EXHIBIT 5
DEED OF HYPOTHEC TO SECURE
PAYMENT OF DEBENTURES
BEFORE Charlotte Pinsonnault, the undersigned Notary for the Province of Quebec,
practising in Montreal,
APPEARED:
EMS TECHNOLOGIES CANADA, LTD., a corporation duly incorporated under the laws of
Canada, having its registered office, chief executive office and domicile at
1725 Woodward Avenue, Ottawa, Ontario, K2C 0P9 herein acting and represented by
Francois Bastien, hereunto duly authorized by a resolution of its board of
directors, a certified copy of which resolution has been appended hereto after
having been acknowledged true and signed for identification by the said
representatives with and in the presence of the undersigned Notary,
(hereinafter called the "Grantor")
AND:
BANK OF AMERICA, NATIONAL ASSOCIATION (CANADA BRANCH), an authorized foreign
bank under the Bank Act (Canada), herein acting as fonde de pouvoir pursuant to
Article 2692 of the Civil Code of Quebec, having its principal place of business
at Atlanta Plaza Building, 600 Peachtree Street NE, 13th Floor, Atlanta,
Georgia, USA, and whose establishment directly concerned for the purposes hereof
is located at 200 Front Street West, Suite 2700, Toronto, Ontario, herein
represented by Mary Jeanne Phelan, and duly authorized for the purposes hereof
as she so declares, notice of its address having been registered at the Register
of Personal and Movable Real Rights under the number 02224,
(hereinafter called the "Trustee")
WHICH PARTIES DECLARE AS FOLLOWS:
WHEREAS the Grantor is authorized by law to issue debentures and to
sell them and to give them as security;
WHEREAS the Grantor is desirous of issuing debentures and securing
the payment thereof in the manner hereinafter provided.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
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ARTICLE 1
INTERPRETATION
In this Deed, unless the context indicates otherwise:
"Credit Agreement" means that certain Canadian revolving credit agreement
entered into on December 10, 2004 among the Grantor, as Borrower, EMS
Technologies, Inc., Bank of America, National Association (Canada branch), as
Canadian Administrative Agent and Funding Agent and the Lenders referred to
therein, the whole as amended, supplemented, restated, renewed or otherwise
modified from time to time;
1.1 "Debentureholder" or "Holder" means a person entered as a holder of
Debentures in the register maintained for that purpose by the Trustee;
1.2 "Debentureholders' Instrument" means any document signed by the Holders of
at least sixty-six and two-thirds per cent (66 2/3%) of the value of the
outstanding Debentures;
1.3 "Debentures" means the debentures which have been or may be issued
hereunder;
1.4 "Event of Default" means any of the events of default specified in Section
6.1;
1.5 "Mortgaged Property" means all property and rights subjected to or intended
to be subjected to the security constituted under this Deed.
ARTICLE 2
ISSUE OF DEBENTURES
2.1 The Debentures which may be outstanding under this Deed are limited to a
principal amount of Fifty million Canadian dollars (CDN $50,000,000) and may be
issued as the directors of the Grantor may determine.
2.2 The Debentures shall be substantially in the form set out in Schedule I of
this Deed.
2.3 The Debentures shall bear the date of their issue and shall be payable at
the place indicated therein or at any other place subsequently designated to the
Trustee and the Grantor in a Debentureholders' Instrument. The Debentures shall
bear interest from the date of their issuance, both before and after maturity,
at the rate of TWENTY per cent (20%) per annum. The principal and interest of
the Debentures shall be
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payable on demand, with interest on overdue interest at the aforementioned rate.
2.4 The Debentures may be signed by any officer or director of the Grantor and
shall be certified and delivered by the Trustee to the Grantor or to any other
person designated by written instruction to the Trustee signed by any officer or
director of the Grantor.
2.5 The certification of the Debentures by the Trustee shall constitute
conclusive evidence that the Debentures have been issued hereunder but shall not
be construed as a representation or warranty by the Trustee as to the validity
of this Deed, the security constituted hereby or the Debentures, and the Trustee
shall in no way be liable for the use made of the Debentures or the proceeds
thereof. So long as Debentures are outstanding, the Grantor shall not issue and
the Trustee shall not certify additional Debentures without a Debentureholders'
Instrument authorizing same.
2.6 If a Debentureholder returns a Debenture to the Trustee or the Grantor for
cancellation, such Debenture shall be considered as not issued and, subject to
the provisions hereof, the Grantor may reissue same or issue other Debentures in
place of the Debentures so returned for cancellation.
2.7 The Debentures may be hypothecated, pledged or assigned by the Grantor as
security for any indebtedness or any other obligations, direct or indirect,
present or future, of the Grantor or any other person, or may be sold or
otherwise alienated. In the event of such hypothec, pledge or assignment, the
extinction of the underlying indebtedness or obligation shall not constitute
payment of the Debentures.
2.8 All Debentures shall benefit equally and rateably from the security
constituted hereunder.
2.9 The Grantor shall cause to be kept by the Trustee at its office located at
the address indicated on the first page of this Deed (or at such other address
as the Trustee may indicate in a notice to the Grantor and the Debentureholders)
a register in which shall be entered the name and address of each of the
Debentureholders. No transfer of Debentures shall be valid unless made on such
register and upon compliance with such reasonable requirements as the Trustee
may prescribe. The registered holder of a Debenture shall be deemed to be the
owner thereof for all purposes of this Deed.
2.10 Upon request from a Debentureholder and subject to such reasonable
requirements as the Trustee may prescribe, the Grantor shall issue and the
Trustee shall certify and deliver a new Debenture certificate in
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place of a Debenture certificate requiring replacement by reason of such
certificate having been lost, mutilated or destroyed or for any other reason.
ARTICLE 3
CHARGING PROVISIONS
3.1 For purposes of securing the payment of the Debentures in principal and
interest as well as the payment of all other sums, if any, due hereunder to the
Debentureholders or to the Trustee, the Grantor hereby hypothecates and charges
in favour of the Trustee for the benefit of the Debentureholders the
universality of all of the movable property of the Grantor, tangible and
intangible, present and future, of whatever nature and wherever situated. All of
the property subjected to or intended to be subjected to the foregoing hypothec
is hereafter referred to as the "Mortgaged Property".
3.2 The hypothec constituted by the Grantor under Section 3.1 is granted for the
sum of Fifty million Canadian dollars (CDN $50,000,000), with interest at the
rate of twenty per cent (20%) per annum from the date hereof.
3.3 Without limiting the generality of Section 3.1, in order to comply with the
requirements of any applicable law relating to the description of the Mortgaged
Property, the Grantor acknowledges that the Mortgaged Property includes
inventory, equipment, accounts receivable, deposit account and other debts,
negotiable and similar instruments, securities and any investment property,
documents of title, money, intellectual property, rights under contracts of any
nature whatsoever, any other intangible property and any other assets of the
Borrower as well as any proceeds of any of the foregoing;
3.4 The Grantor represents to the Trustee that all tangible property currently
forming part of the Mortgaged Property is located in the provinces of Quebec and
Ontario.
3.5 All proceeds received by the Trustee upon the sale, lease, other alienation
or expropriation of any Mortgaged Property and all insurance proceeds with
respect to the Mortgaged Property shall be held by it and used in accordance
with instructions contained in a Debentureholders' Instrument. The receipt and
use by the Trustee of such proceeds shall not constitute payment of the
Debentures or a reduction of the security constituted by this Deed,
notwithstanding any law, usage or custom to the contrary.
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ARTICLE 4
COVENANTS
4.1 The Grantor shall pay to the Trustee all reasonable costs and expenses
incurred by the Trustee in the performance of its duties and in the enforcement
of the security constituted hereunder (including principal and interest on
borrowings or sums advanced for such purposes by the Trustee), as well as all of
the Trustee's fees.
4.2 The Grantor shall notify the Trustee without delay of:
4.2.1 any change of its name or in the location of its head or chief
executive office;
4.2.2 the details of any change in the information contained in Section
3.4.
4.3 Except as otherwise permitted by a Debentureholders' Instrument, the Grantor
shall deliver to the Trustee all certificates evidencing all shares held by the
Grantor in any subsidiary of the Grantor.
4.4 Except as otherwise permitted by a Debentureholders' Instrument, the Grantor
shall do all things and execute all documents necessary for the security
constituted hereunder to have full effect and be constantly perfected and
enforceable in all jurisdictions where the Mortgaged Property may be located.
4.5 The Grantor shall reimburse the Trustee for all reasonable costs and
expenses referred to in Section 4.1 hereof, with interest at the prime rate in
effect from time to time increased by three percentage points (3%). For the
purposes hereof, the prime rate shall be the annual rate announced as such by
Bank of America, National Association (Canada branch) and being its reference
rate to determine interest rates on commercial loans made by it in Canadian
dollars in Canada.
ARTICLE 5
POWERS OF THE TRUSTEE
5.1 The Trustee may, without being bound to do so, fulfil any or all of the
obligations of the Grantor hereunder if the Grantor fails to do so after fifteen
(15) days prior notice to the Grantor specifying the nature of such failure.
5.2 The Grantor may collect all its debts and accounts receivable forming part
of the Mortgaged Property until the Trustee withdraws such authorization. Upon
such withdrawal, which may only occur after the occurrence of an Event of
Default, the Trustee may collect such debts and
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accounts receivable and shall be entitled to a reasonable commission which it
may deduct from amounts collected.
5.3 Where the Mortgaged Property include securities, the Trustee may, following
the occurrence and continuance of an Event of Default, exercise any right
attached thereto, including any right to vote and any right of conversion or
redemption. Until the occurrence of an Event of Default, the Grantor shall be
entitled to exercise all rights attached to the securities owned by it, provided
that such rights are not exercised in a manner which would impair the value of
such securities.
5.4 If the Trustee has possession of any of the Mortgaged Property, it shall
have no obligation to maintain the use for which the Mortgaged Property is
normally intended nor to make it productive nor to continue its use or
operation.
5.5 The Grantor constitutes and appoints the Trustee its irrevocable attorney,
with power of substitution, in order to do any act and to sign any document
necessary or useful to the exercise after an Event of Default of the rights and
powers conferred on the Trustee hereunder.
ARTICLE 6
DEFAULT
6.1 Each of the following events shall be an event of default ("Event of
Default"):
6.1.1 if the Grantor fails to observe or perform any covenant or agreement
contained in this Deed and such failure remains unremedied for 30
days after the earlier of (i) any Responsible Officer (as such term
is defined in the Credit Agreement) of the Grantor becomes aware of
such failure, or (ii) notice thereof has been given to the Grantor
by the Trustee, the Canadian Collateral Agent, the Canadian
Administrative Agent, the Funding Agent or any Lender (as the latter
four terms are defined in the Credit Agreement);
6.1.2 if the Grantor fails to pay any Debenture on demand; or
6.1.3 if there shall be an Event of Default as such term is defined in the
Credit Agreement.
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ARTICLE 7
REMEDIES IN CASE OF DEFAULT
7.1 If an Event of Default occurs and is continuing, the Trustee may, at its
discretion, and shall, if required by a Debentureholders' Instrument, declare
the security hereby constituted to have become enforceable. In such event, the
principal and interest on the Debentures and all other amounts owing hereunder
shall immediately become payable to the Trustee for the benefit of the
Debentureholders.
7.2 If the security hereby constituted shall have become enforceable:
7.2.1 the Trustee may realize the security constituted hereunder and
exercise all rights and remedies of a hypothecary creditor under the
Civil Code of Quebec and of a secured party under the laws of any
jurisdiction where any Mortgaged Property shall be situated or where
the security constituted hereunder shall be enforced;
7.2.2 the Trustee may also (without being required to do so) take
possession and administer the Mortgaged Property or any part
thereof, with full power to use, protect, preserve and sell same and
to receive all revenue therefrom, including granting leases in
respect thereof or renewing existing leases on terms and conditions
it deems appropriate and the Trustee may compromise or transact with
the debtors of debts and accounts receivable which are subject to
the security constituted hereby and may grant releases and
discharges thereto. The Trustee may also do all things necessary or
useful for the purpose of selling or realizing the Mortgaged
Property, including completing the manufacture of inventory and
purchasing raw materials.
7.3 The Trustee may, if authorized by a Debentureholders' Instrument, waive in
writing any default or any rights hereunder. Any such action on the part of the
Trustee shall not affect any subsequent default or the remedies arising
therefrom.
7.4 The remedies provided in this Article 7 may be exercised on all the
Mortgaged Property taken as a whole or in respect of any part thereof.
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ARTICLE 8
GENERAL PROVISIONS
8.1 The security created hereby is in addition to and not in substitution for
any other security held by the Trustee or the Debentureholders.
8.2 This security is a continuing security and shall subsist notwithstanding the
payment from time to time, in whole or in part, of any of the obligations
secured hereby. The hypothec constituted hereunder is not a "floating hypothec"
and this deed is not intended to create a trust under the laws of the Province
of Quebec.
8.3 In each case provided in Section 6.1, the Grantor shall be in default by the
mere lapse of time, without the necessity of any notice or demand other than as
set forth in Section 6.1.
8.4 Unless otherwise provided in a Debentureholders' Instrument, any sum
collected by the Trustee in the exercise of its rights after the occurrence of
an Event of Default may be held by the Trustee, as Mortgaged Property, provided
that any such sum shall be applied to the payment of the obligations secured
hereby and then due. The Trustee shall have the choice of the order of
application of any such sum.
8.5 The exercise by the Trustee of any recourse shall not preclude the Trustee
from exercising any other recourse provided hereunder or by law. All the
recourses of the Trustee are cumulative and not alternative. The failure of or
forbearance by the Trustee to exercise any recourse hereunder does not
constitute a renunciation to the later exercise of such recourse. The Trustee
may exercise its recourses hereunder without being required to exercise any
recourse against any other person liable for the payment of the obligations
secured hereby or to realize any other security held for the payment of such
obligations.
ARTICLE 9
THE TRUSTEE
9.1 The Trustee shall hold the hypothec granted pursuant to this Deed for the
benefit of the Debentureholders and shall act as their agent in the exercise of
the rights conferred on the Trustee hereunder. The Trustee shall be considered a
Fonde de pouvoir of the Debentureholders within the meaning of Article 2692 of
the Civil Code of Quebec. The Trustee may perform any act necessary to the
performance of its duties.
9.2 Any person who becomes a Debentureholder shall benefit from the provisions
hereof and the appointment of the Trustee as agent for the Debentureholders and,
upon becoming a Debentureholder, irrevocably authorizes the Trustee to perform
such functions.
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9.3 No Debentureholder may exercise individually any rights conferred on the
Trustee.
9.4 The Trustee shall have the right to proceed in its name as Trustee hereunder
in the enforcement of the security hereby constituted by any remedy provided by
law. The Trustee may, before exercising any remedy, require the Debentureholders
to deposit the Debentures with the Trustee, for which Debentures the Trustee
shall issue a receipt. The obligation of the Trustee to exercise any remedy
shall be conditional upon the Debentureholders furnishing the Trustee, when
required in writing by the latter, sufficient funds for such purpose and an
indemnity which the Trustee considers reasonable to cover the Trustee against
any costs, expenses, borrowings, advances and fees of the Trustee and against
all liability which the Trustee may incur.
9.5 No person dealing with the Trustee or its agents need inquire whether the
security hereby constituted has become enforceable or whether the powers which
the Trustee is purporting to exercise have become exercisable.
9.6 Each party hereto agrees that, notwithstanding Section 32 of An Act
Respecting Special Powers of Legal Persons (Quebec), the Trustee shall be
entitled to act as Debentureholder and to acquire and/or be the pledgee of any
Debenture or other title of indebtedness issued or to be issued hereunder.
9.7 The Trustee is only required to exercise reasonable care in the exercise of
its rights and the performance of its obligations and, in any event, is only
liable for its intentional fault or gross negligence.
9.8 The Trustee may delegate the exercise of its rights or the performance of
its obligations hereunder to another person including a Debentureholder. In that
event, the Trustee may furnish that person with any information it may have
concerning the Grantor or the Mortgaged Property. The Trustee shall not be
responsible for damages resulting from such delegation or from any fault
committed by such delegate.
9.9 The rights of the Trustee hereunder shall benefit any successor of the
Trustee, including any person resulting from the amalgamation of the Trustee
with any other person.
9.10 The Trustee shall be under no duty to take any discretionary action
permitted to be taken by it hereunder or pursuant to applicable law unless it
shall be requested to do so by a Debentureholders' Instrument.
9.11 The Trustee may exercise all of its rights hereunder without possession of
the Debentures and without having to produce same in support of any judicial
proceeding or trial in connection therewith.
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9.12 The Trustee may at any time resign hereunder upon not less than thirty (30)
days notice in writing to the Grantor and to the Debentureholders, or upon such
shorter notice as the Debentureholders may accept; the Debentureholders may then
appoint a new Trustee. The Debentureholders may also remove the Trustee and
appoint a new Trustee in its place and stead, upon not less than thirty (30) day
notice in writing to the Trustee and to the Grantor. Such new Trustee, without
further act, shall be vested with and have the rights and powers granted to the
Trustee hereunder and shall be subject in all respects to the conditions and
provisions hereof.
ARTICLE 10
GOVERNING LAW
10.1 This deed shall be governed by and construed in accordance with the laws of
the Province of Quebec and the federal laws of Canada applicable therein,
provided that to the extent that the laws of any jurisdiction in which any
Mortgaged Property is situated govern the validity, perfection or enforcement of
the security constituted hereunder, the local laws of such jurisdiction shall
govern those issues.
10.2 The provisions of and the terms used in this Deed shall also be interpreted
in order to give effect to the intent of the parties that the security
constituted hereunder shall be valid and effective in all jurisdictions where
the Mortgaged Property may be situated and in all other jurisdictions where the
rights and remedies of the Trustee may have to be exercised.
10.3 In the event of conflict between the provisions of this Deed and those of
the Credit Agreement, the provisions of the Credit Agreement shall prevail.
ARTICLE 11
SCHEDULES
11.1 The following is the Schedule referred to in this Deed:
SCHEDULE I
DEBENTURE
$-
EMS TECHNOLOGIES CANADA, LTD., a corporation duly incorporated under the
laws of Canada, having its registered office at 1725 Woodward Avenue, Ottawa,
Ontario, K2C 0P9 (hereinafter called the "Grantor"), for value received,
promises to pay, on demand, to - or to its order, at its office located at -,
Province of -, the sum of - dollars ($-) with interest thereon from the date
hereof at the rate of TWENTY per cent (20%)
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per annum, both before and after maturity, with interest on overdue interest at
the same rate.
This Debenture is issued under and secured by a Deed of Hypothec to Secure
Payment of Debentures (the "Deed of Hypothec") bearing the date of December 10,
2004 executed by the Grantor in favour of Bank of America, National Association
(Canada branch), as Fonde de pouvoir of the Debentureholders, and this Debenture
is subject to, and its holder is bound by, the provisions of the Deed of
Hypothec.
This Debenture shall be certified by the Trustee and may be transferred by
its holder upon compliance with the provisions of the Deed of Hypothec.
IN WITNESS WHEREOF the Grantor has caused this Debenture to be signed by
its undersigned representative and to be dated the - day of -, -.
EMS TECHNOLOGIES CANADA, LTD.
Per: ____________________________
TRUSTEE'S CERTIFICATE
This Debenture has been issued under the Deed of Hypothec within mentioned
and - appears on the register of the Trustee as the holder of this Debenture.
SIGNED AT -, this - day of -, -
BANK OF AMERICA, NATIONAL ASSOCIATION
(CANADA BRANCH)
Per: ____________________________
[SIGNATURE PAGE FOLLOWS]
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WHEREOF ACTE:
DONE AND PASSED at the City of Montreal, this tenth (10th) day of
December, two thousand and four (2004) and of record in the office of the
undersigned Notary, under the minute number ____________________________________
________________________________________________________________________________
______________________ (___________).
And, after the parties declared that they have taken cognizance of these
presents and exempted the undersigned Notary from reading same or having same
read, the said authorized representatives of the Grantor and the Trustee signed
these presents in the presence of the said Notary who has also signed.
EMS TECHNOLOGIES CANADA, LTD.
Per: ________________________________
Francois Bastien
BANK OF AMERICA, NATIONAL ASSOCIATION
(CANADA BRANCH)
Per: ________________________________
Mary Jeanne Phelan
_____________________________________
Charlotte Pinsonnault, Notary