Exhibit 2.5
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 27,
2005, by and among Mitel Networks Corporation, a corporation incorporated under
the laws of Canada, with headquarters located at 000 Xxxxxx Xxxxx, Xxxxxx,
Xxxxxxx X0X 0X0 (the "COMPANY"), and the Buyers listed on the Schedule of Buyers
attached hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the United States Securities Act of 1933, as amended (the "1933 ACT"),
and Rule 506 of Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the 1933 Act.
B. The Company has authorized a series of senior secured convertible notes
of the Company, in substantially the form attached hereto as Exhibit A (as
amended or modified from time to time, collectively, the "NOTES"), which Notes
shall be convertible into the Company's common shares ("COMMON SHARES"), in
accordance with the terms of the Notes (as converted, collectively, the
"CONVERTED SHARES" and together with the shares delivered in connection with the
make whole provisions of the Notes, the "CONVERSION SHARES").
C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate principal
amount of Notes set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers (which aggregate principal amount for all Buyers shall be
US$55,000,000) and (ii) warrants, in substantially the form attached hereto as
Exhibit B (the "WARRANTS"), to acquire up to that number of additional Common
Shares set forth opposite such Buyer's name in column (4) of the Schedule of
Buyers (as exercised, collectively, the "WARRANT SHARES").
D. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (as amended or modified
from time to time, the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company has agreed to provide certain registration rights with respect to the
Conversion Shares and the Warrant Shares under the 1933 Act and the rules and
regulations promulgated thereunder.
E. The Notes, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "SECURITIES".
F. The Notes constitute indebtedness of the Company and will be secured by
a first priority, perfected security interest in certain assets of the Company
and certain stock and assets of certain of the Company's Subsidiaries (as
hereinafter defined), subject to certain exceptions, as evidenced by the pledge
and security agreements attached hereto as Exhibits X-0, X-0 and D-3 (the
"PLEDGE AND SECURITY AGREEMENTS") and the guarantee and security agreements
attached
Portions of this document marked with "***" are subject to a pending
Confidential Treatment Request filed with the Secretary of the Securities and
Exchange Commission and have been filed separately with the Securities and
Exchange Commission.
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hereto as Exhibits E-1 and E-2 (the "GUARANTEES" and, together with the Pledge
and Security Agreements and the other security documents listed in Exhibit F,
the "SECURITY DOCUMENTS"). Each Subsidiary which has guaranteed the Notes
pursuant to a Security Document is referred to herein as a "GUARANTOR".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) Purchase of Notes and Warrants.
(i) Subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, the Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, agrees to purchase from
the Company on the Closing Date (as defined below), (x) a principal amount
of Notes as is set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers and (y) Warrants to acquire up to that number of Warrant
Shares as is set forth opposite such Buyer's name in column (4) on the
Schedule of Buyers (the "CLOSING").
(ii) Closing. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m., New York City Time, on April 27, 2005 (or such
later date as is mutually agreed to by the Company and each Buyer) after
notification of satisfaction (or waiver) of the conditions to the Closing
set forth in Sections 6 and 7 below at the offices of Xxxxxxx Xxxx & Xxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(iii) Purchase Price. The aggregate purchase price for the Notes
and the Warrants to be purchased by each Buyer at the Closing (the
"PURCHASE PRICE") shall be the amount set forth opposite such Buyer's name
in column (5) of the Schedule of Buyers. Each Buyer shall pay US$1.00 for
each US$1.00 of principal amount of Notes and related Warrants to be
purchased by such Buyer at the Closing.
(b) Form of Payment. On the Closing Date, (i) each Buyer shall pay its
Purchase Price to the Company for the Notes and the Warrants to be issued and
sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and (ii) the
Company shall deliver or caused to be delivered to each Buyer (A) the Notes (for
the account of such Buyer as such Buyer shall instruct) which such Buyer is then
purchasing and (B) the Warrants (in the amounts as such Buyer shall request)
such Buyer is purchasing, in each case duly executed on behalf of the Company
and registered in the name of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer severally represents and warrants, with respect to only
itself, that:
(a) No Public Sale or Distribution. Such Buyer is (i) acquiring the
Notes and the Warrants and (ii) upon conversion of the Notes and exercise of the
Warrants, will acquire the Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise of the Warrants, in each
case, for its own account and not with a view towards, or for
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resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act and qualified for
public distribution or exempted under the securities legislation and regulations
of, and the instruments, policies, rules, orders, codes, notices and published
interpretation notes of, the securities regulatory authorities of the provinces
and territories of Canada (the "CANADIAN SECURITIES LAWS"), as applicable;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act
and in accordance with Canadian Securities Laws. Such Buyer is acquiring the
Securities hereunder in the ordinary course of its business. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities. As used in this Agreement, "PERSON"
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
(b) Institutional Accredited Investor Status. Such Buyer is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the 1933 Act (an "INSTITUTIONAL ACCREDITED
INVESTOR"). Such Buyer is not an entity formed for the sole purpose of acquiring
the Securities.
(c) Reliance on Exemptions. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from (i) the
registration requirements of United States federal and state securities laws and
(ii) the prospectus and registration requirements of Canadian Securities Laws
applicable in Ontario and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
such Buyer to acquire the Securities.
(d) No General Solicitation or Advertising. Such Buyer acknowledges
that it is not purchasing the Notes and the Warrants as a result of any general
solicitation or general advertising, as such terms are used in Regulation D
under the 1933 Act, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising.
(e) Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities involves a
high degree of risk and is able to bear the economic risk of such investment.
Such Buyer has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment in the
Securities and
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has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the
Securities.
(f) No Governmental Review. Such Buyer understands that no United
States or Canadian federal, state or provincial agency or any other government
or governmental agency has passed on or made any recommendation or endorsement
of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.
(g) Transfer or Resale. Such Buyer understands that: (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
will not be registered under the 1933 Act or any state securities laws or
qualified under Canadian Securities Laws; (ii) such Buyer agrees that if it
decides to offer, sell or otherwise transfer any of the Notes, Conversion Shares
or Warrant Shares, such Notes, Conversion Shares and Warrant Shares may be
offered, sold or otherwise transferred only: (A) pursuant to an effective
registration statement under the 1933 Act; (B) to the Company; (C) outside the
United States in accordance with Rule 904 of Regulation S under the 1933 Act and
in compliance with local laws; or (D) within the United States (1) in accordance
with the exemption from registration under the 1933 Act provided by Rule 144 or
Rule 144A thereunder, if available, and in compliance with any applicable state
securities laws or (2) in a transaction that does not require registration under
the 1933 Act or applicable state securities laws, and the seller shall be
required to furnish to the Company an opinion to such effect from counsel of
recognized standing reasonably satisfactory to the Company prior to such offer,
sale or transfer; and (iii) such Buyer agrees that if it decides to offer, sell
or otherwise transfer any of the Warrants, such Warrants may be offered, sold or
otherwise transferred only: (A) pursuant to an effective registration statement
under the 1933 Act; (B) to the Company; or (C) to an institutional "accredited
investor" in a transaction that does not require registration under the 1933 Act
or applicable state securities laws, and the seller shall be required to furnish
to the Company an opinion to such effect from counsel of recognized standing
reasonably satisfactory to the Company prior to such offer, sale or transfer.
(h) Legends. Such Buyer understands that upon the original issuance
thereof, and until such time as the same is no longer required under applicable
requirements of the 1933 Act or applicable state securities laws, the
certificates or other instruments representing the Notes and, unless no longer
applicable at the time of issuance, the Conversion Shares and the Warrant
Shares, and all certificates or other instruments issued in exchange therefor or
in substitution thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT; (B) TO THE COMPANY; (C) OUTSIDE THE UNITED STATES
IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL LAWS; OR (D) WITHIN THE
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UNITED STATES (1) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF
AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS
OR (2) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
1933 ACT OR APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER SHALL
FURNISH TO THE COMPANY AN OPINION TO SUCH EFFECT FROM COUNSEL OF
RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE COMPANY PRIOR TO
SUCH OFFER, SALE OR TRANSFER. [ADD THE FOLLOWING SENTENCE FOR SHARES -
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.]
[ADD THE FOLLOWING PARAGRAPH FOR THE NOTES - ANY TRANSFEREE OF THIS
NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING
SECTIONS 3(C)(III) AND 22(A) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED
BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(C)(III) OF THIS NOTE.]
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF] SHALL NOT TRADE SUCH IN ONTARIO OR TO RESIDENTS OF
ONTARIO BEFORE JULY 31, 2005.
[ADD THE FOLLOWING LEGEND FOR THE NOTES - THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO A SECURITIES PURCHASE AGREEMENT, DATED AS OF
APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE INVESTORS REFERRED TO
THEREIN (THE "SECURITIES PURCHASE AGREEMENT") AND THE HOLDER OF THE
NOTE, BY ACCEPTANCE OF THIS NOTE, AGREES TO BE BOUND BY ALL APPLICABLE
PROVISIONS OF THE SECURITIES PURCHASE AGREEMENT. THE SECURITIES
REPRESENTED HEREBY ARE SUBJECT TO A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE INVESTORS
REFERRED TO THEREIN (THE "REGISTRATION RIGHTS AGREEMENT") AND THE
HOLDER OF THE NOTE, BY ACCEPTANCE OF THIS NOTE, AGREES TO BE BOUND BY
ALL APPLICABLE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, SECTION 5 THEREOF. NO TRANSFER OF THIS
NOTE SHALL BE MADE WITHOUT
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COMPLYING WITH THE PROVISIONS OF SECTION 22(A) OF THIS NOTE.]"
provided, that the first paragraph of such legend may be removed from
certificates representing the Notes, Conversion Shares and Warrant Shares in
connection with a sale pursuant to an effective registration statement under the
1933 Act; provided, further, that if the Company is a "foreign issuer" within
the meaning of Regulation S under the 1933 Act and the Notes, Conversion Shares
or Warrant Shares are being sold pursuant to Rule 904 of Regulation S, such
legend may be removed by providing a declaration to the Company to the effect
set forth in Exhibit J; and, provided, further, that, if any such Notes,
Conversion Shares or Warrant Shares are being sold pursuant to Rule 144 under
the 1933 Act, such legend may be removed by delivering to the Company's
registrar and transfer agent and the Company an opinion of counsel, of
recognized standing reasonably satisfactory to the Company, that such legend is
no longer required under applicable requirements of the 1933 Act or state
securities laws, and the third paragraph of such legend may be removed when no
longer applicable.
Such Buyer further understands that upon the original issuance thereof, and
until such time as the same is no longer required under applicable requirements
of the 1933 Act or applicable state securities laws, the certificates or other
instruments representing the Warrants, and all certificates or other instruments
issued in exchange therefor or in substitution thereof, shall bear the following
legends:
"THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT; (B) TO THE COMPANY; OR (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE 1933 ACT IN A TRANSACTION THAT DOES
NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR APPLICABLE STATE
SECURITIES LAWS, AND THE HOLDER HAS FURNISHED TO THE COMPANY AN
OPINION TO SUCH EFFECT FROM COUNSEL OF RECOGNIZED STANDING REASONABLY
SATISFACTORY TO THE COMPANY PRIOR TO SUCH OFFER, SALE OR TRANSFER. ANY
TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE TERMS OF THIS
WARRANT. THE NUMBER OF COMMON SHARES ISSUABLE UPON EXERCISE HEREOF MAY
BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 1(a) HEREOF.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON EXERCISE
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HEREOF SHALL NOT TRADE SUCH SECURITIES IN ONTARIO OR TO RESIDENTS OF
ONTARIO BEFORE JULY 31, 2005.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT, DATED AS OF APRIL 27, 2005, BY AND AMONG THE COMPANY AND
THE INVESTORS REFERRED TO THEREIN (THE "SECURITIES PURCHASE
AGREEMENT") AND THE HOLDER OF THE CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL APPLICABLE PROVISIONS OF THE
SECURITIES PURCHASE AGREEMENT. THE SECURITIES REPRESENTED HEREBY ARE
SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 27,
2005, BY AND AMONG THE COMPANY AND THE BUYERS (THE "REGISTRATION
RIGHTS AGREEMENT") AND THE HOLDER OF THE CERTIFICATE, BY ACCEPTANCE OF
THIS CERTIFICATE, AGREES TO BE BOUND BY ALL APPLICABLE PROVISIONS OF
THE REGISTRATION RIGHTS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
SECTION 5 THEREOF. NO TRANSFER OF THIS WARRANT SHALL BE MADE WITHOUT
COMPLYING WITH THE PROVISIONS OF SECTION 7(a) OF THIS WARRANT."
(i) Consent. Such Buyer consents to the Company making a notation on
its records or giving instructions to any transfer agent of the Common Shares in
order to implement the restrictions on transfer set forth and described herein.
(j) Filings. If required by applicable securities legislation,
regulatory policy or order, or if required or requested by any securities
commission, stock exchange or other regulatory authority, at the request of and
at the sole expense of the Company, such Buyer will execute, deliver and file
and otherwise assist the Company in filing reports, questionnaires, undertakings
and other documents with respect to the issue of the Securities.
(k) Validity; Enforcement. This Agreement, the Registration Rights
Agreement and the Security Documents to which such Buyer is a party have been
duly and validly authorized, executed and delivered on behalf of such Buyer and
constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies and except that the enforcement of any rights to
indemnity and contribution in the Registration Rights Agreement may be limited
by federal and state securities laws and the principles of public policy
underlying those laws.
(l) [INTENTIONALLY OMITTED.]
(m) Residency. For purposes of U.S. securities laws, such Buyer is a
resident of that jurisdiction specified below its address on the Schedule of
Buyers.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that, except
as otherwise disclosed in writing to the Buyers on the date hereof in the
Disclosure Letter, dated the date hereof, provided by the Company to the Buyers:
(a) Organization and Qualification. The Company and its Subsidiaries
are entities duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are formed, and have the requisite power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign entity to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby and
the other Transaction Documents (as defined below) or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents. Set forth on Schedule 3(a) is a true, correct and
complete list of all Subsidiaries of the Company. Other than the Subsidiaries
set forth on Schedule 3(a), neither the Company nor any of its Subsidiaries (i)
has or holds, either directly or indirectly, any capital or any other equity
securities or interest in, or control (whether by the ownership or control or
direction of any securities or any other voting or participating interest or by
contract) of, any other Person or (ii) is obligated to make or be bound by any
written, oral or other agreement, contract or understanding of any nature as of
the date hereof or as may hereinafter be in effect under which it may become
obligated to make any future investment in, or capital contribution to, any
other Person. For purposes of this Agreement, the term "SUBSIDIARIES" means: (a)
any company 50% or more of whose outstanding voting shares are owned, directly
or indirectly, by the Company or by one or more of its Subsidiaries, or by the
Company and by one or more of its Subsidiaries, and includes each of the
companies identified in Schedule 3(a) as a Subsidiary; (b) any general
partnership 50% or more of whose outstanding partnership interests shall at the
time be owned by the Company, or by one or more of its Subsidiaries, or by the
Company and one or more of its Subsidiaries; and (c) any limited partnership of
which the Company or any of its Subsidiaries is a general partner, and
"SUBSIDIARY" means any one of them.
(b) Authorization; Enforcement; Validity. Each of the Company and the
Guarantors (to the extent that they are parties) has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Notes, the Registration Rights Agreement, the Security Documents,
the Warrants and each of the other agreements entered into by the parties hereto
in connection with the transactions contemplated by this Agreement
(collectively, the "TRANSACTION DOCUMENTS") and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of the
Transaction Documents by each of the Company and the Guarantors (as applicable)
and the consummation by each of the Company and the Guarantors (as applicable)
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Notes and the Warrants, the reservation for
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issuance and the issuance of the Conversion Shares issuable upon conversion of
the Notes, the reservation for issuance and issuance of the Warrant Shares
issuable upon exercise of the Warrants, and the granting of a security interest
in the Collateral (as defined in the Security Documents) have been duly
authorized by the Company's or the Guarantor's (as applicable) Board of
Directors and (other than (i) the filing of appropriate UCC and Personal
Property Security Act (Ontario) ("PPSA") financing statements and analogous
registrations with the appropriate states, provinces and other authorities
pursuant to the Security Documents, (ii) the filing with the SEC of one or more
Registration Statements in accordance with the requirements of the Registration
Rights Agreement, (iii) the filing of a Form D with respect to the Notes and
Warrants as required under Regulation D and (iv) such filings required under
applicable securities or "Blue Sky" laws of the states of the United States and
applicable Canadian Securities Laws (all of the foregoing, the "REQUIRED
APPROVALS")) no further filing, consent, or authorization is required by the
Company or the Guarantors (as applicable), their respective Boards of Directors
or their respective shareholders in connection therewith. This Agreement and the
other Transaction Documents of even date herewith have been duly executed and
delivered by the Company and each of the Guarantors (as applicable) and
constitute the legal, valid and binding obligations of the Company or the
Guarantors (as applicable), enforceable against the Company or the Guarantors
(as applicable) in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies, and except that the enforcement of any rights to indemnity
and contribution in the Registration Rights Agreement may be limited by federal
and state securities laws and the principles of public policy underlying those
laws.
(c) Issuance of Securities. The issuance of the Notes and the Warrants
are duly authorized and are free from all taxes, liens and charges with respect
to the issue (but not the acquisition, holding or disposition) thereof. As of
the Closing, a number of Common Shares shall have been duly authorized and
reserved for issuance, free of pre-emptive rights (except those that have been
previously waived), sufficient for the purpose of enabling the Company to
satisfy its obligations to issue the Conversion Shares upon conversion of all of
the Notes and the Warrant Shares upon exercise of the Warrants. Upon conversion
in accordance with the Notes or exercise in accordance with the Warrants, as the
case may be, the Conversion Shares and the Warrant Shares, respectively, will be
validly issued, fully paid and nonassessable and free from all preemptive or
similar rights (except those that have been previously waived), and such
Conversion Shares and Warrant Shares will not be subject to any taxes, liens and
charges on the issue (but not the acquisition, holding or disposition) thereof,
with the holders being entitled to all rights accorded to a holder of Common
Shares. Assuming the accuracy of the representations of the Buyers in Section 2
hereof (and in the Recertification Letter (as defined in the Warrant) in
connection with the offer and issuance of Warrant Shares) and their compliance
with the agreements set forth in the Transaction Documents, the offer and
issuance by the Company of the Securities to the Buyers is (or will be in the
case of the Conversion Shares and the Warrant Shares) exempt from registration
under the 1933 Act and the prospectus and registration requirements of Canadian
Securities Laws.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and each of the Guarantors (as applicable)
and the consummation
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by the Company and each of Guarantors (as applicable) of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Notes and the Warrants, the granting of a security interest in the
Collateral and reservation for issuance and issuance of the Conversion Shares
and Warrant Shares) will not (i) result in a violation of the Articles of
Incorporation (as defined in Section 3(t)), any capital stock of the Company or
the Guarantors (as applicable) or the Bylaws (as defined in Section 3(t)) or any
of the organizational documents of any of the Company's Subsidiaries or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and Canadian
Securities Laws) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except, in the case of clauses (ii) and (iii), for such violations
as would not be reasonably expected to have a Material Adverse Effect.
(e) Consents. Other than the Required Approvals, none of the Company
and the Guarantors (as applicable) is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings
and registrations which any of the Company or the Guarantors are required to
obtain prior to the Closing have been obtained or effected on or prior to the
Closing Date, and the Company and its Subsidiaries are unaware of any facts or
circumstances which might prevent the Company from obtaining or effecting any of
the registration, application or filings pursuant to the preceding sentence.
(f) Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company, (ii) an "affiliate" of the Company (as defined in
Rule 144 under the 0000 Xxx) or (iii) to the knowledge of the Company, a
"beneficial owner" of more than 10% of the Common Shares (as defined for
purposes of Rule 13d-3 of the United States Securities Exchange Act of 1934, as
amended (the "1934 ACT")). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.
(g) No General Solicitation; Placement Agent's Fees. Neither the
Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of
-11-
any placement agent's fees, financial advisory fees, or brokers' commissions
(other than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged XX Xxxxxx Securities, Inc.
as placement agent (the "AGENT") in connection with the sale of the Notes and
Warrants. Other than the Agent, the Company has not engaged any placement agent
or other agent in connection with the sale of the Securities.
(h) No Integrated Offering. None of the Company, its Subsidiaries, any
of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable shareholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings.
(i) Dilutive Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Notes in accordance with this Agreement
and the Notes and its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants is, in each
case, absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other shareholders of the
Company.
(j) Application of Takeover Protections; Rights Agreement. The Company
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or the laws of the
jurisdiction of its formation or otherwise which is or could become applicable
to any Buyer as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and any
Buyer's ownership of the Securities. The Company has not adopted a shareholder
rights plan or similar arrangement relating to accumulations of beneficial
ownership of Common Shares or a change in control of the Company.
(k) SEC Documents; Financial Statements. During the two (2) years
prior to the date hereof, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the "SEC DOCUMENTS"). The Company has delivered
to the Buyers or
-12-
their respective representatives copies of the SEC Documents filed by the
Company during such period not available on the XXXXX system. As of their
respective dates, the SEC Documents, as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States, consistently applied, during the periods involved (except as may
be otherwise indicated in such financial statements or the notes thereto) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the
periods then ended.
(l) Absence of Certain Changes. Since April 25, 2004, no event or
circumstance has occurred which would have, individually or in the aggregate, a
Material Adverse Effect. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company is not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will not
be Insolvent (as defined below). For purposes of this Section 3(l), "INSOLVENT"
means (i) the present fair saleable value of the Company's assets is less than
the amount required to pay the Company's total Indebtedness (as defined in
Section 3(t)), (ii) the Company is unable to pay its debts and liabilities as
such debts and liabilities become absolute and matured, (iii) the Company
intends to incur or believes that it will incur debts that would be beyond its
ability to pay as such debts mature or (iv) the Company has unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted. No Default or Event
of Default (each as defined in the Bank of Montreal Facility (as defined below))
has occurred and is continuing.
(m) Absence of Undisclosed Liabilities. Other than as set forth in the
Annual Report of the Company filed on Form 20-F for the fiscal year ended April
25, 2004 (the "2004 COMPANY 20-F"), or as incurred by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with past
practice, neither the Company nor any Subsidiary has any material liabilities or
obligations of any nature, whether accrued, absolute, contingent, or otherwise
(including liabilities as guarantor or otherwise with respect to obligations of
others) and whether due or to become due.
(n) Conduct of Business; Regulatory Permits. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its Articles
of Incorporation or Bylaws or their organizational charter or certificate of
incorporation or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries, and
-13-
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect. The
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director or officer, nor to the knowledge of the Company,
any agent, employee or other Person acting on behalf of the Company or any of
its Subsidiaries, has, in the course of its actions for, or on behalf of, the
Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(p) Xxxxxxxx-Xxxxx Act. There is and has been no failure on the part
of the Company or any of the Company's directors or executive officers, in their
capacities as such, to comply in all material respects with any provision of the
Xxxxxxxx-Xxxxx Act of 2002, as in effect at the applicable time and applicable
to the Company, and the rules and regulations promulgated in connection
therewith (the "XXXXXXXX-XXXXX ACT"), including Section 402 related to loans and
Sections 302 and 906 related to certifications.
(q) Internal Accounting Controls. Except where the failure to do so
will not, individually or in the aggregate, have a Material Adverse Effect, the
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference.
(r) Transactions With Affiliates. Except as disclosed in the 2004
Company 20-F, for the period since the beginning of the preceding three fiscal
years up to the date of this Agreement, there have not been any material
transactions or loans (including guarantees of any kind) within the meaning of
Item 7.B. of Form 20-F under the 1934 Act between the Company or any of its
Subsidiaries and (a) enterprises that directly or indirectly through one or more
intermediaries, control or are controlled by, or are under common control with,
the Company or any of its Subsidiaries; (b) associates; (c) individuals owning,
directly or indirectly, an interest in the voting power of the Company or any of
its Subsidiaries that gives them significant influence over the Company or any
of its Subsidiaries, and close members of any such individual's family;
-14-
(d) key management personnel, that is, those persons having authority and
responsibility for planning, directing and controlling the activities of the
Company or any of its Subsidiaries, including directors and senior management of
companies and close members of such individuals' families; and (e) enterprises
in which a substantial interest in the voting power is owned, directly or
indirectly, by any person described in (c) or (d) or over which such a person is
able to exercise significant influence (including enterprises owned by directors
or major shareholders of the Company or any of its Subsidiaries and enterprises
that have a member of key management in common with the Company or any of its
Subsidiaries). For the purposes of this Section 3(r): (i) close members of an
individual's family are those that may be expected to influence, or be
influenced by, that person in their dealings with the Company or any of its
Subsidiaries; (ii) an associate is an unconsolidated enterprise in which the
Company or any of its Subsidiaries has a significant influence or which has
significant influence over the Company or any of its Subsidiaries; (iii)
significant influence over an enterprise is the power to participate in the
financial and operating policy decisions of the enterprise but is less than
control over those policies; and (iv) shareholders beneficially owning a 10%
interest in the voting power of the Company or any of its Subsidiaries are
presumed to have a significant influence on the Company or any of its
Subsidiaries.
(s) Equity Capitalization. As of the date hereof, after giving effect
to the transactions contemplated by the Transaction Documents, the authorized
capital stock of the Company consists of (i) Unlimited Common Shares, of which
as of the date hereof, 117,149,933 are issued and outstanding, 25,000,000 shares
are reserved for issuance pursuant to the Company's stock option plan of which
18,504,755 shares are reserved for issuance, (ii) 20,000,000 Class A Convertible
Preferred Shares, Series 1 (the "SERIES A SHARES") and (iii) 67,789,300 Class B
Convertible Preferred Shares, Series 1 (the "SERIES B SHARES"). The Series A
Shares and the Series B Shares are convertible into Common Shares on a one-for
one basis (and, in certain circumstances on a greater than one-for-one basis) at
the option of the holders and upon certain triggering events. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. None of the Company's capital stock is subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in the 2004 Company
20-F, there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any capital stock
of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional capital stock of the Company or any
of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries. Other than Permitted Debt (as defined in the
Notes) and Indebtedness not in excess US$250,000 individually and US$2,000,000
in the aggregate, there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound other than those
which are being terminated upon the Closing. Other than Permitted Liens (as
defined in the Notes), there are no financing statements securing obligations in
any material amounts, either singly or in the aggregate, filed in connection
with the Company or any of its Subsidiaries. Except as disclosed in the 2004
Company 20-F, there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights Agreement) or
under any applicable Canadian securities laws. Except as disclosed in the 2004
-15-
Company 20-F, there are no outstanding securities or instruments of the Company
or any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries. Except as disclosed in the
2004 Company 20-F, there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities. The Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. The
Company has furnished to each Buyer true, correct and complete copies of the
Company's Articles of Incorporation, as amended and as in effect on the date
hereof (the "ARTICLES OF INCORPORATION"), and the Company's Bylaws, as amended
and as in effect on the date hereof (the "BYLAWS"), and the terms of all
securities convertible into, or exercisable or exchangeable for, Common Shares
and the material rights of the holders thereof in respect thereto. Set forth on
Schedule 3(s) is a true, correct and complete list of the record holders of
shares of capital stock of the Company and each of its Subsidiaries as of the
date hereof. As of the date specified therein, such holders own of record all
the outstanding capital stock of the Company and each such Subsidiary, each of
them so owning the number of shares set forth opposite such holder's name on
Schedule 3(s). Set forth on Schedule 3(s) is a true, correct and complete list
(except as otherwise noted on such schedule) of the record holders of options
and warrants exercisable for shares of capital stock of the Company and its
Subsidiaries. The shares held by the Company or any of its Subsidiaries are held
free and clear of all liens or any other restriction on the right to vote, sell
or otherwise dispose of such capital stock. There are no bonds, debentures,
notes or other indebtedness or securities of the Company or its Subsidiaries
having the right to vote (or convertible into, or exchangeable or exercisable
for, securities having the right to vote) on any matters on which shareholders
of the Subsidiaries of the Company or their respective Subsidiaries may vote.
(t) Indebtedness and Other Contracts. Neither the Company nor any of
its Subsidiaries (i) has any outstanding Indebtedness (as defined below) in
excess of US$250,000 individually or US$2,000,000 in the aggregate, (ii) is a
party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument would result in a Material Adverse Effect, (iii) is in violation of
any term of or in default under any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. Schedule 3(t) provides a description
of the material financial terms of any outstanding Indebtedness of the Company
and its Subsidiaries in excess of US$250,000 individually or US$2,000,000 in the
aggregate. For purposes of this Agreement: (x) "INDEBTEDNESS" of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in
-16-
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; and (y) "CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
(u) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the best knowledge
of the Company, threatened against or affecting the Company or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, other than actions, suits,
proceedings or investigations claiming damages, fines, penalties or other
payments not in excess of US$100,000 individually and US$1,000,000 in the
aggregate.
(v) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage that is material to the business of the Company and that has
been sought or applied for and neither the Company nor any such Subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(w) Employee Relations. (i) Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer of the Company (as defined
in Rule 501(f) under the 0000 Xxx) has notified the Company that such officer
intends to leave the Company or otherwise terminate such officer's employment
with the Company. No executive officer of the Company, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or
-17-
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with all
federal, state, provincial, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms
and conditions of employment and wages and hours, except where failure to
be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(x) Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries, except for Permitted Liens. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
(y) Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses as now conducted. All such Intellectual Property Rights are owned or
licensed by the Company and/or the Guarantors. None of the Company's
Intellectual Property Rights have expired or terminated, or are expected to
expire or terminate, within three years from the date of this Agreement. The
Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company,
being threatened, against the Company or its Subsidiaries regarding its
Intellectual Property Rights. The Company is unaware of any facts or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
(z) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval except where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect. As used in this Agreement,
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
-18-
subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively,
"HAZARDOUS MATERIALS") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.
(aa) Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
(bb) Tax Status. The Company and each of its Subsidiaries (i) has made
or filed all foreign, federal, state and provincial income and all other tax
returns, reports and declarations required to be made or filed by it by any
jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, and that are
shown or determined to be due and payable by it on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply and which such taxes are not yet due and payable. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction.
(cc) Ranking of Notes. No Indebtedness of the Company is senior to or
ranks pari passu with the Notes in right of payment, whether with respect of
payment of redemptions, interest, damages or upon liquidation or dissolution or
otherwise.
(dd) Independent Accountants. Deloitte & Touche LLP, who have
certified the consolidated financial statements of the Company as of April 25,
2004, are independent public accountants within the meaning of the 1933 Act.
(ee) Investment Company. Neither the Company nor any entity which it
"controls" (as defined by the Investment Company Act of 1940, as amended (the
"Investment Company Act")) is, and, after giving effect to the offering and sale
of the Notes and Warrants and the application of the proceeds thereof, will be,
required to seek an order permitting registration, under the Investment Company
Act. No entity, which is organized under any "State" (as defined in the
Investment Company Act) and which is "controlled" (as defined by the Investment
Company Act) by the Company, is required to register under the Investment
Company Act. To the Company's knowledge, no entity which "controls" (as defined
by the Investment Company Act) the Company is registered, or is required to
register or seek an order permitting registration, under the Investment Company
Act.
(ff) Disclosure. All disclosure provided to the Buyers regarding the
Company, its business and the transactions contemplated hereby, including the
Disclosure Letter and any quarterly financial information, furnished by or on
behalf of the Company is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
-19-
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release
issued by the Company during the twelve (12) months preceding the date of this
Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries which would result, either individually or in the
aggregate, in a Material Adverse Effect.
(gg) Non-Guarantor Subsidiaries.
(i) As at March 27, 2005, not less than 95% of the revenues of
the Company and its Subsidiaries, determined on a consolidated basis in
accordance with United States generally accepted accounting procedures,
consistently applied ("GAAP"), are revenues of the Company and the
Guarantors (excluding revenues resulting from sales to Subsidiaries of the
Company which are not Guarantors).
(ii) As at March 27, 2005, not less than 95% of the assets of the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, are assets of the Company and the Guarantors.
(hh) Payoff of Bank of Montreal Facility. The Company has not drawn
from the Bank of Montreal Facility an amount in excess of the amount set forth
in the payoff letter (the "PAYOFF LETTER") from the Bank of Montreal attached
hereto as Exhibit K, other than letters of credit referenced in the Payoff
Letter which shall remain outstanding after Closing.
(ii) Source of Value. The Common Shares do not derive their value
principally from real property situated in Canada.
4. COVENANTS.
(a) Reasonable Best Efforts. Each party shall use its reasonable best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Notes and Warrants as required under Regulation D and to provide
a copy thereof to counsel for the Buyers promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States and the applicable Canadian
Securities Laws.
(c) Use of Proceeds. The Company will use the proceeds from the sale
of the Notes and Warrants for the (i) repayment of all amounts outstanding under
the Amended and
-20-
Restated Credit Agreement, dated as of April 21, 2004, among the Company, Bank
of Montreal, as Administrative Agent and the Lenders from time to time party
thereto (the "BANK OF MONTREAL FACILITY") and (ii) general corporate purposes,
and shall not use the proceeds for the redemption or repurchase of any of its
equity securities, including but not limited to any redeemable Common Shares,
the Series A Shares and the Series B Shares, other than employee stock option
repurchases pursuant to the Company's stock option plan.
(d) Financial Information. For so long as any Securities remain
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
under the 1933 Act, the Company will, during any period in which it is not
subject to Section 13 or 15(d) under the 1934 Act, make available to the Buyer
and any holder of Securities in connection with any sale thereof and any
prospective purchaser of Securities and securities analysts, in each case upon
request, the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the 1933 Act (or any successor thereto).
(e) Fees and Expenses.
(i) The Company shall pay or reimburse, on the Closing Date, for
the fees and disbursements of Xxxxxxx Xxxx & Xxxxx LLP, Goodmans LLP,
Sidley Xxxxxx Xxxxx & Xxxx LLP and Xxxxxxxx Xxxxxxx incurred in connection
with the negotiation, execution and delivery of the Transaction Documents
in aggregate an amount not to exceed ***, which amount may be withheld
by Highbridge International LLC from its Purchase Price at the Closing. The
Company shall also be responsible for the payment of any placement agent's
fees, financial advisory fees, or broker's commissions (other than for
Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby, including, without limitation, any fees
payable to the Agent. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment. Except as otherwise
set forth in the Transaction Documents, each party to this Agreement shall
bear its own expenses in connection with the sale of the Notes and Warrants
to the Buyers.
(ii) The Company shall pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder,
including without limitation, all fees, costs and expenses (A) incident to
the preparation, issuance, execution, authentication and delivery of the
Securities and (B) incurred in connection with the registration or
qualification and determination of eligibility for investment of the
Securities under United States federal and state laws.
(f) Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by a Holder (as defined in the Registration Rights
Agreement) to an Institutional Accredited Investor in connection with a bona
fide margin agreement or other loan or financing arrangement that is secured by
the Securities; provided that any such pledgee shall not foreclose on such
pledge other than in compliance with the transfer restrictions set forth in
Section 2(g) hereof. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Buyer effecting
a pledge of Securities shall be
-21-
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document. The Company hereby agrees to execute and deliver such documentation as
a pledgee of the Securities may reasonably request in connection with a pledge
of the Securities to such pledgee by a Buyer.
(g) Variable Securities; Dilutive Issuances. So long as any Buyer
beneficially owns any Notes, the Company will not issue any Notes other than to
the Buyers as contemplated hereby and the Company shall not issue any other
securities that would cause a breach or default under the Notes. At any time
after a public offering of its Common Shares and for so long as any Notes remain
outstanding, the Company shall not, in any manner: (i) issue or sell any rights,
warrants or options to subscribe for or purchase Common Shares or directly or
indirectly convertible into or exchangeable or exercisable for Common Shares at
a price which varies or may vary with the market price of the Common Shares (in
a transaction commonly known as "death spirals" or "toxic converts"), including
by way of one or more reset(s) to any fixed price, unless the conversion,
exchange or exercise price of any such security cannot be less than the then
applicable Conversion Price (as defined in the Notes) with respect to the Common
Shares into which any Note is convertible; and (ii) enter into or effect any
Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive
Issuance is to cause the Company to be required to issue upon conversion of any
Note any Common Shares in excess of that number of Common Shares which the
Company may issue upon conversion of the Notes or exercise of the Warrants
without breaching the Company's obligations under the rules or regulations of
the principal market in which the Common Shares are listed.
(h) Reservation of Shares. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, free
of pre-emptive rights (except those that have been previously waived), after the
Closing Date, a number of Common Shares sufficient for the purpose of enabling
the Company to satisfy all obligations to issue the Conversion Shares upon
conversion of all of the Notes and the Warrant Shares upon exercise of the
Warrants.
(i) Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
(j) Right of Participation in Additional Issuances of Securities.
(i) For purposes of this Section 4(j), the following definitions
shall apply.
(1) "CONVERTIBLE SECURITIES" means any shares or securities
(other than Options) convertible into or exercisable or exchangeable for Common
Shares.
(2) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common Shares or Convertible Securities.
-22-
(3) "COMMON SHARE EQUIVALENTS" means, collectively, Options
and Convertible Securities.
(4) "EXCLUDED SECURITIES" means (A) the sale of the Notes
and Warrants under this Agreement or the issuance of the Conversion Shares or
Warrant Shares; (B) the grant by the Company of employee, director or consultant
stock options; (C) the issuance by the Company of any Common Shares upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof (provided that the terms of such options or warrants are not
amended or modified in any manner after the date hereof) or an option or warrant
issued or granted in compliance with this paragraph; (D) a Qualified IPO; (E)
from and after a Qualified IPO, pursuant to a bona fide firm commitment fully
underwritten public offering with a nationally recognized underwriter which
generates gross proceeds to the Company in excess of $25,000,000 (other than an
"at-the-market offering" as defined in Rule 415(a)(4) under the 1933 Act and
"equity lines"); (F) any Common Shares issued or issuable in connection with an
acquisition of assets or a business the primary purpose of which is not to raise
equity capital; provided that, prior to a Qualified IPO (i) the cost of such
acquisition is less than $10,000,000, (ii) any such transaction is approved by
the Board of Directors of the Company, and (iii) the maximum aggregate number of
Common Shares that may be issued pursuant to all transactions contemplated by
this clause (F) shall not exceed 5% of the aggregate number of Common Shares
issued and outstanding on the date hereof on a fully diluted basis (subject to
adjustment for stock splits, stock dividends, recapitalizations, combinations,
reverse stock splits or other similar events); (G) any Common Shares issued or
issuable to or in connection with any of the following (i) licensors of
technology to the Company, (ii) lending or leasing institutions in connection
with obtaining debt financing, or (iii) any other technology licensing,
equipment leasing or other non-equity interim financing transaction; provided
that: (X) any such transaction or transactions are approved by the Board of
Directors of the Company; and (Y) the maximum aggregate number of Common Shares
that may be issued pursuant to all transactions contemplated by this clause (G)
shall not exceed 5% of the aggregate number of Common Shares issued and
outstanding on the date hereof on a fully diluted basis (subject to adjustment
for stock splits, stock dividends, recapitalizations, combinations, reverse
stock splits or other similar events); (H) the filing of any registration
statement or prospectus in respect of the Conversion Shares or Warrant Shares;
(I) Common Shares issued or issuable in respect of subdivisions, stock dividends
or capital reorganizations affecting the Common Shares; and (J) Common Shares
issued to bona fide consultants or professional advisors of the Company as part
of the consideration for services received by the Company from such consultants
or professional advisors.
(5) "QUALIFIED IPO" means the Company's sale of its Common
Shares in a firm commitment, fully underwritten public offering conducted in the
United States through a nationally recognized investment banking firm and
pursuant to a registration statement under the Securities Act, the public
offering price of which was not less than $1.61 per share, the gross proceeds of
which to the Company (before underwriting discounts, commissions and fees)
exceeds $75,000,000 and after which the Common Shares are listed either on NYSE
or admitted for trading on the Nasdaq National Market; provided that prior to
the consummation of a Qualified IPO, the acquisition of the Company by a
Successor Entity whose common shares (or its equivalent) are publicly traded (a
"PUBLIC ACQUIROR") shall not be deemed a Qualified IPO for purposes hereof but a
subsequent offering by a Public Acquiror after
-23-
the acquisition of the Company shall be deemed a Qualified IPO for purposes
hereof to the extent that such subsequent offering meets the criteria above.
(6) "SUBSEQUENT PLACEMENT" means an (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any Common Shares or
any securities convertible into or exercisable or exchangeable for Common
Shares, or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Shares whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise.
(ii) From the date hereof until the one (1) year anniversary of a
Qualified IPO, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4(j)(ii).
(1) The Company shall deliver to each Buyer a written notice
(the "OFFER NOTICE") of any proposed or intended issuance or sale or exchange
(the "OFFER") of the securities being offered (the "OFFERED SECURITIES") in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with
such Buyers a pro rata portion of 32% of the Offered Securities allocated among
such Buyers (a) based on such Buyer's pro rata portion of the aggregate
principal amount of Notes purchased hereunder (the "BASIC AMOUNT"), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any additional
portion of the Offered Securities attributable to the Basic Amounts of other
Buyers as such Buyer shall indicate it will purchase or acquire should the other
Buyers subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION
AMOUNT").
(2) To accept an Offer, in whole or in part, such Buyer must
deliver a written notice to the Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (the "OFFER
PERIOD"), setting forth the portion of such Buyer's Basic Amount that such Buyer
elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase
(in either case, the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed
for by all Buyers are less than the total of all of the Basic Amounts, then each
Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance
shall be entitled to purchase, in addition to the Basic Amounts subscribed for,
the Undersubscription Amount it has subscribed for; provided, however, that if
the Undersubscription Amounts subscribed for exceed the difference between the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent its deems reasonably
necessary.
-24-
(3) The Company shall have ten (10) Business Days from the
expiration of the Offer Period above to offer, issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has not
been given by the Buyers (the "REFUSED SECURITIES"), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring person or persons or less favorable to
the Company than those set forth in the Offer Notice.
(4) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 4(j)(ii)(3) above), then each Buyer may, at its sole option
and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that such Buyer elected
to purchase pursuant to Section 4(j)(ii)(2) above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(j)(ii)(3) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Buyers in accordance with Section 4(j)(ii)(1) above.
(5) Upon the closing of the issuance, sale or exchange of
all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 4(j)(ii)(3) above if the Buyers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Buyers of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Buyers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Buyers and their
respective counsel.
(6) Any Offered Securities not acquired by the Buyers or
other persons in accordance with Section 4(j)(ii)(3) above may not be issued,
sold or exchanged until they are again offered to the Buyers under the
procedures specified in this Agreement.
(iii) The restrictions contained in clause (ii) above shall not
apply in connection with (x) the issuance of any Excluded Securities and
(y) a Non-Qualified IPO (as defined in the Registration Rights Agreement)
to the extent that the sole or lead managing Underwriter (as defined in the
Registration Rights Agreement) of such Non-Qualified IPO shall advise the
Company in writing that the sale to the Buyers of such Offered Securities
would materially interfere with the successful marketing of the securities
being offered in such Non-Qualified IPO.
(k) General Solicitation. None of the Company, any of its affiliates
(as defined in Rule 501(b) under the 0000 Xxx) or any person acting on behalf of
the Company or such affiliate will solicit any offer to buy or offer or sell the
Securities by means of any form of general
-25-
solicitation or general advertising within the meaning of Regulation D,
including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio; and (ii) any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
(l) Integration. None of the Company, any of its affiliates (as
defined in Rule 501(b) under the 0000 Xxx) or any person acting on behalf of the
Company or such affiliate will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the 1933 Act)
which will be integrated with the sale of the Securities or the Conversion
Shares in a manner which would require the registration under the 1933 Act of
the Securities and the Company will take all action that is appropriate or
necessary to assure that its offerings of other securities will not be
integrated for purposes of the 1933 Act;
(m) Publicity. Prior to the effective date of the registration
statement relating to the Qualified IPO (and except as may be required to be set
forth in any registration statement filed or any prospectus delivered in
connection with such offering), the Company shall consult with the Buyers in
issuing any press releases or otherwise making public statements or filings and
other communications with respect to the transactions contemplated hereby, and
none of the parties shall issue any such press release or otherwise make any
such public statement, filing or other communication without the prior consent
of the others (such consent not to be unreasonably withheld), except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other parties with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not (a)
prior to the effective date of the registration statement relating to the
Qualified IPO (and except as may be required to be set forth in any registration
statement filed or any prospectus delivered in connection with such offering),
publicly disclose the name of any Buyer or include the name of any Buyer,
without the prior written consent of such Buyer in any other press release or
public statement or filing, except to the extent the Company has received a
legal opinion that such disclosure is required by law, in which case the Company
shall provide such Buyer with prior notice of such disclosure or (b) disclose
the name of any Buyer or include the name of any Buyer without the prior written
consent of such Buyer (which consent shall not be unreasonably withheld or
delayed), to any third party or in any materials prepared for any third party.
(n) [INTENTIONALLY OMITTED.]
(o) [INTENTIONALLY OMITTED.]
(p) Non-Guarantor Subsidiaries. Prior to a Qualified IPO, if at the
end of any fiscal quarter of the Company the representations contained in
Section 3(gg) (without regard to the date limitation contained therein) are not
true and correct as of the end of such fiscal quarter, based, in the case of
revenues, on the Company's financial statements for the fiscal year to date and,
in the case of assets, on the Company's balance sheet at such fiscal quarter,
the Company shall cause one or more Subsidiaries (each, an "ADDITIONAL
GUARANTOR") to become a Guarantor by delivering the documents referred to in the
next sentence within the time period described therein, such that taking into
account the assets and revenues of such Additional Guarantor(s) as Guarantor(s),
the representations contained in Section 3(gg) would have been true and correct
as of the end of such fiscal quarter. Prior to a Qualified IPO, the Company
shall cause each
-26-
Additional Guarantor, as soon as practicable and in any event within 30 business
days following delivery or filing of the financial information required to be
delivered or filed in respect of such fiscal quarter pursuant to Section 17(e)
of the Note, to enter into an unlimited guarantee in favor of the Collateral
Agent, and grant to the Collateral Agent a first ranking Lien over all assets of
such Additional Guarantor (subject to Permitted Liens). The Company shall at the
same time deliver to the Collateral Agent: (i) a certificate of status,
compliance, good standing or like certificate with respect to the Additional
Guarantor issued by the appropriate governmental entity of the jurisdiction of
its incorporation; (ii) a certified copy of (A) the charter documents and
by-laws of such Additional Guarantor, (B) the resolutions of the board of
directors of such Additional Guarantor approving the entering into of all
security documents to which it is a party and the completion of all transactions
contemplated thereunder, and (C) all other instruments evidencing necessary
corporate action of such Additional Guarantor and of any required authorization
with respect to such matters; (iii) a certificate of the secretary or an
assistant secretary of such Additional Guarantor certifying the names and true
signatures of its officers authorized to sign the security documents to which it
is a party; (iv) evidence of registration in the necessary jurisdictions of the
Liens created by the security documents executed by such Additional Guarantor;
(vi) an opinion of counsel to such Additional Guarantor in the jurisdiction of
its incorporation and in each jurisdiction specified by the Collateral Agent, in
form and substance reasonably acceptable to the Collateral Agent, as is relevant
to confirm the validity and perfection of the Liens created by the security
documents executed by such Additional Guarantor; and (ix) such other
certificates and documentation as the Collateral Agent may reasonably request in
relation to such Additional Guarantor.
(q) Treaty Information. (i) Each Buyer agrees to provide to the
Company, upon reasonable notice prior to the first interest payment date under
the Notes and (ii) each transferee of a Buyer agrees to promptly provide the
Company, within 30 days of notice to the Company of such transfer of Securities,
factual information reasonably requested by the Company to determine such
Buyer's or transferee's, as applicable, eligibility for benefits under a
bilateral income tax treaty to which Canada is a party or the lack of such
eligibility. Each Buyer or transferee, as applicable, shall promptly notify the
Company as to any changes to any information previously provided by such Buyer
or transferee, as applicable, under this Section 4(q).
(r) Tax Information. The Company shall provide all factual information
reasonably requested by a Buyer or a transferee of a Buyer to assist such holder
in determining the Canadian tax consequences to such holder of its disposition
of Securities.
(s) Common Shares. The Common Shares issued pursuant to section 12 of
the Notes shall be duly authorized and validly issued.
(t) Restrictions on Distributions. The Company agrees to comply with
Section 17(g) of the Notes.
5. REGISTER.
The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each
holder of Securities), a register
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for the Notes and the Warrants, in which the Company shall record the name and
address (including facsimile number) of the Person in whose name the Notes and
the Warrants have been issued (including the name and address (including
facsimile number) of each transferee) and Warrant Shares issuable upon exercise
of the Warrants held by such Person. The Company shall keep the register open
and available at all times during business hours for inspection of any Buyer or
its legal representatives.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Notes
and the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
(a) Such Buyer shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the Company.
(b) Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price for the Notes and the related Warrants being
purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company (less, in the
case of Highbridge International LLC, the amounts withheld pursuant to Section
4(e)(i)).
(c) The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Notes and the
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:
(a) The Company shall have executed and delivered to such Buyer (i)
each of the Transaction Documents, (ii) the Notes being purchased by such Buyer
at the Closing pursuant to this Agreement, and (iii) the Warrants being
purchased by such Buyer at the Closing pursuant to this Agreement.
(b) Such Buyer shall have received the opinions of (i) Skadden, Arps
Slate, Xxxxxxx & Xxxx LLP, the Company's special United States outside counsel;
(ii) Osler, Xxxxxx & Harcourt, LLP, the Company's Canadian outside counsel,
dated as of the Closing Date; (iii) Xxxxxx Xxxx, the Company's United Kingdom
outside counsel; (iv) Xxxx Xxxxxxx, the
-28-
Company's in-house Canadian Corporate Counsel; and (v) Christian Na, the
Company's in-house U.S. Corporate Counsel, in substantially the form of Exhibits
X-0, X-0, X-0, G-4 and G-5 attached hereto.
(c) The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company and each of its
Subsidiaries in such entity's jurisdiction of formation issued by the Secretary
of State (or comparable office) of such jurisdiction, as of a date within 10
days of the Closing Date.
(d) The Company shall have delivered to such Buyer a certificate
evidencing the Company's qualification as a foreign or extra-provincial
corporation and good standing issued by the Secretaries of State (or comparable
office) of Ontario, Canada, Delaware, Virginia and New York, as of a date within
ten (10) days of the Closing Date.
(e) [INTENTIONALLY OMITTED.]
(f) The Company shall have delivered to such Buyer a certificate,
executed by the Assistant Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the
Company's Board of Directors in a form reasonably acceptable to such Buyer, (ii)
the Articles of Incorporation and (iii) the Bylaws, each as in effect at the
Closing, in the form attached hereto as Exhibit H.
(g) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form attached hereto as Exhibit I.
(h) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities.
(i) [INTENTIONALLY OMITTED.]
(j) In accordance with the terms of the Security Documents, the
Company shall have delivered to the Collateral Agent:
(1) certificates representing the shares of capital stock of
Mitel Networks, Inc. and Mitel Networks Holdings Limited, along with duly
executed blank stock powers;
(2) a pay-off letter in form and substance satisfactory to
the such Buyer as to the Bank of Montreal Facility;
-29-
(3) (A) certified copies of UCC, PPSA and U.K. lien search
results, listing all effective financing statements which name as debtor the
Company, Mitel Networks Limited or Mitel Networks, Inc. filed in the prior five
years to perfect an interest in any assets thereof, together with copies of such
financing statements, none of which, except as otherwise agreed in writing by
the Buyers or in respect of which Buyers have received an acknowledgement
acceptable to the Buyers, shall cover any of the Collateral (as defined in the
Security Documents) which results, except as otherwise agreed to in writing by
the Buyers shall not show any such Liens (as defined in the Security Documents)
except for Permitted Liens; and (B) a perfection certificate, duly completed and
executed by the Company, Mitel Networks Limited and Mitel Networks, Inc., in
form and substance satisfactory to the Buyers; and
(4) The Company shall have delivered to the Collateral Agent
such other documents and certificates as the Collateral Agent may reasonably
require.
(k) The Company shall have prepared and delivered to such Buyer a
true, correct and complete table reflecting the capitalization of the Company,
which table shall be consistent in all material respects with Section 3(s)
hereof and Schedule 3(s)
(l) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
(m) The Company shall have simultaneously sold to each Buyer the Notes
and Warrants to be purchased by such Buyer hereunder at the Closing and shall
have received payment in full for such Notes and Warrants.
8. TERMINATION.
In the event that the Closing shall not have occurred with respect to
a Buyer on or before five (5) Business Days from the date hereof due to the
Company's or such Buyer's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, if this Agreement is terminated pursuant to this Section 8 by
reason of a breach by the Company, the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g)
above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial.
(i) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
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federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to
it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in
any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(ii) If for the purpose of obtaining or enforcing judgment
against the Company in any court in any jurisdiction it becomes necessary
to convert into any other currency (such other currency being hereinafter
in this paragraph referred to as the "JUDGMENT CURRENCY") an amount due in
US dollars under this Agreement, the conversion shall be made at the
exchange rate between United States Dollars and Canadian Dollars as
reported in the New York edition of The Wall Street Journal (the "EXCHANGE
RATE") prevailing on the business day immediately preceding:
(1) the date of actual payment of the amount due, in the
case of any proceeding in the courts of New York or in the courts of any
other jurisdiction that will give effect to such conversion being made on
such date: or
(2) the date on which the foreign court determines, in the
case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this paragraph (ii)(2) being
hereinafter referred to as the "JUDGMENT CONVERSION DATE").
(iii) If in the case of any proceeding in the court of any
jurisdiction referred to in paragraph (ii)(2) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the
date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in
the Judgment Currency, when converted at the Exchange Rate prevailing on
the date of payment, will produce the amount of US dollars which could have
been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
(iv) Any amount due from the Company under this provision shall
be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Agreement.
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(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate principal amount
of the Notes issued and issuable hereunder, and any amendment to this Agreement
made in conformity with the provisions of this Section 9(e) shall be binding on
all Buyers and holders of Notes, as applicable. No provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the applicable Securities then
outstanding. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to
the Transaction Documents, holders of Notes or holders of the Warrants, as the
case may be. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction
Documents.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
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If to the Company:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx XxXxxxxx, Treasurer
Copy to:
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx, Corporate Counsel
Copy to:
Osler, Xxxxxx & Xxxxxxxx XXX
Xxxxx 0000, 00 X'Xxxxxx Xxxxxx
Xxxxxx, XX X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with a copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
If Highbridge International LLC is no longer the Collateral Agent,
then notice will be given to the successor Collateral Agent at the address
specified by such successor.
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The Company hereby irrevocably appoints Mitel Networks, Inc at 000 Xxx
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Telephone: (000) 000-0000, Facsimile:
(000) 000-0000, Attention: Xxxx Xxxxxxx, Corporate Counsel, as its agent for the
receipt of service of process in connection with any action pursuant to any
Transaction Document in the United States. The Company agrees that any document
may be effectively served on it in connection with any action, suit or
proceeding in the United States by service on its agents.
Any document shall be deemed to have been duly served if marked for
the attention of the agent at its address (as set out above) or such other
address in the United States as may be notified to the party wishing to serve
the document and delivered in accordance with the notice provisions set forth in
this Section 9(f).
If the Company's agent at any time ceases for any reason to act as
such, the Company shall appoint a replacement agent having an address for
service in the United States and shall notify each Buyer in writing of the name
and address of the replacement agent. Failing such appointment and notification,
each Buyer shall be entitled by notice to the Company to appoint a replacement
agent to act on the Company's behalf. The provisions of this Section 9(f)
applying to service on an agent apply equally to service on a replacement agent.
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate principal
amount of the Notes issued and issuable hereunder. A Buyer may assign some or
all of its rights hereunder without the consent of the Company, in which event
such assignee shall be deemed to be a Buyer hereunder with respect to such
assigned rights and shall agree to be bound by the provisions hereof.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, provided, however, that X.X. Xxxxxx Securities Inc. may
rely upon Section 2 and Section 3 hereof.
(i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and
9 shall survive the Closing. Each Buyer shall be severally responsible only for
its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the
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Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and such Buyer's
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (each, an "INDEMNITEE" and
collectively, the "INDEMNITEES"), as incurred, from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities or (iii) the status of such Buyer or holder of the Securities
as an investor in the Company pursuant to the transactions contemplated by the
Transaction Documents; provided that indemnification pursuant to this clause
(iii) shall not be available to the extent arising primarily from such Buyer's
bad faith, breach of the Transaction Documents, fraud, gross negligence or
willful misconduct. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 9(k) shall be the same as those set forth in
Section 6 of the Registration Rights Agreement. If a third party claim in
respect of Indemnified Liabilities involves more than one Indemnitee, the
Indemnitees shall conduct the defence through the same legal counsel, at
indemnitor's expense, acceptable to all Indemnitees, provided that an Indemnitee
may employ separate counsel, at indemnitor's expense, if representation by the
same legal counsel would be inappropriate due to differing interests between the
Indemnitees.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the
-35-
event that it fails to perform, observe, or discharge any or all of its
obligations under the Transaction Documents, any remedy at law may prove to be
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond
or other security.
(n) Payment Set Aside. To the extent that the Company makes a payment
or payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
(o) Independent Nature of Buyers' Obligations and Rights. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
(p) Currency. Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in United States Dollars.
(q) Termination of Security Documents. Upon the consummation of a
Qualified IPO, all of the Security Documents and Guarantees shall terminate and
the Collateral Agent and the Holders irrevocably authorize and direct the
Company, and any agent under their respective direction, at the sole expense of
the Company, to (a) discharge any and all registrations and filings made in
favor of the Holder or the Collateral Agent on behalf of the Holders, against
the Company or its Subsidiaries (and any predecessor entities of or to the
Company or its Subsidiaries) and any financing change statements filed in
connection with such registrations; and (b) file any UCC financing statement
terminations.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
MITEL NETWORKS CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYER:
HIGHBRIDGE INTERNATIONAL LLC
By: HIGHBRIDGE CAPITAL MANAGEMENT, LLC
By: /s/ Xxxx X. Chill
------------------------------------
Name: Xxxx X. Chill
Title: Managing Director
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYER:
LAKESHORE INTERNATIONAL, LTD.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Authorized Signer
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYER:
MARATHON SPECIAL OPPORTUNITY
MASTER FUND, LTD.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYER:
FORE MASTER CONVERTIBLE FUND, LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Assistant Secretary
[Signature Page to Securities Purchase Agreement]
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5) (6)
AGGREGATE
PRINCIPAL NUMBER OF LEGAL REPRESENTATIVE'S
ADDRESS AND AMOUNT WARRANT PURCHASE ADDRESS
BUYER FACSIMILE NUMBER OF NOTES SHARES PRICE AND FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
Highbridge International c/o Highbridge Capital Management, LLC 13,750,000 4,125,000 $13,750,000 Xxxxxxx Xxxx & Xxxxx LLP
LLC 0 Xxxx 00xx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx Attention: Xxxxxxx Xxxxx, Esq.
Xxxx X. Chill Facsimile:(000) 000-0000
Facsimile: (000) 000-0000 Telephone:(000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
Lakeshore International, Lakeshore International, Ltd. 13,750,000 4,125,000 $13,750,000
Ltd. 000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention:
Facsimile:
Telephone:
Residence:
Sidley Xxxxxx Xxxxx & Xxxx
Marathon Special NSCC N.Y. Window 13,750,000 4,125,000 $13,750,000 LLP
Opportunity Master 00 Xxxxx Xx. 0xx Xx. 000 Xxxxxxx Xxxxxx
Fund,Ltd. Account Bear Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
FBO Marathon Special Opportunity Attention: Xxxxxx Xxxxxxx
Master Fund, Ltd. #10227022 Facsimile: (000) 000-0000
Xxx Xxxx, XX 00000 Telephone: (000) 000-0000
Attention:
Facsimile:
Telephone:
Residence:
Fore Master Convertible NY Window 13,750,000 4,125,000 $13,750,000
Fund, Ltd. 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Concourse level, S Building
A/C Xxxxxx Xxxxxxx
NY -- 038165304
Attention: Xxx
Facsimile:
Telephone:
Residence:
EXHIBITS
Exhibit A Form of Notes
Exhibit B Form of Warrant
Exhibit C Registration Rights Agreement(1)
Exhibit D Pledge and Security Agreements(1)(2)
Exhibit E Guarantees(1)(2)
Exhibit F List of Other Security Documents
Exhibit G-1 Form of US Outside Company Counsel Opinion
Exhibit G-2 Form of Canadian Outside Company Counsel Opinion
Exhibit G-3 Form of UK Outside Company Counsel Opinion
Exhibit G-4 Form of Canadian In-House Company Counsel Opinion
Exhibit G-5 Form of US In-House Company Counsel Opinion
Exhibit H Form of Officer's Certificate
Exhibit I Form of Officer's Certificate
Exhibit J Declaration for Removal of Legend
Exhibit K Bank of Montreal Payoff Letter
Exhibit L Collateral Agent Appointment Agreement
SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(s) Capitalization
Schedule 3(t) Indebtedness
(1) Filed as an exhibit to the annual report on Form 20-F of Mitel for the year
ended April 24, 2005 and the transition period ended April 30, 2005 and
incorporated herein by reference.
(2) Filed separately as an exhibit to this annual report.
EXHIBIT A
FINAL
[FORM OF SENIOR SECURED CONVERTIBLE NOTE]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT; (B) TO THE COMPANY; (C)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS; OR (D) WITHIN THE UNITED
STATES (1) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS OR (2) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES LAWS, AND
THE HOLDER SHALL FURNISH TO THE COMPANY AN OPINION TO SUCH EFFECT FROM COUNSEL
OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE COMPANY PRIOR TO SUCH
OFFER, SALE OR TRANSFER. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(C)(III) AND 22(A) HEREOF. THE PRINCIPAL
AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(C)(III) OF THIS NOTE.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
SHALL NOT TRADE SUCH SECURITIES IN ONTARIO OR TO THE RESIDENTS OF ONTARIO BEFORE
JULY 31, 2005.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT, DATED AS OF APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE
INVESTORS REFERRED TO THEREIN (THE "SECURITIES PURCHASE AGREEMENT") AND THE
HOLDER OF THE NOTE, BY ACCEPTANCE OF THIS NOTE, AGREES TO BE BOUND BY ALL
APPLICABLE PROVISIONS OF THE SECURITIES PURCHASE AGREEMENT. THE SECURITIES
REPRESENTED HEREBY ARE SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF
APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE INVESTORS REFERRED TO THEREIN
(THE "REGISTRATION RIGHTS AGREEMENT") AND THE HOLDER OF THE NOTE, BY ACCEPTANCE
OF THIS NOTE, AGREES TO BE BOUND BY ALL APPLICABLE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTION 5 THEREOF.
NO TRANSFER OF THIS NOTE SHALL BE MADE WITHOUT COMPLYING WITH THE PROVISIONS OF
SECTION 22(A) OF THIS NOTE.
MITEL NETWORKS CORPORATION
SENIOR SECURED CONVERTIBLE NOTE
Issuance Date: April 27, 2005 Principal: US $_____________
FOR VALUE RECEIVED,
Mitel Networks Corporation, a corporation duly
incorporated under the laws of Canada (the "COMPANY"), hereby promises to pay to
the order of [HIGHBRIDGE INTERNATIONAL LLC], [OTHER BUYERS] or registered
assigns ("HOLDER") the amount set out above as the Principal (as reduced
pursuant to the terms hereof pursuant to redemption, repurchase, conversion or
otherwise, the "PRINCIPAL") when due, whether upon the Maturity Date (as defined
below), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest ("INTEREST") on any outstanding Principal
at the Interest Rate (as defined below), from the date set out above as the
Issuance Date (the "ISSUANCE DATE") until the same becomes due and payable,
whether upon an Interest Date (as defined below), the Maturity Date,
acceleration, conversion, redemption or otherwise (in each case, in accordance
with the terms hereof). This Senior Secured Convertible Note (including all
Senior Secured Convertible Notes issued in exchange, transfer or replacement
hereof, this "NOTE") is one of an issue of Senior Secured Convertible Notes
issued pursuant to the Securities Purchase Agreement (as defined below) on the
Closing Date (as defined below) (such other Senior Secured Convertible Notes
being the "ADDITIONAL NOTES" and, together with this Note, collectively referred
to herein as the "NOTES"). Certain capitalized terms used herein are defined in
Section 38.
(1) MATURITY. On the Maturity Date, the Holder shall surrender the
Note to the Company and the Company shall pay to the Holder an amount in cash
representing all outstanding Principal and accrued and unpaid Interest. The
"MATURITY DATE" shall be April 28, 2010, such date to be extended through the
date that is ten days after the consummation of a Fundamental Change in the
event that a Fundamental Change is publicly announced or a Fundamental Change
Company Notice (as defined in Section 5(b)) is delivered prior to the Maturity
Date.
(2) INTEREST; INTEREST RATE. (a) Interest on this Note shall accrue at
the Interest Rate and shall commence accruing on the Issuance Date. Interest
shall be computed on the basis of a 360-day year and the actual number of days
in the applicable Interest Period and shall be payable semi-annually in arrears
on each May 1 and November 1 and on the Maturity Date (each, an "INTEREST DATE")
with the first Interest Date being November 1, 2005. Interest shall be payable
on each Interest Date in cash. Interest payable on each Interest Date shall
equal the amount of interest accrued for the period commencing on and including
the immediately preceding Interest Date in respect of which interest has been
paid (or commencing on and including the Issuance Date if no interest has been
paid) and ending on and including the day preceding such Interest Date (each, an
"INTEREST PERIOD"). Interest which is not paid when due shall itself bear
interest at the Interest Rate in accordance with this Section 2.
2
(b) Notwithstanding the foregoing provisions of this Note, the
Company shall in no event be obliged to make any payments of interest or other
amounts payable to the Holder hereunder in excess of an amount or rate which
would be prohibited by law.
(c) The Company and the Holder each acknowledge and agree that
all calculations of interest under this Note are to be made on the basis of the
nominal interest rate described herein and not on the basis of effective yearly
rates or on any other basis which gives effect to the principle of deemed
reinvestment of interest. The Company and the Holder each acknowledge that there
is a material difference between the stated nominal interest rates and the
effective yearly rates of interest and that they are capable of making the
calculations required to determine such effective yearly rates of interest.
(3) CONVERSION OF NOTES. This Note shall be convertible into Common
Shares, on the terms and conditions set forth in this Section 3.
(a) Conversion Right. (i) Subject to the provisions of Section
3(d), at any time or times on or after the consummation of a Qualified IPO or
upon a Fundamental Change (regardless of whether the Company has delivered a
Fundamental Change Conversion Notice), the Holder shall be entitled to convert
any portion (equal to $1,000 or integral multiples thereof) of the outstanding
and unpaid Conversion Amount (as defined below) into fully paid and
nonassessable Common Shares in accordance with Section 3(c), at the Conversion
Rate (as defined below). The Company shall not issue any fraction of a Common
Share upon any conversion. If the issuance would result in the issuance of a
fraction of a Common Share, the Company shall round such fraction of a Common
Share up to the nearest whole share.
(ii) The Company shall pay all expenses in connection with
all Designated Taxes and Other Taxes, if any, that may be payable by the Company
in respect of the issuance of Common Shares or the holding or disposition of
this Note or any Common Shares, and shall indemnify and hold harmless the Holder
and its affiliates from any taxes, interest, penalties and governmental charges
which may become payable by the Holder or any of its affiliates as a result of
the failure or delay by the Company to pay such taxes or governmental charges
specified above. However, the Holder shall pay any such taxes which are due
because the Holder requests the Common Shares to be issued in a name other than
the Holder's name. The Company may refuse to deliver the certificate
representing the Common Shares being issued in a name other than the Holder's
name until the Company receives a sum sufficient to pay any Other Taxes which
will be due because the Common Shares are to be issued in a name other than the
Holder's name. For purposes of this Section 3(a), "OTHER TAXES" means any
present or future stamp, documentary or similar issue or transfer taxes or any
other excise or property taxes, charges, governmental charges or similar levies
in respect of the issuance and delivery of Common Shares upon conversion of any
Conversion Amount, and "DESIGNATED TAXES" means any liability of a non-resident
of Canada for the purposes of the Income Tax Act (Canada) for Canadian income or
capital gains tax arising (A) as a result of the conversion of a Conversion
Amount upon a Fundamental Change prior to a Qualified IPO or (B) as a
consequence of the disposition of (i) this Note to the Company upon a
Fundamental Change prior to a Qualified IPO or (ii) any Common Shares acquired
as a result of a conversion of a Conversion Amount upon a Fundamental Change
prior to a Qualified IPO (including any liability of a non-resident of Canada
for purposes of the Income Tax Act (Canada) for Canadian income or capital gains
tax
3
arising as a result of the receipt of a payment under this Section 3(a)(ii)),
provided that the aggregate amount of Designated Taxes shall not exceed an
amount equal to the income and capital gains tax arising in respect of such
conversion or disposition by the Holder for consideration having a value equal
to 250% of the Conversion Amount.
(b) Conversion Rate. The number of Common Shares issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
"CONVERSION RATE").
(i) "CONVERSION AMOUNT" means the sum of (A) the portion of
the Principal to be converted, redeemed or otherwise with respect to which this
determination is being made and (B) accrued and unpaid Interest with respect to
such Principal.
(i) "CONVERSION PRICE" means, as of any Conversion Date
or other date of determination, (x) 110% of the lower of (1) the price per
Common Share in a Qualified IPO, subject to adjustment as provided in Section 7
hereof as if such price were the Conversion Price and (2) if the average
referred to in clause (x)(2)(A) of this definition has been determined, the
higher of (A) the arithmetic average of the first ten Closing Sale Prices of the
Common Shares on the NYSE or Nasdaq National Market immediately following the
Lock-up Expiration Date, subject to adjustment for share splits, share
dividends, recapitalizations, combinations, reverse share splits or other
similar events during such period and (B) 80% of the price per Common Share in a
Qualified IPO, subject to adjustment as provided in Section 7 hereof as if such
price were the Conversion Price or (y) in connection with any Fundamental Change
occurring prior to the consummation of a Qualified IPO, $1.50, in each case
subject to adjustment as provided herein.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount
into Common Shares on any date, the Holder shall (A) transmit by facsimile (or
otherwise deliver), for receipt on or prior to 11:59 p.m.,
New York Time, on
such date, a copy of an executed notice of conversion in the form attached
hereto as Exhibit I (the "CONVERSION Notice") to the Company and (B) if required
by Section 3(c)(iii), surrender this Note to a common carrier for delivery to
the Company as soon as practicable on or following such date (or an
indemnification undertaking with respect to this Note in the case of its loss,
theft or destruction). On or before 4:00 p.m.,
New York Time, on the second
(2nd) Trading Day following the date of receipt of a Conversion Notice, the
Company shall transmit by facsimile a confirmation of receipt of such Conversion
Notice to the Holder and the Company's transfer agent, if any (the "TRANSFER
AGENT"). The date on which the Holder satisfies the foregoing requirements is
hereinafter referred to as the "CONVERSION DATE". On or before 4:00 p.m., New
York Time, on the third (3rd) Trading Day following the date of receipt of a
Conversion Notice (the "SHARE DELIVERY DATE"), the Company shall (X) provided
that the Transfer Agent, if any, is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, credit such
aggregate number of Common Shares to which the Holder shall be entitled to the
Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program or if the
foregoing is not applicable, issue and deliver to the address as
4
specified in the Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of Common Shares to which the Holder
shall be entitled. If this Note is physically surrendered for conversion as
required by Section 3(c)(iii) and the outstanding Principal of this Note is
greater than the Principal portion of the Conversion Amount being converted,
then the Company shall as soon as practicable and in no event later than three
(3) Trading Days after receipt of this Note and at its own expense, issue and
deliver to the holder a new Note (in accordance with Section 22(d)) representing
the same indebtedness to the extent of the outstanding Principal not converted.
The Person or Persons entitled to receive the Common Shares issuable upon a
conversion of this Note shall be treated for all purposes as the record holder
or holders of such Common Shares on the Conversion Date.
(ii) Company's Failure to Timely Convert. Subject to Section
28, if an Event of Default under Section 4(a)(i) has occurred due to the
Company's failure to deliver the required number of shares by 4:00 p.m. on the
third (3rd) Trading Day following the Conversion Date, and if on or after 4:00
p.m. on the third (3rd) Trading Day following the Conversion Date (as referred
to in Section 4(a)(i)) the Holder purchases (in an open market transaction or
otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of
Common Shares issuable upon such conversion that the Holder anticipated
receiving from the Company (a "BUY-IN"), then the Company shall, within three
(3) Trading Days after the Holder's request pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage commissions and
other out-of-pocket expenses, if any) for the Common Shares so purchased (the
"BUY-IN PRICE"), at which point the Company's obligation to deliver such
certificate (and to issue such Common Shares) shall terminate.
(iii) Book-Entry. Notwithstanding anything to the contrary
set forth herein, upon conversion of any portion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this
Note to the Company unless (x) the full Conversion Amount represented by this
Note is being converted or (y) the Holder has provided the Company with prior
written notice (which notice may be included in a Conversion Notice) requesting
physical surrender and reissue of this Note. The Holder and the Company shall
maintain records showing the Principal, Interest converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder and the Company, so as not to require physical surrender of this Note
upon conversion.
(iv) Pro Rata Conversion; Disputes. In the event that the
Company receives a Conversion Notice from more than one holder of Notes for the
same Conversion Date and the Company can convert some, but not all, of such
portions of the Notes submitted for conversion, the Company, subject to Section
3(d), shall convert from each holder of Notes electing to have Notes converted
on such date a pro rata amount of each such holder's portion of its Notes
submitted for conversion based on the principal amount of Notes submitted for
conversion on such date by such holder relative to the aggregate principal
amount of all Notes submitted for conversion on such date. In the event of a
dispute as to the number of Common Shares issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the number
of Common Shares not in dispute and resolve such dispute in accordance with
Section 28.
5
(d) Limitations on Conversions. The Company shall not effect any
conversion of this Note, and the Holder shall not have the right to convert any
portion of this Note pursuant to Section 3(a), to the extent that after giving
effect to such conversion (including any Make-Whole Premium), the Holder
(together with the Holder's affiliates) would beneficially own in excess of
4.99% (the "CONVERSION LIMITATION") of the number of Common Shares outstanding
immediately after giving effect to such conversion. For purposes of the
foregoing sentence, the number of Common Shares beneficially owned by the Holder
and its affiliates shall include the number of Common Shares issuable upon
conversion of this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of Common Shares which would be
issuable upon (i) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of its affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any Additional Notes or warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
3(d), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. For purposes of this Section 3(d), in determining the
number of outstanding Common Shares, the Holder may rely on the number of
outstanding Common Shares as reflected in (x) the Company's most recent Form
20-F, Form 6-K or other public filing with the SEC or any Canadian regulatory
authority (y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Transfer Agent setting forth the number of Common
Shares outstanding. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within two (2) Business Days confirm orally and
in writing to the Holder the number of Common Shares then outstanding. In any
case, the number of outstanding Common Shares shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its affiliates since the date as of which such
number of outstanding Common Shares was reported. By written notice to the
Company, the Holder may increase or decrease the Conversion Limitation to any
other percentage not in excess of 9.99% specified in such notice; provided that
(A) any such increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, and (B) any such increase or
decrease will apply only to the Holder and not to any other holder of Notes.
Notwithstanding the foregoing, the Conversion Limitation shall not be applicable
(1) on any of the ten Trading Days up to and including the Maturity Date, or (2)
or any of the ten Trading Days up to and including the Effective Date or (3)
during the Fundamental Change Conversion/Repurchase Period.
(e) Conversion Upon Fundamental Change. The conversion by the
Holder following its receipt of a Fundamental Change Company Notice during the
Fundamental Change Conversion/Repurchase Period shall be a "FUNDAMENTAL CHANGE
CONVERSION". In connection with a Fundamental Change Conversion, the Holder
shall be entitled to receive the Make-Whole Premium with respect to any
Conversion Amount converted in accordance with Section 3(c).
(f) Allocation. Section 3(b) determines the aggregate
consideration to be received by the Holder upon a conversion of any Conversion
Amount. Notwithstanding any of the foregoing such consideration is to be
allocated as follows: (i) in respect of accrued and unpaid Interest with respect
to the Principal to be converted, the Holder shall receive that
6
number, or fraction, of Common Shares that has a value equal to such accrued and
unpaid Interest and (ii) in respect of Principal to be converted, the Holder
shall receive the number of Common Shares determined under Section 3(b) less the
number or fraction of Common Shares determined under Section 3(f)(i).
(4) RIGHTS UPON EVENT OF DEFAULT.
(a) Event of Default. "EVENT OF DEFAULT" wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the Company's (A) failure to deliver the required number
of Common Shares by 4:00 p.m. on the third (3rd) Trading Day after the
applicable Conversion Date or (B) (x) written notice to any holder of the Notes,
including by way of written public announcement or through any of its agents or
(y) oral notice by a senior executive officer of the Company to any holder of
the Notes, at any time, in each case, of the Company's intention not to comply
with a request for conversion of any Notes into Common Shares that is tendered
in accordance with the provisions of the Notes; or
(ii) a default in the payment of Interest on any Note when
due and payable and such default continues for a period of 30 days; or
(iii) a default in the payment of the Principal, the
Optional Redemption Price, the Tax Redemption Price, the Fundamental Change
Repurchase Price, including any amount owing pursuant to Section 15(b)(ii), or
any applicable Make-Whole Premium on any Note when it becomes due and payable;
or
(iv) a default in the performance of any covenant, agreement
or condition of the Company in this Note or any other Transaction Document
(other than a default specified in clauses (i) through (iii) above), and such
default continues for a period of 30 days after there has been given, by
registered or certified mail, to the Company by the Holder or any holder of
Additional Notes a written notice (a "NOTICE OF DEFAULT") specifying such
default and requiring it to be remedied and stating that such notice is a
"NOTICE OF DEFAULT" hereunder; or
(v) a default by the Company or any Subsidiary in the
payment of the principal or interest on any loan agreement or other instrument
under which there may be outstanding, or by which there may be evidenced, any
debt for money borrowed in excess of $5 million in the aggregate of the Company
and any Subsidiary (other than indebtedness for borrowed money secured only by
the real property to which the indebtedness relates and which is non-recourse to
the Company or to such Subsidiary), whether such debt now exists or shall
hereafter be created, either at its stated maturity or resulting in such debt
becoming or being declared due and payable prior to its stated maturity, in the
later case and such acceleration shall not have been rescinded or annulled
within 30 days after a Notice of Default specifying such default and requiring
it to be remedied and stating that such notice is a "NOTICE OF DEFAULT"
hereunder has been received by the Company or such Subsidiary from the Holder or
any holder
7
of Additional Notes; provided that if any time before a judgment or decree has
been obtained, such default is remedied or cured by the Company or such
Subsidiary within the applicable cure period, or is waived by the holders of
such indebtedness, default under this clause (v) shall be deemed to have been
remedied, cured or waived, as the case may be; or
(vi) if the Company has failed to meet the Interest Coverage
Test (which Interest Coverage Test only applies on the 30 month anniversary of
the Issuance Date if no Qualified IPO has been consummated); or
(vii) if the Company receives a redemption or repurchase
notice with respect to or otherwise becomes obligated to redeem or repurchase,
any Capital Shares of the Company, except with respect to the repurchase or
redemption of Capital Shares for an aggregate repurchase or redemption price
that shall not exceed the lesser of (x) $5 million and (y) the Cumulative
Retained Earnings; or
(viii) if the Company: (A) amends any of sections 6.6, 6.7,
6.8, 6.9 or 6.10 of the Shareholders' Agreement (the "PUT PROVISIONS"); (B)
amends, deletes or adds any other section of the Shareholders' Agreement that
affects, supersedes or obviates any of the Put Provisions; or (C) enters into,
amends or terminates any agreement (including without limitation corporate
governance documents) which has the effect of amending superseding or obviating
the Put Provisions, without, in each case, the approval of the Required Holders;
or
(ix) one or more final unsatisfied judgments not covered by
insurance aggregating in excess of $5 million, at any one time, are rendered
against the Company or any Subsidiary and not stayed, bonded or discharged
within 60 days; or
(x) a failure by the Company to give the Fundamental Change
Company Notice when required by Section 5(b) hereof; or
(xi) If an event of default under the Technology Partnership
Canada Agreement has occurred and is continuing and in the case of an event of
default referred to in (c), (d) or (e) of Section 8.1 of the Technology
Partnership Canada Agreement, the Minister has given the notice referred to in
the proviso to Section 8.1 and the Company has failed, within 30 days of receipt
of the notice, either to correct the condition or event complained of or to
demonstrate, to the satisfaction of the Minister, that it has taken such steps
as are necessary to correct the condition, and has notified the Minister of the
rectification. Capitalized terms used in this subsection shall be given the
meaning ascribed thereto in the Technology Partnership Canada Agreement; or
(xii) the entry by a court having jurisdiction in the
premises of (x) a decree or order for relief in respect of the Company or any
Subsidiary (other than any subsidiaries) of a voluntary case or proceeding under
any applicable federal, state, Canadian or other foreign bankruptcy, insolvency,
reorganization or other similar law or (y) a decree or order adjudging the
Company or any Subsidiary (other than any subsidiaries) as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or any
Subsidiary (other than any subsidiaries) under any applicable federal, state,
Canadian or other foreign law or (z) appointing a custodian,
8
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary (other than any subsidiaries) or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60 consecutive
days; or
(xiii) the commencement by the Company or any Subsidiary
(other than any subsidiaries) of a voluntary case or proceeding under any
applicable federal, state, Canadian or foreign bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company or any Subsidiary (other
than any subsidiaries) in an involuntary case or proceeding under any applicable
federal, state, Canadian or other foreign bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal, state, Canadian
or other foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any
Subsidiary (other than any subsidiaries) or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company or any
Subsidiary (other than any subsidiaries) in furtherance of any such action; or
(xiv) any Event of Default (as defined in the Additional
Notes) occurs with respect to any Additional Notes.
For purposes of this Section 4(a), "SUBSIDIARIES" means entities in which the
Company, directly or indirectly, owns capital shares or holds an equity or
similar interest which entities individually and in the aggregate, comprise less
than 5% of the consolidated revenues and assets of the Company and its
Subsidiaries.
(b) Redemption Right. Promptly after the occurrence of an Event
of Default with respect to this Note or any Additional Note, the Company shall
deliver written notice thereof via facsimile and overnight courier (an "EVENT OF
DEFAULT NOTICE") to the Holder. At any time after the earlier of the holders'
receipt of an Event of Default Notice and the holders becoming aware of an Event
of Default, and prior to 30 Trading Days after such Event of Default is cured,
holders of Notes representing the lesser of (i) at least $5 million of the
aggregate principal amount of the Notes then outstanding or (ii) at least 25% of
the aggregate principal amount of the Notes then outstanding, may accelerate and
require the Company to redeem all or any portion (equal to $1,000 or integral
multiples thereof) of the Notes held by such holders of the Notes electing
redemption by delivering written notice thereof (the "EVENT OF DEFAULT
REDEMPTION NOTICE") to the Company. The Event of Default Redemption Notice shall
indicate the aggregate Conversion Amount of the Notes such holders are electing
to redeem. The Notes (or portions thereof) subject to redemption by the Company
pursuant to this Section 4(b) shall be redeemed by the Company at a price equal
to the Conversion Amount to be redeemed (the "EVENT OF DEFAULT REDEMPTION
PRICE"). Redemptions required by this Section 4(b) shall be made in accordance
with the provisions of Section 15.
9
(5) RIGHTS UPON FUNDAMENTAL CHANGE.
(a) Assumption. The Company shall not enter into or be party to a
Fundamental Change unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Note and the other Transaction Documents
in accordance with the provisions of this Section 5(a) pursuant to written
agreements, including agreements to deliver to each holder of Notes in exchange
for such Notes a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the
principal amounts and the interest rates of the Notes held by such holder,
having similar ranking to the Notes, providing for the applicable conversion
rights herein (except that the Successor Entity shall have the right to deliver
to the holder upon conversion subsequent to the Effective Date, in lieu of the
Common Shares issuable upon the conversion of the Notes prior to such Effective
Date, such shares, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the holder
would have been entitled to receive upon the Effective Date had this Note been
converted immediately prior to such Effective Date, based on the Conversion Rate
in effect at the time of the conversion following the Effective Date) and having
a conversion price equal to the conversion price of the Notes held by such
holder, as such price may be adjusted to reflect the consideration paid in such
Fundamental Change (the "SUCCESSOR NOTE") and (ii) prior to the consummation of
a Qualified IPO, the perfection and priority of the Liens constituted by the
Security Documents are not impaired. Upon the occurrence of any Fundamental
Change, the Successor Entity shall succeed to, and be substituted for (so that
from and after the Effective Date, the provisions of this Note referring to the
"COMPANY" shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Note with the same effect as if such Successor Entity had
been named as the Company herein, until such time as the Successor Note is
delivered. The provisions of this Section shall apply similarly and equally to
successive Fundamental Changes and shall be applied without regard to any
limitations on the conversion or redemption of this Note.
(b) Repurchase Right upon Fundamental Change. If prior to the
Maturity Date there shall have occurred a Fundamental Change, the Company shall
irrevocably offer to repurchase all or a portion of this Note (a "FUNDAMENTAL
CHANGE REPURCHASE") at the Fundamental Change Repurchase Price on the
Fundamental Change Settlement Date. No sooner than thirty (30) days nor later
than fifteen (15) days prior to the consummation of a Fundamental Change (but
from and after a public offering by the Company of Common Shares, not prior to
the public announcement of such Fundamental Change), the Company shall deliver
written notice thereof via facsimile and overnight courier to the Holder (a
"FUNDAMENTAL CHANGE COMPANY NOTICE") which shall state:
(i) the events causing a Fundamental Change and the
anticipated Effective Date;
(ii) the last date of the Fundamental Change
Conversion/Repurchase Period (as defined below) by which a Holder must deliver a
Fundamental Change Repurchase Notice to elect the repurchase option pursuant to
this Section 5(b) or deliver a Notice of Conversion requesting conversion upon a
Fundamental Change in accordance with Section 3(c);
10
(iii) the Fundamental Change Settlement Date;
(iv) the Fundamental Change Repurchase Price;
(v) the Conversion Price applicable on the date of the
Fundamental Change Company Notice;
(vi) that Notes may be converted in connection with a
Fundamental Change;
(vii) that the Fundamental Change Repurchase Price for any
Note as to which a Fundamental Change Repurchase Notice has been duly given will
be paid promptly on the Fundamental Change Settlement Date;
(viii) that the Holder is entitled to receive a Make-Whole
Premium upon any conversion occurring within the Fundamental Change
Conversion/Repurchase Period; and
(ix) whether such Make-Whole Premium shall be delivered in
cash, by delivery of Common Shares or a combination thereof in accordance with
Section 12 (and containing such information required by Section 12).
At any time during the period (the "FUNDAMENTAL CHANGE CONVERSION/REPURCHASE
PERIOD") beginning after the Holder's receipt of a Fundamental Change Company
Notice and ending thirty (30) days after the Effective Date of such Fundamental
Change, the Holder may require the Company to repurchase all or any portion of
this Note by delivering written notice thereof ("FUNDAMENTAL CHANGE REPURCHASE
NOTICE") to the Company, which Fundamental Change Repurchase Notice shall
indicate the Principal amount the Holder is accepting to be repurchased.
Repurchases required by this Section 5 shall be made in accordance with the
provisions of Section 15 and shall have priority to payments to shareholders in
connection with a Fundamental Change. Notwithstanding anything to the contrary
in this Section 5, until the Fundamental Change Repurchase Price (together with
any interest thereon) is paid in full, the Principal amount submitted for
repurchase under this Section 5(b) (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Common Shares pursuant to
Section 3.
(6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE
EVENTS.
(a) Purchase Rights. Subject to the limitations set forth in
Section 17(f), if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase shares, warrants, securities or
other property pro rata to the record holders of any class of Common Shares (the
"PURCHASE RIGHTS"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, upon the Holder's election, the aggregate
Purchase Rights, and in lieu of any adjustments to which the Holder is otherwise
entitled under Section 7 below in respect of each Purchase Right, which the
Holder could have acquired if the Holder had held the number of Common Shares
acquirable upon complete conversion of this Note (without taking into account
any limitations or restrictions on the convertibility of this Note) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Shares are to
11
be determined for the grant, issue or sale of such Purchase Rights. However, the
Company shall not grant, issue or sell any Purchase Rights to the extent that
the fair market value of any Purchase Rights that the Company would become
obligated to grant to the Holder under this Section 6(a) and/or the aggregate of
any dividends, distributions or cash that the Company would become obligated to
pay to the Holder under Section 19 of this Note, together with (i) the fair
market value of any Purchase Rights previously granted pursuant to Section 6(a)
of this Note, (ii) any dividends, distributions or cash previously paid in
respect of this Note pursuant to Section 19 of this Note, (iii) any payments or
repayments of or reductions of Principal to the Holder under this Note as a
result of a conversion that the Company was obligated to make or is currently
obligated (under this Note or under the Securities Purchase Agreement) to make
on account of the principal amount (as defined in the Income Tax Act (Canada))
of this Note and (iv) of any reductions of Principal as a result of a conversion
under this Note that the Company was obligated to make, would cause the Company
to pay or repay, or become obligated to pay or repay, more than 20% of the
Principal of this Note prior to the Maturity Date.
(b) Other Corporate Events. (i) In addition to and not in
substitution for any other rights hereunder, prior to the consummation of any
Fundamental Change pursuant to which holders of Common Shares are entitled to
receive securities or other assets with respect to or in exchange for Common
Shares (a "CORPORATE EVENT"), the Company shall make appropriate provision to
ensure that the Holder, if it has not elected a Fundamental Change Repurchase,
will have the right to receive Alternate Consideration upon a conversion of this
Note following the Effective Date of such Fundamental Change.
(ii) In addition to and not in substitution for any other
rights hereunder, should a Corporate Event occur, and should a Holder not elect
a Fundamental Change Repurchase and not elect a Fundamental Change Conversion,
then the Company shall make appropriate provision to ensure that the Holder
will, in respect of a conversion of this Note, have the right to receive
Alternate Consideration; provided, however, that this Note will not be
convertible into a security other than (x) a "prescribed security" as defined
for purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) or (y)
such other security where the right of a Holder to convert the Note into such
other security does not cause interest payable on the Note to persons who deal
with the Company at arm's length to cease to be exempt from Canadian withholding
tax. Should such restriction apply, the Notes will be convertible into
securities of the Company that are "prescribed securities" as so defined (the
"Substituted Securities") in lieu of the Alternate Consideration, provided that
the Substituted Securities into which this Note is convertible will, at the time
of such a conversion, have a fair market value that is equal to the fair market
value, at the time of the conversion, of the Alternate Consideration that would
have otherwise been received, but for the foregoing restriction, on such a
conversion. Notwithstanding the foregoing restriction on conversion into the
Alternate Consideration, the Company may, at its option, deliver the Alternate
Consideration to a Holder on the conversion of the Notes in lieu of the
Substituted Securities.
(iii) In this Section 6, "ALTERNATE CONSIDERATION" means (A)
in the event that the Common Shares remain outstanding after such Corporate
Event, any securities or others assets to which the Holder would have been
entitled (in addition to the Common Shares receivable on such conversion) with
respect to the number of Common Shares issuable upon conversion at the
Conversion Rate in effect at the time of such conversion had such Common
12
Shares been held by the Holder upon the consummation of the Corporate Event
(without taking into account any limitations or restrictions on the
convertibility of this Note) and (B) in the event that the Common Shares are no
longer outstanding after any such Corporate Event, in lieu of the Common Shares
otherwise receivable upon such conversion, such securities or other assets
received by the holders of Common Shares in connection with the consummation of
such Corporate Event as if the consideration attributable to one Common Share in
connection with the consummation of the Corporate Event were one Common Share.
(iv) The provisions of this Section shall apply similarly
and equally to successive Corporate Events and shall be applied without regard
to any limitations on the conversion or redemption of this Note. Notwithstanding
this Section (6)(b), in no event shall the Company be obligated to distribute
any Purchase Rights pursuant to this Section (6)(b) if and to the extent that it
has distributed such Purchase Rights to the Holder pursuant to Section (6)(a).
(c) Reclassification, Etc. If there is any reclassification,
reorganization or change of Common Shares issuable upon conversion of the Notes
(other than any change for which there is an adjustment under Section 7 or which
is already addressed in this Section 6); then the Company shall make appropriate
provision to ensure that the Holder will have the right to receive, upon a
conversion, the kind and amount of shares of stock and other securities and
property to which the Holder would have been entitled had this Note initially
been issued with conversion rights for the form of such consideration (as if the
kind and amount of shares and other securities and property attributable to one
Common Share in connection with such reclassification, reorganization or change
were one Common Share) at a conversion rate equal to the Conversion Rate
applicable at the time of the conversion by the Holder ("REORGANIZATION
CONSIDERATION") provided, however, that this Note will not be convertible into a
security other than (x) a "prescribed security" as defined for purposes of
clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) or (y) such other
security where the right of a Holder to convert the Note into such other
security does not cause interest payable on the Note to persons who deal with
the Company at arm's length to cease to be exempt from Canadian withholding tax.
Should such restriction apply, the Notes will be convertible into securities of
the Company that are "prescribed securities" as so defined (the "Substituted
Securities") in lieu of the Reorganization Consideration, provided that the
Substituted Securities into which this Note is convertible will, at the time of
such a conversion, have a fair market value that is equal to the fair market
value, at the time of the conversion, of the Reorganization Consideration that
would have otherwise been received, but for the foregoing restriction, on such a
conversion. Despite the foregoing restriction on conversion into the
Reorganization Consideration, the Company may, at its option, deliver the
Reorganization Consideration to a Holder on the conversion of the Notes in lieu
of the Substituted Securities.
(d) Notwithstanding any other provision of this Note, including
the definition of "Common Shares" herein, the Company shall not be obliged to
deliver to the Holder any security or any other property that is not a
"prescribed security" as defined for the purpose of clause 212(1)(b)(vii)(E) of
the Income Tax Act (Canada) except upon a Fundamental Change and except as
provided in Section 6(a) and Section 19 of this Note.
(7) ADJUSTMENT OF CONVERSION PRICE.
13
(a) If and whenever after the Subscription Date, and subject to
the restrictions set forth in Section 17, the Company shall (A) pay a dividend
on its Common Shares in Common Shares, (B) make a distribution on its Common
Shares in Common Shares, (C) subdivide its outstanding Common Shares into a
greater number of shares, or (D) combine its outstanding Common Shares into a
smaller number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the holder of any Note thereafter surrendered
for conversion shall be entitled to receive that number of Common Shares which
it would have received had such Note been converted immediately prior to the
happening of such event (without taking into account any limitations or
restrictions on the convertibility of the Notes). An adjustment made pursuant to
this subsection (i) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(b) On or after the consummation of a Qualified IPO, the
Conversion Price shall be adjusted from time to time by the Company as follows:
(i) In case the Company shall issue rights, options or
warrants (other than pursuant to a shareholders rights plan) to all or
substantially all holders of its Common Shares entitling them to subscribe for
or purchase Common Shares (or securities convertible into or exercisable or
exchangeable for Common Shares) at a price per share (or having a conversion,
exercise or exchange price per share) less than the Closing Sale Price per
Common Share on the record date for the determination of shareholders entitled
to receive such rights, options or warrants (or if no such record date is fixed,
the Business Day immediately prior to the date of announcement of such issuance)
(treating the conversion, exercise or exchange price per share of the securities
convertible into or exercisable or exchangeable for Common Shares as equal to
(x) the sum of (i) the price for a unit of the security convertible into or
exercisable or exchangeable for Common Shares and (ii) any additional
consideration initially payable upon the conversion of such security into or
exercise or exchange of such security for Common Shares divided by (y) the
number of Common Shares initially underlying such security), the Conversion
Price in effect immediately prior thereto shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
at the opening of business on the date after such record date (or if no such
record date is fixed, the applicable Business Day) by a fraction of which:
(A) the numerator shall be the number of Common Shares
outstanding on the close of business on such record date with
respect to such issuance (or if no record date is fixed, the date
of announcement of such issuance), plus the number of shares
which the aggregate subscription or purchase price for the total
number of Common Shares underlying the rights options, or
warrants so issued (or the aggregate conversion, exercise or
exchange price of the securities so offered) would purchase at
the Current Market Price of the Common Shares on such record
date; and
(B) the denominator shall be the number of Common Shares
outstanding at the close of business on the record date with
respect to such issuance (or if no such record date is fixed, the
date immediately prior to the date
14
of announcement of such issuance), plus the total number of
additional Common Shares underlying the rights, options or
warrants so issued.
Such adjustment shall be made successively whenever any such rights, options or
warrants are issued, and shall become effective on the day following the date of
such announcement of such issuance.
(ii) (1) In case the Company shall distribute to all or
substantially all holders of its Common Shares any Capital Shares of the Company
(other than Common Shares), evidences of indebtedness or other non-cash assets
(including securities of any person other than the Company but excluding (A)
dividends or distributions paid exclusively in cash or (B) dividends or
distributions referred to in subsection (4) of this Section 7(b)(ii)), or shall
distribute to all or substantially all holders of its Common Shares rights or
warrants to subscribe for or purchase any of its securities (excluding those
rights and warrants referred to in subsection (2) of this Section 7(b)(ii)) and
also excluding the distribution of rights to all holders of Common Shares
pursuant to a Rights Plan or the detachment of such rights to the extent set
forth in Section 7(b)(ii)(3), then in each such case the Conversion Price shall
be adjusted to equal the price determined by multiplying the current Conversion
Price by a fraction of which:
(A) the numerator shall be the Current Market Price per
Common Share on such record date; less the fair market value on
such record date (as determined in good faith by the board of
directors of the Company) of the portion of the distributed
assets so distributed applicable to one Common Share (determined
on the basis of the number of Common Shares outstanding on the
record date); and
(B) the denominator shall be such Current Market Price on
such record date.
Such adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(2) In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared.
(3) In the event that the Company has in effect a
preferred shares rights plan ("RIGHTS PLAN"), following conversion of the Notes
into Common Shares, to the extent that such Rights Plan is in effect upon such
conversion, the holders of Notes will receive as owners of the Common Shares,
the rights described in the Rights Plan (whether or not the rights have
separated from the Common Shares at the time of conversion), subject to the
limitations set forth in any such Rights Plan. If the Rights Plan provides that
upon separation of rights under such plan from the Common Shares that the
Holders would not be entitled to receive any such rights in respect of the
Common Shares issuable upon conversion of the Notes, the Conversion Price will
be adjusted as provided in this Section 7(b) (with such separation deemed to be
the distribution of such rights), subject to readjustment in the event of the
expiration,
15
termination or redemption of the rights. Any distribution of rights or warrants
pursuant to a Rights Plan that would allow a holder to receive, following
conversion as owners of the Common Shares, the rights described in the Rights
Plan (whether or not the rights have separated from the Common Shares at the
time of conversion) shall not constitute a distribution of rights or warrants
pursuant to this Section 7(b)(ii).
(4) Rights, options or warrants distributed by the
Company to all or substantially all holders of Common Shares entitling the
holders thereof to subscribe for or purchase shares of the Company's Capital
Shares (either initially or under certain circumstances), which rights, options
or warrants, until the occurrence of a specified event or events ("TRIGGER
EVENT"): (i) are deemed to be transferred with such Common Shares; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of Common
Shares, shall be deemed not to have been distributed for purposes of this
Section 7 (and no adjustment to the Conversion Price under this Section 7 will
be required) until the occurrence of the earliest Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under this
Section 7(b)(ii). If any such right, option or warrant, including any such
existing rights, options or warrants distributed prior to the Issuance Date, are
subject to events, upon the occurrence of which such rights, options or warrants
become exercisable to purchase different securities, evidences of indebtedness
or other assets, then the date of the occurrence of any and each such event
shall be deemed to be the date of distribution and record date with respect to
new rights or warrants with such rights (and a termination or expiration of the
existing rights, options or warrants without exercise by any of the holders
thereof). In addition, in the event of any distribution (or deemed distribution)
of rights, options or warrants, or any Trigger Event or other event (of the type
described in the preceding sentence) with respect thereto that was counted for
purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 7 was made, in the case of any such rights,
options or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Shares with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all or substantially all holders
of Common Shares as of the date of such redemption or repurchase.
(iii) In case the Company shall, by dividend or otherwise,
at any time distribute (a "TRIGGERING Distribution") to all or substantially all
holders of its Common Shares cash, the Conversion Price shall be adjusted so
that the same shall equal the rate determined by multiplying such Conversion
Price in effect immediately prior to the Business Day immediately preceding the
record date ("DETERMINATION DATE") for such Triggering Distribution is declared
by the Company by a fraction of which:
(A) the numerator shall be such Current Market Price per
share of the Common Shares (as determined in accordance with
subsection (v) of this Section 7(b)) on the Determination Date,
less the Triggering Distribution applicable to one Common Share
(determined on the basis of the number of Common Shares
outstanding on the Determination Date); and
16
(B) the denominator shall be such Current Market Price on
such Determination Date.
Such decrease to become effective immediately prior to the opening of business
on the day following the date on which the Triggering Distribution is paid. In
lieu of the foregoing adjustment, the Holder may elect to receive, pursuant to,
and subject to the limitations in, Section 19, the cash distribution the Holder
would be entitled to receive as if the Holder had completely converted this Note
immediately prior to the record date for such distribution.
(iv) In case the Company or any of its Subsidiaries shall
purchase any shares of the Common Shares by means of tender offer, then
effective immediately prior to the opening of business on the day after the last
date (the "EXPIRATION DATE") tenders could have been made pursuant to such
tender offer (as it may be amended) (the last time at which such tenders could
have been made on the Expiration Date is hereinafter sometimes called the
"EXPIRATION TIME"), the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Expiration Date by a fraction
of which:
(A) the numerator shall be product of the number of Common
Shares outstanding (including Purchased Shares (as defined below)
but excluding any shares held in the treasury of the Company)
immediately prior to the Expiration Time multiplied by the
Current Market Price per Common Share (as determined in
accordance with subsection (v) of this Section 7(b)); and
(B) the denominator shall be the sum of (x) the aggregate
consideration (determined as set forth below) payable to
shareholders of the Company based on the acceptance (up to any
maximum specified in the terms of the tender offer) of all shares
validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred
to as the "PURCHASED SHARES") and (y) the product of the number
of Common Shares outstanding (less any Purchased Shares and
excluding any shares held in the treasury of the Company)
immediately prior to the Expiration Time and the Current Market
Price per Common Share (as determined in accordance with
subsection (v) this Section 7(b)).
For purposes of this Section 7(b)(iv), the aggregate consideration in any such
tender offer shall equal the sum of the aggregate amount of cash consideration
and the aggregate fair market value (as determined in good faith by the board of
directors of the Company) of any other consideration payable in such tender
offer. In the event that the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by applicable
law from effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application of this Section 7(b)(iv) to any tender offer would
result in an increase to the Conversion Price, no adjustment shall be made for
such tender offer under this Section 7(b)(iv). For purposes of this Section
7(c)(iv), the term "tender offer" shall mean and include both tender offers and
exchange offers, all references to "purchases" of shares in tender offers (and
all similar references) shall
17
mean and include both the purchase of shares in tender offers and the
acquisition of shares pursuant to exchange offers, and all references to
"tendered shares" (and all similar references) shall mean and include shares
tendered in both tender offers and exchange offers.
(v) For the purpose of any computation under clauses (i),
(ii) and (iii) of Section 7(b), the current market price (the "CURRENT MARKET
PRICE") per Common Share on any date shall be deemed to be the arithmetic
average of the daily Closing Sale Prices for the twenty (20) consecutive Trading
Days commencing eleven (11) Trading Days before the record date with respect to
distributions, issuances or other events requiring such computation under this
Section 7. For purposes of any computation under subsection (iv) of this Section
7(b), the Current Market Price per Common Share shall be deemed to be the
arithmetic average of the daily Closing Date Prices for the ten (10) consecutive
Trading Days commencing on the Trading Day next preceding the Expiration Date.
(vi) In any case in which this Section 7(b) shall require
that an adjustment be made following a record date or a Determination Date or
Expiration Date, as the case may be, established for purposes of this Section 7,
the Company may elect to defer (but only until five Business Days following the
delivery by the Company to the holders of the notice described in Section 8(d))
issuing to the holder of any Note converted after such record date or
Determination Date or Expiration Date the Common Shares and other capital shares
of the Company issuable upon such conversion over and above the Common Shares
and other capital shares of the Company issuable upon such conversion on the
basis of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or cause its
transfer agents to issue evidence prepared by the Company of the right to
receive such shares. If any distribution in respect of which an adjustment to
the Conversion Price is required to be made as of the record date or
Determination Date or Expiration Date therefor is not thereafter made or paid by
the Company for any reason, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect if such record date had not been
fixed or such effective date or Determination Date or Expiration Date had not
occurred.
(c) For purposes of this Section 7, "record date" shall mean,
with respect to any dividend, distribution or other transaction or event in
which the holders of Common Shares have the right to receive any cash,
securities or other property or in which the Common Shares (or other applicable
security) is exchanged or converted into any combination of cash, securities or
other property, the date fixed for determination of shareholders entitled to
receive such cash, security or other property (whether or not such date is fixed
by the board of directors of the Company or by statute, contract or otherwise).
18
(8) NO ADJUSTMENT.
(a) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least $0.01
in the Conversion Price as last adjusted; provided, however, that any
adjustments which would otherwise be required to be made but for the provisions
of this Section 8(a), shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 8 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(b) No adjustment in the Conversion Price shall be required for
issuances of Common Shares pursuant to a Company plan for reinvestment of
dividends or interest or for a change in the par value or a change to no par
value of the Common Shares.
(c) No adjustment in the Conversion Price shall be made pursuant
to Section 7 if the holders of Notes (in their capacity as holders) may
participate in the transaction that would otherwise give rise to an adjustment
pursuant to Section 7.
(d) Other than as described above in Section 7, no adjustment to
the Conversion Price shall be required for any issuance of Common Shares or
convertible or exchangeable securities or rights to purchase Common Shares or
convertible or exchangeable securities.
(e) Whenever the Conversion Price is required to be adjusted
pursuant to Section 7, the Company shall promptly mail to the Holders a notice
of the adjustment and briefly stating the facts requiring the adjustment and the
manner of computing it. Upon the request of the Holder, there shall be
transmitted promptly to the Holder a certificate of a firm of independent
chartered accountants showing any such adjustment, stating in reasonable detail
the facts upon which such adjustment is based and stating that such firm concurs
with the Company's calculation of such adjustment.
(9) [RESERVED].
(10) COMPANY'S RIGHT OF OPTIONAL REDEMPTION.
(a) Following the consummation of a Qualified IPO, the Company
shall have the redemption rights set forth in this Section 10. At any time
commencing on and after the later of (i) May 1, 2008 and (ii) the 18 month
anniversary of the Lock-up Expiration Date (such later date, the "OPTIONAL
REDEMPTION TRIGGER DATE"), provided that on each of the ten consecutive Trading
Days immediately preceding the Optional Redemption Notice Date (as defined
below) the Closing Sale Price of the Common Shares has exceeded 200% of the
Conversion Price (subject to adjustment for share splits, share dividends,
recapitalizations combinations, reverse share splits or other similar events
during such period), the Company shall have the right to redeem (an "OPTIONAL
REDEMPTION") all or any portion of the Principal then remaining under this Note
at the redemption price equal to the sum of (A) the Principal to be redeemed,
(B) interest accrued to but excluding the Optional Redemption Date, plus (C) the
Present Value of Interest (excluding any amounts payable under clause (B)
hereof) (the "OPTIONAL REDEMPTION Price"). At least 30 days but not more than 60
days before any proposed redemption date (the "OPTIONAL REDEMPTION DATE"), the
Company shall mail a notice
19
of redemption (a "NOTICE OF OPTIONAL REDEMPTION") by facsimile and overnight
courier to the holder of the Notes. The Notice of Optional Redemption shall
state: (1) the aggregate Principal of the Notes which the Company has elected to
be subject to Optional Redemption from all of the holders of the Notes pursuant
to this Section 10(a) (and analogous provisions under the Additional Notes); (2)
the Optional Redemption Price; (3) the Conversion Price in effect as of the date
of the Notice of Optional Redemption; and (4) that Notes called for redemption
may be converted at any time before the close of business on the Business Day
immediately preceding the Optional Redemption Date. Each such Optional
Redemption Notice shall be irrevocable. The date on which the Company provides
holders of the Notes with an Optional Redemption Notice is referred to as the
"OPTIONAL REDEMPTION NOTICE DATE". All Conversion Amounts converted by the
Holder after the Optional Redemption Notice Date and prior to the Optional
Redemption Date shall (I) entitle the Holder to receive the Present Value of
Interest for the Principal converted on the Conversion Date and (II) reduce the
Principal of this Note required to be redeemed on the Optional Redemption Date.
Redemptions made pursuant to this Section 10(a) shall be made in accordance with
Section 15.
(b) If the Company elects to cause an Optional Redemption of all
or any portion of the Principal of this Note pursuant to this Section 10, then
it must simultaneously take the same action with respect to the Additional
Notes.
(11) TAX REDEMPTION.
(a) The Company shall have the right to redeem (a "TAX
REDEMPTION") the Notes, in whole but not in part (other than with respect to any
Notes for which the Holder or any holder of Additional Notes shall have
delivered a Notice of Election pursuant to this Section 11 or analogous
provisions of the Additional Notes), at a redemption price equal to the
Principal amount thereof together with accrued and unpaid Interest to the Tax
Redemption Date (the "TAX REDEMPTION PRICE"), upon providing the Holder and each
holder of Additional Notes a written notice (a "NOTICE OF TAX REDEMPTION") and
on the terms and subject to satisfaction of the other conditions described
below, if (i) there is any change or amendment (including any announced
prospective change or amendment) to the laws (or any regulations or rulings
promulgated thereunder) of Canada or of any political subdivision or taxing
authority thereof or therein, affecting taxation, or any change in the
application or interpretation of such laws, regulations or rulings by any
applicable legislative body, court, governmental agency or regulatory authority
of Canada or of any political subdivision or taxing authority thereof or
therein, which change or amendment is announced or becomes effective on or after
the date of issuance with respect to the Notes and, in a written opinion to the
Company of legal counsel of recognized standing, as a result of such change or
amendment, the Company has or will (assuming, in the case of any announced
prospective change or amendment, that such announced change or amendment will
become effective as of the date specified in such announcement and in the form
announced) become obligated to pay, on the next succeeding date on which
interest is due; (ii) Additional Amounts in excess of those required to be paid
by it prior to any such change or amendment pursuant to Section 14 or any
Additional Amounts if no Additional Amounts were required to be paid by it prior
to any such change or amendment pursuant to Section 14 (the "EXCESS ADDITIONAL
AMOUNTS") and (iii) the Company (or its successor), in its business judgment,
determines that such obligation cannot be avoided by the use of reasonable
measures available to it; provided, however, that (x) no such Notice of Tax
Redemption may be given less than 30 days
20
or earlier than 60 days prior to the earliest date on which the Company would be
obligated, but for such Tax Redemption, to pay such Excess Additional Amounts or
later than 365 days after the Company first becomes liable to pay any Excess
Additional Amounts as a result of any changes or amendments described above; (y)
at the time such Notice of Tax Redemption is given, such obligation to pay such
Excess Additional Amounts remains in effect. The date all of the holders of
Notes receive the Notice of Tax Redemption is referred to as the "TAX REDEMPTION
NOTICE DATE". All Conversion Amounts converted by the Holder after the Tax
Redemption Notice Date shall reduce the Principal of this Note redeemed on the
Tax Redemption Date. Redemptions made pursuant to this Section 11 shall be made
in accordance with Section 15.
(b) Upon receiving such Notice of Tax Redemption, the Holder, if
it does not wish to have the Company redeem this Note pursuant to this Section
11, shall be entitled to elect to (i) convert this Note pursuant to Section 3(c)
or (ii) not have this Note redeemed, provided that no Excess Additional Amounts
that arise solely as a result of the change or amendment specified in Section
11(a)(i) that gave rise to the right of the Company to redeem Notes pursuant to
this Section will be payable by the Company on any payment with respect to this
Note after the Tax Redemption Date. All future payments will be subject to the
deduction or withholding of any Taxes required by law to be deducted or withheld
solely to the extent and as provided for in clause (ii) of the immediately
preceding sentence.
(c) Where no such election is made, this Note shall be redeemed
on the Tax Redemption Date without any further action by the Holder. If the
Holder does not elect to convert this Note pursuant to Section 3(c) but wishes
to elect to not have this Note redeemed pursuant to clause (ii) of Section
11(b), the Holder must deliver to the Company not later than the close of
business on the Business Day immediately preceding the Tax Redemption Date (the
"NOTICE OF ELECTION DUE DATE") a written notice (the "NOTICE OF ELECTION")
stating that it is electing to not have this Note redeemed. The Holder may
withdraw any Notice of Election by delivering to the Company a written notice of
withdrawal prior to the close of business on the Business Day prior to the Tax
Redemption Date.
(12) MAKE-WHOLE PREMIUM.
(a) If a Fundamental Change occurs and the Holder elects a
Fundamental Change Conversion, the Holder shall receive upon conversion of the
Notes additional Common Shares (the "MAKE-WHOLE PREMIUM") as set forth in this
Section 12.
(b) The "MAKE-WHOLE PREMIUM" shall be determined by reference to
the applicable table below (the "MAKE-WHOLE PREMIUM TABLES") and is based on the
Effective Date and the Share Price. The following tables show what the
Make-Whole Premium would be for various Share Prices and Effective Dates set
forth below, based upon whether a Fundamental Change occurs prior to the
consummation of a Qualified IPO (the "PRE-IPO MAKE-WHOLE PREMIUM TABLE") or
following such consummation (the "POST-IPO MAKE-WHOLE PREMIUM TABLE"), in each
case expressed as a percentage increase of the Make-Whole Conversion Rate (the
"MAKE-WHOLE PREMIUM PERCENTAGE"). For purposes of determining a price in the
left hand column of the Post-IPO Make-Whole Premium Table entitled "Share Price"
such price shall be the product of the percentage set forth in such column
multiplied by the Qualified IPO Price.
21
PRE-QUALIFIED IPO
MAKE-WHOLE PREMIUM TABLE
(% OF MAKE-WHOLE CONVERSION RATE)
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
SHARE PRICE MAY 1, 2005 2005 MAY 1, 2006 2006 MAY 1, 2007 2007
----------- ----------- ----------- ----------- ----------- ----------- -----------
$1.50 27.2 23.7 19.8 15.5 10.3 0.0
$1.80 19.3 16.1 12.7 8.9 4.5 0.0
$2.10 14.7 12.1 9.2 6.1 2.8 0.0
$2.40 11.9 9.7 7.2 4.7 2.2 0.0
$2.70 10.0 8.1 6.1 4.0 1.9 0.0
$3.00 8.7 7.0 5.3 3.5 1.7 0.0
$3.30 7.7 6.2 4.7 3.1 1.5 0.0
$3.60 6.9 5.6 4.2 2.8 1.4 0.0
$3.90 6.2 5.0 3.8 2.5 1.3 0.0
$4.20 5.7 4.6 3.5 2.3 1.1 0.0
$4.50 5.2 4.2 3.2 2.1 1.1 0.0
22
POST-QUALIFIED IPO
MAKE-WHOLE PREMIUM TABLE
(% OF MAKE-WHOLE CONVERSION RATE)
SHARE PRICE NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
(% OF QUALIFIED IPO PRICE) 2007 MAY 1, 2008 2008 MAY 1, 2009 2009 MAY 1, 2010
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Qualified IPO Price 23.0 20.3 17.3 13.8 9.4 0.0
105% 20.8 18.2 15.1 11.7 7.3 0.0
120% 15.9 13.5 10.7 7.6 3.9 0.0
140% 12.0 9.9 7.6 5.1 2.4 0.0
160% 9.6 7.8 5.9 3.9 1.9 0.0
180% 8.0 6.5 4.9 3.3 1.6 0.0
200% 6.9 5.6 4.2 2.9 1.4 0.0
220% 6.1 4.9 3.7 2.5 1.3 0.0
240% 5.5 4.4 3.3 2.3 1.1 0.0
260% 5.0 4.0 3.0 2.1 1.0 0.0
280% 4.6 3.6 2.7 1.9 0.9 0.0
300% 4.2 3.4 2.5 1.7 0.9 0.0
23
(c) If the Share Price is between two Share Price amounts listed
on the applicable Make-Whole Premium Table or the Effective Date is between two
dates listed on the applicable Make-Whole Premium Table, the Make-Whole Premium
shall be determined by linear interpolation between the amounts set forth in
such Make-Whole Premium Table for the higher and lower Share Price amounts and
the two dates, as applicable, based on a 365-day or 366-day year, as applicable.
If the Share Price on the Effective Date exceeds (x) $4.50 per share in the
Pre-Qualified IPO Make-Whole Table (subject to adjustment pursuant to Section 7)
(the "PRE-IPO SHARE PRICE CAP"), no Make-Whole Premium will be delivered or (y)
300% of the Qualified IPO Price on the Post-Qualified IPO Make-Whole Table
(subject to adjustment pursuant to Sections 7(a) and 7(b)), (the "POST-IPO SHARE
PRICE CAP" and together with the Pre-IPO Share Price Cap, the "SHARE PRICE
CAP"), no Make-Whole Premium will be delivered; and if the Share Price on the
Effective Date is less than or equal to (1) $1.50 per share in the Pre-Qualified
IPO Make-Whole Table (subject to adjustment pursuant to Section 7(a)), (the
"PRE-IPO SHARE PRICE THRESHOLD"), no Make-Whole Premium will be delivered or (2)
the Qualified IPO Price on the Post-Qualified IPO Make-Whole Table (subject to
adjustment pursuant to Sections 7(a) and 7(b)), (the "POST-IPO SHARE PRICE
THRESHOLD", and together with the Pre-IPO Share Price Threshold, the "SHARE
PRICE THRESHOLD"), no Make-Whole Premium will be delivered. The Share Prices set
forth in the first column are subject to adjustment pursuant to Section 12(f).
(d) (i) The Company, at its option, may satisfy its obligation to
deliver additional Common Shares (which shares, for purposes of the Transaction
Documents, shall be considered Conversion Shares) pursuant to Section 12(a) by
paying such value in cash, in the same form of consideration into which Common
Shares have been converted in connection with the applicable Fundamental Change
or in any combination of the foregoing and/or Common Shares. The Fundamental
Change Company Notice delivered pursuant to Section 5(b) in connection with the
Fundamental Change shall state the percentage of any Make-Whole Premium, stated
in total Principal as if all Notes then outstanding shall be converted or
repurchased during the Fundamental Change Conversion/Repurchase Period, that
will, subject to Section 12(e), be paid in Common Shares (which indication shall
be irrevocable). For purposes of the foregoing the consideration into which a
Common Share has been converted shall be deemed to equal the same percentage of
each form of consideration as encompasses the aggregate consideration
distributed in respect of all Common Shares participating in the distribution.
Unless the Company gives notice to the contrary in the Fundamental Change
Company Notice, Common Shares shall be delivered in respect of the Make-Whole
Premium.
(ii) The number of Common Shares to be delivered as the
Make-Whole Premium shall equal the product of (x) the Make-Whole Premium
Percentage and (y) the Make-Whole Conversion Rate (the "MAKE WHOLE SHARE
AMOUNT"). If the Company elects in the Fundamental Change Company Notice to pay
all or any portion of the Make-Whole Premium in cash, the amount of cash to be
delivered shall equal the product of (i) the Make-Whole Share Amount and (ii)
the Share Price. If the Company elects to pay the Make-Whole Premium in the same
form of consideration used to pay for the Common Shares in connection with the
applicable Fundamental Change, the value of the consideration to be delivered in
respect of the Make-Whole Premium will be calculated as follows:
24
(1) securities that are traded on the NYSE, AMEX or TSX
or approved for quotation on the Nasdaq National Market, The Nasdaq Small Cap
Market or any similar system of automated dissemination of quotations of
securities prices will be based on 95% of the arithmetic average of the Closing
Sale Price of such securities during each of the ten (10) Trading Days ending on
the Trading Day immediately preceding the Effective Date;
(2) other securities, assets or property (other than
cash) will be valued on 95% of the arithmetic average of the fair market value
of such securities, assets or property (other than cash) as determined by two
independent nationally recognized investment banks selected by the Company and
satisfactory to the Required Holders; and
(3) 100% of any cash.
(iii) If a Make-Whole Premium is required, the Company shall
from time to time appoint an independent nationally recognized investment bank,
which investment bank shall be satisfactory to the Required Holders, to serve as
calculation agent with respect calculation of the Make-Whole Premium (the
"CALCULATION AGENT"). The Calculation Agent shall, on behalf and upon request by
the Company, calculate (x) the Share Price and (y) the Make-Whole Premium with
respect to such Share Price based on the Effective Date specified by the
Company, and shall deliver its calculation of the Share Price and Make-Whole
Premium to the Company within five (5) Business Days after the request by the
Company. The Company, (A) shall notify the holders of the Share Price and the
estimated Make-Whole Premium per $1,000 of Principal of Notes with respect to a
Fundamental Change as part of the Fundamental Change Company Notice delivered in
connection with a Fundamental Change in accordance with Section 5(b) or
otherwise in accordance with the notice provisions of the Notes and (B) shall
notify the holders promptly upon the opening of business on the Effective Date
of the number of Common Shares or the amount of the cash payment (or, at the
option of the Company, other securities, assets or property or cash into which
all or substantially all of the Common Shares have been converted as of the
Effective Date as described above) to be delivered in respect of the Make-Whole
Premium, if any, payable in connection with conversions or redemptions upon such
Fundamental Change.
(e) In the event of a Fundamental Change where the Company is not
the surviving entity (including an amalgamation), for each conversion by the
Holder after the Effective Date, the Company or its successor may choose to
deliver in lieu of each Common Share payable as the Make-Whole Premium the
consideration received in such Fundamental Change for each Common Share
(provided that any securities that are issuable as part of such consideration
shall meet the conditions set forth in this Section 12(e) as if such securities
were "COMMON SHARES" under this section).
(f) Whenever the Conversion Price shall be adjusted from time to
time by the Company pursuant to Section 7, the Pre-IPO Share Price Threshold and
the Pre-IPO Share Price Cap shall be adjusted in accordance with Section 7(a),
the Post-IPO Share Price Threshold and the Post-IPO Share Price Cap shall be
adjusted (any such adjustment shall be made at the time the Qualified IPO Price
has been determined and as if the Qualified IPO Price had been determined prior
to the event or occurrence causing the adjustment) in accordance with Sections
7(a) and 7(b), and each of the Share Prices set forth in the Make-Whole Premium
Tables shall be
25
adjusted, by multiplying each such amount by a fraction the numerator of which
is the Conversion Price as so adjusted and the denominator of which is the
Conversion Price immediately prior to such adjustment.
(13) NONCIRCUMVENTION. The Company hereby covenants and agrees that
the Company will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger,
amalgamation, scheme or plan of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all times in good
faith carry out all of the provisions of this Note and take all action as may be
required to protect the rights of the Holder of this Note.
(14) TAXES. (a) Any and all payments by the Company hereunder,
including any amounts paid on a redemption or repurchase, of this Note and any
amounts on account of or in lieu of interest, deemed interest under the Income
Tax Act (Canada) or Special Interest Payments shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings levied by the Government of Canada or the
government of a province or territory of Canada, and any interest or penalties
with respect thereto, excluding any such tax, levy, impost, deduction,
withholding, interest or penalty to which the beneficial owner or Holder is
subject by reason of such beneficial owner or holder being connected with Canada
or a province or territory thereof otherwise than solely by reason of the mere
acquisition or holding of this Note (all such non-excluded taxes, levies,
imposts, deductions, charges withholdings, interest and penalties, collectively
or individually, "TAXES"). Subject to Section 11(b), if the Company shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
the beneficial owner of the Note, (i) the sum payable shall be increased by the
amount (an "ADDITIONAL AMOUNT"), payable as interest, necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 14) such beneficial owner shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Company shall make such deductions and (iii) the Company shall pay the
full amount deducted to the relevant governmental authority in accordance with
applicable law; provided, however, that the Company shall not be required to pay
any Additional Amounts to the extent that any combination of the following
apply:
(ii) the beneficial owner of this Note does not deal at
arm's length with the Company at the time of the relevant payment or credit
within the meaning of the Income Tax Act (Canada); or
(iii) the beneficial owner of the Note is subject to such
Taxes by reason of its failure to comply with any certification, identification,
information, documentation or other reporting requirement if compliance is
required by law, regulation, administrative practice or any applicable treaty as
a precondition to exemption from, or a reduction in the rate of deduction or
withholding of, such Taxes or by reason of its failure to comply with a timely
request of the Company to provide information, documents, certification or other
evidence concerning such owner's nationality, residence, entitlement to treaty
benefits, identity or connection with Canada or any political subdivision or
authority thereof.
26
(b) In addition, the Company agrees to pay to the relevant
governmental authority in accordance with applicable law any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Note ("OTHER
TAXES"). The Company shall deliver to the Holder official receipts, if any, in
respect of any Taxes or Other Taxes payable hereunder promptly after payment of
such Taxes or Other Taxes or other evidence of payment reasonably acceptable to
the Holder.
(c) The Company hereby indemnifies and agrees to hold the Holder
harmless from and against Taxes and Other Taxes (including, without limitation,
Taxes and Other Taxes imposed on any amounts payable under this Section 14) paid
by such Person, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be paid within ten (10) days from
the date on which any such Person makes written demand therefore specifying in
reasonable detail the nature and amount of such Taxes or Other Taxes.
(d) The obligations of the Company under Section 3(a)(ii) and
this Section 14 shall survive the Maturity Date of this Note and the payment of
the Principal of this Note and all other amounts payable hereunder.
(e) If, following the imposition of any Taxes on any payment by
the Company to the Holder or a beneficial owner of this Note in consequence of
which the Company pays an Additional Amount, the relevant beneficial owner or a
Person affiliated therewith receives or is granted a refund of such Taxes or a
credit against or relief or remission for or repayment of such Taxes (a "TAX
CREDIT"), such beneficial owner shall reimburse the Company promptly after
receipt or crediting of such Tax Credit by the beneficial owner for an amount
equal to the amount or value of the Tax Credit.
(15) REPURCHASES AND REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Event of
Default Redemption Price to the Holder within five Business Days after the
Company's receipt of the Holder's Event of Default Redemption Notice. If the
Holder has submitted a Fundamental Change Repurchase Notice in accordance with
Section 5(b), the Company shall deliver the applicable Fundamental Change
Repurchase Price to the Holder on the Fundamental Change Settlement Date. The
Company shall deliver the Optional Redemption Price to the Holder on or before
the Optional Redemption Date and the Tax Redemption Price on the Tax Redemption
Date. In the event of a redemption or repurchase of less than all of the
Principal of this Note, the Company shall promptly cause to be issued and
delivered to the Holder a new Note (in accordance with Section 22(d))
representing the outstanding Principal which has not been redeemed or
repurchased. In the event that the Company does not pay the applicable
Redemption/Repurchase Price to the Holder within the time period required, at
any time thereafter and until the Company pays such unpaid Redemption/Repurchase
Price in full, the Holder shall have the option, in lieu of redemption or
repurchase to require the Company to promptly return to the Holder all or any
portion of this Note representing the Principal that was submitted for
redemption or repurchase and for which the applicable Redemption/Repurchase
Price has not been paid. Upon the Company's receipt of such notice, (x) the
27
Redemption/Repurchase Notice shall be null and void with respect to such
Principal and (y) the Company shall immediately return this Note, or issue a new
Note (in accordance with Section 22(d)) to the Holder representing such
Principal.
(b) Redemption by Other Holders.
(i) Upon the Company's receipt of notice from any of the
holders of the Additional Notes for redemption, repurchase or repayment as a
result of an event or occurrence described in Sections 4(b) or 5(b) (each, an
"OTHER REDEMPTION/REPURCHASE NOTICE"), the Company shall on the next Business
Day forward to the Holder by facsimile a copy of such Other
Redemption/Repurchase Notice. At any time after the earlier of the Holder's
receipt of an Other Redemption/Repurchase Notice and the Holder becoming aware
of such Other Redemption/Repurchase Notice, the Holder may require the Company
to redeem all or any portion of this Note by delivering written notice thereof
to the Company indicating the portion of this Note the Holder is electing to
redeem. Any such redemption or repurchase shall be in accordance with Section
15(a) and Sections 4(b) or 5(b) (as applicable).
(ii) If the Company receives a Redemption/Repurchase Notice
and one or more Other Redemption/Repurchase Notices, during the seven (7)
Business Day period beginning on and including the date which is three (3)
Business Days prior to the Company's receipt of the Holder's
Redemption/Repurchase Notice and ending on and including the date which is three
(3) Business Days after the Company's receipt of the Holder's
Redemption/Repurchase Notice and the Company is unable to redeem all principal,
interest and other amounts designated in such Redemption/Repurchase Notice and
such Other Redemption/Repurchase Notices received during such seven (7) Business
Day period, then the Company shall redeem a pro rata amount from each holder of
the Notes (including the Holder) based on the principal amount of the Notes
submitted for redemption or repurchase pursuant to such Redemption/Repurchase
Notice and such Other Redemption/Repurchase Notices received by the Company
during such seven Business Day period. Notwithstanding the foregoing, the
Company shall remain liable for any portion of any Redemption/Repurchase Price
that it has not delivered to the Holder due to any pro rata redemption made
pursuant to the preceding sentence and such unpaid amount shall remain
immediately due and payable.
(16) VOTING RIGHTS. The Holder shall have no voting rights as the
holder of this Note, except as required by law, the Canada Business Corporations
Act and as expressly provided in this Note, or any other Transaction Documents.
(17) COVENANTS.
(a) Rank. All payments due under this Note (i) shall rank pari
passu with all Additional Notes and (ii) prior to the consummation of a
Qualified IPO, shall not be subordinate to any Indebtedness.
(b) Incurrence of Indebtedness. So long as this Note is
outstanding and prior to the consummation of a Qualified IPO, the Company shall
not, and the Company shall not permit any Guarantor or Subsidiary to, directly
or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness,
other than Permitted Indebtedness.
28
(c) Existence of Liens. So long as this Note is outstanding and
prior to the consummation of a Qualified IPO, the Company shall not, and the
Company shall not permit any Guarantor or Subsidiary to, directly or indirectly,
allow or suffer to exist any Lien, upon or in any property or assets (including
accounts and contract rights) owned or hereafter acquired, or any income or
profits therefrom, by the Company or any of its Subsidiaries other than
Permitted Liens.
(d) Existence. The Company will, and will cause each Guarantor
to, at all times, preserve and keep in full force and effect its existence and
all rights and franchises, licenses, patents and permits, in each case to the
extent material to its business; provided that neither the Company nor any
Guarantor or their respective Subsidiaries shall be required to preserve any
such existence, right or franchise, licenses and permits.
(e) Capital Shares. Prior to the consummation of a Qualified IPO,
the Company shall not amend any voting powers, resignations, preferences, rights
and qualifications, limitations or restrictions of any Capital Shares of the
Company without the prior written consent of the Required Holders.
(f) Reports and Delivery of Certain Information.
(i) The Company shall deliver to the Holder such annual and
quarterly reports, information, documents and other reports, copies of its
annual report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act, within 15 days after the applicable
filing date as set forth in the Exchange Act, whether or not Company makes the
filing with the SEC. At any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, the Company shall furnish to the Holder: (x)
within the earlier of (A) 3 days after the related board of directors meeting
and (B) 60 days after the end of each fiscal quarter of the Company,
consolidated balance sheets of the Company as of the end of such quarter and
consolidated statements of income and retained earnings consolidated and of cash
flows of the Company for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by the chief financial
officer of the Company, (y) as soon as available but in no event later than 180
days after the end of each fiscal year of the Company, a copy of the annual
report for such year for the Company, containing consolidated financial
statements for such year certified in a manner acceptable to the holders of the
Notes by independent public accountants of recognized standing and (z) at the
time of delivery of the financial statements required by clauses (x) and (y)
above, (1) a copy of the "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and (2) the quarterly report on related
party transactions. The Company shall be deemed to have satisfied its
obligations under this clause (i) if it such information is filed with the SEC
(if the SEC will accept such filing) or otherwise makes such information
available on or through its website.
(ii) At any time when the Company is not subject to Section
13 or 15(d) of the Exchange Act, upon the request of the Holder, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
below) and any reports required to be filed by them under the Exchange Act or
the Securities Act to the Holder the extent required
29
to permit compliance by the Holder with Rule 144A under the Securities Act in
connection with the resale of any such security. "RULE 144A INFORMATION" shall
be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.
(g) Restrictions on Distributions. (i) So long as this Note is
outstanding and prior to the consummation of a Qualified IPO, the Company shall
not, and the Company shall not permit any Guarantor or Subsidiary to, declare,
make, permit or pay (A) any dividend or other distribution on issued shares
(other than dividends in kind paid by the issue of shares of the Company); (B)
the purchase, redemption or retirement price of any issued shares, warrants or
other Options or Convertible Securities to acquire shares of the Company, the
Guarantors or any of the Subsidiaries of the Company redeemed or purchased by
the Company or any of its Subsidiaries, except with respect to the repurchase or
redemption of Class A Shares, Class B Shares and redeemable Common Shares upon
the exercise of the repurchase or redemption rights by the holders of such
shares in accordance with the Put Provisions and having an aggregate repurchase
or redemption price in an amount that shall not exceed the lesser of (x) $5
million and (y) the Cumulative Retained Earnings; (C) loans to any shareholders
thereof; (D) loans to any directors or officers thereof; or (E) any similar
distributions (each a "CORPORATE DISTRIBUTION"); provided, however, that
Corporate Distributions made only to the Company or a Guarantor shall be
permitted so long as no Event of Default or event that with the passage of time
or the giving of notice would become an Event of Default would result from such
distribution to the Company or a Guarantor.
(ii) So long as this Note is outstanding, the Company shall
not grant, issue or sell any Purchase Rights (as defined in Section 6(a)) and
shall not pay any dividends or make any distributions to the holders of Common
Shares (as contemplated in Section 19) to the extent that the fair market value
of any Purchase Rights that the Company would become obligated to grant to the
Holder under Section 6(a) and/or any dividends, distributions or cash that the
Company would become obligated to pay under Section 19, together with (i) the
fair market value of any Purchase Rights previously granted to the Holder
pursuant to Section 6(a), (ii) any dividends, distributions or cash previously
paid to the Holder pursuant to Section 19, (iii) any payments or repayments or
reductions of capital pursuant to a conversion that the Company has made or is
currently obligated (under this Note or under the Securities Purchase Agreement)
to make on account of the principal amount (as defined in the Income Tax Act
(Canada)) of this Note, would cause the Company to pay or repay, or become
obligated to pay or repay, more than 20% of the Principal of this Note prior to
the Maturity Date.
(h) Interest Coverage Test. On the 30 month anniversary of the
Issuance Date, if no Qualified IPO has been consummated, the Company shall have
satisfied the Interest Coverage Test. On such anniversary, the Company shall
deliver to the Holder a certificate, signed by the Chief Executive Officer and
Chief Financial Officer of the Company, certifying as to LTM EBITDA, LTM Capital
Expenditures and LTM Net Interest Expense as of such date showing in reasonable
detail the calculation of each of these figures.
(i) Compliance with Applicable Laws. Prior to the consummation of
a Qualified IPO, the Company shall, and shall cause each of the Guarantors and
each other Subsidiary to, comply in all material respects with all Applicable
Laws, including Environmental Laws, the non-compliance with which would
materially and adversely affect the business,
30
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, or the ability to perform any of their obligations under this Note or
the Security Documents or the enforceability of the security interests and the
Company shall, and shall cause each Guarantor to, comply in all material
respects with the terms of and maintain all consents, licenses, franchises,
certificates, consents, rights, approvals, authorizations, registrations, orders
or permits from, and make such filings with, any governmental or public
authority and to comply with such Applicable Laws as may be necessary to carry
on its respective businesses, to own, lease and operate its properties and to
enable the Company and each of the Guarantors to enter into and perform their
obligations under Transaction Documents or to render this Note or the Security
Documents legal, valid, binding or enforceable.
(j) Payment of Taxes. Prior to the consummation of a Qualified
IPO, the Company shall, and shall cause each Guarantor and each other Subsidiary
to, pay or cause to be paid, when due, all material Company Taxes, material
property taxes, material business taxes, material social security premiums,
material assessments and governmental charges or material levies imposed upon it
or upon its income, sales, capital or profit or any property belonging to it
unless any such Company Tax, social security premiums, assessment, charge or
levy is contested by it in good faith with appropriate reserves, and to collect
and remit when due all payroll and withholding taxes.
(k) Insurance. Prior to the consummation of a Qualified IPO, the
Company shall maintain, or cause to be maintained, on behalf of the Company and
its Subsidiaries, insurance with responsible and reputable insurance companies
or associations in such amounts and covering such risks as would be prudent for
companies engaged in similar businesses and owning similar properties and assets
in the same general areas in which the Company or such Subsidiaries (as the case
may be) operate.
(l) Current Business. The Company shall, and shall cause its
Subsidiaries to, continue to engage in the Permitted Business substantially
carried on by it and shall not engage in any other line of business other than
the Permitted Business.
(m) Keeping of Books. Prior to the consummation of a Qualified
IPO, the Company shall, and shall cause each Guarantor and each other Subsidiary
to, keep proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Company and each of its Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
(n) Registrations. Prior to the consummation of a Qualified IPO,
the Company shall, and shall cause each Guarantor to maintain all such
registrations, filings and recordings as are necessary to preserve, protect and
perfect the charges and security interest created, or intended to be created, by
the Security Documents.
(o) Dealings with Collateral. Prior to the consummation of a
Qualified IPO, the Company shall not, without the prior written consent of the
Required Holders, locate any Collateral (as such term is defined in the General
Security Agreement executed by the Company) in any province other than the
Province of Ontario if, as a result, less than 95% (on a net book value basis)
of all tangible assets comprising such Collateral, are situate in the Province
31
of Ontario unless the Company has given the Collateral Agent at least 20
Business Days prior written notice and effected the registrations referred to in
Section 17(n) in such province and in the case of Quebec, entered into
additional security documents reasonably acceptable to the Collateral Agent.
(p) Governmental Receivables. Prior to the consummation of a
Qualified IPO, upon request by the Required Holders at any time following the
occurrence of a default in payment obligations hereunder by the Company or Event
of Default, the Company shall promptly deliver specific assignments of all or
any part of its Governmental Receivables as requested by the Required Holders
and shall obtain such consents, acknowledgements and approvals or authorizations
as may be required in connection with enforcement of the Lien against such
Governmental Receivables granted by the Company and the Guarantors to the
Collateral Agent, on behalf of the holders of the Notes, pursuant to the
Security Documents as may be required by applicable law including, without
limitation, the Financial Administration Act (Canada), federal laws of the
United States and comparable provincial, state or territorial legislation or
legislation in any political subdivision thereof.
(q) Restriction on Sale-Leasebacks. Prior to the consummation of
a Qualified IPO and other than in connection with a Fundamental Change, the
Company shall not, and shall not permit any Guarantor or other Subsidiary to,
enter into sale and leaseback transactions or securitization transactions other
than (i) Permitted Securitization Transactions; (ii) sale and leaseback
transactions completed by the Company, its Guarantors and Subsidiaries taken
together, in an aggregate amount not exceeding $5,000,000 (or its equivalent
amount in another currency) in any fiscal year for a period of five years; and
(iii) sale and leaseback of the Company's real property owned by Mitel Networks
Limited located in Portskewett, Monmouthshire; provided that, notwithstanding
the foregoing, Intellectual Property may not be sold, leased, conveyed or
otherwise disposed of, except that Intellectual Property may be licensed, and
the licensee may sub-license such Intellectual Property, in each case in the
ordinary course of business on commercially reasonable terms.
(r) Restriction on Transfer of Assets. Prior to the consummation
of a Qualified IPO and other than in connection with a Fundamental Change, the
Company shall not, and shall not permit any Guarantor or other Subsidiary to
sell, lease, convey or otherwise dispose of any assets or rights of the Company,
the Guarantors or other Subsidiaries taken as a whole, owned or hereafter
acquired whether in a single transaction or a series of related transactions,
that have fair market value in excess of $5,000,000 in any fiscal year for a
period of five years, other than in connection with: the Company's sale of its
Edict Training Limited subsidiary; inter-company sales, sales of obsolete or
redundant equipment; sales of marketable securities where the proceeds are being
re-invested in marketable securities or into the Permitted Business; in each
case, in the ordinary course of business, on commercially reasonable terms and,
except in the case of transactions among the Company and one or more of the
Guarantors, for consideration that represents fair market value; provided that,
notwithstanding the foregoing, Intellectual Property may not be sold, leased,
conveyed or otherwise disposed of, except that Intellectual Property may be
licensed, and the licensee may sub-license such Intellectual Property, in each
case in the ordinary course of business on commercially reasonable terms.
32
(s) Restriction on Financial Assistance to Non-Wholly-Owned
Subsidiaries. Prior to the consummation of a Qualified IPO, the Company shall
not, and shall not permit any Guarantor or other Subsidiary to, directly or
indirectly, make any investment in (other than as permitted in this Section
17(s)), advances to, capital contributions to, loans to or guarantees to, or
give any financial assistance to or for the benefit of any Person other than (i)
financial assistance (including investments in, advances to, capital
contributions to or loans or guarantees to) to the Company or a direct or
indirect wholly-owned Subsidiary of the Company, or (ii) financial assistance
(including investments in, advances to, capital contributions to or loans or
guarantees to) to Tianchi-Mitel Telecommunications Corp. or any other Persons in
an amount not exceeding $5,000,000 in the aggregate in any fiscal year.
(t) Transactions with Affiliates. Prior to the consummation of a
Qualified IPO, the Company shall not, and shall not permit any Guarantor or
other Subsidiary to, enter into any transaction or series of related
transactions with Xxxxxxx X. Xxxxxxxx or any Xxxxxxxx Person, or any Affiliate
of such Person, other than transactions between the Company and one or more of
the Guarantors or transactions between two or more of the Guarantors, except on
terms and conditions no less favorable to the Company, the Guarantor or the
Subsidiary of the Company as could reasonably be obtained by the Company,
Guarantor or Subsidiary at that time in a comparable transaction entered into at
Arm's Length with a Person at Arm's Length with the Company and provided that
the Company, a Guarantor or any Subsidiary of the Company may enter into
employment agreements with respect to the procurement of services of their
respective officers and employees in the ordinary course of business, including
executive compensation arrangements.
(u) Pension Plan Compliance. Prior to the consummation of a
Qualified IPO, the Company shall not (i) terminate, or permit a Guarantor to
terminate, any pension plan in a manner, or take any other action with respect
to any pension plan, which would reasonably be expected to result in any
material liability of the Company or a Guarantor, or (ii) fail to make, or
permit a Guarantor to fail to make, full payment when due of all amounts which,
under the provisions of any pension plan, agreement relating thereto or
applicable law, the Company or a Guarantor is required to pay as contributions
thereto. In addition, the Company shall promptly pay, and shall cause the
Guarantors to promptly pay, not less than the minimum funding requirement from
time to time established by any actuarial report with respect to any pension
plan of the Company or any Guarantor.
(v) Restriction on Reserve Account. Prior to the consummation of
a Qualified IPO, without the prior written consent of the Required Holders, the
Company shall not, and shall not permit MNI to, deposit or cause to be deposited
in the bank account of the Company being account *** and the bank account of
MNI being account number *** (i) an amount greater than $30,000,000, in the
aggregate, (ii) any amount not required to be deposited in such accounts
pursuant to the reserve account requirements contained in the receivables
purchase agreement (the "RPA") dated as of April 16, 2004 between Endurance
Trust, the Company, MNI and Efficient Capital Corporation or (iii) any amount
not derived solely from the net proceeds of the sale of accounts receivable by
the Company or MNI to Endurance Trust or the collections relating to accounts
receivable sold by the Company or MNI to Endurance Trust pursuant to the terms
of the RPA.
33
(w) Restriction on Cash Collateral. Prior to the consummation of
a Qualified IPO, the Company shall not deposit, nor shall it permit any
Guarantor or other Subsidiary to deposit, any amount with any Person as cash
collateral (except for cash collateral deposited in respect of Permitted
Indebtedness or Permitted Liens) without the prior written consent of the
Required Holders, such consent not to be unreasonably withheld or delayed.
(x) Access Rights. Prior to the consummation of a Qualified IPO,
the Holder will have reasonable access, during normal business hours, (I) to the
facilities, records and personnel (including outside accountants) of the Company
and its Subsidiaries and (II) to the executive officers and senior management of
the Company and its Subsidiaries, in each case to the extent that the same
reasonably relates to the Holder's interest in the Company, subject to
reasonable prior written notice delivered to the Company and subject to
execution by the Holder, at the Company's request, of a confidentiality and
nondisclosure agreement in the form reasonably agreed to by the Company. The
Company shall be entitled to designate one or more representatives of the
Company to be present during all such periods of access.
(y) Restrictions on Acquisitions. Prior to the consummation of a
Qualified IPO, the Company shall not, and shall not permit any Guarantor or
other Subsidiary to, make any investment, or acquire the capital shares, assets
or business of, any Person, whether in a single transaction or a series of
related transactions, for purchase price in excess of $5,000,000 per transaction
and $10,000,000 in the aggregate in any fiscal year.
(18) SECURITY. This Note and the Additional Notes are secured to the
extent and in the manner set forth in the Security Documents (as defined in the
Securities Purchase Agreement). Upon the consummation of a Qualified IPO, all of
the Security Documents and Guarantees shall terminate and the Holder irrevocably
authorizes and directs the Company, and any agent under their respective
direction, at the sole expense of the Company, to (a) discharge any and all
registrations and filings made in favor of the Holder or the Collateral Agent on
behalf of the holders of the Notes, against the Company or its Subsidiaries (and
any predecessor entities of or to the Company or its Subsidiaries) and any
financing change statements filed in connection with such registrations; and (b)
file any UCC financing statement terminations.
(19) PARTICIPATION. Subject to the limitations set forth in Section
17(f), the Holder, as the holder of this Note, shall be entitled to receive such
dividends paid and distributions made to the holders of Common Shares, in lieu
of any adjustments to which the Holder is otherwise entitled under Section 7, to
the same extent as if the Holder had converted this Note into Common Shares
(without regard to any limitations on conversion herein or elsewhere) and had
held such Common Shares on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Shares. However, the Company
shall not pay any dividends or distributions pursuant to this Section 19 to the
extent that the fair market value of any Purchase Rights that the Company would
become obligated to grant to the Holder under Section 6(a) and/or any dividends,
distributions or cash that the Company would become obligated to pay to the
Holder under Section 19 of this Note, together with (i) the fair market value of
any Purchase Rights previously granted to the Holder of this Note pursuant to
Section 6(a) of this Note, (ii) dividends, distributions or cash previously paid
pursuant to Section 19 of this Note, (iii) any payments or repayments of or
reductions of Principal to the Holder under this
34
Note as a result of a conversion that the Company was obligated to make or is
currently obligated (under this Note or under the Securities Purchase Agreement)
to make on account of the principal amount (as defined in the Income Tax Act
(Canada)) of this Note and (iv) any reductions of Principal as a result of a
conversion under this Note that the Company was obligated to make, would cause
the Company to pay or repay, or become obligated to pay or repay, more than 20%
of the Principal of this Note prior to the Maturity Date.
(20) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative
vote at a meeting duly called for such purpose, or the written consent without a
meeting, of the Required Holders shall be required for any change, amendment,
alteration or waiver to this Note or the Additional Notes; provided, however,
that no such change, amendment, alteration or amendment, as applied to any of
the Notes held by any particular holder of Notes, shall, without the written
consent of that particular holder, (i) reduce the Interest Rate, extend the time
for payment of Interest or change the manner or rate of accrual of Interest on
the Notes, including, without limitation, modifying the definition contained in
Section 38(xxxi), (ii) reduce the amount of Principal, or change the Maturity
Date, of the Notes, (iii) make any change that impairs or adversely affects the
conversion rights of the Notes (including, without limitation, the provisions
contained in Section 7 hereof), (iv) reduce any of the Redemption/Repurchase
Prices, or amend or modify in any manner adverse to the holders of the Notes the
Company's obligation to make such payments, whether through an amendment or
waiver of provisions in the covenants, definitions or otherwise; (v) modify the
provisions with respect to the right of the holders of the Notes to cause the
Company to redeem or repurchase for the Notes pursuant to Sections 4(b) or 5(b)
herein and the analogous provisions of the Additional Notes (including, without
limitation, modifying Section 4(a) hereof or any definitions contained in
Section 38(xxiv); (vi) make any Interest or Principal on the Notes payable other
than as set forth herein and in the Additional Notes; (vii) impair the right of
any holder of Notes to receive payment of Principal or Interest or other
payments due under the Notes, if any, on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
holder; (viii) change the ranking of this Note or any Additional Notes in a
manner adverse to the holder thereof; or (ix) modify any of the provisions of,
or impair the right of any holder of Notes under, Section 6, Section 17, this
Section 20, Section 21, Section 23 and Section 33(b) hereof or the analogous
provisions of the Additional Notes; and as further provided that no such change
shall be made prior to the Company having consulted tax counsel as to the tax
consequences of such a change on the Holder and on the Company. Neither the
Company nor any of its Subsidiaries will, directly or indirectly, pay or cause
to be paid any consideration, whether by way of Interest, fees or otherwise, to
any holder for or as inducement to any consent, waiver or amendment of any of
the terms or provisions of the Notes unless such consideration is offered to be
paid or is paid to all holders. So long as any Notes remain outstanding, at no
time shall the Company or any of its Subsidiaries, directly or indirectly,
purchase or offer to purchase any of the outstanding Notes or exchange or offer
to exchange for any consideration (including, without limitation, for cash,
securities, property or otherwise) any outstanding Notes unless the Company or
such Subsidiary, as applicable, purchases, offers to purchase, exchanges or
offers to exchange the outstanding Notes of all of the holders for the same
consideration (on a pro rata basis in accordance with each holder's percentage
ownership of then outstanding Notes) and on identical terms.
35
(21) TRANSFER. This Note and any Common Shares issued upon the
conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company.
(22) REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall
surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section
22(d)), registered as the Holder may request, representing and evidencing the
same outstanding Principal being transferred by the Holder and, if less than the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 22(d)) to the Holder representing and evidencing the same
outstanding Principal not being transferred. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(c)(iii) following conversion or redemption of any portion of this
Note, the outstanding Principal evidenced by this Note may be less than the
Principal stated on the face of this Note. The Holder and any assignee, by
acceptance of the Note acknowledge and agree that they are bound by the terms of
the Collateral Agency Agreement, a copy of which is attached to the Securities
Purchase Agreement as Exhibit L, and further agree, at the request of the
Collateral Agent, to execute and deliver an assumption agreement in favor of the
Collateral Agent with respect to the Collateral Agency Agreement, in form and
substance acceptable to the Collateral Agent.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation
of this Note, the Company shall execute and deliver to the Holder a new Note (in
accordance with Section 22(d)) representing and evidencing the same outstanding
Principal.
(c) Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 22(d) and in
principal amounts of at least $100,000) representing in the aggregate and
evidencing the same outstanding Principal of this Note, and each such new Note
will evidence such portion of such outstanding Principal as is designated by the
Holder at the time of such surrender.
(d) Issuance of New Notes. Whenever the Company is required to
issue a new Note pursuant to the terms of this Note, such new Note (i) shall be
of like tenor with this Note, (ii) shall evidence the same and represent, as
indicated on the face of such new Note, the Principal remaining outstanding (or
in the case of a new Note being issued pursuant to Section 22(a) or Section
22(c), the Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior
to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this
Note, (iv) shall have the same rights and conditions and evidence the same
indebtedness as this Note, and (v) shall evidence accrued Interest on the
Principal and Interest of this Note, from the Issuance Date.
36
(23) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note and any of the other
Transaction Documents at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
Holder's right to pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(24) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
(a) If (i) this Note is placed in the hands of an attorney for
collection or enforcement or is collected or enforced through any legal
proceeding or the Holder otherwise takes action to collect amounts due under
this Note or to enforce the provisions of this Note or (ii) there occurs any
bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors' rights and involving a claim under this Note, then
the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees
and disbursements.
(b) If the expenses of any action, suit or proceeding in
enforcing rights under this Note are to be paid by the Company, the Holder shall
conduct such action, suit or proceeding through the same legal counsel
acceptable to the Company, provided that the Holder may employ separate legal
counsel if representation by the same legal counsel would be inappropriate due
to actual or potential differing interests between the Company and the Holder.
(25) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly
drafted by the Company and the initial holders of this Note and shall not be
construed against any person as the drafter hereof. The headings of this Note
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Note.
(26) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of the Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
(27) DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Closing Bid Price or the Closing Sale Price, the arithmetic
calculation of the Conversion Rate, any Redemption/Repurchase Price, Alternate
Consideration or Reorganization
37
Consideration, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within one (1) Business Day of receipt, or
deemed receipt, of the Conversion Notice or Redemption/Repurchase Notice or
other event giving rise to such dispute, as the case may be, to the Holder. If
the Holder and the Company are unable to agree upon such determination or
calculation within one (1) Business Day of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit via facsimile (a) the disputed determination of
the Closing Bid Price, the Closing Sale Price or the Share Price to an
independent, reputable investment bank selected by the Company and approved by
the Holder, acting reasonably, or (b) the disputed arithmetic calculation of the
Conversion Rate or the Redemption/Repurchase Price to the Company's independent,
outside accountant. The Company, at the Company's expense, shall cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than five (5) Business Days from the time it receives the
disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
(28) PERMITTED DEALINGS WITH COLLATERAL. Except as provided herein or
in the Securities Purchase Agreement, unless and until an Event of Default has
occurred and is continuing, the Company may, without the consent of the
Collateral Agent or the Holder:
(a) sell, assign, transfer, exchange, lease, consign or otherwise
dispose of inventory in the ordinary course of its business;
(b) sell or otherwise dispose of such part of its equipment which
is no longer necessary or useful in connection with its business or which has
become worn out or obsolete or unsuitable for the purpose for which it was
intended;
(c) collect accounts in the ordinary course of its business; and
(d) commit any other acts permitted herein and by the Securities
Purchase Agreement.
(29) INFORMATION REGARDING COLLATERAL. Prior to the consummation of a
Qualified IPO (a) Company will furnish to the Collateral Agent at least 30 days'
prior written notice before it effects, or, in the case of Guarantors, permits
to be effected, any change (i) in its legal name or the legal name of any
Guarantor, (ii) in its identity or organizational structure or jurisdiction of
formation or that of any Guarantor (iii) in its Federal Taxpayer Identification
Number or that of any Guarantor, if any. The Company agrees that such written
notice will provide all information necessary to make all filings under the
Uniform Commercial Code or the Personal Property Security Act (Ontario) or
otherwise that are required in order for the Collateral Agent to continue at all
times following such change to have a valid, legal and perfected security
interest in all the Collateral and for the Collateral at all times following
such change to have a valid, legal and perfected security interest as
contemplated in the Security Documents. Prior to the consummation of a Qualified
IPO the Company also agrees
38
promptly to notify the Collateral Agent if any material portion of the
Collateral is damaged or destroyed.
(30) ANNUAL COLLATERAL VERIFICATION. Prior to the consummation of a
Qualified IPO and at any time following the occurrence of an Event of Default
which is continuing and has not been waived or cured, at the time of delivery of
annual financial statements, the Company (i) shall deliver to the Collateral
Agent an officer's certificate either confirming that there has been no material
change in such information contained in the schedules to the Security Documents
since the Closing Date or the date of the most recent certificate delivered
pursuant to this Section, as applicable, and (ii) shall assist the Collateral
Agent in performing a collateral appraisal at the Company's reasonable expense.
(31) MAINTENANCE OF PROPERTIES. Prior to the consummation of a
Qualified IPO the Company will, and will cause each Guarantor to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear and casualty and condemnation events excepted, all material
properties used or useful in the business of the Company and the Guarantors and
from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof in each case in this section, except when the
failure to do so would not reasonably be expected to adversely affect the value
or usefulness of such property, it being understood that this provision shall
not limit dispositions of assets otherwise permitted hereunder.
(32) NOTICE OF LITIGATION. Prior to the consummation of a Qualified
IPO, the Company will promptly notify the Holder of any action, suit,
proceeding, complaint, notice, order or material environmental claim which is
commenced or issued or of which it becomes aware (and which has not been
disclosed in the Securities Purchase Agreement) which is pending or issued
against or, to the best of its information, knowledge and belief, affecting the
Company, a Guarantor or any other Subsidiary or any of their undertaking,
property and assets at law, in equity or before any arbitrator or before or by
any governmental department, body, commission, board, bureau, agency or
instrumentality in respect of which the Company determines in good faith that
there is a reasonable possibility of a determination adverse to the Company, any
Guarantor or any other Subsidiary which would, if determined adversely,
reasonably be expected to materially and adversely affect the business,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or the ability to perform any of their
obligations under this Note or the Security Documents or the enforceability of
the Security, and any action, suit or proceeding claiming payment (whether by
way of an amount owing, damages or otherwise) of an amount exceeding $500,000 in
respect of any one matter or $1,000,000 in the aggregate.
(33) NOTICES; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this
Note, unless otherwise provided herein, such notice shall be given in accordance
with the Securities Purchase Agreement. The Company shall provide the Holder
with prompt written notice of all actions taken pursuant to this Note, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Conversion
Price,
39
setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least twenty (20) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Shares, (B) with respect to any pro rata
subscription offer to holders of Common Shares or (C) for determining rights to
vote with respect to any Fundamental Change, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder.
The Company hereby irrevocably appoints Mitel Networks, Inc. at 00 Xxx
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000 Telephone: (000) 000-0000, Facsimile:
(000) 000-0000, Attention: Xxxx Xxxxxxx, Corporate COUNSEL, as its agent for the
receipt of service of process in connection with any action pursuant to this
Note in the United States. The Company agrees that any document may be
effectively served on it in connection with any action, suit or proceeding in
the United States by service on its agents.
Any document shall be deemed to have been duly served if marked for
the attention of the agent at its address (as set out above) or such other
address in the United States as may be notified to the party wishing to serve
the document and delivered in accordance with the notice provisions set forth in
this Section 33(a).
If the Company's agent at any time ceases for any reason to act as
such, the Company shall appoint a replacement agent having an address for
service in the United States and shall notify the Holder in writing of the name
and address of the replacement agent. Failing such appointment and notification,
the Holder shall be entitled by notice to the Company to appoint a replacement
agent to act on the Company's behalf. The provisions of this Section 33(a)
applying to service on an agent apply equally to service on a replacement agent.
(b) Payments. Whenever any payment of cash is to be made by the
Company to any Person pursuant to this Note, such payment shall be made in
lawful money of the United States of America by a check drawn on the account of
the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the
case of each of the initial holders of this Note, shall initially be as set
forth on the Schedule of Buyers attached to the Securities Purchase Agreement);
provided that the Holder may elect to receive a payment of cash via wire
transfer of immediately available funds by providing the Company with prior
written notice setting out such request and the Holder's wire transfer
instructions. If any Interest Date, other than the Maturity Date, would
otherwise be a date that is not a Business Day, such Interest Date shall be
postponed to the next day that is a Business Day, except that if such Business
Day is in the next succeeding calendar month, such Interest Date shall be the
immediately preceding Business Day, and the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of
Interest due on such date. If the Maturity Date or any Redemption Date falls on
a day which is not a Business Day, payment of principal and interest with
respect to this Note shall be paid on the next succeeding Business Day with the
same force and effect as if made on such date and no interest on such payment
shall accrue from and after such date, and the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of
Interest due on such date.
40
(c) Currency. Unless otherwise indicated, all dollar amounts
referred to in this Note are in United States dollars (the "NOTE CURRENCY").
(34) CANCELLATION. After all Principal, accrued Interest and other
amounts at any time owed on this Note have been paid in full, this Note shall
automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.
(35) WAIVER OF NOTICE. To the extent permitted by law, the Company
hereby waives demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Securities Purchase Agreement.
(36) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Note and the consummation of the transactions
contemplated hereby.
(37) GOVERNING LAW; JURISDICTION; JURY TRIAL.
(i) All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Note and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(ii) If for the purpose of obtaining or enforcing judgment
against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this
paragraph referred to as the "JUDGMENT CURRENCY") an amount due in the Note
Currency under this Note, the conversion shall be made at the exchange rate
between the Note Currency and Canadian Dollars as reported in the New
41
York edition of The Wall Street Journal (the "EXCHANGE RATE") prevailing on the
business day immediately preceding:
(1) the date of actual payment of the amount due, in
the case of any proceeding in the courts of New York or in the courts of any
other jurisdiction that will give effect to such conversion being made on such
date: or
(2) the date on which the foreign court determines, in
the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this paragraph (ii)(2) being
hereinafter referred to as the "JUDGMENT CONVERSION DATE").
(iii) If in the case of any proceeding in the court of any
jurisdiction referred to in paragraph (ii)(2) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of
actual payment of the amount due, the applicable party shall pay such adjusted
amount as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the Exchange Rate prevailing on the date of payment,
will produce the amount of the Note Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iv) Any amount due from the Company under this provision
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Note.
(38) CERTAIN DEFINITIONS. For purposes of this Note, the following
terms shall have the following meanings:
(i) "ADDITIONAL AMOUNT" shall have the meaning set forth in
section 14(a).
(ii) "AMEX" means the American Stock Exchange.
(iii) "APPLICABLE LAW" means, with respect to any Person,
property, transaction or event, all present or future applicable laws, statutes,
regulations, rules, orders, codes, treaties, conventions, judgments, awards,
determinations and decrees of any governmental, regulatory, fiscal or monetary
authority or court of competent jurisdiction in any applicable jurisdiction.
(iv) "ARM'S LENGTH" has the meaning ascribed thereto for the
purposes of the Income Tax Act (Canada) in effect as of the date hereof;
(v) "BLOOMBERG" means Bloomberg Financial Markets.
(vi) "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York or the
City of Ottawa, Canada are authorized or required by law to remain closed and
which is also a day on which dealings in deposits are transacted in the London
interbank market.
42
(vii) "CAPITAL SHARES" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
shares, including, without limitation, with respect to partnerships, partnership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
(viii) "CALENDAR QUARTER" means each of: the period
beginning on and including January 1 and ending on and including March 31; the
period beginning on and including April 1 and ending on and including June 30;
the period beginning on and including July 1 and ending on and including
September 30; and the period beginning on and including October 1 and ending on
and including December 31.
(ix) "CANADIAN SECURITIES LAWS" means the securities
legislation and regulations of, and the instruments, policies, rules, orders,
codes, notices and published interpretation notes of, the securities regulatory
authorities of the provinces and territories of Canada.
(x) "CLOSING BID PRICE" and "CLOSING SALE PRICE" mean, for
any security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the "pink sheets" by Pink
Sheets LLC (formerly the National Quotations Bureau, Inc.). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be
the fair market value as determined in good faith by the board of directors of
the Company. All such determinations to be appropriately adjusted for any share
dividend, share split, share combination or other similar transaction during the
applicable calculation period.
(xi) "CLASS A SHARES" means the Class A Convertible
Preferred Shares, Series 1 of the Company.
(xii) "CLASS B SHARES" means the Class B Convertible
Preferred Shares, Series 1 of the Company.
(xiii) "CLOSING DATE" shall have the meaning set forth in
the Securities Purchase Agreement, which date is the date the Company initially
issued Notes pursuant to the terms of the Securities Purchase Agreement.
43
(xiv) "COLLATERAL AGENT" shall have the meaning set forth in
the Collateral Agency Agreement and "COLLATERAL AGENCY AGREEMENT" means the
Collateral Agency Agreement dated the date hereof by and among the initial
holders of the Notes, Highbridge International LLC, as collateral agent, and the
Company.
(xv) "COMMON SHARES" means the Common Shares, with no par
value per share, of the Company as it exists on the Issuance Date or any other
Capital Shares of the Company into which the Common Shares shall be reclassified
or changed or, in the event of a merger, consolidation, amalgamation or other
similar transaction involving the Company that is otherwise permitted hereunder
in which the Company is not the surviving corporation (including, without
limitation, an amalgamation), the common shares, common equity interests,
ordinary shares or depositary shares or other certificates representing common
equity interests of such surviving corporation or its direct or indirect parent
corporation.
(xvi) "COMPANY TAXES" includes all present and future
income, corporation, capital gains, capital and value-added, and goods and
services taxes and all stamp and other taxes and levies, imposts, deductions,
duties, charges and withholdings whatsoever together with interest thereon and
penalties with respect thereto, if any, and charges, fees and other amounts made
on or in respect thereof;
(xvii) "CONVERTIBLE SECURITIES" means any shares or
securities (other than Options) directly or indirectly convertible into or
exercisable or exchangeable for Common Shares.
(xviii) "CUMULATIVE RETAINED EARNINGS" means the combined
amount of Net Income reported by the Company during the Measurement Period, plus
any Equity Infusion obtained by the Company during such period.
(xix) "EDC" means Export Development Canada and its
successors.
(xx) "EFFECTIVE DATE" means the date of consummation of the
applicable Fundamental Change.
(xxi) "EQUITY INFUSION" means any amount of cash received by
the Company in return for Common Shares.
(xxii) "ENVIRONMENTAL LAWS" means any present or future
applicable federal, provincial, state, municipal or other local law, statute,
regulation or by-law, code, ordinance, decree, directive, standard, policy,
rule, order, treaty, convention, judgment, award or determination for the
protection of the environment or human health and safety, present or future.
(xxiii) "EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended.
(xxiv) "FUNDAMENTAL CHANGE" means the occurrence, after the
Issuance Date, of one or more of the following events:
44
(1) any sale, transfer, lease, conveyance or other
disposition (in one transaction or a series of related transactions) of all
or substantially all of the Company's property or assets to any Person or
group of related Persons (other than to any of the Company's wholly owned
Subsidiaries) as defined in Sections 13(d) and 14(d) of the Exchange Act,
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act, other than any sale, transfer, lease, conveyance or other
disposition in which (x) Persons who, directly or indirectly, are
beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of the
Company's Voting Shares immediately prior to such transaction, beneficially
own, directly or indirectly, immediately after such transaction at least a
majority of the total voting power of the outstanding Voting Shares of the
corporation or entity purchasing such properties or assets in such sale,
lease, conveyance or other disposition and (y) Persons who, directly or
indirectly, are beneficial owners of the Company's Voting Shares
immediately prior to such transaction, beneficially own, directly or
indirectly, immediately after such transaction shares of the corporation or
entity purchasing such properties or assets in such sale, lease, conveyance
or other disposition in a proportion that does not, on the whole,
materially differ from such ownership immediately prior to the transaction;
(2) the approval by the holders of the Company's
Capital Shares of any plan or proposal for liquidation or dissolution;
(3) if any "person" or "group" (as these terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act) (other than
Xxxxxxx X. Xxxxxxxx and the Xxxxxxxx Persons) is or shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Voting Shares of the Company; or
(4) any event, whether by a single transaction or a
series of transactions, that results in Xx. Xxxxxxx X. Xxxxxxxx and the
Xxxxxxxx Persons, collectively, "beneficially owning" (within the meaning
of Rule 13d-3 under the Exchange Act) directly or indirectly in the
aggregate less than 115,000,000 of the issued and outstanding shares in the
capital of the Company (subject to appropriate adjustments for share
dividends, share splits, recapitalizations, combinations, reverse share
splits or other similar events occurring after the Issuance Date),
calculated on an as-if-converted to Common Shares basis; or
(5) the Company consolidates with, or merges with or
into, another Person or any Person consolidates with, or merges with or
into, the Company, or the Company and any other Person amalgamates, other
than any consolidation, amalgamation or merger in which Persons who,
directly or indirectly, are beneficial owners (as defined in Rule 13d-3
under the Exchange Act) of the Company's Voting Shares immediately prior to
such transaction, beneficially own, directly or indirectly, immediately
after such transaction at least a majority of the total voting power of the
outstanding Voting Shares of the continuing or surviving corporation or
entity.
45
Notwithstanding the foregoing, a merger or consolidation shall not be
deemed to constitute a "Fundamental Change" if (i) at least 90% of the
consideration (excluding cash payments for fractional shares or pursuant to
statutory appraisal rights) in such merger or consolidation, amalgamation or
share exchange offer consists of Capital Shares or American Depositary Shares
that are, or immediately after the transaction or event will be, traded on the
NYSE or quoted on the Nasdaq National Market (or which shall be so traded or
quoted when issued or exchanged in connection with such merger or consolidation)
(these securities being referred to as "publicly traded securities") and (ii) as
a result of such merger or consolidation, amalgamation or share exchange offer
the Notes become immediately convertible into such publicly traded securities
and other such consideration received by the shareholders.
(xxv) "FUNDAMENTAL CHANGE REPURCHASE PRICE" means (i) for
any Fundamental Change occurring during the 18 months after the Issuance Date
but prior to the consummation of a Qualified IPO, 125% of the Principal of the
Notes to be repurchased, together with accrued and unpaid Interest to, but
excluding, the Fundamental Change Settlement Date or (ii) for any Fundamental
Change occurring following the 18 months after the Issuance Date but prior to
the consummation of a Qualified IPO, 120% of the Principal of the Notes to be
repurchased, together with accrued and unpaid Interest, to, but excluding, the
Fundamental Change Settlement Date or (iii) for any Fundamental Change occurring
following the consummation of a Qualified IPO, 100% of the Principal of the
Notes to be repurchased, together with accrued and unpaid Interest, to, but
excluding, the Fundamental Change Settlement Date.
(xxvi) "FUNDAMENTAL CHANGE SETTLEMENT DATE" means the 30th
day after the Effective Date for a Fundamental Change; provided that, with
respect to any Fundamental Change Conversion or Fundamental Change Repurchase
for which a Notice of Conversion or Fundamental Change Repurchase Notice, as
applicable, has been delivered after the Effective Date (and during the
Fundamental Change Conversion/Repurchase Period), the Fundamental Change
Settlement Date shall mean the date that is three (3) Business Days following
the delivery of the applicable Notice of Conversion or Fundamental Change
Repurchase Notice.
(xxvii) "GAAP" means United States generally accepted
accounting principles, consistently applied. All accounting and financial terms,
unless specifically defined in this document, will be interpreted in accordance
with GAAP.
(xxviii) "GUARANTORS" shall have the meaning set forth in
the Security Documents.
(xxix) "INDEBTEDNESS" of any Person means, at any date,
without duplication, (i) all obligations of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, (iv) all obligations of such Person as
lessee which are capitalized in accordance with GAAP, (v) all indebtedness,
liabilities and obligations secured by a Lien on any asset of such Person,
whether or not the same is otherwise indebtedness, liabilities, or obligations
of such Person, (vi) all indebtedness, liabilities and obligations of others
which is, directly or indirectly, guaranteed by such Person or which
46
such Person has agreed (contingently or otherwise) to purchase or otherwise
acquire, (vii) all reimbursement and other obligations with respect to letters
of credit, bankers' acceptances and surety bonds, whether or not matured, (viii)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (ix)
all obligations of such Person under commodity price hedging arrangements, in
each case whether contingent or matured, (x) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, (xi) all
indebtedness, liabilities and obligations in respect of financial instruments
which are classified as a liability on the balance sheet of such Person
(excluding any obligations of the Company to redeem or repurchase Class A Shares
or Class B Shares in accordance with the Put Provisions in the Shareholder's
Agreement) and (xii) all obligations of such Person to otherwise assure a
creditor against loss.
(xxx) "INTELLECTUAL PROPERTY" has the meaning defined in the
Security Agreements.
(xxxi) "INTEREST COVERAGE TEST" means that the result of (x)
LTM EBITDA minus LTM Capital Expenditures, divided by (y) LTM Interest Expense
is greater than 6.0.
(xxxii) "INTEREST RATE" means (x) for any period prior to
consummation of a Qualified IPO, the applicable LIBOR plus five percent (5.0%),
(y) for any period following consummation of a Qualified IPO, the applicable
LIBOR plus two and one half percent (2.5%) and (z) on and after the 30 month
anniversary of the Issuance Date if a Qualified IPO has not been consummated,
the applicable LIBOR plus ten percent (10.0%); provided, however, that the
Interest Rate shall be increased for any applicable Special Interest Payments.
The Interest Rate shall be re-calculated as of the first day of each Calendar
Quarter or, initially, as of the Issuance Date.
(xxxiii) "IP SCHEDULE" means a schedule prepared by the
Company setting out the core Intellectual Property of the Company and its
Subsidiaries, as such schedule may be amended from time to time.
(xxxiv) "LIBOR" means, as of each date of determination, (a)
the three-month London Interbank Offered Rate for deposits in U.S. dollars, as
shown on such date in The Wall Street Journal (Eastern Edition) under the
caption "Money Rates - London Interbank Offered Rates (LIBOR)"; or (b) if The
Wall Street Journal does not publish such rate, the offered three-month rate for
deposits in U.S. dollars which appears on the Reuters Screen LIBO Page as of
10:00 a.m., New York time, each day, provided that if at least two rates appear
on the Reuters Screen LIBO Page on any day, the "LIBOR" for such day shall be
the arithmetic mean of such rates.
(xxxv) "LIENS" means mortgages, pledges, liens, hypothecs,
charges, security agreements or other encumbrances or other arrangements that in
substance secure
47
payment or performance of an obligation, statutory and other non-consensual
liens or encumbrances and includes the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement.
(xxxvi) "LOCK-UP EXPIRATION DATE" means the date of
expiration of any lock-up restrictions entered into by the Holder in connection
with a Qualified IPO.
(xxxvii) "LTM CAPITAL EXPENDITURES" means for the twelve
month period for which financials are available immediately preceding the 30
month anniversary of the Issuance Date, with respect to the Company, the
aggregate of all expenditures by the Company and its subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs,
maintenance and improvements during such period) that are required to be
capitalized under GAAP on a consolidated balance sheet of the Company and its
subsidiaries.
(xxxviii) "LTM EBITDA" means with respect to the Company,
the Net Income of such Company and its subsidiaries for the twelve month period
for which financials are available immediately preceding the 30 month
anniversary of the Issuance Date, plus without duplication, the sum of the
following amounts of the Company and its subsidiaries for such period and to the
extent deducted in determining Net Income of such Persons for such period: (1)
Net Interest Expense, (2) income tax expense, (3) depreciation expense, (4)
amortization expense, and minus, onetime or non-cash gains, including but not
limited to (5) gains generated from disposition of assets, (6) gains resulted
from reversal of charges, (7) gains resulted from change of estimates, (8) gains
resulted from change of actuarial assumptions, or (9) extraordinary gains.
(xxxix) "LTM NET INTEREST EXPENSE" means, with respect to
the Company, gross interest expense of the Company for the twelve month period
for which financials are available immediately preceding the 30 month
anniversary of the Issuance Date determined on a consolidated basis and in
accordance with GAAP, (including, without limitation, interest expense paid to
affiliates of the Company), plus any amount of interest capitalized as an asset
during the same twelve month period.
(xl) "LTM SALES" means, for the relevant twelve month
period, revenue as reported in accordance with GAAP.
(xli) "MAKE-WHOLE CONVERSION RATE" means the quotient of
$1,000 divided by the Conversion Price.
(xlii) "XXXXXXXX PERSONS" means the immediate family of
Xxxxxxx X. Xxxxxxxx and any "person" or "group" under Section 13(d)(3) of the
Exchange Act that is controlled solely by Xxxxxxx X. Xxxxxxxx or his immediate
family, any beneficiary of the estate of Xxxxxxx X. Xxxxxxxx or his immediate
family or any trust or partnership controlled by any of the foregoing.
(xliii) "MEASUREMENT PERIOD" means, with respect to any
request for repurchase or redemption of Class A Shares, Class B Shares or
redeemable Common Shares in accordance with the Shareholders' Agreement, the
third fiscal quarter of fiscal year 2006, and all
48
subsequent quarters, through, but excluding, the quarter in which the redemption
of Class A Shares, Class B Shares or redeemable Common Shares occurs.
(xliv) "MNI" means Mitel Networks, Inc., a corporation
incorporated under the laws of Delaware and an indirect wholly-owned Subsidiary
of the Company.
(xlv) "MNL" means Mitel Networks Limited, a private company
limited by shares incorporated in England and Wales under number 1309629, whose
registered office is at Xxxxxxxxxxx, Xxxxxxxxxxxxx, XX0X 0XX, and an indirect
wholly-owned Subsidiary of the Company.
(xlvi) "NET INCOME" means, with respect to any Person for
any applicable period, the net income (loss) of such Person for such period,
determined on a consolidated basis and in accordance with GAAP.
(xlvii) "NET INTEREST EXPENSE" means, with respect to any
Company for any applicable period, gross interest expense of the Company for
such period determined on a non-consolidated basis and in accordance with GAAP,
plus any amount of interest capitalization as an asset during the same period.
(xlviii) "NYSE" means The New York Stock Exchange, Inc.
(xlix) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common Shares or Convertible Securities
(l) "PERMITTED BUSINESS" means the business of developing,
selling, licensing, distributing, servicing and maintaining, as applicable,
enterprise and customer premises business communications solutions and services,
including without limitation advanced voice over internet protocol, video and
data communications platforms, desktop phones, Internet appliances and client
and server software applications and code (including applications for customer
relationship management and mobility, messaging and multimedia collaboration).
(li) "PERMITTED INDEBTEDNESS" means:
(1) Indebtedness owing hereunder, under the Additional
Notes and under the Security Documents;
(2) Subordinated Indebtedness;
(3) Trade debt and similar unsecured indebtedness
incurred in the ordinary course of business (but excluding indebtedness for
borrowed money outstanding for more than 90 days);
(4) certain indebtedness of MNL owing to Mitel Networks
International Limited on account of royalties;
(5) Intercorporate Indebtedness owed by any Subsidiary
to the Company or any of the Guarantors;
49
(6) Intercorporate Indebtedness between the Company and
the Guarantors;
(7) Intercorporate Indebtedness owed by any
wholly-owned Subsidiary of the Company (other than the Guarantors) to
another wholly-owned Subsidiary of the Company;
(8) Indebtedness in an aggregate amount not exceeding
$15,000,000 (or its equivalent amount in another currency) incurred in
connection with the obligations of a Person as lessee which are capitalized
in accordance with GAAP;
(9) Indebtedness incurred pursuant to performance
bonds, bid bonds and other similar instruments entered into in the ordinary
course of business;
(10) Indebtedness for borrowed money in an aggregate
amount not exceeding L15,000,000 incurred pursuant to overdraft, working
capital credit facilities and any other form of financing by Subsidiaries
of the Company carrying on business in the United Kingdom and Europe
(including a L7.5 million real estate mortgage dated January 24, 2002
granted by MNL in favor of Barclays Bank plc and a L5 million chattel
mortgage dated October 31, 2001 granted by MNL in favor of Barclays Bank
plc, as each may be amended, restated, supplemented or replaced from time
to time with the consent of the Required Holders);
(11) Indebtedness pursuant to letters of credit in an
aggregate face amount not exceeding Cdn. $600,000 issued in respect of the
Company's supplemental executive retirement plan;
(12) Indebtedness incurred or assumed in connection
with Permitted Purchase Money Security Interests;
(13) Indebtedness secured by assets or properties at
the time of entering into an agreement with respect to the acquisition of
such assets or properties and assumed in connection with such acquisition
and Indebtedness of a corporation existing at the time such corporation
becomes a Subsidiary of the Company provided, in either case, that such
Indebtedness was not incurred in anticipation of such acquisition or in
anticipation of such corporation becoming a Subsidiary and excluding any
extensions or renewals of any such Indebtedness;
(14) Unsecured Indebtedness incurred in connection with
transactions entered into for the purpose of hedging foreign exchange risk
of the Company and its Subsidiaries or for the purpose of hedging interest
rate exposure on Permitted Indebtedness (but, in either case not for
speculative purposes);
(15) Unsecured Indebtedness in an aggregate amount not
exceeding $25,000,000 (or its equivalent amount in another currency)
pursuant to a daylight overdraft facility incurred solely to facilitate the
clearance of inter-corporate Indebtedness;
50
(16) secured Indebtedness pursuant to a daylight
overdraft facility incurred with Xxxxxx Bank solely to facilitate the
clearance of inter-corporate Indebtedness;
(17) Indebtedness represented by obligations of MNL in
respect of its defined benefit pension plan;
(18) Letters of credit and letters of guarantee,
performance/bid bonds, cash management arrangements (including, but not
limited to: electronic funds transfer programs, daylight overdraft
facilities, F/X settlement risk facilities, and other facilities involving
intra-day/inter-day settlement risk); unadvised treasury risk facilities
(including facilities provided for conducting F/X and hedging/derivative
transactions; bank overdraft lines, including cash collateral in connection
with any of the foregoing, all as is consistent with past practice of the
Company or such Subsidiary or with the ongoing ordinary course developments
in the business of the Company or such Subsidiary; and
(19) Unsecured Indebtedness not included in any of the
foregoing and not exceeding $5,000,000 (or its equivalent amount in another
currency), in the aggregate.
Notwithstanding the foregoing, the aggregate amount of Permitted Indebtedness
shall not exceed, at any time, the Permitted Indebtedness Cap.
(lii) "PERMITTED INDEBTEDNESS CAP" means (x) during the
first year following the Issuance Date, $300,000,000 and (y) for each fiscal
year (consisting of twelve months) thereafter the greater of (A) $300,000,000
and (B) the Permitted Indebtedness Cap as calculated using the following
formula:
Amount of Permitted Indebtedness Cap for the immediately preceding fiscal year X
(1+ (.5 X ((LTM Sales for the immediately preceding fiscal year / LTM Sales for
the penultimate fiscal year) - 1)));
provided, however, that no (x) amount of Indebtedness incurred pursuant to
clause (18) of the definition of Permitted Indebtedness or (y) intercorporate
Indebtedness between the Company and any Guarantors or between any Guarantors
shall be included to determine whether the Permitted Indebtedness Cap has been
exceeded.
(liii) "PERMITTED LIENS" means the following types of Liens:
(1) Liens in respect of taxes, assessments or
governmental charges or claims the payment of which is not, at the time,
overdue;
(2) statutory Liens of landlords, statutory liens of
banks and rights of set-off, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by
law, in each case incurred in the ordinary course of business (a) for
amounts not yet overdue or (b) for amounts that are overdue and that (in
the case of any such amounts overdue for a period in excess of five days)
are being contested in good faith by appropriate proceedings, so long as
(1) such
51
reserves or other appropriate provisions, if any, as shall be required by
generally accepted accounting principles as applied in Canada shall have
been made for any such contested amounts, and (2) in the case of a Lien
with respect to any portion of the collateral in respect of which the
holders of the Notes, or the Collateral Agent on their behalf, have a
security interest in respect of the obligations of the Company under the
Notes (the "COLLATERAL"), such contest proceedings conclusively operate to
stay the sale of any portion of the Collateral on account of such Lien;
(3) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(4) any attachment or judgment Lien not involving (i)
in any individual case an amount in excess of $1,000,000, or (ii) in the
aggregate at any time outstanding an amount in excess of $2,500,000 (in
either case to the extent such amount is not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) except if any such attachment or judgment Lien shall
remain undischarged, undisputed (in the case of a writ in the United
Kingdom), unvacated, unbonded or unstayed for a period of 60 days (or in
any event later than five days prior to the date of any proposed sale
thereunder);
(5) Liens relating to leases or subleases granted to
third parties which do not interfere in any material respect with the
ordinary conduct of the business of the Company or any of its subsidiaries
or result in a material diminution in the value of any of the Collateral;
(6) Liens relating to easements, rights-of-way,
restrictions, encroachments, and other minor defects or irregularities in
title, in each case which do not and will not interfere in any material
respect with the ordinary conduct of the business of the Company or any of
its subsidiaries or result in a material diminution in the value of any of
the Collateral;
(7) any (a) interest or title of a lessor or sublessor
under any operating lease in respect of which the Company or any of its
subsidiaries shall be, or become liable whether directly or by assignment
or as a guarantor or other surety for the obligations of the lessee under
any such operating lease, to the extent that the aggregate annual rental
payments of the Company and its subsidiaries in respect of all such
operating leases shall not exceed $25,000,000, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor may be
subject to, or (c) subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred to in the
preceding clause (b), so long as the holder of such restriction or
encumbrance agrees to recognize the rights of such lessee or sublessee
under such lease;
52
(8) Liens arising from the filing of Personal Property
Security Act (Ontario) or UCC financing statements, relating solely to true
operating leases;
(9) Liens in favor of EDC arising out of certain
obligations and liabilities of the Company to EDC in connection with or
relating to indemnity agreements entered into, or which may in the future
be entered into, by the Company in favor of EDC in respect of surety and
performance bonds issued or to be issued by surety companies (including
ACE-INA Insurance) with EDC's full or partial indemnity for the account of
the Company, for so long as such liens are subject to the postponement and
subordination agreement dated April 27, 2005 between the Collateral Agent
and EDC;
(10) liens in favor of The Canada Trust Company in its
capacity as trustee of Endurance Trust under the RPA over bank accounts of
the Company and of MNI being account *** and ***, respectively, provided
that the funds to be deposited in such accounts are limited to the amounts
which the Company or MNI are required to deposit in such accounts pursuant
to the reserve account requirements contained in the RPA and provided
further that such deposited funds are derived solely from the net proceeds
of the sale of accounts receivable by the Company or MNI to Endurance Trust
or the collections relating to accounts receivable sold by the Company or
MNI to Endurance Trust pursuant to the terms of the RPA unless otherwise
permitted in writing by the Required Holders;
(11) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(12) Liens relating to any zoning or similar law or
right reserved to or vested in any governmental office or agency to control
or regulate the use of any real property;
(13) Liens against owners' or sublessors' interest in
any leasehold property used or occupied by the Company or any of its
Subsidiaries;
(14) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary course of
business of the Company or any of its Subsidiaries;
(15) Liens relating to licenses of patents, trademarks
and other intellectual property rights granted by the Company or any of its
Subsidiaries in the ordinary course of business and not interfering in any
material respect with the ordinary conduct of the business of the Company
or such Subsidiary;
(16) Liens granted to evidence the security interests
of the holders of the Notes, or the Collateral Agent on their behalf, in
the Collateral;
(17) Permitted Purchase Money Security Interests;
53
(18) Liens granted in connection with obligations
incurred pursuant to clause, (10), (11) or (18) of the definition of
Permitted Indebtedness;
(19) Liens not included in any of the foregoing in
respect of obligations not exceeding $5,000,000 (or its equivalent amount
in another currency) in the aggregate; and
(20) Liens relating to certain rights of the Government
of Canada in the intellectual property of the Company pursuant to the
Technology Partnerships Canada Agreement.
For greater certainty, the registration of a financing statement in
respect of the absolute assignment of accounts receivable under the Personal
Property Security Act (Ontario) or the UCC does not constitute a Lien for so
long as such registration does not constitute a Lien under the Personal Property
Security Act (Ontario) or the UCC.
(liv) "PERMITTED PURCHASE MONEY SECURITY INTEREST" means any
Lien on any property or asset created, issued or assumed to secure Indebtedness
incurred, assumed or issued to satisfy, in whole or in part, the purchase price
of such property or asset (including installation costs) and expenditures made
for any repairs, alterations, construction, development or improvements
performed thereon or added thereto, provided that such Lien, or any agreement or
other instrument under which such Lien is constituted, is limited to the
property or asset acquired in connection with the assumption, issuance or
incurring of such Indebtedness and is created, issued or assumed concurrently
with the acquisition of such property or assets.
(lv) "PERMITTED SECURITIZATION TRANSACTIONS" means any
transaction providing for the sale, securitization or other asset-backed
financing of trade accounts receivable arising in Canada or the United States of
or owing to the Company or a Subsidiary of the Company, provided that such
disposition of accounts receivable pursuant to the securitization transactions
are without recourse to the Company or such Subsidiary and provided that the
terms and conditions of all such securitization transactions shall be on an
Arm's Length basis and on commercially reasonable terms provided that the
receivables to which such securitization relates shall at no time be greater
then the aggregate of $34,000,000 and Cdn. $6,000,000;
(lvi) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department
or agency thereof.
(lvii) "PRESENT VALUE OF INTEREST" means the aggregate net
present value of the remaining scheduled payments of interest, if any, that, but
for the redemption or conversion of this Note, would have accrued under this
Note at the Interest Rate during the period from the applicable conversion or
redemption date, as the case may be, through the Maturity Date calculated using
a discount rate of 50 basis points higher than the yield to maturity of the
United States Treasury notes with a five-year maturity, as provided in The Wall
Street Journal (Eastern Edition) on the date that is three (3) Business Days
before the applicable conversion or redemption and assuming, for purposes of
this calculation, that the Interest Rate in effect on the date of determination
remains in effect through Stated Maturity.
54
(lviii) "PRINCIPAL MARKET" means the principal stock
exchange or trading market for the Common Shares, if any.
(lix) "QUALIFIED IPO" means the Company's sale of its Common
Shares in a firm commitment, fully underwritten public offering conducted in the
United States through a nationally recognized investment banking firm and
pursuant to a registration statement under the Securities Act, the public
offering price of which was not less than $1.61 per share, the gross proceeds of
which to the Company (before underwriting discounts, commissions and fees)
exceeds $75,000,000 and after which the Common Shares are listed either on NYSE
or admitted for trading on the Nasdaq National Market; provided that prior to
the consummation of a Qualified IPO, the acquisition of the Company by a
Successor Entity whose common shares (or its equivalent) are publicly traded (a
"PUBLIC ACQUIROR") shall not be deemed a Qualified IPO for purposes hereof but a
subsequent offering by a Public Acquiror after the acquisition of the Company
shall be deemed a Qualified IPO for purposes hereof to the extent that such
subsequent offering meets the criteria above.
(lx) "QUALIFIED IPO PRICE" means the price per share to the
public in a Qualified IPO.
(lxi) "REDEMPTION/REPURCHASE PRICES" means, collectively,
the Event of Default Redemption Price, the Fundamental Change Repurchase Price,
the Optional Redemption Price and the Tax Redemption Price.
(lxii) "REGISTRATION RIGHTS AGREEMENT" means that certain
registration rights agreement dated as of the Closing Date by and among the
Company and the initial holders of the Notes relating to, among other things,
the registration of the resale of the Common Shares issuable upon conversion of
the Notes.
(lxiii) "REQUIRED HOLDERS" means the holders of Notes
representing at least a majority of the aggregate principal amount of the Notes
then outstanding; it being understood that Notes held by the Collateral Agent
shall be included in such calculation and that Notes held by, or on behalf of,
the Company or any Affiliate of the Company shall be disregarded.
(lxiv) "RULE 144(K)" means Rule 144(k) promulgated under the
Securities Act and any successor provision thereto.
(lxv) "SEC" means the United States Securities and Exchange
Commission.
(lxvi) "SECURITIES ACT" means the United States Securities
Act of 1933, as amended.
(lxvii) "SECURITIES PURCHASE AGREEMENT" means that certain
securities purchase agreement dated as of the Subscription Date by and among the
Company and the initial holders of the Notes pursuant to which the Company
issued the Notes.
55
(lxviii) "SHARE PRICE" means the price paid per Common Share
in the transaction constituting the applicable Fundamental Change, determined as
follows: (x) if holders of Common Shares receive only cash in the Fundamental
Change, the Share Price shall be the cash amount paid per Common Share; or (y)
in all other circumstances (1) at any time prior to the consummation of a
Qualified IPO, the fair market value of the Common Shares as mutually determined
by the board of directors of the Company or (2) following the consummation of a
Qualified IPO, the Share Price shall be the arithmetic average of the Closing
Sale Prices of the Common Shares on the ten (10) Trading Days prior to, but not
including, the Effective Date. If the Company and the Required Holders are
unable to agree upon the fair market value of the Common Shares in clause (1) of
the foregoing, then such dispute shall be resolved pursuant to Section 27.
(lxix) "SHAREHOLDERS' AGREEMENT" means the Shareholders'
Agreement dated as of April 23, 2004 between the Company, EdgeStone Capital
Equity Fund II-B GP, Inc. and EdgeStone Capital Equity Fund II-B GP, Inc., as
nominee, Mitel Systems Corporation, Mitel Knowledge Corporation, Zarlink
Semiconductor Inc., Power Technology Investment Corporation and Xxxxxx Xxxxxx
Corporation.
(lxx) "SPECIAL INTEREST PAYMENTS" has the meaning specified
in the Registration Rights Agreement.
(lxxi) "SUBORDINATED INDEBTEDNESS" means Indebtedness
incurred by the Company, any Guarantor or other Subsidiary that is made
expressly subordinate in right of payment to the Indebtedness evidenced by this
Note, as reflected in a written agreement acceptable to the Required Holders and
approved by the Required Holders, and which Indebtedness does not (1) provide at
any time for the payment, prepayment, repayment, repurchase or defeasance,
directly or indirectly, of any principal or premium, if any, thereon until at
least 91 days after the Maturity Date and (2) exceed, at any time, $50,000,000.
(lxxii) "SUBSCRIPTION DATE" means April 27, 2005.
(lxxiii) "SUBSIDIARY" shall have the meaning specified in
the Securities Purchase Agreement.
(lxxiv) "SUCCESSOR ENTITY" means the Person, which may be
the Company, formed by, resulting from, continuing from or surviving any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made.
(lxxv) "TAX REDEMPTION DATE" means the date that is
specified in the Notice of Election, which date shall not be less than 30 days
after the Tax Redemption Notice Date.
(lxxvi) "TECHNOLOGY PARTNERSHIP CANADA AGREEMENT" means the
Technology Partnerships Canada Agreement, executed by the parties on the ninth
and tenth of October, 2002 between the Debtor, March Networks Corporation, Mitel
Knowledge Corporation and Her Majesty the Queen in Right of Canada, as amended,
restated, supplemented and modified from time to time.
56
(lxxvii) "TRADING DAY" means any day on which the Common
Shares is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Shares, then on the principal securities
exchange or securities market on which the Common Shares is then traded;
provided that "Trading Day" shall not include any day on which the Common Shares
is scheduled to trade on such exchange or market for less than 4.5 hours or any
day that the Common Shares is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00:00 p.m., New York Time).
(lxxviii) "TRANSACTION DOCUMENTS" means this Note, the
Additional Notes, the Securities Purchase Agreement, the Registration Rights
Agreement, the Collateral Agency Agreement, the Security Documents and any other
documents or agreements executed in connection with the transactions
contemplated hereunder or thereunder.
(lxxix) "TSX" means the Toronto Stock Exchange.
(lxxx) "UCC" shall have the meaning set forth in the
Security Documents.
(lxxxi) "VOTING SHARES" of a Person means Capital Shares of
such Person of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint, at least a
majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time Capital Shares of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
[SIGNATURE PAGE FOLLOWS]
57
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the Issuance Date set out above.
MITEL NETWORKS CORPORATION
By:
------------------------------
Name:
Title:
EXHIBIT I
MITEL NETWORKS CORPORATION
CONVERSION NOTICE
Reference is made to the Senior Secured Convertible Note (the "NOTE") issued to
the undersigned by
Mitel Networks Corporation (the "COMPANY"). In accordance
with and pursuant to the Note, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Note) of the Note indicated below into
Common Shares no par value per share (the "COMMON SHARES") of the Company, as of
the date specified below.
Date of Conversion: _______________________________________________________
Aggregate Conversion Amount to be converted: ______________________________
Please confirm the following information:
Conversion Price: _________________________________________________________
Number of Common Shares to be issued: _____________________________________
Please issue the Common Shares into which the Note is being converted in the
following name and to the following address:
Issue to: _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Facsimile Number: _________________________________________________________
Authorization: ____________________________________________________________
By:
------------------------------------------------------------------
Title: __________________________________________________________
Dated: _________________________________________________________________________
Account Number: ___________________________________________________________
(if electronic book entry transfer)
Transaction Code Number: __________________________________________________
(if electronic book entry transfer)
EXHIBIT B
FINAL
[FORM OF WARRANT]
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES,
AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT; (B) TO THE COMPANY; OR (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE 1933 ACT IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES LAWS, AND THE
HOLDER SHALL FURNISH TO THE COMPANY AN OPINION TO SUCH EFFECT FROM COUNSEL OF
RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE COMPANY PRIOR TO SUCH OFFER,
SALE OR TRANSFER. ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE
TERMS OF THIS WARRANT. THE NUMBER OF COMMON SHARES ISSUABLE UPON EXERCISE HEREOF
MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION
1(A) HEREOF.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF SHALL NOT TRADE SUCH SECURITIES IN ONTARIO OR TO RESIDENTS OF
ONTARIO BEFORE JULY 31, 2005.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT, DATED AS OF APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE
INVESTORS REFERRED TO THEREIN (THE "SECURITIES PURCHASE AGREEMENT") AND THE
HOLDER OF THE CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND
BY ALL APPLICABLE PROVISIONS OF THE SECURITIES PURCHASE AGREEMENT. THE
SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF APRIL 27, 2005, BY AND AMONG THE COMPANY AND THE INVESTORS REFERRED
TO THEREIN (THE "REGISTRATION RIGHTS AGREEMENT") AND THE HOLDER OF THE
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL
APPLICABLE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, SECTION 5 THEREOF. NO TRANSFER OF THIS WARRANT SHALL BE MADE WITHOUT
COMPLYING WITH THE PROVISIONS OF SECTION 7(A) OF THIS WARRANT.
MITEL NETWORKS CORPORATION
WARRANT TO PURCHASE COMMON SHARES
Warrant No.: SPA-__
Number of Common Shares: 4,125,000
Date of Issuance: April 27, 2005 ("ISSUANCE DATE")
Mitel Networks Corporation, a corporation incorporated under the laws of
Canada (the "COMPANY"), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
[HIGHBRIDGE INTERNATIONAL LLC] [LAKESHORE INTERNATIONAL, LTD.][MARATHON SPECIAL
OPPORTUNITY MASTER FUND, LTD.] [FORE MASTER CONVERTIBLE FUND, LTD.], the
registered holder hereof or its permitted assigns (the "HOLDER"), is entitled,
subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant
to Purchase Common Shares (including any Warrants to Purchase Common Shares
issued in exchange, transfer or replacement hereof, the "WARRANT"), at any time
or times on or after (the "WARRANT EXERCISE ELIGIBILITY DATE") the earliest of
(x) the date of effectiveness of a Qualified IPO (as defined in that certain
Securities Purchase Agreement, dated as of April 27, 2005 (the "SUBSCRIPTION
DATE"), by and among the Company and the investors (the "BUYERS") referred to
therein (the "SECURITIES PURCHASE AGREEMENT")), (y) the date of effectiveness of
any other public offering of the Common Shares or (z) if occurring prior to the
dates set forth above in clauses (x) or (y), in contemplation of, upon and
following a Fundamental Transaction (as defined below), but not after 11:59
p.m., New York Time, on the Expiration Date (as defined below), Four Million,
One Hundred and Twenty-Five Thousand (4,125,000) fully paid nonassessable Common
Shares (as defined below) (the "WARRANT SHARES"). Except as otherwise defined
herein, capitalized terms in this Warrant shall have the meanings set forth in
Section 15. This Warrant is one of the Warrants to Purchase Common Shares (the
"SPA WARRANTS") issued pursuant to Section 1 of the Securities Purchase
Agreement.
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section
1(f)), this Warrant may be exercised by the Holder on any day on or
after the Warrant Exercise Eligibility Date, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as
Exhibit A (the "EXERCISE NOTICE"), of the Holder's election to
exercise this Warrant, (ii) delivery of a signed letter substantially
in the form attached hereto as Exhibit B (the "RECERTIFICATION
LETTER"), and (iii)(A) payment to the Company of an amount equal to
the applicable Exercise Price multiplied by the number of Warrant
Shares as to which this Warrant is being exercised (the "AGGREGATE
EXERCISE PRICE") in cash or wire transfer of immediately available
funds or (B) by notifying the Company that this Warrant is being
exercised pursuant to a Cashless Exercise (as defined in Section
1(d)). The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and
delivery of the Exercise Notice with respect to less than all of the
Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares. On or before the
second Business Day following the date on which the Company has
received each of the Exercise Notice, the Recertification Letter and
the Aggregate Exercise Price (or notice of a
-2-
Cashless Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the Company
shall transmit by facsimile an acknowledgment of confirmation of
receipt of the Exercise Delivery Documents to the Holder and the
Company's transfer agent (the "TRANSFER AGENT"). On or before the
third Business Day following the date on which the Company has
received all of the Exercise Delivery Documents (the "SHARE DELIVERY
DATE"), the Company shall, subject to applicable law (X) provided that
the Transfer Agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, upon the request
of the Holder, credit such aggregate number of Common Shares to which
the Holder is entitled pursuant to such exercise to the Holder's or
its designee's balance account with DTC through its Deposit Withdrawal
Agent Commission system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program,
issue and dispatch by overnight courier to the address as specified in
the Exercise Notice, a certificate, registered in the Company's share
register in the name of the Holder or its designee, for the number of
Common Shares to which the Holder is entitled pursuant to such
exercise. Upon delivery of the Exercise Notice and Aggregate Exercise
Price referred to in clause (iii)(A) above or notification to the
Company of a Cashless Exercise referred to in Section 1(d), the Holder
shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. If this Warrant is
submitted in connection with any exercise pursuant to this Section
1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares
being acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than three Business Days after any
exercise and at its own expense, issue a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional Common Shares are to be
issued upon the exercise of this Warrant, but rather the number of
Common Shares to be issued shall be rounded up to the nearest whole
number. The Company shall pay all expenses in connection with, and all
Other Taxes and Designated Taxes, if any, that may be payable by the
Company in respect of the issuance and delivery of Warrant Shares upon
exercise of this Warrant pursuant to clause (z) of the definition
herein of Warrant Exercise Eligibility Date or the holding or
disposition of the Warrant Shares after such exercise, and shall
indemnify and hold the Holder and its affiliates harmless from any
taxes, interest, penalties and governmental charges which may become
payable by the Holder or any of its affiliates as a result of the
failure or delay by the Company to pay such expenses, governmental
charges, Other Taxes or Designated Taxes specified above. For purposes
hereof, "Other Taxes" means any present or future stamp, documentary
or similar issue or transfer taxes or any other excise or property
taxes, charges, governmental charges, or similar levies in respect of
the issue or delivery of Warrant Shares upon exercise of this Warrant,
and "Designated Taxes" means any liability of a non-resident of Canada
for purposes of the Income Tax Act (Canada) for Canadian
-3-
income or capital gains tax arising as a result of the exercise of
this Warrant for Warrant Shares or as a consequence of the holding or
disposition of this Warrant or any Warrant Shares and any and all
costs and expenses associated with compliance with the Income Tax Act
(Canada) and any analogous or similar legislation. The Company and the
Holder agree that should the exercise of the Warrant give rise to any
filing requirements, including under the Income Tax Act (Canada), the
Company and the Holder shall cooperate fully with each other with a
view to satisfying such filing requirements.
(b) Exercise Price. For purposes of this Warrant, "EXERCISE PRICE" means,
subject to adjustment as provided herein, (x) prior to the last day of
the Adjusted Exercise Price Period, US$1.50, and (y) thereafter, the
lower of (i) US$1.50 and (ii) the Adjusted Exercise Price.
(c) Company's Failure to Timely Deliver Securities. Subject to Section 12,
if within three (3) trading days after the Company's receipt of the
facsimile copy of a Exercise Notice the Company shall fail to issue
and deliver a certificate to the Holder and register such Common
Shares on the Company's share register or credit the Holder's balance
account with DTC for the number of Common Shares to which the Holder
is entitled upon such holder's exercise hereunder, and if on or after
such trading day the Holder purchases (in an open market transaction
or otherwise) Common Shares to deliver in satisfaction of a sale by
the Holder of Common Shares issuable upon such exercise that the
Holder anticipated receiving from the Company (a "BUY-IN"), then the
Company shall, within three Business Days after the Holder's request,
pay cash to the Holder in an amount equal to the Holder's total
purchase price (including brokerage commissions, if any) for the
Common Shares so purchased (the "BUY-IN PRICE"), at which point the
Company's obligation to deliver such certificate (and to issue such
Common Shares) shall terminate.
(d) Cashless Exercise. Notwithstanding anything contained herein to the
contrary, the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon
such exercise the "Net Number" of Common Shares determined according
to the following formula (a "CASHLESS EXERCISE"):
Net Number = (A x B) - (A x C)
-----------------
B
For purposes of the foregoing formula:
A= the total number of shares with respect to which this Warrant is
then being exercised.
B= the arithmetic average of the Closing Sale Price of the Common
Shares during the ten (10) trading days immediately preceding the date
of the Exercise Notice.
-4-
C= the Exercise Price then in effect for the applicable Warrant Shares
at the time of such exercise.
(e) Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares,
the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance
with Section 12.
(f) Limitations on Exercises; Beneficial Ownership. Other than in
contemplation of, upon and following a Fundamental Transaction, the
Company shall not effect the exercise of this Warrant, and the Holder
shall not have the right to exercise this Warrant, to the extent that
after giving effect to such exercise, such Person (together with such
Person's affiliates) would beneficially own in excess of 4.99% of the
Common Shares outstanding immediately after giving effect to such
exercise (the "MAXIMUM PERCENTAGE"). For purposes of the foregoing
sentence, the aggregate number of Common Shares beneficially owned by
such Person and its affiliates shall include the number of Common
Shares issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude
Common Shares which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by
such Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company beneficially owned by such Person and its affiliates
(including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein. Except as set
forth in the preceding sentence, for purposes of this paragraph,
beneficial ownership shall be calculated in accordance with Section
13(d) of the United States Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of
outstanding Common Shares, the Holder may rely on the number of
outstanding Common Shares as reflected in (1) the Company's most
recent Form 20-F, Form 6-K or other public filing with the United
States Securities and Exchange Commission or any Canadian regulatory
authority, as the case may be, (2) a more recent public announcement
by the Company or (3) any other notice by the Company or the Transfer
Agent setting forth the number of Common Shares outstanding. For any
reason at any time, upon the written or oral request of the Holder,
the Company shall within one Business Day confirm orally and in
writing to the Holder the number of Common Shares then outstanding. In
any case, the number of outstanding Common Shares shall be determined
after giving effect to the conversion or exercise of securities of the
Company, including the SPA Securities and the SPA Warrants, by the
Holder and its affiliates since the date as of which such number of
outstanding Common Shares was reported. By written notice to the
Company, the Holder may increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company,
and (ii) any such increase or decrease will apply only to the Holder
and not to any other holder of SPA Warrants.
-5-
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise
Price and the number of Warrant Shares shall be adjusted from time to time
as follows:
(a) Adjustment Upon Issuance of Common Shares. Prior to a Qualified IPO,
if and whenever on or after the Subscription Date the Company issues
or sells, or in accordance with this Section 2 is deemed to have
issued or sold, any Common Shares (including the issuance or sale of
Common Shares owned or held by or for the account of the Company (but
excluding Common Shares deemed to have been issued by the Company (x)
in connection with any Excluded Securities (as defined in the
Securities Purchase Agreement) or (y) to the Canadian government as
warrants exercisable for up to 12,000,000 Common Shares pursuant to
the Integrated Communications Solutions R&D Project Agreement between
the Company, Mitel Knowledge Corporation, March Networks Corporation
and Her Majesty the Queen in Right of Canada dated October 10, 2002)
for a consideration per share (the "NEW ISSUANCE PRICE") less than a
price (the "APPLICABLE PRICE") equal to the Exercise Price in effect
immediately prior to such issue or sale or deemed issuance or sale
(the foregoing a "DILUTIVE ISSUANCE"), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be reduced
to an amount equal to the New Issuance Price. Upon each such
adjustment of the Exercise Price hereunder, the number of Warrant
Shares shall be adjusted to the number of shares of Common Stock
determined by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment. For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants any
Options and the lowest price per share for which one Common Share
is issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the
Applicable Price, then such Common Share shall be deemed to be
outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Option for such price
per share. For purposes of this Section 2(a)(i), the "lowest
price per share for which one Common Share is issuable upon
exercise of such Options or upon conversion, exercise or exchange
of such Convertible Securities" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one Common Share upon the
granting or sale of the Option, upon exercise of the Option and
upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of
the Exercise Price or number of Warrant Shares shall be made upon
the actual issuance of such Common Shares or of such Convertible
Securities upon the exercise of such Options or upon the actual
issuance of such Common
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Shares upon conversion, exercise or exchange of such Convertible
Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price
per share for which one Common Share is issuable upon the
conversion, exercise or exchange thereof is less than the
Applicable Price, then such Common Share shall be deemed to be
outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section
2(a)(ii), the "lowest price per share for which one Common Share
is issuable upon the conversion, exercise or exchange" shall be
equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one Common
Share upon the issuance or sale of the Convertible Security and
upon conversion, exercise or exchange of such Convertible
Security. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such
Common Shares upon conversion, exercise or exchange of such
Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for
which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 2(a), no further
adjustment of the Exercise Price or number of Warrant Shares
shall be made by reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase
price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange
of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exercisable or
exchangeable for Common Shares increases or decreases at any
time, the Exercise Price and the number of Warrant Shares in
effect at the time of such increase or decrease shall be adjusted
to the Exercise Price and the number of Warrant Shares which
would have been in effect at such time had such Options or
Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section
2(a)(iii), if the terms of any Option or Convertible Security
that was outstanding as of the date of issuance of this Warrant
are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the Common Shares deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been
issued as of the date of such increase or decrease. No adjustment
pursuant to this Section 2(a) shall be made if such adjustment
would result in an increase of the Exercise Price then in effect
or a decrease in the number of Warrant Shares.
(iv) Calculation of Consideration Received. In case any Option is
issued in connection with the issue or sale of other securities
of the Company,
-7-
together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued
for a consideration of US$0.01. If any Common Shares, Options or
Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor.
If any Common Shares, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists
of securities, in which case the amount of consideration received
by the Company will be the Closing Sale Price of such security on
the date of receipt. If any Common Shares, Options or Convertible
Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the
surviving entity or to owners of an entity with which the Company
amalgamates (the "amalgamating entity"), the amount of
consideration therefor will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving
entity or amalgamating entity as is attributable to such Common
Shares, Options or Convertible Securities, as the case may be.
The fair value of any consideration other than cash or securities
will be determined by the Board of Directors of the Company in
good faith.
(v) Record Date. If the Company takes a record of the holders of
Common Shares for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Shares, Options
or in Convertible Securities or (B) to subscribe for or purchase
Common Shares, Options or Convertible Securities, then such
record date will be deemed to be the date of the issue or sale of
the Common Shares deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(vi) Expiration of Options and Convertible Securities. Any adjustment
under this Section 2(a) is to be disregarded if, and to the
extent that, all of the Options or Convertible Securities that
gave rise to such adjustment expire or are cancelled without
having been exercised, exchanged or converted, so that the
Exercise Price effective immediately upon such expiration or
cancellation is equal to the Exercise Price that otherwise would
have been in effect had such expired or cancelled Options or
Convertible Securities not been issued.
(b) Adjustment upon Subdivision or Combination of Common Shares. If the
Company at any time on or after the Subscription Date subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or
more classes of its outstanding Common Shares into a greater number of
shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of Warrant
Shares will be proportionately increased. If the Company
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at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of
its outstanding Common Shares into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(b)
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(c) Other Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of Warrant
Shares so as to protect the rights of the Holder; provided that no
such adjustment pursuant to this Section 2(c) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise
determined pursuant to this Section 2.
(d) Notice of Adjustments. Upon any adjustment of the Exercise Price or of
the number or kind of securities into which this Warrant is
exercisable pursuant to the terms of this Warrant, the Company shall
give written notice thereof to the Holder, which notice shall state
the Exercise Price or the number of Warrant Shares or other securities
subject to this Warrant resulting from such adjustment, as the case
may be, and shall set forth in reasonable detail the method of such
calculation and the facts upon which such calculation is based.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. Subject to Section 4(a), if the Company
shall declare or make any dividend or other distribution of its assets (or
rights to acquire its assets) to holders of Common Shares, by way of return
of capital or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement
or other similar transaction) (a "DISTRIBUTION"), at any time after the
issuance of this Warrant, then, in each such case:
(a) any Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of
Common Shares entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price
determined by multiplying such Exercise Price by a fraction of which
(i) the numerator shall be the Closing Bid Price of the Common Shares
on the trading day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the
Company's Board of Directors) applicable to one Common Share, and (ii)
the denominator shall be the arithmetic average of the Closing Bid
Price of the Common Shares during the ten (10) trading days
immediately preceding such record date; and
(b) the number of Warrant Shares shall be increased to a number of shares
equal to the number of Common Shares obtainable immediately prior to
the close of business on the record date fixed for the determination
of holders of Common Shares entitled to receive the Distribution
multiplied by the reciprocal of the
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fraction set forth in the immediately preceding paragraph (a);
provided that in the event that the Distribution is of Capital Stock
("OTHER CAPITAL STOCK") of a company whose Capital Stock is traded on
a national securities exchange or a national automated quotation
system, then the Holder may elect to receive a warrant to purchase
Other Capital Stock in lieu of an increase in the number of Warrant
Shares, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the number
of shares of Other Capital Stock that would have been payable to the
Holder pursuant to the Distribution had the Holder exercised this
Warrant immediately prior to such record date and with an aggregate
exercise price equal to the product of the amount by which the
exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding
paragraph (a) and the number of Warrant Shares calculated in
accordance with the first part of this paragraph (b).
4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights. If at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders
of any class of Common Shares (the "PURCHASE RIGHTS"), then, upon the
Holder's election, the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights and in lieu of any
adjustments to which the Holder is otherwise entitled under Section 3
above in respect of such Purchase Rights, the aggregate Purchase
Rights which the Holder could have acquired if the Holder had held the
number of Common Shares acquirable upon complete exercise of this
Warrant (without regard to any limitations on the exercise of this
Warrant) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Shares are to be determined for the grant, issue or sale of such
Purchase Rights.
(b) Fundamental Transactions. The Company shall not enter into or be party
to a Fundamental Transaction unless (i) the Successor Entity
satisfactorily assumes in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in
accordance with the provisions of this Section (4)(b), including
agreements to deliver to each holder of SPA Warrants in exchange for
such SPA Warrants a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this
Warrant, including, without limitation, an adjusted exercise price
equal to the value for the Common Shares reflected by the terms of any
Fundamental Transaction, and exercisable for a corresponding number of
shares of capital stock equivalent to the Common Shares acquirable and
receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to any Fundamental
Transaction, and (ii) either (x) the Successor Entity is a publicly
traded corporation whose Capital Stock is quoted on or listed for
trading on a securities exchange or quotation system or (y) in the
case of a reclassification or recapitalization of Common Shares only,
there is no diminution in the rights of a Holder or the value of such
Common Shares. Upon the occurrence of any
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Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the "Company"
shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations
of the Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein. Upon
consummation of any Fundamental Transaction, the Successor Entity
shall deliver to the Holder confirmation that there shall be issued
upon exercise of this Warrant at any time after the consummation of
the Fundamental Transaction, in lieu of the Common Shares (or other
securities, cash, assets or other property) purchasable upon the
exercise of the Warrant prior to such Fundamental Transaction, such
shares of stock, securities, cash, assets or any other property
whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been
converted immediately prior to such Fundamental Transaction, as
adjusted in accordance with the provisions of this Warrant. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant to
which holders of Common Shares are entitled to receive securities or
other assets with respect to or in exchange for Common Shares (a
"CORPORATE EVENT"), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon
an exercise of this Warrant at any time after the consummation of the
Fundamental Transaction but prior to the Expiration Date, in lieu of
the Common Shares (or other securities, cash, assets or other
property) purchasable upon the exercise of this Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash,
assets or any other property whatsoever (including warrants or other
purchase or subscription rights) which the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction
had the Warrant been exercised immediately prior to such Fundamental
Transaction. In addition to the foregoing, in connection with any
Fundamental Transaction (other than a reclassification or
recapitalization of the Company's Common Shares that does not result
in a diminution in the rights of a Holder or the value of such Common
Shares), the Holder shall have the right, for a period of 30 days
following the consummation of such Fundamental Transaction, to require
the Company to exchange all or any portion of the Warrants for a
number of Common Shares equal to the quotient obtained by dividing (i)
the value of the Warrants as of the date of the Fundamental
Transaction determined using the Black-Scholes Pricing Model by (ii)
the consideration paid per Common Share in such Fundamental
Transaction, provided that such right shall not apply if (x) (I) at
least 90% of the consideration (excluding cash payments for fractional
shares or pursuant to statutory appraisal rights) in such merger or
consolidation consists of Capital Stock that is, or immediately after
consummation of such Fundamental Transaction will be, traded on The
New York Stock Exchange, Inc. or quoted on the Nasdaq National Market
or traded on the Toronto Stock Exchange or London Stock Exchange, in
the case of the latter two stock exchanges with a minimum market
capitalization of $1 billion (or which shall be so traded or quoted
when issued or exchanged in
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connection with such Fundamental Transaction) (any of these securities
being referred to as "publicly traded securities") and (II) as a
result of such merger or consolidation the SPA Warrants become
exercisable for such publicly traded securities, excluding cash
payments for fractional shares, or (y) in connection with such
Fundamental Transaction the consideration paid to all holders of
Common Shares and securities convertible into, exercisable for and
exchangeable for Common Shares is securities of an entity that is not
is an affiliate of the Company and is not a publicly traded
corporation whose Capital Stock is quoted on or listed on a securities
exchange or quotation system. In connection with any Fundamental
Transaction in which all holders of Common Shares and securities
convertible into, exercisable for and exchangeable for Common Shares
are solely to receive in such Fundamental Transaction cash and/or
securities of an entity that is not a publicly traded corporation
whose Capital Stock is quoted on or listed on a securities exchange or
quotation system in exchange for such securities, the Company shall
have the right to require the Holder to sell all or any portion of its
Warrants to the Company for cash payable at consummation of such
Fundamental Transaction in an amount equal to the value of the
Warrants as of the date of the Fundamental Transaction determined
using the Black-Scholes Pricing Model. The provisions of this Section
shall apply similarly and equally to successive Fundamental
Transactions and Corporate Events and shall be applied without regard
to any limitations on the exercise of this Warrant.
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Articles of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger,
amalgamation, scheme or plan of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at
all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any Common Shares receivable upon the exercise of
this Warrant above the Exercise Price then in effect, (ii) shall take all
such actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Common Shares
upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA Warrants are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Shares, solely for the
purpose of effecting the exercise of the SPA Warrants, the number of Common
Shares as shall from time to time be necessary to effect the exercise of
the SPA Warrants then outstanding (without regard to any limitations on
exercise).
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in such Person's capacity as a holder
of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon the
Holder, solely in such Person's capacity as the Holder of this Warrant, any
of the rights of a shareholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue
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of stock, reclassification of stock, consolidation, merger, amalgamation,
conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the Holder of
the Warrant Shares which such Person is then entitled to receive upon the
due exercise of this Warrant. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as
a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices and other
information given to the shareholders of the Company generally,
contemporaneously with the giving thereof to the shareholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. This Warrant may only be offered, sold or
otherwise transferred (a) pursuant to an effective registration
statement under the 1933 Act, (b) to the Company or (c) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the 1933 Act in a
transaction that does not require registration under the 1933 Act or
applicable state securities laws, and the holder shall furnish to the
Company an opinion to such effect from counsel of recognized standing
reasonably satisfactory to the Company prior to such offer, sale or
transfer. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant
(in accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant Shares
not being transferred and the transferee shall agree to be bound by
the terms hereof.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute
and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section
7(d)) representing in the aggregate the right to purchase the number
of Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, that no Warrants for fractional Common
Shares shall be given.
-13-
(d) Issuance of New Warrants. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as
indicated on the face of such new Warrant, the right to purchase the
Warrant Shares then underlying this Warrant (or in the case of a new
Warrant being issued pursuant to Section 7(a) or Section 7(c), the
Warrant Shares designated by the Holder which, when added to the
number of Common Shares underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same
as the Issuance Date unless such Warrant was issued in connection with
a transfer, and (iv) shall have the same rights and conditions as this
Warrant.
8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall
provide the Holder with prompt written notice of all actions taken pursuant
to this Warrant, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i)
immediately upon any adjustment of the Exercise Price, setting forth in
reasonable detail, and certifying, the calculation of such adjustment, (ii)
at least fifteen days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution
upon the Common Shares, (B) with respect to any grants, issuances or sales
of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of Common Shares or (C)
for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such
notice being provided to the Holder and (iii) at least 15 days prior to any
Fundamental Transaction (other than pursuant to clause (iii) of such
definition, in which case within one day of the Company's knowledge of such
transaction or proposed transaction).
The Company hereby irrevocably appoints Mitel Networks, Inc. at 000 Xxx
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Telephone: (000) 000-0000, Facsimile:
(000) 000-0000, Attention: Xxxx Xxxxxxx, Corporate Counsel, as its agent for the
receipt of service of process in connection with any action pursuant to this
Warrant in the United States. The Company agrees that any document may be
effectively served on it in connection with any action, suit or proceeding in
the United States by service on its agents.
Any document shall be deemed to have been duly served if marked for the
attention of the agent at its address (as set out above) or such other address
in the United States as may be notified to the party wishing to serve the
document and delivered in accordance with the notice provisions set forth in
this Section 8.
If the Company's agent at any time ceases for any reason to act as such,
the Company shall appoint a replacement agent having an address for service in
the United States and shall notify the Holder in writing of the name and address
of the replacement agent. Failing such appointment and notification, the Holder
shall be entitled by notice to the Company to appoint a
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replacement agent to act on the Company's behalf. The provisions of this Section
8 applying to service on an agent apply equally to service on a replacement
agent.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions
of this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Required
Holders; provided that no such action may increase the exercise price of
any SPA Warrant or decrease the number of shares or class of stock
obtainable upon exercise of any SPA Warrant without the written consent of
the Holder. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the SPA Warrants then
outstanding.
10. GOVERNING LAW; JURISDICTION; JURY TRIAL.
(i) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by the
internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than
the State of New York. Subject to Section 12, each party hereby
irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this
Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
(ii) If for the purpose of obtaining or enforcing judgment against the
Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being
hereinafter in this paragraph referred to as the "JUDGMENT
CURRENCY") an amount due in US dollars under this Warrant, the
conversion shall be made at the exchange rate
-15-
between United States Dollars and Canadian Dollars as reported in
the New York edition of The Wall Street Journal (the "EXCHANGE
RATE") prevailing on the business day immediately preceding:
(A) the date of actual payment of the amount due, in the case of
any proceeding in the courts of New York or in the courts of
any other jurisdiction that will give effect to such
conversion being made on such date: or
(B) the date on which the foreign court determines, in the case
of any proceeding in the courts of any other jurisdiction
(the date as of which such conversion is made pursuant to
this paragraph (ii)(B) being hereinafter referred to as the
"JUDGMENT CONVERSION DATE").
(iii) If in the case of any proceeding in the court of any
jurisdiction referred to in paragraph (ii)(B) above, there is a
change in the Exchange Rate prevailing between the Judgment
Conversion Date and the date of actual payment of the amount due,
the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment
Currency, when converted at the Exchange Rate prevailing on the
date of payment, will produce the amount of US dollars which
could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate
prevailing on the Judgment Conversion Date.
(iv) Any amount due from the Company under this provision shall be due
as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this
Warrant.
11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and all the Buyers and shall not be construed against any
person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.
12. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations
via facsimile within two Business Days of receipt of the Exercise Notice
giving rise to such dispute, as the case may be, to the Holder. If the
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three
Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within two Business
Days submit via facsimile (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Company
and approved by the Holder or (b) the disputed arithmetic calculation of
the Warrant Shares to the Company's independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant,
as the case may be, to perform the determinations or calculations and
notify the Company and
-16-
the Holder of the results no later than ten Business Days from the time it
receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may be,
shall be binding upon all parties absent demonstrable error.
13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant and the other Transaction Documents,
at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to comply
with the terms of this Warrant. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Holder
and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the holder of this Warrant shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond
or other security being required.
14. TRANSFER. Subject to Section 7 hereof, this Warrant may be offered for
sale, sold, transferred or assigned without the consent of the Company.
15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:
(a) "ADJUSTED EXERCISE PRICE" means the arithmetic average of the Closing
Sale Price of the Common Shares during the Adjusted Exercise Price
Period (subject to adjustment for stock splits, stock dividends,
reclassifications, reorganizations, recapitalizations, combinations,
reverse stock splits or other similar events during such period),
provided that the Adjusted Exercise Price shall in no event be less
than the greater of (x) $1.29 (subject to adjustment for stock splits,
stock dividends, reclassifications, reorganizations,
recapitalizations, combinations, reverse stock splits or other similar
events) and (y) 80% of the price per Common Share in a Qualified IPO,
subject to adjustment as provided in Section 2 hereof as if such price
were the Exercise Price.
(b) "ADJUSTED EXERCISE PRICE PERIOD" means the first ten (10) trading days
following the date of expiry of any lock-up restrictions entered into
by the Holder in connection with a Qualified IPO.
(c) "BLOOMBERG" means Bloomberg Financial Markets.
(d) "BUSINESS DAY" means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or
required by law to remain closed.
(e) "CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock,
including, without limitation, with respect to partnerships,
partnership interests (whether general or
-17-
limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
(f) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means, for any security
as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate
on an extended hours basis and does not designate the closing bid
price or the closing trade price, as the case may be, then the last
bid price or last trade price, respectively, of such security prior to
4:00 p.m., New York Time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade
price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security
in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or
last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in
the "pink sheets" by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price, as
the case may be, of such security on such date shall be the fair
market value as determined by the Board of Directors of the Company in
good faith. All such determinations to be appropriately adjusted for
any stock dividend, stock split, reclassification, reorganization,
recapitalization, combination, reverse stock split or other similar
event during the applicable calculation period.
(g) "COMMON SHARES" means (i) the Company's Common Shares, no par value,
and (ii) any share capital into which such Common Shares shall have
been changed or any share capital resulting from a reclassification of
such Common Shares.
(h) "CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or
exchangeable for Common Shares.
(i) "ELIGIBLE MARKET" means the American Stock Exchange, The New York
Stock Exchange, Inc., the Nasdaq National Market, the Toronto Stock
Exchange or the London Stock Exchange.
(j) "EXPIRATION DATE" means the date that is the later of (i) the fourth
anniversary of the Issuance Date, and (ii) if the completion of a
Qualified IPO occurs prior to the fourth anniversary of the Issuance
Date, the first anniversary of the effective date of such Qualified
IPO, or if such later date falls on a day other than a Business Day or
on which trading does not take place on the Principal Market (a
"HOLIDAY"), the next date that is not a Holiday.
-18-
(k) "FUNDAMENTAL TRANSACTION" means (a) that the Company shall, directly
or indirectly, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company is the surviving
corporation) or amalgamate with another Person, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company to another Person, or (iii)
allow another Person to make, or fail to prevent another Person from
making, a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding Common Shares (not
including any Common Shares held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (iv) consummate a
stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or
scheme or plan of arrangement) with another Person whereby such other
Person acquires more than the 50% of the outstanding Common Shares
(not including any Common Shares held by the other Person or other
Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock purchase agreement or other
business combination), or (v) reorganize, recapitalize or reclassify
its Common Shares or (b) any event, whether by a single transaction or
a series of transactions, that results in Xx. Xxxxxxx X. Xxxxxxxx and
the Xxxxxxxx Persons, collectively, "beneficially owning" (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly,
in the aggregate less than 115,000,000 of the issued and outstanding
shares in the capital of the Company (subject to appropriate
adjustments for share dividends, share splits, recapitalizations,
combinations, reverse share splits or other similar events occurring
after the Issuance Date), in each case calculated on an
as-if-converted to Common Shares basis; and "XXXXXXXX PERSONS" means
the immediate family of Xxxxxxx X. Xxxxxxxx and any "person" or
"group" under Section 13(d)(3) of the United States Securities and
Exchange Act of 1934 that is controlled solely by Xxxxxxx X. Xxxxxxxx
or his immediate family, any beneficiary of the estate of Xxxxxxx X.
Xxxxxxxx or his immediate family or any trust or partnership
controlled by any of the foregoing.
(l) "OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Shares or Convertible Securities.
(m) "PARENT ENTITY" of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or
equivalent equity security is quoted or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person
or Parent Entity with the largest public market capitalization as of
the date of consummation of the Fundamental Transaction.
(n) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any
department or agency thereof.
(o) "PRINCIPAL MARKET" means The New York Stock Exchange, Inc., the Nasdaq
National Market, the Toronto Stock Exchange or the London Stock
Exchange as the case may be.
-19-
(p) "REQUIRED HOLDERS" means the holders of the SPA Warrants representing
at least a majority of Common Shares underlying the SPA Warrants then
outstanding.
(q) "SPA SECURITIES" means the Notes issued pursuant to the Securities
Purchase Agreement.
(r) "SUCCESSOR ENTITY" means the Person (or, if so elected by the Required
Holders, the Parent Entity) formed by, resulting from, continuing from
or surviving any Fundamental Transaction or the Person (or, if so
elected by the Required Holders, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
16. CURRENCY. Unless otherwise indicated, all dollar amounts referred to in
this Warrant are in United States Dollars.
[SIGNATURE PAGE FOLLOWS]
-20-
IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase
Common Shares to be duly executed as of the Issuance Date set out above.
MITEL NETWORKS CORPORATION
By:
------------------------------------
Name:
Title:
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON SHARES
MITEL NETWORKS CORPORATION
The undersigned holder hereby exercises the right to purchase
_________________ of the Common Shares ("WARRANT SHARES") of Mitel Networks
Corporation, a corporation incorporated under the laws of Canada (the
"COMPANY"), evidenced by the attached Warrant to Purchase Common Shares (the
"WARRANT"). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
____________ a "Cash Exercise" with respect to _________________
Warrant Shares; and/or
____________ a "Cashless Exercise" with respect to _______________
Warrant Shares.
2. Payment of Exercise Price. In the event that the holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of
US$___________________ to the Company in accordance with the terms of the
Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
--------------------------------
Name of Registered Holder
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs
[INSERT NAME OF TRANSFER AGENT] to issue the above indicated number of Common
Shares to [INSERT NAME OF HOLDER] in accordance with the Transfer Agent
Instructions dated _________, from the Company and acknowledged and agreed to by
[INSERT NAME OF TRANSFER AGENT].
MITEL NETWORKS CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT B
FORM OF LETTER TO BE DELIVERED
UPON EXERCISE OF WARRANTS
Mitel Networks Corporation
Dear Sirs:
We are delivering this letter in connection with the purchase of
common shares (the "Shares") of Mitel Networks Corporation (the "Company"), a
corporation existing under the laws of Canada, upon the exercise of warrants of
the Company ("Warrants").
We hereby confirm that:
(a) we are an institutional "accredited investor" within the meaning of
Rule 501 (a)(1),(2),(3) or (7) of Regulation D under the United States
Securities Act of 1933 (the "1933 Act");
(b) we are purchasing the Shares for our own account;
(c) we have such knowledge and experience in financial and business matters
that we are capable of evaluating the merits and risks of purchasing the Shares;
(d) we are not acquiring the Shares with a view to distribution thereof or
with any present intention of offering or selling any of the Shares, except (A)
pursuant to an effective registration statement under the 1933 Act; (B) to the
Company; (C) outside the United States in accordance with Rule 904 of Regulation
S under the 1933 Act and in compliance with applicable local laws; or (D) within
the United States (1) in accordance with the exemption from registration under
the 1933 Act provided by Rule 144 or Rule 144A thereunder, if available, and in
compliance with any applicable state securities laws or (2) in a transaction
that does not require registration under the 1933 Act or applicable state
securities laws, and the offeror, seller or transferor shall furnish to the
Company an opinion to such effect from counsel of recognized standing reasonably
satisfactory to the Company prior to such offer, sale or transfer.
(e) we acknowledge that we have had access to such financial and other
information as we deem necessary in connection with our decision to purchase the
Shares; and
(f) we acknowledge that we are not purchasing the Shares as a result of any
general solicitation or general advertising (as such terms are defined under
Regulation D under the 1933 Act), including advertisements, articles, notices or
other communications published in any newspaper, magazine or similar media or
broadcast over radio, television, or any seminar or meeting whose attendees have
been invited by general solicitation or general advertising.
We understand that the Shares are being offered in a transaction not
involving any public offering within the United States within the meaning of the
1933 Act and that the Shares have not been and, other than under the
Registration Rights Agreement dated as of April 27, 2005 among the Company and
the other parties thereto, will not be registered under the 1933 Act. We further
understand that any Shares acquired by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of paragraph (d) above.
We acknowledge that you will rely upon our confirmations, acknowledgements
and agreements set forth herein, and we agree to notify you promptly in writing
if any of our representations or warranties herein ceases to be accurate or
complete.
(Name of Holder)
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
--------------------------
EXHIBIT F
NIL
1
EXHIBIT G-1 FORM OF US OUTSIDE COMPANY COUNSEL OPINION
April 27, 2005
To: The Purchasers listed on Annex A hereto
Re: Mitel Networks Corporation
Senior Secured Convertible Notes
Ladies and Gentlemen:
We have acted as special United States counsel to (a) Mitel Networks
Corporation, a Canadian corporation (the "Company"), in connection with the
Securities Purchase Agreement, dated April 27, 2005 (the "Securities Purchase
Agreement"), between the Company and the several Purchasers listed on Annex A
hereto (the "Buyers"), and (b) Mitel Networks, Inc., a Delaware corporation
("MNI"), in connection with the Guarantee and Security Agreement, dated April
27, 2005 (the "Guarantee and Security Agreement"), between MNI and Highbridge
International LLC, as collateral agent (the "Collateral Agent").
This opinion is being furnished to you pursuant to Section 7(b) of
the Securities Purchase Agreement.
In rendering the opinions set forth herein, we have examined and
relied on originals or copies of the following:
(a) an executed copy of the Securities Purchase Agreement;
(b) executed copies of the Company's Senior Secured Convertible
Notes due April 28, 2010, issued under the Securities Purchase Agreement (the
"Notes");
(c) executed copies of the Warrants of the Company (the "Warrants")
issued under the Securities Purchase Agreement to purchase common shares, no par
value, of the Company ("Warrant Shares");
Highbridge International LLC et al
April 27, 2005
Page 2
(d) an executed copy of the Registration Rights Agreement, dated
April 27, 2005 (the "Registration Rights Agreement"), between the Company and
the Buyers relating to resales of the Warrant Shares and common shares of the
Company issuable upon conversion of the Notes ("Conversion Shares");
(e) an executed copy of the Guarantee and Security Agreement;
(f) an executed copy of the Appointment of the Collateral Agent
Agreement, dated April 27, 2005 (the "Collateral Agent Appointment"), among the
Company, the Purchasers and the Collateral Agent;
(g) a certificate of Xxxxx Xxxxxxx, Chief Financial Officer of the
Company, dated April 27, 2005 (the "Company Certificate"), a copy of which is
attached as Exhibit A hereto;
(h) a certificate of Christian Na, Corporate Secretary of MNI, dated
April 27, 2005 (the "MNI Certificate"), a copy of which is attached as Exhibit B
hereto;
(i) a certificate of Xxxxx Xxxxxxx, a Director of Mitel Networks
Limited ("MNL"), dated April 27, 0000 (xxx "XXX Certificate", and together with
the Company Certificate and the MNI Certificate, the "Mitel Certificates"), a
copy of which is attached as Exhibit C hereto;
(j) the certificate of XX Xxxxxx Securities Inc., the Company's
placement agent for the Notes, dated April 27, 2005, relating to the manner of
offers and sales of the Notes and the Warrants (the "XX Xxxxxx Certificate");
and
(k) an unfiled copy of a financing statement identifying "Mitel
Networks, Inc." as debtor and "Highbridge International LLC" as secured party,
which we understand will be filed in the office of the Secretary of State of the
State of the Delaware (such filing office, the "Filing Office" and such
financing statement, the "Financing Statement").
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and MNI and such
agreements, certificates and receipts of public officials, certificates of
officers or other representatives of the Company and MNI and others, and such
other documents as we have deemed necessary or appropriate as a basis for the
opinions set forth below.
We understand that each Warrant entitles the holder thereof to
subscribe for one Warrant Share at the Exercise Price, subject to adjustment, at
any time on or after the Warrant Exercise Eligibility Date and prior to the
Expiration Date (in each case as such terms are defined in the Warrant), and we
further understand that each Note is convertible, without payment of any
additional consideration, into Conversion Shares at
Highbridge International LLC et al
April 27, 2005
Page 3
the Conversion Price, subject to adjustment, at any time on or prior to the
Conversion Date (in each case as such terms are defined in the Note).
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies. In making our
examination of executed documents, we have assumed that the parties thereto,
including the Company and MNI, had the power, corporate or other, to enter into
and perform all obligations thereunder and, have also assumed the due
authorization by all requisite action, corporate or other, and, except to the
extent set forth in paragraph 3 below, the execution and delivery by such
parties of such documents and, except to the extent set forth in paragraphs 1, 2
and 3 below, the validity and binding effect thereof on such parties. We have
also assumed that each of the Company and MNI has been duly organized and is
validly existing in good standing under the laws of its jurisdiction of
incorporation and that each of the Company and MNI has complied with all aspects
of applicable laws of jurisdictions other than the United States of America, the
State of New York and the State of Delaware in connection with the transactions
contemplated by the Transaction Documents (as defined herein). As to any facts
material to the opinions expressed herein that we did not independently
establish or verify, we have relied upon statements and representations of
officers and other representatives of the Company, MNI and others and of public
officials, including the facts set forth in the Mitel Certificates and the XX
Xxxxxx Certificate.
The Securities Purchase Agreement, the Notes, the Warrants, the
Guarantee and Security Agreement, the Collateral Agent Appointment and the
Registration Rights Agreement are referred to herein collectively as the
"Transaction Documents." As used herein, (i) "Applicable Laws" means the General
Corporation Law of the State of Delaware, the Delaware UCC (as defined below)
and those laws, rules and regulations of the State of New York and the federal
laws, rules and regulations of the United States of America, in each case that,
in our experience, are normally applicable to transactions of the type
contemplated by the Transaction Documents (other than the United States federal
securities laws, state securities or blue sky laws, antifraud laws and the rules
and regulations of the National Association of Securities Dealers, Inc.), but
without our having made any special investigation as to the applicability of any
specific law, rule or regulation; (ii) "Delaware UCC" means the Uniform
Commercial Code as in effect on the date hereof in the State of Delaware
(without regard to laws referenced in Section 9-201 thereof); (iii)
"Governmental Authorities" means any court, regulatory body, administrative
agency or governmental body of the State of New York or the United States of
America having jurisdiction over the Company and MNI under Applicable Laws; (iv)
"Governmental Approval" means any consent, approval, license, authorization or
validation of, or filing, qualification or registration with, any Governmental
Authority required to be made or obtained by the Company pursuant to
Highbridge International LLC et al
April 27, 2005
Page 4
Applicable Laws, other than any consent, approval, license, authorization,
validation, filing, qualification or registration which may have become
applicable as a result of the involvement of any party (other than the Company
or MNI) in the transactions contemplated by the Transaction Documents, or
because of such parties' legal or regulatory status or because of any other
facts specifically pertaining to such parties; (v) "New York UCC" means the
Uniform Commercial Code as in effect on the date hereof in the State of New York
(without regard to laws referenced in Section 9-201 thereof); (vi) "UCC" means
the New York UCC and the Delaware UCC, as applicable; and (vii) "UCC Collateral"
means that portion of the Collateral (as such term is defined in the Guarantee
and Security Agreement) to the extent the UCC governs a security interest in
such collateral.
The opinions set forth below are subject to the following
qualifications, further assumptions and limitations:
(a) we do not express any opinion as to the effect on the opinions
expressed herein of (i) the compliance or noncompliance of any party to each of
the Transaction Documents (other than with respect to the Company or MNI, to the
extent necessary to render the opinions set forth herein) with any state,
federal or other laws or regulations applicable to it or them or (ii) the legal
or regulatory status or the nature of the business of any party (other than the
Company, MNI or MNL, as applicable, to the extent necessary to render the
opinions set forth herein);
(b) we have assumed that the execution and delivery by each of the
Company and MNI of the Transaction Documents to which it is a party and the
performance by each of the Company and MNI of its obligations under the
Transaction Documents to which it is a party do not and will not violate,
conflict with or constitute a default under (i) any agreement or instrument to
which such party or any of its properties is subject, (ii) any law, rule, or
regulation to which it or any of its properties is subject (other than to the
extent referred to in paragraphs 4 and 5 below), (iii) any judicial or
regulatory order or decree of any Governmental Authority to which it is subject
or (iv) any Governmental Approval (other than to the extent referred to in
paragraph 6 below);
(c) the validity or enforcement of any agreements or instruments may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law);
(d) we do not express any opinion as to the applicability or effect
of any fraudulent transfer, preference or similar law on each of the Transaction
Documents or any transactions contemplated thereby;
(e) we do not express any opinion as to the enforceability of any
right to indemnification or contribution that may be violative of the public
policy underlying
Highbridge International LLC et al
April 27, 2005
Page 5
any laws, rules or regulations (including any federal or state securities laws,
rules or regulation);
(f) the enforceability of provisions imposing a payment obligation
pending the ability of the Company to timely comply with its registration
obligation under the Registration Rights Agreement may be limited by applicable
law;
(g) to the extent any opinion relates to the enforceability of the
choice of New York law and choice of New York forum provisions in any of the
Transaction Documents, our opinion is rendered in reliance upon N.Y. Gen. Oblig.
Law Sections 5-1401, 5-1402 (XxXxxxxx 2001) and N.Y. CPLR 327(b) (XxXxxxxx 2001)
and is subject to the qualification that such enforceability may be limited by
public policy considerations of any jurisdiction, other than the courts of the
State of New York, in which enforcement of such provisions, or of a judgment
upon an agreement containing such provisions, is sought;
(h) in rendering the opinions expressed below we have also assumed,
without independent investigation or verification of any kind, that the choice
of New York law to govern the Transaction Documents, which are stated therein to
be governed thereby, is legal and valid under the laws of other applicable
jurisdictions and that insofar as any obligation any of the Transaction
Documents is to be performed in any jurisdiction outside the United States of
America its performance will not be illegal or ineffective by virtue of the law
of that jurisdiction;
(i) our opinion is subject to possible judicial action giving effect
to governmental actions or foreign laws affecting creditors' rights;
(j) in rendering the opinions set forth in paragraphs 8, 9 and 10
below, we have assumed (i) the accuracy of the representations and warranties of
the Company set forth in Section 3 of the Securities Purchase Agreement and of
the Buyers in Section 2 of the Securities Purchase Agreement, (ii) the due
performance by the Company and the Buyers of their respective covenants and
agreements set forth in the Securities Purchase Agreement, (iii) the accuracy of
the statements set forth in the XX Xxxxxx Certificate; (iv) that the Notes and
Warrants have been and will be offered and sold in accordance with the
procedures, undertakings and agreements as set forth in the Securities Purchase
Agreement and the XX Xxxxxx Certificate; and (v) for purposes of the opinion set
forth in paragraph 10 below, that no commission or other remuneration will be
paid or given directly or indirectly for soliciting the conversion of the Notes;
(k) except as set forth in paragraphs 9 and 10 below, we do not
express any opinion as to the conditions or circumstances under which the
Warrant Shares or Conversion Shares may be issued upon exercise of the Warrants
or conversion of the Notes, as applicable;
Highbridge International LLC et al
April 27, 2005
Page 6
(l) we do not express any opinion with respect to any subsequent
resale of any Notes, Warrants, Conversion Shares or Warrant Shares;
(m) in rendering the opinion set forth in paragraph 11 below, we
have assumed that the proceeds from the issuance and sale of the Notes and
Warrants are applied as set forth in Section 4(c) of the Securities Purchase
Agreement;
(n) we do not express any opinion with respect to any provision of
the Transaction Documents to the extent it establishes a standard of care for
collateral in the possession or control of the Collateral Agent to the extent
such standard of care is unenforceable under Sections 1-102 and 9-207 of the
UCC; and
(o) certain of the remedial provisions with respect to the security
contained in the Guarantee and Security Agreement may be unenforceable in whole
or in part, but the inclusion of such provisions does not affect the validity of
the Guarantee and Security Agreement, taken as a whole, and the Guarantee and
Security Agreement, taken as a whole, together with applicable law, contains
adequate provisions for the practical realization of the benefits of the
security.
We do not express any opinion as to any laws other than Applicable
Laws and the federal laws of the United States of America to the extent referred
to specifically herein. Insofar as the opinions expressed herein relate to
matters governed by laws other than those set forth in the preceding sentence,
we have assumed, without having made any independent investigation, that such
laws do not affect any of the opinions set forth herein. The opinions expressed
herein are based on laws in effect on the date hereof, which laws are subject to
change with possible retroactive effect.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. Each of the Securities Purchase Agreement, the Collateral
Agent Appointment and the Registration Rights Agreement constitutes a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
2. When issued and delivered by the Company against payment
therefor in accordance with the terms of the Securities Purchase
Agreement, each of the Notes and the Warrants will constitute a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
3. The Guarantee and Security Agreement has been duly executed
and delivered by MNI and constitutes a valid and binding agreement of MNI,
enforceable against MNI in accordance with its terms.
Highbridge International LLC et al
April 27, 2005
Page 7
4. The execution and delivery by the Company of the Securities
Purchase Agreement, the Registration Rights Agreement and the Collateral
Agent Appointment and the consummation by the Company of the transactions
contemplated thereby, including the issue and sale of the Notes and the
Warrants, will not violate or conflict with, or result in any
contravention of, any Applicable Law.
5. The execution and delivery by MNI of the Guarantee and
Security Agreement and the consummation by MNI of the transactions
contemplated thereby, will not violate or conflict with, or result in any
contravention of, any Applicable Law.
6. No Governmental Approval, which has not been obtained or
taken and is not in full force and effect, is required to authorize, or is
required for, the execution or delivery of each of the Transaction
Documents by the Company, MNI or MNL, as applicable, or the consummation
by the Company, MNI or MNL of the transactions contemplated thereby.
7. Neither the Company nor MNL is, and solely after giving
effect to the offer and sale of the Notes and the Warrants and the
application of the proceeds thereof as described in the Securities
Purchase Agreement, neither the Company nor MNL will be, required to seek
an order permitting registration under the U.S. Investment Company Act of
1940, as amended (the "1940 Act"). MNI is not an "investment company" as
such term is defined in the 1940 Act.
8. The offer, sale and delivery of the Notes and the Warrants
in the manner contemplated by the Securities Purchase Agreement do not
require registration under the U.S. Securities Act of 1933, as amended
(the "1933 Act").
9. Provided that the Warrants are exercised by the holders
thereof in accordance with the terms of the Warrants, registration will
not be required under the 1933 Act in connection with the issuance of the
Warrant Shares by the Company to the original purchasers of the Warrants
upon the exercise of the Warrants.
10. Provided that the Notes are converted by the holders
thereof in accordance with the terms of the Notes, registration will not
be required under the 1933 Act in connection with the issuance of the
Conversion Shares by the Company to the original purchasers of the Notes
upon conversion thereof.
11. Neither the issuance of the Notes or the Warrants by the
Company nor the application of the proceeds of the Notes or Warrants will
Highbridge International LLC et al
April 27, 2005
Page 8
violate the provisions of Regulation T, U or X of the Board of Governors
of the Federal Reserve System of the United States.
12. Under the New York UCC, the provisions of the Guarantee
and Security Agreement are effective to create a valid security interest
in MNI's rights in the UCC Collateral in favor of the Collateral Agent for
the benefit of the Secured Parties (as defined in the Guarantee and
Security Agreement) to secure the Liabilities (as defined in the Guarantee
and Security Agreement) owed to the Collateral Agent and the Secured
Parties (as defined in the Guarantee and Security Agreement).
13. To the extent the Delaware UCC is applicable to the
authorization of the Financing Statement, pursuant to the provisions of
the Guarantee and Security Agreement, MNI has authorized the filing of
the Financing Statement for purposes of Section 9-509 of the Delaware UCC.
14. To the extent the Delaware UCC is applicable, the
Financing Statement includes not only all the types of information
required by Section 9-502(a) of the Delaware UCC but also the types of
information without which the Filing Office may refuse to accept the
Financing Statement pursuant to Section 9-516 of the Delaware UCC.
15. To the extent the Delaware UCC is applicable, the security
interest of the Collateral Agent for the benefit of the Secured Parties
(as defined in the Guarantee and Security Agreement) will be perfected in
MNI's rights in all UCC Collateral upon the later of the attachment of the
security interest and the filing of the Financing Statement in the Filing
Office; provided, however, we do not express any opinion with respect to
(i) money, (ii) deposit accounts, (iii) letter of credit rights, (iv)
goods covered by a certificate of title statute, (v) as-extracted
collateral or timber to be cut, or (vi) any property subject to a statute,
regulation or treaty of the United States whose requirements for a
security interest's obtaining priority over the rights of a lien creditor
with respect to the property preempt Section 9-310(a) of the Delaware UCC.
Our opinions in paragraphs 12 through 15 are subject to the
following additional assumptions, qualifications and limitations:
(i) we have assumed that MNI owns, or with respect to after-acquired
property will own, the UCC Collateral, and we do not express any opinion
as to the nature or extent of MNI's rights in any of the UCC Collateral,
and we note that with respect to any after-acquired property, the security
interest will not attach until MNI acquires ownership thereof;
Highbridge International LLC et al
April 27, 2005
Page 9
(ii) we do not express any opinion with respect to proceeds other
than proceeds constituting UCC Collateral;
(iii) we do not express any opinion with respect to commercial tort
claims;
(iv) we do not express any opinion with respect to any goods which
are accessions to, or commingled or processed with, other goods to the
extent that the security interest is limited by Section 9-335 or 9-336 of
the UCC;
(v) we do not express any opinion with respect to the choice of law
governing (A) authorization to file the Financing Statement or (B)
perfection, the effect of perfection and non-perfection or priority of the
security interest;
(vi) we do not express any opinion regarding any copyrights,
patents, trademarks, service marks or other intellectual property, the
proceeds thereof or money due with respect to the lease, license or use
thereof except to the extent Article 9 of the UCC may be applicable to the
foregoing, and, without limiting the generality of the foregoing, we do
not express any opinion as to the effect of any federal laws relating to
copyrights, patents, trademarks, service marks or other intellectual
property on the opinions expressed herein;
(vii) we do not express any opinion with respect to any collateral
constituting claims against any government or governmental agency
(including without limitation the United States of America or any state
thereof or any agency or department of the United States of America or any
state thereof);
(viii) we call to your attention that even though the UCC may render
an anti-assignment provision ineffective for purposes of creation,
attachment or perfection of a security interest, nonetheless, in many
cases, the assignee of such a security interest may obtain limited rights
thereunder (including restrictions on rights of use, assignment and
enforcement);
(ix) we call to your attention that in the case of licenses or
permits issued by governmental authorities, MNI may not have sufficient
rights therein for the security interest of the Collateral Agent to attach
and, even if MNI has sufficient rights for the security interest to
attach, exercise of remedies may be limited by the terms of the license or
permit or require the consent of the governmental authority issuing such
license or permit; and
(x) we have assumed that "value" as defined in Section 1-201(44) of
the UCC was given.
Highbridge International LUC et al
April 27, 2005
Page 10
This letter is furnished only to you and is solely for your benefit in
connection with the closing occurring today and the offering of the Notes and
Warrants, in each case, pursuant to the Securities Purchase Agreement. Without
our prior written consent, this letter may not be used, circulated, quoted or
otherwise referred to for any other purpose or relied upon by, or assigned to,
any other person for any other purpose, including any other person that acquires
any Notes, Warrants, Conversion Shares or Warrant Shares or that seeks to assert
your rights in respect of this letter (other than your successor in interest by
means of merger, consolidation, transfer of a business or other similar
transaction).
Very truly yours,
ANNEX A
LIST OF PURCHASERS
Highbridge International LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Lakeshore International, Ltd.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Marathon Special Opportunity Master Fund, Ltd.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fore Master Convertible Fund, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
EXHIBIT A
MITEL NETWORKS CORPORATION
OFFICER'S CERTIFICATE
TO: SKADDEN, ARPS, SLATE, XXXXXXX & XXXX LLP
I, Xxxxx Xxxxxxx, am the Chief Financial Officer of Mitel Networks
Corporation, a Canadian corporation (the "Company"). I understand that Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP is rendering an opinion to several buyers of
warrants and convertible notes of the Company and in that connection will rely
on this Certificate.
With regard to the foregoing, on behalf of the Company, I certify that:
1. I am familiar with the business of the Company and its subsidiaries.
2. The Company is a Foreign Issuer. As used in this paragraph, "Foreign
Issuer" means any company incorporated outside the United States except a
company meeting the following conditions: (1) more than 50% of the company's
outstanding voting securities are directly or indirectly held of record by U.S.
residents, and (2) any one of the following: (i) a majority of the company's
executive officers or a majority of its directors are United States citizens or
residents, (ii) more than 50% of the company's assets are located in the United
States, or (iii) the company's business is administered principally in the
United States.
3. The Company is primarily engaged directly, or indirectly through
Majority-Owned Subsidiaries, in the business of providing IP communication
solutions; and the Company: (i) is not and does not hold itself out as being
engaged primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting or trading in Securities, (ii) has not and is not engaged
in, and does not propose to engage in, the business of issuing Face-Amount
Certificates of the Installment Type and has no such certificate outstanding,
and (iii) does not own or propose to acquire Investment Securities having a
Value exceeding 40% of the Value of the total assets of the Company (exclusive
of Government Securities and cash items) on an unconsolidated basis. As used in
this paragraph, the following terms shall have the following meanings:
"Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result of
an official position with such company.
"Face-Amount Certificate of the Installment Type" means any certificate,
investment contract, or other Security that represents an obligation on the part
of its issuer to pay a stated or determinable sum or sums at a fixed or
determinable date or dates more than 24 months after the date of issuance, in
consideration of the payment of periodic installments of a stated or
determinable amount.
"Government Securities" means all Securities issued or guaranteed as to
principal or interest by the United States, or by a person controlled or
supervised by and
acting as an instrumentality of the government of the United States pursuant to
authority granted by the Congress of the United States; or any certificate of
deposit for any of the foregoing.
"Investment Securities" includes all Securities except (A) Government
Securities, (B) Securities issued by companies the only shareholders in which
are employees and former employees of a company and its subsidiaries, members of
the families of such persons and the company and its subsidiaries and (C)
Securities issued by Majority-Owned Subsidiaries of the Company which are not
engaged and do not propose to be engaged in activities within the scope of
clause (i), (ii) or (iii) of paragraph 4 of this Certificate or which are
exempted or excepted from treatment as an investment company by statute, rule or
governmental order (other than solely by section 3(c)(1) or 3(c)(7) of the
Investment Company Act of 1940 (applicable to certain privately offered
investment funds)).
"Majority-Owned Subsidiary" of a person means a company 50% or more of the
outstanding Voting Securities of which are owned by such person, or by a company
which, within the meaning of this paragraph, is a Majority-Owned Subsidiary of
such person.
"Security" means any note, stock, treasury stock, security future, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferrable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
"Value" means (i) with respect to Securities owned at the end of the last
preceding fiscal quarter for which market quotations are readily available, the
market value at the end of such quarter; (ii) with respect to other Securities
and assets owned at the end of the last preceding fiscal quarter, fair value at
the end of such quarter, as determined in good faith by or under the direction
of the board of directors; and (iii) with respect to securities and other assets
acquired after the end of the last preceding fiscal quarter, the cost thereof.
2
"Voting Security" means any security presently entitling the owner or
holder thereof to vote for the election of directors of a company (or its
equivalent, e.g., general partner, manager of an LLC, etc.).
Dated: April , 2005
MITEL NETWORKS CORPORATION
By:
----------------------
Name: Xxxx Xxxxxxx
Title: General Counsel
3
EXHIBIT B
MITEL NETWORKS, INC.
OFFICER'S CERTIFICATE
TO: SKADDEN, ARPS, SLATE, XXXXXXX & XXXX LLP
I, Christian Na, am the Corporate Secretary of Mitel Networks, Inc., a
Delaware corporation (the "Company"). I understand that Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP is rendering an opinion to several buyers of warrants and
convertible notes of Mitel Networks Corporation, which note will be guaranteed
by the Company and in that connection will rely on this Certificate.
With regard to the foregoing, on behalf of the Company, I certify that:
1. I am familiar with the business of the Company and its subsidiaries.
2. The Company is primarily engaged directly, or indirectly through
Majority-Owned Subsidiaries, in the business of providing IP communication
solutions; and the Company: (i) is not and does not hold itself out as being
engaged primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting or trading in Securities, (ii) has not and is not engaged
in, and does not propose to engage in, the business of issuing Face-Amount
Certificates of the Installment Type and has no such certificate outstanding,
and (iii) does not own or propose to acquire Investment Securities having a
Value exceeding 40% of the Value of the total assets of the Company (exclusive
of Government Securities and cash items) on an unconsolidated basis. As used in
this paragraph, the following terms shall have the following meanings:
"Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result of
an official position with such company.
"Face-Amount Certificate of the Installment Type" means any certificate,
investment contract, or other Security that represents an obligation on the part
of its issuer to pay a stated or determinable sum or sums at a fixed or
determinable date or dates more than 24 months after the date of issuance, in
consideration of the payment of periodic installments of a stated or
determinable amount.
"Government Securities" means all Securities issued or guaranteed as to
principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
"Investment Securities" includes all Securities except (A) Government
Securities, (B) Securities issued by companies the only shareholders in which
are employees and former employees of a company and its subsidiaries, members of
the families of such persons and the company and its subsidiaries and (C)
Securities issued by Majority-Owned Subsidiaries of the Company which are not
engaged and do not propose to be engaged in activities within the scope of
clause (i), (ii) or (iii) of paragraph 4 of this Certificate or which are
exempted or excepted from treatment as an investment company by statute, rule or
governmental order (other than solely by section 3(c)(1) or 3(c)(7) of the
Investment Company Act of 1940 (applicable to certain privately offered
investment funds)).
"Majority-Owned Subsidiary" of a person means a company 50% or more of the
outstanding Voting Securities of which are owned by such person, or by a company
which, within the meaning of this paragraph, is a Majority-Owned Subsidiary of
such person.
"Security" means any note, stock, treasury stock, security future, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferrable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
"Value" means (i) with respect to Securities owned at the end of the last
preceding fiscal quarter for which market quotations are readily available, the
market value at the end of such quarter; (ii) with respect to other Securities
and assets owned at the end of the last preceding fiscal quarter, fair value at
the end of such quarter, as determined in good faith by or under the direction
of the board of directors; and (iii) with respect to securities and other assets
acquired after the end of the last preceding fiscal quarter, the cost thereof.
2
"Voting Security" means any security presently entitling the owner or
holder thereof to vote for the election of directors of a company (or its
equivalent, e.g., general partner, manager of an LLC, etc.).
Dated: April , 2005
MITEL NETWORKS, INC.
By:
-------------------------
Name: Christian Na
Title: Corporate Secretary
3
EXHIBIT C
MITEL NETWORKS LIMITED
OFFICER'S CERTIFICATE
TO: SKADDEN, ARPS, SLATE, XXXXXXX & XXXX LLP
I, Xxxxx Xxxxxxx, am a Director of Mitel Networks Limited, a U.K.
corporation (the "Company"). I understand that Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP is rendering an opinion to several buyers of warrants and convertible
notes of Mitel Networks Corporation, which note will be guaranteed by the
Company and in that connection will rely on this Certificate.
With regard to the foregoing, on behalf of the Company, I certify that:
1. I am familiar with the business of the Company and its subsidiaries.
2. The Company is primarily engaged directly, or indirectly through
Majority-Owned Subsidiaries, in the business of providing IP communication
solutions; and the Company: (i) is not and does not hold itself out as being
engaged primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting or trading in Securities, (ii) has not and is not engaged
in, and does not propose to engage in, the business of issuing Face-Amount
Certificates of the Installment Type and has no such certificate outstanding,
and (iii) does not own or propose to acquire Investment Securities having a
Value exceeding 40% of the Value of the total assets of the Company (exclusive
of Government Securities and cash items) on an unconsolidated basis. As used in
this paragraph, the following terms shall have the following meanings:
"Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result of
an official position with such company.
"Face-Amount Certificate of the Installment Type" means any certificate,
investment contract, or other Security that represents an obligation on the part
of its issuer to pay a stated or determinable sum or sums at a fixed or
determinable date or dates more than 24 months after the date of issuance, in
consideration of the payment of periodic installments of a stated or
determinable amount.
"Government Securities" means all Securities issued or guaranteed as to
principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
"Investment Securities" includes all Securities except (A) Government
Securities, (B) Securities issued by companies the only shareholders in which
are employees and former employees of a company and its subsidiaries, members of
the families of such persons and the company and its subsidiaries and (C)
Securities issued by Majority-Owned Subsidiaries of the Company which are not
engaged and do not propose to be engaged in activities within the scope of
clause (i), (ii) or (iii) of paragraph 4 of this Certificate or which are
exempted or excepted from treatment as an investment company by statute, rule or
governmental order (other than solely by section 3(c)(1) or 3(c)(7) of the
Investment Company Act of 1940 (applicable to certain privately offered
investment funds)).
"Majority-Owned Subsidiary" of a person means a company 50% or more of the
outstanding Voting Securities of which are owned by such person, or by a company
which, within the meaning of this paragraph, is a Majority-Owned Subsidiary of
such person.
"Security" means any note, stock, treasury stock, security future, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferrable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
"Value" means (i) with respect to Securities owned at the end of the last
preceding fiscal quarter for which market quotations are readily available, the
market value at the end of such quarter; (ii) with respect to other Securities
and assets owned at the end of the last preceding fiscal quarter, fair value at
the end of such quarter, as determined in good faith by or under the direction
of the board of directors; and (iii) with respect to securities and other assets
acquired after the end of the last preceding fiscal quarter, the cost thereof.
2
"Voting Security" means any security presently entitling the owner or
holder thereof to vote for the election of directors of a company (or its
equivalent, e.g., general partner, manager of an LLC, etc.).
Dated: April __, 2005
MITEL NETWORKS LIMITED
By:
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Director
3
EXHIBIT G-2 FORM OF CANADIAN OUTSIDE COMPANY COUNSEL OPINION
EXHIBIT G-2
April 27, 2005 Direct Dial:(000) 000-0000
Our Matter Number: 1051043
Highbridge International LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Lakeshore International, Ltd.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
-and-
Marathon Special Opportunity Master Fund, Ltd.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Fore Master Convertible Fund, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs/Mesdames:
MITEL NETWORKS CORPORATION
We have acted as counsel to Mitel Networks Corporation ("MITEL") in connection
with the Transaction Documents (as defined below).
All capitalized terms used in this opinion letter, unless otherwise defined in
this opinion letter, shall have the meanings specified in the Securities
Purchase Agreement (as defined below) or the Notes (as defined below), as
applicable.
A. DOCUMENTATION
As such counsel, we have examined an executed copy of each of the following:
(a) the securities purchase agreement dated April 27, 2005 (THE
"SECURITIES PURCHASE AGREEMENT") between Mitel and the several
purchasers party thereto (the "BUYERS");
(b) the senior secured convertible notes issued by Mitel pursuant to the
Securities Purchase Agreement (the "NOTES");
(c) the registration rights agreement dated April 27, 2005 between Mitel
and the Buyers;
(d) the warrants of Mitel issued under the Securities Purchase Agreement
(the "WARRANTS");
(e) the appointment of collateral agent agreement dated April 27, 2005
among the Collateral Agent, the Buyers and Mitel; and
(f) the security agreement granted by Mitel in favour of Highbridge
International LLC, in its capacity as Collateral Agent for the
Holders (the "SECURED PARTY") dated April 27, 2005 (the "SECURITY
AGREEMENT").
The documents noted in subsections (a), (b), (c), (d), (e) and (f) above are
collectively referred to as the "TRANSACTION DOCUMENTS". The documents noted in
subsections (a), (b), (c), (d) and (e) are collectively referred to as the "US
DOCUMENTS".
B. JURISDICTION
We are solicitors qualified to practice law in the Province of Ontario and we
express no opinion as to any laws or any matters governed by any laws other than
the laws of the Province of Ontario and the federal laws of Canada applicable in
the Province of Ontario ("APPLICABLE LAW"). In particular, without limiting the
generality of the immediately preceding sentence, no opinion is expressed with
respect to the laws of any other jurisdiction to the extent these laws may
govern the validity, perfection, effect of perfection or non-perfection or
enforcement of the security interest created by the Documents as a result of the
application of the Ontario conflict of laws rules including, without limitation,
the provisions of the Personal Property Security Act (Ontario) (the "PPSA"). In
addition, we express no opinion as to whether Applicable Law governs the
validity, perfection, effect of perfection or non-perfection or enforcement of
those security interests.
C. SCOPE OF EXAMINATIONS
In connection with the opinions expressed in this letter, we have considered
such questions of law and examined such public and corporate records,
certificates and other
-3-
documents and conducted such other examinations as we have considered necessary
for the purposes of the opinions expressed in this letter.
D. ASSUMPTIONS AND RELIANCES
In expressing the opinion in paragraph E.1, we have relied solely upon a
certificate of compliance issued by the Department of Industry Canada dated
April 27, 2005, a copy of which has been delivered to you.
In expressing the opinion in paragraph E.2, we have relied solely upon a
certified corporate profile report dated April 27, 2005 issued by the Ontario
Ministry of Consumer and Business Services, a copy of which has been delivered
to you.
For purposes of the opinions expressed in this letter, we have assumed:
(a) the legal capacity of all individuals, the genuineness of all
signatures and the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all
documents submitted to us as copies;
(b) the accuracy, currency and completeness of the indices and filing
systems maintained at the public offices where we have searched or
enquired or have caused searches or enquiries to be conducted or
where we have registered, filed or recorded the Security Agreement
or notices in respect of the Security Agreement;
(c) the accuracy and sufficiency of the description of the collateral as
specified in the Security Agreement;
(d) that all facts set forth in all certificates supplied, or otherwise
conveyed to us, by public officials are true;
(e) that the Security Agreement has been duly authorized, executed and
delivered by, all parties to it;
(f) that the Security Agreement is enforceable in accordance with its
terms against all parties to it, other than Mitel;
(g) that the Secured Party has given value and that the Secured Party
and Mitel have not agreed to postpone the time for attachment of the
security interests purported to be created by the Security
Agreement;
(h) the Collateral (as defined in the Security Agreement) does not
include consumer goods;
-4-
(i) Mitel has all necessary corporate power and capacity to enter into
the Security Agreement and to perform its obligations under the
Security Agreement;
(j) The execution and delivery by Mitel of the Security Agreement and
the performance of its obligations under the Security Agreement have
been duly authorized by all necessary corporate action on the part
of Mitel;
(k) Mitel is not a party to, bound by, or subject to any article or
by-law provision, which is or will be violated, contravened or
breached by the execution or delivery by Mitel of the Security
Agreement or the performance by Mitel of any of the terms of the
Security Agreement;
(l) the representations, warranties, covenants and Events of Default
contained in the Notes and Securities Purchase Agreement are
commercially reasonable in the sense of having been negotiated and
agreed to for bona fide commercial reasons; the representations,
warranties, covenants, Events of Default and Fundamental Changes
contained in the Notes are beyond the control of the holders of the
Notes and beneficial owners of the Notes and the terms of the Notes
and the Securities Purchase Agreement do not create contrived events
of default intended to give the holders or beneficial owners of the
Notes control or discretion over the acceleration of the Notes; and
(m) there are no understandings, arrangements or agreements, written or
verbal, relating to the Transaction Documents other than (i) the
"Transaction Documents" (as defined in the Securities Purchase
Agreement); and (ii) as contemplated by the Transaction Documents.
E. OPINIONS
On the basis of the foregoing and subject to the qualifications and limitations
expressed in Section F, we are of the opinion that:
1. Mitel is a corporation existing under the laws of Canada.
2. Mitel is duly qualified to do business in Ontario.
3. The Security Agreement is enforceable against Mitel in accordance with its
terms.
4. The Security Agreement creates a valid security interest in favour of the
Secured Party in the assets described by the Security Agreement in which
Mitel now has any rights, and is sufficient to create a valid security
interest in favour of the
-5-
Secured Party in any assets in which Mitel subsequently acquires any
rights when Mitel acquires those rights.
5. Registration has been made in all public offices provided for under
Applicable Law where such registration is necessary to perfect the
security interests created by the Security Agreement in favour of the
Secured Party in the personal property of Mitel described in the Security
Agreement. The registration particulars for the Security Agreement are set
out in Schedule A.
6. Mitel is not a party to, bound by, or subject to any Applicable Law which
is violated, contravened or breached by the execution or delivery by Mitel
of any of the Transaction Documents and the consummation by Mitel of the
transactions contemplated thereby.
7. No deduction or withholding of tax will be required under the federal laws
of Canada or the laws of the Province of Ontario on any amount that Mitel
pays or credits as, on account of or in lieu or payment of or in
satisfaction of principal, interest (including Special Interest Payments)
on principal or premium, if any, in respect of the Notes to a holder of
the Notes or beneficial owner who is not or is deemed not to be a resident
of Canada under the Income Tax Act (Canada) and the regulations thereto
(together, the "TAX ACT") provided that at all relevant times the holder
of the Notes and beneficial owner is a person that deals at arm's length
with Mitel for purposes of the Tax Act.
8. No documentary, stamp, transfer or similar taxes are payable by Mitel
under the federal laws of Canada or the laws of the Province of Ontario in
connection with the creation, issuance, sale or delivery of the Notes and
Warrants to a holder of the Notes and Warrants.
9. Other than those which have been obtained or made there are no (a)
authorizations, approvals, orders, consents, permits, or other actions
required; (b) filings required to be made with; or (c) notices required to
be given, to any governmental agency or authority, regulatory body, court,
tribunal or other similar entity having jurisdiction under Applicable Law
(i) in connection with the execution and delivery by Mitel of the
Transaction Documents; (ii) for the issuance and sale by Mitel of the
Notes, the Warrants, the Conversion Shares or the Warrant Shares as
contemplated by the Transaction Documents; or (iii) for the exercise of
any rights and remedies under any Transaction Document, provided that the
opinion in clause (iii) is restricted to authorizations, approvals,
orders, consents, permits, licences, filings and notices required to be
made by Mitel only.
10. If: (a) the Secured Party has given value to Mitel, and (b) the
certificate representing the 1000 common shares in the capital stock of
Mitel Networks International Limited (the "PLEDGED SHARES") are held in
Ontario by the Secured
-6-
Party or an agent on behalf of the Secured Party (who is not Mitel or an
agent of Mitel) at the time the security interest in such Pledged Shares
attached, and (c) the Secured Party is acting in good faith (as such term
is defined in the Business Corporations Act (Ontario) (the "OBCA")), and
(d) the Secured Party has no notice of any adverse claim (as such term is
defined in the OBCA) affecting the Pledged Shares, the Secured Party's
security interest in the Pledged Shares has priority over any security
interest in the Pledged Shares perfected by registration or temporarily
perfected under the PPSA, and the Secured Party has acquired such interest
in the Pledged Shares free of any adverse claim in the Pledged Shares.
11. The choice of the laws of New York ("NEW YORK LAW") as the governing law
of the US Documents will be upheld as a valid choice of law by a court of
competent jurisdiction of the Province of Ontario (an "ONTARIO COURT")
provided that such choice of law is bona fide (in the sense that it was
not made with a view to avoiding the consequences of the law of any other
jurisdiction) and is not contrary to public policy as this term is
understood under the laws of the Province of Ontario ("ONTARIO LAW").
12. In the event that the US Documents are sought to be enforced in the
Province of Ontario, in accordance with New York Law, an Ontario Court
would, subject to paragraph 11, recognize the choice of law and apply New
York Law, upon proof of those laws, except to the extent that the
provisions of the US Documents or New York Law are contrary to public
policy as that term is understood under Ontario Law, or those laws are
foreign revenue, expropriatory or penal laws; provided, however, that:
(a) in matters of procedure or laws in force in Ontario which are
applicable by reason of their particular object, an Ontario Court
will apply Ontario Law;
(b) an Ontario Court will retain discretion to decline to hear such an
action if it is not the proper forum to hear such an action, or if
another action between the same parties, based on the same subject
matter is properly pending before a foreign authority or a decision
thereon has been rendered by a foreign authority;
(c) an Ontario Court may not enforce an obligation enforceable under New
York Law where performance of the obligation would be illegal by the
laws of the place of performance; and
(d) there is compliance with the Limitations Xxx 0000 (Ontario).
13. A final and conclusive civil judgment for a sum certain obtained in a
court of competent jurisdiction of New York (a "NEW YORK COURT") against
Mitel in connection with any action arising out of or relating to the US
Documents which
-7-
judgment is not impeachable as void or voidable under New York Law would
be recognized and could be sued upon in an Ontario Court and such court
would grant a judgment which would be enforceable against Mitel in the
Province of Ontario provided that:
(a) the New York Court has jurisdiction over Mitel according to Ontario
Law;
(b) such judgment was not obtained by fraud or in any manner contrary to
natural justice and the enforcement thereof would not be
inconsistent with public policy as such term is understood under
Ontario Law;
(c) enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriatory or
penal laws;
(d) a dispute between the same parties based on the same subject matter
has not given rise to a decision rendered by an Ontario Court or has
been decided by a foreign authority and the decision meets the
necessary conditions for recognition under Ontario Law;
(e) such judgment was not obtained contrary to an order made by the
Attorney General of Canada under the Foreign Extraterritorial
Measures Act (Canada) or by the Competition Tribunal under the
Competition Act (Canada);
(f) no new admissible evidence is discovered and presented before the
Ontario Court reaches its judgment;
(g) a sum of money will be converted by an Ontario Court into Canadian
currency in accordance with the Courts of Justice Act (Ontario); and
(h) there has been compliance with the Limitations Act (Ontario).
F. QUALIFICATIONS
The opinions under Section E are subject to the following qualifications and
limitations:
(a) BANKRUPTCY - enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, preference, moratorium,
arrangement or winding up laws or other similar laws affecting the
enforcement of creditor's rights generally;
(b) EQUITABLE PRINCIPLES - enforceability may be limited by equitable
principles, including the principle that equitable remedies, such as
specific
-8-
performance and injunction, may only be granted in the discretion of
a court of competent jurisdiction;
(c) SEVERABILITY - the validity and enforceability of provisions
inserted in any agreement or instrument which purport to sever from
the agreement or instrument any provision which is prohibited or
unenforceable under Applicable Law without affecting the
enforceability or validity of the remainder of the agreement or
instrument would be determined only in the discretion of the court;
(d) INDEMNITY - a court may decline to enforce rights of indemnity and
contribution under the Security Agreement to the extent it directly
or indirectly relates to liabilities imposed on the Secured Party by
law for which it would be contrary to public policy to require Mitel
to indemnify the Secured Party;
(e) WAIVERS - enforceability of any provision of any of the Security
Agreement exculpating a person from a liability or duty otherwise
owed by it, or waiving legal and equitable defences or agreeing not
to challenge the validity or enforceability of remedies may be
limited by law;
(f) PPSA - The PPSA imposes certain obligations on secured creditors
which cannot be varied by contract. The PPSA may also affect the
enforcement of certain rights and remedies contained in the Security
Agreement to the extent that those rights and remedies are
inconsistent with or contrary to the PPSA including, without
limitation, sections 16, 17 and 39 and Part V of the PPSA. However,
the PPSA does not render the Security Agreement invalid as a whole,
and there exist, in the Security Agreement or pursuant to Applicable
Law, legally adequate remedies for realization of the principal
benefits of the Collateral (as defined in the Documents) purported
to be provided by the Security Agreement.
(g) AMENDMENTS - we express no opinion as to the enforceability of any
provision of the Security Agreement which states that modifications,
amendments or waivers are not binding unless in writing;
(h) RECEIVER - a receiver or receiver and manager appointed pursuant to
the Security Agreement may, for certain purposes, be treated as the
agent of the Secured Party and not solely as the agent of Mitel and
the Secured Party may not be deemed to be acting as the agent and
attorney of Mitel in making such appointment, notwithstanding any
provision in the Security Agreement to the contrary. No opinion is
expressed as to any provision of the Security Agreement which
purports to relieve the Secured Party of
-9-
liability for any wilful misconduct or gross negligence of any
receiver or receiver and manager appointed by it;
(i) COMMERCIAL REASONABLENESS - notwithstanding any term or condition
contained in the Security Agreement including, without limitation,
the right of any party to exercise its sole discretion, a court of
competent jurisdiction may retain the discretion to determine when
the Secured Party's or its agents' actions have been conducted in
good faith;
(j) JUDICIAL CHALLENGE - notwithstanding any provision contained in the
Security Agreement, any determination provided for in such Security
Agreement may be subject to challenge in a court on the grounds of
fraud, collusion or mistake;
(k) COSTS AND EXPENSES - the ability and extent to which the Secured
Party or its agents would be able to recover or claim for certain
costs and expenses may be subject to judicial discretion and the
tariff provisions of the Rules of Civil Procedure (Ontario)
notwithstanding express provision in the Documents to the contrary;
(1) REASONABLE TIME - the enforceability of any of the provisions of the
Security Agreement entitling the Secured Party to exercise rights
and remedies may be limited by applicable law requiring creditors
and secured parties to give borrowers a reasonable time to rectify
any default or to repay as demanded prior to taking any action to
exercise such rights and remedies;
(m) LIMITATIONS ACT, 2002 - enforceability of the Security Agreement
will be subject to the limitations contained in the Limitations Act,
2002, and we express no opinion as to whether a court may find any
provision of the Security Agreement to be unenforceable as an
attempt to vary or exclude a limitation period under that Act;
(n) PENALTY - we express no opinion as to the enforceability of any
provision of the Security Agreement which may be characterized by a
court as an unenforceable penalty and not as a genuine pre-estimate
of damages;
(o) CRIMINAL RATE OF INTEREST - the provisions for the payment of
interest (for the purposes of the Criminal Code (Canada)) under the
Security Agreement may be unenforceable if those provisions create
an obligation to pay interest in an amount or at a rate prohibited
by the Criminal Code (Canada);
-10-
(p) CURRENCY - pursuant to the Currency Act (Canada), a monetary
judgment by a court in any province in Canada may be awarded in
Canadian currency only;
(q) ASSIGNMENT OF DEBTS - an assignment of debts, accounts, agreements
or rights may be subject to the equities between the parties to such
debts, accounts, agreements or rights, including any requirement to
give notice to or obtain consents from the other parties to such
debts, accounts, agreements or rights;
(r) TITLE - we express no opinion as to whether Mitel has title to or
any rights in the collateral charged by the Security Agreement or on
the rank or priority of any mortgage, assignment, pledge, charge or
security interest provided for in the Security Agreement, including,
without limitation, the effect of any floating charges created in
the Security Agreement;
(s) REAL PROPERTY REGISTRATIONS - we have not registered the Security
Agreement or notice of it in any land registry office or under any
land registry statutes even though the Security Agreement may create
a security interest in the Mitel's real property or leases of real
property or in property which is now or may, after the date of the
Security Agreement, become a fixture or a right to payment under a
lease, mortgage or charge of real property;
(t) BUILDING MATERIALS - to the extent that building materials become
affixed to real property, the security interests of the Secured
Party created by the Security Agreement will no longer exist unless
the Security Agreement creates a security interest in Mitel's real
property and the Security Agreement or notice of such Security
Agreement is registered in any land registry office or under any
land registry statutes;
(u) UNIDENTIFIABLE PROPERTY - we express no opinion as to any security
interest created by the Security Agreement with respect to any
property of Mitel that is transformed in such a way that it is not
identifiable or traceable or any proceeds of property of Mitel that
are not identifiable or traceable;
(v) INTELLECTUAL PROPERTY - to the extent that the collateral charged by
the Security Agreement includes patents, trademarks, copyrights or
industrial designs, registration under the PPSA may not be effective
to fully preserve, perfect or protect the security interests created
by the Security Agreement. To fully protect a security interest in
such collateral, further steps may be required or be advisable under
the appropriate federal statutes;
-11-
(w) SPECIAL REGISTRATIONS - we have made no registrations:
(i) under the Patent Act (Canada), the Trade-marks Act (Canada),
the Industrial Design Act (Canada), the Integrated Circuit
Topography Act (Canada), the Copyright Act (Canada) or the
Plant Breeders' Rights Act (Canada),
(ii) under the Canada Shipping Act in respect of any vessel which
is recorded or registered under that Act, or
(iii) under the Canada Transportation Act or the Railways Act
(Ontario) in respect of any rolling stock to which the
provisions of either of those Acts may apply;
(x) MOTOR VEHICLES - if the collateral charged by the Security Agreement
includes a motor vehicle (as defined in the regulations under the
PPSA) which is classified as equipment of Mitel and which is sold by
Mitel out of the ordinary course of business, the buyer of that
motor vehicle will take it free and clear of the security interests
in the Security Agreement unless:
(i) the vehicle identification number is set out in the financing
statement; or
(ii) the buyer knew that the sale constituted a breach of the
Security Agreement.
As to paragraph (i) above, no vehicle registration number is set out
in the financing statement(s) referred to in Schedule A;
(y) PROPERTY OUTSIDE OF ONTARIO - our opinions expressed in paragraphs
E.4 and E.5 are not to be taken as relating to any property or
assets which are located outside the Province of Ontario or as to
the validity or enforceability of the Security Agreement insofar as
it relates to such property;
(z) SPECIAL PROPERTY - we express no opinion as to the creation of any
security interest in property consisting of a receivable, licence,
approval, privilege, franchise, permit, lease or agreement
(collectively, "SPECIAL PROPERTY") to the extent that the terms of
the Special Property or any applicable law prohibit the assignment
thereof or require, as a condition of assignability, a consent,
approval or other notice, authorization or registration which has
not been made or given;
-12-
(aa) INSURANCE - we express no opinion as to the creation of any
security interest in any policy of insurance in respect of
which notices to insurers in respect for life, accident or
sickness, insurance policies and annuity contracts have not
been given;
(bb) SECURITIES LAWS - We express no opinion with respect to
Ontario securities laws in connection with opinions 6 and 9;
(cc) PARAMOUNTCY - we express no opinion as to the enforceability
of any provision of the Security Agreement which may be
expressly or impliedly subject to the provisions of any other
document, nor the enforceability of any provision of the
Security Agreement which, prevails over such document; and
(dd) JURY TRIAL - We express no opinion as to the enforceability of
the last sentence of Section 12.11 of the Security Agreement.
The opinions in paragraph 7 are based in part on the current provisions of the
Tax Act, all specific proposals to amend the Tax Act publicly announced by or on
behalf of the Minister of Finance (Canada) prior to the date of this opinion. We
express no opinion as to, or as to any matters governed by, the laws of any
other jurisdiction except as specifically noted below. In addition, the opinions
in paragraph 7 are based in part on our understanding of the published
administrative and assessing policies and practices of the Canada Revenue Agency
(the "CRA") in respect of subparagraph 212(1)(b)(vii) of the Tax Act, which
practices have significant importance to the application of this provision.
There can be no assurance that the CRA will not change its administrative
practices or that any specific proposals to amend the Tax Act will be enacted in
their present form if at all. The opinions in paragraphs 7 and 8 do not
otherwise take into account or anticipate any other changes in law or
administrative practice, whether by legislative, governmental or judicial
action. The opinions in paragraph 7 are also based in part on certain letters
from Mitel and from X.X. Xxxxxx Securities Inc.
G. SEARCHES AND ADMINISTRATIVE MATTERS
1. We have conducted or caused to be conducted searches current as of the
dates indicated in Schedule B under the statutes and at the offices of
public record in the Province of Ontario specified in Schedule B. The
results of the searches are set out in Schedule B as of the respective
currency dates.
2. The following actions are required in order to maintain perfection of the
security interests created by the Security Agreement:
(a) The registration period of the financing statement referred to in
Schedule A will expire, and the security interests perfected thereby
will become
-13-
unperfected, in 6 years from the date of registration unless the
registration period is extended prior to that time by registration
under the PPSA of a financing change statement designated as a
renewal. We assume no responsibility for registering this financing
change statement or for reminding you of the date by which it must
be registered.
(b) Any change in the name of Mitel and any transfer by Mitel of any or
all of the collateral charged by the Security Agreement (the
"COLLATERAL") will require the filing of a financing change
statement under the PPSA:
(i) within 15 days of the transfer if the Mitel transfers the
Collateral with the prior consent of the Secured Party, or
(ii) within 30 days after (A) the later of (1) the transfer, if the
Secured Party had prior knowledge of the transfer and had, at
the time of the transfer, the information required to register
the financing change statement and (2) the day the Secured
Party learns of such information, in each case, if the
transfer was made without the prior consent of the Secured
Party or (B) after the Secured Party learns of the change of
name and the new name.
We assume no responsibility for making this type of registration or
for notifying you if circumstances arise which necessitate this type
of registration.
The opinions expressed in this opinion letter are given solely for the benefit
of the Secured Party and its successors and assigns, in connection with the
transactions referred to in this opinion letter, and may not, in whole or in
part, be relied upon by or shown or distributed to any other person.
Yours very truly,
RB:DS
SCHEDULE A
REGISTRATION
1. A financing statement was filed against Mitel under the PPSA on April 20,
2005 as Registration No. 20050420 1557 1590 7313, Reference File No.
614382192 for a period of 6 years;
SCHEDULE B
SEARCHES
EXHIBIT G-3
Our Ref: MDM/MD/MIT.409659.32
Xxxxxxx Court
Highbridge International LLC Park Place
Investment and Corporate Banking CARDIFF
0xx Xxxxx XX00 0XX
Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Tel: 000 0000 0000
Ontario Fax: 000 0000 0000
Canada M5X 1H3 DX: 33014 Cardiff
xxx.xxxxxx-xxxx.xxx
and the Secured Parties from time to time under the Transaction Documents
referred to below.
27 April 2005
Dear Sirs
We are Solicitors to Mitel Networks Holdings Limited ("MNHL"). MNHL is the UK
subsidiary of Mitel Networks Corporation ("MNC"), a corporation incorporated
under the laws of Canada. We refer to a Securities Purchase Agreement ("THE
AGREEMENT") made between MNC, Highbridge International Inc as security agent
("THE SECURITY AGENT") for the Secured Parties, and others dated 27 April 2005
and the senior secured convertible notes issued pursuant to the Agreement. We
have been asked to provide a legal opinion in respect of a Share Charge ("THE
CHARGE") given by MNHL on 27 April 2005 for the liabilities of MNC under the
Transaction Documents.
1. DOCUMENTS
1.1 In our capacity as solicitors to MNHL, we have examined the following
documents which we have solely relied on for the purposes of this Opinion;
(a) A certified copy of the Memorandum and Articles of Association ("THE
MEMORANDUM AND ARTICLES") of MNHL as at 21 April 2005
(b) A copy of the Certificate of Incorporation of MNHL.
(c) A certified copy of the resolution ("THE RESOLUTION") of the Board
of Directors of MNHL dated 27 April 2005 relating to the Charge.
1
(d) A copy of the microfiche of documents maintained by the Registrar of
Companies at Companies House relating to MNHL dated 21 April 2005
("THE SEARCH").
(e) The Charge.
1.2 On 21 April 2005, we carried out a Company Search at Companies Registry,
Cardiff, and on 27 April 2005 we carried out a winding-up search at the
Royal Courts of Justice, Strand, London, both in respect of MNHL, but we
have not conducted any further search since such date.
1.3 Except as mentioned above we have not examined any agreements,
instruments, records or other documents whatsoever relating to MNHL and
have not made any other enquiries or investigations concerning MNHL in
connection with the giving of this Opinion.
1.4 We express no opinion as to any laws other than the laws of England in
force and as interpreted at the date of this Opinion.
2. ASSUMPTIONS
2.1 In giving this Opinion we have assumed:-
(a) the genuiness of all signatures;
(b) the authenticity and completeness of all documents submitted to us
as originals;
(c) the conformity to original documents of all documents submitted to
us as copies and the authenticity and completeness of such original
documents;
(d) that the documents dated the date hereof or dated earlier than the
date hereof and on which we have expressed reliance, remain accurate
and that no additional matters would have been disclosed by company
searches at the Companies Registry or winding-up searches at the
Royal Courts of Justice being carried out since the carrying out of
the searches referred to above, and that the particulars disclosed
by our company searches are true, complete and up-to-date;
(e) that all matters which should have been registered with the
Registrar of Companies as at 21 April 2005 have been duly registered
against MNHL and appear on the Search;
(f) that MNHL has not passed a voluntary winding-up resolution and that
no petition has been presented to or order made by a court for the
winding-up or dissolution of MNHL, and that no application has been
made to the court or notice given to the court for the appointment
of an administrator of MNHL, and that no receiver or administrator
has been appointed in respect of MNHL or any of its assets and that
the Registrar of Companies has not taken any steps to
2
strike off MNHL, which in any such case has not been revealed by the
company search and the winding-up search referred to above;
(g) that the Memorandum and Articles of Association were true and
complete and up to date as at 21 April 2005 and there have been no
amendments to the Memorandum and Articles of Association;
(h) that the Resolution was duly passed at a properly convened meeting
of duly appointed directors of MNHL and that a duly qualified quorum
of such directors was present throughout the meeting and voted in
favour of approving the resolution and that any provisions contained
in the Companies Xxx 0000 or the Articles of Association of MNHL
relating to the declaration of directors' interests or the power of
interested directors to vote were duly observed and that such
resolution has not been amended or rescinded and is in full force
and effect;
(i) that the Charge have been validly authorised, executed and delivered
by the Security Agent in the form of the copy supplied to us and
that the same constitute legally binding and enforceable obligations
of the Security Agent;
(j) the absence of any other agreements or arrangements between the
parties to the Charge which modifies or supersedes any of its terms;
(k) that at the time that the Charge is created there is no payment due
to MNHL arising from the Collateral (as defined in the Charge)
necessitating the registration of the Charge as a charge on book
debts of MNHL at Companies House.
3. OPINION
3.1 On the basis of the foregoing, and in reliance thereon, and subject to the
limitations and qualifications and exceptions set forth below, we are of
the opinion that:-
(a) MNHL is a limited liability Company duly incorporated and subsisting
under the laws of England and, so far as it is discoverable from
public records, it is not in liquidation;
(b) MNHL has all requisite corporate power and authority to enter into,
execute, deliver and perform the Charge and to carry out the
transactions contemplated thereby;
(c) the entry into, execution, delivery and performance of the Charge
has been duly authorised by all necessary corporate action on the
part of MNHL. The Charge (i) has been duly executed and delivered by
MNHL (ii) constitute the legally valid and binding obligations of
MNHL and (iii) is enforceable against MNHL in accordance with its
terms;
(d) Neither the execution and delivery of the Charge nor the performance
by MNHL of any of the obligations under the Charge, nor compliance
by MNHL
3
with the terms, conditions and provisions of the Charge, will
conflict with or result in a breach of any of the terms, conditions
or provisions of:
(i) the Memorandum and Articles of Association; or
(ii) any applicable law, statute, regulation, rule, order, code,
treaty or convention of any governmental, judicial or public
body or authority of or in the United Kingdom;
(e) no authorisation, approvals, consents, licences, exemptions, filings
or registrations of or with any governmental, judicial or public
body or authority of or in the United Kingdom are required as a
condition to the entry by MNHL into or the performance, validity or
enforceability of its obligations or the exercise of any rights and
remedies by the Secured Parties under the Charge.
(f) it is not necessary under the laws of England in order to ensure the
legality, validity, effectiveness and enforceability of the Charge
that they be filed, registered or notarised in any public office or
elsewhere or that any other documents or instrument relating thereto
be executed, delivered, filed, registered or recorded.
(g) no stamp or registration duty or other similar taxes or duties are
payable in the United Kingdom in respect of the execution or
delivery of the Charge.
(h) the Charge creates in favour of the Security Agent (as defined in
the Charge) valid security interests in the assets and undertaking
covered by the Charge.
4. QUALIFICATION
This Opinion is subject to the following qualifications:-
4.1 any statement, determination or certificate made or given pursuant to any
provision of the Charge which provides for such statement, determination
or certificate to be final, conclusive or binding might be held under
English law not to be final, conclusive or binding if such statement,
determination or certificate could be shown to have been incorrect,
unreasonable or arbitratory or not to have been given or made in good
faith;
4.2 an English court may not give effect to a purported obligation to pay
another party's litigation costs and may make its own order as to costs;
4.3 whilst an English court would have power to give judgement expressed as an
order to pay a currency other than pounds sterling and is normally
prepared to do so, it may decline to do so in its discretion and may not
enforce the benefit of any currency conversion and indemnity clauses
contained in the Charge;
4.4 our opinion in point 3.1 (c) and (h) above as to the validity, binding
effect and enforceability of the Charge is subject to all bankruptcy,
insolvency, reorganisation, moratorium or similar laws affecting
creditors' rights generally. In particular:-
4
4.4.1 we express no opinion as to whether MNHL is solvent, immediately
following creation of the Charge and whether the Charge is or may at
any time prove to have been created at a relevant time prior to an
application for an administration order being made in relation to,
or commencement of winding-up of, MNHL or the appointment of an
administrator of, MNHL, so that the Charge may be void or voidable
or otherwise affected by any order of the court under any insolvency
laws;
4.4.2 the Insolvency Xxx 0000 prohibits certain steps being taken except
with the leave of the Court (or, where an administration order is in
force or where an administrator has been appointed, the
administrator) against a company after an application is made for an
administration order, or an administrator has been appointed. This
prohibition continues if an administration order is made for as long
as it is in force or for so long as an administrator is in office.
Prohibited steps include steps taken to enforce any security over
the company's property, the commencement or continuation of
proceedings or execution or other legal process or the levying of
distress against the company or its property and, where an
administration order is in force or an administrator is in office,
the appointment of an administrative receiver;
4.4.3 where the Charge states that it creates security over debts owing
from or contractual or other rights against, third parties, these
are subject to the rights of the third parties concerned and may be
invalid if the term of such debts or rights do not permit them to be
charged or assigned;
4.4.4 a mortgagee or chargee owes certain duties of good faith for the
purpose of preserving or realising the assets mortgaged or charged.
Such duties are owed to the mortgagor or chargor and other
encumbrancers, and may be owed to any guarantor or other surety
interested therein;
4.4.5 when a debt or other chose in action has been charged (other than by
way of a floating charge) by the creditor or other obligee, the
debtor or other obligor will in the absence of due notice of the
charge, (1) obtain a good receipt, release or discharge from the
chargor or from any other chargee who or which has given such notice
and (2) treat any such other chargee as having priority by virtue of
a prior notice;
4.4.6 we express no opinion on the existence of, or the title of MNHL to,
or the value of, any of the assets or rights expressed to be subject
to the Charge;
4.5 an English court would not give effect to any provision of the Charge
providing for the payment of interest on unpaid amounts if such provision
was held to constitute a penalty and not a genuine and reasonable
pre-estimate of the loss likely to be suffered as a result of the default
in payment of the amount in question. We express no view on whether any
rate of interest specified in the Charge constitutes a genuine
pre-estimate of loss;
5
4.6 where a party to the Charge is vested with a discretion or may determine a
matter in its opinion, English law may require that such discretion is
exercised reasonably or that such an opinion is based upon reasonable
grounds;
4.7 an English court will not necessarily grant a remedy, the availability of
which is subject to equitable considerations or which is otherwise in the
discretion of the court In particular, orders for specific performance and
injunctions are, in general, discretionary remedies under the laws of
England and specific performance is not available where damages are
considered by the Court to be an adequate alternative remedy;
4.8 the claim for the breach of, or enforcement of any provisions of the
Charge would need to be brought within the limitation periods applicable
under the laws of England;
4.9 any terms in the Charge that provide that any provisions of the Charge
which are invalid may be severed from other provisions of the Charge may
not be effective under the laws of England;
4.10 without prejudice to the statements expressly set out in this Opinion, we
offer no opinion in relation to the accuracy of any of the representations
or warranties made or given by MNHL in the Charge;
4.11 claims under the Charge may be or become subject to defences, set off or
counterclaims;
4.12 the enforcement of the rights and obligations of the parties to the Charge
may be limited by the provisions of English law concerning frustration of
contracts.
This Opinion is rendered solely in connection with the Charge and may not be
relied upon in any manner by any person other than its addressee, any successor
or assignee of the addressee (including successive assignees). This Opinion
shall not be quoted or otherwise included, summarised or referred to in any
publication or document, in whole or in part, for any purpose whatsoever, or
furnished to any person without our prior written consent.
This Opinion is given on condition that it is governed by and shall be construed
in accordance with the laws of England and that any action arising out of it is
subject to the exclusive jurisdiction of the Courts of England and Wales.
Yours faithfully
XXXXXX XXXX
6
Our Ref: MDM/MD/MIT.409659.32
Xxxxxxx Court
Park Place
Highbridge International LLC CARDIFF
Investment and Corporate Banking CF10 3DP
4th Floor
First Canadian Place Tel: 000 0000 0000
Toronto Fax: 000 0000 0000
Ontario DX: 00000 Xxxxxxx
Xxxxxx X0X 0X0 xxx.xxxxxx-xxxx.xxx
and the Secured Parties from time to time under the Transaction Documents
referred to below.
27 April 2005
Dear Sirs
We are Solicitors to Mitel Networks Limited ("MNL"). MNL is the UK subsidiary of
Mitel Networks Corporation ("MNC"), a corporation incorporated under the laws of
Canada. We refer to a Securities Purchase Agreement ("THE AGREEMENT") made
between MNC, Highbridge International LLC as security agent ("THE SECURITY
AGENT") for the Secured Parties, and others dated 27 April 2005 and the senior
secured convertible notes issued pursuant to the Agreement. We have been asked
to provide a legal opinion in respect of a Guarantee and Indemnity ("THE
GUARANTEE"), a Charge over Book Debts and Cash at Bank ("THE CHARGE") and a
Debenture ("THE DEBENTURE") given by MNL on 27 April 2005 for the liabilities of
MNC under the Transaction Documents. The Guarantee, the Charge and the Debenture
are collectively referred to in this Opinion as the "DOCUMENTS".
1. DOCUMENTS
1.1 In our capacity as solicitors to MNL, we have examined the following
documents which we have solely relied on for the purposes of this Opinion;
(a) A certified copy of the Memorandum and Articles of Association ("THE
MEMORANDUM AND ARTICLES") of MNL as at 21 April 2005
(b) A copy of the Certificate of Incorporation and Certificate of Change
of Name of MNL.
(c) A certified copy of the resolution ("THE RESOLUTION") of the Board
of Directors of MNL dated 27 April 2005 relating to the Documents.
7
(d) A copy of the microfiche of documents maintained by the Registrar of
Companies at Companies House relating to MNL dated 19 April 2005
("THE SEARCH").
(e) The Guarantee.
(f) The Debenture.
(g) The Charge.
1.2 On 19 April 2005, we carried out a Company Search at Companies Registry,
Cardiff, and on 27 April 2005 we carried out a winding-up search at the
Royal Courts of Justice, Strand, London, both in respect of MNL, but we
have not conducted any further search since such date.
1.3 Except as mentioned above we have not examined any agreements,
instruments, records or other documents whatsoever relating to MNL and
have not made any other enquiries or investigations concerning MNL in
connection with the giving of this Opinion.
1.4 We express no opinion as to any laws other than the laws of England in
force and as interpreted at the date of this Opinion.
2. ASSUMPTIONS
2.1 In giving this Opinion we have assumed:-
(a) the genuiness of all signatures;
(b) the authenticity and completeness of all documents submitted to us
as originals;
(c) the conformity to original documents of all documents submitted to
us as copies and the authenticity and completeness of such original
documents;
(d) that the documents dated the date hereof or dated earlier than the
date hereof and on which we have expressed reliance, remain accurate
and that no additional matters would have been disclosed by company
searches at the Companies Registry or winding-up searches at the
Royal Courts of Justice being carried out since the carrying out of
the searches referred to above, and that the particulars disclosed
by our company searches are true, complete and up-to-date;
(e) that all matters which should have been registered with the
Registrar of Companies as at 19 April 2005 have been duly registered
against MNL and appear on the Search;
8
(f) that MNL has not passed a voluntary winding-up resolution and that
no petition has been presented to or order made by a court for the
winding-up or dissolution of MNL, and that no application has been
made to the court or notice given to the court for the appointment
of an administrator of MNL, and that no receiver or administrator
has been appointed in respect of MNL or any of its assets and that
the Registrar of Companies has not taken any steps to strike off
MNL, which in any such case has not been revealed by the company
search and the winding-up search referred to above;
(g) that the Memorandum and Articles of Association were true and
complete and up to date as at 21 April 2005 and there have been no
amendments to the Memorandum and Articles of Association
(h) that the Resolution was duly passed at a properly convened meeting
of duly appointed directors of MNL and that a duly qualified quorum
of such directors was present throughout the meeting and voted in
favour of approving the resolution and that any provisions contained
in the Companies Xxx 0000 or the Articles of Association of MNL
relating to the declaration of directors' interests or the power of
interested directors to vote were duly observed and that such
resolution has not been amended or rescinded and is in full force
and effect;
(i) that the Documents have been validly authorised, executed and
delivered by all parties to it other than MNL in the form of the
copies supplied to us and that the same constitute legally binding
and enforceable obligations of such parties thereto.
(j) the absence of any other agreements or arrangements between any of
the parties to the Documents which modifies or supersedes any of
their terms.
3. OPINION
3.1 On the basis of the foregoing, and in reliance thereon, and subject to the
limitations and qualifications and exceptions set forth below, we are of
the opinion that:-
(a) MNL is a limited liability Company duly incorporated and subsisting
under the laws of England and, so far as it is discoverable from
public records, it is not in liquidation;
(b) MNL has all requisite corporate power and authority to enter into,
execute, deliver and perform the Documents and to carry out the
transactions contemplated thereby;
(c) the entry into, execution, delivery and performance of the Documents
has been duly authorised by all necessary corporate action on the
part of MNL. The Documents (i) have been duly executed and delivered
by MNL (ii) constitute the legally valid and binding obligations of
MNL and (iii) are enforceable against MNL in accordance with their
terms;
9
(d) Neither the execution and delivery of the Documents nor the
performance by MNL of any of the obligations under the Documents,
nor compliance by MNL with the terms, conditions and provisions of
the Documents, will conflict with or result in a breach of any of
the terms, conditions or provisions of:
(i) the Memorandum and Articles of Association; or
(ii) any applicable law, statute, regulation, rule, order, code,
treaty or convention of any governmental, judicial or public
body or authority of or in the United Kingdom;
(e) no authorisation, approvals, consents, licences, exemptions, filings
or registrations of or with any governmental, judicial or public
body or authority of or in the United Kingdom are required as a
condition to the entry by MNL into or the performance, validity or
enforceability of its obligations or the exercise of any rights and
remedies by the Secured Parties under the Documents save for due
filing of the Charge and the Debenture at Companies House within 21
days of their creation.
(f) it is not necessary under the laws of England in order to ensure the
legality, validity, effectiveness and enforceability of the
Documents that they be filed, registered or notarised in any public
office or elsewhere or that any other documents or instrument
relating thereto be executed, delivered, filed, registered or
recorded other than the filing of the Charge and the Debenture at
Companies House within 21 days of their creation.
(g) no stamp or registration duty or other similar taxes or duties are
payable in the United Kingdom in respect of the execution or
delivery of the Documents other than the Companies House fees for
registration of the Charge and the Debenture;
(h) provided that registration of the Charge and the Debenture are
effected with Companies House (to whom particulars of the Charge and
the Debenture in the prescribed form must be delivered within 21
days after the creation of the Charge and the Debenture) the Charge
and the Debenture create in favour of the Security Agent (as defined
in the Charge) valid security interests in the assets and
undertaking covered by the Charge and the Debenture.
(i) the Charge and the Debenture will be subject to the following
security interests (as relevant) which have been revealed by the
Search:
10
DATE NATURE OF SECURITY CHARGEE
31 October Mortgage over specific Barclays Bank Plc
2001 equipment
24 January Legal Charge over Mitel Barclays Bank Plc
2002 Business Park,Portskewett
3 March Charge over Book Debts and Export Development
2003 Cash at Bank Canada
25 April Mortgage over specific Barclays Bank Plc
2003 equipment
11 June Amending Agreement to a Export Development
2003 Charge over Book Debts and Canada
Cash at Bank
4. QUALIFICATION
This Opinion is subject to the following qualifications:-
4.1 any statement, determination or certificate made or given pursuant to any
provision of the Documents which provides for such statement,
determination or certificate to be final, conclusive or binding might be
held under English law not to be final, conclusive or binding if such
statement, determination or certificate could be shown to have been
incorrect, unreasonable or arbitratory or not to have been given or made
in good faith;
4.2 an English court may not give effect to a purported obligation to pay
another party's litigation costs and may make its own order as to costs;
4.3 whilst an English court would have power to give judgement expressed as an
order to pay a currency other than pounds sterling and is normally
prepared to do so, it may decline to do so in its discretion and may not
enforce the benefit of any currency conversion and indemnity clauses
contained in the Documents;
4.4 our opinion in point 3.1 (c) and (h) above as to the validity, binding
effect and enforceability of the Documents is subject to all bankruptcy,
insolvency, reorganisation, moratorium or similar laws affecting
creditors' rights generally. In particular:-
4.4.1 we express no opinion as to whether MNL is solvent, immediately
following creation of the Documents and whether the Documents are or
may at any time prove to have been created at a relevant time prior
to an application for an administration order being made in relation
to, or commencement of winding-up of, MNL or the appointment of an
administrator of, MNL, so that the Documents may be void or voidable
or otherwise affected by any order of the court under any insolvency
laws;
11
4.4.2 the Insolvency Xxx 0000 prohibits certain steps being taken except
with the leave of the Court (or, where an administration order is in
force or where an administrator has been appointed, the
administrator) against a company after an application is made for an
administration order, or an administrator has been appointed. This
prohibition continues if an administration order is made for as long
as it is in force or for so long as an administrator is in office.
Prohibited steps include steps taken to enforce any security over
the company's property, the commencement or continuation of
proceedings or execution or other legal process or the levying of
distress against the company or its property and, where an
administration order is in force or an administrator is in office,
the appointment of an administrative receiver;
4.4.3 where the Charge or the Debenture states that it creates security
over debts owing from or contractual or other rights against, third
parties, these are subject to the rights of the third parties
concerned and may be invalid if the term of such debts or rights do
not permit them to be charged or assigned;
4.4.4 a mortgagee or chargee owes certain duties of good faith for the
purpose of preserving or realising the assets mortgaged or charged.
Such duties are owed to the mortgagor or charger and other
encumbrancers, and may be owed to any guarantor or other surety
interested therein;
4.4.5 when a debt or other chose in action has been charged (other than by
way of a floating charge) by the creditor or other obligee, the
debtor or other obligor will in the absence of due notice of the
charge, (1) obtain a good receipt, release or discharge from the
chargor or from any other chargee who or which has given such notice
and (2) treat any such other chargee as having priority by virtue of
a prior notice;
4.4.6 we express no opinion on the existence of, or the title of MNL to,
or the value of, any of the assets or rights expressed to be subject
to the Charge or the Debenture;
4.4.7 charges over book debts and other debts or over securities belonging
to MNL expressed to be fixed charges may only take effect as
floating charges, depending on the measure of control over the Debts
(as defined in the Charge and the Debenture) in particular following
the decision of the Judicial Committee of the Privy Council in the
New Zealand case of Xxxxx -v- Inland Revenue Commissioner (also
known as Re: Brumark Investments Limited) (5 June 2001) it is likely
that the charges over the Debts (as defined in the Charge and the
Debenture) will take effect as floating charges;
4.5 an English court would not give effect to any provision of the Documents
providing for the payment of interest on unpaid amounts if such provision
was held to constitute a penalty and not a genuine and reasonable
pre-estimate of the loss likely to be suffered as a result of the default
in payment of the amount in question. We express no view on whether any
rate of interest specified in the Documents constitutes a genuine
pre-estimate of loss;
12
4.6 where a party to the Documents is vested with a discretion or may
determine a matter in its opinion, English law may require that such
discretion is exercised reasonably or that such an opinion is based upon
reasonable grounds;
4.7 an English court will not necessarily grant a remedy, the availability of
which is subject to equitable considerations or which is otherwise in the
discretion of the court. In particular, orders for specific performance
and injunctions are, in general, discretionary remedies under the laws of
England and specific performance is not available where damages are
considered by the Court to be an adequate alternative remedy;
4.8 the claim for the breach of, or enforcement of any provisions of the
Documents would need to be brought within the limitation periods
applicable under the laws of England;
4.9 any terms in the Documents that provide that any provisions of the
Documents which are invalid may be severed from other provisions of the
Documents may not be effective under the laws of England;
4.10 without prejudice to the statements expressly set out in this Opinion, we
offer no opinion in relation to the accuracy of any of the representations
or warranties made or given by MNL in the Documents;
4.11 claims under the Documents may be or become subject to defences, set off
or counterclaims;
4.12 the enforcement of the rights and obligations of the parties to the
Documents may be limited by the provisions of English law concerning
frustration of contracts;
4.13 Our Opinion in 3.1 (c) above as to the validity, binding effect and
enforceability of the Documents is subject to the qualification that we
express no opinion whatsoever on whether any authorisations, approvals,
consents, licences, exemptions, filings or registrations of or with any
governmental, judicial or public body or authority of or in the USA are
required as a condition to the validity or enforceability of the charges
created by the Debenture over MNL's shareholding in Mitel Networks Inc.
This Opinion is rendered solely in connection with the Documents and may not be
relied upon in any manner by any person other than its addressee, any successor
or assignee of the addressee (including successive assignees). This Opinion
shall not be quoted or otherwise included, summarised or referred to in any
publication or document, in whole or in part, for any purpose whatsoever, or
furnished to any person without our prior written consent.
This Opinion is given on condition that it is governed by and shall be construed
in accordance with the laws of England and that any action arising out of it is
subject to the exclusive jurisdiction of the Courts of England and Wales.
Yours faithfully
XXXXXX XXXX
13
EXHIBIT G-4
MITEL NETWORKS CORPORATION
000 Xxxxxx Xxxxx
[MITEL LOGO] Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Fax: (000) 000-0000
April 27, 2005
Highbridge International LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Lakeshore International, Ltd.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
-and-
Marathon Special Opportunity Master Fund, Ltd.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Fore Master Convertible Fund, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs/Mesdames:
I am corporate counsel for Mitel Networks Corporation ("MITEL") in connection
with, and have examined, an executed copy of:
(a) the securities purchase agreement between Mitel and the several
purchasers party thereto (the "BUYERS") dated April 27, 2005 (the
"SECURITIES PURCHASE AGREEMENT");
-2-
(b) the senior secured convertible notes issued by Mitel pursuant to the
Securities Purchase Agreement (the "NOTES");
(c) the registration rights agreement dated April 27, 2005 between Mitel
and the Buyers (the "REGISTRATION RIGHTS AGREEMENT");
(d) the warrants of Mitel issued under the Securities Purchase Agreement
(the "WARRANTS");
(e) the collateral agent agreement dated April 27, 2005 among the
Collateral Agent, the Buyers and Mitel; and
(f) the security agreement granted by Mitel in favour of Highbridge
International LLC, in its capacity as Collateral Agent for the
Holders (the "SECURED PARTY") dated April 27, 2005 (the "SECURITY
AGREEMENT").
All of the above documents are collectively referred to in this opinion letter
as the "DOCUMENTS".
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Securities Purchase Agreement.
I am a solicitor qualified to practise law in the Province of Ontario and I
express no opinion as to any laws or any matters governed by any laws other than
the laws of the Province of Ontario and the federal laws of Canada applicable in
the Province of Ontario ("APPLICABLE LAW").
I have (i) examined such public and corporate records, certificates and other
documents; (ii) made such further investigations and searches; and (iii)
considered such questions of law, as I have considered necessary or advisable
for the purposes of the opinions hereinafter expressed.
In expressing the opinions in paragraph 1 below, I have relied solely upon a
certificate of compliance issued by the Department of Industry Canada, dated
April 27, 2005, a copy of which has been delivered to you.
I have assumed the legal capacity of all individuals, the genuineness of all
signatures, the authenticity of all documents submitted to me as originals and
the conformity to authentic original documents of all documents submitted to me
as certified, conformed, photostatic or facsimile copies.
-3-
A. OPINIONS
On the basis of the foregoing and subject to the qualifications and limitations
expressed herein, I am of the opinion that:
1. Mitel is a corporation existing under the laws of Canada.
2. There are no restrictions on the corporate power and capacity of Mitel to
enter into the Documents, to perform its obligations under the Documents
(including the issuance of the Securities), to own its property and assets
or to conduct its business as presently conducted. Mitel is duly qualified
to do business in the Province of Ontario.
3. The execution and delivery by Mitel of each of the Documents and the
performance of its obligations under the Documents (including, without
limitation, the issuance of the Notes, Warrants, Conversion Shares and
Warrant Shares and the granting of the security interest in the
Collateral) have been duly authorized by all necessary corporate action on
the part of Mitel. The Documents have been duly executed and delivered by
Mitel.
4. The execution, delivery and performance of the Documents by Mitel and the
consummation by Mitel of the transactions contemplated thereby, including,
without limitation, the issuance of the Notes and the Warrants, the
granting of a security interest in the Collateral and the issuance of the
Conversion Shares and the Warrant Shares, does not and will not (i) result
in a violation of the Articles of Incorporation, or the Bylaws of Mitel
(ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Mitel is a party, or (iii)
result in a violation of Applicable Law, or, to my knowledge after making
reasonable inquiries of those who would reasonably be expected to have
knowledge, any order, judgment or decree applicable to Mitel or by which
any property or asset of Mitel is bound or affected, except in the case of
clauses (ii) and (iii), for such violations as would not be reasonably
expected to have a Material Adverse Effect.
5. The Notes have been duly authorized and validly created and issued by all
necessary corporate action on the part of Mitel and have been duly
executed and delivered by Mitel.
6. The Warrants have been duly authorized and validly created and issued by
all necessary corporate action on the part of Mitel and have been duly
executed and delivered by Mitel.
-4-
7. All necessary corporate action has been taken by Mitel to authorize the
issue of the Conversion Shares, and upon the conversion of the Notes in
accordance with their terms, the Conversion Shares will be validly issued
and outstanding as fully paid and non-assessable common shares in the
capital of Mitel. When issued the Conversion Shares will be free of
statutory preemptive rights and to my knowledge after making reasonable
inquiries of those who would reasonably be expected to have knowledge,
contractual preemptive rights, rights of first refusal and similar rights
contained in any agreement, note, lease, mortgage deed or other instrument
to which Mitel is a party or by which Mitel is bound.
8. All necessary corporate action has been taken by Mitel to authorize the
issue of the Warrant Shares, and upon the exercise of the Warrants in
accordance with their terms, the Warrants Shares will be validly issued
and outstanding as fully paid and non-assessable common shares in the
capital of Mitel. When issued the Warrant Shares will be free of statutory
preemptive rights and to my knowledge after making reasonable inquiries of
those who would reasonably be expected to have knowledge, contractual
preemptive rights, rights of first refusal and similar rights contained in
any agreement, note, lease, mortgage deed or other instrument to which
Mitel is a party or by which Mitel is bound.
9. As of the date hereof, the authorized capital of Mitel consists of (i) an
unlimited number of Common Shares, of which as of the date hereof, no more
than 117,249,933 are issued and outstanding (ii) an unlimited number of
Class A Convertible Preferred Shares, issuable in series of which
20,000,000 Class A Convertible Preferred Shares, Series 1 are issued and
outstanding and (iii) an unlimited number of Class B Convertible Preferred
Shares, issuable in series of which 67,789,300 Class B Convertible
Preferred Shares, Series 1 are issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. None of the shares is subject to preemptive rights (other
than those contained in the Shareholders' Agreement (as defined in the
Notes) and the Securities Purchase Agreement) or other rights of the
shareholders of Mitel pursuant to Mitel's Articles of Incorporation or
Bylaws or Applicable Law or, to my knowledge after making reasonable
inquiries of those who would reasonably be expected to have knowledge, any
agreement, note, lease, mortgage deed or other instrument to which Mitel
is a party or by which Mitel is bound. To my knowledge after making
reasonable inquiries of those who would reasonably be expected to have
knowledge, Mitel is not under any obligation to register any of its
presently outstanding securities or any securities that may hereafter be
issued except as set forth in the Registration Rights Agreement and in the
Existing Registration Rights Agreement (as defined in the Registration
Rights Agreement).
10. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, except as disclosed in
Disclosure
-5-
Letter to the Securities Purchase Agreement, there are no outstanding
subscriptions, rights, options, warrants, calls, convertible securities,
commitments of sales or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into shares
or ownership interests in Mitel.
11. Other than those that have been obtained, no consent or authorization of,
filing with, notice to or registration with, any of the shareholders of
Mitel is required to be obtained by Mitel (i) to enter into and perform
its obligations under the Documents; or (ii) for the issuance and sale of
the Notes, the Warrants, the Conversion Shares or the Warrant Shares as
contemplated by the Documents.
12. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, except as set forth in the
Disclosure Letter to the Securities Purchase Agreement, there are no
actions, suits, claims, investigations or proceedings pending, threatened
or contemplated to which Mitel or any of its respective directors or
officers is a party or to which any of its respective properties is
subject at law or in equity, before or by any Canadian federal,
provincial, local or foreign governmental or regulatory commission, board,
body, authority or agency which would reasonably be expected to have a
Material Adverse Effect.
13. Other than those which have been obtained or made there are no (a)
authorizations, approvals, orders, consents, permits, licenses or other
actions required by Mitel; (b) filings required to be made by Mitel; or
(c) notices required to be given, to any governmental agency or authority,
regulatory body, court, tribunal or other similar entity having
jurisdiction under Applicable Law by Mitel (i) in connection with the
execution and delivery and performance by Mitel of the Documents
(including the issuance of the Securities) or (ii) for the exercise of any
rights and remedies under any of the Documents; provided, however, for the
purposes of this opinion, I express no opinion with respect to the
securities laws of the province of Ontario.
14. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, Mitel has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under Applicable Law in order to operate its
properties and conduct its business other than those which the failure to
obtain would not reasonably be expected to have a Material Adverse Effect.
To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, Mitel is not in violation of, or
in default under, or has not received notice of any proceedings relating
to revocation or modification of, any such license, authorization, consent
or approval and is not in violation of or default under Applicable Law or
any decree, order or judgment applicable to Mitel, which
-6-
violation, default, revocation or modification would reasonably be
expected to have a Material Adverse Effect.
The opinions expressed herein are solely for the benefit of the addressees
hereof and their respective successors and assigns in connection with the
transactions contemplated in the Documents and may not be relied upon in any
manner or for any purpose by any other person.
Yours very truly,
/s/ Xxxx Xxxxxxx
----------------------------
Xxxx Xxxxxxx
Corporate Counsel
EXHIBIT G-5
[ON LETTERHEAD OF MITEL NETWORKS, INC.]
April 27, 2005
Highbridge International LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Lakeshore International, Ltd.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
-and-
Marathon Special Opportunity Master Fund, Ltd.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
-and-
Fore Master Convertible Fund, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs/Mesdames:
I am General Counsel & Corporate Secretary for Mitel Networks, Inc. ("MNI") in
connection with, and have examined, an executed copy of:
(a) the securities purchase agreement between Mitel Networks Corporation
("MITEL PARENT") and the several purchasers party thereto (the
"BUYERS") dated April 27, 2005, including the Disclosure Letter
thereto (the "SECURITIES PURCHASE AGREEMENT"); and
(b) the Guarantee and Security Agreement.
I have also (i) examined MNI's certificate of incorporation (as amended), its
by-laws and the minute books containing the resolutions of MNI's board of
directors; and (ii) considered such questions of law as I have considered
necessary or advisable for the purposes of the opinions hereinafter expressed.
-2-
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Securities Purchase Agreement.
I am an attorney qualified to practice law in Virginia, Massachusetts and the
District of Columbia, and I express no opinion as to any laws or any matters
governed by any laws other than the laws of those jurisdictions and the federal
laws of the United States of America applicable to them ("APPLICABLE LAW").
In expressing the opinions in paragraph 1 below, I have relied solely upon a
certificate of good standing issued by the State of Delaware, dated April 27,
2005, a copy of which has been delivered to you.
I have assumed the legal capacity of all individuals, the genuineness of all
signatures, the authenticity of all documents submitted to me as originals and
the conformity to authentic original documents of all documents submitted to me
as certified, conformed, photostatic or facsimile copies.
A. OPINIONS
On the basis of the foregoing and subject to the qualifications and limitations
expressed herein, I am of the opinion that:
1. MNI is a corporation existing under the laws of Delaware.
2. MNI has the requisite corporate power and capacity to own its property and
assets, to conduct its business as presently conducted and to enter into
the Guarantee and Security Agreement and to perform its obligations
thereunder. MNI is duly qualified to carry on business in the State of
Virginia.
3. All of the outstanding shares of capital stock of MNI have been duly
authorized and validly issued, are fully paid and are owned by Mitel
Networks Limited ("MNL").
4. The execution, delivery and performance of the Guarantee and Security
Agreement by MNI and the consummation by MNI of the transactions
contemplated thereby, does not and will not (i) result in a violation of
the Articles of Incorporation or the Bylaws of MNI (ii) to my knowledge
after making reasonable inquiries of those who would reasonably be
expected to have knowledge, conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which MNI is a party, or (iii) result in a violation of Applicable Law,
or, to my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, any order, judgment or
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decree applicable to MNI or by which any property or assets of MNI is
bound or affected, except in the case of clauses (ii) and (iii), for such
violations as would not be reasonably expected to have a Material Adverse
Effect.
5. The execution and delivery by MNI of the Guarantee and Security Agreement
and the performance of its obligations thereunder has been duly authorized
by all necessary corporate action on the part of MNI. The Guarantee and
Security Agreement has been duly executed and delivered by MNI.
6. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, except as disclosed in
Disclosure Letter to the Securities Purchase Agreement, there are no
outstanding subscriptions, rights, options, warrants, calls, convertible
securities, commitments of sales or other rights to purchase, agreements
or other obligations to issue or other rights to convert any obligation
into shares of capital stock or ownership interests in MNI.
7. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, except as set forth in the
Disclosure Letter to the Securities Purchase Agreement, there are no
actions, suits, claims, investigations or proceedings pending, threatened
or contemplated to which MNI or any of its respective directors or
officers is a party or to which any of its respective properties is
subject at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority or
agency which would reasonably be expected to have a Material Adverse
Effect.
8. Other than those which have been obtained or made there are no (a)
authorizations, approvals, orders, consents, permits, licenses or other
actions required by; (b) filings required to be made with; or (c) notices
required to be given, to any governmental agency or authority, regulatory
body, court, tribunal or other similar entity having jurisdiction under
Applicable Law in connection with the execution and delivery and
performance by MNI of the Guarantee and Security Agreement; provided,
however, for the purposes of this opinion, I express no opinion with
respect to the securities laws of the individual States of America.
9. To my knowledge after making reasonable inquiries of those who would
reasonably be expected to have knowledge, MNI has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under Applicable Law in order to operate its properties and
conduct its business other than those which the failure to obtain would
not reasonably be expected to have a Material Adverse Effect. To my
knowledge after making reasonable inquiries of those who would reasonably
be expected to have knowledge, MNI is
-4-
not in violation of, or in default under, or has not received notice of
any proceedings relating to revocation or modification of, any such
license, authorization, consent or approval and is not in violation of or
in default under Applicable Law or any decree, order or judgment
applicable to MNI, which violation, default, revocation or modification
would reasonably be expected to have a Material Adverse Effect.
The opinions expressed herein are solely for the benefit of the addressees
hereof and their respective successors and assigns in connection with the
transactions contemplated in the Guarantee and Security Agreement and may not be
relied upon in any manner or for any purpose by any other person.
Yours very truly,
Xxxxxxxxx X. Na
General Counsel,
U.S., Asia-Pac. & Latin Amer.
EXHIBIT H
MITEL NETWORKS CORPORATION
OFFICER'S CERTIFICATE
The undersigned hereby certifies that she is the duly elected, qualified
and acting Assistant Secretary of Mitel Networks Corporation, a corporation
incorporated under the laws of Canada (the "COMPANY"), and that as such he is
authorized to execute and deliver this certificate in the name and on behalf of
the Company and in connection with the Securities Purchase Agreement, dated as
of April __, 2005, by and among the Company and the Buyers (the "SECURITIES
PURCHASE AGREEMENT"), and further certifies in her official capacity, in the
name and on behalf of the Company, the items set forth below. Capitalized terms
used but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement.
1. Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company at a
meeting of the Board of Directors held on April 21, 2005. Such resolutions
have not in any way been amended, modified, revoked or rescinded, have
been in full force and effect since their adoption to and including the
date hereof and are now in full force and effect.
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
Articles of Incorporation of the Company, together with any and all
amendments thereto currently in effect, and no action has been taken to
further amend, modify or repeal such Articles of Incorporation, the same
being in full force and effect in the attached form as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete copy of the
Bylaws of the Company and any and all amendments thereto currently in
effect, and no action has been taken to further amend, modify or repeal
such Bylaws, the same being in full force and effect in the attached form
as of the date hereof.
4. Each person listed below has been duly elected or appointed to the
position(s) indicated opposite his name and is duly authorized to sign the
Securities Purchase Agreement and each of the Transaction Documents on
behalf of the Company, and the signature appearing opposite such person's
name below is such person's genuine signature.
NAME POSITION SIGNATURE
---------------- ----------------------- -----------------------
Xxx Xxxxx Chief Executive Officer _______________________
Xxxxx Xxxxxxx Chief Financial Officer _______________________
Xxxx XxXxxxxx Treasurer _______________________
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this __
day of April, 2005.
___________________________________
Xxxxxx Felskie
Assistant Secretary
I, Xxxxx Xxxxxxx, Chief Financial Officer, hereby certify that Xxxxxx
Felskie is the duly elected, qualified and acting Assistant Secretary of the
Company and that the signature set forth above is his true signature.
___________________________________
Xxxxx Xxxxxxx
Chief Financial Officer
EXHIBIT A
RESOLUTIONS
EXHIBIT B
ARTICLES OF INCORPORATION
EXHIBIT C
BYLAWS
EXHIBIT I
MITEL NETWORKS CORPORATION
OFFICER'S CERTIFICATE
The undersigned, Chief Executive Officer of Mitel Networks Corporation, a
corporation incorporated under the laws of Canada (the "COMPANY"), pursuant to
Section 7(g) of the Securities Purchase Agreement, dated as of April __, 2005,
by and among the Company and the Buyers (the "SECURITIES PURCHASE AGREEMENT"),
hereby represents, warrants and certifies to the Buyers as follows (capitalized
terms used but not otherwise defined herein shall have the meaning set forth in
the Securities Purchase Agreement):
1. All representations and warranties of the Company set forth in the
Securities Purchase Agreement are true and correct as of the date
when made and as of the date hereof (except for representations and
warranties that speak as of a specific date).
2. The Company has performed, satisfied and complied in all respects
with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate
this___________ day of April, 2005.
_________________________________
Name: Xxx Xxxxx
Title: Chief Executive Officer
EXHIBIT J
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
The undersigned (a) acknowledges that the sale of the securities of Mitel
Networks Corporation (the "Corporation") to which this declaration relates is
being made in reliance on Rule 904 of Regulation S under the United States
Securities Act of 1933, as amended (the "1933 Act") and (b) certifies that (1)
it is not an affiliate of the Corporation (as defined in Rule 405 under the 1933
Act), (2) the offer of such securities was not made to a person in the United
States and either (A) at the time the buy order was originated, the buyer was
outside the United States, or the seller and any person acting on its behalf
reasonably believe that the buyer was outside the United States, or (B) the
transaction was executed on or through the facilities of The Toronto Stock
Exchange and neither the seller nor any person acting on its behalf knows that
the transaction has been prearranged with a buyer in the United States, (3)
neither the seller nor any affiliate of the seller nor any person acting on any
of their behalf has engaged or will engage in any directed selling efforts in
the United States in connection with the offer and sale of such securities, (4)
the sale is bonafide and not for the purpose of "washing off the resale
restrictions imposed because the securities are "restricted securities" (as such
term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not
intend to replace the securities sold in reliance on Rule 904 of the 1933 Act
with fungible unrestricted securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated: _______________ _______________________________
Name of Seller
By: ____________________________
Name:
Title:
EXHIBIT K
TERMINATION, RELEASE AND DISCHARGE
TO: HIGHBRIDGE INTERNATIONAL LLC, as collateral agent under the senior secured
convertible notes issued pursuant to a securities purchase agreement dated
April 27,2005 among Mitel Networks Corporation, the buyers from time to
time signatory thereto and Highbridge International LLC (the "Collateral
Agent")
This Termination, Release and Discharge is made this 27th day of April, 2005
between Mitel Networks Corporation, Mitel Networks, Inc. and Mitel Networks
Limited (collectively, "Mitel"), Bank of Montreal, as Administrative Agent and
Lead Arranger under the Credit Agreement (as defined below) (the "Bank") and the
lenders from time to time party to the Credit Agreement (the "Lender Parties"
and, together with the Bank, the "Lenders").
Reference is made to an amended and restated credit agreement made as of April
21,2004 between Mitel and the Lenders (as amended, renewed, restated or modified
from time to time, the "Credit Agreement") and the security documents entered
into in connection with the Credit Agreement, excluding (i) the CCSA (as defined
below) and (ii) the postponement and subordination agreement dated April 21,2004
between Bank of Montreal and Export Development Canada and including, without
limitation, the documents listed in Schedule "A" (collectively, as amended,
renewed, restated or modified from time to time, the "Security Documents" and
together with the Credit Agreement, the "Documents". Unless defined herein, all
capitalized terms used in this Termination, Release and Discharge shall have the
respective meanings set forth in the Credit Agreement.
WHEREAS Mitel desires to terminate the Documents effective April 27, 2005 (the
"Cancellation Date") and the Lenders have agreed to such termination upon
receipt from Mitel on the Cancellation Date of the indebtedness, liabilities and
obligations in the amount of Cdn$23,107,720.55 (the "Payout Amount") owing to
the Agent and the Lenders by Mitel under the Documents and upon the deposit of
cash collateral in the amount of Cdn$1,300,000 (the "Deposit Amount") by Mitel
with the Agent under a cash collateral security agreement (the "CCSA") in the
form appended hereto as Schedule B to secure the repayment and reimbursement to
the Agent and Lenders of any amounts payable by the Agent and Lenders with
respect to the outstanding Letters of Credit and any amounts payable by Mitel to
the Agent and Lenders in connection with cash management arrangements and other
lines of credit including, without limitation, those described in Appendix A
hereto.
NOW THEREFORE WITNESSETH that in consideration of the premises, the sum of TWO
DOLLARS ($2.00) and other good and valuable consideration the receipt and
sufficiency whereof is hereby mutually acknowledged, the parties hereto hereby
agree as follows:
1. Mitel agrees to execute and deliver to the Agent for the benefit of the
Agent and Lenders the CCSA and agrees to deposit Cdn$1,300,000 in the
Collateral Accounts (as defined in the CCSA) forthwith upon execution of
this Agreement. In furtherance thereof, Mitel
- 2 -
hereby directs the Agent to transfer such amount from its accounts with
the Agent to and for deposits to the credit of the Collateral Accounts.
2. The Lenders hereby acknowledge receipt of the Payout Amount and the
Deposit Amount from Mitel and agree that there is no other indebtedness,
liability and obligation outstanding under the Documents other than in
respect of the outstanding Letters of Credit and the indebtedness,
liabilities and obligations specified in sections 3.3,8.4,13.4 and 13.5 of
the Credit Agreement (such indebtedness, liabilities and obligations being
collectively referred to as the "Surviving Obligations").
3. The parties agree that the Documents shall be terminated as of the
Cancellation Date and shall be of no further force and effect as of such
date, other than the outstanding Letters of Credit and sections
3.3,8.4,13.4 and 13.5 of the Credit Agreement.
4. Each of Mitel, the Agent and the Lenders forever terminate, remise,
release and discharge all actions, causes of action, suits, duties,
accounts, covenants, rights, claims and demands whatsoever that such
person now has against the other parties hereto under or in connection
with the Documents, except with respect to any Surviving Obligations and
the CCSA.
5. The Agent and the Lenders release, discharge and reconvey all of their
right and interest in and to all liens, charges, security interests,
hypothecs, pledges, mortgages and other encumbrances whatsoever that they
have or may have, in or to any and all property, assets and undertaking of
Mitel and in all present or future proceeds arising from such property,
assets and undertaking, except for any liens, charges, security
interests, hypothecs, pledges, mortgages and other encumbrances granted
under the CCSA.
6. The Lenders irrevocably authorize and direct Osler, Xxxxxx & Harcourt LLP
("Osler") and Goodmans LLP, and any agent under their respective direction
(together with Osler and Goodmans LLP, the "Authorized Entities"), at the
sole expense of Mitel, to discharge any and all registrations and filings
made in favour of the Agent and the Lenders under or in respect of any or
all of the Documents, against Mitel (and any predecessor entities of or to
Mitel), and any financing change statements filed in connection with such
registrations, other than the registration listed in Schedule "C"; and
(b) file any UCC financing statement terminations, including, without
limitation, in respect of the UCC financing statements listed in Schedule
"D".
7. The Lenders agree to execute and deliver as soon as reasonably practicable
to and in favour of Mitel such documents and agreements as Mitel may
reasonably request for the purpose of evidencing the discharge and release
of the security given by Mitel to the Lenders under Section 427 of the
Bank Act as described in Schedule "E", all at the sole expense of Mitel.
8. The Agent and the Lenders agree as soon as reasonably practicable to
execute and deliver to and in favour of Mitel such further releases,
discharges, authorizations, directions, financing change statements,
instruments, notices and other documents and agreements as Mitel may
reasonably request for the purpose of discharging or releasing (or
providing notice of discharge or release) all of the liens, charges,
security interests, hypothecs, pledges, mortgages, and other encumbrances
of the Agent and the Lenders to be released and discharged in accordance
with the terms hereof and relating solely to the Documents or to otherwise
give effect to the provisions of this document, all at the sole expense of
Mitel.
- 3 -
9. Mitel shall continue to be liable to the Agent and the Lender Parties for
the Surviving Obligations, for any indebtedness, liabilities and
obligations of Mitel under the CCSA or in respect of the cash management
arrangements and other lines of credit herein referenced and for any and
all fees, expenses and charges reasonably incurred by the Agent or a
Lender Party (including, without limitation, legal fees and expenses) in
connection with the full repayment of the Payout Amount, the satisfaction
and full payment of the Surviving Obligations and the performance by the
Agent or a Lender Party of its obligations hereunder, under the CCSA and
in respect of the Surviving Obligations including any expenses incurred in
connection herewith or relating to the matters set forth herein.
10. The Agent and the Lender hereby confirm that the security interest against
Mitel as evidenced by the registration (the "Registration") set out in
Schedule "C", is restricted to the collateral described in (a) through (e)
of section 2.1 of the CCSA as set out in Schedule "B" in the maximum
amount of Cdn. $30 million, plus interest thereon (the "CCSA Collateral"),
and that such security interests and Registration does not now, and will
not at any time in the future, attach to, encumber or perfect a security
interest in any property, assets or undertaking of Mitel other than the
CCSA Collateral. The Agent and the Lender further confirms that the
Registration shall not be used to perfect future security agreements.
11. This Termination, Release and Discharge shall enure to the benefit of each
of the Authorized Entities and its respective successors (including any
successor by reason of amalgamation) and permitted assigns.
12. This Termination, Release and Discharge shall be governed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
13. This Termination, Release and Discharge may be executed in counterparts
and may be executed and delivered by facsimile and all such counterparts
and facsimiles shall together constitute one and the same agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF the parties hereto have executed this Termination, Release
and Discharge.
BANK OF MONTREAL, as BANK OF MONTREAL, as Lender
Administrative Agent and Lead Arranger
By: __________________________________ By: ______________________________
Name: Name:
Title: Title:
By: __________________________________ By: ______________________________
Name: Name:
Title: Title:
MITEL NETWORKS CORPORATION MITEL NETWORKS, INC.
By: __________________________________ By: ______________________________
Name: Name:
Title: Title:
By: __________________________________ By: ______________________________
Name: Name:
Title: Title:
MITEL NETWORKS LIMITED
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
SCHEDULE "A"
1. Amended and Restated Guarantee and Security Agreement dated as of January
21,2002 between Mitel Networks, Inc. and Bank of Montreal.
2. Second Amended and Restated Guarantee and Security Agreement dated as of
February 27, 2003 between Mitel Networks, Inc. and Bank of Montreal.
3. Confirmation of Guarantee and Security dated as of April 21, 2004 between
Mitel Networks, Inc. and Bank of Montreal.
4. Amended and Restated Guarantee and Security Agreement dated as of January
21,2002 between Mitel Networks Solutions, Inc. and Bank of Montreal.
5. Second Amended and Restated Guarantee and Security Agreement dated as of
February 27, 2003 between Mitel Networks Solutions, Inc. and Bank of
Montreal.
6. Confirmation of Guarantee and Security dated as of April 21, 2004 between
Mitel Networks Solutions, Inc. and Bank of Montreal.
7. Guarantee and Indemnity dated as of July 25,2001 between Mitel Networks
Limited and Bank of Montreal.
8. Charge over Book Debts and Cash at Bank dated July 25,2001 between Mitel
Networks Limited and Bank of Montreal.
9. Amended Agreement dated June 10,2002 to a Charge over Book Debts and Cash
at Bank dated July 25,2001 between Mitel Network Limited and Bank of
Montreal.
10. Confirmation of Guarantee and Security dated as of April 21, 2004 between
Mitel Networks Limited and Bank of Montreal.
11. General security agreement made as of February 27, 2003 between Mitel
Networks Corporation and Bank of Montreal.
12. Contract relative to Bank Act Security dated February 27,2003 between
Mitel Networks Corporation and Bank of Montreal.
13. Assignment dated February 27,2003 under Section 427 of the Bank Act
granted by Mitel Networks Corporation in favour of Bank of Montreal.
14. Application for Credit and Promise to give Bank Act Security dated
February 27, 2003 made by Mitel Networks Corporation in favour of Bank of
Montreal.
15. Letter agreement dated April 21, 2004 between T.H. Xxxxxxxx and Mitel
Networks Corporation.
SCHEDULE "B"
Form of Cash Collateral Security Agreement
CASH COLLATERAL SECURITY AGREEMENT
THIS AGREEMENT is made as of April 27, 2005,
BY: MITEL NETWORKS CORPORATION, a corporation incorporated under the
laws of Canada and having its chief executive office at 000
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx
(the "Debtor")
IN FAVOUR OF: BANK OF MONTREAL, as administrative agent under the Credit
Agreement (as defined below)
(the "Agent")
RECITALS:
A. Pursuant to an amended and restated credit agreement made as of April
21, 2004 between the Debtor as borrower, the financial institutions from
time to time party thereto as lenders (the "Lenders") and the Agent as
administrative agent, as amended, (the "Credit Agreement"), the Lenders
have made credit facilities available to the Debtor.
B. The Debtor has requested that the Credit Agreement be terminated and the
Agent and Lenders are willing pursuant to the Termination, Release and
Discharge dated as of the date hereof (the "Payout Letter") between, inter
alia, the Debtor, the Agent and the Lenders to terminate the Credit
Agreement and Security Documents (as used herein, as defined in the Payout
Letter) in accordance with the terms of the Payout Letter.
C. The Debtor will remain indebted to the Agent and Lenders under certain
Letters of Credit (as used herein, as defined in the Payout Letter) and in
respect of those cash management arrangements and other lines of credit
described in the Payout Letter following termination of the Credit
Agreement and Security Documents and such indebtedness and all
indebtedness, liabilities and obligations of the Debtor to the Agent and
the Lender howsoever arising whether now or hereafter incurred in
connection with such Letters of Credit, cash management arrangements and
other lines of credit (collectively, the "Outstanding Obligations") shall
be secured by the collateral described herein.
D. In consideration for permitting the Outstanding Obligations to remain
outstanding following the termination of the Credit Agreement and the
Security Documents, the Debtor has agreed to provide the Agent for and on
behalf of itself and the Lenders with a security interest in, and other
rights in respect of, certain personal property as set forth in this
Agreement.
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NOW THEREFORE in consideration of the sum of $1.00 and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Debtor agrees with the Agent as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, in addition to the definitions set out in the recitals, if
any:
1.1.1 "THIS AGREEMENT", "HERETO", "HEREIN", "HEREOF", "HEREBY",
"HEREUNDER" and any similar expressions refer to this Agreement as
it may be amended or supplemented from time to time, and not to any
particular Article, section or other portion hereof;
1.1.2 "BANKING DAY" means any day, other than a Saturday and Sunday or
other day on which banks are required or authorized to close in
Toronto, Ontario;
1.1.3 "COLLATERAL" means all of the property and assets of the Debtor
subject to, or intended to be subject to, the Security Interest, and
any reference to "Collateral" shall be deemed to be a reference to
"Collateral or any part thereof" except where otherwise specifically
provided;
1.1.4 "COLLATERAL ACCOUNTS" means any account at any branch of the Agent
now or hereafter designated by the Agent to be a Collateral Account
pursuant to this Agreement, and all other accounts at any branch of
the Agent established or maintained in substitution for all or any
part of any account which is, at the time of substitution, a
Collateral Account, and any reference to "Collateral Accounts" shall
be deemed to be a reference to "Collateral Accounts or one or more
thereof" except where otherwise specifically provided;
1.1.5 "INSTRUMENT" means,
(i) a xxxx, note or cheque within the meaning of the Bills of Exchange
Act (Canada) or any other writing that evidences a right to the
payment of money and is of a type that in the ordinary course of
business is transferred by delivery with any necessary endorsement
or assignment, or
(ii) a letter of credit and an advice of credit if the letter or advice
states that it must be surrendered upon claiming payment thereunder,
but does not include a writing that constitutes part of chattel
paper, a document of title or a security;
1.1.6 "PPSA" means the Personal Property Security Act (Ontario) as amended
from time to time and any Act substituted therefor and amendments
thereto;
1.1.7 "PROCEEDS" means identifiable or traceable personal property in any
form derived directly or indirectly from any dealing with Collateral
or the proceeds therefrom, and includes any payment representing
indemnity or compensation for loss of or damage to the property or
proceeds therefrom; and
-3-
1.1.8 "SECURITY INTEREST" has the meaning assigned to such term in section
2.1.
1.2 HEADINGS
The inclusion of headings in this Agreement is for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.3 REFERENCES TO ARTICLES AND SECTIONS
Whenever in this Agreement a particular Article, section or other
portion thereof is referred to, such reference pertains to the particular
Article, section or portion thereof contained herein, unless otherwise
indicated.
1.4 CURRENCY
Except where otherwise expressly provided, all amounts in this
Agreement are stated and shall be paid in Canadian currency.
1.5 GENDER AND NUMBER
In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.6 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Agreement, is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of the other provisions specifically identified
in this section nor any other provision hereof.
1.7 AMENDMENT, WAIVER
No amendment or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any provision
of this Agreement shall constitute a waiver of any other provision nor shall any
waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
1.8 GOVERNING LAW, ATTORNMENT
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein
and the Debtor hereby irrevocably attorns to the jurisdiction of the courts of
Ontario.
-4-
ARTICLE 2
SECURITY INTEREST
2.1 SECURITY INTEREST
The Debtor hereby grants to the Agent a security interest (the
"Security Interest") in all of its right, title and interest of the Debtor in
and to:
(a) all credit balances now or hereafter in the Collateral
Accounts;
(b) all money, Instruments and other documents or amounts now or
hereafter deposited, delivered to the Agent for deposit,
transferred or otherwise credited to the Collateral Accounts;
(c) all interest now or hereafter accruing on the Collateral
Accounts;
(d) all certificates of deposit, whether or not negotiable, and
Instruments issued by the Agent evidencing the Collateral
Accounts; and
(e) all Proceeds (including Proceeds of Proceeds) of any of the
property described in this section.
2.2 ATTACHMENT
The attachment of the Security Interest has not been postponed and
the Security Interest shall attach to any particular Collateral as soon as the
Debtor has rights in such Collateral.
2.3 OBLIGATIONS SECURED
The Security Interest granted hereby secures payment, performance
and satisfaction of the Outstanding Obligations.
ARTICLE 3
SPECIAL CONDITIONS AND
RESTRICTIONS APPLICABLE TO COLLATERAL
3.1 REIMBURSEMENT OF LENDER
In the event that the Agent or a Lender is called upon by a
beneficiary to honour a Letter of Credit or is not reimbursed by the Debtor for
amounts owing to such Lender under its cash management arrangements or other
lines of credit with the Debtor, the Agent, without notice to the Debtor, may
withdraw from the Collateral Accounts an amount sufficient to permit the Agent
or such Lender to discharge its obligations under the Letter of Credit or to
reimburse the Agent or such Lender for any amounts owing to it in respect of the
above-referenced cash management arrangements and other lines of credit, plus
that amount equal to any and all charges and expenses which such Lender may pay
or incur relative to such Letter of Credit, cash management arrangements or
lines of credit.
-5-
3.2 SPECIAL CONDITIONS APPLICABLE TO COLLATERAL ACCOUNTS
Notwithstanding any other provision herein or the terms of any other
agreement, whether express or implied, between the Debtor and the Agent,
including without limitation any operating account agreement relating to the
Collateral Accounts, as long as any Outstanding Obligations exist, the Debtor
has no right to withdraw any credit balance in any Collateral Account, to draw
cheques, bills of exchange or other instruments or other orders for the payment
of money against any Collateral Account, or otherwise deal with any credit
balance in any Collateral Account or any interest of the Debtor in any
Collateral Account, unless and to the extent that following any such withdrawal
the aggregate balance remaining in the Collateral Account is at least equal to
Cdn.$1,300,000, provided that the Agent may withdraw, credit balances from the
Collateral Accounts, and draw cheques, bills of exchange and other instruments
and other orders for the payment of money against the Collateral Accounts, in
accordance with section 3.1 hereof.
3.3 ACTUAL PRACTICES IRRELEVANT
The provisions of section 3.2 shall apply notwithstanding:
(a) the Agent's records and statements of account or other
documents prepared for the Debtor from time to time indicate
the existence of credit balances in any Collateral Account;
(b) the Agent from time to time may permit the Debtor to take any
of the actions described in clause 3.2; or
(c) any other statement, practice or evidence inconsistent with
section 3.2.
3.4 RESTRICTIONS ON DEALING WITH COLLATERAL
The Debtor shall not:
(a) sell, assign, transfer, exchange, or otherwise dispose of
the Collateral, except to the extent permitted by section 3.2;
or
(b) create, or suffer to exist any lien, security interest, charge
or mortgage upon the Collateral or any Collateral Account.
3.5 DELIVERY OF CERTIFICATES OF DEPOSIT TO AGENT
The Debtor shall deliver to the Agent and the Agent is authorized to
hold all certificates of deposit, whether or not negotiable, and Instruments
issued by the Agent evidencing the Collateral Accounts and the amounts deposited
to the credit of the Collateral Accounts.
3.6 FURTHER ASSURANCES
The Debtor shall at its own expense do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all such
further acts, powers of attorney and assurances (including instruments
supplemental or ancillary hereto) and such financing statements as the Agent may
from time to time reasonably request to better assure and perfect its security
on the Collateral.
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ARTICLE 4
SET-OFF AND OTHER REMEDIES
4.1 SET-OFF
The Agent shall be entitled as and when it thinks fit and without
prior notice to the Debtor to immediately set off, consolidate, appropriate and
apply all or any portion of the credit balances in the Collateral Accounts, any
other deposits held by or for the benefit of the Debtor with the Agent, and any
other indebtedness and liability of the Agent to the Debtor, in each case
whether matured or unmatured, against and in reduction of all or any part of
the Outstanding Obligations, all in such order of application as the Agent may
from time to time determine, and the Agent is hereby irrevocably authorized and
empowered to take all such action. The Agent agrees to promptly notify the
Debtor after any such set-off and application. The failure to give such notice
shall not, however, affect the validity of such set-off and application.
4.2 REMEDIES NOT EXCLUSIVE
All rights, powers and remedies of the Agent under this Agreement
may be exercised separately or in combination and shall be in addition to, and
not in substitution for, any other security now or hereafter held by the Agent
and any other rights, powers and remedies of the Agent however created or
arising. No single or partial exercise by the Agent of any of the rights, powers
and remedies under this Agreement or under any other security now or hereafter
held by the Agent shall preclude any other and further exercise of any other
right, power or remedy pursuant to this Agreement or any other security or at
law, in equity or otherwise. The Agent shall at all times have the right to
exercise any rights, powers or remedies under this Agreement and to proceed
against Collateral or any other security in such order and in such manner as it
shall determine without waiving any rights, powers or remedies which the Agent
may have with respect to this Agreement or any other security or at law, in
equity or otherwise. No delay or omission by the Agent in exercising any right,
power or remedy hereunder or otherwise shall operate as a waiver thereof or of
any other right, power or remedy.
4.3 DEBTOR LIABLE FOR DEFICIENCY
The Debtor shall remain liable to the Agent and the Lenders for any
deficiency after each set-off, consolidation, appropriation and application made
by the Agent pursuant to sections 3.1, 3.2, 4.1 or otherwise.
4.4 EXCLUSION OF LIABILITY OF AGENT
The Agent shall not be liable for any exercise or any failure to
exercise its rights, powers or remedies arising hereunder or otherwise, other
than as a result of its gross negligence or wilful misconduct.
4.5 CURRENCY CONVERSION
In the event that from time to time the Collateral Accounts are in a
currency (the "Deposit Currency") different from the currency (the "Obligations
Currency") of any of the Obligations, the Agent may convert the Collateral
Accounts into the Outstanding Obligations Currency and for the purposes of this
Agreement the rate of exchange between the currencies shall be the rate of
exchange in effect at the time of conversion at which the Agent would sell to
the Debtor the Obligations Currency for the Deposit Currency.
-7-
ARTICLE 5
GENERAL
5.1 ENTRIES TO RECORDS
The Agent is authorized and shall be entitled to make such debits,
credits, correcting entries, and other entries to the Collateral Accounts, the
Debtor's other accounts and the Agent's records relating to the Debtor as the
Agent, acting reasonably and in good faith, thinks fit in order to give effect
to this Agreement including without limitation the Agent's rights, powers and
remedies under sections 2.1, 3.1, 3.2 and 4.1, and the Debtor agrees to be bound
by such entries absent manifest error.
5.2 EXPENSES
The Debtor shall pay to the Agent on demand all of the Agent's
reasonable costs, charges and expenses (including, without limitation, legal
fees on a solicitor and his own client basis) in connection with the
preparation, registration or amendment of this Agreement, the perfection or
preservation of the Security Interest, the enforcement by any means of any of
the provisions hereof or the exercise of any rights, powers or remedies
hereunder, together with interest theron from the date each of such costs,
charges and expenses were incurred to the date of payment at the prime rate of
interest announced from time to time by the Agent, plus 2%.
5.3 DEALINGS WITH OTHERS
The Agent may grant extensions of time and other indulgences, take
and give up security, accept compositions, make settlements, grant releases and
discharges and otherwise deal with the Debtor, debtors of the Debtor, sureties
and other Persons and with Collateral and other security as the Agent sees fit,
acting reasonably and in good faith, without prejudice to the liability of the
Debtor to the Agent or the rights, powers and remedies of the Agent under this
Agreement.
5.4 NO OBLIGATION TO ADVANCE
Nothing herein contained shall in any way obligate the Agent or
the Lenders to advance any funds, or otherwise make or continue to make any
credit available, to the Debtor.
5.5 PERFECTION OF SECURITY
The Debtor authorizes the Agent to file such financing statements
and other documents and do such acts, matters and things as the Agent may
consider appropriate acting reasonably and in good faith to perfect and continue
the Security Interest, to protect and preserve the interest of the Agent in
Collateral and to realize upon the Security Interest.
5.6 COMMUNICATION
Any notice or other communication, including a demand or a
direction, required or permitted to be given hereunder shall be given in the
manner and to the addresses provided for in the Senior Credit Agreement.
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5.7 SUCCESSORS AND ASSIGNS
This Agreement shall be binding on the Debtor and its successors and
shall enure to the benefit of the Agent and its successors and assigns. This
Agreement shall be assignable by the Agent free of any set-off, counter-claim or
equities between the Debtor and the Agent, and the Debtor shall not assert
against an assignee of the Agent any claim or defense that the Debtor has
against the Agent. This Agreement shall not be assignable by the Debtor with the
prior written consent of the Agent.
5.8 COPY RECEIVED
The Debtor hereby acknowledges receipt of a copy of this Agreement
and a copy of the financing statement/verification statement registered under
the PPSA in respect of the Security Interest.
5.9 FACSIMILES
This Agreement may be executed in counterparts and may be executed
and delivered by facsimile and all such counterparts and facsimiles shall
together constitute one and the same agreement.
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IN WITNESS WHEREOF the Debtor has executed this Agreement.
MITEL NETWORKS CORPORATION
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
SCHEDULE "C"
ONTARIO - REGISTRATIONS UNDER THE PERSONAL PROPERTY SECURITY ACT (ONTARIO)
BASE REGISTRATION NO. NAME OF DEBTOR NAME OF SECURED PARTY
--------------------- ------------------------------------- ----------------------
872198055 Mitel Networks Corporation
Mitel Networks Corporation Corporation
Mitel Networks
Corporation Mitel Networks Mitel Networks
Corporation
Corporation Mitel Networks
SCHEDULE "D"
DELAWARE - UCC FINANCING STATEMENTS FILED WITH THE DELAWARE SECRETARY OF STATE
INITIAL FINANCING
STATEMENT FILE NO. NAME OF DEBTOR NAME OF SECURED PARTY
------------------- -------------------------------- ---------------------
2002009161 5 Mitel Networks, Inc. Bank of Montreal,
Corporate &
Investment Banking
2002009158 1 Mitel Networks Solutions, Inc. Bank of Montreal,
Corporate &
Investment Banking
VIRGINIA- UCC FINANCING STATEMENTS FILED WITH THE VIRGINIA STATE CORPORATION
COMMISSION
INITIAL FINANCING
STATEMENT FILE NO. NAME OF DEBTOR NAME OF SECURED PARTY
------------------- -------------------------------- ---------------------
010511 7065 Mitel Networks, Inc. Bank of Montreal
Corporate &
Investment Banking
010511 7066 Mitel Networks Solutions, Inc. Bank of Montreal
VIRGINIA - UCC FINANCING STATEMENTS FILED WITH THE FAIRFAX CLERK OF THE
COUNTY, VA
INITIAL FINANCING
STATEMENT FILE NO. NAME OF DEBTOR NAME OF SECURED PARTY
------------------ -------------------------------- ---------------------
01-005078 Mitel Networks, Inc, Bank of Montreal
01-005079 Mitel Networks Solutions, Inc. Bank of Montreal
ILLINOIS - UCC FINANCING STATEMENTS FILED WITH THE ILLINOIS SECRETARY OF STATE
INITIAL FINANCING
STATEMENT FILE NO. NAME OF DEBTOR NAME OF SECURED PARTY
------------------ -------------------------------- ---------------------
4384081FS Mitel Networks, Inc. Bank of Montreal
438408OFS Mitel Networks Solutions, Inc. Bank of Montreal
ILLINOIS - UCC FINANCING STATEMENTS FILED WITH THE XXXX COUNTY RECORDER, IL
INITIAL FINANCING
STATEMENT FILE NO. NAME OF DEBTOR NAME OF SECURED PARTY
------------------ ----------------------------- ---------------------
01U04417 Mitel Networks, Inc. Bank of Montreal
01U04416 Mitel Networks Solutions, Inc. Bank of Montreal
SCHEDULE "E"
REGISTRATION NO. REGISTRATION DATE REGISTRATION NAME BANK NAME
---------------- ----------------- ----------------- ---------------
01131793 2003/02/27 Mitel Networks Bank of Montreal
Corporation
APPENDIX A
CUSTOMER: MITEL NETWORKS CORPORATION
(A) PRODUCT: LETTERS OF CREDIT
OUTSTANDING BASE OUTSTANDING INSTRUMENT LIABILITY
PRODUCT INSTRUMENT ---------------------- ----------------------------------
PRODUCT TYPE ID CURR LIABILITY AMOUNT CURR LIABILITY BASE AMOUNT END DATE BENEFICIARY NAME
------- ------- ---------- ---- ----------------- ---- --------------------- ----------- -------------------
STANDBY LC OUTWARD BMT014630OS CAD 222,013.33 CAD 222,013.33 31 DEC 2005 SUN LIFE FINANCIAL
TRUST INC.
STANDBY LC OUTWARD BMTO14631OS CAD 242,061.04 CAD 242,061.04 31 DEC 2005 SUN LIFE FINANCIAL
TRUST INC.
STANDBY LC OUTWARD BMTO14634OS USD 120,000.00 CAD 145,200.00 23 JAN 2006 U.S. BANK NATIONAL
ASSOCIATION ND
STANDBY LC OUTWARD BMOT146620S CAD 235,000.00 CAD 235,000.00 11 MAR 2008 NATIONAL LEASING
GROUP INC.
STANDBY LC OUTWARD BMT060368OS USD 26,392 33 CAD 31,934.72 02 DEC 2005 ACE IN A INSURANCE
STANDBY LC OUTWARD BMTO97905OS USD 18,000.00 CAD 21,780.00 29 MAR 0000 XXXXX XX XXX XXXX
SUBTOTAL CAD 897,989.00
TOTAL CAD 897,989.00
(B) OTHER CASH MANAGEMENT ARRANGEMENTS (COPIES OF THE FOLLOWING
AGREEMENTS ARE ATTACHED):
(1) Cash Management Services Master Agreement
As supplements to the Cash Management Services Master Agreement:
(2) DirectLine Services Agreement;
(3) Wire Transfer Agreement;
(4) Verbal/Facsimile Message Agreement;
(5) DirectLine for Business Service Agreement;
(6) Electronic Funds Transfer Service Agreement; and
(7) ESQWIRE Service Agreement
EXECUTION COPY
EXHIBIT L
g
As of April 27, 2005
Highbridge International LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Dear Sirs and Mesdames:
RE: APPOINTMENT OF COLLATERAL AGENT
Reference is made to the Securities Purchase Agreement (the "SECURITIES PURCHASE
AGREEMENT"), dated as of April 27,2005, among Mitel Networks Corporation ("MNC")
and the Buyers parties thereto (the "BUYERS") including Highbridge International
LLC ("HIGHBRIDGE") (in its capacity as collateral agent, Highbridge is referred
to as "COLLATERAL AGENT"), with respect of the purchase of U.S. $55,000,000 of
senior secured convertible notes (the "NOTES") and certain Warrants by the
Buyers attached thereto. All capitalized but undefined terms used herein shall
have the meanings ascribed thereto in the Securities Purchase Agreement or the
Notes. The Buyers and each successor holder of Notes are referred to herein as
the "NOTEHOLDERS".
For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Noteholders, MNC and the Collateral Agent hereby agree
as follows:
1. APPOINTMENT AND AUTHORIZATION OF COLLATERAL AGENT. (a) Each Noteholder
hereby appoints and authorizes, and hereby agrees that it will require any
assignee or transferee of any of its Notes to appoint and authorize, the
Collateral Agent to enter into, execute and deliver the Security Documents
and to hold the Security Documents and act as Collateral Agent thereunder
for the benefit of the Collateral Agent and the Noteholders (the "SECURED
PARTIES") in accordance with the terms hereof and, subject to the terms
hereof, to take such actions as agent on its behalf and to exercise such
powers under this agreement and the Security Documents as are delegated to
the Collateral Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. (b) Neither the Collateral
Agent nor any of its members, directors, officers, employees,
representatives or agents (the "COLLATERAL INDEMNITEES") shall be liable
to the Noteholders or to MNC and its affiliates (the "OBLIGORS") for any
action taken or omitted to be taken by it or them under or in connection
with this agreement or the Security Documents, except for its own gross
negligence or wilful misconduct, and each Noteholder hereby acknowledges
that the Collateral Agent shall be entitled to the benefit of this
Agreement on its own behalf and as agent and trustee for its members,
directors, officers, employees, representatives and agents. (c) Any Person
who becomes a Noteholder, shall be deemed to have consented to and
confirmed the Collateral Agent as agent in such capacity, and to have
ratified, as of the date it becomes a Noteholder all actions taken by the
Collateral Agent in such capacity. Without limiting the generality of the
foregoing, the Collateral Agent may require any such Noteholder to execute
and
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deliver an assumption agreement with respect to this agreement in form and
substance acceptable to the Collateral Agent, acting reasonably, (d) The
Collateral Agent acknowledges that it holds the Liens created by the
Security Documents for the benefit of the Secured Parties in accordance
with the terms hereof.
2. SCOPE OF AGENCY. Each Noteholder acknowledges that the Collateral Agent is
acting as agent, on behalf of the Secured Parties solely for the purposes
of (i) holding the Liens constituted by the Security Documents and all
right, title, interest and benefits deriving from the Security Documents
and (ii) exercising all rights and recourses derived or resulting from the
Security Documents. Each Noteholder authorizes the Collateral Agent to
take such action as the Collateral Agent hereunder and under the Security
Documents and to exercise such powers hereunder and thereunder as the
requisite Holders may instruct or approve, in accordance with Section 6
hereof.
3. CONSULTATION WITH COUNSEL. The Collateral Agent may consult with legal
counsel selected by it as counsel for the Collateral Agent (which may also
be the counsel to the Noteholders) and may rely on and shall not be liable
for any action taken or not taken or suffered by it in good faith and in
accordance with the advice of such counsel. In addition, the Collateral
Agent may, for the execution of the duties and powers conferred upon it
hereunder and with the approval of the Required Holders, appoint or employ
a receiver, agents, accountants, engineers, appraisers or other Persons,
but the Collateral Agent shall not be responsible for any misconduct on
the part of any such Person appointed by it hereunder, and shall not be
bound to supervise the activities of any such Person.
4. DOCUMENTS. The Collateral Agent shall not be under any duty to the
Noteholders to examine, enquire into or pass upon the validity,
effectiveness or genuineness of or any instrument, document or
communication furnished pursuant to or in connection herewith or pursuant
to or in connection with any Security Document and the Collateral Agent
shall, be entitled to assume that the same are valid, effective and
genuine, have been signed or sent by the proper parties and are what they
purport to be.
5. RESPONSIBILITY OF COLLATERAL AGENT. The duties and obligations of the
Collateral Agent to the Noteholders hereunder and under the Security
Documents are only those expressly set forth herein. The Collateral Agent
shall not have any duty to the Noteholders to investigate an Event of
Default (as defined in the Notes). The Collateral Agent shall, as regards
the Noteholders, be entitled to assume that no Event of Default or
potential event of default has occurred and is continuing unless the
Collateral Agent has actual knowledge or has been notified by MNC in
writing of such fact or has been notified in writing by a Noteholder that
an Event of Default has occurred and is continuing, such notification to
specify in detail the nature thereof.
6. ACTION BY COLLATERAL AGENT.
(a) At any time after the earlier of the Noteholders' receipt of an
Event of Default Notice and the Noteholders becoming aware of an
Event of Default, and prior to 30 Trading Days after such Event of
Default is cured, holders of Notes representing at least 25% of the
aggregate principal amount of the Notes then outstanding (the
"REQUESTING NOTEHOLDERS") may request the Collateral Agent to
-3-
take steps to enforce the Liens constituted by the Security
Documents by delivering a written request to the Collateral
Agent (the "ENFORCEMENT REQUEST"). The Enforcement Request shall
indicate the specific enforcement steps the Requesting
Noteholders request the Collateral Agent to take.
(b) As soon as practicable after receipt of an Enforcement Request, the
Collateral Agent shall send a copy of such Enforcement Request to
each Noteholder in accordance with Sections 18 and 19 hereof. If the
Required Holders do not direct the Collateral Agent not to act upon
the Enforcement Request, by written notice received by the
Collateral Agent within 2 Business Days after receipt or deemed
receipt by the Noteholders (other than the Requesting Noteholders)
of a copy of the Enforcement Request pursuant to (a) above, the
Enforcement Request shall become effective, and subject to the terms
of this Agreement, the Collateral Agent shall take steps to enforce
the Liens constituted by the Security Documents in accordance with
the Enforcement Request.
(c) At any time after an Enforcement Request becomes effective, the
Requesting Holders may request the Collateral Agent to take further
enforcement steps by delivering a further Enforcement Request to the
Collateral Agent and the foregoing provisions shall apply equally to
such further Enforcement Request.
(d) Subject to the terms of this Agreement, the Collateral Agent shall
exercise or refrain from exercising any rights which may be vested
in it on behalf of the Secured Parties by and under this agreement
and the Security Documents and otherwise deal with the Security
Documents and any assets, rights or benefits thereunder in
accordance with, as applicable: (i) an effective Enforcement
Request; (ii) with respect to any matter not governed by an
effective Enforcement Request and not subject to (iii) below, the
written direction of the Required Holders or (iii) with respect to
the release of any guarantee or the release of the Liens constituted
by the Security Documents over all or substantially all of the
Collateral, the written direction of all of the Holders; provided
that the foregoing shall not restrict the Collateral Agent in its
capacity as a Noteholder. The Collateral Agent shall incur no
liability to the Noteholders hereunder or under or in respect of any
of the Security Documents with respect to anything which it may do
or refrain from doing (x) in the exercise of its judgment or which
may seem to it to be necessary or desirable in the circumstances,
except for its own gross negligence or wilful misconduct, or (y) in
reliance upon the requisite level of Noteholder approval as provided
in this Section 6.
(e) Notwithstanding any provisions of the Transaction Documents which
provide that the Collateral Agent must act reasonably, or any
provisions herein of similar import, the Collateral Agent shall not
be obliged to take any action without the requisite level of
Noteholder approval as determined by it in its sole discretion,
7. RESPONSIBILITY DISCLAIMED. The Collateral Agent shall be under no
liability or responsibility whatsoever as agent, to the Noteholders:
(a) as a consequence of any failure or delay in performance by, or any
breach by the Obligors of any of their respective obligations under
the Security Documents; or
-4-
(b) for any statements, representations or warranties in any Security
Document or in any other documents contemplated thereby or in any
other information provided pursuant to any Security Document or any
other documents contemplated thereby or for the validity,
effectiveness, enforceability or sufficiency of any Security
Document or any other document contemplated thereby.
8. INDEMNIFICATION. Each Noteholder agrees to defend, protect, indemnify and
hold harmless, the Collateral Indemnitees from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any nature whatsoever
(including, without limitation, reasonable attorneys fees and
disbursements on a solicitor-client basis) which may be imposed on,
incurred by or asserted against the Collateral Indemnitees, whether
groundless or otherwise, whether direct, indirect or consequential in any
way relating to or arising out of the Collateral Agent acting as
collateral agent, whether pursuant to this agreement or any of the
Security Documents or any other document contemplated hereby or thereby or
otherwise, or any action taken or omitted by the Collateral Indemnitees in
connection with the Collateral Agent acting as collateral agent, whether
under this agreement or under any of the Security Documents or any
document contemplated hereby or thereby or otherwise, other than those
resulting from the gross negligence or wilful misconduct of the applicable
Collateral Indemnitee. This Section 8 shall survive the termination of
this agreement or any Security Document and the resignation of the
Collateral Agent.
9. INDEMNIFICATION OF MNC. MNC agrees to defend, protect, indemnify and hold
harmless, the Collateral Indemnitees from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any nature whatsoever
(including, without limitation, reasonable attorneys fees and
disbursements on a solicitor-client basis) which may be imposed on,
incurred by or asserted against the Collateral Indemnitees, whether
groundless or otherwise, whether direct, indirect or consequential in any
way relating to or arising out of the Collateral Agent acting as
collateral agent, whether pursuant to this agreement or any of the
Security Documents or any other document contemplated hereby or thereby or
otherwise, or any action taken or omitted by the Collateral Indemnitees in
connection with the Collateral Agent acting as collateral agent, whether
under this agreement or under any of the Security Documents or any
document contemplated hereby or thereby or otherwise, other than those
resulting from the gross negligence or wilful misconduct of the applicable
Collateral Indemnitee. This Section 8 shall survive the termination of
this agreement or any Security Document and the resignation of the
Collateral Agent
10. RIGHTS OF COLLATERAL AGENT AS NOTEHOLDER. With respect to its Notes, the
Collateral Agent shall have the same rights and powers under this
agreement and the Transaction Documents as any other Noteholders, and it
may exercise such rights and powers as though it were not performing the
duties and functions delegated to it as Collateral Agent hereunder, and
the term "NOTEHOLDER" or any other similar term shall include the
Collateral Agent in its capacity as a Noteholder.
11. FIDUCIARY RELATIONSHIP. The Collateral Agent shall not have, by reason
hereof or any of the Security Documents, a fiduciary relationship in
respect of any Noteholder.
-5-
12. CREDIT DECISION. The Noteholders each represent and warrant to the
Collateral Agent that:
(a) in making its decision to enter into this agreement and the Security
Documents, it is independently taking whatever steps it considers
necessary to evaluate the financial condition and affairs of the
Obligors and that it has made an independent credit judgment without
reliance upon any information furnished by the Collateral Agent; and
(b) so long as this agreement is outstanding, it will continue to make
its own independent evaluation of the financial condition and
affairs of the Obligors.
13. SUCCESSOR COLLATERAL AGENT.
(a) The Collateral Agent may resign at any time by giving 30 days
written notice thereof to the Noteholders and MNC or may be removed
for cause by written notice from the Required Holders to the
Collateral Agent and MNC. Upon any such resignation or removal, the
Required Holders shall have the right to appoint a successor
Collateral Agent. All fees, costs and expenses associated with such
appointee shall be borne by MNC. In any event, the Collateral
Agent's resignation shall nevertheless be effective 60 days after
notice of resignation has been given as provided above. Upon the
Collateral Agent's resignation in accordance with this agreement,
the retiring Collateral Agent shall be discharged from its duties
and obligations hereunder and under the Security Documents.
(b) Upon the acceptance of any appointment as Collateral Agent hereunder
by a successor Collateral Agent pursuant to Section 13(a) such
successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and
obligations of the retiring Collateral Agent. After any retiring
Collateral Agent's resignation or removal hereunder as the
Collateral Agent, the provisions of this agreement shall continue in
effect in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent.
(c) If at any time Highbridge give notice in writing to MNC stating that
it wishes to be replaced as Collateral Agent, then MNC shall, within
30 days of receipt of such notice, appoint a trust company or other
entity acceptable to Highbridge to replace Highbridge as Collateral
Agent, and shall pay the costs and expenses of Highbridge and the
replacement Collateral Agent as well as the fees of the replacement
Collateral Agent in connection with such replacement and the ongoing
services of the replacement Collateral Agent.
14. AUTHORITY OF EACH NOTEHOLDER. Each Noteholder represents and warrants to
the Collateral Agent that, it has the authority to enter into this
agreement.
15. MERGER, CONSOLIDATION, AMALGAMATION. Any company with which the Collateral
Agent may be merged, consolidated or amalgamated will become the successor
Collateral Agent hereunder without any further action on the part of the
Collateral Agent.
-6-
16. DELEGATION BY COLLATERAL AGENT. The Collateral Agent shall have the right
to delegate any of its duties or obligations hereunder as Collateral Agent
to any Person so long as the Collateral Agent shall not thereby be
relieved of such duties or obligations, except as provided in Section 3.
17. RIGHT TO DISCLOSE. The Collateral Agent shall have the right to disclose
to any governmental authority information disclosed or released to it
pursuant to or in connection with this agreement if, in the reasonable
opinion of the Collateral Agent, the Collateral Agent is required to
disclose such information to such governmental authority having
jurisdiction over the Collateral Agent in order to comply with applicable
laws.
18. REGISTER OF HOLDERS. In accordance with Section 5 of the Securities
Purchase Agreement, MNC shall maintain a register of Noteholders and shall
provide a duplicate copy thereof to the Collateral Agent. The Collateral
Agent shall be entitled to rely conclusively on such duplicate register of
Noteholders in determining who the Noteholders are from time to time, for
all purposes of this agreement and the Security Documents.
19. NOTICES, ETC. Any notice, direction or other communication required or
permitted to be given under this agreement shall be made in accordance
with the notice section of the Securities Purchase Agreement provided that
the addresses and facsimile numbers for such communications to Noteholders
shall be as set out in the duplicate register referred to in Section 18.
20. DETERMINATION BY COLLATERAL AGENT CONCLUSIVE AND BINDING. Any
determination to be made by the Collateral Agent under this agreement or
any Security Document shall be made by the Collateral Agent in good faith
and, if so made, shall be binding on all parties hereto, absent manifest
error.
21. ENTERING INTO CONTRACTS. The Collateral Agent may also enter into any
Security Document as agent, for and on behalf of any Noteholder thereunder
whether entered into prior, or subsequent, to the execution and delivery
of this agreement.
22. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning the
construction, validity, enforcement and interpretation of this agreement
shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New
York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this agreement and
agrees that such service shall constitute good and sufficient service of
-7-
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
23. LIMITS OF COLLATERAL AGENT'S OBLIGATIONS. Notwithstanding any provision of
this agreement or any of the Security Documents to the contrary, the
Collateral Agent shall not be obligated to follow any instruction from any
instructing party hereunder if the Collateral Agent believes in good faith
that such instruction is unlawful or could reasonably be expected to
expose the Collateral Agent to any expense or liability in respect of
which it has not been provided with indemnification, which may include
posting of cash collateral, acceptable to the Collateral Agent in its sole
discretion.
24. APPLICATION OF PROCEEDS. The Collateral Agent shall apply the proceeds of
any collateral under the Security Documents in the manner specified in
Section 15 of the U.S. Guaranty and Security Agreement dated the date
hereof executed by Mitel Networks, Inc.
25. EXPENSES. MNC agrees to pay on demand all reasonable costs and expenses
incurred by the Collateral Agent in acting in such capacity other than
with respect to the preparation of the Transaction Documents which costs
are provided for in Section 4(e)(i) of the Securities Purchase Agreement.
Please indicate your agreement with the foregoing terms and conditions by
countersigning this letter in the space provided below.
HIGHBRIDGE INTERNATIONAL LLC
Address;
Highbridge International LLC BY: HIGHBRIDGE CAPITAL
c/o Highbridge Capital Management, LLC MANAGEMENT, LLC, AS COLLATERAL AGENT
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 By: _______________________________
USA Name: Xxxx X. Chill
Title:
Attention: Xxxx X. Chill
Facsimile: (000)000-0000
HIGHBRIDGE INTERNATIONAL LLC
Address:
Highbridge International LLC BY: HLGHBRIDGE CAPITAL
c/o Highbridge Capital Management, LLC MANAGEMENT,LLC, AS A NOTEHOLDER
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 By: _______________________________
USA Name: Xxxx X. Chill
Title:
Attention: Xxxx X. Chill
Facsimile: (000)000-0000
Address: MITEL NETWORKS CORPORATION
Mitel Networks Corporation
000 Xxxxxx Xxxxx By: _______________________________
Xxxxxx, Xxxxxxx X0X 0X0 Authorized Signing Officer
Canada
Attention: Treasurer
Facsimile: (000)000-0000
Address: LAKESHORE INTERNATIONAL, LTD.
Lakeshore International, Ltd.
000 Xxxxxxx Xxxxxxx, Xxxxx 000 By: _______________________________
Xxxxxxxxxx, XX 00000 Name:
USA Title:
Attention:
Facsimile:
MARATHON SPECIAL OPPORTUNITY
Address: MASTER FUND, LTD.
Marathon Special Opportunity Master
Fund, Ltd. By: _____________________________
Name:
Title:
Attention:
Facsimile:
FORE MASTER CONVERTIBLE FUND,
Address: LTD.
Fore Master Convertible Fund, Ltd.
Marc Hershoran By: ____________________________
000 Xxxx Xxxxxx Name:
Xxx Xxxx, XX 00000 Title:
USA
Attention:
Facsimile:
SCHEDULE 3(a)
ORGANIZATION AND QUALIFICATION
SUBSIDIARIES
The full corporate name, jurisdiction of incorporation and registered and
beneficial ownership of the issued and outstanding shares of each direct and
indirect Subsidiary is as follows:
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP OF SECURITIES
-------------------- ------------------ ----------------------------------------
Mitel Networks Limited United Kingdom Wholly-owned by Mitel Networks
Holdings Limited (73,816,467 common
shares), which is in turn wholly-owned
by the Company
Mitel Networks, Inc. Delaware Wholly owned by Mitel Networks
Limited (118 common shares), which is
in turn wholly-owned by Mitel Networks
Holdings Limited, which is in turn
wholly-owned by the Company
Mitel Networks Holdings United Kingdom Wholly-owned by the Company
Limited (31,746,012 ordinary shares)
Mitel Networks Asia Hong Kong Wholly-owned by the Company
Pacific Limited (3,556,659 ordinary shares)
Mitel Networks Barbados Wholly-owned by the Company (1,000
International Limited common shares)
Mitel Networks Overseas Barbados Wholly-owned by the Company
Limited (259,859,275 common shares and
31,457,599 preference shares)
Mitel Networks SARL France Wholly-owned by Mitel Networks
Limited (7,500 parts), which is in turn
wholly-owned by Mitel Networks
Holdings Limited, which is in turn
wholly-owned by the Company
Mitel Networks Italia SRL Italy Wholly-owned by Mitel Networks
Limited (1 common share), which is in
turn wholly-owned by Mitel Networks
Holdings Limited, which is in turn
wholly-owned by the Company
Mitel Networks GmbH Germany Wholly-owned by Mitel Networks
Limited (a share capital of Euro 25,000)
which is in turn wholly-owned by Mitel
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP OF SECURITIES
-------------------- --------------- -------------------------------------------
Networks Holdings Limited, which is in
turn wholly-owned by the Company
Mitel Telecom Limited United Kingdom Wholly-owned by Mitel Networks
Limited (2 ordinary shares), which is in
turn wholly-owned by Mitel Networks
Holdings Limited, which is in turn
wholly-owned by the Company
Edict Training Limited Scotland 20% owned by Xxxx Xxxx; 80% owned by
Mitel Networks Limited (8,000 ordinary
shares), which is in turn wholly-owned
by Mitel Networks Holdings Limited,
which is in turn wholly-owned by the Company
Mitel Financial Services United Kingdom 25% owned by First Asset Finance PLC;
Limited 75% owned by Mitel Networks Limited
(75A ordinary shares), which is in turn
wholly-owned by Mitel Networks Holdings Limited,
which is in turn wholly-owned by the Company
PARTNERSHIPS, JOINT VENTURES, ETC.
The Company or its Subsidiaries are a partner or participant in the
following partnerships or joint ventures, or own or have agreed to acquire
securities in the following businesses or Persons:
NAME OF JOINT VENTURE JURISDICTION OWNERSHIP OF SECURITIES
------------------------ ------------ -----------------------------
Tianchi Mitel China 50 % owned by the Company
Telecommunications Corp
- 25% owned by Tricom
Tianchi Limited
- 21.25% owned by Tianjin
Zhonghuan Electronic
Computer Company
- 3.125% owned by Tianjin
Economic Technological
Development Area Industrial
Investment Company
- 0.625% owned by Trianjin
Post and Telecommunications
Administration of China
- Certain corporate filings for Mitel Networks Limited, namely, annual
audited financial statements for the fiscal year ended April 25, 2004, which
were due February 2005 have not yet been filed with the UK Companies House. The
Company expects to complete and to undertake such filings, on behalf of Mitel
Networks Limited, in the first quarter of the Company's next fiscal year (FY06).
As a result of having not completed such corporate filings, Mitel Networks
Limited may not be in good standing under the laws of its jurisdiction.
- The Company is not a partner in a partnership.
SCHEDULE 3(s)
EQUITY CAPITALIZATION
STOCKHOLDER RIGHTS AND RESTRICTIONS (INTER ALIA, PRICE PROTECTION, TRANSFER,
PREEMPTIVE, CONVERSION, REDEMPTION, PUT, AND ANTI-DILUTION RIGHTS)
- The Company has obtained (at its request) an order under the Canadian
Business Corporations Act, as amended (CBCA), dated December 21, 2004 (the
"Order"), under which the Company is determined not to be a distributing
corporation (as defined in CBCA regulations). A copy of the Order is attached to
this Schedule 3(s) as APPENDIX "A".
- Pursuant to an arrangement between the Corporation and Osler, Xxxxxx &
Harcourt LLP ("OHH") in respect of the provision of legal services to the
Company, (a) the Company may issue Common Shares to OHH in partial satisfaction
of outstanding accounts with that firm, up to 25% of the value of each eligible
invoice capped at a dollar amount of $200,000 per year, and (b) certain "price
protection" rights have been granted to OHH such that OHH will be issued
additional Common Shares if the Company subsequently issues Common Shares (or
grants options) at a lower price.
- Under the terms of the Shareholders' Agreement, Zarlink and PTIC have
the right to require the Company to purchase their common shares and Series B
Shares, respectively, if Mitel Networks fails to complete an IPO before
September 1, 2006. Upon the exercise of this right by Zarlink or PTIC,
Edgestone, the holder of Series A Shares also has the right to require the
Company to purchase its Series A shares. See also the 2004 Company 20-F.
WARRANTS
- Warrants to acquire 26,849,911 Common Shares (as at April 19, 2005) have
been granted by the Company to the Government of Canada pursuant to the
Integrated Communications Solutions R&D Project Agreement dated October 10,
2002, between the Company, March Networks Corporation and the Government of
Canada (the "TPC Agreement"). The warrants are exercisable on a one-for-one
basis for Common Shares of the Company for no additional consideration. The TPC
Agreement and warrant rights are further described in and attached as an exhibit
to the 2004 Company 20-F.
- In favour of CIBC World Markets Inc., warrants to purchase a total of
1,000,000 common shares of the Company at an exercise price of CDN$1.00, as set
forth in the Warrant Certificate attached as APPENDIX "B" to this Schedule 3(s).
- A list of the record holders of warrants exercisable for shares of
capital stock of the Company and its Subsidiaries, as at April 18, 2005, is
attached as APPENDIX "C" to this Schedule 3(s).
OPTIONS
- The Mitel Networks Corporation Employee Stock Option Plan (the "ESOP")
is attached as APPENDIX "D" to this Schedule 3(s) and is described in the 2004
Company 20-F.
- An aggregate of 25,000,000 Common Shares have been reserved for issuance
under the ESOP. As of the date hereof, options to purchase an aggregate of
18,504,755 Common Shares of the Company have been granted and are outstanding
under the ESOP.
- A list of the record holders of options exercisable for shares of
capital stock of the Company and its Subsidiaries, as at April 18, 2005, is
attached as APPENDIX "E" to this Schedule 3(s).
OTHER PLANS
- Effective May 14, 2001, the Corporation entered into the Mitel Networks
Corporation U.S. Employee Stock Purchase Plan which plan provided a means for
employees of Mitel Networks Inc. and Mitel Networks Solutions, Inc. to purchase
common shares in the Corporation for a period of one (1) year from the effective
date and in accordance with the terms provided therein. Although the plan is no
longer active for the issuance of shares, shares remain issued and outstanding
under the agreement.
- The Company and Sun Life Financial Trust Inc. (the "Trustee") are party
to the Mitel Networks Corporation Executive Pension Program Trust Agreement (the
"Trust Agreement") dated February 17, 2001, a copy of which is attached to this
Schedule 3(s) as APPENDIX "F". The Company has agreed to pay certain
supplemental retirement benefits ("supplemental benefits") to certain of its
executive employees under a Supplementary Executive Retirement Program ("SERP").
Two Company executives, Xxxx Xxxxxxx and Xxxx Xxxxxxxxx (the "Executives"), are
(the only) participants under the SERP. Each of the Executives and the Company
are party to a Supplemental Executive Retirement Plan (SERP) Agreement (the
"SERP Agreement"), each dated February 17, 2001. The supplemental benefits have
been calculated, in part, by the Company through notional contributions and
notional Credits/Debits to one or more notional investment accounts (in the
aggregate known as a notional account) on behalf of each Executive. The
Company's obligations under each of the SERP Agreements are secured by one-year
standby Letters of Credit. The Executive's notional account is administered by
and is held in trust with the Trustee (the "Trust") under the terms of the Trust
Agreement. As at June 30, 2004, the value of each executive's notional account
was: (a) Xxxx Xxxxxxx - CDN$242,061.00; and (b) Xxxx Xxxxxxxxxx - CDN$222,013.00
(collectively, the "SERP Liability"). The Company intends to wind-up the SERP,
and terminate the Trust Agreement and all outstanding SERP Agreements. In place
of the SERP, the Company has established a Deferred Stock Unit Plan (the "DSUP")
for the benefit of key
employees of the Corporation, including the Executives ("DSUP Participants").
Upon executing a Deferred Share Unit Agreement in favour of and on terms
satisfactory to the Company (the "DSU Agreement"), DSUP Participants will be
eligible to receive Deferred Share Units ("DSUs") from the Company. Each DSU is
equal to the value of a common share of the Company, as determined by the
Company's Compensation Committee and in accordance with and subject to the terms
of the DSUP. A copy of the DSUP is attached to this Schedule 3(s) as APPENDIX
"G".
OTHER REDEMPTION OBLIGATIONS, SHAREHOLDER AGREEMENTS OR REGISTRATION RIGHTS
AGREEMENTS
- Pursuant to Section 5.5 of the Corporation's "Stock Option
Administration Policy and Procedure", the Company has made it a practice to
reinstate stock options for those employees terminated involuntarily and rehired
within six months.
- As a general practice, the Company accepts share subscriptions from
certain employees for the purchase of Common Shares, and agrees to advance
interest free loans to such employees to purchase such Common Shares. The
Company has made it a practice, although it is not an obligation, to forgive
loans for employees who are terminated involuntarily, In such instances, the
Company redeems the shares not yet paid for.
- There is a Registration Rights Agreement dated April 23, 2004. This is
described more fully in the 2004 Company 20-F.
INDEBTEDNESS IN EXCESS OF US$250,000 INDIVIDUALLY AND US$2,000,000 IN THE
AGGREGATE
See Schedule 3(t) Part 2 to this Disclosure Letter.
SHAREHOLDERS OF RECORD
- For the Company, see APPENDIX "H" to this Schedule 3(s).
- For each of the Company's Subsidiaries, see Schedule 3(a) to this
Disclosure Letter.
EXECUTION COPY
SCHEDULE 3(s) APPENDIX A - CBCA EXEMPTION
SEE ATTACHED
[LOGO] Industry Canada Industrie Canada
Corporations Canada Corporations Canada
0xx Xxxxx 0xx Xxxxx
Xxxx Xxxxxxx Xxxxxx X. Tour Xxxx Xxxxxxx sud
000 Xxxxxxx Xxxxxx West 000, xxxxxx Xxxxxxx x
Xxxxxx, Xxxxxxx X0X OCB Ottawa (Ontario) K1A OCB
December 21, 2004
Xxxxxxx Xxxxxxx
Osler, Xxxxxx & Xxxxxxxx XXX
Xxxxx 0000
00 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Dear Ms, Xxxxxxx:
RE: APPLICATION FOR EXEMPTION
MITEL NETWORKS CORPORATION
CORPORATION MITEL NETWORKS
Further to your letter of November 12, 2004, attached
application and subsequent correspondence, please find
enclosed exemptions No. A-004/04 granted to the above
referenced corporation pursuant to subsection 2(6) of the
Canada Business Corporations Act.
Trusting this to be to your satisfaction. I remain,
Yours truly,
/s/ Xxxxxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxxxxx Xxxxxxx
Arrangements and Exemptions Section
Compliance and Policy Directorate
Corporations Canada
t (000) 000-0000
f.(000) 000-0000
Encl. A-004/04
[CANADA LOGO]
[LOGO] Industry Canada Industrie Canada
Canada Business Loi canadienne sur les
Corporations Act societes par actions
Decision No. A-004/04
File No. 3854604
IN THE MATTER CONCERNING THE DIRECTOR APPOINTED UNDER
THE CANADA BUSINESS CORPORATIONS ACT
AND
THE APPLICATION OF
MITEL NETWORKS CORPORATION
CORPORATION MITEL NETWORKS
(hereinafter called the "Corporation")
FOR THE ISSUING OF AN EXEMPTION UNDER SUBSECTION 2(6)
EXEMPTION
UPON APPLICATION OF the Corporation under subsection 2(6) of the
Canada Business Corporations Act (the "Act"), for a determination that the
corporation is not and was not at any time a distributing corporation,
AND UPON reading the application documents and being satisfied that
the determination would not be prejudicial to the public interest,
IT IS HEREBY DETERMINED that MITEL NETWORKS CORPORATION /
CORPORATION MITEL NETWORKS is not and was not a distributing corporation.
THIS DETERMINATION Is made subject to the following terms:
1. It ceases to have further effect if, after the date the
exemption is granted.
(a) the Corporation becomes a "reporting issuer" under any
legislation that is set out in column 2 of an item of Schedule
1 to the Canada Business Corporations Regulations, 2001;
(b) the Corporation has filed a prospectus or registration
statement under provincial legislation or under the laws of a
jurisdiction outside Canada (other than a registration
statement under the United States Securities Exchange Act of
1934 which is not in connection with an offering of the
Corporation's securities to the public);
(c) any of the securities of the Corporation are listed and
posted for trading on a stock exchange in or outside Canada;
or
(d) the Corporation is involved in, formed for, results from
or is continued after an amalgamation, a reorganization, an
arrangement or a statutory procedure, if one of the
participating bodies corporate is a corporation to which
paragraph (b) or (c) above applies.
2. Notwithstanding that Corporation is not a distributing
corporation, the Corporation shall have an auditor and an
audit committee under s. 163 and s.171.
[CANADA LOGO]
-2-
3. This determination shall cease to have effect if,at any time
after the date the exemption is granted, the Corporation
provides written notice to the Director appointed under the
Act that the Corporation desires the determination to cease to
have effect.
DATED, this 21st day of December, 2004
/s/ Xxxxxx Xxxxxx
----------------------
Xxxxxx Xxxxxx
Deputy Director
EXECUTION COPY
SCHEDULE 3(s)- APPENDIX B - CIBC WARRANT
SEE ATTACHED
Filed on May 9, 2006 as an exhibit to the Form F-1 of the Registrant, dated May
9, 2006, and incorporated herein by reference.
SCHEDULE 3(S) APPENDIX C
MITEL NETWORKS CORPORATION
WARRANTS
Date of Certificate Shares Subject Price Per Expiry
Registered Name Issue No. to Warrant Share Date
---------------------------------------- --------- ------------ -------------- ---------- ---------
Her Majesty the Queen in Right of Canada 10/16/02 1 4,634,522 $ 2.75 $ 12,744,935.50
Her Majesty the Queen in Right of Canada 10/25/02 2 1,548,066 $ 2.75 $ 4,257,181.50
Her Majesty the Queen in Right of Canada 09/30/03 3 6,804,380 $ 2.00 $ 13,608,760.00
Her Majesty the Queen in Right of Canada 09/30/04 4 13,862,943 $ 1.00 $ 13,862,943.00
-------------
26,849,911
-------------
CIBC World Markets Inc. 04/29/04 1,000,000 $ 1.00 28-Apr-09 $ 1,000,000.00
-------------
EdgeStone Capital Equity Fund II Nominee, 04/23/04 Series 1 5,000,000 $ 1.25 23-Apr-11 $ 6,250,000.00
-------------
EdgeStone Capital Equity Fund II-A, L.P. Series 2 tbd $ 0.00
-------------
32,849,911
=============
SCHEDULE 3(S) APPENDIX D
[MITEL LOGO]
MITEL NETWORKS CORPORATION
EMPLOYEE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of the Mitel Networks Corporation Employee Stock Option Plan is to
develop the interest of and provide an incentive to eligible employees,
directors, officers and consultants of Mitel Networks Corporation (the
"Corporation"), any Subsidiary and any Affiliate (each as defined below), in the
Corporation's growth and development by granting options to purchase Common
Shares to eligible employees, directors, officers and consultants, thereby
advancing the interests of the Corporation and its shareholders.
2. DEFINITIONS
In this Plan:
a) "AFFILIATE" has the meaning assigned by the Ontario Securities Act.
b) "ASSOCIATE" has the meaning assigned by the Ontario Securities Act.
c) "BOARD OF DIRECTORS" means the Board of Directors of the
Corporation.
d) "CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
e) "COMMITTEE" means:
i) with respect to Participants, the Employee Compensation
Committee appointed by the Board of Directors to administer
the Plan and the Board of Directors if no Employee
Compensation Committee has been appointed; and
ii) with respect to Director Participants, the Board of Directors.
After the Corporation's Initial Public Offering, the Plan shall be
administered by the Employee Compensation Committee and if the
Corporation thereafter becomes subject to the requirements of
section 162(m) of the Code, the composition of the Committee shall
satisfy the requirements of section 162(m) of the Code and the
accompanying United States Treasury Department Regulations.
f) "COMMON SHARES" means the common shares of the Corporation, or in
the event of an adjustment contemplated by Section 18, such other
securities to which a Participant or a Director Participant may be
entitled upon the exercise of an Option as a result of such an
adjustment.
g) "CONSULTANT" means an individual, other than an employee, that is
engaged to provide consulting, technical, management or other
services to the Corporation, a Subsidiary or an Affiliate under a
written contract between the Corporation, the Subsidiary or the
Affiliate and either the individual or a Consultant Company, if the
individual spends or will spend a significant amount of time and
attention on the affairs and business of the Corporation, the
Subsidiary or the Affiliate, provided, however, that a Consultant
shall exclude an individual who performs services in connection with
the offer and sale of securities in a capital raising transaction or
services that directly or indirectly promote or maintain a market
for the Corporation's securities.
h) "CONSULTANT COMPANY" means, with respect to an individual
Consultant, either (i) a company of which the Consultant is an
employee or shareholder; or (ii) a partnership of which the
Consultant is an employee or partner.
i) "CORPORATIONS ACT" means the Canada Business Corporations Act, as
amended, and the regulations promulgated thereunder.
j) "DATE OF GRANT" means, for any Option, the date specified by the
Committee at the time it grants the Option, (provided, however, that
such date shall not be prior to the date the Committee acts to grant
the Option) or, if no such date is specified, the date upon which
the Option was granted.
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
k) "DIRECTOR PARTICIPANT" means a member of the Board of Directors of
the Corporation who is not an employee of the Corporation.
l) "DISABILITY" means permanent and total disability as determined
under procedures established by the Committee for the purposes of
the Plan.
m) "EXERCISE DATE" means the date the Secretary of the Corporation
receives from a Participant or a Director Participant a completed
Notice of Exercise form with payment for the Option Shares being
purchased.
n) "EXERCISE PERIOD" means, with respect to any Option, the period
during which a Participant or a Director Participant may purchase
Option Shares pursuant to such Option.
o) "INITIAL PUBLIC OFFERING" means the earlier of (i) listing and
posting for trading of the Common Shares on any stock exchange in
Canada or such other event by which the Corporation becomes a
"reporting issuer" within the meaning of the Ontario Securities Act
and (ii) initial registration of the Common Shares under the 1933
Act.
p) "INSIDER" means: (i) an insider of the Corporation as defined in the
Ontario Securities Act, other than a person who falls within that
definition solely by virtue of being a director or senior officer of
a subsidiary, or an "affiliate" of the Corporation as defined in the
1934 Act; and (ii) an Associate of any person who is an Insider by
virtue of this subsection.
q) "OPTION" means a non-assignable and non-transferable option to
purchase Option Shares granted by the Committee pursuant to the
Plan.
r) "OPTIONEE" means a Participant or a Director Participant who has
been granted one or more Options.
s) "OPTION SHARES" means Common Shares which are subject to purchase
upon the exercise of outstanding Options.
t) "OUTSTANDING ISSUE" means, at any time, the number of Common Shares
that are outstanding immediately prior to any issuance of Option
Shares, excluding Option Shares issued pursuant to this Plan as well
as Common Shares issued pursuant to all other Share Compensation
Arrangements during the preceding one year period.
u) "PARTICIPANT" means an employee or officer of the Corporation, any
Subsidiary or any Affiliate, a director (other than a Director
Participant) of any Subsidiary or any Affiliate, and a Consultant or
a Consultant Company.
v) "PLAN" means the Mitel Networks Corporation Employee Stock Option
Plan as set out herein and as amended from time to time in
accordance with the provisions hereof.
w) "QUEBEC PARTICIPANTS" has the meaning ascribed to it in Clause 6
hereof.
x) "RELATED PERSON" means a director or senior officer of the
Corporation or an Associate of a director or senior officer of the
Corporation.
y) "RETIREMENT" means retirement from active employment with the
Corporation, a Subsidiary or an Affiliate at or after age 65, or
with the consent for purposes of the Plan of such officer of the
Corporation as may be designated by the Committee, at or after such
earlier age and upon the completion of such years of service as the
Committee may specify.
z) "SHARE COMPENSATION ARRANGEMENT" means a stock option, stock option
plan, employee stock purchase plan or any other compensation or
incentive mechanism involving the issuance or potential issuance of
Common Shares of the Corporation to one or more service providers,
including a share purchase from treasury which is financially
assisted by the Corporation by way of a loan, guaranty of otherwise.
aa) "STANDING COMMITTEE" means any sub-committee of the Board of
Directors, established by the Board of Directors from time to time
and shall include the Audit Committee and the Employee Compensation
Committee.
bb) "SUBSIDIARY" means any corporation in which the Corporation,
directly or through one or more corporations which are themselves
Subsidiaries of the Corporation, owns 50% or more of the shares
eligible to vote at meetings of the shareholders.
cc) "1933 ACT" means the United States Securities Act of 1933, as
amended from time to time.
3. ELIGIBILITY
All Participants and Director Participants shall be eligible to participate in
the Plan. Eligibility to participate shall not confer upon any Participant or
Director Participant any right to be granted one or more Options pursuant to the
Plan. The extent to which any Participant or Director Participant shall be
entitled to be
2
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
granted Options pursuant to the Plan shall be determined in the sole and
absolute discretion of the Committee.
4. NUMBER OF OPTION SHARES AVAILABLE FOR GRANTS
The aggregate number of Common Shares that may be issued pursuant to the
exercise of Options shall not exceed 25,000,000 Common Shares, subject to
adjustment pursuant to Section 18. No Option may be granted by the Committee
that would have the effect of causing the total number of Common Shares subject
to Options to exceed the total number of Common Shares reserved for issuance
pursuant to the exercise of Options.
Upon the expiration, surrender, cancellation or termination, in whole or in
part, of an unexercised Option, the Option Shares subject to such Option shall
again become available for grant under this Plan.
In addition,
a) the aggregate number of Common Shares reserved for issuance to
Insiders under the Plan shall not exceed 50% of the aggregate number
of Common Shares that may be issued pursuant to the exercise of
Options;
b) the number of Common Shares reserved for issuance pursuant to the
exercise of Options hereunder, together with the number of Common
Shares reserved for issuance pursuant to the exercise of options
under all of the Corporation's other previously established or
proposed Share Compensation Arrangements (excluding Common Shares
reserved for issuance under any stock purchase plan), shall not
exceed 25% of the Outstanding Issue and no Common Shares shall be
issued upon the exercise of an Option which, together with issuances
of Common Shares under all of the Corporation's other previously
established or proposed Share Compensation Arrangements, results in
the issuance of greater than 25% of the Outstanding Issue within a
one-year period;
c) the number of Common Shares reserved for issuance pursuant to
Options granted to Insiders or Related Persons, together with the
number of Common Shares reserved for issuance to Insiders or Related
Persons pursuant to all of the Corporation's other previously
established or proposed Share Compensation Arrangements, shall not
exceed 10% of the Outstanding Issue;
d) the number of Common Shares issued to Insiders or Related Persons
within a one year period, pursuant to the Plan and all of the
Corporation's other previously established or proposed Share
Compensation Arrangements, shall not exceed 10% of the Outstanding
Issue;
e) the number of Common Shares issued to any one Insider or Related
Person and the Associates of any such Insider or Related Person
within a one year period, pursuant to the Plan and all of the
Corporation's other previously established or proposed Share
Compensation Arrangements, shall not exceed 5% of the Outstanding
Issue; and
f) the number of Common Shares reserved for issuance pursuant to
Options granted to any one Insider or Related Person and the
Associates of any such Insider or Related Person, together with the
number of Common Shares reserved for issuance pursuant to options or
purchase rights granted to any one Insider or Related Person and the
Associates of any such Insider or Related Person pursuant to all of
the Corporation's other previously established or proposed Share
Compensation Arrangements, shall not exceed 5% of the Outstanding
Issue.
5. GRANTING OF OPTIONS
The Committee may from time to time grant Options to Participants to purchase a
specified number of Option Shares at a specified exercise price per Option
Share. The number of Options to purchase Option Shares to be granted, the Date
of Grant, and such other terms and conditions of the Option shall be as
determined by the Committee.
The Board of Directors shall grant Options to Director Participants at their
discretion.
6. EXERCISE PRICE
Prior to the Initial Public Offering, if the Common Shares are not listed on a
securities exchange, the exercise price per Option Share purchasable under an
Option shall be determined by the Board of Directors but in any event shall not
be lower than the fair market value of a Common Share on the Date of
3
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
Grant. For the purposes of this Clause 6, fair market value shall be determined
in accordance with a documented valuation methodology consistently applied that
would take into account equity transactions that were completed in the last
twelve months prior thereto, valuations of peer companies in the industry and
other industry-specific or company-specific events that would impact on the
value of the common shares of the Company; except that, in the case of Options
to be granted to Participants who are resident in the Province of Quebec
("Quebec Participants"), if the exercise price per Option Share established by
the Board of Directors is less than the price per Common Share of the last arm's
length Common Share transaction during the previous twelve (12) month period,
the Corporation shall obtain shareholder approval in respect of such Options to
be granted to Quebec Participants and if such grants have already been made
without shareholder approval, then the Corporation shall obtain ratification of
the shareholders at the very next meeting of shareholders.
After the Initial Public Offering, the exercise price per Option Share
purchasable under an Option shall be no less than (a) the average of the daily
high and low board lot trading price of the Common Shares for the five (5)
trading days preceding the Date of Grant, rounded to the next highest cent, if
the Common Shares are listed on a securities exchange in Canada, (b) the average
of the daily high and low sales price of the Common Shares reported in the
consolidated reporting system in the United States for the five (5) trading days
preceding the Date of Grant, rounded to the next highest cent, if the Common
Shares are not listed on a securities exchange in Canada, or (c) the fair market
value of a Common Share on the Date of Grant, as reasonably determined by the
Committee, if the sales price of the Common Shares is not reported in the
consolidated reporting system in the United States.
7. EXERCISE PERIOD
Unless otherwise specified by the Committee at the time of granting an Option
and except as otherwise provided in the Plan, each Option shall be exercisable
in the following installments:
PERCENTAGE OF TOTAL NUMBER OF OPTION SHARES
WHICH MAY BE PURCHASED EXERCISE PERIOD OF OPTION
-------------------------------------------- -------------------------------------------------------
25% From the first anniversary of the Date of Grant to and
including the fifth anniversary of the Date of Grant
25% From the second anniversary of the Date of Grant to and
including the fifth anniversary of the Date of Grant
25% From the third anniversary of the Date of Grant to and
including the fifth anniversary of the Date of Grant
25% From the fourth anniversary of the Date of Grant to and
including the fifth anniversary of the Date of Grant
Once an Option becomes exercisable it shall remain exercisable until expiration
or termination of the Exercise Period, unless otherwise specified by the
Committee. Each Option or installment may be exercised at any time or from time
to time, in whole or in part, for up to the total number of Option Shares with
respect to which it is then exercisable. The Committee shall have the right to
accelerate the date upon which any installment of any Option is exercisable.
8. TERM OF OPTIONS
Subject to accelerated termination as provided for in the Plan, each Option
shall, unless otherwise specified by the Committee, expire on the fifth
anniversary of the Date of Grant, provided, however, that no Option may be
exercised after the tenth anniversary of the Date of Grant.
9. EXERCISE OF OPTIONS
An Optionee may at any time within the Exercise Period elect to purchase all or
a portion of the Option Shares which such Optionee is then entitled to purchase
by delivering to the Secretary of the Corporation a completed Notice of
Exercise, specifying the Date of Grant of the Option being exercised, the
exercise price of the Option and the number of Option Shares the Optionee
desires to purchase. The Notice of
4
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
Exercise shall be accompanied by payment in full of the purchase price for such
Option Shares. Payment can be made by cash, certified cheque, bank draft, money
order or the equivalent payable to the order of the Corporation or by such other
means as may be specified by the Committee. Without limiting the foregoing,
after the Initial Public Offering, the Committee may permit an Optionee to pay
the exercise price of the Option by authorizing a third party (a broker) to sell
Option Shares acquired upon exercise of the Option and remitting to the
Corporation a sufficient portion of the sale proceeds to pay the entire exercise
price (and any tax withholding resulting from such exercise). Notwithstanding
the preceding provisions of this Section 9. the Committee may deny an Optionee
the right to purchase Option Shares if such purchase would exceed the
limitations of Section 4 hereof.
10. WITHHOLDING OF TAX
If the Corporation determines that under the requirements of applicable taxation
laws it or any Subsidiary or Affiliate is primarily liable or is obliged to
withhold for remittance to a taxing authority any amount arising upon exercise
of an Option, the Corporation or the relevant Subsidiary or Affiliate may, prior
to and as a condition of the Corporation issuing the Option Shares, require the
Optionee exercising the Option to pay to the Corporation, or to the relevant
Subsidiary or Affiliate, in addition to and in the same manner as the purchase
price for the Option Shares, such amount as the Corporation or the relevant
Subsidiary or Affiliate is liable for or is obliged to remit to such taxing
authority in respect of the exercise of the Option. Any such additional payment
shall, in any event, be payable at the time of exercise of the Option or such
later date as may be agreed to by the Corporation or the relevant Subsidiary or
Affiliate, In the event that the Optionee is unable to remit the required sum at
the time of exercise of the Option the Optionee shall as a condition precedent
to the issue of the shares hereby grants full power of attorney and/or legal
authorization to the Corporation or the relevant Subsidiary or Affiliate to
sell, or, with respect only to the Corporation, to withhold, a sufficient number
of Option Shares to meet the tax liability and/or any amount required to be
remitted to the taxing authority and to issue to the Optionee the balance of the
Option Shares together with any remaining balance of the sale proceeds.
In connection with any Option granted to a Participant employed by an Affiliate
organized in the United Kingdom or in the event of a Participant's change of
employment among Affiliates organized in the United Kingdom, the Committee may
require the Participant to enter into a UK Inland Revenue approved election to
transfer the secondary Class 1A National Insurance Contributions liability from
such employing Affiliate to the Participant under the Child Support Pensions and
Social Security Xxx 0000. In the event that such a requirement is made, either
in connection with the grant of an Option or a change in employment, and no such
election is entered into within one month or such later date as the Corporation
shall determine, the Option granted to a Participant (if such election is
requested to be made in connection with the grant of an Option) or all Options
previously granted to a Participant (if such election is requested to be made in
connection with a change of employment) shall immediately lapse.
11. SHARE CERTIFICATES
Subject to the provisions of Section 4 hereof, upon exercise of an Option and
payment in full of the exercise price and any applicable tax withholdings, the
Corporation shall cause to be issued and delivered to the Optionee within a
reasonable period of time a certificate or certificates in the name of or as
directed by the Optionee representing the number of Option Shares the Optionee
has purchased.
12. TERMINATION OF EMPLOYMENT OR SERVICES
Unless otherwise determined by the Committee, if an Optionee's employment or
services terminate for any reason other than death, Disability or Retirement,
any Option (other than a Director's Option) held by such Optionee shall
thereupon terminate effective the date that written notice of the termination is
delivered to the employee, except that each such Option, to the extent then
exercisable, may be exercised for the lesser of 60 days following the delivery
date of such written notice of termination, or the balance of such Option's
term. Nothing contained in this Section 12 shall confer upon any Participant any
right to notice or payment in lieu of notice of termination of employment or
services.
Options shall not be affected by any change of employment within or among the
Corporation or any Subsidiary.
5
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
Unless otherwise determined by the Board of Directors, if an Optionee's services
terminate for any reason other than death, any Director Participant's Option, to
the extent it becomes exercisable, held by such Optionee can be exercised within
the lesser of three years from the date of termination or the balance of such
Option's term.
13. TERMINATION BY REASON OF DEATH, DISABILITY OR RETIREMENT
If an Optionee's employment or services terminate by reason of death, any
unvested Option held by such Optionee vests immediately and may thereafter be
exercised for a period of 365 days (or such other period as the Committee may
specify) from the date of such death. For greater certainty, any Options which
would have expired during the one-year period shall be extended to the end of
the one-year period.
Except in the case of a Director Participant's Option, if an Optionee's
employment or services terminate by reason of Disability or Retirement, any
Option held by such Optionee may thereafter be exercised, to the extent then
exercisable or to such other extent as the Committee may determine, until the
expiration of the stated term of such Option.
14. TRANSFER AND ASSIGNMENT
Options granted under the Plan are not assignable or transferable by the
Optionee or subject to any other alienation, sale, pledge or encumbrance by such
Optionee except by will or by the laws of descent and distribution. During the
Optionee's lifetime Options shall be exercisable only by the Optionee. The
obligations of each Optionee shall be binding on his heirs, executors and
administrators.
15. NO RIGHT TO EMPLOYMENT
The granting of an Option to a Participant under the Plan does not confer upon
the Participant any right to expectation of employment by, or to continue in the
employment of, the Corporation, any Subsidiary or any Affiliate, or to be
retained as a Consultant or as a director or officer of the Corporation, any
Subsidiary or any Affiliate.
16. RIGHTS AS SHAREHOLDERS
The Optionee shall not have any rights as a shareholder with respect to Option
Shares until full payment has been made to the Corporation and the Option Shares
have been issued to the Optionee (as evidenced by the appropriate entry on the
books of the Corporation or of a duly authorized transfer agent of the
Corporation).
17. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. No member of the Committee,
while a member, shall be eligible to participate in the Plan other than with
respect to Options granted as set forth in Schedule 1 to the Plan. Subject to
the terms of the Plan, the Committee shall have the authority to:
6
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
a) determine the individuals and entities (from among the class of
individuals and entities eligible to receive Options) to whom
Options may be granted;
b) determine the number of Option Shares to be subject to each Option;
c) determine the terms and conditions of any grant of Option, including
but not limited to
i) the time or times at which Options may be granted;
ii) the exercise price at which Option Shares subject to each
Option may be purchased;
iii) the time or times when each Option shall become exercisable
and the duration of the Exercise Period;
iv) whether restrictions or limitations are to be imposed on
Option Shares, and the nature of such restrictions or
limitations, if any;
v) any acceleration of exercisability or waiver of termination
regarding any Option, based on such factors as the Committee
may determine;
vi) to cancel, amend, adjust or otherwise change any Option under
such circumstances considered appropriate by the Committee;
vii) upon the direction of the Board of Directors, prior to the
Initial Public Offering, to require that an Optionee execute a
shareholder's agreement, with such terms as the Board of
Directors deems appropriate, with respect to any Common Shares
issued or distributed pursuant to this Plan; and
viii) If requested by the Corporation or by any managing underwriter
in connection with any public offering of securities of the
Corporation under the Ontario Securities Act, the 1933 Act, or
other applicable securities law, to require a recipient
(including any successor) not to sell or otherwise transfer
any shares or other securities of the Corporation during the
180-day period following the date of issuance by the Ontario
Securities Commission of a receipt for a prospectus relating
to securities of the Corporation under the Ontario Securities
Act and the effective date of a registration statement of the
Corporation filed under the 1933 Act (or such other period as
may be requested in writing by the Managing Underwriter and
agreed to in writing by the Corporation) (the "Market Standoff
Period"). Such restriction shall apply only to the first
prospectus of the Corporation filed with the Ontario
Securities Commission under the Ontario Securities Act for
which a receipt is issued and the first registration statement
of the Corporation to become effective under the 1933 Act that
includes securities to be sold on behalf of the Corporation to
the public in an underwritten public offering under the
Ontario Securities Act or the 1933 Act, as the case may be.
The Corporation may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period; and
d) interpret the Plan and prescribe and rescind rules and regulations
relating to the Plan.
The interpretation and construction by the Committee or the Board of Directors
of any provisions of the Plan or of any Option granted under it shall be final
and binding on all persons. No member of the Committee or the Board of Directors
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option granted under it. The day-to-day administration of the
Plan may be delegated to such officers and employees of the Corporation, any
Subsidiary or any Affiliate as the Committee shall determine, but only with
respect to Participants who are not Insiders or subject to section 162(m) of the
Code (or any amended or successor provisions).
18. RECAPITALIZATION AND REORGANIZATION
The number of Common Shares reserved for issuance pursuant to the exercise of
Options, the number of Option Shares subject to each outstanding Option and the
exercise price for such Option Shares shall be appropriately adjusted for any
subdivision, redivision, consolidation or any similar change affecting the
Common Shares.
19. CONDITIONS OF EXERCISE
The Plan and each Option shall be subject to the requirement that, if at any
time the Committee determines that the listing, registration or qualification of
the Common Shares subject to such Option upon any securities exchange or under
any provincial, state, federal or other applicable law, or the consent or
approval of any governmental body, securities exchange, or the holders of the
Common Shares generally, is necessary or desirable, as a condition of, or in
connection with, the granting of such
7
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
Option or the issue or purchase of Common Shares thereunder, no such Option may
be granted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
The Committee may, in its discretion, require as a condition to the exercise of
any Option that the Optionee shall have represented at the time of exercise, in
form and substance satisfactory to the Corporation, that the Optionee (i)
understands that the Common Shares are "restricted securities," as that term is
defined in Rule 144 under the 1933 Act, and, accordingly, the Optionee may be
required to hold the Common Shares indefinitely unless they are registered under
the 1933 Act or an exemption from such registration is available, (ii) is
acquiring the Common Shares issued pursuant to such exercise of the Option for
his or her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares, (iii) understands that the
Corporation is not under any obligation to register the Common Shares under the
1933 Act or to comply with any exemption thereunder, and (iv) understands that
if Common Shares are issued without registration under the 1933 Act, a legend to
this effect may be endorsed upon the securities so issued, as well as any other
legends as the Corporation may deem appropriate or that may be required by the
Corporation or by the applicable securities laws.
20. LOANS
The Board of Directors may, in its discretion, but subject always to section 44
of the Corporations Act, grant loans, on such terms as are permitted by law and
the Board of Directors may determine, to Optionees to enable them to purchase
Option Shares, provided that all Common Shares purchased with the proceeds of
such loans shall be held by a trustee until the Corporation has been repaid in
full.
21. RIGHT OF FIRST REFUSAL; REPURCHASE RIGHT
a) OFFER - Prior to the Corporation's Initial Public Offering, if at
any time an individual desires to sell, encumber, or otherwise
dispose of Common Shares that were acquired by him or her under this
Plan and that are transferable, the individual may do so only
pursuant to a bona fide written offer, and the individual shall
first offer the shares to the Corporation by giving the Corporation
written notice disclosing: (i) the name of the proposed transferee
of the Common Shares; (ii) the certificate number and number of
shares of Common Shares proposed to be transferred or encumbered;
(iii) the proposed price; (iv) all other terms of the proposed
transfer; and (v) a written copy of the proposed offer. Within 60
days after receipt of such notice, the Corporation shall have the
option to purchase all or part of such Common Shares at the then
current fair market value and may pay such price in equal
installments over a period not to exceed four years, at the
discretion of the Board of Directors.
b) SALE - In the event the Corporation (or a shareholder, as described
below) does not exercise its option to purchase the Common Shares,
as provided in Section 21 (a), the individual shall have the right,
subject to compliance with applicable securities laws, to sell,
encumber, or otherwise dispose of the Common Shares described in
Section 21 (a) at the price and on the terms of the transfer set
forth in the written notice to the Corporation, provided such
transfer is effected within 15 days after the expiration of the
option period. If the transfer is not effected within such period,
the Corporation must again be given an option to purchase, as
provided above.
c) ASSIGNMENT OF RIGHTS - The Board of Directors, in its sole
discretion, may waive the Corporation's right of first refusal and
repurchase right under this Section 21, If the Corporation's right
of first refusal or repurchase right is so waived, the Board of
Directors may, in its sole discretion, assign such right to the
remaining shareholders of the Corporation in the same proportion
that each shareholder's stock ownership bears to the stock ownership
of all the shareholders of the Corporation, as determined by the
Board of Directors. To the extent that a shareholder has been given
such right and does not purchase his or her allotment, the other
shareholders shall have the right to purchase such allotment on the
same basis.
d) PURCHASE BY THE CORPORATION - Prior to the Corporation's Initial
Public Offering, if a Participant ceases to be employed by, or
provide service to, the Corporation, any Subsidiary or any
Affiliate, the Corporation shall have the right to purchase, for a
period of 60 days following the date such Participant ceases to be
employed by, or provide service to, the Corporation, any Subsidiary
or any Affiliate, all or part of any Common Shares acquired by him
or her under this Plan at the fair market value of such Common
Shares on the date, if any, on which such shares are repurchased by
the Corporation, as reasonably determined by the Committee;
provided, however, that such
8
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
repurchase shall be made in accordance with applicable accounting
rules to avoid adverse accounting treatment.
e) INITIAL PUBLIC OFFERING - On and after the Corporation's Initial
Public Offering, the Corporation shall have no further right to
purchase Common Shares under this Section.
f) SHAREHOLDER'S AGREEMENT - Notwithstanding the provisions of this
Section, if any Participant shall have executed or shall hereafter
execute, a shareholder's agreement that governs any Common Shares
distributed pursuant to this Plan, the provisions of this Section
shall not apply to such Common Shares and the provisions of the
shareholder's agreement shall govern, but only to the extent of any
inconsistency between the provisions of such shareholder's agreement
and of this Plan.
22. NOTICES
All written notices to be given by the Optionee to the Corporation shall be
delivered personally or by registered mail, postage prepaid, addressed as
follows:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Corporate Secretary
Any notice given by the Optionee pursuant to the terms of an Option shall not be
effective until actually received by the Corporation at the above address.
23. CORPORATE ACTION
Nothing contained in the Plan or in an Option shall be construed so as to
prevent the Corporation from taking corporate action which is deemed by the
Corporation to be appropriate or in its best interest, whether or not such
action would have an adverse effect on the Plan or any Option, including, but
not limited to any adjustments to exercise price, exercise period or number of
Option Shares with respect to an Option previously granted if required by any
securities exchange as a condition of any listing being sought by the
Corporation at the time of the Corporation's Initial Public Offering or if
required by applicable securities law.
24. AMENDMENTS
The Board of Directors shall have the right, in its sole discretion, to alter,
amend, modify or terminate the Plan or any Option granted under the Plan at any
time without notice. Subject to Sections 19 and 23, no such amendment, however,
may, without the consent of the Optionee, alter or impair any rights or increase
any obligations with respect to an Option previously granted under the Plan.
25. CHANGE IN CONTROL
Unless otherwise determined by the Committee or the Board of Directors at or
after the Date of Grant, any Options outstanding immediately prior to the
occurrence of a "CHANGE IN CONTROL" (as defined below), but which are not then
exercisable, shall become fully exercisable upon the occurrence of a Change in
Control. Unless otherwise determined by the Committee or the Board of Directors
at or after the Date of Grant, all such outstanding Options shall be cashed out
at the "Change in Control Price" (as defined below), less the applicable
exercise price for such Options, as of the date such Change in Control is
determined to have occurred, or as of such other date as the Committee or the
Board of Directors may determine prior to the Change in Control. Outstanding
Options may only be cashed out, as described above, if the Change in Control
Price is higher than the exercise price for such outstanding options. If the
Change in Control Price is equal to or lower than the exercise price for such
outstanding Options, the Committee or the Board of Directors may terminate such
outstanding Options and such outstanding Options shall be of no further force or
effect. Further, the Committee or the Board of Directors shall have the right to
provide for the conversion or exchange of any outstanding Options into or for
options, rights or other securities in any entity participating in or resulting
from the Change in Control. In addition, and notwithstanding Section 24, the
Committee or the Board of Directors shall have the right to determine, at its
discretion, that Options outstanding, but which are not then exercisable, shall
not become exercisable and shall be canceled in the event of a Change in
Control.
9
MITEL NETWORKS CORPORATION EMPLOYEE STOCK OPTION PLAN
For purposes of this Section, a "CHANGE IN CONTROL" shall mean the happening of
any of the following events:
a) where any "person", or any "affiliate" or "associate" of such
person, as those terms are defined by the Corporations Act, other
than the Corporation, a Subsidiary, an Affiliate, or an employee
benefit plan of the Corporation, of a Subsidiary or of an Affiliate,
including any trustee of such plan acting as trustee, hereafter
acquires, the direct or indirect "beneficial ownership", as defined
by the Corporations Act, of securities of the Corporation
representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities; or
b) the occurrence of a transaction requiring approval of the
Corporation's shareholders involving the acquisition of the
Corporation by an entity through purchase of assets, by amalgamation
or otherwise.
For the purposes of this Section, "CHANGE IN CONTROL PRICE" means the highest
price per Common Share paid in any transaction reported on a securities exchange
or paid or offered in any bona fide transaction related to a potential or actual
Change in Control of the Corporation at any time during the five (5) trading
days (or if the Common Shares are not listed on any securities exchange and are
not quoted for trading on a United States automated quotation system, during the
three month period) preceding the Change in Control, as determined by the
Committee or the Board of Directors.
26. TERMINATION OF PLAN
The Plan shall continue in effect until the Board of Directors, in its
discretion, resolves to terminate the Plan. The termination of the Plan shall
have no effect on outstanding Options, which shall continue in effect in
accordance with their terms and conditions and the terms and conditions of the
Plan, provided that no Option may be exercised after the tenth anniversary of
its Date of Grant.
27. FURTHER ASSURANCES
Each Participant or Director Participant shall, when requested to do so by the
Corporation, sign and deliver all such documents relating to the granting or
exercise of Options deemed necessary or desirable by the Corporation.
28. UNFUNDED STATUS PLAN
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Shares; provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan.
29. GOVERNING LAW
The Plan is established under the laws of the Province of Ontario, and the
rights of all parties and the construction and effect of each provision of the
Plan shall be according to the laws of the Province of Ontario.
DATED this 6th day of March, 2001, as amended as of the May 8, 2001, August 3,
2001, June 18, 2002. September 6, 2002, June 13, 2003, July 15, 2004 and further
amended on March 17, 2005.
MITEL NETWORKS CORPORATION
"Xxxxxxx X. Xxxxxxxx"
Chairman
"Kent H.E. Xxxxxxx"
Secretary
10
SCHEDULE 3(S) APPENDIX E
OPTIONS OUTSTANDING REPORT MITEL NETWORKS CORPORATION
AS OF 4/18/2005
Aggregate
Options Option Options Options Options Options Outstanding
Granted Price exercised Cancelled Exercisable Outstanding Option Price
MITEL NETWORKS CORPORATION
3/6/2001 Non-Qualified 11,469,200 3.50 8,312 9,896,243 1,564,645 1,564,645 $ 5,476,257.50
5/9/2001 Non-Qualified 2,527,838 3.50 3,000 1,998,684 524,652 526,152 $ 1,841,532.00
6/15/2001 Non-Qualified 527,850 4.00 0 365,689 125,844 162,161 $ 648,644.00
6/27/2001 Non-Qualified 146,600 4.00 0 123,600 17,250 23,000 $ 92,000.00
7/30/2001 Non-Qualified 18,800 4.00 0 18,800 0 0 $ 0.00
8/29/2001 Non-Qualified 17,518 4.00 1,895 15,623 0 0 $ 0.00
9/21/2001 Non-Qualified 212,760 4.00 0 131,375 61,312 81,375 $ 325,500.00
12/13/2001 Non-Qualified 209,450 4.00 0 111,500 73,462 97,950 $ 391,800.00
2/25/2002 Non-Qualified 227,290 4.00 0 129,940 79,262 97,350 $ 389,400.00
4/26/2002 Non-Qualified 610,335 4.00 0 223,085 197,119 387,250 $ 1,549,000.00
6/18/2002 Non-Qualified 176,500 2.75 0 150,250 13,750 26,250 $ 72,187.50
7/12/2002 Non-Qualified 114,000 2.75 0 0 57,000 114,000 $ 313,500.00
9/6/2002 Non-Qualified 375,500 2.75 0 167,500 104,000 208,000 $ 572,000.00
12/11/2002 Non-Qualified 199,500 2.75 0 37,500 85,000 162,000 $ 445,500.00
3/11/2003 Non-Qualified 36,000 2.75 0 3,000 16,500 33,000 $ 90,750.00
6/12/2003 Non-Qualified 371,500 2.75 0 304,000 16,875 67,500 $ 185,626.00
7/18/2003 Non-Qualified 118,000 2.75 0 0 29,500 118,000 $ 324,500.00
9/4/2003 Non-Qualified 101,500 2.75 0 80,500 5,250 21,000 $ 57,750.00
12/9/2003 Non-Qualified 632,200 2.00 0 448,763 46,367 183,437 $ 366,874.00
6/15/2004 Non-Qualified 1,000 1.00 0 1,000 0 0 $ 0.00
7/15/2004 Non-Qualified 250,000 1.00 0 0 0 250,000 $ 250,000.00
7/26/2004 Non-Qualified 10,350,144 1.00 0 350,880 0 9,999,264 $ 9,999,264.00
8/20/2004 Non-Qualified 49,451 1.00 0 0 0 49,451 $ 49,451.00
9/9/2004 Non-Qualified 269,387 1.00 0 5,000 0 264,387 $ 264,387.00
12/9/2004 Non-Qualified 336,783 1.00 0 2,800 0 333,983 $ 333,983.00
3/17/2005 Non-Qualified 3,735,600 1.00 0 1,000 0 3,734,600 $ 3,734,600.00
PLAN TOTALS 33,084,694 13,207 14,566,732 3,017,788 18,504,755 $27,774,505.00
EXECUTION COPY
SCHEDULE 3(s)
APPENDIX F - SERP TRUST AGREEMENT
SEE ATTACHED
[SUN LIFE FINANCIAL LOGO]
November 28, 2002
Xx. Xxxxxxx XxXxxxxx
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx XX X0X 0X0
RE: TRUST AGREEMEAT
Dear Xxxxxxx,
Attached please find a copy of the signed Trust Agreement, as requested.
Please feel free to contact me if you have any questions regarding the attached
document.
Yours truly,
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Pension Account Specialist
Group Retirement Services
Encl.
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM
TRUST AGREEMENT
ARTICLE 1
SCHEDULES, DEFINITIONS, GENDER AND NUMBER
1.1 Schedules 1
1.2 Definitions 1
1.3 Gender and Number 1
ARTICLE 2
THE TRUST FUND AND ACCEPTANCE OF TRUST
2.1 Establishment of the Trust Fund 2
2.2 The Trust Fund 2
2.3 Acceptance of Trust 2
2.4 Fiscal Year End 2
2.5 Certain obligations of the Company 2
ARTICLE 3
SERP LIABILITY AND ANNUAL CONTRIBUTIONS
3.1 SERP Liability 3
3.2 Additional Contributions 3
3.3 Application of Contributions 3
3.4 RCA Tax on Contributions 3
ARTICLE 4
LETTER OF CREDIT
4.1 Application for and Terms of Letters of Credit 3
4.2 Fees 4
4.3 Reminder Notice 4
4.4 Inability to Transfer or Pledge 4
4.5 Timetable 4
ARTICLE 5
DEFAULT
5.1 Events of Default 4
5.2 Relation of Event of Default to Particular SERP Agreement 5
5.3 Draw-down of Letter of Credit 5
5.4 Effect of an Event of Default 5
5.5 Obligation of Company to Notify 6
ARTICLE 6
PAYMENTS FROM THE TRUST FUND
6.1 Payments to Participants after Default under Section 5.1(a) 6
6.2 Payment to Participants after Default under Section 5.l(b), (c), (d) or (e) 6
6.3 Trust Fund Held for Plan Purposes 7
6.4 Other Authorized Payments 7
6.5 Effect of Proper Payment 7
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ARTICLE 7
CONCERNING THE TRUSTEE
7.1 Duties and Responsibilities of the Trustee 8
7.2 Authority of Trustee Conclusive 8
7.3 General Powers 8
7.4 Liability of Trustee 10
7.5 Permitted Reliance 10
7.6 Permitted Conflicts of Interest 10
7.7 Compensation and Expenses 10
7.8 Accounts and Records 11
7.9 Income Tax and Certain Other Obligations 11
7.10 Resignation and Removal of Trustee 11
7.11 Appointment of Successor Trustee 12
7.12 Liability following Resignation or Removal 12
ARTICLE 8
INVESTMENTS
8.1 Investment of Trust Fund 12
ARTICLE 9
PARTICIPANTS' MEETINGS
9.1 Right to Convene Meetings 12
9.2 Notice 13
9.3 Regulations 13
9.4 Chairman 13
9.5 Quorum 13
9.6 Show of Hands 13
9.7 Poll and Voting 13
9.8 Ordinary Resolution 13
9.9 Decisions by Ordinary Resolution 13
9.10 Special Resolution 13
9.11 Decisions by Special Resolution 13
9.12 Instruments in Writing 14
9.13 Binding Effect of Resolution 14
ARTICLE 10
AMENDMENT AND TERMINATION
10.1 Amendment of Letters of Credit 14
10.2 Amendment of Agreement 14
10.3 Termination of Agreement and Trust Fund 15
10.4 Wind-Up of Trust Fund 15
ARTICLE 11
GENERAL PROVISIONS
11.1 Authority to Act 16
11.2 Notices 16
11.3 Severability 16
11.4 Notice of Alienation of Benefits 16
11.5 Assignment 16
11.6 Governing Law 17
11.7 Binding Effect 17
11.8 Inconsistency with SERP Agreement 17
-ii-
SCHEDULE << A >>
DEFINITIONS 1
SCHEDULE << B >>
ASSUMPTIONS TO DETERMINE SERP LIABILITY 2
SCHEDULE << C >>
CERTIFICATE OF AUTHORIZED SIGNING OFFICERS 3
SCHEDULE << D >>
FORM OF LETTER OF CREDIT 4
SCHEDULE << E >>
ANNUAL TIMETABLE DEADLINES 9
-iii-
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM
TRUST AGREEMENT
Made as of the 17(th) day of February, 2001
BETWEEN MITEL NETWORKS CORPORATION, a company duly incorporated under the laws
of Canada (the <> )
AND SUN LIFE FINANCIAL TRUST INC., a trust company duly incorporated under
the laws of Canada (the <> )
WHEREAS the Company has adopted the Executive Pension Program and pursuant
thereto has approved the entering into of individual Supplemental Executive
Retirement Plan Agreements (<>) with designated executives
(referred to herein individually as the <> and collectively the
<>);
WHEREAS the Company has agreed to pay supplemental retirement benefits to
the Executives and, upon their death, to the surviving spouse, beneficiary or
estate, as the case may be (the <>);
WHEREAS the Company wishes to secure its obligations under the SERP
Agreements from time to time and accordingly establishes hereby and for that
purpose a trust fund known as the Mitel Networks Corporation Executive Pension
Program Trust Fund (the <>);
WHEREAS the Trustee shall hold one-year standby letters of credit
(<>), the aggregate face values of which will equal the SERP
Liability (as defined in Section 3.1 hereof) and whereas such Letters of Credit
may be supplemented from time to time in a given year and will be amended or
replaced, to the extent necessary, every year (until such time, if any, as an
Event of Default occurs);
WHEREAS upon the occurrence of an Event of Default, the Trustee shall draw
down on the relevant letter(s) of credit, the proceeds of which will then form
part of the Trust Fund;
WHEREAS the Trust Fund shall constitute a retirement compensation
arrangement under the Income Tax Act (Canada) (the <>), thereby requiring
the payment of certain refundable tax under the ITA(the <>);
WHEREAS the parties wish to set forth in this Agreement the terms and
conditions under which the Trustee is to administer, hold, invest, reinvest and
apply the Trust Fund;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
SCHEDULES, DEFINITIONS,
GENDER AND NUMBER
1.1 SCHEDULES - The Schedules hereto shall form an integral part of this
Agreement.
1.2 DEFINITIONS - For purposes hereof, the terms set forth in Schedule <>
hereto shall have the meanings set forth therein.
-1-
1.3 GENDER AND NUMBER - Words importing the singular shall include the plural
and vice versa and words importing the masculine gender shall extend to and
include the feminine and neuter genders, unless the context clearly requires
otherwise.
ARTICLE 2
THE TRUST FUND AND ACCEPTANCE OF TRUST
2.1 ESTABLISHMENT OF THE TRUST FUND - The Company has paid to the Trustee, in
trust, to establish the Trust Fund, an initial contribution of $6,731.16 less
the applicable RCA Tax of $3,365.58. The balance shall be applied by the Trustee
to obtain initial Letters of Credit on or before April 17, 2001 in an aggregate
amount of $474,300.00 that expires on December 31, 2001, the whole in accordance
with Article 4. The aggregate amount of the Letters of Credit represents the
Company's estimate of the liability that will accrue to Participants under the
SERP Agreements to December 31, 2001
2.2 THE TRUST FUND - The Trust Fund shall consist of:
(a) the above-mentioned initial contribution and all additional
Contributions by the Company pursuant to Section 3.2, net of any RCA
Tax payable thereon;
(b) the above-mentioned initial Letters of Credit, and any amendments or
replacements thereof;
(c) the proceeds of a Letter of Credit, net of any RCA Tax payable
thereon;
(d) all securities or other property of any nature held by the Trust
Fund and any capital or Income proceeds therefrom;
(e) all earnings and profits earned by the Trust Fund, net of RCA Tax
payable thereon; and
(f) the right to the RCA Tax held by Canada Customs and Revenue Agency
(<>),
LESS all distributions and payments properly payable therefrom in
accordance with the terms of this Agreement.
2.3 ACCEPTANCE OF TRUST - The Trustee hereby accepts the trust created by this
Agreement (the <>). In doing so, the Trustee agrees to hold the Trust
Fund in trust and to administer, hold, invest, reinvest and apply the Trust Fund
in the manner, for the purposes and in accordance with the terms and conditions
set forth in this Agreement.
2.4 FISCAL YEAR END - The fiscal year of the Trust Fund shall end on December 31
of each year.
2.5 CERTAIN OBLIGATIONS OF THE COMPANY - In addition to obligations of the
Company described elsewhere in this Agreement, the Company shall file any and
all returns and forms relating to the Trust Fund that are required to be filed
by the Company under applicable law and, unless expressly stated to the contrary
herein, the Company shall pay all expenses incurred by the Trust Fund with
respect to its creation, management and maintenance, including without
limitation, the compensation and expenses due to persons engaged pursuant to
Section 7.3(j) and to the Trustee pursuant to Section 7.7 and the cost of
indemnifying the Trustee pursuant to Section 7.3(d).
-2-
ARTICLE 3
SERP LIABILITY AND ANNUAL CONTRIBUTIONS
3.1 SERP LIABILITY - The Company shall ensure that the Trustee receives, not
later than November 15 of each year, written notice of the Company's estimate of
the maximum liability that will accrue to each Participant under his or her SERP
Agreement to December 31 of the following year (the aggregate liability accruing
to all Participants shall be referred to herein as the <>). In
making such determination, the Company shall use the assumptions set forth in
Schedule <> hereto, which assumptions may be amended from time to time by the
Company.
3.2 ADDITIONAL CONTRIBUTIONS - Not later than 15 business days prior to December
31 of each year, commencing in 2001, the Company shall make an annual
contribution, in trust, to the Trust Fund (the <>) of the amount
necessary to enable the Trustee to obtain replacement or amended Letters of
Credit, the aggregate face values of which equal the SERP Liability determined
under Section 3.1. For greater certainty, the making of Contributions shall not
relieve the Company of its obligations under the SERP Agreements.
3.3 APPLICATION OF CONTRIBUTIONS - The Trustee shall forthwith upon its receipt
of a Contribution pursuant to Section 3.2 apply such amount for one purpose
only, namely to obtain replacement or amended Letters of Credit that expire on
December 31 of the following year.
3.4 RCA TAX ON CONTRIBUTION - The Company shall forthwith establish its own
retirement compensation arrangement remittance account with Canada Customs and
Revenue Agency. Thereafter, it shall remit to the Receiver General of Canada,
within the prescribed time, the RCA Tax payable with respect to the initial
contribution and each Contribution and shall confirm such remittance to the
Trustee in writing on or before each fiscal year end of the Trust.
ARTICLE 4
LETTER OF CREDIT
4.1 APPLICATION FOR AND TERMS OF LETTERS OF CREDIT - In respect of the initial
Letters of Credit referred to in Section 2.1, the Company shall arrange for the
issuance to the Trustee by one or more Canadian chartered banks
(<>) irrevocable standby Letters of Credit in substantially the
form set forth in Schedule <>, the aggregate face values of which shall equal
the liability assessed by the Company as accruing to December 31, 2001 under the
SERP Agreements. Each of these initial Letters of Credit shall expire on
December 31, 2001, shall designate the Trustee as beneficiary and shall require
the Institution to honour a written demand for payment that is made by the
Trustee in accordance with this Agreement and the terms of the Letter of Credit.
Thereafter, not later than 15 business days prior to December 31 every
year, commencing in 2001, the Company shall have arranged for the issuance to
the Trustee by one or more Institutions replacement or amended Letters of Credit
in substantially the form set forth in Schedule <>, the aggregate face values
of which shall equal the SERP Liability determined under Section 3.1. Each
Letter of Credit will have a one-year term and expire on December 31 of the year
following which it is issued. Each Letter of Credit shall designate the Trustee
as beneficiary and shall require the Institution to honour a written demand for
payment that is made by the Trustee in accordance with this Agreement and the
terms of the Letter of Credit.
In the case of each new SERP Agreement entered into after the date of this
Agreement, the Company shall arrange for the issuance of an initial Letter of
Credit that will cover the liability accruing to December 31 of the particular
year, and the replacement or amendment of such Letter of Credit will be in
accordance with the terms of this Article 4.
-3-
4.2 FEES - The fees due to the Institution for each Letter of Credit shall be
paid by the Trustee from the Trust Fund.
4.3 REMINDER NOTICE - The Trustee will send a written notice to the Company
between November 1 and November 30 of each year, reminding the latter of its
obligation to arrange for the issuance of replacement or amended Letters of
Credit by, not later than 10 business days prior to December 31 of that year.
The parties hereto acknowledge that should the Company fail to receive such a
notice for any reason whatsoever, the Company shall not be relieved of any of
its obligations under this Agreement.
4.4 INABILITY TO TRANSFER OR PLEDGE - Notwithstanding Section 7.3 or any other
provisions of this Agreement, but subject to Section 5.4, the Trustee shall not
be permitted to transfer, or otherwise dispose of, nor to pledge, mortgage or
grant any encumbrance on, any Letter of Credit or rights accruing thereunder.
4.5 TIMETABLE - The timetable for obtaining replacement or amended Letters of
Credit in each year is set forth as Schedule <> hereto.
ARTICLE 5
DEFAULT
5.1 EVENTS OF DEFAULT - Each and every one of the following events, (a) to (e),
shall constitute an independent event of default (<>) for
purposes of this Agreement:
(a) (i) the Trustee receives a written notice from any Participant or
the Company, certifying that the Company has failed to make
any payment to the Participant provided for under his or her
SERP Agreement and certifying that the Participant is entitled
to receive such payment; and
(ii) the Company fails, within 10 business days following its
receipt of a written notice from the Trustee that describes
the default and names such Participant, to provide a written
certification to the Trustee that it has made the required
payment to the Participant.
Upon receipt by the Trustee of a notice as described in paragraph (i),
the Trustee shall provide the Company with written notice describing
the default, the amount of such default and the name of the
Participant; OR
(b) if for any reason whatsoever, the Trustee does not receive, at least
10 business days prior to December 31 the required replacement or
amended Letters of Credit; OR
(c) the Trustee receives written notice from a Participant or the Company
certifying the occurrence of any one or more of the following: the
making by the Company of an assignment for the benefit of its
creditors; the filing by it of a petition for the declaration of its
own bankruptcy; the consenting by it to the institution of, or to the
granting by a court of, bankruptcy or other insolvency proceedings
against it; the admission by the Company to some or all of its
creditors at a meeting or by other means of communication that it is
insolvent or the commencement by the Company of any proceeding
relative to overdue Indebtedness of the Company under any
reorganization, arrangement, compromise, adjustment or postponement of
debt, dissolution, winding-up, composition or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; OR
-4-
(d) the Trustee receives written notice from a Participant or the
Company certifying the occurrence of any one or more of the
following: (1) the making of an order or judgement by a court having
jurisdiction adjudging the Company bankrupt or insolvent, or
ordering the winding-up or liquidation or rearrangement of its
affairs, or (2) the seizure or attachment of all or a substantial
part of the Company's property at the instigation of a creditor, or
(3) the appointment of a person to take possession or control of all
or a substantial part of the assets of the Company under an
agreement subjecting property of the Company to a security interest
or pursuant to an order of any court having jurisdiction, such
person to include a receiver, a receiver-manager, an agent, a
sequestrator, a trustee under a trust indenture, a creditor in
possession or any person or corporation authorized to act on their
behalf; and certifying that such order, judgment, seizure or
attachment has remained in force or such taking of possession or
control has continued in effect for a period of 30 days; OR
(e) the Trustee receives written notice from the Company that it is
terminating the Agreement and the Trust Fund or amending the
Agreement, and such termination or amendment is not in accordance
with Article 10.
5.2 RELATION OF EVENT OF DEFAULT TO PARTICULAR SERP AGREEMENT - An Event of
Default under Section 5.1(a) is an Event of Default in respect of the particular
Participant's SERP Agreement.
An Event of Default under Section 5.1(b) is an Event of Default in respect
of each and every SERP Agreement.
5.3 DRAW-DOWN OF LETTER OF CREDIT - Upon the occurrence of an Event of Default
in respect of one or more particular SERP Agreements (the <>)
and after the Trustee has received the advice described in Section 5.4(e) below,
the Trustee shall present the related Letter(s) of Credit to the Institution and
request payment of the value of the Notional Account(s) of the affected
Participant(s) as at the Date of Default in accordance with the terms of such
Letter(s) of Credit, together with any other necessary documentation, not later
than the second to last banking day prior to the expiry date thereof, unless
prior thereto, the Company has paid to the Trustee an amount in cash equal to
the value of the Notional Account(s) of the affected Participant(s) as at the
Date of Default, net of any applicable RCA Tax.
For greater certainty, if the relevant Letter(s) of Credit is in danger of
expiration prior to receipt by the Trustee of the advice described in Section
5.4(e), the Trustee shall act without such advice and shall instead request
payment of the face amount of the relevant Letter(s) of Credit.
5.4 EFFECT OF AN EVENT OF DEFAULT - Upon the occurrence of an Event of Default,
notwithstanding any other provisions of the related SERP Agreement(s) or this
Agreement:
(a) the Executive to whom the SERP Agreement under which there has been
an Event of Default relates shall be 100% vested under this or her
SERP Agreement as of the Date of Default, if not already vested;
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(b) in the case of an Event of Default under Section 5.l(b), (c), (d) or
(e), the Trustee may resign and be discharged from the Trust only
upon appointing a successor Trustee which must be approved by the
Participants, which approval shall not be unreasonably withheld, and
the Company shall have no further right to appoint a successor
Trustee;
(c) the Trustee may take all such actions as it may deem necessary,
including instituting legal action, to require the Company to
perform its obligations under this Agreement and the Company agrees
that specific performance of such obligations is available as a
remedy to the Trustee;
(d) in the case of an Event of Default under Section 5.1(b), (c), (d) or
(e), the Company shall consider exercising its discretion under
Section 11 of the SERP Agreements to cease making further Notional
Contributions to them; and
(e) the Company shall, within 5 days of the Date of Default, advise the
Trustee in writing of the value of the Notional Account(s) of the
affected Participant(s) as at the Date of Default.
5.5 OBLIGATION OF COMPANY TO NOTIFY - The Company shall promptly notify the
Trustee of the occurrence of any Event of Default described in Section 5.1.
ARTICLE 6
PAYMENTS FROM THE TRUST FUND
6.1 PAYMENTS TO PARTICIPANTS AFTER DEFAULT UNDER SECTION 5.1(a) - After an Event
of Default in respect of a Participant's SERP Agreement under Section 5.1(a) and
the draw-down on the relevant Letter(s) of Credit by the Trustee in accordance
with Section 5.3, the Trustee shall advise the Company and the affected
Participant in writing that it has drawn proceeds in accordance with the related
Letter of Credit, along with the particulars thereof. In addition, the Trustee
shall advise the Company and the affected Participant that the Trustee shall, as
soon as practicable, make a lump sum payment to the affected Participant equal
to the value of the Notional Account of the Participant as at the Date of
Default.
The Trustee shall act in accordance with its advice to the Company and the
affected Participant.
6.2 PAYMENT TO PARTICIPANTS AFTER DEFAULT UNDER SECTION 5.1(b), (c), (d) OR (e)
- After an Event of Default in respect of a Participant's SERP Agreement under
any of Sections 5.1(b), (c), (d) or (e) and the draw-down on the relevant
Letter(s) of Credit by the Trustee in accordance with Section 5.3, the Trustee
shall advise the Company and the affected Participant in writing that it has
drawn proceeds in accordance with the related Letter of Credit, along with the
particulars thereof. In addition, the Trustee shall advise the Company and the
affected Participant that:
(a) if the Trustee does not receive, within 30 days of the Company's
receipt of said notice, written notification from the Company that
it has decided to continue making Notional Contributions to the SERP
Agreement of the affected Participant (<>)
then (1) in accordance with Sections 11 and 16 of the SERP
Agreement, there will be no further Notional Contributions to the
affected Participant's SERP Agreement, there will be no further
Notional Contributions to the affected Participant's SERP Agreement
as of the Date of Default (also known as the Cessation Date under
the SERP Agreement) and (2) the Trustee shall, as soon as
practicable thereafter, make a
-6-
lump sum payment to the affected Participant equal to the value of
the Notional Account of the Participant as at the Date of Default;
and
(b) if the Trustee receives the Notice of Continuation from the Company
in accordance with paragraph (a) above, then the Trustee shall (1)
so advise the affected Participant in writing and (2) administer the
proceeds of the related Letter of Credit until such time as the
Company advises it to mate payment to the affected Participant in
accordance with the SERP Agreement.
The Trustee shall act in accordance with its advice to the Company and the
affected Participant.
The Company hereby agrees to provide the Trustee with any and all
information that the Trustee reasonably requires in order to make such payment.
If any person to whom a payment is to be made is under the legal age of
majority, the Trustee may make such payment to any parent or legal or de facto
guardian from time to time of such person, and the receipt by such parent or
legal or de facto guardian shall be a complete release and discharge to the
Trustee.
For greater certainly, the receipt by or on behalf of a Participant of a
payment from the Trust Fund of any amount due under his or her SERP Agreement
shall, to the extent of such payment, be a complete release and discharge to the
Company of its obligations under such SERP Agreement to such Participant.
6.3 TRUST FUND HELD FOR PLAN PURPOSES - No part of the Trust Fund shall be paid
to the Company until all amounts payable to the Participants under the SERP
Agreements have been paid and all other liabilities of the Trust Fund have been
satisfied.
6.4 OTHER AUTHORIZED PAYMENTS - The Trustee shall pay out of the Trust Fund:
(a) all fees due to institutions for any letters of credit;
(b) all taxes and other assessments levied or assessed under any laws
applicable to the trust against the trustee or in respect of the
trust fund, or any part thereof, to the extent not paid by the
company, and shall withhold from payments out of the trust fund all
taxes and other amounts required by any applicable law to be so
withheld; provided that the trustee shall review all such tax levies
and assessments with a view to determining the correctness thereof
and, in cases where there is any doubt, shall forthwith notify the
company so that there will be sufficient time for discussion and,
where appropriate, objection to or appeal of any questionable levy
or assessment; and
(c) all expenses and fees of the Trust Fund required to be paid by the
Company in accordance with the SERP Agreements or this Agreement, in
the event the Company fails to pay them within 30 days after written
notification to the Company of such amounts, provided that the Trust
Fund shall then have a claim for reimbursement against the Company
with respect thereto.
6.5 EFFECT OF PROPER PAYMENT - Upon a payment being made from the Trust Fund in
accordance with the terms of this Agreement, the amount hereof shall no longer
constitute a part of the Trust Fund.
-7-
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE - The duties and responsibilities
of the Trustee shall be limited to carrying out the terms of this Agreement and
exercising its powers with respect to all matters relating to the Trust Fund,
honestly and in good faith and with the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
7.2 AUTHORITY OF TRUSTEE CONCLUSIVE - All persons dealing with the Trustee are
released from inquiry into any decision or authority of the Trustee relating to
the Trust Fund and from seeing to the application of any monies, securities or
other property paid or delivered to the Trustee. Every document which has been
executed by the Trustee as provided herein shall be conclusive in favour of any
person relying thereon that: (a) at the time of the document's delivery this
Agreement was in full force and effect; (b) the document was effected in
accordance with the terms and conditions of this Agreement; and (c) the Trustee
was duly authorized and empowered to execute such document.
7.3 GENERAL POWERS - Subject to any restrictions provided for in this Agreement,
including without limitation, pursuant to Sections 2.1, 3.3 and 8.1, the Trustee
shall have each and every power, right and authority necessary or desirable to
enable it to administer the Trust Fund and carry out its obligations under this
Agreement, including, without restricting the generality of the foregoing:
(a) to purchase or otherwise acquire any securities or other property
with any cash held by it and to hold and retain the same in trust
hereunder, in accordance with written instructions received from the
Company;
(b) subject to Section 4.4, to sell for cash or on credit, or partly for
cash and partly on credit, convey, exchange for other securities or
other property, convert, transfer, or otherwise dispose of any
securities or other property held by it by any means considered
reasonable by the Trustee, and to receive the consideration and
grant discharges therefor, in accordance with written instructions
received from the Company;
(c) to vote personally, or by general or by limited proxy, any
securities or other property which may be held by it and similarly
to exercise personally or by general or by limited power of attorney
any right relating to any securities or other property held by it,
in accordance with written instructions received from the Company;
(d) to commence, defend, adjust or settle suits or legal proceedings in
connection with the Trust Fund (including any taken by the Trust
Fund against the Company); to represent the Trust Fund in any such
suits or legal proceedings and except where the interest of the
Company is adverse to the Trust, to keep the Company informed;
provided, however, that the Trustee shall not be obliged to do so
unless it receives adequate security from the Company, the Trust
Fund or the Participants, that it will be indemnified against all
reasonable expenses and liabilities sustained or anticipated by the
Trustee with respect thereto;
(e) subject to Section 4.1, as the Trustee may determine:
(i) to register securities or other property of the Trust Fund in
its own name or in the names of nominees with or without the
addition of words indicating that the same are held in a
fiduciary capacity;
-8-
(ii) to hold securities or other property in bearer form;
(iii) to keep securities or other property, wholly or partly, in its
principal office or in any one or more of its branches in any
Province of Canada or at the office of any financial
institution that is authorized to act as a custodian of
securities by the laws of any jurisdiction in which such
financial institution is located; and
(iv) to hold securities which are on deposit with The Canadian
Depository for Securities Limited, or any other comparable
depository outside of Canada, through the facilities of said
depository,
provided such securities or other property of the Trust Fund are at
all times kept distinct in the records, registers and books of
account of the Trustee from its own assets and from those of its
nominees, authorized financial institutions and any other person and
provided further that records, registers and books of the Trustee
and, where possible, those of its nominees and authorized financial
institutions, shall at all times show that all such securities or
other property are part of the Trust Fund;
(f) to make, execute, acknowledge and deliver any and all deeds, leases,
mortgages, conveyances, contracts, waivers, releases or other
documents of transfer and any and all other instruments in writing
that may be necessary or proper for the accomplishment of any of the
powers herein granted;
(g) to the extent not prohibited by legislation or regulations or by the
policies or administrative practices of federal and provincial
regulatory authorities, and pending receipt from Canada Customs and
Revenue Agency of a full refund of RCA Tax, to borrow money against
assets of the Trust Fund on such terms and conditions as the Trustee
may determine (including the right to borrow from itself or its
affiliates), but only if such borrowing is required for the purpose
of making payments to Participants in accordance with the terms of
the SERP Agreements or to satisfy the Trustee's obligation to remit
RCA Tax, and does not exceed the above-mentioned refund; and the
cost of such borrowing shall be borne by the Company;
(h) to hold such portion of the Trust Fund in cash as the Trustee may,
from time to time, deem to be in the best interests of the Trust and
to retain the cash balances on deposit in such interest bearing
account as the Trustee determines with any chartered bank or other
depository, including the Trustee or any of its affiliates, or to
invest such cash balances in the guaranteed investment certificates
of depositories;
(i) to deposit any property forming part of the Trust Fund, including
securities and documents of title held by it hereunder, with any
bank or other depository, including the Trustee or any of its
affiliates;
(j) in consultation with the Company, to employ such counsel, actuaries,
auditors, advisors, agents or other persons (who may be employed by
the Company or any affiliate) as the Trustee may deem necessary from
time to time for the purpose of discharging its duties hereunder;
and
(k) to do all such acts, take all such proceedings and exercise all such
rights and privileges, although not specifically mentioned herein,
as the Trustee may deem necessary to administer the Trust Fund and
to carry out the purposes of the Trust.
-9-
The exercise of any one or more of the foregoing powers or any combination
thereof from time to time shall not be deemed to exhaust the rights of the
Trustee to exercise such power or powers or combination of them thereafter
from time to time.
7.4 LIABILITY OF TRUSTEE - The Trustee shall not be responsible for the adequacy
of the Trust Fund to meet and discharge any payments and liabilities owed to
Participants under the SERP Agreements, nor for any toss to, or diminution of,
the Trust Fund (whether resulting from the making, holding or sale of any
investment or reinvestment or the making of any loan by it as herein provided or
from any other act or omission of any nature whatsoever in connection with the
affairs of the Trust as trustee, custodian or otherwise), except when such
inadequacy, loss or diminution is caused by the negligence, wilful misconduct or
lack of good faith of the Trustee. The Company shall indemnify and save harmless
the Trustee and the Trust Fund against any loss resulting from such a claim
asserted by any person or persons where the Trustee has acted on the direction
of the Company or, subject to any express obligations of the Trustee under this
Agreement, where the Trustee has not acted in the absence of any such direction
from the Company.
7.5 PERMITTED RELIANCE - Provided the selection of any nominees, custodians,
counsel, actuaries, auditors, advisors, agents, or other persons employed by the
Trustee hereunder was made by the Trustee with reasonable care and in accordance
with the terms of this Agreement and provided the Trustee supervised the
delegates in a manner appropriate for the circumstances, the Trustee shall be
fully protected in acting or refraining from acting in good faith on the opinion
or advice of or information obtained from any such persons in relation to any
matter arising in the administration of the Trust.
7.6 PERMITTED CONFLICTS OF INTEREST - Subject to any liabilities or limitations
otherwise imposed on the Trustee in this Agreement, the Trustee may from time to
time in its discretion:
(a) on its own account or for the account of another (in a fiduciary
capacity or otherwise) appoint, employ, invest in, contract or deal
with any individual, firm, partnership, association, trust or body
corporate, including without limitation, itself, any Participant,
the Company and anyone with which it may be directly or indirectly
affiliated or in which it may be directly or indirectly interested;
and
(b) on its own account or for the account of another (in a fiduciary
capacity or otherwise) purchase, hold, sell, invest in or otherwise
deal with securities or other property of the same class and nature
as may be held in the Trust Fund.
7.7 COMPENSATION AND EXPENSES - The Trustee shall be entitled to such
compensation as may from time to time be mutually agreed upon in writing by the
Trustee and the Company. Such compensation and all disbursements made and
expenses incurred in the performance of the duties of the Trustee hereunder
shall be paid by the Company. These shall constitute a charge against the Trust
Fund and, in the event that they are not paid by the Company within 30 days
after written notification to the Company of such amounts, they shall be paid
out of the Trust Fund and the Trust Fund shall have a claim for reimbursement
against the Company for those expenses it should have so paid.
-10-
\
The Company agrees that the Trustee may retain Sun Life Assurance Company
of Canada as its agent in accordance with Section 7.3(j) of this Agreement and
the Trustee directs the Company to make all payments under this Section 7.7
directly to Sun Life Assurance Company of Canada.
7.8 ACCOUNTS AND RECORDS - The Trustee shall keep and maintain accurate and
detailed accounts and records to record all transactions with respect to its
administration of the Trust Fund, in addition to such other accounts and records
as the Company may reasonably request. The Company, or any duly authorized
representative, may at any time during normal business hours inspect and audit
all such accounts and records, as well as the assets of the Trust Fund.
Not later than 3 months following the end of each fiscal year of the Trust
Fund and the end of such other accounting periods as may be agreed upon by the
Company and the Trustee, and not later than 3 months following the effective
date of the resignation or removal of the Trustee, the Trustee shall deliver to
the Company statements of account showing, inter alia, all investments, receipts
and disbursements of the Trust Fund for the relevant accounting period. Such
statements shall be prepared in such form and shall contain such information and
details as may from time to time be agreed upon by the Company and the Trustee.
In the absence of specific written objections filed by the Company with
the Trustee within 12 months after the Company's receipt of such statements of
account, the same shall be deemed to have been approved; and in such case, or
upon the written approval of the Company of any such statements of account, the
Trustee shall be released, relieved and discharged with respect to all matters
and things set forth therein as though the same had been settled by the decree
of a court of competent jurisdiction; provided, however, that such release and
discharge shall not apply to relieve the Trustee from liability for any matter
or thing which arises as a result of the Trustee's own negligence, wilful
misconduct or lack of good faith.
The Trustee may require the Company or a Participant to submit to it any
information, data, reports or documents reasonably relevant to and suitable for
the purposes of administering the Trust Fund.
7.9 INCOME TAX AND CERTAIN OTHER OBLIGATIONS - The Trustee shall file, or cause
to be filed, in prescribed form and within the prescribed time, such income tax
returns and information returns on behalf of the Trust Fund as are required by
the ITA or any other applicable federal or provincial laws and shall furnish
each Participant and the Company with all requisite statements for income tax
purposes. The Trustee shall also calculate the RCA Tax of the Trust Fund at the
end of each fiscal year and shall remit to, or claim from, the Receiver General
the amount of RCA Tax, If any, payable by the Trust Fund, or due to it, as the
case may be, for the year. The Trustee shall further perform all required
withholding and reporting under the ITA or any other applicable federal or
provincial laws in respect of distributions under the Trust Fund.
7.10 RESIGNATION AND REMOVAL OF TRUSTEE - Subject to Section 5.4: (a) the
Trustee may resign and be discharged as trustee of the Trust Fund by filing
written notice with the Company; and (b) the Company may remove any Trustee as
trustee of the Trust Fund, at any time, with or without cause, by filing a
signed notice with the Trustee. However, such resignation or removal shall only
take effect 3 months following the giving of such notice, unless the party to be
notified waives such requirement.
-11-
7.11 APPOINTMENT OF SUCCESSOR TRUSTEE - Subject to Section 5.4, in the event the
Trustee resigns or is removed or if a vacancy in the trusteeship of the trust
Fund arises for any reason, a successor that is a duly licensed and qualified
trust company shall be appointed by the Company. The appointment and acceptance
thereof shall be evidenced by instruments in writing executed by the Company and
successor Trustee respectively. Upon its acceptance of the appointment, any
successor Trustee shall have the same powers and duties as those conferred upon
the Trustee hereunder and the replaced Trustee shall, within 3 months, assign,
transfer and pay over to its successor all assets then constituting the Trust
Fund, less only such reasonable compensation and other expenses due to it in
connection with its administration of the Trust to the date of its resignation
or removal, that have not yet been paid by the Company. The replaced Trustee
shall also, within 3 months, deliver any and all records, books and documents in
the Trustee's possession as may be required to effect such assignment, transfer
and payment over of the Trust Fund.
If a successor Trustee has not been appointed by the end of the 3 month
notice period referred to in Section 7.10, the Trustee and/or the Company and,
after an Event of Default under Section 5.1(b), (c), (d) or (e), the Trustee
and/or the Participants may apply to a court of competent jurisdiction for the
appointment of a successor Trustee. Any costs incurred by the Trustee in
connection with the appointment of a successor Trustee shall constitute a charge
against the Trust Fund, unless paid by the Company.
Notwithstanding the foregoing, any trust company resulting from the merger
or amalgamation of the Trustee with one or more trust companies and any trust
company which succeeds to substantially all of the trust business of the Trustee
shall thereupon become the successor Trustee hereunder without further act or
formality.
7.12 LIABILITY FOLLOWING RESIGNATION OR REMOVAL - Upon completing the transfer
to its successor in accordance with Section 7.11, the replaced Trustee shall be
discharged from any further liability, obligation and responsibility with
respect to the Trust Fund or the SERP Agreements, except for any matter or thing
which arose during its term of trusteeship as a result of its negligence, wilful
misconduct or lack of good faith.
ARTICLE 8
INVESTMENTS
8.1 INVESTMENT OF TRUST FUND - Subject to Section 2.1 and 3.3, the Trust Fund
shall be held, invested and reinvested in such Investments as the Company
directs, pending the distribution of the Trust Fund in accordance with Section
6.1 or 6.2, without in any way being limited to investments authorized for
trustees under any applicable federal or provincial legislation.
ARTICLE 9
PARTICIPANTS' MEETINGS
9.1 RIGHT TO CONVENE MEETINGS - The Trustee may at any time, and from time to
time, convene a meeting of the Participants. It shall be obliged to give notice
convening a meeting within 15 days after one or more Events of Default provided
that such Events of Default affect(s) at least 25% of the Participants or after
receipt of a written request from at least 25% of the Participants, failing
which the Participants may convene such meeting. Every meeting shall be held in
the City of Kariata or at such other place in Ontario as may be approved or
determined by the Trustee.
-12-
9.2 NOTICE - At least 21 days' prior notice of any meeting shall be given to the
Participants and, if the meeting is called by the Participants, to the Trustee.
Such notice shall provide the time and place of the meeting, as well as a brief
description of the general nature of the business to be transacted at the
meeting. However, it shall not be necessary to set out the terms of any proposed
resolution or any of the provisions of this Article 9.
9.3 REGULATIONS - Subject to the express provisions of this Article 9, the
Trustee may from time to time make or amend such regulations as it shall think
fit regarding the form of proxy, the calling of meetings of Participants and the
conduct of business at such meetings. Any regulations so made shall be binding
on the Participants.
9.4 CHAIRMAN - An individual nominated in writing by the Trustee shall be
chairman of the meeting. However, if no individual is so nominated or if the
individual so nominated is not present at the time fixed for the commencement of
the meeting, the Participants present in person or by proxy shall choose the
chairman.
9.5 QUORUM - At any meeting of the Participants a quorum shall consist of not
less than 33-1/3% of the Participants, present in person or by proxy,
representing at least 51% of the value of all of the Notional Accounts of
Participants. A proxy need not be a Participant. If a quorum of Participants is
not present within 30 minutes from the time fixed for the meeting, the meeting
shall stand adjourned without notice to the same day of the next week (unless
such day is a non-business day in which case it shall stand adjourned to the
next business day) at the same time and place. At the reconvened meeting, the
Participants present in person or by proxy shall be deemed for all purposes to
form a quorum.
9.6 SHOW OF HANDS - Every matter to be decided at a meeting, other than a
Special Resolution, shall be submitted to a vote by show of hands. For this
purpose, every person who is present and entitled to vote, whether as a
Participant or as a duly appointed proxy, shall have one vote. However, if a
decision by show of hands is not unanimous, it will not be binding and a poll
shall be required. A declaration by the chairman that a resolution has been
carried unanimously shall be conclusive evidence of the fact.
9.7 POOL AND VOTING - A poll shall be taken in such manner as the chairman shall
direct with respect to all Special Resolutions and all matters that are not
unanimously agreed upon by show of hands.
9.8 ORDINARY RESOLUTION - An ordinary resolution is one passed by the
affirmative vote of at least 51% of the Participants present at a meeting (in
person or by proxy), representing not less than 51% of the value of the Notional
Accounts of all Participants so present.
9.9 DECISIONS BY ORDINARY RESOLUTION - Unless otherwise expressly provided in
this Agreement, every question submitted to a meeting of Participants shall be
decided by ordinary resolution.
9.10 SPECIAL RESOLUTION - A Special Resolution is a resolution that is: (a)
proposed at a meeting of Participants duly convened for that purpose; and (b)
passed by the affirmative vote of at least 66-2/3% of Participants present at
the meeting (in person or by proxy) representing not less than 75% of the value
of the Notional Accounts of Participants present at the meeting and not less
than 51% of the value of the Notional Accounts of all Participants (whether or
not present).
9.11 DECISIONS BY SPECIAL RESOLUTION - In addition to matters described
elsewhere in this Agreement the following matters shall be decided by Special
Resolution:
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(a) after an Event of Default, any action undertaken by the Participants
which may adversely affect the rights of the Participants, or of the
Trustee (in Its capacity as trustee hereunder or on behalf of the
Participants against the Company), whether such rights arise under
this Agreement or the SERP Agreements or otherwise, provided however
that in no event can the Participants determine to reduce the
benefits to which any Participant is entitled unless they determine
to reduce the benefits of all Participants proportionately, based
upon the values of their respective Notional Accounts; and
(b) the amendment or repeal of any Special Resolution previously passed
or sanctioned by the Participants.
9.12 INSTRUMENTS IN WRITING - All decisions which may be made by the
Participants at a meeting may also be made by the signature (in person or by
attorney duly appointed in writing) of an instrument in writing, in one or more
counterparts, by at least 66-2/3% of all Participants, representing not less
than 75% of the value of the Notional Accounts of all Participants. Such an
instrument shall constitute a Special Resolution for purposes of this Agreement.
9.13 BINDING EFFECT OF RESOLUTION - Every ordinary resolution and Special
Resolution passed in accordance with this Article 9 at a meeting of Participants
shall be binding upon all the Participants, whether present at or absent from
such meeting, and every instrument in writing signed by Participants in
accordance with Section 9.12 shall be binding upon all the Participants, whether
signatories thereto or not.
ARTICLE 10
AMENDMENT AND TERMINATION
10.1 AMENDMENT OF LETTERS OF CREDIT - Each Letter of Credit may be amended to
increase the face amount from time to time with the consent of the Institution
and the consent of the Company. Where the parties have consented to an amendment
as aforesaid, the Trustee shall deliver the Letter of Credit to the Institution
for amendment.
10.2 AMENDMENT OF AGREEMENT - The company may at any time and from time to time
amend, in whole or in part, any or all of the provisions of this Agreement,
other than Section 10.3, by 30 days' prior written notice thereof delivered to
the Trustee, provided that no such amendment which affects the rights, duties,
responsibilities or compensation of the Trustee may be made without its consent,
and provided further that:
(a) where the amendment is of a clerical or administrative nature and
would not, in the Board's good faith judgement, have a materially
adverse effect on the rights of the Participants, the Company may
make such amendment unconditionally. Examples of a clerical or
administrative amendment include, but are not limited to, amendments
to bring this Agreement into conformity with current practice, to
make any change or correction which is a typographical correction or
is required to cure or correct any ambiguity or defective or
inconsistent provision or to bring the Trust into compliance with
any change to the law, interpretation thereof or administrative
practice relating thereto;
(b) in the case of any amendment not covered in Section 10.2(a) above,
prior to an Event of Default, where at the time of the amendment the
Board has certified that there are reasonable grounds for believing
that an Event of Default has not occurred and will not occur during
the ensuing 12 month period, the Company may make the amendment
subject to 30 days' prior notice to the Participants, specifying the
amendment and the reasons therefor and that the above-noted
conditions have been complied with; and
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(c) in the case of any amendment not covered in Sections 10.2(a) and
l0.2(b) above, prior to or after an Event of Default, such amendment
shall be made only with the consent of the Participants given by
Special Resolution.
10.3 TERMINATION OF AGREEMENT AND TRUST FUND - Prior to an Event of Default:
(a) where the Board has certified that there has been an announced
change in an applicable law or regulation or in the interpretation
or administration of such law or regulation which, in its good faith
judgement,
(i) would nullify or materially impair the tax effectiveness to
the Company and/or the Participants of the Trust fund as a
retirement compensation arrangement; or
(ii) would materially increase the cost to the Company of
maintaining the Trust Fund above the cost thereof as of the
date of this Agreement; and
the Board has certified that there are reasonable grounds for
believing that an Event of Default has not occurred and will not
occur during the ensuing 12 month period, the Company may terminate
this Agreement and the Trust Fund upon giving 30 days' prior written
notice to the Trustee and the Participants, advising of the reasons
for the termination and of the Board's certification;
(b) in any circumstance not covered in Section 10.3(a), the Company may
terminate this Agreement and the Trust Fund upon giving 12 months'
prior written notice to the Trustee and the Participants, provided
that the Board has certified that there are reasonable grounds for
believing that an Event of Default has not occurred and will not
occur during the ensuing 12 month period.
After an Event of Default under Section 5.1(b), (c), (d) or (e), this
Agreement and the Trust Fund shall terminate after the Notional Accounts of all
Participants have been paid by the Trustee pursuant to Section 6.1, to the
extent the Trust Fund suffices to pay such Notional Accounts.
10.4 WIND-UP OF TRUST FUND - Upon termination of the Agreement and the Trust
Fund, the Trustee will wind-up the Trust Fund, on a timely basis, as follows:
(a) file final trust information and tax returns, in prescribed form and
within prescribed times, under all applicable federal and provincial
laws and obtain any necessary clearance certificates and any balance
of RCA Tax owing to the Trust Fund; and
(b) pay all amounts properly payable out of the Trust Fund, including
repayment of loans and, to the extent not paid by the Company, any
amounts due to the Trustee pursuant to this Agreement, and
thereafter take the proper steps and make the necessary arrangements
to make payments to participants and to make any other required
distributions pursuant to this Agreement, and
(c) only after all the above-mentioned payments and distributions have
been made in full, remit to the Company for its absolute use and
benefit, the balance, if any, of the Trust Fund; and
(d) provide a final accounting for the purposes of the termination of
the Trust Fund.
ARTICLE 11
GENERAL PROVISIONS
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11.1 AUTHORITY TO ACT - The Trustee shall be entitled to rely on, and shall be
fully protected in acting upon any Notices (as defined in Schedule <>) given
by the Company, provided such Notices are signed by such duly authorized
individuals as are designated from time to time for such purpose. The names,
titles and specimen signatures of such individuals must be provided by way of a
certificate that is in the form set forth in Schedule <> and is signed by the
Secretary of the Company. The certificate may be amended from time to time.
11.2 NOTICES - All Notices to the Trustee, Company and Participants shall be
deemed sufficiently given if made in writing and delivered personally or sent by
telecopier or prepaid first class mail to their respective addresses:
Sun Life Financial Trust Inc.
C/o Sun Life of Canada
Group Retirement Services
660 - 1155 Xxxxxxxx
XXXXXXXX XX X0X 0X0
Attention: Manager, Pension & Savings
Mitel Networks Corporation
000 Xxxxxx Xxxxx
XXXXXX XX X0X 0X0
Attention: Associate General Counsel and Assistant Secretary
Participants
Their last known addresses provided to the Company.
Any Notice so given shall be deemed to have been received when delivered
personally or when sent by telecopier or, if mailed, on the fifth business day
following the day on which it was posted in Canada. In the event of a postal
disruption all Notices shall be delivered personally or by telecopier. The
Company, the Trustee and Participants may from time to tome change their
respective addresses by giving notice in accordance with this Section 11.2
11.3 SEVERABILITY - If any provision of this Agreement shall be held illegal or
invalid for any reason by a court of competent jurisdiction, such illegality or
invalidity shall not affect the remaining provisions of the Agreement and the
Agreement shall be construed and enforced as if such illegal or invalid
provision had never formed part thereof.
11.4 NOTICE OF ALIENATION OF BENEFITS - Upon the Trustee's receipt of any
voluntary assignment or attempted assignment or of any involuntary assignment,
seizure, garnishment, process of law or execution, or of any notice of the
foregoing, that relates to any benefits payable out of the Trust Fund, the
Trustee will notify the Company thereof.
11.5 ASSIGNMENT - The Agreement may not be assigned by the Trustee except as
provided for herein. It may be assigned by the Company to a successor of its
business, to any corporation resulting from the amalgamation or merger of the
Company with one or more corporations, or to any corporation resulting from the
reorganization of the Company.
11.6 GOVERNING LAW - This Agreement shall be construed, administered and
enforced according to the laws of the Province of Ontario and the laws of Canada
applicable therein.
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11.7 BINDING EFFECT - This Agreement shall enure to the benefit of and be
binding upon the Company, the Trustee and their respective permitted successors
and assigns.
11.8 INCONSISTENCY WITH SERP AGREEMENT - Unless there is a statement to the
contrary, if there is any inconsistency between the provisions of this Agreement
and a SERP Agreement with respect to a particular matter, the provisions of the
SERP Agreement(s) shall govern.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their respective duly authorized officers and their corporate seals to be
affixed as of the day and year first above written.
MITEL NETWORKS CORPORATION
Per: /s/ Xxxxxx Xxxxxxx
------------------------
Per: /s/ Xxxxxxx Xxxxxxxx
------------------------
SUN LIFE FINANCIAL TRUST INC.
Per: XXX
------------------------
Per: XXX
------------------------
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SCHEDULE <> TO THE
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM TRUST AGREEMENT
DEFINITIONS
<> shall mean the Board of Directors of the Company or any committee of
the Board duly authorized to act with respect to the matter in question.
<> shall mean Mitel Networks Corporation or any successor corporation
whether by amalgamation, merger or otherwise.
<> shall have the meaning set forth in Section 3.2.
<> shall have the meaning set forth in Section 5.1.
<> shall have the meaning set forth in the SERP Agreement, at Section
2.
<> shall have the meaning set forth in Section 4.1.
<> shall mean the Income Tax Act (Canada) as the same may be amended from
time to time.
<> shall have the meaning set forth in Section 4.1
<> shall mean any notices, directions, instructions, elections or other
communications given with respect to this Agreement.
<> shall have the meaning set forth in Section 2 of the SERP
Agreements.
<> shall have the meaning set forth in Section 2 of the
SERP Agreements.
<> shall have the meaning set forth in the Preamble. A Participant
shall cease to be a Participant when all amounts due to him or her under the
Plan have been fully distributed in accordance with the SERP Agreement or this
Agreement.
<> shall have the meaning set forth in Section 3.1.
<> shall have the meaning set forth in the Preamble.
<> shall mean the individual Supplemental Executive Retirement
Plan (SERP) Agreement entered into between the Company and the Executive.
<> shall have the meanings set forth in Section 9.10 and
9.12.
<> shall have the meaning set forth in Section 2.3.
<> shall mean Sun Life Financial Trust Inc. or any successor trustee
appointed in accordance with this Agreement.
<> shall mean the Mitel Networks Corporation Executive Pension
Program Trust Fund.
-1-
SCHEDULE <> TO THE
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM TRUST AGREEMENT
ASSUMPTIONS TO
DETERMINE SERP LIABILITY
1. That the value of the Executives' Notional Accounts as at any year-end of
the Company will be determined by the Company, having regard to the
Executives' Earnings and the Company's best estimate of the Rate of Return
in respect of each SERP Agreement.
2. That the value of the Notional Account for each Executive will be
increased by 10% to arrive at the SERP Liability.
3. That the Participant will be 100% vested on the occurrence of an Event of
Default, if not already vested.
4. That the Participant will be responsible (to the exclusion of the Company,
Trustee and Trust Fund) for all personal income taxes imposed under
applicable income tax legislation on any payments received by him or her
from the Trust Fund.
-2-
SCHEDULE <> TO THE
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM TRUST AGREEMENT
CERTIFICATE OF AUTHORIZED SIGNING OFFICERS
The following are specimen signatures of the individuals who are duly authorized
to give all notices, directions, instructions, elections or other communications
from Mitel Networks Corporation to the Trustee pursuant to the Agreement.
Mitel Networks Corporation assumes responsibility for amending this list from
time to time.
Signature: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Assistant Secretary
Signature: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Treasurer
CERTIFIED AS TRUE this 11 day of April, 2001.
/s/ XXX
---------------------
COO
-3-
SCHEDULE <> TO THE
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM TRUST AGREEMENT
FORM OF LETTER OF CREDIT
On Letterhead of the Issuing Bank (including address)
Beneficiary: Applicant:
Sun Life Financial Trust Inc., as Trustee of the Mitel Networks Corporation
Mitel Networks Corporation Executive 000 Xxxxxx Xxxxx
Pension Program Trust Fund Kanata, Ontario
Metro Centre K2K 2W7
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Date: _______________________
Currency & Amount: ____________________ Canadian dollars
Date of Expiry:_________________
_______________________
We hereby issue in the favour of the Beneficiary our irrevocable;
transferable, Standby Letter of Credit for the above-mentioned amount for
account of the Applicant.
This Standby Letter of Credit is available for payment against presentation to
us of a written demand for payment, indicating the amount being claimed, from
the beneficiary on Canadian Imperial Bank of Commerce (<>), Trade Finance
Centre, Toronto, Ontario mentioning our Standby Letter of Credit number and
date, accompanies by the undernoted documents:
(a) a certificate signed by the Beneficiary (i) indicating the name of
the executive on whose behalf this claim is being submitted and
confirming that the amount claimed under the Letter of Credit
(No.__) has accrued to (the executive), in accordance with the terms
of a Supplemental Executive Retirement Plan Agreement dated February
17, 2001 between Mitel Networks Corporation and (the executive),
(ii) stating that the Beneficiary hereunder is entitled to draw upon
this Letter of Credit pursuant to the terms of the trust agreement
between Mitel Networks Corporation and the Beneficiary, as Trustee,
made as
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of February 17, 2001, as amended from time to time, establishing a
retirement compensation agreement, and (iii) stating that the monies
drawn pursuant to this Letter of Credit will be used by the Trustee
to satisfy the obligations under the said trust agreement, (iv)
stating our Standby Letter of Credit number and
(b) the original of this Standby Letter of Credit.
Partial drawings are permitted.
This Standby Letter of Credit shall expire at the counters of our Trade
Finance Centre, 16th floor, Commerce Court North, Toronto, Ontario, M5L 1A2 on
the above-mentioned expiry date and any drawings hereunder must be presented
prior to 4:00 p.m. on that date.
An Applicant shall advise the CIBC in writing no later than 45 days prior
to the expiry date hereof, whether it wishes to purchase an amended Letter of
Credit and, if so, the face amount it wishes the amended Letter of Credit to
carry.
Subject to receipt of the above advice from the Applicant, no later than
30 days prior to the expiry date hereof, the CIBC shall advise the Applicant and
beneficiary in writing as to whether it agrees to amend this Letter of Credit at
the requested face amount and, if so, the fee for such amendment.
In the event that a new Trustee has been chosen by Mitel Networks
Corporation to act as Trustee of the Mitel Networks Corporation Executive
Pension Program Trust Fund, (the <>), the Beneficiary may request
us to issue a new Standby Letter of Credit in favour of the New Trustee by
forwarding to the CIBC, at the above address, a certificate, completed and
signed by the Beneficiary substantially in the form of Appendix 1 below,
accompanied by this original Standby Letter of Credit for its cancellation and
retention by us. Upon receipt by us of the Certificate and this original Letter
of Credit, a new Standby Letter of Credit for the amount of this Standby Letter
of Credit, less any amount(s) drawn hereunder by the Beneficiary and/or any
reductions in amount(s) authorized by the Beneficiary, will be issued in favour
of the New Trustee, as stated in the Beneficiary's certificate, and consistent
with all other terms and conditions of this Standby Letter of Credit.
-5-
This Standby Letter of Credit is issued subject to the Uniform Customs and
Practice for Documentary Credits, (1993 Revision), International Chamber of
Commerce Publication No. 500 and engages us in accordance with the terms
thereof.
-------------------------------
(Authorized Signature)
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APPENDIX I
CERTIFICATE
Date: _______________
To: Canadian Imperial Bank of Commerce
Trade Finance Centre
Commerce Court North, 16th Floor
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Re: Irrevocable Standby Letter of Credit No. T-__________________
We hereby request you to issue a new irrevocable, transferable Standby
Letter of Credit in favour of:
--------------------------------
(Name of New Beneficiary)
--------------------------------
(Address)
We the undersigned waive all our rights as Beneficiary under the
above-referenced Standby Letter of Credit, the original of which (together with
all amendments thereto, if any) is returned herewith for cancellation, and we
ask you to issue a new irrevocable, transferable Standby Letter of Credit in
favour of the new Beneficiary stated above as Trustee of the Mitel Networks
Corporation Executive Pension Program Trust Fund, with provisions consistent
with the above-referenced Standby Letter of Credit. We also request that you
forward the new original Standby Letter of Credit to the new Beneficiary stated
above to the attention of:______________________.
In consideration of your issuing a new Standby Letter of Credit, the
undersigned hereby pays the Bank its fees as it may charge and amend from time
to time for such issuance.
Yours truly,
________________________________
(Name of Present Beneficiary)
By:_____________________________
(authorized officers)
-7-
Acknowledged by Mitel Networks Corporation:
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
-8-
SCHEDULE <> TO THE
MITEL NETWORKS CORPORATION EXECUTIVE PENSION PROGRAM TRUST AGREEMENT
ANNUAL TIMETABLE DEADLINES(1)
November 15 Company to advise the Trustee of the SERP
Liability to December 31 of the following year
November 1-30 Trustee to send reminder notice to the Company
(however, the Company is not relieved of its
obligations should it fail to receive such notice
for any reason whatsoever)
15 business days before
December 31 Company to make Contribution
15 business days before
December 31 Company to arrange for issuance of replacement or
amended Letters of Credit by this deadline
December 31 Former Letters of Credit expire
December 31 Company confirms to the Trustee its prior
remittance of RCA Tax relating to the Contribution
-9-
(1) Assumes no Event of Default has occurred prior to any of the following
dates.
-10-
SCHEDULE 3(s)-APPENDIX G
MITEL NETWORKS CORPORATION
DEFERRED SHARE UNIT PLAN FOR EXECUTIVES
Filed as an exhibit to the annual report on Form 20-F of Mitel for the year
ended April 24, 2005 and the transition period ended April 30, 2005 and
incorporated herein by reference.
SCHEDULE 3(s)
APPENDIX H - SHAREHOLDER LIST
***
SCHEDULE 3(t)
INDEBTEDNESS AND OTHER CONTRACTS
In addition to transactions described in the 2004 Company 20-F,
PART 1:
(i) This is a list of contracts, agreements or instruments where the Company or
a Subsidiary is a party, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument would result in a
Material Adverse Effect:
***
PART 2:
This is a list of outstanding Indebtedness in excess of US$250,000 individually
or US$2,000,000 in the aggregate.
- Certain real property leases entered into by the Company or its
Subsidiaries as set forth in Appendix "A" to this Schedule 3(t).
- Certain Bonds set forth in Appendix "B" to this Schedule 3(t).
- Certain purchase money security interest registrations as set forth in
Appendix "D" to this Schedule 3(t).
- The Company is a party to an "R/3 Software End User Value License
Agreement", effective February 16, 2001 with SAP Canada Inc. This license
agreement provides the Corporation with the business process management
software. The licenses for 966 users are perpetual and cost $625,000 CDN per
year.
- The Company is a party to a capital leasing facility dated October
25, 2004 with Hewlett-Packard Financial Services for the use of hardware and
software, and consulting services. The contract is for a 48 month term for some
of the equipment, and a 36 month term for the balance. The facility is in the
amount of $3.2M CDN.
- The Company is a party to capital leasing facility dated October 12,
2004 with Dell Financial Services for use of servers, workstations, laptops
desktops, and software. The contract is for 36 months in the amount of $507K
CDN.
- The Company is a party to a capital leasing facility dated January 4,
2005 with Xxxxx Fargo Equipment Finance Inc. for use of an exhibit booth. The
contract is for 24 months in the amount of US$150,440.
- There is a lease agreement between Mitel Research Park Corporation and
the Company for the lease of 000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx (as described in
the 2004 Company 20-F).
- Amended and restated credit agreement dated April 21, 2004 between the
Company and Bank of Montreal (as Administrative Agent and Lead Lender) for a
revolving credit facility capped at CDN$30,000,000, (as described in the 2004
Company 20-F)
- Receivables purchase agreement between the Company, Mitel Networks, Inc.
and Mitel Networks Solutions, Inc. (the "Sellers"), the Canada Trust Company in
its capacity as Trustee of Endurance Trust (the "Purchaser"), and Efficient
Capital Corporation (the "Securitization Agent"), effective April 16, 2004,
whereby the Purchaser has agreed to purchase up to USD$34,000,000 and
CDN$6,000,000 (on a revolving basis) of Canadian and US based trade receivables
from the Sellers, as further described in the 2004 Company 20F. See also
Schedule 3(1) of this Disclosure Letter
- Chattel and real property mortgages given by Mitel Networks Limited in
favour of Barclays Bank and securing certain equipment and owned real estate
located in the U.K., (as described in the 2004 Company 20F).
- The Company has fleet leases with Enterprise and Xxxx in North America,
and Xxxxxxx Xxxxx in the UK.
- The Company has leases with National Leasing and IKON for photocopiers.
SCHEDULE 3(t) - APPENDIX "A"
LEASED REAL PROPERTY
SCHEDULE 3(t)
APPENDIX A - LEASED REAL PROPERTY
CANADA
2800, 000 - 0xx Xxxxxx XX 15-APR-04 30-APR-06 ***
Xxxxx 0000
Xxxxxxx, XX X0X 0X0
0000 Xxxxxx Xxx, 000 01-JUL-98 00-XXX-00 ***
Xxxxxxx, XX X0X 0X0
000 Xx. Xxxx Xxxxxx 01-DEC-04 00-XXX-00 ***
Xxxxxxxx, XX X0X 0X0
0000 Xxxxxxxxxx Xx. 1110 01-JAN-02 31-DEC-05 ***
Xxxxxxx, XX X0X 0X0
0000 Xxxxxxx Xxxx Xxxx, 00-XXX-00 02-OCT-06 ***
Carp. ON
000, 000 Xxxxxx Xxxxx, 000 Xxxxx Xxxx 27-MAR-01 00-XXX-00 ***
Xxxxxx, XX X0X 0X0
000 Xxxxxxxx Xxxx. West, 28-OCT-98 00-XXX-00 ***
Xxxxxxxxxxx, XX X0X 0X0
000 Xxx Xxxxxx, 000, 01-MAY-00 00-XXX-00 ***
Xxxxxxx, XX
0000 xxxxxxxxx Xx.-Xxxxxxxx-Xxxxxxx 01-FEB-05 31-JAN-12 ***
0xx xxxxx, Xxxxx , Xx Xxxxxxx XX
X0X 0X0
XXXXXX XXXXXX
0000 Xxxxxxx Xxxxxx, 200 11-JAN-99 00-XXX-00 ***
Xxxxx Xxxx, XX 00000
0000 Xxxxxx Xxxxx, Xxxxx 000 01-MAY-02 00-XXX-00 ***
Xxx Xxxxx, XX 00000
000 Xxxxxxxxx Xxxxx, 000, 223 01-MAY-01 28-FEB-06 ***
XXX Xxxxxxxxxx, XX 00000
0000 Xxxxxxxx Xxxx, X-0 15-JAN-98 31-JAN-06 ***
Xxxxxxx, XX 00000
000-000 Xxxxxxxxxx Xxxxx Xxxxxxx 25-SEP-00 00-XXX-00 ***
Xxxxxxx, XX 00000
The Kartyn Building 01-JAN-03 31-DEC-05 ***
000 X. Xxxxxxxx Xx, Xxxxx 00
Xxxx Xxxxx. XX 00000
(Chicago)
000-000 Xxxxxxxxxx Xxxx 1-AUG-01 00-XXX-X0 ***
-00-
Xxxxxxxxxxxx, XX ***
(Boston)
0000 Xxxx Xxx Xxxxxxx, 128 01-DEC-01 00-XXX-00 ***
Xxxxx, XX 00000
(Minneapolis)
0000-X Xx. Xxxxxxx Xxxx 01-AUG-98 31-JUL-06 ***
Xxxxxxxxx, XX 00000
137-1099 Wall Street West 16-MAY-03 30-JUN-06 ***
Xxxxxxxxx, XX 00000
00000 Xxxxxxxx Xxxxxxx 01-MAR-96 30-APR-06 ***
Xx. Xxxxxx, XX 00000
0 Xxxxxxx Xxxxxxxx Xxxx. 01-MAR-96 00-XXX-00 ***
Xxxxxx, XX 00000
(Albany)
0 Xxxx Xxxxxx 14-MAY-04 30-JUN-09 ***
00xx Xxxxx
Xxx Xxxx, XX 00000
00-000 Xxx Xxxx Xxxxx 01-JAN-01 00-XXX-00 ***
Xxxx xx Xxxxx, XX (Rochester)
GSW Distribution Center #1 01-MAY-04 30-JUN-07 ***
000 X.X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxx, XX 00000
000 Xxx Xxxxx Xxxxxx, 400 01-AUG-04 31-JUL-09 ***
Xxxxxx, XX 00000-0000
160-9100 Arboretum Parkway 01-FEB-04 00-XXX-00 ***
Xxxxxxxx, XX 00000
0000 Xxxxxxx Xxxxxx 01-NOV-02 31-OCT-07 ***
Xxxxxxxx, XX 00000
(Little Chute)
X00 X00000 Xxxxxxxxx Xxxxx 01-JAN-03 00-XXX-00 ***
Xxxxxxxx, Xxxxxxxxx
(Xxxxxxxxx)
XXXXXX XXXXXXX
Mitel Business Park Freehold Freehold ***
Xxxxxxxxxxx
Xxxxxxxxxxxxx, XX00 0XX
Allantoun House 1999 2024 ***
Linnet Way
Strathclyde Business Park
Bellshill, Lanarkshire
000-000 Xxxxxxxxxx Xxxxxx 0000 2016 ***
Xxxxxx XX0 0XX
-58-
The Gatehouse 1980 2005 ***
Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxx X0 0XX
2230 The Cresert 1990 2015 ***
Xxxxxxxxxx Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, X00 0XX
9 The Parks 2003 2013 ***
Xxxxxx-Le-Willows
Xxxxxxxxxx, XX00 OJQ
Xxxxxxx House 1995 0000 ***
Xxxxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx
Xxx Xxxxx House 2002 2014 ***
India Street, Glasgow
Suite 1.19,16 St Martins Le Grand Annual license Annual license ***
London, EC1 A 4NA
0xx Xxxxx, 0 Xxxxxxx Xxx Annual license Annual license ***
London, XX0 0XX
Suite 3N International House Annual license Annual license ***
Xxxxxxxx International Technology Park
Blantyre,G72 OBN
INTERNATIONAL OFFICES
Centro Direzional Milano Oltre 2001 2007 ***
Xxxxxxx Xxxxxxxx
20090 Segrate, MI
Xxxxxxxxxxx 0X, Xxxxxxxxxx, XX 2004 2009 ***
Dubai Internet City, Renewable annually Renewable annually ***
Xxxxxx 000/000, Xxxxxxxx Xx.0.
XX Xxx 000000, Xxxxx, XXX
Le Quebec,11 Xxx Xxxxxxx 2002 2011 ***
Cartier,78280
Guyancourt (France)
Prinzenalle 15, D-40549 2003 2013 ***
Dusseldorf, Germany
Bosque de Alisos 47-A Int. A2-02
Bosques de las Lomas, Delegacion Cuajimalpa
Mexico DF, CP 05102 2003 2005 ***
Xxxx 0000, 00xx Xxxxx 2005 2007 ***
00 Xxxx Xxx Xxxxxx
Xxxxxxxx Xxx
Xxxx Xxxx
00 Xxxxx Xxxx #00-00 2005 0000 ***
-00-
xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx 000000
Suite 1203B, Level 12 2004 2007
000-000 Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxxxx
SCHEDULE 13(t)
APPENDIX B - BONDS AND GUARANTEES
SEE ATTACHED
BONDS & GUARANTEES
OUTSTANDING AT APRIL 20, 2005
***
SCHEDULE 3(t)
APPENDIX C-BMO WAIVER
SEE ATTACHED
[BMO LOGO] BANK OF MONTREAL LOAN PRODUCTS GROUP
INVESTMENT & CORPORATE BANKING
4th floor, 0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
November 4, 2004
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX X0X 0X0
Attention: Xxxx XxXxxxxx
Dear Sir:
Re; Waiver/consent request under Amended and Restated Credit Agreement made as
of April 21, 2004 ("Credit Agreement") between Mitel Networks Corporation
("Mitel" or the "Borrower",) as borrower, the Lenders from time to time parties
hereto ("Lenders"), as lenders, and Bank of Montreal as administrative agent on
behalf of the Lenders ("Administrative Agent"), as amended.
We are in receipt of your letter dated October 22, 2004 requesting consent in
writing of the Administrative Agent and the Requited Lenders to non-compliance
with minimum EBITDA covenant for the fiscal quarter ending October 24, 2004, per
Section 8.3(ii) of the Credit Agreement, as well as a waiver by the
Administrative Agent and the Required Lenders of the Event of Default arising
under Section 11.1(e) of the Credit Agreement as a result thereof.
Bank of Montreal hereby agrees, as Administrative Agent and current sole Lender
under the Credit Agreement, to the consent and waiver requested above.
Very truly yours,
/s/ Xxxxx Xxx
--------------------------------
Xxxxx Xxx
Vice President
A Member of BMO [BMO LOGO] Financial Group
SCHEDULE 3(t)
APPENDIX D-BMO WAIVER
SEE ATTACHED
[BMO LOGO] BANK OF MONTREAL LOAN PRODUCTS GROUP
INVESTMENT & CORPORATE BANKING
4th floor, 0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
January 26, 2005
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx XxXxxxxx
Dear Sir:
Re; Waiver/consent request under Amended and Restated Credit Agreement made as
of April 21, 2004 ("Credit Agreement") between Mitel Networks Corporation
("Mitel" or the "Borrower",) as borrower, the Lenders from time to time parties
hereto ("Lenders"), as lenders, and Bank of Montreal as administrative agent on
behalf of the Lenders ("Administrative Agent"), as amended.
We are in receipt of your letter dated requesting consent in writing of the
Administrative Agent and the Requited Lenders to non-compliance with minimum
EBITDA covenant for the fiscal quarter ending January 24, 2005, per Section
8.3(ii) of the Credit Agreement; as well as a waiver by the Administrative Agent
and the Required Lenders of the Event of Default arising under Section 11.1(e)
of the Credit Agreement as a result thereof.
Bank of Montreal hereby agrees, as Administrative Agent and current sole Lender
under the Credit Agreement, to the consent and waiver requested above.
Very truly yours,
/s/ Xxxxx Xxx
--------------------------------
Xxxxx Xxx
Vice President
(000) 000-0000
A Member of BMO [BMO LOGO] Financial Group
SCHEDULE 3(C) - APPENDIX "E"
MITEL NETWORKS CORPORATION (currency: April 20, 2005)
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
2 4 613695483 MITEL HEWLETT-PACKARD E. O. NFMD EQUIPMENT
20050329 1437 8077 2187 NETWORKS FINANCIAL SCHEDULE ANY
March 29, 2005 000 XXXXXX XX XXXXXXXX XXXXXX AND ALL
5 Years KANATA ON COMPANY EQUIPMENT,
K2K 2W7 0000 XXXXXXXX XXXXXXXX XXX
XXX XXXXXXXXXX,
XXXXXXXXXXX XX PURSUANT TO
X0X XX0 EQUIPMENT
SCHEDULE NO.
GA10338000004CAN,
AND AMENDMENTS
THERETO, UNDER
MASTER LEASE
AGREEMENT NO.
GA10338, AND ALL
AMOUNTS OWING
THEREUNDER.
3 5 612046467 MITEL HEWLETT-PACKARD E.O.NFMD MASTER LEASE
20050117 1447 8077 8665 NETWORKS FINANCIAL GA103380 ANY AND
January 17, 2005 CORPORATION SERVICES CANADA ALL EQUIPMENT,
4 Years 350 LEGGET COMPANY TANGIBLE AND
DRIVE 5150 SPECTRUM INTANGIBLE,
KANATA ON WAY LEASED PURSUANT
K2K 2W7 XXXXXXXXXXX XX XX XXXXXXXXX
X0X 0X0 UNDER MASTER
LEASE XXXXXXXXX
XX. XX000000
DATED OCTOBER
25, 2004 AND ANY
PROCEEDS
THEREFROM.
4 8 609864651 MITEL DELL FINANCIAL E.O.NFMD ALL DELL
20041015 1727 8077 5018 NETWORKS SERVICES CANADA COMPUTER
-2-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
October 15, 2004 CORPORATION 155 XXXXXX XXXXX EQUIPMENT AND
5 years 000 XXXXXX XXXX, XXX 000 XXXXXXXXXXX
XXXXX XXXXX XXXX XX WHEREVER
XXXXXX XX X0X 0X0 LOCATED
K2K 2W7 HERET OFORE OR
MITEL HEREAFTER
NETWORKS LEASED TO
CORPORATION DEBTOR BY
CORPORATION SECURED PARTY
MITEL PURSUANT TO A
NETWORKS MASTER LEASE
350 LEGGET AGREEMENT NO.
DRIVE 138484 DATED THE
XXXXXX XX 00XX XX XXXXXXX
X0X 0X0 2004 TOGETHER
CORPORATION WITH ALL
MITEL SUBSTITUTIONS,
NETWORKS ADDITIONS.
350 LEGGET ACCESSIONS AND
DRIVE REPLACEMENTS
OTTAWA ON THERETO AND
K2K 2W7 THERE OF NOW AND
HEREAFTER
INSTALLED IN.
AFFIXED TO. OR
USED IN
CONJUNCTION
WITH SUCH
EQUIPMENT AND
PROCEEDS
THEREOF
TOGETHER WITH
ALL RENTAL OR
INSTALLMENT [SIC]
PAYMENTS,
INSURANCE
PROCEEDS, AND
-3-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
PAYMENTS DUE OR
TO BECOME DUE
AND ARISING FROM
OR RELATING TO
SUCH EQUIPMENT.
PROCEEDS ALL
PRESENT AND
AFTER-ACQUIRED
PERSONAL
PROPERTY.
8 20 891638748 MITEL NATIONAL LEASING E ALL PHOTOCOPIERS
20030212 1604 6005 4172 NETWORKS GROUP INC. L# OF EVERY NATURE
February 12, 2003 CORPORATION 2200001 OR KIND
5 years 350 LEGGET 1558 XXXXXXX DESCRIBED IN
DRIVE PLACE LEASE NUMBER
OTTAWA ON WINNIPEG MB 2200001 BETWEEN
K2K 2W7 X0X 0X0 THE SECURED
PARTY, AS LESSOR
AND THE DEBTOR
AS LESSEE, AS
AMENDED FROM
TIME TO TIME
TOGETHER WITH
ALL
ATTACHMENTS.
ACCESSORIES AND
SUBSTITUTIONS.
9 22 086417217 MITEL IKON OFFICE E, RICOH COPIER
20020509 1425 0088 0828 NETWORKS SOLUTIONS AS=$33360, XXXXXX 000
Xxx 00, 0000 XXXX. 0000 XXXXXXX DM=MAY H4725000014
4years 000 XXXXXX XXXXX 01, 2006 SR 000 XXXXXXXX
XXXXX XXXXXXXXXXX XX H4910202749
XXXXXX XX X0X 0X0
K2K 2W7
10 23 086317875 MITEL IKON OFFICE E, RICOH COPIER
20011219 1139 0043 6834 NETWORKS SOLUTIONS AS=$39600, AFICIO 551
December 19, 2001 CORPORATON 5200 ORBITOR DM=DEC H4715401189
-4-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/ Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral or Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
----- ------ ------------------- -------------- ---------------- -------------- ----------------- ----------
4 years 135 MATRESON BLVD.W DRIVE 01, 0000
XXXXXXXXXXX XX X0X 0X0 XXXXXXXXXXX
XX LAW 5B4
11 24 876264327 MITEL NETWORKS HEWLETT-PACKARD E.O
20010917 1205 1590 CORPORATION 350 LEGGET (CANADA)LTD.
0000 XXXXX XXXXXX XX 5150 SPECTRUM
September 17, 2001 K2K 2W7 WAY MISSISSAUGA
5 years ON X0X 0X0
13 34 871569792 20010418 MITEL NETWORKS GE CAPITAL X.X.XX ALL PRESENT AND
1343 1254 8506 CORPORATION 350 LEGGET VEHICLE AND AFTER ACQUIRED
April 18, 2001 DRIVE KANATA ONT EQUIPMENT LEASING MOTOR VEHICLES,
5 years K2K 2W7 INC. 2300 TRAILER, TRACTORS,
MEADOWVALE BLVD., VAN AND BUSES
2ND FLOOR UNDER LEASE AND
MISSISSAUGA ONT L5N PROCEEDS THEREOF
5P9 (FLEET #5497) AND
SUBSEQUENT
35 871569792 20020723 BRECONRIDGE AMENDMENT
0000 0000 0000 MANUFACTURING TO ADD 2ND
July 23, 2002 SOLUTIONS DEBTOR TO
CORPORATION 000 XXXXXX XXXXXXXXXXXX
XXXXX XXXXX XXX X0X
0X0
36 871569792 20030321 CORPORATION MITEL I, E, A, 0, AMENDMENT
1448 1530 6290 NETWORKS 350 XXXXXX XX ADD ADDITIONAL
March 21, 2003 DR. XX XXX 00000 XXXXXXX.XXXXX
XXXXXX XX COLLATERAL
CLASSIFICATION.
-5-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/ Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral or Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
X0X 0X0
MITEL
NETWORKS CORPORATION
CORPORATION
MITEL NETWORKS
350 LEGGET DR.PO XXX
00000 XXXXXX XX
X0X 0X0
CORPORATION MITEL
NETWORKS MITEL
NETWORKS CORPORATION
350 LEGGET DR. XX XXX
00000 XXXXXX XX X0X
0X0
CORPORATION MITEL NETWORKS(CURRENCY, APRIL 20, 2005)
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/ Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral or Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
2 4 613695483 MITEL NETWORKS 000 XXXXXXX-XXXXXXX X, X, XXXX EQUIPMENT
20050329 1437 0000 XXXXXX XX XXXXXX XX FINANCIAL SCHEDULE, ANY
2187 K2K 2W7 SERVICES CANADA AND ALL EQUIPMENT,
March 29, 2005 COMPANY 5150 TANGIBLE AND
5 years SPECTRUM WAY INTANGIBLE,
MISSISSAUGA ON PURSUANT TO
LAW 5G1 EQUIPMENT
-6-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
SCHEDULE NO.
GA10338000004CAN,
AND AMENDMENTS
THERETO, UNDER
MASTER LEASE
AGREEMENT NO.
GA10338 AND ALL
AMOUNTS OWING
THEREUNDER.
3 5 612046467 MITEL NETWORKS HEWLETT-PACKARD E, O, NFMD MASTER LEASE
20050117 1447 8077 CORPORATION 350 FINANCIAL GA103380 ANY AND
0000 XXXXXX XXXXX XXXXXXXX XXXXXX ALL EQUIPMENT,
January 17, 2005 XXXXXX XX X0X 0X0 COMPANY 5150 TANGIBLE AND
4 years SPECTRUM WAY INTANGIBLE,
MISSISSAUGA ON LEASED PURSUANT
X0X 0X0 TO SCHEDULES
UNDER MASTER
LEASE AGREEMENT
XX. XX000000
DATED OCTOBER
25, 2004 AND ANY
PROCEEDS
THEREFROM.
4 8 609864651 MITEL NETWORKS DELL FINANCIAL E, O, NFMD ALL DELL
20041015 1727 8077 CORPORATION 350 SERVICES CANADA COMPUTER
0000 XXXXXX XXXXX 155 XXXXXX XXXXX EQUIPMENT AND
October 15, 2004 XXXXXX XX X0X 0X0 ROAD, STE 501 PERIPHERALS
5 years NORTH YORK ON WHEREVER
M2H 3N5 LOCATED
HERETOFORE OR
HEREAFTER
LEASED TO
MITEL NETWORKS DEBTOR BY
CORPORATION SECURED PARTY
CORPORATION MITEL PURSUANT TO A
NETWORKS MASTER LEASE
AGREEMENT NO.
-7-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- ---------------- ---------------- -------------- ----------------- ----------
350 LEGGET 138484 DATED THE
DRIVE 12TH OF OCTOBER
OTTAWA ON 2004 TOGETHER
K2K 2W7 WITH ALL
SUBSTITUTIONS,
CORPORATION MITEL ADDITIONS,
NETWORKS ACCESSIONS AND
350 LEGGET REPLACEMENTS
DRIVE THERETO AND
OTTAWA ON THEREOF NOW AND
K2K 2W7 HEREAFTER
INSTALLED IN,
AFFIXED TO, OR
USED IN
CONJUNCTION
WITH SUCH
EQUIPMENT AND
PROCEEDS
THEREOF
TOGETHER WITH
ALL RENTAL OR
INSTALLMENT [SIC]
PAYMENTS.
INSURANCE
PROCEEDS, AND
PAYMENTS DUE OR
TO BECOME DUE
AND ARISING FROM
OR RELATING TO
SUCH EQUIPMENT.
PROCEEDS ALL
PRESENT AND
AFTER-ACQUIRED
PERSONAL
PROPERTY.
8 20 891638748 MITEL NATIONAL LEASING E ALL PHOTOCOPIERS
20030212 1604 6005 4172 NETWORKS GROUP INC. L* OF EVERY NATURE
-8-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
February 12, 2003 CORPORATION 2200001 OR KIND
5 years 350 LEGGET 1558 XXXXXXX DESCRIBED IN
DRIVE PLACE LEASE NUMBER
OTTAWA ON WINNIPEG MB 2200001 BETWEEN
K2K 2W7 X0X 0X0 THE SECURED
PARTY, AS LESSOR
AND THE DEBTOR
AS LESSEE, AS
AMENDED FROM
TIME TO TIME,
TOGETHER WTTH
ALL
ATTACHMENTS,
ACCESSORIES AND
SUBSTITUTIONS.
9 22 086417217 MITEL IKON OFFICE E. RICOH COPIER
20020509 1425 NETWORKS SOLUTIONS AS=$33360, AFICI0 551
0088 0828 CORP. 5200 ORBITOR DM=MAY H4725000014
May 09, 2002 000 XXXXXX XXXXX 01, 2006 SR 740 FINISHER
0 xxxxx XXXXX XXXXXXXXXXX XX H4910202749
XXXXXX XX X0X 0X0
X0X 0X0
10 23 086317875 20011219 MITEL NETWORKS IKON OFFICE E. RICOH COPIER AFICIO
1139 CORPORATION SOLUTIONS AS=$39600, 551
0043 6834 135 XXXXXXXX 5200 ORBITOR DM=DEC H4715401189
December 19, 0000 XXXX. X XXXXX 01, 2005
4 years MISSISSAUGA XXXXXXXXXXX XX
XX X0X 0X0 X0X 0X0
-9-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
11 24 876264327 MITEL HEWLETT-PACKARD E, O
20010917 1205 1590 9895 NETWORKS (CANADA) LTD.
September 17,2001 CORPORATION 5150 SPECTRUM
5 years 000 XXXXXX XXX
XXXXX XXXXXXXXXXX XX
XXXXXX XX X0X 0X0
K2K 2W7
13 34 871569792 MITEL GE CAPITAL E, O, MV ALL PRESENT AND
20010418 1343 1254 8506 NETWORKS VEHICLE AND AFTER ACQUIRED
April 18,2001 CORPORATION EQUIPMENT MOTOR VEHICLES,
5 years 350 LEGGET LEASING INC. TRAILER.
DRIVE 2300 MEADOWVALE TRACTORS, VAN
KANATA ONT BLVD., 2ND FLOOR AND BUSES UNDER
K2K 2W7 MISSISSAUGA ONT LEASE AND
L5N 5P9 PROCEEDS
THEREOF (FLEET
#5497) AND
SUBSEQUENT
35 871569792 BRECONRIDGE AMENDMENT
20020723 1659 1254 9129 MANUFACTURIN
July 23, 2002 G SOLUTIONS TO ADD 2ND
CORPORATION DEBTOR
000 XXXXXX XX
XXXXX XXXXXXXXXXXX
XXXXX XXX
X0X 0X0
36 871569792 CORPORATION I.E,A.O.
20030321 1448 1530 6290 MITEL MV AMENDMENT
March 21, 2003 NETWORKS ADD ADDITIONAL
350 LEGGET DR. DEBTORS.
XX XXX 00000 XXXXX
XXXXXX XX XXXXXXXXXX
X0X 0X0 CLASSIFICA-
TION.
MTTEL
-10-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
NETWORKS
CORPORATION
CORPORATION
MITEL
NETWORKS
350 LEGGET DR.
XX XXX 00000
XXXXXX XX
X0X 0X0
CORPORATION
MITEL
NETWORKS
MITEL
NETWORKS
CORPORATION
35O LEGGET DR.
XX XXX 00000
XXXXXX XX
X0X 0X0
MITEL NETWORKS CORPORATION CORPORATION MITEL NETWORKS (currency: April 20, 2005)
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
2 4 609864651 MITEL DELL FINANCIAL E. O. NFMD ALL DELL
20041015 1727 8077 5018 NETWORKS SERVICES CANADA COMPUTER
October 15, 2004 CORPORATION 155 XXXXXX XXXXX EQUIPMENT AND
5 years 000 XXXXXX XXXX, XXX 000 XXXXXXXXXXX
XXXXX XXXXX XXXX XX WHEREVER
XXXXXX XX X0X 0X0 LOCATED
K2K 2W7 HERETOFORE OR
HEREAFTER
MITEL LEASED TO
-11-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
NETWORKS DEBTOR BY
CORPORATION SECURED PARTY
CORPORATION PURSUANT TO A
MITEL MASTER LEASE
NETWORKS AGREEMENT NO.
350 LEGGET 138484 DATED THE
DRIVE 12TH OF OCTOBER
OTTAWA ON 2004 TOGETHER
K2K 2W7 WITH ALL
SUBSTITUTIONS,
CORPORATION ADDITIONS,
MITEL ACCESSIONS AND
NETWORKS REPLACEMENTS
350 LEGGET THERETO AND
DRIVE THEREOF NOW AND
XXXXXX XX XXXXXXXXX
X0X 0X0 INSTALLED IN,
AFFIXED TO, OR
USED IN
CONJUNCTION
WITH SUCH
EQUIPMENT AND
PROCEEDS
THEREOF
TOGETHER WITH
ALL RENTAL OR
INSTALLMENT [SIC]
PAYMENTS.
INSURANCE
PROCEEDS, AND
PAYMENTS DUE OR
TO BECOME DUE
AND ARISING FROM
OR RELATING TO
SUCH EQUIPMENT.
PROCEEDS ALL
PRESENT AND
-12-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
AFTER-ACQUIRED
PERSONAL
PROPERTY.
7 25 871569792 MITEL GE CAPITAL B. O. MV ALL PRESENT AND
20010418 1343 1254 8506 NETWORKS VEHICLE AND AFTER ACQUIRED
April 18, 2001 CORPORATION EQUIPMENT MOTOR VEHICLES,
5 years 350 LEGGET LEASING INC. TRAILER,
DRIVE 2300 MEADOWVALE TRACTORS, VAN
KANATA ONT BLVD., 2ND FLOOR AND BUSES UNDER
K2K 2W7 MISSISSAUGA ONT LEASE AND
L5N 5P9 PROCEEDS
THEREOF (FLEET
#5497)AND
SUBSEQUENT
26 871569792 BRECONRIDGE AMENDMENT
20020723 1659 1254 9129 MANUFACTURIN
July 23, 2002 G SOLUTIONS TO ADD 2ND
CORPORATION DEBTOR TO
000 XXXXXX XXXXXXXXXXXX
XXXXX
XXXXX XXX
X0X 0X0
27 871569792 CORPORATION I.E, A.O. AMENDMENT
20030321 1448 1530 6290 MITEL MV
March 21, 2003 NETWORKS ADD
350 LEGGET DR. ADDITIONAL
XX XXX 00000 XXXXXXX.
XXXXXX XX AMEND
K2K 2W7 COLLATERAL
CLASSIFICA-
MITEL TION.
NETWORKS
CORPORATION
CORPORATION
MITEL
NETWORKS
-13-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
350 LEGGET DR.
XX XXX 00000
XXXXXX XX
X0X 0X0
CORPORATION
MITEL
NETWORKS
MITEL
NETWORKS
CORPORATION
350 LEGGET DR.
XX XXX 00000
XXXXXX XX
X0X 0X0
CORPORATION MITEL NETWORKS MITEL NETWORKS CORPORATION (currency; April 20, 2005)
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
2 4 609864651 MITEL DELL FINANCIAL E. O. NFMD ALL DELL
20041015 1727 8077 5018 NETWORKS SERVICES CANADA COMPUTER
October 15, 2004 CORPORATION 155 XXXXXX XXXXX EQUIPMENT AND
5 years 000 XXXXXX XXXX, XXX 000 XXXXXXXXXXX
XXXXX XXXXX XXXX XX WHEREVER
XXXXXX XX X0X 0X0 LOCATED
K2K 2W7 HERETOFORE OR
HEREAFTER
MITEL, LEASED TO
NETWORKS DEBTOR BY
CORPORATION SECURED PARTY
CORPORATION PURSUANT TO A
MITEL MASTER LEASE
NETWORKS AGREEMENT NO.
350 LEGGET 138484 DATED THE
-14-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
DRIVE 12TH OF OCTOBER
OTTAWA ON 2004 TOGETHER
K2K 2W7 WITH ALL
SUBSTITUTIONS,
CORPORATION ADDITIONS,
MITEL ACCESSIONS AND
NETWORKS REPLACEMENTS
350 LEGGET THERETO AND
DRIVE THEREOF NOW AND
XXXXXX XX XXXXXXXXX
X0X 0X0 INSTALLED IN,
AFFIXED TO, OR
USED IN
CONJUNCTION
WITH SUCH
EQUIPMENT AND
PROCEEDS
THEREOF
TOGETHER WITH
ALL RENTAL OR
INSTALLMENT (SIC)
PAYMENTS,
INSURANCE
PROCEEDS, AND
PAYMENTS DUE OR
TO BECOME DUE
AND ARISING FROM
OR RELATING TO
SUCH EQUIPMENT.
PROCEEDS ALL
PRESENT AND
AFTER-ACQUIRED
PERSONAL
PROPERTY.
-15-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
7 25 871569792 MITEL GE CAPITAL X.X.XX ALL PRESENT AND
20010418 1343 1254 8506 NETWORKS VEHICLE AND AFTER ACQUIRED
April 18, 2001 CORPORATION EQUIPMENT MOTOR VEHICLES,
5 Years 350 LEGGET LEASING INC. TRAILER,
DRIVE 2300 MEADOWVALE TRACTORS, VAN
KANATA ONT BLVD., 2ND FLOOR AND BUSES UNDER
K2K 2W7 MISSISSAUGA ONT LEASE AND
L5N 5P9 PROCEEDS
THEREOF (FLEET
#5497) AND
SUBSEQUENT
26 871569792 BRECONRIDGE AMENDMENT
20020723 1659 1254 9129 MANUFACTURIN
July 23, 2002 G SOLUTIONS TO ADD 2ND
CORPORATION DEBTOR TO
350 LEGGET XXXXXXXX-
XXXXX XXXX
XXXXX XXX
X0X 0X0
27 871569792 CORPORATION I.E,A.O. AMENDMENT
20030321 1448 1530 6290 MITEL MV
March 21, 2003 NETWORKS ADD
350 LEGGET DR. ADDITIONAL
XX XXX 00000 XXXXXXX.
XXXXXX XX AMEND
K2K 2W7 COLLATERAL
CLASSIFI-
MITEL CATION.
NETWORKS
CORPORATION
CORPORATION
MITEL
NETWORKS
000 XXXXXX XX
XX XXX 00000
XXXXXX XX
X0X 0X0
-16-
File No. General Collateral Purpose of
Search Registration No. Secured Description (and/or Financial
Page Registration Date Debtor(s) Name Party(ies) Collateral Motor Vehicle Change
No: No. Registration Period and Address Name and Address Classification Description) Statement
------ ----- ----------------------- -------------- ---------------- -------------- ----------------- ----------
CORPORATION
MITEL
NETWORKS
MITEL
NETWORKS
CORPORATION
350 LEGGET DR.
XX XXX 00000
XXXXXX XX
X0X 0X0
