto, this 20th day of September 1996.
/s/ Sidney Ackerman c/s
----------------------------------------
SIDNEY ACKERMAN
Secretary
[LOGO]
NATIONAL
BANK
OF CANADA SUBORDINATION AGREEMENT
1. Subordination For good and valuable consideration, the undersigned hereby
agrees that the payment of any and all debts and sums of money which now are or
may hereafter become due or owing by ROSEDALE WALLCOVERINGS & FABRICS, INC. (the
"Customer") shall be subordinated in all respects to the payment of the
Customer's obligations to National Bank of Canada (the "Bank"); the debts and
sums of money due or owing to the undersigned by the Customer are hereinafter
called the "Subordinated Debts".
2. Effects of Subordination As a result of such subordination, the undersigned
agrees that payment of the Subordinated Debts shall become due and payable and
shall be made only after the payment of any and all obligations of the Customer
to the Bank. Any security securing the Subordinated Debts shall rank after the
rights of the Bank against the Customer, even if the Bank were not to have
security on the Customer's property.
3. Delivery of Sums Collected Should the undersigned nonetheless receive sums of
money in payment of the Subordinated Debts, he shall hold such sums as a
depositary and trustee for the Bank, and shall deliver the same to the Bank
without delay.
4. Assignment As additional security for the payment of the Customer's
obligations to the Bank, the undersigned hereby assigns the Subordinated Debts
to the Bank.
5. Rights of the Bank All sums which the Bank may receive hereunder may, at its
discretion, be held as security for the Customer's obligations to the Bank or
may be applied to the payment of such obligations, whether or not due. The Bank
shall have the choice of how any such sums collected shall be applied.
6. Interpretation The Customer's obligations to the Bank referred to hereunder
shall be any and all direct and indirect, present and future indebtedness and
obligations of the Customer to the Bank.
7. Successor of the Bank This agreement shall be binding upon the undersigned
and enure to the benefit of the Bank and any of its successors, by way of
amalgamation or otherwise.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
/s/ Alan Fine
- --------------------------------- -------------------------------
Name: ALAN FINE
Address
-------------------------------
-------------------------------
-------------------------------
ACCEPTANCE
The Customer named in the Subordination Agreement hereinabove acknowledges
having received a copy and having taken cognizance thereof and further agrees to
comply therewith.
Executed at Toronto, this 20th day of September, 1996.
Witness Signature(s)
ROSEDALE WALLCOVERINGS & FABRICS INC.
- ----------------------------------- ---------------------------------------
Per: /s/ Alan Fine c/s
---------------------------------------
ALAN FINE - President
---------------------------------------
Per: Sidney Ackerman
---------------------------------------
SIDNEY ACKERMAN - Secretary
STATUTORY DECLARATION
CANADA ) IN THE MATTER OF a guarantee and a
) subordination agreement given by Alan
PROVINCE OF ONTARIO ) Fine to National Bank of Canada (the
) "Bank") in support of loans and credit
TO WIT: ) facilities given by the Bank to Rosedale
) Wallcoverings & Fabrics Inc.;
)
) AND IN THE MATTER OF a registration
) under the Personal Property Security Act.
I, ALAN IRVING FINE, of the City of North York, in the Municipality
of Metropolitan Toronto, Province of Ontario, SOLEMNLY DECLARE THAT:
1. My legal name is Alan Irving Fine. I am not, and have not been, known by
any other name or names;
2. I am not in the process of obtaining a change of all or part of my name
pursuant to the Change of Name Act (Ontario);
3. My date of birth is April 12, 1945;
4. My residence address is 407 Woburn Avenue, North York, Ontario, M5M 1L4;
5. A true copy of each of my birth certificate and my Ontario driver's licence
are attached to this declaration as Exhibits "A" and "B" respectively, to
evidence my name, date of birth and residence address.
AND I MAKE THIS SOLEMN DECLARATION conscientiously, believing it to be true
and knowing that it is of the same force and effect as if made under oath.
DECLARED BEFORE ME at )
the City of Toronto )
0n the Municipality ) /s/ Alan Fine
of Metropolitan Toronto ) ----------------------------------
this 20th day of September, 1996. ) ALAN IRVING FINE
)
/s/ S F Sulley
A Commissioner, etc.
This is Exhibit "A" referred to in the Statutory Declaration
of Alan Irving Fine, sworn before me, this 20th day of
September, 1996.
/s/ S F Sulley
............................................
A Commissioner for Taking Affidavits
[GRAPHIC OMITTED]
This is Exhibit "B" referred to in the Statutory Declaration
of Alan Irving Fine, sworn before me, this 20th day of
September, 1996.
/s/ S F Sulley
............................................
A Commissioner for Taking Affidavits
[GRAPHIC OMITTED]
ACKNOWLEDGMENT OF RECEIPT
TO: NATIONAL BANK OF CANADA
FROM: PALLETT VALO
RE: National Bank of Canada (the "Bank") Credit Facilities to Rosedale
Wallcoverings & Fabrics Inc. - Guarantee and Subordination Agreement
by Alan Fine - Registration under the Personal Property Security Act
(Ontario)
- --------------------------------------------------------------------------------
THE UNDERSIGNED acknowledges receipt of a copy of each of the
verification statements noted below:
PPSA File No. Registration No.
------------- ----------------
824429412 960823 1922 1529 4144
080538678 960826 1932 1529 6311
DATED this 20th day of September, 1996.
/s/ Alan Fine
-----------------------------------
ALAN FINE
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG
Personal Property Security Act
REG NUM/NO ENREGIST
960823192215294144
REG PERIOD/PERIODE
5
REF FILE NUM/NO DE REFERENCE
824429412
CAUTION FILING/AVERTIS
[ ]
EXPIRY DATE/DATE D'EXPIRATION
23 AUG 2001
DEBTORS/DEBITEUR
- --------------------------------------------------------------------------------
DATE OF BIRTH/DATE DE NAISSANCE
Alan I. Fine 12 APR 45
407 Woburn Avenue
North York ON M5M 1L4
SECURED PARTIES/CREANCIER GARANTI
- --------------------------------------------------------------------------------
National Bank Of Canada
50 BURNHAMTHORPE ROAD WEST, SUITE 216
Mississauga ON L5B 3J1
COLLATERAL / BIENS GREVES
- --------------------------------------------------------------------------------
[illegible]ONS GOODS/BIENS CONS
[ ]
INVTRY/STOCK
[ ]
EQUIP/MATER
[ ]
ACCTS/COMPT
[ ]
OTHER/AUTRE
[ ]
MV INCL/VA INCLUS
[ ]
AMOUNT/MONTANT
DATE OF MATURITY/DATE ECHEANCE
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG
Personal Property Security Act
REG NUM/NO ENREGIST
960826193215296311
CHANGE/MODIF
[illegible]-Other Change
EXPIRY DATE/DATE D'EXPIRATION
29 NOV 2005
REF FILE NUM/NO DE REFERENCE
080538678
REN YEARS/REN ANNEES
CAUTION FILING/AVERTIS
[ ]
CORR PER/PER EXAC
DEBTOR NAME (AS RECORDED) /NOM DU DEBITEUR (TEL QU'INSCRIT)
- --------------------------------------------------------------------------------
Rosedale Wallcoverings & Fabrics Inc.
OTHER CHANGE DESCRIPTION/DESCRIPTION DE L'AUTRE MODIFICATION
- --------------------------------------------------------------------------------
SPECIFY OTHER CHANGE/PRECISER L'AUTRE MODIFICATION
Subordination
Subordination by Alan Fine of reference File No. 080538678 to and in favour of
National Bank of Canada's reference File No. 824305932.
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
ACKNOWLEDGMENT OF RECEIPT
TO: NATIONAL BANK OF CANADA
AND TO: PALLETT VALO
RE: National Bank of Canada (the "Bank") Credit Facilities to Rosedale
Wallcoverings & Fabrics Inc. - Guarantee and Subordination Agreement by
Sidney Ackerman - Registration under the Personal Property Security Act
(Ontario)
- --------------------------------------------------------------------------------
THE UNDERSIGNED acknowledges receipt of a copy of each of the
verification statements noted below:
PPSA File No. Registration No.
------------- ----------------
824429421 960823 1922 1529 4145
080538696 960826 1932 1529 6313
DATED this 20th day of September, 1996
/s/ Sidney Ackerman
-------------------------
SIDNEY ACKERMAN
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG
Personal Property Security Act
REG NUM/NO ENREGIST
960823192215294145
REG PERIOD/PERIODE
5
REF FILE NUM/NO DE REFERENCE
824429421
CAUTION FILING/AVERTIS
[ ]
EXPIRY DATE/DATE D'EXPIRATION
23 AUG 2001
DEBTORS / DEBITEUR
- --------------------------------------------------------------------------------
DATE OF BIRTH/DATE DE NAISSANCE
Sidney A. Ackerman 2 AUG 45
359 Lytton Boulevard
Toronto ON M5N 1R9
SECURED PARTIES/CREANCIER GARANTI
- --------------------------------------------------------------------------------
National Bank Of Canada
350 BURNHAMTHORPE ROAD WEST, SUITE 216
Mississauga ON L5B 3J1
COLLATERAL / BIENS GREVES
- --------------------------------------------------------------------------------
[illegible]ONS GOODS/BIENS CONS
[ ]
INVTRY/STOCK
[ ]
EQUIP/MATER
[ ]
ACCTS/COMPT
[ ]
OTHER/AUTRE
[ ]
MV INCL/VA INCLUS
[ ]
AMOUNT/MONTANT
DATE OF MATURITY/DATE ECHEANCE
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG
Personal Property Security Act
REG NUM/NO ENREGIST
960826193215296313
CHANGE/MODIF
[illegible]-Other Change
EXPIRY DATE/DATE D'EXPIRATION
29 NOV 2005
REF FILE NUM/NO DE REFERENCE
080538696
REN YEARS/REN ANNEES
CAUTION FILING/AVERTIS
[ ]
CORR PER/PER EXAC
DEBTOR NAME (AS RECORDED) /NOM DU DEBITEUR (TEL QU'INSCRIT)
- --------------------------------------------------------------------------------
Rosedale Wallcoverings & Fabrics Inc.
OTHER CHANGE DESCRIPTION/DESCRIPTION DE L'AUTRE MODIFICATION
- --------------------------------------------------------------------------------
SPECIFY OTHER CHANGE/PRECISER L'AUTRE MODIFICATION
Subordination
Subordination by Sidney Ackerman of reference File No. 080538696 to and in
favour of National Bank of Canada's reference File No. 24305932.
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 303
* * * * * END OF VERIFICATION STATEMENT * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
ACKNOWLEDGMENT OF RECEIPT
TO: NATIONAL BANK OF CANADA
AND TO: PALLETT VALO
RE: National Bank of Canada (the "Bank") Credit Facilities to Rosedale
Wallcoverings & Fabrics Inc. - Guarantee and Subordination Agreement
by 521305 Ontario Inc. - Registration under the Personal Property
Security Act (Ontario)
- --------------------------------------------------------------------------------
THE UNDERSIGNED acknowledges receipt of a copy of each of the
verification statements noted below:
PPSA File No. Registration No.
------------- ----------------
824305941 960819 1846 1529 6725
080538687 960826 1932 1529 6312
DATED this 20th day of September, 1996.
521305 ONTARIO INC.
c/s
Per: /s/ Alan Fine
----------------------------
ALAN FINE
President
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG REG PERIOD/PERIODE CAUTION FILING/
AVERTIS
Personal Property 5 |_|
Security Act
REG NUM/NO ENREGIST REF FILE NUM/NO EXPIRY DATE/DATE
DE REFERENCE D' EXPIRATION
960819184615296725 824305941 19 AUG 2001
DEBTORS/DEBITEUR
- --------------------------------------------------------------------------------
CORPORATION NUMBER
[Illegible]21305 Ontario Inc.
[Illegible]14 Courtland Avenue
Concord ON L4K 4L3
SECURED PARTIES/CREANCIER GARANTI
- --------------------------------------------------------------------------------
National Bank Of Canada 350 BURNHAMTHORPE ROAD WEST, SUITE 216 Mississauga ON
L5B 3J1
COLLATERAL/BIENS GREVES
- --------------------------------------------------------------------------------
CONS GOODS/BIENS CONS INVTRY/STOCK EQUIP/MATER ACCTS/COMPT
[_] [_] [_] [X]
OTHER/AUTRE MV INCL/VA INCLUS
[_] [_]
MOUNT/MONTANT DATE OF MATURITY/DATE ECHEANCE
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
350 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG EXPIRY DATE/DATE D'EXPIRATION CAUTION FILING/AVERTIS
Personal Property 29 NOV 2005 [_]
Security Act
REG NUM/NO ENREGIST REF FILE NUM/NO DE REFERENCE
960826193215296312 080538687
CHANGE/MODIF REN YEARS/REN ANNEES CORR PER/PER EXAC
J-other Change
DEBTOR NAME (AS RECORDED) /NOM DU DEBITEUR (TEL QU'INSCRIT)
- --------------------------------------------------------------------------------
Rosedale Wallcoverings & Fabrics Inc.
OTHER CHANGE DESCRIPTION/DESCRIPTION DE L'AUTRE MODIFICATION
- --------------------------------------------------------------------------------
SPECIFY OTHER CHANGE/PRECISER L'AUTRE MODIFICATION
Subordination
Subordination by 521305 Ontario Inc. of reference File No. 080538687 to and in
favour of National Bank of Canada's reference File No. 824305932.
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
ACKNOWLEDGMENT OF RECEIPT
TO: NATIONAL BANK OF CANADA
AND TO: PALLETT VALO
RE: National Bank of Canada (the "Bank") Credit Facilities to Rosedale
Wallcoverings & Fabrics Inc. - Registration under the Personal
Property Security Act (Ontario) in respect of Security Interests
granted to the Bank
- --------------------------------------------------------------------------------
THE UNDERSIGNED acknowledges receipt of a copy of the verification
statement noted below on which the undersigned is named as the debtor, and a
copy of which is attached hereto:
PPSA File No. Registration No.
------------- ----------------
824305932 960819 1846 1529 6724
DATED this 20th day of September, 1996.
ROSEDALE WALLCOVERINGS & FABRICS
INC.
c/s
Per: /s/ Alan Fine
-----------------------
ALAN FINE
President
- --------------------------------------------------------------------------------
VERIFICATION STATEMENT/ETAT DE VERIFICATION
- --------------------------------------------------------------------------------
REG UNDER/T. ENREG REG PERIOD/PERIODE CAUTION FILING/
AVERTIS
Personal Property 5 |_|
Security Act
REG NUM/NO ENREGIST REF FILE NUN/NO EXPIRY DATE/DATE
DE REFERENCE D' EXPIRATION
960819184615296725 824305932 19 AUG 2001
DEBTORS/DEBITEUR
- --------------------------------------------------------------------------------
CORPORATION NUMBER
Rosedale Wallcoverings & Fabrics Inc.
214 Courtland Avenue
Concord ON L4K 4L3
SECURED PARTIES/CREANCIER GARANTI
- --------------------------------------------------------------------------------
National Bank Of Canada
350 BURNHAMTHORPE ROAD WEST, SUITE 216
Mississauga ON L5B 3J1
COLLATERAL/BIENS GREVES
- --------------------------------------------------------------------------------
CONS GOODS/BIENS CONS INVTRY/STOCK EQUIP/MATER ACCTS/COMPT
[_] [X] [X] [X]
OTHER/AUTRE MV INCL/VA INCLUS
[X] [X]
MOUNT/MONTANT DATE OF MATURITY/DATE ECHEANCE
AGENT/AGENT
- --------------------------------------------------------------------------------
Pallett Valo
90 Burnhamthorpe Road West Ste 1600
Mississauga, ON L5B 3C3
* * * * * END OF VERIFICATION STATEMENT * * * * *
* * * * * FIN DE L'ETAT DE VERIFICATION * * * * *
- --------------------------------------------------------------------------------
Verification Statement Last Page . . .
Etat De Verification Derniere Page . . . Page 1
CERTIFICATE OF SOLVENCY
with respect to Section 20 of the
Business Corporations Act (Ontario)
TO: NATIONAL BANK OF CANADA
RE: National Bank of Canada loan to Rosedale Wallcoverings & Fabrics
Inc. (the "Borrower") - Guaranteed by Ontario Paint & Wallpaper
Limited (the "Corporation")
THE undersigned, a duly appointed officer of the Corporation, refers
to the guarantee (the "Guarantee") dated September 20 , 1996, given by the
Corporation to you in respect of the debts and liabilities of the Borrower and
hereby certifies that there are no reasonable grounds for believing that:
(i) the Corporation is or, after giving the Guarantee, would be unable
to pay its liabilities as they become due; or
(ii) the realizable value of the Corporation's assets, excluding the
amount of any financial assistance in the form of a loan and in the
form of any secured guarantee, after giving the Guarantee, would be
less than the aggregate of the Corporation's liabilities and stated
capital of all classes.
DATED this 20th day of September , 1996.
c/s
/s/ Sidney Ackerman
-----------------------------------
SIDNEY ACKERMAN
President
DIRECTION RE: FUNDS
TO: NATIONAL BANK OF CANADA
RE: National Bank of Canada credit facilities to Rosedale Wallcoverings
& Fabrics Inc. pursuant to Offer of Finance dated August 8, 1996
- --------------------------------------------------------------------------------
YOU ARE HEREBY authorized and directed to pay the proceeds of the
above loan and/or withdraw funds from our account to:
(i) pay the balance of moneys owing by us to HONGKONG BANK OF CANADA pursuant
to a payout statement to be obtained from that bank on the day of payout;
and
(ii) pay the legal fees and disbursements of Pallett Valo in connection with
this transaction upon presentation of their invoice;
AND FOR SO DOING, this shall be your full, sufficient and irrevocable authority.
DATED this 20th day of September , 1996.
ROSEDALE WALLCOVERINGS & FABRICS
INC.
c/s
Per: /s/ Alan Fine
---------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
---------------------------------
SIDNEY ACKERMAN - Secretary
AUTHORIZATION TO INSERT DATES, ETC.
TO: NATIONAL BANK OF CANADA
AND TO: PALLETT VALO
RE: National Bank of Canada (the "Lender") loan to Rosedale
Wallcoverings & Fabrics Inc. pursuant to Offer of Finance dated
August 8, 1996
- --------------------------------------------------------------------------------
YOU ARE HEREBY irrevocably authorized and directed to do the
following:
1. to date the Acknowledgment of Debt Revolving Demand Credit in the
principal amount of $3,500,000.00 the date of funding, and to insert the
applicable prime rate on that date;
2. to date the Bank Act documents, namely, Application for Credit and Promise
to Give Security Under the Bank Act [Form 10014], Security Under Section
427 of the Bank Act [Form] 10015 and Agreement Respecting Security Given
By the Customer [Form 10115], a date that is at least one clear day
subsequent to the registration date of the Notice of Intention to give
security under Section 427 of the Bank Act, and to insert all other dates
as necessary.
DATED this 20th day of September, 1996.
ROSEDALE WALLCOVERINGS & FABRICS
INC.
c/s
Per: /s/ Alan Fine
---------------------------------
ALAN FINE - President
Per: /s/ Sidney Ackerman
---------------------------------
SIDNEY ACKERMAN - Secretary
[Letterhead of Torkin, Manes, Cohen & Arbus]
October 29, 1996
National Bank of Canada
350 Burnhamthorpe Road West
Suite 216
Mississauga, Ontario L5B 3J1
- - and -
Pallett Valo
Barristers and Solicitors
90 Burnhamthorpe Road West
Suite 1600
Mississauga, Ontario L5B 3C3
Dear Sirs:
Re: National Bank of Canada (the "Lender") Loan to Rosedale Wallcoverings &
Fabrics Inc. (the "Borrower") pursuant to Offer of Finance dated August 8,
1996 (the "Offer of Finance")
- --------------------------------------------------------------------------------
We are the corporate solicitors for the Borrower and have acted for the Borrower
in connection with the granting by the Borrower to the lender of the security
referred to below to secure credit facilities offered by the Lender to the
Borrower pursuant to the Offer of Finance.
In connection with the foregoing, we have reviewed the Offer of Finance and the
following documents, among others:
1. An acknowledgment of debt revolving demand credit limited to the principal
amount of $3,500,000.00 Canadian, to be dated the date of funding;
2. A general security agreement dated September 20, 1996;
3. A general assignment of book debts, dated September 20, 1996;
4. A Notice of Intention to give security under Section 427 of the Bank Act,
dated September 20, 1996;
5. An application for credit and promise to give security under the Bank Act,
dated October 10, 1996;
6. An agreement respecting security given by the customer, dated October 10,
1996;
Page 2
7. An agreement regarding security under Section 427 of the Bank Act, dated
October 10, 1996;
8. Security with respect to an insurance policy, on commercial insurance of
the Borrower, dated September 20, 1996;
9. Security with respect to an insurance policy, on insurance on the life of
Sidney A. Ackerman, dated September 20, 1996;
10. Security with respect to an insurance policy, on insurance on the life of
Alan I. Fine, dated September 20, 1996;
11. Undertaking with respect to life insurance for Alan I. Fine dated October
29, 1996;
12. Priorities Agreement among the Lender, Laurentian Bank of Canada, Ontario
Paint & Wallpaper and the Borrower dated October 29, 1996;
(the Offer of Finance and all of the foregoing documents being hereinafter
collectively referred to as the "Security Documents").
We have also reviewed such constating documents, corporate records, public
documents and certificates of officers of the Borrower and of public officials
as we have considered necessary as the basis for the opinions hereinafter
expressed.
In such examinations we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic (or
similarly reproduced) copies, and the authenticity of all of the originals of
such documents.
In addition, we have considered such questions of law and have examined such
legislation and regulations thereto as we have considered necessary as a basis
for the opinions hereinafter set forth.
We have relied solely on the Corporate Certificate dated September 20, 1996 as
to the matters of fact set out therein.
Based and relying upon and subject to the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that:
1. The Borrower is a corporation duly incorporated and organized under the
laws of the Province of Ontario, and has not been dissolved;
Page 3
2. The Borrower has the power to own and lease its property and to carry on
its business in the Province of Ontario;
3. The Borrower has all necessary power and capacity to borrow money in the
manner and on the terms and conditions set out in the Offer of Finance and
such borrowing of money has been authorized by all necessary action on the
part of the Borrower;
4. The Borrower has all necessary power and capacity to execute and deliver
the Security Documents and to perform and observe its obligations
thereunder;
5. The Security Documents have been duly authorized, executed and delivered
by the Borrower and constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms;
6. The borrowing of money on the terms set out in the Offer of Finance, the
execution and delivery by the Borrower of the Security Documents, and the
performance by the Borrower of its obligations under the Security
Documents will not conflict with or result in a violation of the terms,
conditions and provisions of the constating documents or bylaws of the
Borrower, or of any provision of law, or of any agreement, indenture or
other document to which the Borrower is a party or by which it may be
bound and of which we have knowledge;
7. We have no knowledge of any actions or proceedings, pending or threatened,
before any court or before any governmental or administrative body or
agency, which may result in any material adverse change in the operations,
business, property or assets of the Borrower or in the condition
(financial or otherwise) of the Borrower's ability to perform its
obligations under the Security Documents.
The foregoing opinions as to the enforceability of the obligations of the
Borrower are subject to the following qualifications:
1. Specific performance and injunctions, being equitable remedies, may be
granted only in the discretion of a Court of competent jurisdiction;
2. Enforceability may be limited by bankruptcy, insolvency, liquidation,
moratorium, reorganization, reconstruction and other similar laws
affecting the enforceability of creditors' rights generally;
3. The enforceability of security agreements which are subject to the
Personal Property Security Act (Ontario) (the "PPSA") may be limited or
affected by the terms of the PPSA; and
4. In respect of security agreements which are subject to the PPSA, a filing
under the PPSA
Page 4
in respect of the security interests perfected thereby must be renewed
prior to the expiry date of the initial filing thereunder and such filing
must be amended in certain circumstances specified in the PPSA in order to
preserve the security created by such instruments in respect of property
to which the PPSA applies.
5. We were not requested nor have we been involved in the registration of any
of the security agreements under the PPSA or the Bank Act;
6. We express no opinion as to the title to or ownership of the personal
property charged by the security agreements;
7. We express no opinion as to the priority of the Lender's security
interests in the assets charged pursuant to the security agreements or
whether the security agreements contain provisions that would effectively
subordinate the Lender's interests to that of third parties;
8. To the extent that the security interests created under the security
agreements purport to encumber or assign the rights of the Borrower under
any agreement with any third party or any license, permit or approval, the
security interests created thereunder may be effective only if such third
party provides its consent; and
9. Interest on amounts payable by the Borrower under the security agreements
may be limited to five percent (5%) per annum if the rate of interest
payable on such amounts in the security agreements is determined not to
satisfy the disclosure requirements of Section 4 of the Interest Act
(Canada), which provides that a borrower must be able to determine the
annual rate of interest being charged by a lender;
Yours very truly,
TORKIN, MANES, COHEN & ARBUS
Per:
/s/ Torkin, Manes, Cohen & Arbus
[Letterhead of Torkin, Manes, Cohen & Arbus]
October 29, 1996
National Bank of Canada
350 Burnhamthorpe Road West
Suite 216
Mississauga, Ontario
L5B 3J1
- - and -
Pallett Valo
Barristers and Solicitors
90 Burnhamthorpe Road West
Suite 1600
Mississauga, Ontario
L5B 3C3
Dear Sirs:
Re: National Bank of Canada (the "Lender") Loan to Rosedale Wallcoverings &
Fabrics Inc. (the "Borrower") pursuant to Offer of Finance dated August 8,
1996 (the "Offer of Finance") - Guaranteed by 521305 Ontario Inc. (the
"Guarantor")
- --------------------------------------------------------------------------------
We are the corporate solicitors for the Guarantor and have acted for the
Guarantor in connection with the granting by the Guarantor to the lender of the
security referred to below to secure credit facilities offered by the Lender to
the Borrower pursuant to the Offer of Finance.
In connection with the foregoing, we have reviewed the Offer of Finance and the
following documents, among others:
1. a guarantee of indebtedness of the Borrower, limited to $1,000,000.00 plus
interest and dated September 20, 1996 (the "Guarantee"); and
2. a subordination agreement, dated September 20, 1996;
(the Offer of Finance and the foregoing documents being hereinafter collectively
referred to as
Page 2
the "Security Documents").
We have also reviewed such constating documents, corporate records, public
documents and certificates of officers of the Guarantor and of public officials
as we have considered necessary as the basis for the opinions hereinafter
expressed.
In such examinations we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic (or
similarly reproduced) copies, and the authenticity of all of the originals of
such documents.
In addition, we have considered such questions of law and have examined such
legislation and regulations thereto as we have considered necessary as a basis
for the opinions hereinafter set forth and, in particular, we have considered
the application of section 20 of the Business Corporations Act (Ontario) to the
Guarantee.
We have relied solely on the Corporate Certificate dated September 20, 1996 and
the Solvency Certificate dated September 20, 1996 as to the matters of fact set
out therein.
Based and relying upon and subject to the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that:
1. The Guarantor is a corporation duly incorporated and organized under the
laws of the Province of Ontario and has not been dissolved;
2. The execution, delivery and performance of the Security Documents by the
Guarantor does not contravene section 20(1) of the Business Corporations
Act (Ontario);
3. The Guarantor has all necessary power and capacity to execute and deliver
the Security Documents and to perform and observe its obligations
thereunder;
4. The Security Documents have been duly authorized, executed and delivered
by the Guarantor and now constitute legal, valid and binding obligations
of the Guarantor enforceable against the Guarantor in accordance with
their terms;
5. The execution and delivery of the Security Documents by the Guarantor and
the performance by the Guarantor of its obligations under the Security
Documents will not conflict with or result in a violation of the terms,
conditions and provisions of the constating documents or bylaws of the
Guarantor or of any provision of law, or of any agreement, indenture or
other document to which it is a party or by which it may be bound and of
which we have knowledge; and
6. We have no knowledge of any litigation or proceedings, pending or
threatened, before any
Page 3
court or before any governmental or administrative body or agency, which
may result in any material adverse change in the operations, business,
property or assets of the Guarantor or in the condition (financial or
otherwise) of the Guarantor's ability to perform its obligations under the
Security Documents.
The foregoing opinions as to the enforceability of the obligations of the
Guarantor are subject to the following qualifications:
1. Specific performance and injunctions, being equitable remedies, may be
granted only in the discretion of a Court of competent jurisdiction; and
2. Enforceability may be limited by bankruptcy, insolvency, liquidation,
moratorium, reorganization, reconstruction and other similar laws
affecting the enforceability of creditors' rights generally.
3. The enforceability of security agreements which are subject to the
Personal Property Security Act (Ontario) (the "PPSA") may be limited or
affected by the terms of the PPSA;
4. In respect of security agreements which are subject to the PPSA, a filing
under the PPSA in respect of the security interests perfected thereby must
be renewed prior to the expiry date of the initial filing thereunder and
such filing must be amended in certain circumstances specified in the PPSA
in order to preserve the security created by such instruments in respect
of property to which the PPSA applies;
5. We were not requested nor have we been involved in the registration of any
of the security agreements under the PPSA or the Bank Act;
6. We express no opinion as to the title to or ownership of the personal
property charged by the security agreements;
7. We express no opinion as to the priority of the Lender's security
interests in the assets charged pursuant to the security agreements or
whether the security agreements contain provisions that would effectively
subordinate the Lender's interests to that of third parties;
8. To the extent that the security interests created under the security
agreements purport to encumber or assign the rights of the Borrower under
any agreement with any third party or any license, permit or approval, the
security interests created thereunder may be effective only if such third
party provides its consent; and
Page 4
9. Interest on amounts payable by the Borrower under the security agreements
may be limited to five percent (5%) per annum if the rate of interest
payable on such amounts in the security agreements is determined not to
satisfy the disclosure requirements of Section 4 of the Interest Act
(Canada), which provides that a borrower must be able to determine the
annual rate of interest being charged by a lender;
Yours very truly,
TORKIN, MANES, COHEN & ARBUS
Per:
/s/ Torkin, Manes, Cohen & Arbus
[Letterhead of Torkin, Manes, Cohen & Arbus]
October 29, 1996
National Bank of Canada
350 Burnhamthorpe Road West
Suite 216
Mississauga, Ontario
L5B 3J1
- - and -
Pallett Valo
Barristers and Solicitors
90 Burnhamthorpe Road West
Suite 1600
Mississauga, Ontario
L5B 3C3
Dear Sirs:
Re: National Bank of Canada (the "Lender") Loan to Rosedale Wallcoverings &
Fabrics Inc. (the "Borrower") pursuant to Offer of Finance dated August 8,
1996 (the "Offer of Finance") - Guaranteed by Ontario Paint & Wallpaper
Limited (the "Guarantor")
- --------------------------------------------------------------------------------
We are the corporate solicitors for the Guarantor and have acted for the
Guarantor in connection with the granting by the Guarantor to the lender of the
security referred to below to secure credit facilities offered by the Lender to
the Borrower pursuant to the Offer of Finance.
In connection with the foregoing, we have reviewed, among other documents, the
Offer of Finance and a guarantee given by the Guarantor guaranteeing the
indebtedness of the Borrower, limited to $750,000.00 plus interest and dated
September 20, 1996 (the "Guarantee"). (The Offer of Finance and the Guarantee
are hereinafter collectively referred to as the "Security Documents").
We have also reviewed such constating documents, corporate records, public
documents and certificates of officers of the Guarantor and of public officials
as we have considered necessary as the basis for the opinions hereinafter
expressed.
In such examinations we have assumed the genuineness of all signatures, the
authenticity of all
Page 2
documents submitted to us as originals, the conformity to original documents of
documents submitted to us as certified or photostatic (or similarly reproduced)
copies, and the authenticity of all of the originals of such documents.
In addition, we have considered such questions of law and have examined such
legislation and regulations thereto as we have considered necessary as a basis
for the opinions hereinafter set forth and, in particular, we have considered
the application of section 20 of the Business Corporations Act (Ontario) to the
Guarantee.
We have relied solely on the Corporate Certificate dated September 20, 1996 and
the Solvency Certificate dated September 20, 1996 as to the matters of fact set
out therein.
Based and relying upon and subject to the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that:
1. The Guarantor is a corporation duly incorporated and organized under the
laws of the Province of Ontario and has not been dissolved;
2. The execution, delivery and performance of the Security Documents by the
Guarantor does not contravene section 20(1) of the Business Corporations
Act (Ontario);
3. The Guarantor has all necessary power and capacity to execute and deliver
the Security Documents and to perform and observe its obligations
thereunder;
4. The Security Documents have been duly authorized, executed and delivered
by the Guarantor and now constitute legal, valid and binding obligations
of the Guarantor enforceable against the Guarantor in accordance with
their terms;
5. The execution and delivery of the Security Documents by the Guarantor and
the performance by the Guarantor of its obligations under the Security
Documents will not conflict with or result in a violation of the terms,
conditions and provisions of the constating documents or bylaws of the
Guarantor or of any provision of law, or of any agreement, indenture or
other document to which it is a party or by which it may be bound and of
which we have knowledge; and
6. We have no knowledge of any litigation or proceedings, pending or
threatened, before any court or before any governmental or administrative
body or agency, which may result in any material adverse change in the
operations, business, property or assets of the Guarantor or in the
condition (financial or otherwise) of the Guarantor's ability to perform
its obligations under the Security Documents.
The foregoing opinions as to the enforceability of the obligations of the
Guarantor are subject to the following qualifications:
Page 3
1. Specific performance and injunctions, being equitable remedies, may be
granted only in the discretion of a Court of competent jurisdiction; and
2. Enforceability may be limited by bankruptcy, insolvency, liquidation,
moratorium, reorganization, reconstruction and other similar laws
affecting the enforceability of creditors' rights generally.
Yours very truly,
TORKIN, MANES, COHEN & ARBUS
Per:
/s/ Torkin, Manes, Cohen & Arbus