EXHIBIT 99.3
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THIS RETURN OF CAPITAL, VOTING AND CONVERSION AGREEMENT is made as of the 22nd
day of June, 2007.
BETWEEN:
EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., as agent for EdgeStone
Capital Equity Fund II-A, L.P. and its parallel investors, and
EDGESTONE CAPITAL EQUITY FUND II NOMINEE, INC., as nominee for
EdgeStone Capital Equity Fund II-A, L.P. and its parallel investors
(collectively, the "SHAREHOLDER")
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MITEL NETWORKS CORPORATION, a corporation governed by the laws of
Canada,
("MITEL")
RECITALS:
A. The Shareholder is the beneficial owner of 20,000,000 issued and
outstanding Class A convertible preferred shares, Series 1 shares (the
"SERIES A SHARES") in the capital of Mitel.
B. The Shareholder is also the holder of a Series 2 warrant (the "SERIES 2
WARRANT") to acquire a certain number of Common Shares determined in
accordance with the terms and conditions of the Series 2 Warrant,
exercisable upon the occurrence of certain events.
C. Mitel has agreed to acquire indirectly all of the outstanding stock of
Inter-Tel (Delaware), Incorporated ("INTER-TEL") (the "MERGER") pursuant
to the terms of an agreement and plan of merger between Inter-Tel, Mitel
and a subsidiary of Mitel dated April 26, 2007.
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D. In contemplation of the Merger, Mitel has agreed to return TWENTY MILLION
Canadian Dollars (CDN$20,000,000) to the Shareholder as a return of
capital invested in the Series A Shares by the Shareholder, by way of a
reduction of the stated capita] of the SERIES A Shares.
E. In further contemplation of the Merger, Mitel has agreed, subject to
receiving the required shareholder approval therefor, to amend the terms
and conditions of the Series A Shares to provide that each Series A Share
shall be convertible, at the option of the holder thereof, into 0.0008976
of a Class 1 Share (as defined below) and 0.2679946 of a Common Share.
F. In further contemplation of the Merger, and subsequent to the return of
capital set forth in Recital D above, the Shareholder has agreed to
convert, in accordance with their terms, as amended, the Series A Shares
into 17,952 Class 1 convertible preferred shares (the "CLASS 1 SHARES"),
such Class 1 Shares to be created by Mitel by the filing of articles of
amendment prior to the closing of the Merger, and 5,359,893 Common Shares
and Mitel has agreed to issue to the Shareholder an additional 1,048 Class
1 Shares as additional consideration for the Shareholder's agreement to
convert its Series A Shares.
G. Also in contemplation of the Merger, the Shareholder and Mitel have agreed
to take certain other actions as set forth in this Agreement.
THEREFORE, the parties agree as follows:
1. DEFINITIONS
Whenever used in this Agreement, the following words and terms have the meanings
set out below:
"AFFILIATE" HAS the meaning set forth in the CANADA BUSINESS CORPORATIONS
ACT;
"AGREEMENT" means this Return of Capital, Voting and Conversion Agreement,
including all schedules, and all amendments or restatements, as permitted,
and references to "ARTICLE" or "SECTION" mean the specified Article or
Section of this Agreement;
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"ARTICLES" means the articles of amendment to be filed by Mitel prior to
the closing of the Merger, which articles of amendment shall, INTER ALIA,
amend the TERMS and conditions attaching to the Series A Shares to provide
that each Series A Share shall be convertible, at the option of the holder
thereof, into 0.0008976 of a Class 1 Share and 0.2679946 of a Common
Share;
"BUSINESS DAY" means any day on which the Canadian chartered banks are
open for business in the City of Ottawa, excluding Saturdays and Sundays;
"CLOSING DATE" has the meaning set forth in Section 2;
"COMMON SHARES" means the common shares in the capital of Mitel;
"ENCUMBRANCES" means pledges, liens, charges, security interests, leases,
title retention agreements, mortgages, restrictions, developments or
similar agreements, easements, rights-of-way, title defects, options or
adverse claims, or encumbrances of any kind or character whatsoever; and
"PARTIES" means the Shareholder and Mitel, collectively, and "Party" means
any one of them.
2. NOTIFICATION OF CLOSING OF THE MERGER
At least ten (10) Business Days prior to the date of closing (the "CLOSING
DATE") of the Merger, Mite] shall provide written notice (the "MITEL NOTICE") of
such Closing Date to the Shareholder, which notice shall also include reference
to the date on or before which the Shareholder is required to deliver, in
connection with the Merger, to Mitel the Shareholder's notice of conversion
pursuant to the Articles.
3. RETURN OF CAPITAL
Immediately prior to the Merger, Mitel shall return to the Shareholder an
aggregate of TWENTY MILLION Canadian Dollars (CDN$20,000,000) as a return of
capital on the Series A Shares held by the Shareholder, by way of a reduction of
the stated capital of the Series A Shares. Mitel shall make the return of
capital by way of certified cheque drawn in the name of or wire transfer to the
account of the Shareholder (without withholding, deduction or set off in any
manner
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whatsoever other than any withholding required or expressly permitted by
applicable tax law). In the event the Shareholder requires payment of the return
of capital by way of wire transfer, the Shareholder shall provide to Mite] in
writing its wire transfer coordinates at least three (3) Business Days prior to
the Closing Date, together with the coordinates of a contact person at the
Shareholder's bank authorized to make the necessary arrangements with regards to
such wire transfer.
4. AGREEMENT TO CONVERT THE SERIES A SHARES
The Shareholder hereby agrees to convert to Class 1 Shares and Common Shares the
Series A Shares in accordance with the Articles immediately prior to and
conditional upon the closing of the Merger, but subsequent to receipt of the
return of capital payment set forth in Section 3, in respect of which conversion
the Shareholder shall receive from Mitel 17,952 Class 1 Shares and 5,359,893
Common Shares and Mitel hereby AGREES to issue to the Shareholder, immediately
prior to and conditional upon the closing of the Merger, an additional 1,048
Class 1 Shares FREE and clear of all Encumbrances imposed by or through Mite].
At least six (6) Business Days prior to the Closing Date, the Shareholder shall
deliver to Mitel a written conversion notice (the "EDGESTONE CONVERSION NOTICE")
in accordance with the Articles regarding the conversion of the Series A Shares.
The EdgeStone Conversion Notice shall be in the form attached to this Agreement
as Schedule "A".
5. CANCELLATION OF SERIES 2 WARRANT
Immediately prior to and conditional upon the closing of the Merger, the
Shareholder shall surrender to Mitel for cancellation the warrant certificate
evidencing the Series 2 Warrant. As and from the closing of the Merger, the
Shareholder agrees that the Series 2 Warrant, and all of the Shareholder's
rights thereunder, shall be terminated in its and their entirety.
6. FAILURE TO CLOSE THE MERGER
In the event that the closing of the Merger has not occurred within thirty (30)
days of the Closing Date referenced in the Mite] Notice, the EdgeStone
Conversion Notice delivered in accordance with Section 4 of this Agreement shall
be void and of no further effect. Mite] shall forthwith
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return to the Shareholder the share certificates evidencing the Series A Shares
and the warrant certificate evidencing the Series 2 Warrant.
7. AGREEMENT TO VOTE
The Shareholder hereby agrees to vote (or cause to be voted) the Series A
Shares, whether by way of vote, in person or by proxy, at any shareholders
meeting or by way of written consent, in favour of, and to take all other
actions necessary or desirable to approve the amendment of the articles of Mitel
to:
(a) create a new class of shares in the capital of Mitel, the Class 1
Shares, substantially on the terms and conditions set forth in the
draft subscription agreement provided to the Shareholder as Schedule
A to the Consent and Waiver executed by the Shareholder on or about
the date hereof and to amend the terms and conditions attaching to
the Series A Shares as set out in the definition of "Articles"
above; and
(b) after the conversion of the Series A Shares and the repurchase of
certain other shares in the capital of Mitel, to delete from the
articles the class A convertible preferred shares and class B
convertible preferred shares, together with all designated SERIES
thereof.
To the extent permitted by law, the Shareholder hereby expressly waives any
right of dissent or appraisal under applicable laws with respect to the
approvals set forth in paragraphs (a) and (b) of this Section 7.
8. AGREEMENT TO TERMINATE SHAREHOLDERS AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT
The Shareholder hereby agrees to terminate, conditional upon the completion by
Mitel of its obligations in Sections 3 and 4 of this Agreement and upon the
closing of the Merger:
(a) the Shareholder's Agreement; and
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(b) the Registration Rights Agreement dated as of the 23'd day of April,
2004 among Mitel, the Shareholder and certain other shareholders of
Mite] (the "REGISTRATION RIGHTS AGREEMENT"),
in accordance with the terms of each of the Shareholders Agreement and the
Registration Rights Agreement. The form of such termination agreement shall be
as set forth in Schedule "B" (Termination of Shareholders Agreement and
Registration Rights Agreement) attached to this Agreement.
9. AGREEMENT TO ENTER INTO FRANCISCO PARTNERS SHAREHOLDERS AGREEMENT AND
REGISTRATION RIGHTS AGREEMENT
As a condition to the Shareholder's obligations pursuant to Sections 4, 7 and 8
of this Agreement, the Shareholder and Mitel hereby agree that the Shareholder
shall, on the Closing Date, conditional upon the closing of the Merger, become a
party to:
(a) the shareholders agreement to be entered into by Mitel, Francisco
Partners II, L.P. ("FRANCISCO PARTNERS") and certain other investors
in Mitel, substantially in the form of agreement attached as
Schedule "C" to this Agreement, as a Shareholder (as such term is
defined in such shareholders agreement); and
(b) the registration rights agreement to be entered into by Mite],
Francisco Partners and certain other investors in Mitel,
substantially in the form of agreement attached as Schedule "D" to
this Agreement, as a Holder (as such term is defined in such
registration rights agreement).
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHAREHOLDER
The Shareholder represents, warrants and covenants that:
(a) the Shareholder has the requisite power, authority and capacity to
enter into this Agreement (and all other agreements and documents
required to be delivered hereunder) on the terms and conditions
herein set forth and all necessary corporate action has been or will
be taken prior to the Closing Date on the part of the Shareholder to
convert the Series A Shares in accordance with this Agreement
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and to otherwise comply with all of the Shareholder's obligations
pursuant to this Agreement;
(b) the execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part
of the Shareholder. This Agreement and all documents executed or to
be executed by the Shareholder pursuant to this Agreement constitute
and will constitute on the Closing Date valid and binding
obligations of the Shareholder enforceable against it in accordance
with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and subject to
general principles of equity;
(c) the execution, delivery, and performance of this Agreement by the
Shareholder will not (i) constitute a violation of its articles of
incorporation or by-laws, each as amended, (ii) result in the breach
of or constitute a default under any material agreement of the
Shareholder, or (iii) constitute a violation of any law applicable
or relating to it or its businesses;
(d) no Person, other than Mitel, has any agreement, option or right to
purchase or acquire, or capable of becoming an agreement for the
purchase or acquisition of the Series 2 Warrant; and
(e) the Shareholder has good and marketable title to the Series A Shares
and the Series 2 Warrant and has the exclusive right to dispose of
the Series 2 Warrant. The Series 2 Warrant will be transferred to
Mite] free and clear of all Encumbrances.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MITEL
Mitel hereby represents, warrants and covenants to the Shareholder that:
(a) Mitel has the requisite power, authority and capacity to enter into
this Agreement (and all other agreements and documents required to
be delivered hereunder) and to carry out its obligations under this
Agreement on the terms and conditions
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herein set forth, including the return of capital set forth in
Section 3 of this Agreement;
(b) the execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Mite].
This Agreement and all documents executed or to be executed by Mite]
pursuant to this Agreement constitute and will constitute on the
Closing Date valid and binding obligations of Mitel enforceable
against it in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and subject to general principles of equity; and
(c) the execution, delivery, and performance of this Agreement by Mitel
(including the return of capital set forth in Section 3 of this
Agreement) will not (i) constitute a violation of its articles of
incorporation or by-laws, each as amended, (ii) result in the breach
of or constitute a default under any material agreement of Mitel, or
(iii) constitute a violation of any law applicable or relating to it
or its businesses.
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The respective representations, warranties and covenants of the Shareholder and
Mite] contained herein shall survive the consummation of the transactions set
forth in this Agreement. No investigations made by or on behalf of Mitel or the
Shareholder or any of their respective authorized agents at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation, warranty or covenant made by the Shareholder or Mitel, as the
case may be, in or pursuant to this Agreement.
13. POWER OF ATTORNEY
Should the Shareholder, in the opinion of Mite! acting reasonably, fail to
convert the Series A Shares in accordance with Section 4, to transfer the Series
2 Warrant to Mitel in accordance with Section 5 or to vote the Series A Shares
in accordance with Section 7, or to fulfil any of its other obligations pursuant
to this Agreement, then the Secretary of Mite! shall be deemed to be irrevocably
appointed as the true and lawful attorney for the Shareholder with authority to
do all
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things and execute and deliver, on behalf of and in the name of the Shareholder,
such consents, resolutions, proxies, deeds, transfers, share certificates,
resignations or other documents as may be necessary to complete the conversion
and sale transactions contemplated herein, and to vote the Series A Shares in
accordance with Section 7, and the Shareholder shall have no claim or cause of
action against any Party hereto, or against any third party, as a result of the
Secretary of Mitel so acting as its attorney, or otherwise in connection with
such conversion or sale transaction or vote. Such appointment and power of
attorney, being coupled with an interest, shall not be revoked by the insolvency
or bankruptcy of the Shareholder and the Shareholder hereby ratifies and
confirms and agrees to ratify and confirm all that the Secretary of Mitel may
lawfully do or cause to be done by virtue of such appointment and power.
14. FURTHER ASSURANCES
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by the other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions.
15. REMEDIES AND SPECIFIC PERFORMANCE
The rights and remedies OF the Parties under this Agreement are cumulative and
are not exclusive of any rights or remedies that the Parties would otherwise
have under this Agreement or otherwise. The Shareholder acknowledges that a
breach by it of this Agreement would CAUSE Mitel irreparable harm and that money
damages are not an adequate remedy FOR violations of this Agreement and,
therefore that Mitel may, in its sole discretion, apply to a court for specific
performance, injunctive, or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation thereof, and
to the extent permitted by applicable law, the Shareholder waives any objection
to the imposition of such relief.
16. NOTICE
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "NOTICE") shall be in
writing and shall be sufficiently
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given if delivered (whether in person, by courier service or other personal
method of delivery), or if transmitted by facsimile ore-mail:
(a) in the case of a Notice to the Shareholder at:
EdgeStone Capital Equity Fund II Nominee, Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxx and Xxxxxx Xxxxx
Fax: (000) 000-0000
Email: o
(b) IN the case of a Notice to Mitel at:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxx, XX X0X 0X0
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Email: xxxxx_xxxxxxx@xxxxx.xxx
Any Party may, from time to time, change its address by giving Notice to the
other Parties in accordance with the provisions of this Section.
17. GENERAL PROVISIONS
(a) All amounts references herein are references to United States
dollars unless otherwise specifically indicated.
(b) Time is of the essence in the performance of the Parties' respective
obligations.
(c) This Agreement is a contract made under and shall be governed by and
construed in accordance with the laws of the Province of Ontario and
the federal laws of Canada applicable in the Province of Ontario.
(d) This Agreement enures to the benefit of and is binding upon the
Parties and their respective successors and assigns.
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(e) No amendment, supplement, modification, waiver or termination of
this Agreement and, unless otherwise specified, no consent or
approval by any Party, is binding unless executed in writing by the
Party to be bound.
(f) This Agreement may be executed by the Parties in counterparts and
may be executed and delivered by facsimile and all such counterparts
and facsimiles together constitute one and the same agreement.
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IN WITNESS OF WHICH the Shareholder and Mitel have executed this Agreement.
EDGESTONE CAPITAL EQUITY FUND
II-B GP, INC., AS AN AGENT FOR EDGESTONE
CAPITAL EQUITY FUND II-A, L.P. AND ITS
PARALLEL INVESTORS
By:
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Name:
Title:
EDGESTONE CAPITAL EQUITY FUND II NOMINEE,
INC., as nominee for EdgeStone CAPITAL
EQUITY FUND II-A, L.P. AND ITS PARALLEL
INVESTORS
By:
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Name:
Title:
[SIGNATURE PAGE TO EDGESTONE RETURN OF CAPITAL,
VOTING AND CONVERSION AGREEMENT]
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MITEL NETWORKS CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
[SIGNATURE PAGE TO EDGESTONE RETURN OF CAPITAL,
VOTING AND CONVERSION AGREEMENT]
SCHEDULE "A"
FORM OF EDGESTONE CONVERSION NOTICE
NOTICE OF CONVERSION WHEREAS:
A. Mitel Networks Corporation (the "Corporation") issued Class A
Convertible Preferred Shares, Series 1 ("Series A Shares") to EdgeStone
Capital Equity Fund II-B GP, Inc., as agent for EdgeStone Capita]
Equity Fund II-A, L.P. and its parallel investors, and EdgeStone
Capital Equity Fund II Nominee, Inc., as nominee for EdgeStone Capital
Equity Fund II-A, L.P. and its parallel investors (the "Holder") on
April 23, 2004.
B. In order to effect an optional conversion of the Series A Shares into
Class 1 preferred shares (the "Class 1 Shares") and common shares
("Common Shares") in the capital of the Corporation, the Holder must,
pursuant to Section o of Schedule A to the Articles of Amendment of the
Corporation filed o, 2007 (the "Articles"), deliver this Notice.
NOW THEREFORE:
The Holder hereby elects to convert 20,000,000 Series A Shares held by the
Holder into 17,420 Class 1 Shares and 5,359,893 Common Shares pursuant to
Section o of Schedule A to the Articles, being the aggregate number of shares
required to be delivered by the Corporation pursuant to Section o of Schedule A
to the Articles.
The certificate representing the Class 1 Shares and Common Shares to be issued
upon conversion shall be registered as follows:
NAME OF REGISTRANT
EdgeStone Capital Equity Fund II Nominee, Inc.
c/o EdgeStone Capital Equity Fund Nominee Inc.
000 Xxxx Xxxxxx Xxxx, Xxxxx 000
X.X. Xxx 000 Xxxxxxx, Xxxxxxx X0X 0X0
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DATED this day of , 2007.
EDGESTONE CAPITAL EQUITY FUND II-B GP,
INC., AS AGENT FOR EDGESTONE CAPITAL
EQUITY FUND II-A, L.P. AND ITS PARALLEL
INVESTORS
By:
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Name: Xxxxxxx Xxxxxxx
Title: Executive Vice President &
Partner
EDGESTONE CAPITAL EQUITY FUND II NOMINEE,
INC., AS NOMINEE FOR EDGESTONE CAPITAL
EQUITY FUND II-A, L.P. AND ITS PARALLEL
INVESTORS
By:
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Name: Xxxxxxx Xxxxxxx
Title: Executive Vice President &
Partner
SCHEDULE "B"
FORM OF TERMINATION AGREEMENT OF
SHAREHOLDERS AGREEMENT AND
REGISTRATION RIGHTS AGREEMENT
SCHEDULE "C"
FORM OF FRANCISCO PARTNERS SHAREHOLDERS AGREEMENT
SCHEDULE "D"
FORM OF FRANCISCO PARTNERS REGISTRATION RIGHTS AGREEMENT
