EXHIBIT 4.9
DEED OF MOVABLE HYPOTHEC
WITHOUT DELIVERY
ON THIS FIRST (1ST) DAY OF DECEMBER IN THE YEAR ONE
THOUSAND NINE HUNDRED AND NINETY-SEVEN (1997);
BEFORE: MTRE. DAVID M. KLINEBERG, the undersigned Notary
for the Province of Quebec, practising in the City of
Montreal;
APPEARED: BRANT-ALLEN INDUSTRIES, INC., a corporation
duly formed under the laws of Delaware,
hereinacting and represented by Thomas R. M. Davis,
its authorized representative, duly authorized in
virtue of a resolution adopted by the unanimous
consent of its Directors dated November 21,
1997, a certified copy of which has been
annexed hereto after having been signed by the
said representative for identification with and
in the presence of the undersigned Notary.
(hereinafter called the "Grantor");
CRESTAR BANK, a Virginia Banking Corporation,
acting in its capacity of trustee and fonde de
pouvoir for the Holders under the Indenture (as
such terms are defined hereinafter),
hereinacting and represented by Dominique
Belisle, its authorized representative, duly
authorized as she so declares.
(hereinafter called the "Trustee");
WHEREAS a trust Indenture dated as of December 1,
1997 was executed among Bear Island Paper Company,
L.L.C., Bear Island Finance Company II (collectively, the
"Issuers"), Bear Island Timberlands Company, L.L.C.,
"Soucy Inc." (as hereinafter defined), the Grantor and
the Trustee, as trustee (such trust indenture, as
amended, supplemented or otherwise modified from time to
time being herein referred to as the "Indenture");
WHEREAS the Notes (as defined in the Indenture) are
secured under the Indenture by hypothec on the Soucy
Collateral (as defined hereinafter);
NOW, THEREFORE, in consideration of the
premises and to induce Issuers (as defined in the
Indenture) to enter into the Indenture and to enhance the
creditworthiness of the Notes, the Grantor hereby agrees
with the Trustee, for the benefit of the holders of the
Notes (the "Holders"), as follows:
1. Defined Terms. (a) Capitalized terms not
defined herein shall be as defined in the Indenture.
(b) The following terms shall have the following
meanings:
"Bank Credit Agreement": the collective reference
to the Paper Company Credit Agreement and the Timberlands
Credit Agreement.
"Bank Pledge Agreement": the Pledge Agreement
between the Grantor and the Toronto-Dominion (Texas),
Inc. as Timberlands Agent and as Paper Company Agent
governed by the laws of New York which, together with
the Bank Hypothec, is referred to as the Soucy Pledge
Agreement in the Bank Credit Agreement.
"Bank Hypothec": the Deed of Hypothec between the
Grantor and the Toronto-Dominion (Texas), Inc. as
Timberlands Agent and as Paper Company Agent governed by
the laws of Quebec which, together with the Bank Pledge
Agreement, is referred to as the Soucy Pledge Agreement
in the Bank Credit Agreement.
"Code": the Civil Code of Quebec.
"Collateral Documents": the Timberlands Pledge
Agreement, the Company Pledge and Security Agreement, the
Note Pledge Agreement and this Deed.
"Deed": this Deed of Movable Hypothec Without
Delivery, as the same may be amended, modified or
otherwise supplemented from time to time, which Deed is
referred to as the Hypothec Agreement in the Indenture.
"Governmental Authority": as defined in the Paper
Company Credit Agreement.
"Hypothecated Stock": the 271,479 common shares of
Capital Stock issued by Soucy Inc. represented by share
certificate C-5, together with all stock certificates,
options or rights of any nature whatsoever that may be
issued or granted by the Soucy Inc. to the Grantor while
this Deed is in effect.
"Intercreditor Agreement": the intercreditor
agreement, dated as of December 1, 1997, among the
Trustee, the Issuers, Toronto-Dominion (Texas), Inc. as
agent for the Timberlands Agent, for the benefit of the
Timberlands Lenders, and the Paper Company Agent, for the
benefit of the Paper Company Lenders (the "Agent"), as it
may be amended, supplemented or otherwise modified from
time to time.
"Soucy Inc.": F.F. Soucy, Inc., being the company
which is the issuer of the Hypothecated Stock.
"Lenders": the collective reference to the Paper
Company Lenders and the Timberlands Lenders.
"Lien": as defined in the Indenture.
"Note Pledge Agreement": the Pledge Agreement
between the Grantor and the Trustee governed by the laws
of New York and referred to as the Soucy Pledge Agreement
in the Indenture.
"Paper Company": as defined in the definition of
Paper Company Credit Agreement.
"Paper Company Agent": as defined in the definition
of Paper Company Credit Agreement.
"Paper Company Credit Agreement": the Credit
Agreement, dated as of December 1, 1997 (as amended,
supplemented or otherwise modified from time to time)
among Bear Island Paper Company, LLC (the "Paper
Company"), Toronto-Dominion (Texas), Inc., as
administrative agent and fonde de pouvoir (in such
capacity, the "Paper Company Agent"), the arranger party
thereto and the Lenders parties thereto (the "Paper
Company Lenders").
"Paper Company Lenders": as defined in the
definition of the Paper Company Credit Agreement.
"Proceeds": all proceeds, fruits and revenues from
the Hypothecated Shares and, in any event, shall include,
without limitation, all dividends or other income from
the Hypothecated Stock, collections thereon or
distributions with respect thereto and whatever is
received upon the sale, exchange, collection or other
disposition of collateral or proceeds.
"Requirement of Law": as defined in the Bank Credit
Agreement.
"Secured Obligations": the collective reference to
(a) the obligations of the Issuers under the Indenture
and (b) all obligations and liabilities of the Grantor
that may arise under or in connection with this Deed, or
any other Collateral Document to which the Grantor is a
party, whether on account of fees, indemnities, costs,
expenses or otherwise that are required to be paid by the
Grantor pursuant to the terms thereof (including, without
limitation, all reasonable fees and disbursements of
counsel to the Trustee or to the Issuers that are
required to be paid the Grantor pursuant to the terms of
this Deed or any other Collateral Document to which the
Grantor is a party).
"Securities Act": the Securities Act of the
Province of Quebec, as amended, together with the
securities laws of any other jurisdiction in which the
Hypothecated Stock may be sold.
"Soucy Collateral": the Hypothecated Stock and all
Proceeds.
"Soucy Collateral Account": any account established
to hold cash Proceeds, maintained under the sole dominion
and control of the Trustee, subject to withdrawal by the
Trustee for the account of the Holders only as provided
in paragraph 8(a).
"Timberlands Agent": as defined in the definition
of the Timberlands Credit Agreement.
"Timberlands Credit Agreement": the Credit
Agreement, dated as of December 1, 1997 (as amended,
supplemented or otherwise modified from time to time)
among the Grantor, Toronto-Dominion (Texas), Inc., as
administrative agent and fonde de pouvoir (in such
capacity, the "Timberlands Agent") and the Lenders
parties thereto (the "Timberlands Lenders").
"Timberlands Lenders": as defined in the definition
of the Timberlands Credit Agreement.
(c) The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Deed shall
refer to this Deed as a whole and not to any particular
provision of this Deed, and section and paragraph
references are to this Deed unless otherwise specified.
(d) The meanings given to terms defined herein
shall be equally applicable to both the singular and
plural forms of such terms.
2. Grant of Hypothec. The Grantor hereby grants to
the Trustee, as fonde de pouvoir and as Trustee under the
Indenture, a hypothec and security interest in the amount
of TWO HUNDRED AND TWENTY FIVE MILLION CANADIAN DOLLARS
(CDN$ 225,000,000) bearing interest from the date hereof
at the rate of twenty-five percent per annum (25%) on the
Soucy Collateral, as collateral security for the prompt
and complete payment and performance when due (whether at
the stated maturity, by acceleration or otherwise) of the
Secured Obligations (for the benefit of the Holders).
Any future obligation secured hereby shall be deemed
to be one in respect of which the Grantor has once again
obligated itself in accordance with article 2797 of the
Code.
3. Appointment of Trustee as Fonde de Pouvoir. The
Grantor hereby acknowledges and agrees and accepts the
appointment of the Trustee and further irrevocably
appoints the Trustee, hereto accepting, to act as fonde
de pouvoir on behalf of the Holders in order to receive
and hold any right, hypothec and security interest
created hereby and hereafter created and constituted as
continuing security for the performance of the Secured
Obligations.
4. Representations and Warranties. The Grantor
represents and warrants that:
(a) The Grantor has the corporate power and
authority and the legal right to execute and deliver, to
perform its obligations under, and to grant the hypothecs
in the Soucy Collateral pursuant to, this Deed and has
taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the
hypothecs in the Soucy Collateral pursuant to, this Deed.
(b) This Deed constitutes a legal, valid and
binding obligation of the Grantor, enforceable in
accordance with its terms and the hypothecs created
pursuant to this Deed will constitute valid, perfected
hypothecs in the Soucy Collateral in favor of the Trustee
as fonde de pouvoir, enforceable in accordance with its
terms against all creditors of the Grantor and any
Persons purporting to purchase any Soucy Collateral from
the Grantor, except as against the hypothecs and security
interests created pursuant to the Bank Pledge Agreement
and the Bank Hypothec, and as enforceability may be
affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights
generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(c) The shares of Hypothecated Stock constitute 65%
of all the issued and outstanding shares of all classes
of the capital stock of Soucy Inc.
(d) All the shares of the Hypothecated Stock have
been duly and validly issued and are fully paid and
nonassessable.
(e) The Grantor is the record and beneficial owner
of, and has title to, the Hypothecated Stock, free of any
and all Liens or options in favor of, or claims of, any
other Person, except the hypothecs created by this Deed
and the pledge and security interest granted in the Note
Pledge Agreement and Liens pursuant to the Bank Pledge
Agreement and the Bank Hypothec (collectively, the
"Permitted Liens").
(f) There is no shareholders agreement in
connection with the Hypothecated Stock and there is no
restriction in the constitution documents or articles of
association of Soucy Inc. regarding the assignment or
transfer the Hypothecated Stock other than the
restrictions pertaining to a closed company pursuant to
the Securities Act (Quebec).
(g) The head office of Soucy Inc. is located in the
Province of Quebec.
The Trustee represents and warrants that it has the
corporate power and authority to execute and perform its
rights and obligations hereunder, including to act as
Trustee and fonde de pouvoir for all purposes under this
Deed.
5. Covenants. The Grantor covenants and agrees
with the Trustee that, from and after the date of this
Deed until this Deed is terminated and the hypothecs
created hereby are released in accordance with the terms
hereof:
(a) If the Grantor shall, as a result of its
ownership of the Hypothecated Stock, become entitled to
receive or shall receive any stock certificate
(including, without limitation, any certificate
representing a stock dividend or a distribution in
connection with any reclassification, increase or
reduction of capital or any certificate issued in
connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a
conversion of, or in exchange for any shares of the
Hypothecated Stock, or otherwise in respect thereof, the
Grantor shall accept the same as the agent of the
Trustee, hold the same in trust for the Trustee and
deliver the same forthwith to the Trustee in the exact
form received, duly endorsed by the Grantor to the
Trustee in blank, if required, together with an undated
stock power covering such certificate duly executed in
blank by the Grantor and with, if the Trustee so
requests, signature guaranteed, to be held by the
Trustee, subject to the terms hereof, the Intercreditor
Agreement, the Bank Pledge Agreement, the Note Pledge
Agreement and the Bank Hypothec as additional collateral
security for the Secured Obligations. Any sums paid upon
or in respect of the Hypothecated Stock upon the
liquidation or dissolution of Soucy Inc. shall be paid
over to the Trustee to be held by it hereunder as
additional collateral security for the Secured
Obligations, and in case any distribution of capital
shall be made on or in respect of the Hypothecated Stock
or any property shall be distributed upon or with respect
to the Hypothecated Stock, in each case pursuant to the
recapitalization or reclassification of the capital of
Soucy Inc. or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Trustee
to be held by it hereunder as additional collateral
security for the Secured Obligations. If any sums of
money or property so paid or distributed in respect of
the Hypothecated Stock (other than distributions
permitted to be made or received pursuant to the Bank
Credit Agreement or the Indenture) shall be received by
the Grantor, the Grantor shall, until such money or
property is paid or delivered to the Trustee, hold such
money or property as agent for the Trustee, segregated
from other funds of the Grantor, as additional collateral
security for the Secured Obligations.
(b) Except as permitted by either of the Bank
Credit Agreements, so long as such Bank Credit Agreement
is in effect, or the Indenture, without the prior written
consent of the Trustee, the Grantor will not (1) vote to
enable, or take any other action to permit, Soucy Inc. to
issue any stock or other equity securities of any nature
or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock
or other equity securities of any nature of Soucy Inc.
except issuances of equity interests to the Grantor which
constitute Soucy Collateral hereunder or under the Note
Pledge Agreement, the Bank Pledge Agreement or the Bank
Hypothec, (2) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect
to, the Soucy Collateral or any other shares of Capital
Stock of Soucy Inc. owned by the Grantor, (3) create,
incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the
Soucy Collateral or any other shares of Capital Stock of
the Soucy Inc. owned by the Grantor, or any interest
therein, except for the hypothecs created by this Deed
and the Permitted Liens or (4) enter into any agreement
or undertaking restricting the right or ability of the
Grantor or the Trustee (after exercise of its hypothecary
recourses) to sell, assign or transfer any of the Soucy
Collateral other than such restrictions under the Bank
Credit Agreement, the Bank Pledge Agreement, the Bank
Hypothec, the Note Pledge Agreement and the Indenture.
(c) The Grantor shall maintain the hypothecs
created by this Deed as perfected hypothecs and shall
defend such hypothecs against claims and demands of all
Persons whomsoever except for Permitted Liens. At any
time and from time to time, upon the written request of
the Trustee, and at the sole expense of the Grantor, the
Grantor will promptly and duly execute and deliver such
further instruments and documents and take such further
actions as the Trustee may reasonably request for the
purposes of obtaining or preserving the full benefits of
this Deed and of the rights and powers herein granted.
If any amount payable under or in connection with any of
the Soucy Collateral (to the extent such amounts are
otherwise required by this Deed to be paid to the
Trustee) shall be or become evidenced by any promissory
note, other instrument or chattel paper, such note,
instrument or chattel paper in excess of US$ 500,000
shall form part of the Proceeds forming part of the Soucy
Collateral hypothecated pursuant to this Deed.
(d) The Grantor shall pay, and save the Trustee
harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp,
excise, sales or other similar taxes which may be payable
or determined to be payable with respect to any of the
Soucy Collateral or in connection with any of the
transactions contemplated by this Deed, other than taxes
covered by Section 2.18 of the Paper Company Credit
Agreement or Section 2.15 of the Timberlands Credit
Agreement.
(e) The Grantor shall inform the Trustee promptly
of any change in its name.
6. Voting Rights. No vote shall be cast or
corporate right exercised or other action taken which, in
the Trustee's reasonable judgment, would impair in any
material respect the Soucy Collateral or which would be
inconsistent with or result in any violation of any
provision of this Deed, the Indenture or any other
Collateral Document.
7. Rights of the Trustee. (a) All money Proceeds
received by the Trustee hereunder shall be held by the
Trustee in a Soucy Collateral Account. All Proceeds
while held by the Trustee in a Soucy Collateral Account
(or by the Grantor as agent for the Trustee) shall
continue to be held as collateral security for all the
Secured Obligations and shall not constitute payment
thereof until applied as provided in paragraph 8(a).
(b) If an Event of Default shall occur and be
continuing and the Trustee shall give notice of its
intent to exercise such rights to the Grantor, to the
extent permitted by the Intercreditor Agreement and by
applicable law, (1) the Trustee shall have the right to
receive any and all cash dividends paid in respect of the
Hypothecated Stock and make application thereof to the
Secured Obligations in such order as the Trustee may
determine, and (2) all shares of the Hypothecated Stock
shall be registered in the name of the Trustee or its
nominee, and the Trustee or its nominee may thereafter
exercise (A) all voting, corporate and other rights
pertaining to such shares of the Hypothecated Stock at
any meeting of shareholders of Soucy Inc. or otherwise
and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options
pertaining to such shares of the Hypothecated Stock as if
it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any
and all of the Hypothecated Stock upon the merger,
consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of Soucy
Inc., or upon the exercise by the Grantor or the Trustee
of any right, privilege or option pertaining to such
shares of the Hypothecated Stock, and in connection
therewith, the right to deposit and deliver any and all
of the Hypothecated Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon
such terms and conditions as the Trustee may determine),
all without liability except to account for property
actually received by it, but the Trustee shall have no
duty to the Grantor to exercise any such right, privilege
or option and shall not be responsible for any failure to
do so or delay in so doing.
8. Remedies. (a) If an Event of Default shall
have occurred and be continuing, at any time at the
Trustee's election, the Trustee may, to the extent
permitted by applicable law, apply all or any part of
Proceeds held in any Soucy Collateral Account in payment
of the Secured Obligations ratably in accordance with the
Intercreditor Agreement and as permitted by law.
(b) If an Event of Default shall occur and be
continuing, the Trustee may exercise, in addition to all
other rights and remedies granted in this Deed and in any
other instrument or agreement securing, evidencing or
relating to the Secured Obligations, and as permitted in
the Intercreditor Agreement, all rights and remedies of a
hypothecary creditor under the Code. Without limiting
the generality of the foregoing, the Trustee, to the
extent permitted by applicable law and the Intercreditor
Agreememt, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to
or upon the Grantor or any other Person (all and each of
which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Soucy
Collateral, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Soucy Collateral or
any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private
sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Trustee or
elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without
assumption of any credit risk. The Trustee and any
Holder shall have the right upon any such public sale or
sales, and, to the extent permitted by law and the
Intercreditor Agreement, upon any such private sale or
sales, to purchase the whole or any part of the Soucy
Collateral so sold, free of any right or equity of
redemption in the Grantor, which right or equity is
waived or released upon the consummation of such sale.
The Trustee shall apply any Proceeds from time to time
held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of
every kind incurred in respect thereof or incidental to
the care or safekeeping of any of the Soucy Collateral or
in any way relating to the Soucy Collateral or the rights
of the Trustee hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel
to the Trustee, to the payment in whole or in part of the
Secured Obligations ratably in accordance with the
Intercreditor Agreement and as permitted by law, and only
after such application and after the payment by the
Trustee of any other amount required by any provision of
law need the Trustee account for the surplus, if any, to
the Grantor. To the extent permitted by applicable law,
the Grantor waives all claims, damages and demands it may
acquire against the Trustee arising out of the exercise
by it of any rights hereunder except to the extent
arising out of gross negligence or willful misconduct of
the Trustee. If any notice of a proposed sale or other
disposition of Soucy Collateral shall be required by law,
such notice shall, to the extent permitted by applicable
law, be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
(c) Without limiting the foregoing provisions of
this Section 8, insofar as Quebec law is concerned, if an
Event of Default shall occur and be continuing, the
Grantor and the Trustee, on behalf of the Holders, agrees
that the following provisions shall apply to the
hypothecary rights of the Trustee, whichever hypothecary
rights the Trustee may decide to exercise, as permitted
by the Intercreditor Agreement:
(1) the Trustee may directly or indirectly purchase
or otherwise acquire the Hypothecated Stock at any public
or private sale of the Hypothecated Stock;
(2) if the Grantor exercises its right to remedy
the Event of Default mentioned in the prior notice of
default, the Grantor shall, as the law requires it, pay
all fees incurred by the Trustee by reason of the
default; those fees shall include without limitation the
administrative fees of the Trustee, the legal fees of its
legal advisers and fees paid to experts; and
(3) the Grantor shall be deemed to have surrendered
the Soucy Collateral held by the Trustee or on its behalf
if the Trustee has not, within the delay imposed by law
or by a tribunal to surrender the Soucy Collateral,
received written notice from the Grantor to the effect
that the Grantor is opposed to the exercise of the
hypothecary right set forth in the prior notice.
9. Registration Rights; Private Sales. (a) If the
Trustee shall determine to exercise its right to sell any
or all of the Hypothecated Stock pursuant to paragraph
8(b) hereof, and if in the reasonable opinion of the
Trustee it is necessary or advisable to have the
Hypothecated Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act,
the Grantor will cause Soucy Inc. thereof to (1) execute
and deliver, and cause the directors and officers of
Soucy Inc. to execute and deliver, all such instruments
and documents, and do or cause to be done all such other
acts as may be, in the reasonable opinion of the Trustee,
necessary or advisable to register the Hypothecated
Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (2) to use its
reasonable efforts to cause the registration statement
relating thereto to become effective and to remain
effective for a period of one year from the date of the
first public offering of the Hypothecated Stock, or that
portion thereof to be sold, and (3) to make all
amendments thereto and/or to the related prospectus
which, in the reasonable opinion of the Trustee, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the Quebec Securities Commission
applicable thereto. The Grantor agrees to cause Soucy
Inc. to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions of the
United States or Canada which the Trustee shall designate
and to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the
provisions of the Securities Act.
(b) The Grantor recognizes that the Trustee may be
unable to effect a public sale of any or all the
Hypothecated Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for
their own account for investment and not with a view to
the distribution or resale thereof. The Grantor
acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable
manner. The Trustee shall be under no obligation to
delay a sale of any of the Hypothecated Stock for the
period of time necessary to permit Soucy Inc. to register
such securities for public sale under the Securities Act,
or under applicable provincial or state securities laws
of the United States or Canada, even if Soucy Inc. would
agree to do so.
(c) The Grantor further agrees to use its
reasonable efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales
of all or any portion of the Hypothecated Stock pursuant
to this Section valid and binding and in compliance with
any and all other applicable Requirements of Law. The
Grantor further agrees that a breach of any of the
covenants contained in this Section will cause
irreparable injury to the Trustee and the Holders, that
the Trustee and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall
be specifically enforceable against the Grantor, and the
Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of
such covenants except for a defense that no Event of
Default has occurred under the Indenture.
10. Irrevocable Authorization and Instruction to
Soucy Inc.. The Grantor hereby authorizes and instructs
Soucy Inc. to comply with any instruction received by it
from the Trustee in writing that (a) states that an Event
of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Deed,
without any other or further instructions from the
Grantor, and the Grantor agrees that Soucy Inc. shall be
fully protected in so complying.
11. Trustee's Appointment as Attorney-in-Fact. (a)
The Grantor hereby irrevocably constitutes and appoints
the Trustee and any officer or agent of the Trustee, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and
authority in the place and stead of the Grantor and in
the name of the Grantor or in the Trustee's own name,
from time to time in the Trustee's discretion, for the
purpose of carrying out the terms of this Deed, to take
any and all appropriate action and to execute any and all
documents and instruments which may be necessary or
desirable to accomplish the purposes of this Deed,
including, without limitation, any registration,
financing statements, endorsements, assignments or other
instruments of transfer, which power of attorney is only
exercisable if an Event of Default shall have occurred
and be continuing.
(b) The Grantor hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant
to the power of attorney granted in paragraph 11(a). All
powers, authorizations and agencies contained in this
Deed and are irrevocable until this Deed is terminated
and the hypothecs created hereby are released in
accordance with the terms hereof.
12. Duty of Trustee. Neither the Trustee nor any
of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any
of the Soucy Collateral or for any delay in doing so
(unless the same shall result from the gross negligence
or willful misconduct of such Person) or shall be under
any obligation to sell or otherwise dispose of any Soucy
Collateral upon the request of the Grantor or any other
Person or to take any other action whatsoever with regard
to the Soucy Collateral or any part thereof.
13. Other Security The hypothecs created and the
rights conferred hereby are in addition to and not in
substitution of the rights and the pledges and security
interest constituted by the Note Pledge Agreement.
14. Authority of Trustee. The Grantor acknowledges
that the rights and responsibilities of the Trustee under
this Deed with respect to any action taken by the Trustee
or the exercise or non-exercise by the Trustee of any
option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of
this Deed shall, as between the Trustee and the Holders
be governed by the Indenture and the Intercreditor
Agreement, but, as between the Trustee and the Grantor,
the Trustee shall be conclusively presumed to be acting
as Trustee and fonde de pouvoir for the Holders pursuant
to the Indenture with full and valid authority so to act
or refrain from acting, and neither the Grantor nor Soucy
Inc. shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.
15. Notices. All notices, requests and demands to
or upon the Trustee, the Grantor or the Intervenor to be
effective shall be in writing (including by telecopy)
and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered
three Business Days after being deposited in the mails,
postage prepaid, or in the case of telecopy notice, when
received, addressed as follows:
(1) if to the Trustee, at its address or
transmission number for notices provided below:
Crestar Bank
919 Main Street, 10th Floor
Richmond, VA 23219
Attention: Corporate Trust Department
Phone: (804) 782-5726
Telecopy: (804) 782-7855
(2) if to the Grantor, at its address or
transmission number for notices provided below:
Post Office Box 3443
80 Field Point Road
Greenwich, Connecticut 06830
Phone: 203-661-3344
Fax: 203-661-3349
(3) if to the Intervenor, at its address or
transmission number for notices provided below:
F.F. Soucy, Inc.
191 Delage Street
Riviere-du-Loup, Quebec G5R 3Z1
Attention: Edward Sherrick
Phone: (418) 862-6941
Telecopy: (418) 862-1134
The Trustee, the Grantor and the Intervenor (as
hereinafter defined) may change their addresses and
transmission numbers for notices by notice in the manner
provided in this Section.
16. Severability. Any provision of this Deed which
is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any
other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative
Remedies. (a) None of the terms or provisions of this
Deed may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the
Grantor and the Trustee, provided that any provision of
this Deed may be waived by the Trustee in a letter or
agreement executed by the Trustee or by telex or
facsimile transmission from the Trustee.
(b) The Trustee shall not, by any act (except by a
written instrument pursuant to paragraph 18(a) hereof),
delay, indulgence, omission or otherwise, be deemed to
have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the
part of the Trustee, any right, power or privilege
hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. A waiver by the Trustee of any right or
remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the
Trustee would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and
are not exclusive of any other rights or remedies
provided by law.
18. Bank Pledge Agreement. The lien and all terms
and provisions of this Agreement are subordinate and
subject to the lien and all terms and provisions of the
Bank Pledge Agreement and the Bank Hypothec. Subject to
the provisions of the Intercreditor Agreement, to the
extent the Grantor's performance of any obligation under
this Deed would result in a default or breach by the
Grantor under the Bank Pledge Agreement or the Bank
Hypothec, then the Grantor shall have no duty to perform
such obligations under this Deed to the extent that such
performance would constitute a default or breach under
the Bank Pledge Agreement or the Bank Hypothec.
Notwithstanding any other provisions of this Deed, the
Trustee will not accept possession of any Soucy
Collateral, or take any action with respect to Soucy
Collateral (including, without limitation, the exercise
of any remedies) except in accordance with and as
permitted by the Intercreditor Agreement.
19. Release of Deed of Movable Hypothec Without
Delivery. The Grantor shall be automatically released
from its obligations under this Deed and this Deed shall
automatically terminate on the earlier of (a) the date on
which all the Secured Obligations are paid in full and
all the Commitments thereunder are terminated, (b) the
date on which the Notes are rated Investment Grade and
(c) the date on which the Total Committed Debt is not
greater than US$ 145,000,000; and at the time of such
release the Trustee shall deliver the Soucy Collateral to
the Grantor, and will execute and deliver such other
documents and instruments evidencing such termination and
release.
20. Limitation on Recourse. Anything herein to the
contrary notwithstanding, the Trustee shall have recourse
hereunder only against the Collateral in respect of the
Secured Obligations and not against the Grantor
personally or against the assets of the Grantor other
than the Collateral.
21. Controlling Agreement. In the case of any
conflict, inconsistency or ambiguity between the terms of
(i) the Indenture and this Deed, the Indenture shall
control and (ii) the Bank Hypothec and this Deed, the
Bank Hypothec shall control.
22. Section Headings. The section headings used in
this Deed are for convenience of reference only and are
not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
23. Successors and Assigns. This Deed shall be
binding upon the successors and assigns of the Grantor
and shall inure to the benefit of the Trustee and its
permitted successors and assigns.
24. Governing Law. This Deed shall be governed by,
and construed and interpreted in accordance with, the law
of the Province of Quebec.
25. Notwithstanding any other provision of this
Deed, at no time shall the Grantor be required to
hypothecate more than 65% of all of the voting stock of
all classes of the capital stock of Soucy Inc.
26. Intervention. Hereto intervenes:
F.F. SOUCY, INC., a corporation duly formed
under the laws of Quebec, having its head
office in the Province of Quebec, hereinacting
and represented by Thomas R. M. Davis, its
authorized representative, duly authorized in
virtue of a resolution adopted by the unanimous
consent of its Directors dated November 21,
1997, a certified copy of which has been
annexed hereto after having been signed by the
said representative for identification with and
in the presence of the undersigned Notary.
(the "Intervenor")
Which Intervenor hereby acknowledges having taken
cognizance of the present Deed of Movable Hypothec
Without Delivery and agrees for the benefit of the
Trustee and the Holders as follows:
(a) The Intervenor will be bound by the terms of
this Deed and will comply with such terms insofar as
such terms are applicable to it.
(b) The Intervenor will notify the Trustee promptly
in writing of the occurrence of any of the events
described in paragraph 5(a) of this Deed.
(c) The terms of paragraph 9(c) of this Deed shall
apply to it, mutatis mutandis, with respect to all
actions that may be required of it under or pursuant to
or arising out of Section 9 of this Deed.
27. Language. The parties and the Intervenor
acknowledge having requested that this Deed be drafted in
English. Les parties et l'intervenante reconnaissent
avoir demande que le present acte soit redige en anglais.
WHEREOF ACTE:
THUS DONE AND PASSED at the City of Montreal, Province of
Quebec, and of record in the office of the undersigned
notary under the number thirteen thousand one hundred and
seventy-nine.
And after due reading hereof, the parties and the
Intervenor have signed with and in the presence of the
said notary.
BRANT-ALLEN INDUSTRIES, INC.
Per: /s/ Thomas R. M. Davis
______________________________
CRESTAR BANK
Per: /s/ Dominique Belisle
______________________________
Dominique Belisle
F.F. SOUCY, INC.
Per: /s/ Thomas R. M. Davis
_____________________________
/s/ David M. Klineberg
_____________________________
David M. Klineberg, Notary