EXHIBIT 99.5
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SHAREHOLDERS AGREEMENT
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THIS AGREEMENT dated as of this 16th day of August, 2007.
AMONG:
MITEL NETWORKS CORPORATION, a corporation incorporated under the
laws of Canada (the "CORPORATION")
and
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 ("EDGESTONE")
and
POWER TECHNOLOGY INVESTMENT CORPORATION, a corporation
incorporated under the laws of Canada ("PTIC")
and
XXXXXXX X. XXXXXXXX, an individual residing in the City of
Ottawa, Province of Ontario ("XXXXXXXX")
and
XXXXXX XXXXXX CORPORATION, a corporation incorporated under the
laws of Newfoundland and Labrador ("WCC")
and
CELTIC TECH JET LIMITED, a corporation incorporated under the
laws of Canada ("CTJL", and together with EdgeStone, PTIC,
Xxxxxxxx and WCC, the "EXISTING SHAREHOLDERS")
and
ARSENAL HOLDCO I, S.A.R.L. AND ARSENAL HOLDCO II, S.A.R.L.
("FRANCISCO PARTNERS"), and the other Francisco Partners
investors identified in Schedule D (collectively the "FP
INVESTORS")
and
XXXXXX XXXXXXX PRINCIPAL INVESTMENTS, INC. ("XXXXXX XXXXXXX") and
the other Xxxxxx Xxxxxxx investors
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identified in Schedule D (collectively the "MS INVESTORS" and together with
the FP Investors, the "INVESTORS", and together with the FP Investors and
the Existing Shareholders, the "SHAREHOLDERS").
RECITALS:
A. Prior to the execution and delivery of this Agreement, the Corporation and
the Investors have entered into a subscription agreement (the "SUBSCRIPTION
AGREEMENT") in connection with the issuance and sale to the Investors of
Class 1 Shares (as defined herein).
B. The Class 1 Shares referred to above are being issued by the Corporation
prior to or contemporaneously with the Merger (as defined in the
Subscription Agreement) such that the capitalization of the Corporation
immediately after consummation of the Merger will be as described in
Schedule A.
C. The parties to this Agreement wish to provide for certain rights of the
Shareholders of the Corporation upon, among other things, the issuance of
the Class 1 Shares by the Corporation and any proposed transfer of
securities by such Shareholders to another person or entity.
NOW THEREFORE the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS, PRINCIPLES OF INTERPRETATION AND REPRESENTATIONS AND WARRANTIES
1.1 DEFINITIONS
Whenever used in this Agreement, the words and terms defined in Appendix 1 shall
have the meanings set out therein.
1.2 CERTAIN RULES OF INTERPRETATION IN THIS AGREEMENT:
(a) CURRENCY - Unless otherwise specified, all references to money amounts
are to lawful currency of the United States of America. Any U.S.
dollar amounts in this Agreement required to be converted into
Canadian dollars shall be converted using the 10:00 a.m. spot rate of
the Federal Reserve Bank of New York on the Business Day prior to the
required translation date.
(b) GOVERNING LAW - This Agreement is a contract made under and shall be
construed, interpreted and enforced in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable in the
Province of Ontario (excluding any conflict of law rule or principle
of such laws that might refer such interpretation or enforcement to
the laws of another jurisdiction). Subject to the provisions of
Section 11.7, any action, suit or proceeding arising out of or
relating to this Agreement shall be brought in the courts of the
Province of Ontario and
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each of the Parties hereby irrevocably submits to the non-exclusive
jurisdiction of such courts.
(c) HEADINGS -- Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
(d) NUMBER AND GENDER -- Unless the context otherwise requires, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(e) STATUTORY REFERENCES -- A reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise
specified, the provisions of any statute or regulation which amends,
supplements or supersedes any such statute or any such regulation.
(f) TIME PERIODS -- Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done shall
be calculated by excluding the day on which the period commences and
including the day on which the period ends and by extending the period
to the next Business Day following if the last day of the period is
not a Business Day.
(g) BUSINESS DAYS -- If any payment is required to be made or other action
is required to be taken pursuant to this Agreement on a day which is
not a Business Day, then such payment or action shall be made or taken
on the next Business Day.
(h) INCLUDING -- Where the word "including" or "includes" is used in this
Agreement, it means "including (or includes) without limitation".
(i) NO STRICT CONSTRUCTION -- The language used in this Agreement is the
language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party.
(j) SEVERABILITY -- If, in any jurisdiction, any provision of this
Agreement or its application to any Party or circumstance is
restricted, prohibited or unenforceable, such provision shall, as to
such jurisdiction, be ineffective only to the extent of such
restriction, prohibition or unenforceability without invalidating the
remaining provisions of this Agreement and without affecting the
validity or enforceability of such provision in any other jurisdiction
or without affecting its application to other Parties or
circumstances.
1.3 ENTIRE AGREEMENT
This Agreement, including the schedules annexed hereto, and the Other Agreements
constitute the entire agreement between the Parties and set out all the
covenants, promises, warranties, representations, conditions, understandings and
agreements between the Parties with respect to the subject matter of this
Agreement and the Other Agreements and supersede all prior understandings,
agreements, negotiations and discussions, whether oral or written, including,
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without limitation, those contained in any term sheet between the Corporation
and the Investors. There are no covenants, promises, representations,
warranties, terms, conditions, undertakings, understandings or other agreements,
oral or written, express, implied or collateral, between the Parties in
connection with the subject matter of this Agreement and the Other Agreements
other than as expressly set forth or referred to in this Agreement or the Other
Agreements.
1.4 SCOPE OF THE AGREEMENT
The Shareholders agree that in the event of any inconsistency or conflict
between the terms of this Agreement and the articles, by-laws or resolutions of
the Corporation or any Subsidiary, the provisions of this Agreement shall
prevail. In this regard, the Shareholders agree more particularly to vote their
shares to ensure that the constating documents of the Corporation and any
Subsidiaries are not amended to include provisions that are or could be
inconsistent with the provisions hereof.
1.5 COVENANT BY CONTROLLING SHAREHOLDERS
Each Controlling Shareholder hereby agrees to take such actions as may be
necessary to cause each of his or its Controlled Shareholders to fully and
faithfully perform and discharge its obligations under this Agreement and to
comply with the terms and conditions of this Agreement; provided that the
foregoing shall not constitute a guarantee of payment of any amount payable
hereunder.
1.6 DISSENT AND OTHER RIGHTS
With respect to any matter provided for in Section 6.4 of this Agreement, each
of the Shareholders hereby expressly waives and agrees that it shall not
exercise any applicable rights to dissent, appraisal, any oppression remedy, or
other similar rights.
1.7 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby severally, but not jointly, represents and
warrants with respect to itself that, as at the date hereof:
(a) unless otherwise indicated on Schedule A, it is the beneficial owner
of the securities in the capital of the Corporation referred to in
Schedule A as being held by it;
(b) except as may be contemplated in this Agreement or in any of the Other
Agreements, such securities are free and clear of all Liens;
(c) it has the full power, authority and legal right to execute and
deliver this Agreement and to perform the terms and provisions hereof;
(d) if other than an individual, it has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement;
(e) this Agreement has been duly executed and delivered by it, and
constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with the terms hereof, subject to the effect
of:
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(i) any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally; and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
(f) the execution and delivery by it of this Agreement and the performance by
it of its obligations hereunder and compliance by it with the terms,
conditions and provisions hereof, will not, as applicable, conflict with or
result in a breach of any of the terms, conditions or provisions of (i) its
charter documents or by-laws; (ii) any law, rule or regulation having the
force of law; (iii) any indenture, mortgage, lease, agreement or instrument
binding or affecting it or its properties; or (iv) any judgment,
injunction, determination or award which is binding on it or its
properties;
(g) no authorization, consent, approval, license or exemption from any
Governmental Body is required by it which has not been obtained in
connection with the execution and delivery by it of, and the performance by
it of its obligations under, this Agreement; and
(h) it is not a party to any agreement which is inconsistent with its rights
and obligations hereunder or otherwise conflicts with the provisions of
this Agreement.
1.8 SCHEDULES
The Appendices and Schedules to this Agreement, as listed below, are an integral
part of this Agreement:
Appendix 1 - Definitions
Appendix 2 - Certain Matters Requiring Investors Majority Approval
Schedule A - Capitalization Table
Schedule B - Articles of Amendment
Schedule C - Assumption Agreement
Schedule D - Investors
ARTICLE 2
MANAGEMENT OF CORPORATION
2.1 AGREEMENT RESPECTING VOTING/CREDIT AGREEMENT DEBT
For so long as this Agreement remains in effect, each Shareholder agrees to
vote any and all Shares held by it from time to time so as to elect and maintain
in office the Francisco Partners Nominees (as defined in Section 2.2) and the
Xxxxxxxx Nominees (as defined in Section 2.2) as members of the Board of
Directors, and to cause the Corporation to act in compliance with all of
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the provisions of this Agreement and in particular to vote to approve any
Transfer which is permitted and otherwise made in compliance with this
Agreement; provided, however, that no Shareholder shall be subject to the voting
agreements in this Section 2.1 or elsewhere in this Agreement if such
Shareholder is PTIC or if such Shareholder, together with its Affiliates, holds
less than 3% of the Common Shares (calculated on an as-if converted to Common
Shares basis). It is acknowledged and agreed that no Shareholder shall be bound
to vote in respect of any matter in the same manner as its nominee director
voted in respect of such matter in his or her capacity as a director on the
Board of Directors. The Shareholders agree that the Credit Agreement Debt
constitutes "Designated Debt" as defined in the Articles of Amendment.
2.2 FRANCISCO PARTNERS NOMINEES AND XXXXXXXX NOMINEES ON THE BOARD OF DIRECTORS
The Board of Directors will be composed of nine members unless a change to
the number of directors is approved by Francisco Partners II (Cayman), L.P. as
the Controlling Shareholder of Arsenal Holdco I, S.a.r.l. The number of
directors to be nominated by Francisco Partners II (Cayman), L.P. (each, a
"FRANCISCO PARTNERS NOMINEE") shall be equal to the product of the number of
directors the Board of Directors is composed of and the number of Common Shares
owned by the holders of Class 1 Shares (calculated on an as-if converted to
Common Shares basis) divided by the number of outstanding Common Shares
(calculated on an as-if converted into Common Shares basis) and rounded up to
the nearest whole number; provided, however, that Francisco Partners II
(Cayman), L.P. shall be entitled to nominate at least one director so long as
the Francisco Partners Group holds at least 5% of the Common Shares (calculated
on as-if converted to Common Shares basis); and provided, further, however, that
Francisco Partners II (Cayman), L.P. shall not be entitled to nominate more than
four directors unless the Francisco Partners Group holds at least 55% of the
Common Shares (calculated on as-if converted to Common Shares basis). The number
of directors to be nominated by Xxxxxxxx (each, a "XXXXXXXX NOMINEE") shall be
equal to the product of the number of directors the Board of Directors is
composed of and the number of Common Shares owned by the Xxxxxxxx Group
(calculated on an as-if converted to Common Shares basis) divided by the number
of outstanding Common Shares (calculated on an as-if converted into Common
Shares basis) and rounded up to the nearest whole number. Accordingly, each of
the Shareholders agrees to act and vote from time to time so that on any
election of directors by the shareholders of the Corporation, the Francisco
Partners Nominees and the Xxxxxxxx Nominees to the Board of Directors are
elected in accordance with this Section 2.2. The remaining directors of the
Board of Directors shall be independent directors nominated by the Board of
Directors. For the avoidance of doubt, as of the date of this Agreement,
Francisco Partners II (Cayman), L.P. shall initially nominate four directors and
Xxxxxxxx shall initially nominate three directors. In the event that Francisco
Partners II (Cayman), L.P. requests that a Francisco Partners Nominee be removed
or replaced as a director of the Corporation or that Xxxxxxxx requests that a
Xxxxxxxx Nominee be removed or replaced as a director of the Corporation, then
each of the Shareholders agrees to act and vote for such removal in accordance
with this Section 2.2. Each Shareholder hereby grants Francisco Partners II
(Cayman), L.P. and Xxxxxxxx a proxy, which shall be irrevocable to the fullest
extent permissible by law and is coupled with an interest, to vote such
Shareholder's Shares in accordance with this Section 2.2. Notwithstanding the
foregoing, no Shareholder shall be subject to the voting agreements in this
Section 2.2 or elsewhere in this Agreement and the grant of proxy pursuant to
this Section 2.2 shall become void if such Shareholder is PTIC or if such
Shareholder, together with its Affiliates, holds less than 3% of the Common
Shares (calculated on an as-if converted to Common Shares basis).
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Each of the Francisco Partners Nominees and the Xxxxxxxx Nominees shall be
an individual who is not disqualified under applicable law from acting as a
director.
2.3 NOTICE OF DIRECTORS MEETINGS
Notice of directors meetings shall be given, in writing, in accordance with
the by-laws of the Corporation, and such notice shall also contain a statement
as to the nature of the business proposed to be transacted at such meeting. Such
notice shall be accompanied by all relevant documentation or information
required for directors to make an informed decision regarding the business to be
transacted.
2.4 EXPENSES OF DIRECTORS
The Corporation shall reimburse all directors for all reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or of any committee of the Board of Directors.
2.5 BOARD OF DIRECTORS COMMITTEES
The Board of Directors shall maintain a standing committee to be known as
the "AUDIT COMMITTEE" and a standing committee to be known as the "COMPENSATION
COMMITTEE". At the option of Francisco Partners so long as the Francisco
Partners Group is entitled to nominate at least one director to the Board of
Directors pursuant to Section 2, at least one of the members of the Audit
Committee, at least one of the members of the Compensation Committee, and at
least one member of any other standing or ad hoc committee of the Board of
Directors, shall be a Francisco Partners Nominee so long as the Francisco
Partners Group holds 1/8th or more of the Shares subject to this Agreement.
2.6 DIRECTORS' LIABILITY INSURANCE
The Corporation will maintain directors' liability insurance for each of
the directors of the Corporation with coverage acceptable to the Board of
Directors. The Corporation will not assign, transfer, dispose of, surrender,
borrow upon or in any way encumber such insurance.
2.7 BOARD OF DIRECTORS OBSERVER
Each of Francisco Partners, Xxxxxxxx, Xxxxxx Xxxxxxx and EdgeStone, as the
case may be, shall have the option at its sole discretion, at any time and from
time to time, to designate an observer representative to receive notice of and
attend meetings of the Board of Directors and meetings of any committee of the
Board of Directors (the "OBSERVER"), provided the Observer agrees to be bound by
the confidentiality obligations set forth in Section 10.1. The Observer shall
have no right to vote as a director of the Corporation with respect to any
matter and shall not be included in any determination as to whether a quorum for
any particular meeting exists. The minutes of each meeting of the Board of
Directors or any such committee at which the Observer is present shall record
that the Observer was present and acting in the capacity as an observer and not
as a director. The Corporation shall pay the Observer's reasonable out of pocket
expenses incurred to attend any meeting of the Board of Directors or any
committee of the Board of Directors. The rights of Francisco Partners in this
Section 2.7 shall terminate once Francisco Partners is no longer entitled to
nominate a director under Section 2.2, and the rights of
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Xxxxxxxx in this Section 2.7 shall terminate once Xxxxxxxx is no longer entitled
to nominate a director under Section 2.2. The rights of EdgeStone in this
Section 2.7 shall terminate once the EdgeStone Group no longer holds at least
50% of the Common Shares (calculated on an as-if converted to Common Shares
basis) held by the EdgeStone Group on the date hereof and reflected on Schedule
D. The rights of Xxxxxx Xxxxxxx in this Section 2.7 shall terminate once the MS
Investors no longer hold at least 25% of the Common Shares (calculated on an
as-if converted to Common Shares basis) held by them on the date hereof and
reflected on Schedule D.
2.8 CERTAIN MATTERS REQUIRING INVESTORS MAJORITY APPROVAL
Provided that members of the Francisco Partners Group hold, in the
aggregate, at least 5% of the Common Shares (calculated on an as-if converted to
Common Shares basis), notwithstanding any other provision of this Agreement, in
addition to any other approvals that may be required by law or pursuant to the
articles, by-laws or other organizational documents of the Corporation or any of
the Subsidiaries, without the prior written consent of an Investors Majority,
neither the Corporation shall nor shall it cause or permit any of the
Subsidiaries to at any time take or agree or commit to take any action referred
to in Appendix 2. It is acknowledged by the Parties that the provisions
referenced in Appendix 2 are for the benefit of the Investors and may be amended
or waived by the mutual agreement of the Corporation and an Investors Majority
at any time.
2.9 ANNUAL BUDGET
At least 30 days prior to the Corporation's fiscal year-end, the
Corporation shall submit the annual budget and business plan of the Corporation,
including a detailed operating budget and a capital budget and the sources of
financing thereof, with detailed supporting assumptions, to the Board of
Directors for approval and thereafter from time to time as appropriate, any
restatements or updates or deviations thereto to the extent they contain items
or amounts not consistent with the normal course operations of the Business and
previously approved budgets.
2.10 REPORTING
(a) MONTHLY. An internally-prepared summary of monthly consolidated
financial results of the Corporation shall be prepared and delivered
to the Investors and EdgeStone within 15 Business Days after the end
of each fiscal month.
(b) ADDITIONAL INFORMATION PROVIDED TO SENIOR LENDERS. The Corporation
shall provide to the Investors and EdgeStone simultaneously with
furnishing such information to any Person as required under the Debt
Obligations of the Corporation and the Subsidiaries: (i) copies of all
other financial statements, reports or projections with respect to the
Corporation or any of the Subsidiaries required to be delivered to the
lenders on a periodic basis; and (ii) copies of all material
information, documents, studies, reviews, reports or assessments
relating to the Business or the assets of the Corporation or any
Subsidiary provided by the Corporation or any Subsidiary from time to
time to any Person pursuant to or as required under the Debt
Obligations, if, in the case of (i) or (ii) above, such documentation
is broader in scope or delivered on a more frequent basis than the
Corporation provides to the Board of Directors or is required to
provide under Section 2.10(a).
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(c) The rights of the Investors and EdgeStone in this Section 2.10 shall
terminate after a Qualified IPO. In addition, and if earlier, the
rights of EdgeStone in this Section 2.10 shall terminate in the event
that the EdgeStone Group no longer holds at least 50% of the Common
Shares (calculated on an as-if converted to Common Shares basis) held
by the EdgeStone Group on the date hereof and reflected on Schedule A.
2.11 ACCESS
The Corporation shall, and the Corporation shall cause each of the
Subsidiaries to, at any and all reasonable times on reasonable notice and during
business hours on any Business Day and in such manner as is not reasonably
likely to adversely affect the operation of the Business, permit the Investors,
EdgeStone and each of their authorized representatives to examine all of the
books of account, records, reports, documents, papers and data of the
Corporation and any of the Subsidiaries, whether in ordinary or machine
language, and to make copies and take extracts, and to discuss the Business,
affairs, finances and accounts of the Corporation and the Subsidiaries with the
Corporation's executive officers, senior financial officers, accountants and
other advisors. The Corporation shall authorize its accountants and other
financial advisors to so discuss the finances and affairs of the Corporation and
the Subsidiaries, and agrees to furnish the Investors, EdgeStone and each of
their authorized representatives with any information reasonably requested
regarding the Business, or the affairs, finances and accounts of the Corporation
or the Subsidiaries. The Corporation shall bear the costs to the Corporation and
any Subsidiary of compliance with this Section 2.11. In no event shall the
Corporation be required to disclose information that it is prohibited from
disclosing by contract (unless the applicable Investor enters into a
confidentiality agreement that has the effect of eliminating such prohibition)
or otherwise by law. The rights of the Investors and EdgeStone in this Section
2.11 shall terminate after a Qualified IPO. In addition, and if earlier, the
rights of EdgeStone in this Section 2.11 shall terminate in the event that the
EdgeStone Group no longer holds at least 50% of the Common Shares (calculated on
an as-if converted to Common Shares basis) held by the EdgeStone Group on the
date hereof and reflected on Schedule A.
ARTICLE 3
VOTING AGREEMENT OF INVESTORS
For so long as this Agreement remains in effect, each Investor agrees to
vote any and all Shares held by it from time to time in the manner designated by
Francisco Partners so long as the Francisco Partners Group, excluding any Person
to which Francisco Partners shall transfer all or substantially all of its
assets, holds at least 30% of the Class 1 Shares. Each Investor hereby grants
Francisco Partners a proxy, which shall be irrevocable to the fullest extent
permissible by law and is coupled with an interest, to vote such Investor's
Shares in accordance with this provision for so long as the Francisco Partners
Group, excluding any Person to which Francisco Partners shall transfer all or
substantially all of its assets, holds at least 30% of the Class 1 Shares.
Francisco Partners agrees not to vote such Investor's Shares to effect any
amendment to the Articles of Amendment that would have an adverse and
disproportionate effect on the MS Investors as compared to the other Investors.
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ARTICLE 4
PRE-EMPTIVE RIGHTS
4.1 EXERCISE OF PRE-EMPTIVE RIGHTS
(a) In the event that the Corporation or any Subsidiary proposes to
undertake an issuance of New Securities (in a single transaction or a
series of related transactions), it shall give to each Principal
Shareholder (as such term is defined below) written notice of its
intention to issue New Securities (the "PRE-EMPTIVE RIGHT NOTICE"),
describing the amount and the type of New Securities and the price and
the proposed closing date, upon which the Corporation proposes to
issue the New Securities. For the purposes of this Section 4.1, the
term "PRINCIPAL Shareholders" means (i) each Shareholder who is a
Shareholder on the date hereof, or any Permitted Transferee of such
Shareholder, and (ii) each other Shareholder who, together with its
Affiliates, holds not less than five percent (5%) of the Common Shares
then outstanding (calculated on an as-if converted to Common Shares
basis).
(b) Each Principal Shareholder shall have 15 Business Days from the date
of receipt of any such Pre-Emptive Right Notice (the "PRE-EMPTIVE
RIGHT ACCEPTANCE PERIOD") to agree in writing (i) to purchase up to
its Pro Rata Share (as nearly as may be determined without division
into fractions) of the New Securities (which for the purpose of this
Article 4 shall be calculated based on holdings on the day immediately
prior to the date of delivery by the Corporation of the Pre-Emptive
Right Notice) for the price and on the other terms specified in the
Pre-Emptive Right Notice and (ii) to purchase more than its Pro Rata
Share (if available) up to a maximum number of the New Securities to
be specified by such Principal Shareholder. Such right to purchase its
Pro Rata Share of New Securities and, if desired, more than its Pro
Rata Share shall be exercised by a Principal Shareholder by giving
written notice (a "PRE-EMPTIVE RIGHT ACCEPTANCE NOTICE") to the
Corporation of such intention and stating therein the maximum number
of New Securities it is willing to purchase (which number may be
greater or less than its Pro Rata Share). If a Principal Shareholder
fails to deliver such notice to the Corporation within the Pre-Emptive
Right Acceptance Period, it shall be deemed to have declined to
exercise its right to purchase any New Securities. If any Principal
Shareholder does not give a Pre-Emptive Right Acceptance Notice within
the Pre-Emptive Right Acceptance Period or specifies in its
Pre-Emptive Right Acceptance Notice a number of Shares less than its
Pro Rata Share, the resulting unaccepted New Securities shall be
deemed to have been offered by the Corporation to such of the
Principal Shareholders who specified in their respective Pre-Emptive
Right Acceptance Notices a desire to acquire a number of the New
Securities greater than their Pro Rata Share, and each such Principal
Shareholder is, subject to the maximum number of the New Securities
specified in its Pre-Emptive Right Acceptance Notice, entitled to
acquire its Pro Rata Share (calculated relative to each of the
Principal Shareholders wishing to purchase more than its Pro Rata
Share) of the unaccepted New Securities based upon the number of
Shares (calculated on an as-if converted to Common Shares basis) owned
by such Principal Shareholders (calculated based on holdings on the
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day immediately prior to the delivery of the Pre-Emptive Right
Notice), as between themselves, or in such other proportion as such
Principal Shareholders may agree in writing.
(c) The Corporation shall, from time to time, when requested to do so,
advise each of the Principal Shareholders promptly of the names of the
other Principal Shareholders who have accepted the Corporation's offer
as contained in a Pre-Emptive Right Notice and the number of New
Securities in respect of which each such Principal Shareholder has
accepted such offer.
(d) Any New Securities not accepted by the Principal Shareholders pursuant
to Section 4.1(b) may be offered and sold by the Corporation to third
parties for a period not to exceed 60 Business Days following the end
of the Pre-Emptive Right Acceptance Period at the same or higher price
and upon non-price terms not more favorable to the purchasers thereof
than as specified in the Pre-Emptive Right Notice. In the event that
the Corporation has not issued and sold such New Securities within
such 60 Business Day period, then the Corporation shall not thereafter
issue or sell any New Securities without again first offering such New
Securities to the Principal Shareholders pursuant to this Article 4.
If the Corporation offers any New Securities not taken up by Principal
Shareholders pursuant to Section 4.1(b), the Corporation shall
promptly notify the Principal Shareholders upon entering into one or
more binding purchase agreement(s) during the 60 Business Day period
referred to herein, including as to (i) the number of New Securities,
if any, that the Corporation will issue (specifying respective numbers
to be purchased by the Principal Shareholders on the one hand (if any)
and by other Person(s) on the other hand), (ii) the material terms of
such issuance(s) and (iii) the name(s) of the purchaser(s) of any New
Securities to be issued (other than the Principal Shareholders).
(e) All sales of New Securities pursuant to this Section 4.1 shall be
consummated contemporaneously at the offices of the Corporation as
soon as is reasonably practicable on such date as the Board of
Directors and the persons purchasing New Securities pursuant to this
Section 4.1 may reasonably determine, but in no event later than the
later of (i) 60 Business Days following the end of the Pre-Emptive
Right Acceptance Period; or (ii) the fifth Business Day following the
expiration or termination of all waiting periods under any competition
or anti-combines legislation applicable to such issuance. The delivery
of certificates or other instruments evidencing such New Securities
shall be made by the Corporation on such date against payment of the
purchase price therefor.
(f) The Corporation may issue New Securities without complying with the
provisions of this Section 4.1 if the New Securities are Permitted
Additional Securities.
4.2 FUTURE SHARES
The Corporation agrees that, as a condition precedent to the grant or
issuance of any securities (including Convertible Securities) to a Person that,
giving effect to such grant or issuance, would hold in excess of 2.5% of the
outstanding Common Shares (calculated on as-if converted to Common Shares
basis), whether now authorized or not, it will require that the
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holder of such securities sign an Assumption Agreement and if the purchaser is a
corporate entity, such agreement will also be signed by any Person who Controls
such corporation; provided, however, that if any such grant or issuance is
pursuant to the exercise or conversion of any Convertible Security granted or
issued prior to the date of this Agreement, the Corporation shall only be
required to use its commercially reasonable efforts to comply with the foregoing
covenant.
ARTICLE 5
RESTRICTIONS ON TRANSFER OF SHARES
5.1 GENERAL PROHIBITION ON TRANSFER
No Shares or Convertible Securities now or in the future held by a
Shareholder or any interest therein may be dealt with or Transferred except as
contemplated in this Agreement. A purported Transfer of any Shares or
Convertible Securities in violation of this Agreement shall not be valid. Any
Shareholder that purports to Transfer any Shares or Convertible Securities in
violation of this Agreement agrees to donate and hereby donates to the
Corporation all dividends and distributions paid or made on any Shares or
Convertible Securities so Transferred during the period of the prohibited
Transfer. The provisions of the immediately preceding sentence are in addition
to, and not in lieu of, any other remedies to enforce the provisions of this
Agreement.
Any permitted Transfer made in compliance with this Agreement, other than
to a Permitted Transferee or pursuant to Section 5.2(b) or 5.2(c), shall require
the approval of the Board of Directors which shall be provided in accordance
with the provisions of Section 2.1.
5.2 PERMITTED TRANSFERS
Each Shareholder may Transfer any Shares or Convertible Securities held by
it or any rights to acquire any Shares or Convertible Securities, pursuant to
and in accordance with Article 5 or Article 6 and in the case of the following
Transfers, without being subject to the requirements of Sections 6.1, 6.2 and
6.3:
(a) to a Permitted Transferee;
(b) in the case of Shares or Convertible Securities held by a Permitted
Transferee of the Shareholder, back to such Shareholder;
(c) to an Investor from another Investor; or
(d) to the Corporation pursuant to the redemption rights under the
Articles of Amendment.
5.3 NO REGISTRATION UNLESS TRANSFEREE IS BOUND
Other than Transfers pursuant to Section 5.4, if a Shareholder purports to
Transfer any Shares or Convertible Securities, no Transfer shall be made or be
effective, no application shall be made to the Corporation or to the
Corporation's transfer agent to register the Transfer, and the Corporation shall
not register the Transfer on its securities register, until the proposed
transferee (and, in the case of a transferee that is not a natural person, other
than a public corporation and other than in the case of a Transfer by an
Investor, the Persons who Control the proposed
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transferee) enters into, or in the case of Convertible Securities, agrees upon
the acquisition of any Shares or Convertible Securities to enter into, an
Assumption Agreement.
5.4 TRANSFERS TO AN AFFILIATE
If a Shareholder purports to Transfer Shares or Convertible Securities to a
Permitted Transferee or pursuant to Section 5.2(b), no Transfer shall be made or
effective, no application shall be made to the Corporation or the Corporation's
transfer agent to register the Transfer, and the Corporation shall not register
the Transfer on its securities register until, the Shareholder and the
transferee have executed and delivered an Assumption Agreement and such other
documents as may be reasonably requested by the Corporation, in which the
Shareholder and the transferee: (i) represent and warrant that the transferee
qualifies as a Permitted Transferee or otherwise qualifies as a recipient of a
Transfer pursuant to 5.2(b); (ii) agree that each shall ensure that the
transferee shall continue to so qualify at all times and that, other than in the
case of a Transfer by an Investor or EdgeStone to a Person listed in the
definitions of "Francisco Partners Group", "MS Affiliate" or "EdgeStone Group"
if the transferee is a corporation, the shareholder(s) of that transferee and
the shareholder(s) of each of its direct and indirect shareholders who are not
natural persons agree that no shares in that transferee shall be Transferred,
without first Transferring (or causing to be Transferred) the Shares held back
to the original Shareholder; and (iii) agree that the transferring Shareholder
shall continue to be bound by all the provisions of this Agreement.
5.5 CONTINUING OBLIGATIONS OF TRANSFEROR
In the event of any Transfer of Shares or Convertible Securities to a
Permitted Transferee or pursuant to Section 5.2(b), the transferor shall, at all
times after such Transfer: (i) be jointly and severally liable with the
transferee for the observance and performance of the covenants and obligations
of the transferee under this Agreement; and (ii) indemnify the other Parties
against any loss, damage or expense incurred as a result of the failure of the
transferee to comply with the provisions of this Agreement.
5.6 SHAREHOLDERS TO FACILITATE PERMITTED TRANSFERS
Each Party to this Agreement shall facilitate any Transfer of Shares or
Convertible Securities in accordance with this Agreement on a timely basis,
including by promptly providing any required consents.
5.7 CORPORATION TO FACILITATE PERMITTED TRANSFERS
The Corporation shall facilitate any Transfer of Shares or Convertible
Securities in accordance with this Agreement on a timely basis, including by
promptly providing such assistance as the transferring Shareholder may
reasonably request to facilitate such Transfer, subject to the provisions of
Section 10.1. In no event shall the Corporation be required to disclose
information that it is prohibited from disclosing by contract or otherwise by
law.
5.8 PLEDGE OF SHARES
No Shareholder shall, directly or indirectly, pledge or otherwise grant or
allow a Lien to exist in respect of any Shares held by that Shareholder, without
the prior written consent of the
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Corporation and Francisco Partners, such consent not to be unreasonably withheld
or delayed, provided that, notwithstanding the foregoing, nothing herein shall
prohibit a Shareholder from granting a Lien by way of a general security
interest over all or substantially all of its assets and undertaking, inclusive
of Shares in favor of a bona fide lender in the ordinary course of business,
provided that in such event any realization by such secured party in respect of
such Shares shall be deemed a Transfer subject to Article 6 of this Agreement.
5.9 SALES TO A DIRECT COMPETITOR
Notwithstanding any provision to the contrary, no Shareholder may Transfer
any Shares to a direct competitor of the Business, unless such Transfer is
approved by the Corporation.
This Section 5.9 shall not apply to a Transfer of Shares pursuant to a
transaction to which Section 6.4 applies.
ARTICLE 6
RIGHTS OF FIRST REFUSAL, TAG-ALONG, AND DRAG-ALONG RIGHTS
6.1 TRANSFER NOTICE
In the event that any Shareholder (the "TRANSFERRING SHAREHOLDER") receives
from any Person, acting as principal and dealing at arm's length with such
Shareholder (the "THIRD PARTY OFFEROR"), a bona fide written offer to purchase
(other than pursuant to a Transfer permitted by Section 5.2) Shares or
Convertible Securities or other equity securities held by the Transferring
Shareholder (the "THIRD PARTY OFFER"), which the Transferring Shareholder wishes
to accept (subject to compliance with Section 6.2 and 6.3), the Transferring
Shareholder will give notice (the "TRANSFER NOTICE") to the Corporation and to
each of the Shareholders (other than any Shareholder that is also a Transferring
Shareholder) (the "OTHER SHAREHOLDERS") setting forth:
(a) the identity of the Third Party Offeror;
(b) if the Third Party Offeror is a corporation, the names of the
principal shareholders, directors and officers of the Third Party
Offeror;
(c) the number and classes of Shares or Convertible Securities or other
equity securities proposed to be sold by the Transferring Shareholder
(the "OFFEROR'S SECURITIES");
(d) the price of and terms of payment for the Offeror's Securities; and
(e) a summary of any other material terms for such sale including the
proposed closing date.
The Transfer Notice shall contain an offer to sell all of the Offeror's
Securities to the Corporation first and then the Other Shareholders (as set out
in Section 6.2) at the price and on the terms set forth in the Transfer Notice.
The Transfer Notice shall include a full and complete copy of the written offer
delivered by the Third Party Offeror. In all circumstances the proposed
consideration for any Offeror's Securities must be in cash and/or Marketable
Securities. The offer contained in the Transfer Notice shall be irrevocable
except with the consent of Corporation or the Other Shareholders, as applicable,
and shall be open for acceptance for a
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period of 19 Business Days after the date upon which the Transfer Notice was
received by the Corporation and 20 Business Days after the date upon which the
Transfer Notice was received by the Other Shareholders (each, an "ACCEPTANCE
PERIOD").
All Transfer Notices and Drag-Along Offers (as defined in Section 6.4)
given under this Article 6 must be given concurrently to all Other Shareholders
and the Corporation.
6.2 RIGHTS OF FIRST REFUSAL
Upon receipt of a Transfer Notice and subject to all of the provisions of
this Section 6.2, the Corporation and the Other Shareholders shall have the
following rights and options:
(a) The Corporation shall have the first right to purchase any or all of
the Offeror's Securities if it gives a notice in writing (an
"ACCEPTANCE NOTICE") accepting the offer contained in the Transfer
Notice and specifying the number of the Offeror's Securities it wishes
to acquire.
(b) If the Corporation does not give an Acceptance Notice to purchase any
or all of the Offeror's Securities at least one Business Day prior to
the expiration of the Acceptance Period, each of the Other
Shareholders shall have the right to purchase up to its Pro Rata Share
of the Offeror's Securities not to be purchased by the Corporation at
the price and on the terms and conditions contained in the Transfer
Notice.
(c) Subject to Sections 6.2(a) and (b), within the Acceptance Period, each
of the Other Shareholders may give to the Transferring Shareholder an
Acceptance Notice accepting the offer contained in the Transfer Notice
and specifying the maximum number of the Offeror's Securities not to
be purchased by the Corporation that it wishes to acquire (which
number may be greater than or less than its Pro Rata Share). Each of
the Other Shareholders shall have the right to purchase up to its Pro
Rata Share of the Offeror's Securities not to be purchased by the
Corporation (which for purposes of this Section 6.2 shall be
calculated based on holdings on the day immediately prior to the
delivery of the Transfer Notice), as nearly as may be determined
without division into fractions and, if available, a number of the
Offeror's Securities not to be purchased by the Corporation greater
than its Pro Rata Share up to a stated maximum. Any Other Shareholder
who does not give an Acceptance Notice within the Acceptance Period
shall be deemed to have declined to purchase any of the Offeror's
Securities. If any Other Shareholder does not give an Acceptance
Notice within the Acceptance Period or specifies in its Acceptance
Notice a number of Shares less than its Pro Rata Share, the resulting
unaccepted Offeror's Securities shall be deemed to have been offered
by the Transferring Shareholder to such of the Other Shareholders who
specified in their respective Acceptance Notices a desire to acquire a
number of the Offeror's Securities not to be purchased by the
Corporation greater than their Pro Rata Share, and each such Other
Shareholder is, subject to the maximum number of the Offeror's
Securities specified in its Acceptance Notice, entitled to acquire its
Pro Rata Share (calculated relative to each of the other Shareholders
wishing to purchase more than its Pro Rata Share) of the unaccepted
Offeror's Securities based upon the number of Shares
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(calculated on an as-if converted to Common Shares basis) owned by
such Other Shareholders (calculated based on holdings on the day
immediately prior to the delivery of the Transfer Notice), as between
themselves, or in such other proportion as such Other Shareholders may
agree in writing. If (i) the Corporation gives notice pursuant to
Section 6.2(a) to purchase all of the Offeror's Securities or (ii) the
Other Shareholders, or any of them, give Acceptance Notices within the
Acceptance Period confirming their agreement to purchase all of the
Offeror's Securities not to be purchased by the Corporation, the sale
of the Offeror's Securities to the Corporation and/or such Other
Shareholders shall be completed within 15 Business Days of the expiry
of the Acceptance Period.
(d) If both (i) the Corporation does not give an Acceptance Notice to
purchase all of the Shares at least one Business Day prior to the
expiry of the Acceptance Period and (ii) the Other Shareholders do not
give notice of acceptance prior to the expiry of the Acceptance Period
which would result in the purchase of all, but not less than all, of
the Offeror's Securities not to be purchased by the Corporation, the
Transferring Shareholder will, notwithstanding any notices of
acceptance of the Offeror's Securities by the Corporation or any Other
Shareholders, subject to the provisions of Section 6.3, have the right
to sell the Offeror's Securities to the Third Party Offeror for a
period of 60 Business Days from the expiration of the Acceptance
Period for a price not less than that provided for in the Transfer
Notice and on terms and conditions not materially more favorable to
the Third Party Offeror than those set out in the Transfer Notice,
provided that such Third Party Offeror first executes and delivers to
the Corporation an Assumption Agreement. If such Transfer is not
consummated within such 60 Business Day period, the Transferring
Shareholder will not Transfer any of the Offeror's Securities without
again complying with all of the provisions of Section 6.1 and Section
6.2.
(e) Any Transfer entered into in connection with this Section 6.2 shall
not provide a Collateral Benefit to any Shareholder or any Affiliate
or Related Party thereof.
(f) For greater certainty, no rights shall arise under this Article 6 in
respect of any purchases by Other Shareholders pursuant to the
exercise of rights under this section.
(g) The provisions of Section 6.1 and 6.2 shall not apply to the Transfer
of any Shares or Convertible Securities pursuant to the provisions of
Section 6.3 or 6.4 and which are exercised in accordance with the
terms thereof.
(h) Each Other Shareholder may assign its right to exercise its right of
first refusal under this 6.2, in whole or in part, to any of its
Affiliates, or, in the case of the Francisco Partners Group, the MS
Investors, the Xxxxxxxx Group or the EdgeStone Group to any member or
members of the Francisco Partners Group or the MS Investors or any MS
Affiliate or the Xxxxxxxx Group or the EdgeStone Group, as applicable,
provided such member or members (and Controlling Persons in the case
of the Xxxxxxxx Group) have first entered into an Assumption
Agreement.
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6.3 TAG-ALONG RIGHTS
Upon receipt of a Transfer Notice, any Other Shareholder(s) may elect to
participate in the proposed Transfer by delivering written notice to the
Corporation and Transferring Shareholder within the Acceptance Period. Each of
the Other Shareholders so electing will be entitled to sell in the contemplated
Transfer, the same proportion (calculated on an as-if-converted to Common Shares
basis) of the Shares and Convertible Securities held by each such Other
Shareholder, respectively, as the proportion of the Transferring Shareholder's
total holdings which the Transferring Shareholder proposes to sell pursuant to
the Transfer Notice (calculated on an as-if-converted to Common Shares basis),
on the same terms (other than price) set forth in the Transfer Notice, and at a
price determined as follows:
(a) if the Transferring Shareholder is proposing to sell Common Shares:
(i) any Common Shares to be sold by an Other Shareholder shall be
sold at the same price per share as the Common Shares proposed to
be sold by the Transferring Shareholder, as set forth in the
Transfer Notice;
(ii) any Class 1 Shares to be sold by an Other Shareholder shall be
sold at a price per share equal to the TR Value calculated based
on a value per share equal to the price per Common Share proposed
by the Transferring Shareholder;
(iii) any Convertible Securities to be sold by an Other Shareholder
shall be sold at a price per Convertible Security equal to: (A)
the value of the Common Shares underlying such Convertible
Security, where such Common Shares are valued at the same price
per share as the Common Shares proposed to be sold by the
Transferring Shareholder, as set forth in the Transfer Notice,
less (B) any amount payable by the holder of the Convertible
Securities on the exercise, exchange or conversion thereof;
(b) if the Transferring Shareholder is proposing to sell Class 1 Shares:
(i) any Common Shares to be sold by an Other Shareholder shall be
valued at a price per share equal to the price per Class 1 Share
proposed to be sold by the Transferring Shareholder, as set forth
in the Transfer Notice, divided by the number of Common Shares
into which a Class 1 Share could convert at the Conversion Value
for the Class 1 Shares then in effect (the "NOTIONAL COMMON SHARE
VALUE");
(ii) any Class 1 Shares to be sold by an Other Shareholder shall be
sold at the same price per share as the Class 1 Shares proposed
to be sold by the Transferring Shareholder, as set forth in the
Transfer Notice; and
(iii) any Convertible Securities to be sold by an Other Shareholder
shall be sold at a price per Convertible Security equal to: (A)
the Notional Common Share Value multiplied by the number of
Common Shares underlying such Convertible Security, less (B) any
amount payable by the
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holder of the Convertible Securities on the exercise, exchange or
conversion thereof.
(c) if the Transferring Shareholder is proposing to sell Convertible
Securities (other than Class 1 Shares), only Shareholders holding the
same type of Convertible Securities with identical provisions (other
than the number of underlying securities in respect of which the
Convertible Securities are exercisable, exchangeable or convertible)
as the Convertible Securities which are the subject of the Transfer
Notice may exercise tag-along rights pursuant to this Section 6.3, and
any such Convertible Securities shall be sold at the same price for
each of the Convertible Securities (based on a unit basis) proposed to
be sold by the Transferring Shareholder, as set forth in the Transfer
Notice. The Shareholders shall have no right to exercise tag-along
rights pursuant to this Section 6.3(c) in respect of Common Shares,
Class 1 Shares or other Convertible Securities which are not identical
to the Convertible Securities which are the subject of the Transfer
Notice.
For greater certainty, no rights shall arise under this Section 6.3 as a
result of any purchases in accordance with the exercise of rights of first
refusal under Section 6.2 nor shall the provisions of Sections 6.1 and 6.3 apply
to the Transfer of any Shares or Convertible Securities to which the provisions
of Section 6.4 apply and which are exercised in accordance with the terms
thereof.
Notwithstanding the foregoing, if any transaction or series of transactions
contemplated by this Section 6.3 would result in a Change of Control Event, the
Shareholders shall not complete the proposed transaction unless the aggregate
consideration payable by the Third Party Offeror pursuant to this Section 6.3 is
allocated in accordance with the Articles of Amendment as if it were a "CHANGE
OF CONTROL EVENT" thereunder.
Any purchase and sale agreement entered into in conjunction with this
Section 6.3 shall:
(a) contain only several (not joint and several) representations,
warranties and covenants from any holder of Shares or Convertible
Securities with recourse limited to that Shareholder's pro rata
portion of the aggregate purchase price to all Shareholders;
(b) contain a limitation on the liability each Shareholder assumes, with
respect to all indemnities, if any, provided to the Third Party
Offeror, to that Shareholder's pro rata portion of the aggregate
purchase price to all Shareholders;
(c) not require the Shareholders that participate in the transaction
pursuant to this Section 6.3 to provide representations or warranties
or covenants related to the Corporation but shall require them to
provide typical title, ownership and authority to sell
representations;
(d) not provide a Collateral Benefit to any Shareholder or any Affiliate
or Related Party thereof (other than the right to receive the purchase
price calculated in accordance with the provisions above); and
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(e) be conditional upon completion of the purchase by the Third Party
Offeror of the Shares or Convertible Securities held by the
Transferring Shareholder which are subject to the Transfer Notice.
Any Shareholder not giving notice within the Acceptance Period under this
Section 6.3 shall be deemed to have declined to exercise its tag-along rights
under this Section 6.3
If any of the Other Shareholders exercises its rights hereunder, the
purchase and sale of the Shares and Convertible Securities of the Corporation to
the Third Party Offeror pursuant to the Transfer Notice shall be completed at
the same time as the purchase and sale of the Offeror's Securities and as part
of the same closing.
To the extent that the Other Shareholders do not exercise their rights
hereunder, the Transferring Shareholder shall be entitled to sell the Shares
specified in the Transfer Notice in accordance with the terms thereof for a
period of 60 Business Days after the expiry of the Acceptance Period. If the
sale is not completed within such 60 Business Day period, the provisions of
Article 6 shall again apply to any proposed sale of Shares and so on from time
to time.
6.4 DRAG-ALONG RIGHTS
(a) If any Shareholder receives from a third party (the "THIRD PARTY")
acting as principal and dealing at arm's length with the Transferring
Shareholder, a bona fide written offer (the "THIRD PARTY Offer") to
purchase all (but not less than all) of the Shares and Convertible
Securities (which transaction may include, without limitation, an
offer pursuant to a merger, amalgamation, arrangement, capital
reorganization, consolidation or similar transaction), and the Third
Party Offer is accepted by either (i) Shareholders holding at least
50% of the votes attached to the outstanding Shares and Convertible
Securities held by parties to this Agreement (including votes that
attach to securities issuable upon exercise of Convertible Securities)
so long as the Third Party Offer is a Qualifying Offer (as defined
hereinafter), or (ii) an Investors Majority (the "ACCEPTING
SHAREHOLDERS"), the Accepting Shareholders shall be entitled to obtain
from the Third Party an offer (a "DRAG-ALONG OFFER") to purchase all
of the Shares and Convertible Securities of the Corporation held by
the Shareholders other than the Accepting Shareholders (the "FORCED
SHAREHOLDERS") on the same terms and conditions as contained in the
Third Party Offer, subject to the provisions of Section 6.4(b).
Notwithstanding the foregoing, Xxxxxxxx shall not be required to
accept a Drag Along Offer prior to the date one year from the date of
this Agreement. If the consideration to be received by the Forced
Shareholders in the Drag-Along Offer includes consideration other than
cash or cash equivalents, the Drag-Along Offer shall, if necessary,
include a valuation prepared in accordance with Section 6.5. The
Drag-Along Offer shall be irrevocable. For the purposes of this
Agreement, a "QUALIFYING OFFER" means a Third Party Offer: (i)
received within two years from the date hereof, and (ii) pursuant to
which the holders of the Class 1 Shares purchased by the Investors
pursuant to the Subscription Agreement would be entitled to receive
aggregate proceeds, payable in cash, equal to not less than $2,000 for
each Class 1 Share held by such Persons.
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(b) The Drag-Along Offer shall:
(i) not provide a Collateral Benefit to any Shareholder or any
Affiliate or Related Party thereof (other than, to the extent
that proceeds are distributed in accordance with the Articles of
Amendment, in the case of any holder of Class 1 Shares, the right
of such holder to receive the TR Value)
(ii) require each of the Shareholders to provide such representations,
warranties and indemnities as are customary and reasonably
requested by the Third Party; and
(iii) provide that each such Shareholder's liability for
representations, warranties and indemnities provided to the Third
Party shall be, in any event, limited to such Shareholder's pro
rata share of the proceeds received from the transaction.
(c) The Forced Shareholders shall be obliged to accept the Drag-Along
Offer (or otherwise take all necessary action to cause the Corporation
to consummate the proposed transaction, as applicable) within 3
Business Days of receipt or such other period agreeable to the
Accepting Shareholders. The acceptance of the Drag-Along Offer shall
be made in writing and a copy of the acceptance (or of the accepted
Drag-Along Offer) shall be delivered to the Accepting Shareholders
within such 3 Business Day period.
(d) If any of the Forced Shareholders do not deliver an acceptance of the
Drag-Along Offer within the 3 Business Day period referred to above,
the Secretary of the Corporation (the "DRAG-ALONG OFFER ATTORNEY")
shall be entitled to, and the Shareholders acknowledge, agree and
authorize the Drag-Along Offer Attorney to, accept the Drag-Along
Offer on behalf of such Forced Shareholders and to deliver the
acceptance to the Third Party and, for such purpose, each of the
Forced Shareholders hereby appoints the Drag-Along Offer Attorney as
its attorney, on the terms set forth in Section 11.2, with full power
of substitution, in the name of the Forced Shareholder to accept the
Drag-Along Offer and to execute and deliver all documents and
instruments to give effect to such acceptance and to establish a
binding contract of purchase and sale between the Forced Shareholder
and the Third Party with respect to all of the Shares and other
securities held by the Forced Shareholder and to execute and deliver
all deeds, transfers, assignments and assurances necessary to
effectively Transfer such Shares to the Third Party. Each of the
Shareholders agrees that it will perform the agreement resulting from
acceptance of the Drag-Along Offer in accordance with its terms and
will ratify and confirm all that the Drag-Along Offer Attorney may do
or cause to be done pursuant to the foregoing. Notwithstanding that
certificates or instruments evidencing the Shares or Convertible
Securities may not have been delivered by any Forced Shareholder to
the Third Party, upon completion of the Third Party's obligations
under the Third Party Offer:
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(i) the purchase of Shares or Convertible Securities from the Forced
Shareholder shall be deemed to have been fully completed and the
records of the Corporation may be amended accordingly;
(ii) all right, title, benefit and interest, both at law and in
equity, in and to the Shares or Convertible Securities shall be
conclusively deemed to have been transferred and assigned to and
become vested in the Third Party; and
(iii) all right, title, benefit and interest of such Forced
Shareholder and of any other Person (other than the Third Party)
having an interest in such Shares, legal or equitable, in any
capacity whatsoever shall cease.
(e) The purchase and sale of Shares and Convertible Securities in
accordance with the provisions of the Drag-Along Offer shall be
completed at the same time and on the same terms as the completion of
the purchase and sale of Shares and Convertible Securities and/or
other securities between the Accepting Shareholders and the Third
Party in accordance with the Third Party Offer and as part of the same
closing within 60 Business Days after expiry of the 3 Business Day
period referred to in Section 6.4(c).
(f) In the event that a Drag-Along Offer is made in connection with a
Third Party Offer and the Shares held by the Accepting Shareholders
and the Forced Shareholders constitute less than all of the Shares of
the Corporation, the Corporation agrees to take all steps necessary to
facilitate the Third Party's compulsory acquisition pursuant to Part
XVII of the CBCA, if applicable, of all Shares of the Corporation not
already purchased by the Third Party.
6.5 VALUATION OF NON-CASH CONSIDERATION
Any valuation of non-cash consideration included in a Third Party Offer
will be, in the case of: (i) Marketable Securities, calculated based on the
weighted average closing price of those securities on the exchange or market on
which the securities are primarily traded for the twenty trading days ended at
the close of business on the day prior to delivery of the applicable notice, and
(ii) other non-cash consideration, the fair market value thereof as determined
in good faith by the Board of Directors, provided, that, if any Shareholder
objects to any such determination within ten (10) days of receiving notice
thereof, such fair market value will be determined by an independent investment
banking or business valuation firm mutually agreeable to the Board of Directors
and an Investors Majority (the costs of which shall be borne by the
Corporation).
ARTICLE 7
TERMINATION
7.1 TERM
Except as otherwise expressly provided in this Agreement, this Agreement
shall come into force and effect as of the date of this Agreement and shall
continue in force in accordance with the terms hereof. Articles 4, 5 and 6 of
this Agreement shall terminate upon the completion
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of a Qualified IPO. Subject to Section 7.2, this Agreement shall terminate upon
the written agreement of the Corporation and an Investors Majority. Except as
contemplated by Section 5.5, the rights and obligations of a Shareholder under
this Agreement shall cease on the date that such Shareholder ceases to own any
Shares or securities in the capital of the Corporation.
7.2 TERMINATION NOT TO EFFECT RIGHTS OR OBLIGATIONS
A termination of this Agreement or any provision of this Agreement shall
not affect or prejudice any rights or obligations which have accrued or arisen
under this Agreement prior to the time of termination, and such rights and
obligations shall survive the termination of this Agreement.
ARTICLE 8
CLOSING PROCEDURES
If a purchase and sale of any Shares, Convertible Securities and/or other
securities of the Corporation is made pursuant to this Agreement, the following
shall apply:
8.1 PAYMENT OF PURCHASE PRICE AND DELIVERY OF CERTIFICATES
Payments on account of the purchase price shall be made by negotiable
check, certified by a chartered bank or trust company or by wire transfer of
funds to an account of a chartered bank or by official bank draft drawn on a
chartered bank against receipt by the purchaser of the share certificate or
certificates representing the Shares, Convertible Securities or other securities
being purchased, duly endorsed for transfer in blank.
8.2 TITLE
The acceptance by the vendor of payment (including an agreement to pay) for
the Shares, Convertible Securities and/or other securities being purchased and
sold shall constitute a representation and warranty by the vendor that the
vendor has good and marketable title to the Shares, Convertible Securities
and/or other securities, free and clear of any Lien. In addition, the vendor
shall deliver to the purchaser all documents, instruments and do all acts and
things as the purchaser may reasonably request, whether before or after
completion of the transaction, to vest title in the purchaser.
8.3 FAILURE TO COMPLETE SALE
If, at the time of closing, the vendor does not complete the sale for any
reason, other than due to the breach of the purchasing party, the purchaser
shall have the right to deposit (including by post-dated check) the purchase
price for the Shares, Convertible Securities and/or other securities to be
purchased and sold for the account of the vendor in an account with the bankers
of the Corporation and that deposit shall constitute valid and effective payment
of the purchase price to the vendor. Thereafter, the purchaser shall have the
right to execute and deliver any deeds, stock transfers, assignments, releases
and other documents as may, in the reasonable opinion of the purchaser, be
necessary or desirable to complete the transaction. If payment of the purchase
price is so deposited, then from and after the date of deposit, notwithstanding
that certificates or instruments evidencing the Shares, Convertible Securities
and/or other securities may not have been delivered to the purchaser:
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(a) the purchase shall be deemed to have been fully completed and the
records of the Corporation may be amended accordingly;
(b) all right, title, benefit and interest, both at law and in equity, in
and to the subject Shares, Convertible Securities and/or other
securities shall be conclusively deemed to have been transferred and
assigned to and become vested in the purchaser; and
(c) all right, title, benefit and interest of the vendor and of any other
Person (other than the purchaser) having any interest in the subject
Shares, Convertible Securities and/or other securities, legal or
equitable, in any capacity whatsoever, shall cease.
8.4 PURCHASER APPOINTED AS ATTORNEY
Each Shareholder hereby appoints, on the terms set forth in Section 11.2,
in case the Shareholder is a vendor of Shares, Convertible Securities and/or
other securities under this Agreement who fails to do anything duly required in
connection with a sale by that vendor, each other Shareholder who may from time
to time be a purchaser of any such Shares, Convertible Securities and/or other
securities, as the vendor's attorney, with full power of substitution, in the
name of the vendor but on behalf of and at the expense of the purchaser, to
execute and deliver all deeds, transfers, assignments and assurances necessary
to effectively Transfer the interest being sold to the purchaser or its
nominees.
8.5 TAXES
At the time of the sale, the vendor shall provide to the purchaser either:
(a) a statutory declaration that the vendor is not a non-resident of
Canada for purposes of the Income Tax Act (Canada); or
(b) a certificate from Canada Revenue Agency under Section 116 of the
Income Tax Act (Canada) with a certificate limit at least equal to the
proceeds payable to such vendor,
provided that if the vendor delivers no declaration or certificate, the
purchaser shall be entitled to deduct from the purchase price payable to the
vendor an amount equal to the amount of tax for which the purchaser may be
liable under the Income Tax Act (Canada) (or any applicable comparable
legislation).
8.6 DELIVERIES ON CLOSING
If, after completion of the transaction of purchase and sale, the vendor
will not own any Shares or other securities of the Corporation, the vendor shall
deliver or cause its nominees to deliver, at the time of completion of the sale,
a written resignation from all positions on the Board of Directors and from any
offices and employment with the Corporation, as reasonably requested by the
Corporation.
-24-
8.7 GOVERNMENTAL APPROVALS
If any Governmental Approval is required in respect of a purchase of
Shares, Convertible Securities and/or other securities of the Corporation by a
Third Party under any provision of this Agreement, then, notwithstanding
anything contained in this Agreement, the time period specified in this
Agreement for the closing of such transaction shall be extended for an
additional 30 Business Days to permit such Third Party to obtain the necessary
Governmental Approval. Any such application for Governmental Approval shall be
the sole responsibility of such Third Party who shall also be responsible for
all costs and expenses incurred in connection therewith. The Other Shareholders
and the Corporation shall use reasonable efforts to cooperate with such Third
Party in any application for Governmental Approval and Francisco Partners shall
be provided with the opportunity to provide input into and shall be consulted in
respect of any submission made in respect of any such Governmental Approval.
ARTICLE 9
SHARE CERTIFICATES
9.1 RESTRICTIVE LEGENDS
In addition to any other legend otherwise prescribed by law or contract,
for so long as this Agreement remains in effect, the certificates representing
any shares of capital stock or other securities of the Corporation held by any
Shareholder will bear restrictive legends in substantially the following form:
"The securities represented by this share certificate are subject to
certain restrictions with respect to the voting and the transfer of
such securities set forth in a Shareholders Agreement dated as of
August 16, 2007 by and among the issuer of such securities and the
registered holder of this share certificate (or such holder's
predecessor-in-interest) and certain others. A copy of such
Shareholders Agreement is on file and may be inspected by the
registered holder of this certificate at the registered office of the
issuer."
ARTICLE 10
CONFIDENTIALITY COVENANTS
10.1 CONFIDENTIALITY
(a) No Party will, at any time or under any circumstances, without the
consent of the Board of Directors, directly or indirectly communicate
or disclose to any Person (other than the other Parties and employees,
agents, advisors and representatives of such Party or Parties) or make
use of (except in connection with its interest in the Corporation) any
confidential knowledge or information howsoever acquired by such Party
relating to or concerning (A) the customers, products, technology,
trade secrets, systems or operations, or other confidential
information regarding the property, business and affairs, of the
Corporation, (B) the identity of the Shareholders party to this
Agreement, and (C) this Agreement and the Other Agreements, except:
-25-
(i) information that is or becomes generally available to the public
(other than by disclosure by such Party or its employees, agents,
advisors or representatives contrary to this Section);
(ii) information that is reasonably required to be disclosed by a
Party to protect its interests in connection with any valuation
or legal proceeding under this Agreement;
(iii) information that is required to be disclosed by law or by the
applicable regulations or policies of any Governmental Body,
regulatory agency of competent jurisdiction or any stock
exchange; and
(iv) in connection with its right to sell Shares in accordance with
the provisions of this Agreement, any Party may disclose
confidential information to the potential purchaser in respect of
such proposed sale or transaction, provided the potential
purchaser agrees to be bound by the confidentiality obligations
set out in this Section 10.1, as well as a covenant of the
potential purchaser not to use or allow the use for any purpose
of the confidential information or notes, summaries or other
material derived from the review of the confidential information,
except to determine whether to purchase Shares from such
Shareholder or otherwise acquire the Corporation.
(b) Notwithstanding Section 10.1(a), Francisco Partners and any member of
the Francisco Partners Group may:
(i) disclose confidential information to members of the Francisco
Partners Group provided such members have agreed to maintain the
confidentiality of such information;
(ii) disclose confidential information to Francisco Partners's
advisory committee or investment committee;
(iii) report confidential information regarding the Francisco Partners
Group's investment in the Corporation, regarding the
Corporation's financial statements, other financial information
regarding the Corporation that the Corporation has provided to
non-shareholder parties, that the Francisco Partners Group is
otherwise required to report to members of the Francisco Partners
Group in connection with its investment in the Corporation and as
otherwise agreed between the Corporation and Francisco Partners
(save and except where such use or disclosure would have a
Material Adverse Effect on the Business of the Corporation); and
(iv) any nominee of Francisco Partners on the Board of Directors or
any Observer may discuss the Business of the Corporation and any
Subsidiary, including confidential information, with the
investment committee, officers, directors, partners, employees
and advisors of the Francisco Partners Group.
-26-
(c) Notwithstanding Section 10.1(a), Xxxxxx Xxxxxxx and any member of the
MS Investors may:
(i) disclose confidential information to MS Affiliates provided such
MS Affiliates have agreed to maintain the confidentiality of such
information;
(ii) disclose confidential information to Xxxxxx Xxxxxxx'x advisory
committee or investment committee; and
(iii) report confidential information regarding the MS Investors'
investment in the Corporation, regarding the Corporation's
financial statements, other financial information regarding the
Corporation that the Corporation has provided to non-shareholder
parties, that the MS Investors are otherwise required to report
to members of the MS Investors in connection with their
investment in the Corporation and as otherwise agreed between the
Corporation and the MS Investors (save and except where such use
or disclosure would have a Material Adverse Effect on the
Business of the Corporation);
(d) Notwithstanding Section 10.1(a), EdgeStone and any member of the
EdgeStone Group may:
(i) disclose confidential information to members of the EdgeStone
Group provided such members have agreed to maintain the
confidentiality of such information;
(ii) disclose confidential information to EdgeStone's advisory
committee or investment committee;
(iii) report confidential information regarding EdgeStone's investment
in the Corporation, regarding the Corporation's financial
statements, other financial information regarding the Corporation
that the Corporation has provided to non-shareholder parties,
that EdgeStone is otherwise required to report to members of the
EdgeStone Group in connection with its investment in the
Corporation and as otherwise agreed between the Corporation and
EdgeStone (save and except where such use or disclosure would
have a Material Adverse Effect on the Business of the
Corporation); and
(iv) any nominee of EdgeStone on the Board of Directors or any
Observer may discuss the Business of the Corporation and any
Subsidiary, including confidential information, with the
investment committee, officers, directors, partners, employees
and advisors of the EdgeStone Group.
(e) Each of the Parties acknowledges that disclosure of any confidential
information regarding the Corporation in contravention of this Section
10.1 may cause significant harm to the Corporation and the
Subsidiaries and that remedies at law may be inadequate to protect
against a breach of this Section. Accordingly, each of the Parties
acknowledges that the Corporation is entitled, in addition to any
-27-
other relief available to it, to the granting of injunctive relief
without proof of actual damages or the requirement to establish the
inadequacy of any of the other remedies available to it. Each of the
Parties covenants not to assert any defence in proceedings regarding
the granting of an injunction or specific performance based on the
availability to the Corporation of any other remedy.
10.2 ACKNOWLEDGEMENT
The covenants contained in Section 10.1 are given by the Shareholders
acknowledging that each of them has specific knowledge of the affairs of the
Corporation and the Subsidiaries and that the other Shareholders would not have
entered into or permitted the Corporation to enter into the transactions
contemplated in this Agreement or in the Other Agreements without the other
Shareholders having provided such covenants.
10.3 REASONABLE OBLIGATIONS NOT EXHAUSTIVE
Each Shareholder acknowledges that the obligations contained in this
Article 10 are not in substitution for any obligations which the Shareholder may
now or hereafter owe to the Corporation, any of the Subsidiaries or any other
Shareholder and which exists apart from this Article and do not replace any
rights of the Corporation, any of the Subsidiaries or any Shareholder with
respect to any such obligation.
Each of the Shareholders hereby agrees that, without in any way derogating
from any other covenants provided by him or it, all the restrictions in this
Article 10 are reasonable and valid and all defenses to the strict enforcement
thereof by the Corporation and/or the other Shareholders are hereby waived.
10.4 SURVIVAL
Notwithstanding any other term or provision hereof (including, without
limitation, Section 7.1), the provisions of this Article 10 shall survive the
termination of this Agreement.
ARTICLE 11
GENERAL
11.1 ALL SECURITIES SUBJECT TO AGREEMENT
Each of the Shareholders agrees that it shall be bound by the terms of this
Agreement with respect to all Shares and securities in the capital of the
Corporation held by it from time to time.
11.2 TERMS OF POWER OF ATTORNEY
If any Shareholder is deemed to appoint an attorney pursuant to Section
6.4(d) or 8.4 of this Agreement, such appointment, being coupled with an
interest, is irrevocable by the Shareholder and shall not be revoked by the
insolvency or bankruptcy of the Shareholder. Any such Shareholder hereby
authorizes its attorney appointed pursuant to Section 6.4(d) or 8.4 to take any
action necessary or advisable in connection with Section 6.4(d) or 8.4,
respectively, hereby giving such attorney full power and authority to do and
perform each and every act or thing whatsoever required or advisable to be done
in connection with the foregoing as fully as
-28-
such Shareholder might or could do so personally, and hereby ratifying and
confirming all that such attorney shall lawfully do or cause to be done by
virtue thereof. Any such power of attorney is not intended to be a continuing
power of attorney within the meaning of and governed by the Substitute Decisions
Act (Ontario), or any similar power of attorney under equivalent legislation in
any of the provinces or territories of Canada (a "CPOA"). The execution of this
Agreement shall not terminate any CPOA granted by a Shareholder previously and
any such power of attorney shall not be terminated by the execution by a
Shareholder in the future of a CPOA, and each Shareholder hereby agrees not to
take any action that results in the termination of any such power of attorney.
11.3 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement and of every part hereof,
and no extension or variation of this Agreement shall operate as a waiver of
this provision.
11.4 FURTHER ASSURANCES
Each of the Shareholders covenants and agrees to vote (or cause to be
voted) its Shares in the capital of the Corporation, and to take all other
necessary or desirable action within its control and to the extent permitted by
law so as to give full effect to the provisions of this Agreement; provided that
no Shareholder shall be obligated to waive any of its rights hereunder or in
respect of its Shares or agree to any reduction in the stated capital of its
Shares.
11.5 ARBITRATION
Subject to Section 11.11, all disputes arising out of or in connection with
this Agreement, or in respect of any legal relationship associated with or
derived from this Agreement, shall be arbitrated and finally resolved pursuant
to the ARBITRATION ACT, 1991 (Ontario). Such arbitration shall be conducted by a
single arbitrator. The arbitrator shall be appointed by agreement between the
parties or, failing agreement, such arbitrator shall be appointed in accordance
with Section 10 of the ARBITRATION ACT, 1991 (Ontario). The place of arbitration
shall be the City of Ottawa in the Province of Ontario. The language of the
arbitration shall be English. Any notice or other document, including a notice
commencing arbitration, may be served by sending it to the addressee by
facsimile in accordance with Section 11.6 hereof. The decision arrived at by the
arbitrator, howsoever constituted, shall be final and binding and no appeal
shall lie therefrom.
11.6 NOTICES
All notices, requests, payments, instructions or other documents to be
given hereunder will be in writing or by written telecommunication, and will be
deemed to have been duly given if (i) delivered personally (effective upon
delivery), (ii) mailed by certified mail, return receipt requested, postage
prepaid (effective five Business Days after dispatch), (iii) sent by a
reputable, established courier service that guarantees next Business Day
delivery (effective the next Business Day), or sent by air mail or by commercial
express overseas air courier, with receipt acknowledged in writing by the
recipient (effective upon the date of such acknowledgement), or (iv) sent by
telecopier or electronic mail followed within 24 hours by confirmation by one of
the foregoing methods (effective upon receipt of the telecopy in complete,
readable form), addressed as follows (or to such other address as the recipient
party may have furnished to the sending party for the purpose pursuant to this
Section 11.6):
-29-
if to the Corporation to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X 0X0
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X 0X0
Attention: Chief Financial Officer, and VP Finance
Fax: (000) 000-0000
And with a copy to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X0X0
Attention: Senior Corporate Counsel
Fax: (000) 000-0000
And with a copy to:
Osler, Xxxxxx & Xxxxxxxx XXX
Xxxxx 0000
00 X'Xxxxxx Xxxxxx
Xxxxxx, XX
X0X 0X0
Attention: J. Xxxxx Xxxxxx
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxx.xxx
if to Francisco Partners:
Arsenal Holdco I, S.a.r.l. and Arsenal Holdco II, S.a.r.l.
0-00 xxx Xxxxxxx Xxxxx
X-0000 Xxxxxxxxxx
with copies to:
-30-
Francisco Partners II., L.P., GP, LLC
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxx
Facsimile: (000) 000-0000
E-mail: xxxx@xxxxxxxxxxxxxxxxx.xxx
O'Melveny & Xxxxx LLP
Embarcadero Center West
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxx@xxx.xxx
Stikeman Elliott LLP
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx
Xxxxxxx, XX, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxx.xxx
if to any MS Investor:
c/o Morgan Xxxxxxx Principal Investments, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx XX
Facsimile: (000) 000-0000
E-mail: xxx.xxxxxx@xxxxxxxxxxxxx.xxx
with a copy to:
XxXxxxxxx Will & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Older
Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxx.xxx
E-Mail: xxxxxxxxx@xxx.xxx
if to Xxxxxxxx, CTJL or WCC:
c/o Xxxxxx Xxxxxx Corporation
000 Xxxxxxx Xxxxx
Xxxxx X, Xxxxx 000
Xxxxxx, Xxxxxxx X0X 0X0
-31-
Attn: Dr. T.H. Xxxxxxxx and Xxxx Xxxxxxxx
Fax: (000) 000-0000
And with a copy to:
------------------
Xxxxxx Xxxxxx Gervais LLP
World Exchange Plaza
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX X0X 0X0
Attention: Xxxxxx Xxxx
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxx.xxx
if to EdgeStone:
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
Fax: (000) 000-0000
if to PTIC:
Power Technology Investment Corporation
751, Square Victoria
Xxxxxxxx, Xxxxxx X0X 0X0
Attn: Mr. Xxxxx Xxxxx
Fax: (000) 000-0000
11.7 WAIVERS, AMENDMENTS
Except as otherwise expressly provided in this Agreement and without
limiting the applicability of the following sentence, no amendment or waiver of
this Agreement shall be binding on a Party unless executed in writing by the
Party to be bound thereby. Any amendment or waiver of this Agreement or any
provision thereof shall be binding on all Parties, and each Party shall sign an
instrument evidencing same, if such amendment or waiver has been consented to in
writing (whether signed in one or more counterparts) by the Corporation and an
Investors Majority; provided, however, that in the event of an amendment or
waiver affecting any Shareholder in a manner that is materially and adversely
disproportionate from the manner in which such amendment or waiver affects any
other Shareholder or group of Shareholders, the waiver and amendment shall
require the consent in writing of each such Shareholder who is
disproportionately affected; provided, further, however, that any amendment or
waiver of this
-32-
Section 11.7 shall require the consent in writing of each Shareholder. Except as
otherwise expressly provided in this Agreement, no waiver of any provision of
this Agreement shall constitute or be deemed to constitute a waiver of any other
provision nor shall any such waiver constitute a continuing waiver.
11.8 COUNTERPARTS
This agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original and such counterparts together shall
be but one and the same instrument. Each Party agrees that the delivery of this
Agreement by facsimile shall have the same force and effect as delivery of
original signatures.
11.9 SUCCESSORS AND ASSIGNS
Except as otherwise specifically permitted herein, neither this Agreement
nor any of the rights of any of the Shareholders may be assigned without the
prior written consent of the other parties to this Agreement. Except as
otherwise provided herein, this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, other personal representatives, successors and permitted assigns
and transferees of Shares or Convertible Securities.
11.10 APPLICATION OF THIS AGREEMENT
The terms of this Agreement shall apply mutatis mutandis to any securities
of the Corporation resulting from the conversion, reclassification,
redesignation, subdivision or consolidation or other change of the Shares.
11.11 EQUITABLE RELIEF
Each of the parties acknowledges that any breach by such Party of his, her,
or its obligations under this Agreement would cause substantial and irreparable
damage to one or more of the other parties and that money damages would be an
inadequate remedy therefor. Accordingly, each Party agrees that the other
parties or any of them will be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations.
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, each of the parties has executed this Shareholders
Agreement on and as of the date first above written.
MITEL NETWORKS CORPORATION
By:
-----------------------------
Name:
Title:
ARSENAL HOLDCO I, SARL
By:
-----------------------------
Name:
Title:
ARSENAL HOLDCO II, SARL
By:
-----------------------------
Name:
Title:
XXXXXX XXXXXXX PRINCIPAL INVESTMENTS, INC.
By:
-----------------------------
Name:
Title:
XXXXXX XXXXXX CORPORATION
By:
-----------------------------
Name:
Title:
-34-
CELTIC TECH JET LIMITED
By:
-----------------------------
Name:
Title:
XXXXXXX X. XXXXXXXX
---------------------------------
POWER TECHNOLOGY INVESTMENT CORPORATION
By:
-----------------------------
Name:
Title:
EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., AS AGENT FOR EDGESTONE
CAPITAL EQUITY FUND II-A, L.P. AND ITS PARALLEL INVESTORS
By:
-----------------------------
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:
-----------------------------
Name:
Title:
-35-
FRANCISCO PARTNERS II (CAYMAN), L.P., AS CONTROLLING SHAREHOLDER FOR
ARSENAL HOLDCO I, S.A.R.L.
By: FRANCISCO PARTNERS XX XX (CAYMAN), L.P.
its General Partner
By: FRANCISCO PARTNERS XX XX MANAGEMENT (CAYMAN) LIMITED
its General Partner
By:
-----------------------------
Name:
Title: Director
APPENDIX 1
DEFINITIONS
"2006 EQUITY COMPENSATION PLAN" means the Corporation's equity compensation plan
approved by the shareholders on September 7, 2006;
"ACCEPTANCE NOTICE" has the meaning set out in Section 6.2(a);
"ACCEPTANCE PERIOD" has the meaning set out in Section 6.1;
"ACCEPTING SHAREHOLDERS" has the meaning set out in Section 6.4(a);
"AFFILIATE" of a Person means any Person that would be deemed to be an
"affiliated entity" of such first-mentioned Person under National Instrument
45-106 promulgated under the SECURITIES ACT (Ontario) as it exists on the date
of this Agreement;
"AGREEMENT" means this Shareholders Agreement, including all Appendices and
Schedules hereto and any amendments or restatements hereof;
"ARM'S LENGTH" has the meaning ascribed to such term for the purposes of the
INCOME TAX ACT (Canada);
"ARTICLES OF AMENDMENT" means the articles of amendment of the Corporation
creating the Class 1 Shares attached as Schedule B hereto;
"AS-IF CONVERTED TO COMMON SHARES BASIS" means, at any time and from time to
time, assuming the conversion or exchange of all outstanding Class 1 Shares and
all other securities of the Corporation exercisable, convertible or exchangeable
into Common Shares which are fully-vested and exercisable, convertible or
exchangeable on the date of the calculation at the respective conversion rate or
conversion prices or exchange rates, as the case may be, applicable at such
time; provided, however, that any warrants to acquire Common Shares held by
Francisco Partners or any member of the FP Group shall not be included in any
calculation of the as if converted to Common Shares basis;
"ASSOCIATE" has the meaning ascribed thereto in the Canada Business Corporations
Act;
"ASSUMPTION AGREEMENT" means the assumption agreement substantially in the form
attached hereto as Schedule C;
"AUDIT COMMITTEE" has the meaning set out in Section 2.5;
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation;
"BUSINESS" means the business of developing, selling, licensing, distributing,
servicing and maintaining, as applicable, enterprise and customer premises
business communications solutions and services, including 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) and the business of InterTel (Delaware),
Incorporated and its subsidiaries;
-2-
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on which
chartered banks in Ottawa, Ontario and San Francisco, California are open for
commercial banking business during normal banking hours;
"CHANGE OF CONTROL EVENT" shall have the meaning set forth in the Articles of
Amendment.
"CLASS 1 SHARES" means the Class 1 Convertible Preferred Shares in the capital
of the Corporation, including the Class 1 Convertible Preferred Shares currently
issued and any Class 1 Convertible Preferred Shares that may be issued after the
date hereof;
"COLLATERAL BENEFIT" means any agreement, commitment or understanding with a
Shareholder that has the effect of providing to that Shareholder (or anyone
acting not at arm's length to that Shareholder), directly or indirectly,
consideration of greater value than that offered to other Shareholders,
excluding consideration paid or to be paid to a Shareholder (or anyone not at
arm's length with a Shareholder) for goods and/or services rendered or provided
or to be rendered or provided by that Shareholder (or anyone not at arm's length
with that Shareholder) where the amount of such consideration is not more than
that which would be negotiated between arm's length parties on market terms,
provided, for greater certainty, that any payment in favor of the holders of the
Class 1 Shares in accordance with the Articles of Amendment shall be deemed not
to constitute a Collateral Benefit;
"COMMON SHARES" means the common shares in the capital of the Corporation,
including the Common Shares currently issued and any Common Shares that may be
issued after the date hereof;
"COMPENSATION COMMITTEE" has the meaning set out in Section 2.5;
"CONTROL" means, with respect to any Person at any time,
(a) holding, as owner or other beneficiary, other than solely as the
beneficiary of an unrealized security interest, directly or
indirectly through one or more intermediaries: (A) more than 50%
of the voting securities of that Person; or (B) securities of
that Person carrying votes sufficient to elect or appoint the
majority of individuals who are responsible for the supervision
or management of that Person; or
(b) the exercise of DE FACTO control of that Person whether direct or
indirect and whether through the ownership of securities, by
contract or trust or otherwise;
and the terms "CONTROLS", "CONTROLLING" and "CONTROLLED" have corresponding
meanings;
"CONTROLLED SHAREHOLDER" means any Shareholder that is Controlled by a
Controlling Shareholder who is a party to this Agreement;
"CONTROLLING SHAREHOLDER" means any Person who is party to this Agreement and
who Controls a Shareholder (and shall, for greater certainty, include Xxxxxxxx
as the Controlling Shareholder of the Xxxxxxxx Group);
-3-
"CONVERSION VALUE" has the meaning set forth in the Articles of Amendment;
"CONVERTIBLE SECURITY" means any option, warrant, right or other security, other
than the Class 1 Shares, which entitles the holder to acquire from the issuer
thereof another security or to convert, exchange or exercise such security into
another security in the capital of such issuer;
"CREDIT AGREEMENT DEBT" has the meaning set out in Appendix 2;
"DEBT OBLIGATIONS" has the meaning set out in Appendix 2;
"DRAG-ALONG OFFER" has the meaning set out in Section 6.4(a);
"EDGESTONE GROUP" means
(a) any Affiliate of EdgeStone;
(b) any other Person, provided that EdgeStone or any Affiliate thereof has
the exclusive right to exercise all rights of EdgeStone transferred
hereunder on behalf of such Person;
(c) any Person whose funds are managed by EdgeStone or an Affiliate of
EdgeStone;
(d) EdgeStone Capital Equity Fund II-A, L.P. and /or any Person which
agrees to invest with it on a parallel or co-investment basis (and the
respective partners thereof, if any) in the manner contemplated in the
constating documents of EdgeStone Capital Equity Fund II-A, L.P. or
EdgeStone Capital Equity Fund II-B, L.P.; and
(e) upon the termination or dissolution of any limited partnership or
other entity that is a limited, special or general partner of
EdgeStone, the beneficial holders of interests of such limited,
special or general partner.
"FORCED SHAREHOLDERS" has the meaning set out in Section 6.4(a);
"FRANCISCO PARTNERS GROUP" means:
(a) Francisco Partners;
(b) limited, special and general partners of Francisco Partners and
Francisco Partners II, L.P.,and any Person to which Francisco Partners
II, L.P. shall transfer all or substantially all of its assets;
(c) all Affiliates, employees and consultants of Francisco Partners and/or
Francisco Partners II, L.P.;
(d) any other Person, provided that Francisco Partners or any Affiliate
thereof has the exclusive right to exercise all rights of Francisco
Partners transferred hereunder on behalf of such Person;
-4-
(e) any Person whose funds are managed by Francisco Partners or an
Affiliate of Francisco Partners and/or Francisco Partners II, L.P.;
and
(f) upon the termination or dissolution of any limited partnership or
other entity that is a Person referred to in clause (b) of this
definition, (A) the beneficial holders of interests in such Person,
and (B) any other Person referred to in clause (b) of this definition,
whether or not, in either case, an Affiliate described in clause (c)
of this definition has the exclusive right to exercise the rights of
Francisco Partners transferred hereunder on behalf of such beneficial
holder or Persons;
"FRANCISCO PARTNERS NOMINEES" has the meaning set forth in Section 2.2;
"GOVERNMENTAL APPROVAL" means the consent of any Governmental Body which may be
required at any time and from time to time to ensure that the purchase of all or
any part of the Shares and/or other securities of the Corporation held by a
Shareholder is not in contravention of any law, regulation or published policy
of, or administered by, such Governmental Body or which may be required in order
to ensure that, notwithstanding the purchase of such shares of all or any part
of the Shares or other securities held by the Shareholders, the holding or
continued holding by the Corporation or any Subsidiary of any franchise,
license, permit or other permission or authority required to carry on its
respective business is unaffected;
"GOVERNMENTAL BODY" means any body of a state or government, any international
body or body assembling several states or provinces, any body, board,
commission, office or other authority, instituted or constituted by a state or a
government, by a law or otherwise, any public or private body, board,
commission, office exercising governmental or quasi-governmental functions or
regulatory or autoregulatory functions on behalf of a state or another
governmental body or otherwise having jurisdiction, as well as any body, office,
commission, board, arbitration or judicial tribunal, quasi-judicial or
administrative tribunal, either national, provincial or governmental, foreign or
international, as well as any court or common law tribunal;
"INITIAL PUBLIC OFFERING" shall have the meaning set forth in Article 1 of the
Registration Rights Agreement;
"INVESTORS MAJORITY" means Francisco Partners (in which such case unanimous
consent provided by the Francisco Partners Nominees shall conclusively be deemed
an Investors Majority); provided, however, if the Francisco Partners Group holds
less than 30% of the outstanding Class 1 Shares, Investors Majority shall mean
the holders of not less than 50% of the outstanding Class 1 Shares;
"LIEN" means any and all liens, claims, mortgages, hypothecs, security
interests, charges, encumbrances, and restrictions on transfer of any kind,
except, in the case of references to securities, any of the same arising under
applicable corporate or securities laws solely by reason of the fact that such
securities were issued pursuant to exemptions from registration or prospectus
requirements under such securities laws or otherwise arising pursuant to this
Agreement, the Subscription Agreement, Articles or the Registration Rights
Agreement;
"MARKETABLE SECURITIES" means equity securities of an issuer which are listed on
an established nationally recognized exchange in Canada or the United States,
which: (i) do not represent in excess of 10% of the relevant issuer's
outstanding securities of the same class or a class into
-5-
which such securities are immediately convertible or exchangeable without cost
to the holder; (ii) have a Public Float of at least US$150 million; (iii) have
had average daily trading volumes for the 10 trading days prior to distribution
of at least US$5,000,000; and (iv) are not subject to any statutory, regulatory,
contractual or other hold period or resale restriction other than a restriction
requiring the filing of a notice only (without requiring any approval);
"MATERIAL ADVERSE EFFECT" means, with reference to the Corporation or any of the
Subsidiaries, a material adverse effect on the condition (financial or
otherwise), operations, business, assets, or prospects of the Corporation and
the Subsidiaries taken as a whole;
"XXXXXXXX GROUP" means
(a) Xx. Xxxxxxx X. Xxxxxxxx, his spouse or former spouse, any lineal
descendant of Xx. Xxxxxxx X. Xxxxxxxx, any spouse or former spouse of
any such lineal descendant, and their respective legal personal
representatives;
(b) the trustee or trustees of any trust (including without limitation a
testamentary trust) for the exclusive benefit of any one or more
members of the Xxxxxxxx Group;
(c) any corporation all of the issued and outstanding shares of which are
beneficially owned by any one or more members of the Xxxxxxxx Group;
(d) any partnership all of the partnership interests in which are
beneficially owned by any one or more members of the Xxxxxxxx Group;
and
(e) any charitable foundation Controlled by any one or more members of the
Xxxxxxxx Group,
and, for this purpose, a trustee or trustees referred to in clause (b)
above shall be deemed to beneficially own any shares or partnership
interests held by them.
"MS AFFILIATE" shall mean any affiliate of any MS Investor. For the purposes of
this definition "affiliate" means any Person that would be deemed an "affiliate"
under Rule 405 under the U.S. Securities Act of 1933, as amended.
"NEW SECURITIES" shall mean any Shares or other equity or debt securities of the
Corporation or any Subsidiary, whether now authorized or not, and includes any
Convertible Securities, but excludes (i) any debt or equity securities of the
Corporation or any Subsidiary issued solely to a wholly-owned Subsidiary, and
(ii) debt securities constituting capitalized leases or purchase money
indebtedness associated with the acquisition of equipment;
"OBSERVER" has the meaning set out in Section 2.7;
"OFFEROR'S SECURITIES" has the meaning set out in Section 6.1(c);
"OTHER AGREEMENTS" means the Registration Rights Agreement, and with respect to
the Investors, the Subscription Agreement and all of the agreements,
instruments, certificates, and other documents executed and delivered by or on
behalf of the Corporation or the Investors or any of their respective Affiliates
at the Closing Time (as defined in the Subscription Agreement)
-6-
or otherwise in connection with the Subscription Agreement and the transactions
contemplated herein or therein;
"PARTY" or "PARTIES" means one or more of the Corporation, the Shareholders and
any other Person who becomes a party to this Agreement by virtue of a Transfer
of Shares or Convertible Securities or otherwise;
"PERMITTED ADDITIONAL SECURITIES" means:
(a) any Common Shares issued or issuable upon conversion of any Class 1
Shares currently outstanding or that may hereafter be issued and
approved in accordance with the provisions of Section 2.8;
(b) any option to purchase Common Shares granted under the 2006 Equity
Compensation Plan, the Stock Option Plan and/or Common Shares allotted
for issuance, issued or issuable pursuant to the 2006 Equity
Compensation Plan, the Stock Option Plan, and any Common Shares or
Convertible Securities allotted for issuance, issued or issuable to
employees, officers, directors or consultants of the Corporation in
accordance with any other stock option plan, stock purchase plan or
other stock compensation program of the Corporation approved by the
Board of Directors; provided, however, that any Common Shares issued
upon the exercise of any such options, together with any Common Shares
or Convertible Securities allocated for issuance, issued or issuable,
shall not exceed 12.5% of the Common Shares outstanding (calculated on
an as-if converted into Common Shares basis) immediately following the
Closing Time (as defined in the Subscription Agreement);
(c) any equity securities issued pursuant to a Qualified IPO;
(d) any Common Shares or Convertible Securities issued in connection with
an acquisition of assets or a business; provided, that: (i) the cost
of such acquisition is less than US$10,000,000; (ii) any such
transaction is approved by the Board of Directors; (iii) the maximum
aggregate number of Common Shares (including Common Shares issuable on
the conversion or exercise of Convertible Securities) that may be
issued pursuant to this clause (d) shall not exceed one percent (1%)
of the aggregate number of Common Shares issued and outstanding
immediately following the Closing Time (as defined in the Subscription
Agreement), subject to appropriate adjustments for stock dividends,
stock splits, stock consolidations, capital reorganizations and the
like occurring after the date hereof, all calculated on an as-if
converted to Common Shares basis; and (iv) the implied issue price of
any such Common Shares or Convertible Securities shall exceed the
Conversion Value of the Class 1 Shares calculated on an as-if
converted to Common Shares basis, in each case expressed on a per
share basis;
(e) any issuance of Common Shares pursuant to the exercise of any warrants
set forth on Schedule A on the date hereof and in the form as in
effect on the date hereof;
(f) any equity securities issued to bona fide consultants or professional
advisors of the Corporation as part of the consideration for services
received by the
-7-
Corporation from such consultants or professional advisors, so long as
such issuances in the aggregate do not exceed 0.25% of the Common
Shares issued and outstanding at the Closing Time (as defined in the
Subscription Agreement), all calculated on an as-if converted into
Common Shares basis; and
(g) any Common Shares or Convertible Securities issued to or in connection
with any of the following (i) licensors of technology of the
Corporation, (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: (A) any such transaction or transactions approved by
the Board of Directors; and (B) the maximum aggregate number of Common
Shares (including Common Shares issuable on the conversion or exercise
of Convertible Securities) that may be issued pursuant to all
transactions contemplated by this clause (i) shall not exceed 1% of
the aggregate number of Common Shares issued and outstanding on the
date hereof, all calculated on an as-if-converted to Common Shares
basis.
(h) any equity securities issued in respect of subdivisions,
consolidations, stock dividends or capital reorganizations approved in
accordance with Section 2.8;
"PERMITTED TRANSFEREE" of any Person means:
(a) in the case of a Person who is a natural person: (A) the spouse of
such Person; (B) any lineal descendant of such Person or a spouse of
any such descendant; (C) a trust (including, without limitation, a
testamentary trust) solely for the benefit of one or more of such
Person, the spouse of such Person or any lineal descendant of such
Person or a spouse of any such descendant; (D) any self-directed
registered retirement savings plan controlled by such Person; or (E) a
corporation of which all of the outstanding shares of each class of
shares of such corporation are beneficially owned, or in the case of
Xxxxxxxx (if Xxxxxxxx hereafter becomes a direct Shareholder)
Controlled, directly or indirectly, in any manner (including, without
limitation, through intermediary corporations or trusts), by one or
more of such Person, the spouse of such Person, any lineal descendant
of such Person or a spouse of any such descendant or such trust; and
includes the legal personal representative(s) of such Person or any
Person referred to in (A);
(b) in the case of a corporation or a limited liability company: (A) any
shareholder of such corporation or member of such limited liability
company, as applicable, if such shareholder or member either alone or
together with one or more Permitted Transferees of such shareholder or
member beneficially owns, or in the case of Xxxxxxxx (if Xxxxxxxx
hereafter becomes a direct Shareholder) Controlled, directly or
indirectly, in any manner (including, without limitation, through
intermediary corporations or trusts), all of the outstanding shares of
each class of shares in the capital of such corporation or membership
interests of such limited liability company; (B) any Permitted
Transferee of such shareholder or member; or (C) an Affiliate, all of
the shares of which are owned by such corporation and/or any Permitted
Transferee (other than under this subclause (b)) of such corporation;
-8-
(c) in the case of a Person which is a trustee: (A) any beneficiary of
such trust; (B) another trustee, provided that the class of
beneficiaries is limited to Permitted Transferees of the beneficiaries
of the original trust; or (C) any Permitted Transferee of such
beneficiary;
(d) in the case of a Person which is an estate of a deceased Person, a
Permitted Transferee of such deceased person determined pursuant to
this definition as if such Person were not deceased or a legal
personal representative of such Person holding on behalf of such
Permitted Transferees;
(e) in the case of a partnership, any partner of the partnership if all of
the partnership interests are beneficially held by such partner either
alone or together with one or more Permitted Transferees of such
partner;
(f) in the case of any member of the Xxxxxxxx Group, includes any other
member of the Xxxxxxxx Group and (i) up to 3,000,000 common shares to
Xxxxxx Xxxxx, (ii) up to 1,000,000 common shares to Xxxx Xxxxxxx,
(iii) up to 900,000 common shares to Xxxxx Xxxxxxxxxxx and (iv) up to
200,000 common shares to Xxxx Xxxxx;
(g) in the case of Francisco Partners, any member of the Francisco
Partners Group;
(h) in the case of the MS Investors, any MS Affiliate; and
(i) in the case of EdgeStone, any member of the EdgeStone Group.
"PERSON" includes any individual, corporation, limited liability company,
Governmental Body, sole proprietorship, partnership, unincorporated association,
unincorporated syndicate, unincorporated organization, trust, body corporate,
and a natural Person in his capacity as trustee, executor, administrator, or
other legal representative;
"PRE-EMPTIVE RIGHT ACCEPTANCE NOTICE" has the meaning set out in Section 4.1(b).
"PRE-EMPTIVE RIGHT NOTICE" has the meaning set out in Section 4.1(a);
"PRO RATA SHARE" in respect of a given Shareholder, means that Shareholder's or
other Person's proportionate share of all outstanding Shares held by all
Shareholders or other Persons (calculated on an as-if converted to Common Shares
basis);
"PUBLIC FLOAT" means, in respect of a class of securities, the market value of
the securities of such class, excluding securities that are beneficially owned,
directly or indirectly, or over which control or direction is exercised by
persons or companies that alone or together with their respective Associates and
Affiliates, beneficially own or exercise control or direction over more than 10%
of the issued and outstanding securities of such class, provided that securities
that would be excluded because a portfolio manager of a pension fund, mutual
fund or non-redeemable investment fund exercises control or direction over them
need only be excluded if the portfolio manager is an Affiliate of the issuer of
those securities;
"QUALIFIED IPO" has the meaning set forth in the Articles of Amendment;
-9-
"QUALIFYING OFFER" has the meaning set forth in Section 6.4(a);
"REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement entered
into between the Corporation, the Investors and the Existing Shareholders on the
date hereof;
"SHARES" means, collectively, the Common Shares and the Class 1 Shares;
"SHAREHOLDERS" has the meaning set out in the recital and includes such other
Persons who may becomes a party to this Agreement as a shareholder of the
Corporation, and "SHAREHOLDER" means each of such Persons individually;
"STOCK OPTION PLAN" means the stock option plan or plans of the Corporation, as
amended from time to time in accordance with the provisions of this Agreement;
"SUBSCRIPTION AGREEMENT" has the meaning set out in the Recitals to this
Agreement;
"SUBSIDIARY" means: (i) any corporation, at least a majority of whose
outstanding Voting Shares is owned, directly or indirectly, by the Corporation
or by one or more of its subsidiaries, or by the Corporation and by one or more
of its subsidiaries; (ii) any general partnership, at least a majority of whose
outstanding partnership interests shall at the time be owned by the Corporation,
or by one or more of its subsidiaries, or by the Corporation and one or more of
its subsidiaries; (iii) any limited partnership of which the Corporation or any
of its subsidiaries is a general partner; and (iv) any limited liability company
of which the Corporation or any of its subsidiaries is a managing member;
"THIRD PARTY" has the meaning set out in Section 6.4(a);
"THIRD PARTY OFFER" has the meaning set out in Section 6.4;
"THIRD PARTY OFFEROR" has the meaning as set out in Section 6.1;
"TR VALUE" has the meaning set out in the Articles of Amendment;
"TRANSFER" (whether used as a noun or a verb) refers to any sale, pledge,
assignment, encumbrance, gift, or other disposition or transfer of Shares or
Convertible Securities, or any legal or beneficial interest therein, including
any tender or transfer in connection with any merger, recapitalization,
reclassification, or tender or exchange offer (for all or any part of the
Corporation's equity securities), whether or not the Person making any such
Transfer votes for or against any transaction involving any such Transfer, and
includes any agreement to effect any such transaction; "TRANSFER NOTICE" has the
meaning set out in Section 6.1;
"TRANSFERRING SHAREHOLDER" has the meaning set out in Section 6.1; and
"VOTING SHARES" means shares, interests, participations or other equivalents in
the equity interests (however designated), including Class 1 Shares, of a Person
having ordinary voting power for the election of the majority of the directors
(or the equivalent) of such Person, other than shares, interests, participations
or other equivalents having such power only by reason of contingency.
APPENDIX 2
MATTERS REQUIRING INVESTORS MAJORITY APPROVAL
(a) amend the Corporation's articles, by-laws or other constating
documents or make, amend, revoke, replace or supersede or repeal any
by-law, including, without limitation, altering or changing the
rights, privileges or preferences of the Class 1 Shares in the capital
of the Corporation or creating any class or series of preferred shares
ranking in priority to or pari passu with the Class 1 Shares in the
capital of the Corporation;
(b) issue any New Securities or any equity securities or rights, options
or warrants to purchase equity securities of any Subsidiary, other
than Permitted Additional Securities and other than equity securities
of a Subsidiary issued to the Corporation;
(c) grant, or acquiesce to the assertion of, any price protection,
anti-dilution or similar rights with respect to any outstanding
securities of the Corporation or any Subsidiary or any securities of
the Corporation or any Subsidiary that may hereafter be issued (except
for such rights as are applicable to the Class 1 Shares in accordance
with the respective terms thereof set forth in the Articles of
Amendment);
(d) redeem, purchase for cancellation or otherwise retire or pay off any
Shares or other equity securities of the Corporation, other than: (i)
in accordance with the Articles of Amendment; (ii) upon the
termination of a shareholder's employment or service to the
Corporation or its affiliates, in accordance with pre-existing
contractual arrangements; or (iii) pursuant to this Agreement;
(e) declare or pay any dividends or make any distribution or return of
capital other than pursuant to clause (d) above, whether in cash, in
stock or in specie, on any Shares or other equity securities;
(f) incur, create, assume, guarantee, become liable for or have
outstanding any borrowing or funded indebtedness (collectively, "Debt
Obligations"), other than obligations under (i) the First and Second
Lien Credit Agreements by and between the Corporation, Mitel Networks,
Inc., Mitel US Holdings, Inc., Arsenal Acquisition Corporation,
Inter-Tel, the various lenders from time to time party thereto, Xxxxxx
Xxxxxxx Senior Funding, Inc., and Xxxxxx Xxxxxxx Senior Funding (Nova
Scotia) Co., dated as of August 16, 2007 (the "CREDIT AGREEMENT
DEBT"), (ii) the Corporation's capital leases in effect on the date
hereof, (iii) InterTel (Delaware), Incorporated and its subsidiaries'
recourse guarantee program for the leasing business of InterTel
(Delaware), Incorporated and its subsidiaries made in the ordinary
course of business, and (iv) other Debt Obligations (subject to
compliance with the provisions of the Credit Agreements referred to in
subclause (i) above) in an aggregate principal amount not in excess of
$30,000,000;
-2-
(g) make any material change in the Business (including, without
limitation, the purchase, establishment or acquisition in any manner
of a material new business undertaking), cause the cessation of the
Business, or conduct any business unrelated to the Business;
(h) create or acquire, or dispose of any material interest in or otherwise
cease to Control, any material Subsidiary, or (i) make any business
acquisition, acquisition of assets or any investment, or (ii) enter
into any joint venture, co-tenancy, partnership or similar arrangement
in the case of (i) or (ii) above involving more than US$10,000,000.00
(inclusive of any assumed indebtedness or other liabilities or
obligations);
(i) approve any changes in the size of the Board of Directors;
(j) make a loan to or enter into or amend any transaction with a director
or officer or their affiliates and Associates or any Shareholders or
Controlling Shareholder or their affiliates and Associates of the
Corporation not in the ordinary course of business;
(k) agree to: (i) a Change of Control Event in which the Corporation is a
party, or (ii) amalgamate, merge or effect an arrangement or other
corporate reorganization with or into any other corporation, except,
in the case of either (i) or (ii), pursuant to either a Qualifying
Offer or a short-form amalgamation with a wholly-owned subsidiary;
(l) take or institute any proceedings for its winding-up, reorganization
or dissolution or any other transaction or scheme out of the ordinary
course of the Business including any proceedings under the BANKRUPTCY
AND INSOLVENCY ACT (Canada), the COMPANIES CREDITORS ARRANGEMENT ACT
(Canada) or any analogous legislation, or otherwise distribute the
assets of the Corporation to its shareholders.
SCHEDULE A
CAPITALIZATION TABLE
[INSERT TABLE]
SCHEDULE B
ARTICLES OF AMENDMENT
SCHEDULE C
ASSUMPTION AGREEMENT
(A) TO: All of the parties now bound by the shareholders' agreement (the
"SHAREHOLDERS' AGREEMENT") made ________, 2007 among Mitel Networks
Corporation (the "CORPORATION"), and certain of its shareholders.
(A) ALL CAPITALIZED TERMS USED IN THIS INSTRUMENT AND DEFINED IN THE
SHAREHOLDERS' AGREEMENT ARE INTENDED TO HAVE THE MEANING ASCRIBED
THERETO IN THE SHAREHOLDERS' AGREEMENT.
WHEREAS:
A. Pursuant to the terms of the Shareholders' Agreement, there can be no
Transfer or issuance of any Shares or securities in the capital of the
Corporation except in certain circumstances and, in certain of such
circumstances, subject to the requirement that the acquiror of such Shares
and/or securities first enters into this instrument;
B. o (the "ACQUIROR") proposes to acquire [PARTICULARS OF SHARES AND/OR
SECURITIES] (the "ACQUIRED INTERESTS") in the Corporation (the "ISSUER");
C. The Acquiror has agreed to observe and be bound by the terms of the
Shareholders' Agreement so that the provisions thereof will govern the rights
and obligations among the Shareholders (including the Acquiror);
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby irrevocably acknowledged, the Acquiror,
intending to be legally bound hereby, hereby covenants and agrees as follows:
The Acquiror acknowledges receipt of a copy of the Shareholders' Agreement.
The Acquiror covenants and agrees that the Acquiror shall be bound by all of
the provisions of the Shareholders' Agreement as if the Acquiror had been
an original party thereto [WHERE ANY OF THE ACQUIRED INTERESTS ARE BEING
ACQUIRED BY A TRANSFER, RATHER THAN AN ISSUANCE FROM TREASURY, THE WORDS
"TO THE SAME EXTENT AS THE PERSON(S) TRANSFERRING THE ACQUIRED INTERESTS"
SHALL BE INSERTED].
The Acquiror hereby represents and warrants that:
(b) the Acquired Interests are or will be owned by the Acquiror free and
clear of all Liens whatsoever and, except as provided in the
Shareholders' Agreement, no Person has or will have any agreement or
option or right capable of becoming an agreement for the purchase of
any such Acquired Interests;
(c) the Acquiror has the capacity to enter into and perform its
obligations under this instrument and the Shareholders' Agreement;
-2-
(d) if the Acquiror is a corporation, it is duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and has
the corporate power and capacity to own its assets and to enter into
and perform its obligations under and give full effect to this
instrument and the Shareholders' Agreement;
(e) if the Acquiror is a trust, partnership or joint venture, it is duly
constituted under the laws which govern it and has the power to own
its assets and to enter into and perform its obligations under and
give full effect to this instrument and the Shareholders' Agreement;
(f) this instrument has been duly authorized by the Acquiror and has been
duly executed and delivered by the Acquiror and constitutes a valid
and binding obligation enforceable in accordance with its terms,
subject to the qualification that enforcement may be limited by
bankruptcy, insolvency or other laws generally affecting the rights of
creditors and subject to the availability of equitable remedies being
in the discretion of a court of competent jurisdiction; and
(g) the execution, delivery and performance of this instrument does not
and will not contravene the provisions of the articles, by-laws,
constating documents or other organization documents or the documents
by which the Acquiror was created or established, if the Acquiror is a
corporation, trust, partnership or joint venture, or the provisions of
any indenture, agreement or other instrument to which the Acquiror is
a party or by which the Acquiror may be bound.
The Acquiror covenants and agrees to take all such steps, execute all such
documents and do all such acts and things as may be necessary to give full
effect to this instrument and to implement to their full extent the
provisions hereof.
This instrument shall be governed by and construed in accordance with the laws
of the Province of Ontario and the federal laws of Canada applicable
therein, without reference to conflicts of law rules.
This instrument shall be binding upon the Acquiror and the heirs,
executors, administrators, successors, permitted assigns and legal
representatives of the Acquiror.
DATED this _____ day of _________________, .
-------------------------------------------
[ ] - Acquiror
Address for Notice:
-------------------------------------------
-------------------------------------------
-------------------------------------------
FAX:
---------------------------------
E-MAIL:
---------------------------------
Schedule C
-3-
[In addition, where the Acquiror is a nominee, holding company or an analogous
Person, the Persons directly or indirectly Controlling the Acquiror shall enter
into the following:]
(A) SUPPLEMENTARY ASSUMPTION AGREEMENT
(B) TO: All of the parties now bound by the Shareholders' Agreement (as
such term is defined in the above Assumption Agreement)
(A) THIS SUPPLEMENTAL ASSUMPTION AGREEMENT IS INTENDED TO FORM A PART
OF THE ABOVE ASSUMPTION AGREEMENT AND ALL CAPITALIZED TERMS USED
BUT NOT DEFINED IN THIS INSTRUMENT ARE INTENDED TO BE DEFINED IN
THE SAME MANNER AS IN THE ABOVE ASSUMPTION AGREEMENT.
IN CONSIDERATION of the issuance or approval of Transfer of the Acquired
Interests to the Acquiror, and for other good and valuable consideration (the
receipt and sufficiency of which are being acknowledged), the undersigned,
represent, warrant, covenant and agree as follows:
1. [EACH OF] the undersigned acknowledges receipt of a copy of the
Shareholders' Agreement.
2. [EACH OF] the undersigned covenants and agrees that they shall be bound by
all of the provisions of the Shareholders' Agreement as if they had been an
original party thereto.
3. As of the date hereof, the direct and indirect holders of securities in the
capital of the Acquiror and each of the undersigned are as set out below
[PARTICULARS TO BE SET OUT BELOW AND, IF REQUIRED, ON A SEPARATE SCHEDULE
TO BE ATTACHED TO THIS INSTRUMENT]:
4. The undersigned will not, without the prior written consent of Francisco
Partners and the Corporation, directly or indirectly Transfer or permit a
Lien over any securities in the capital of the Acquiror or any of the
undersigned or cause or permit any securities in the capital of the
Acquiror or any of the undersigned to be issued if, as a result thereof,
any Person other than one or more of the undersigned would cease to
exercise voting control over the Shares or other securities in the capital
of the Corporation held by the Acquiror; provided that the foregoing shall
not apply to any Transfer between or issuance of securities to members of
the Xxxxxxxx Group.
5. The undersigned shall cause the Acquiror to comply with each and every one
of its obligations under the Shareholders' Agreement.
6. The undersigned hereby confirm(s) the accuracy of the representations and
warranties of the Acquiror in the above Assumption Agreement.
7. This instrument has been duly authorized, executed and delivered by the
undersigned and constitutes a valid and binding obligation enforceable in
accordance with its terms, subject to the qualification that enforcement
may be limited by bankruptcy, insolvency or other laws generally affecting
the rights of creditors and subject to the availability of equitable
remedies being in the discretion of a court of competent jurisdiction.
Schedule C
-4-
8. The execution, delivery and performance of this instrument does not and
will not contravene the provisions of the articles by-laws, constating
documents or other organizational documents or the documents by which the
undersigned (if other than an individual) was created or established, or
the provisions of any indenture, agreement or other instrument to which the
undersigned is a party and by which the undersigned may be bound.
9. The undersigned covenants and agrees to take all such steps, execute all
such documents and do all such acts and things as may be necessary to give
full effect to this instrument and to implement to their full extent the
provisions hereof.
10. This instrument shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein, without reference to conflicts of law rules.
11. This instrument shall be binding upon the undersigned and the heirs,
executors, administrators, successors, permitted assigns and legal
representatives of the undersigned.
Dated this ______ day of _________________________, _______.
-------------------------------------
[ ]
-------------------------------------
[ ]
Schedule C
SCHEDULE D
------------------------------- ------------ ----------------- --------------
Name Class 1 Common Shares Warrants
------------------------------- ------------ ----------------- --------------
Arsenal Holdco I, S.a.r.l. 205,819 0 15,596,446
------------------------------- ------------ ----------------- --------------
Arsenal Holdco II, S.a.r.l. 13,928 0 1,055,429
------------------------------- ------------ ----------------- --------------
Xxxxxx Xxxxxxx Principal 43,340 0 3,284,196
Investments, Inc.
------------------------------- ------------ ----------------- --------------
Edgestone Capital Equity Fund 19,000 5,359,893 5,000,000
II Nominee, Inc. and
Edgestone Capital Equity Fund
II-B GP, Inc., collectively
------------------------------- ------------ ----------------- --------------
Xxxxxx Xxxxxx Corporation 0 158,790,234 0
------------------------------- ------------ ----------------- --------------
Celtic Tech Jet Limited 0 4,555,169 0
------------------------------- ------------ ----------------- --------------
Xxxxxxx X. Xxxxxxxx 13,500 0 1,022,996
------------------------------- ------------ ----------------- --------------
Power Technology Investment 11,500 13,546,042 871,441
Corporation
------------------------------- ------------ ----------------- --------------
