MITEL NETWORKS CORPORATION CLASS 1 CONVERTIBLE PREFERRED SHARE SUBSCRIPTION AGREEMENT August 16, 2007

MITEL NETWORKS CORPORATION

CLASS 1 CONVERTIBLE PREFERRED SHARE
SUBSCRIPTION AGREEMENT

August 16, 2007

Portions of this document marked with “***” are subject to a pending Confidential Treatment Request filed with the Secretary of the Securities and Exchange Commission and have been filed separately with the Securities and Exchange Commission.

TABLE OF CONTENTS

								Page
ARTICLE I						DEFINITIONS AND PRINCIPLES OF INTERPRETATION			1
			1.1			Definitions			1
			1.2			Intellectual Property Definitions			8
			1.3			Certain Rules of Interpretation in this Agreement:			10
			1.4			Knowledge			11
			1.5			Entire Agreement			11
			1.6			Schedules			11
			1.7			Exhibits			11
ARTICLE II						SHARE SUBSCRIPTION			12
			2.1			Subscription and Issuance of Purchased Shares			12
			2.2			Purchase Price			12
			2.3			Closing			12
			2.4			Closing Deliveries			12
			2.5			Closing Conditions in Favor of Investors			13
			2.6			Closing Conditions in Favor of the Corporation			15
ARTICLE III						COMPETITION LAW			16
			3.1			Competition Filings			16
			3.2			Cooperation			17
ARTICLE IV						REPRESENTATIONS AND WARRANTIES OF THE CORPORATION			17
			4.1			Incorporation and Organization			17
			4.2			Corporate Records			18
			4.3			Subsidiaries			18
			4.4			Qualification in Foreign Jurisdictions			18
			4.5			Authorized, Issued and Outstanding Capital			18
			4.6			Lawful Issuance			20
			4.7			Corporate Authorization			21
			4.8			No Governmental or Third Party Consents			21
			4.9			Financial Statements – Absence of Certain Changes			21
			4.10			Indebtedness			23
			4.11			Absence of Undisclosed Liabilities			24
			4.12			Tax Matters			24
			4.13			Real Property			26
			4.14			Personal Property			27
			4.15			Health, Safety and Environmental Matters			27
			4.16			Employment Contracts			27
			4.17			Employee Plans			29
			4.18			Unions			31

TABLE OF CONTENTS
(continued)

								Page
			4.19			Material Contracts			32
			4.20			Customers, Licensors and Suppliers			33
			4.21			Description of Business Intellectual Property			34
			4.22			Intellectual Property Rights			35
			4.23			Litigation			39
			4.24			Insurance			39
			4.25			Insiders and Conflicts of Interest			40
			4.26			Brokers			40
			4.27			No Sale Agreements			41
			4.28			Compliance with Other Instruments, Laws, Etc.			41
			4.29			Merger Agreement			41
			4.30			Compliance with Securities Law			42
			4.31			Full Access			42
			4.32			Disclosure			42
ARTICLE V						REPRESENTATIONS AND WARRANTIES OF THE INVESTORS			42
			5.1			No Public Sale or Distribution			42
			5.2			Accredited Investor Status			43
			5.3			U.S. Accredited Investor Status			43
			5.4			Reliance on Exemptions			44
			5.5			No General Solicitation or Advertising			44
			5.6			Information			44
			5.7			No Governmental Review			45
			5.8			Transfer or Resale			45
			5.9			Legends			45
			5.10			Consent			47
			5.11			Foreign Issuer			47
			5.12			Compliance with Transfer Restrictions			48
			5.13			Filings			48
			5.14			Validity; Enforcement			48
			5.15			Residency			48
			5.16			No Representations Regarding Resale			48
			5.17			Adverse Actions			48
ARTICLE VI						REGISTRATION AND TRANSFER OF SECURITIES			49
			6.1			Transfer and Exchange of Purchased Shares			49
			6.2			Replacement of Certificates			49
			6.3			Share Subscription Agreement			49
ARTICLE VII						COVENANTS OF THE CORPORATION			50
			7.1			Pre-Closing Covenants			50
			7.2			Post-Closing Covenants			50

TABLE OF CONTENTS
(continued)

								Page
ARTICLE VIII						EXPENSES			50
			8.1			Reimbursement of Expenses			50
			8.2			Broker Fees			51
			8.3			Put Option			51
			8.4			Withholding Rights			51
ARTICLE IX						INDEMNIFICATION			51
			9.1			Non-Merger and Exclusive Remedy			51
			9.2			General Indemnification			52
			9.3			Agency for Representatives			53
			9.4			Time Limitations			53
			9.5			Limitations as to Amount			53
			9.6			Notice of Third Party Claims			54
			9.7			Defence of Third Party Claims			54
			9.8			Assistance for Third Party Claims			54
			9.9			Settlement of Third Party Claims			55
			9.10			Direct Claims			55
			9.11			Failure to Give Timely Notice			55
			9.12			Reductions and Subrogation			56
			9.13			Tax Effect			56
			9.14			Additional Rules and Procedures			56
ARTICLE X						GENERAL			57
			10.1			Amendments			57
			10.2			Waiver			57
			10.3			Successors and Assigns			57
			10.4			Notices			57
			10.5			Binding Effect and Benefits			59
			10.6			Further Assurances			60
			10.7			Arbitration			60
			10.8			Counterparts			60
			10.9			Language			60
						20

CLASS 1 CONVERTIBLE PREFERRED SHARE SUBSCRIPTION AGREEMENT

THIS AGREEMENT is made this 16th day of August, 2007,

BY AND AMONG:

MITEL NETWORKS CORPORATION, a corporation incorporated under the laws of Canada (the “Corporation”);

ARSENAL HOLDCO I, S.A.R.L. (“Francisco Partners”), and the other Francisco Partners investors identified in Schedule D (collectively the “FP Investors”); and

▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PRINCIPAL INVESTMENTS, INC. (“▇▇▇▇▇▇ ▇▇▇▇▇▇▇”) and the other ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ investors identified in Schedule D (collectively, the “MS Investors” and together with the FP Investors, the “Investors”)

RECITALS:

A.		The Corporation proposes to acquire indirectly all of the outstanding stock of Inter-Tel (Delaware), Incorporated (the “Merger”) pursuant to the terms of an Agreement and Plan of Merger between Inter-Tel (Delaware), Incorporated (“Inter-Tel”), the Corporation and Arsenal Acquisition Corporation dated April 26, 2007 (the “Merger Agreement”).
B.		In order to finance a portion of the Merger, the Corporation wishes to issue and sell an aggregate of 263,087 Class 1 Convertible Preferred Shares in the capital of the Corporation and warrants to purchase up to 19,936,071 Common Shares of the Corporation to Investors, severally and not jointly, and Investors, severally and not jointly, wish to purchase such shares and warrants upon the terms and conditions set forth in this Agreement (the “Investment”).
C.		Immediately upon completion of the restructuring transactions set forth on Schedule E (the “Restructuring Transactions”) or otherwise contemplated by this Agreement and the Other Agreements, including the completion of the Investment, the issued and outstanding capital of the Corporation shall be as set out in Schedule A.

THEREFORE the parties agree as follows:

ARTICLE I
DEFINITIONS AND PRINCIPLES OF INTERPRETATION

1.1 Definitions

Whenever used in this Agreement (including the Recitals hereto), the following words and terms shall have the meanings set out below:

“2006 Equity Compensation Plan” means the Corporation’s equity compensation plan approved by the shareholders on September 7, 2006;

“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;

“Affiliated Group” includes any combined, consolidated, or unitary group, as defined under any applicable United States, Canadian, state, provincial, local, or foreign income tax law;

“Agreement” means this Class 1 Convertible Preferred Share Subscription Agreement, including all schedules and exhibits and all amendments or restatements as permitted, and references to “Article” or “Section” mean the specified Article or Section of this Agreement;

“Arm’s Length” has the meaning ascribed to such term for the purposes of the Income Tax Act (Canada);

“Business” means the business of the Corporation and its Subsidiaries consisting of developing, selling, licensing, distributing, servicing and maintaining, as applicable, enterprise and customer premises business communications solutions and services, including advanced voice, video and data communications platforms over internet protocol, desktop phones, Internet appliances and client and server software applications and code (including applications for customer relationship management and mobility, messaging and multimedia collaboration), including the business of Inter-Tel (Delaware) Incorporated and its subsidiaries;

“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;

“Canadian Securities Laws” means the securities legislation, regulations, rules and published policy statements, blanket orders and blanket rulings and other regulatory instruments of the securities commissions and other regulatory authorities of the Province of Ontario;

“Claim” means any act, omission or state of facts, and any Legal Proceeding, assessment, judgment, settlement or compromise relating thereto, which may give rise to a right to indemnification under Article IX of this Agreement;

“Class 1 Shares” means the Class 1 Convertible Preferred Shares in the capital of the Corporation having substantially the rights, privileges, restrictions and conditions set forth in Exhibit A;

“Closing” means the completion of the subscription for the Purchased Shares by the Investors as contemplated in this Agreement;

“Closing Date” means the date of the closing of the Merger or such earlier or later date as the Corporation and the Investors may agree in writing;

“Code” means the United States Internal Revenue Code of 1986, as amended;

“Collective Agreement” means any collective agreement, letter of understanding, letter of intent or other written communication with any labor union or employee association that governs the terms and conditions of employment of any employees of the Corporation or any Subsidiary, including the collective agreements listed in Section 4.18 of the Disclosure Schedule;

“Common Shares” means the common shares in the capital of the Corporation;

“Contract” means any written, oral, implied or other agreement, contract, lease, understanding, arrangement, instrument, note, guarantee, indemnity, representation, warranty, deed, assignment, power of attorney, certificate, commitment, option, covenant, assurance or undertaking of any nature. For the purposes of any disclosure required under Section 4.19, the term “Contracts” shall not include any Contracts as between the Corporation and its Subsidiaries;

“Converted Shares” means the Common Shares issued or issuable upon the conversion of the Class 1 Shares and/or the Warrants;

“Debt Financing” means the US$430,000,000.00 in senior secured financing issued pursuant to 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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding (Nova Scotia) Co.;

“Disclosure Schedule” means the schedule of exceptions to the representations and warranties of the Corporation, attached as Schedule B;

“EdgeStone” means 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;

“Employee Plans” means all plans, arrangements, agreements, programs, policies, practices or undertakings, whether or not in writing, with respect to some or all of the current or former directors, officers, employees, independent contractors, agents or other service providers of the Corporation or any of the Subsidiaries which provide for or relate to:

	(a)		bonus, profit sharing or deferred profit sharing, performance compensation, deferred or incentive compensation, share compensation, share purchase or share option purchase, share appreciation rights, phantom stock, employee loans, or any compensation in addition to salary,
	(b)		retirement or retirement savings, including, without limitation, registered or unregistered pension plans, pensions, supplemental pensions, registered retirement savings plans and retirement compensation arrangements, or
	(c)		insured or self-insured benefits for or relating to income continuation or other benefits during absence from work (including short term disability,

long term disability and workers compensation), vacation, sick pay, hospitalization, health, welfare, legal costs or expenses, medical or dental treatments or expenses, life insurance, accident, death or survivor’s benefits, supplementary employment insurance, day care, tuition or professional commitments or expenses or similar employment benefits;

“Encumbrance” means any mortgage, hypothec, lien (statutory or otherwise), charge, pledge, security interest, right of set-off, or other type of encumbrance whether fixed or floating, on any asset or assets, whether real, personal or mixed, tangible or intangible, or pledge or hypothecation of any such assets or any easement, conditional sales agreement or any other title retention agreement or arrangement relating to any such assets, option, right of pre-emption, privilege, or any obligation to assign, license or sub-license any asset including the Business IP (as defined in Section 1.2), or any action, claim, right to salvage, execution or demand of any nature whatsoever, howsoever created or arising, or any Contract to create any of the foregoing (other than any lien for Taxes not yet due and owing);

“Environmental Laws” means, collectively, any and all federal, provincial, state, territorial, local or foreign statutes, regulations, ordinances, orders, and decrees relating to public health and safety, health and safety of employees, or the environment;

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended;

“ERISA Affiliate” means any entity that, together with the Corporation, would be treated as a single employer under section 414 of the Code;

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

“Existing Shareholders Agreement” means the Shareholders Agreement made as of August 23, 2004 and amended on June 26, 2006 among the Corporation, EdgeStone, Zarlink Semiconductor Inc., PTIC, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, Celtic Tech Jet Limited and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇;

“Expenses” has the meaning ascribed thereto in Section 8.1;

“Financial Statement Date” has the meaning ascribed thereto in Section 4.9;

“Financial Statements” has the meaning ascribed to such term in Section 4.9;

“Government Antitrust Entity” has the meaning ascribed thereto in Article III;

“Governmental Authority” means any government, regulatory authority, governmental department, agency, commission, bureau, official, minister, Crown corporation, court, board, tribunal, dispute settlement panel or body or other law, rule or regulation-making entity: (a) having or purporting to have jurisdiction on behalf of any nation, province, state or other geographic or political subdivision thereof; or (b) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power;

“Hazardous Substance” means any pollutant, contaminant, toxic substance, methane gas, oil, or hazardous materials or other chemicals or substances regulated, listed, defined, designated or classified by any Environmental Laws;

“Indebtedness” means:

	(a)		all indebtedness for borrowed money, whether current or long-term, or secured or unsecured,
	(b)		all indebtedness for the deferred purchase price of property or services represented by a note or security agreement,
	(c)		all indebtedness created or arising under any conditional sale or other title retention agreement (even though the rights and remedies of the seller or lender under such agreement in the event of default may be limited to repossession or sale of such property),
	(d)		all indebtedness secured by a purchase money security interest or other Lien to secure all or part of the purchase price of property subject to such interest or Lien,
	(e)		all obligations under leases that have been or must be, in accordance with generally accepted accounting principles, recorded as capital leases in respect of which the Corporation or any Subsidiary is liable as lessee,
	(f)		any liability in respect of banker’s acceptances or letters of credit, and
	(g)		all indebtedness of any Person that is directly or indirectly guaranteed by the Corporation or any Subsidiary or that the Corporation or any Subsidiary has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss;

“Insiders” has the meaning ascribed thereto in the Securities Act (Ontario);

“Investment” has the meaning ascribed thereto in the Recitals hereto;

“Leased Real Property” means real property which the Corporation or a Subsidiary has a right to use or occupy pursuant to a lease, including those set forth and described in Section 4.13(a) of the Disclosure Schedule;

“Legal Proceeding” means any litigation, action, suit, investigation, inquiry, hearing, claim, complaint, grievance, arbitration proceeding, mediation, alternative dispute resolution procedure or other proceeding (court, administrative, regulatory or otherwise), and includes any appeal or review of and any application for same;

“Liens” 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 the Shareholders Agreement or Registration Rights Agreement;

“Loss” means any and all loss, liability, damage, cost, expense, charge, fine, penalty or assessment (including consequential damages, but excluding loss of profits or revenue), resulting from or arising out of any Claim, including the costs and expenses of any Legal Proceeding in relation to any such Claim, and any assessment, judgment, settlement or compromise relating thereto and all interest, punitive damages, fines and penalties and reasonable legal fees and expenses incurred in connection therewith;

“Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), operations, business or assets of the Corporation and the Subsidiaries taken as a whole or the Corporation’s ability to consummate the transactions hereby contemplated other than a Material Adverse Effect resulting from industry wide conditions or the Merger;

“Material Subsidiary” means each of Mitel Networks Holding Limited, Mitel Networks Limited, Mitel Networks, Inc., Mitel Networks International Limited and Mitel Networks Overseas Limited;

“Merger” has the meaning set out in the Recitals.

“Other Agreements” means all of the agreements, instruments, certificates, and other documents, including the Shareholders Agreement, the Registration Rights Agreement and the Warrants, executed and delivered by or on behalf of the Corporation or the Investors or any of their respective Affiliates at the Closing or otherwise in connection with this Agreement and the transactions contemplated herein (including, without limitation, the certificates referred to in Sections 2.4(b)(ii) and 2.4(b)(iii));

“Owned Real Property” means the real and immoveable property owned by the Corporation or any Subsidiary, as described in Section 4.13(a) of the Disclosure Schedule, and includes all plants, buildings, structures, erections, improvements, appurtenances and fixtures situate thereon or forming part thereof;

“Party” or “Parties” means a party to this Agreement;

“Permit” means any permit, license, approval, authorization, certificate, directive, order, variance, registration, right, privilege, concession or franchise issued, granted, conferred or otherwise created by any Governmental Authority;

“Permitted Transferee” has the meaning ascribed to such term in the Shareholders Agreement;

“Person” means any individual, sole proprietorship, partnership, unlimited liability company, limited liability company, limited partnership, firm, joint venture, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, corporation, Governmental Authority, and where the context requires any of the foregoing when they are acting as trustee, executor, administrator or other legal representative;

“PTIC” means Power Technology Investment Corporation;

“Purchase Price” has the meaning ascribed thereto in Section 2.2;

“Purchased Shares” has the meaning ascribed thereto in Section 2.1;

“Real Property” means, collectively, the Leased Real Property and the Owned Real Property;

“Registration Rights Agreement” means the registration rights agreement to be entered into between the Corporation, the Investors and certain other shareholders of the Corporation, substantially in the form attached hereto as Exhibit C;

“Restructuring Transactions” has the meaning set out in the Recital C.

“SEC” means the United States Securities and Exchange Commission;

“Securities” means Purchased Shares, Warrants and Converted Shares;

“Securities Act” means the United States Securities Act of 1933, as amended;

“Securities Authorities” means the securities commissions and other regulatory authorities administering Canadian Securities Laws;

“Shareholders Agreement” means the shareholders agreement to be entered into by the Corporation, the Investors and certain other shareholders of the Corporation, substantially in the form attached hereto as Exhibit B;

“Stock Option Plan” means the stock option plan of the Corporation enacted on March 6, 2001, as amended on May 8, 2001, August 3, 2001, June 18, 2002, September 6, 2002, June 13, 2003, July 15, 2004, March 17, 2005 and September 9, 2005;

“Subsidiaries” means: (a) 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, and includes each of the corporations identified in Section 4.3 of the Disclosure Schedule; (b) 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; (c) any limited partnership of which the Corporation or any of its Subsidiaries is a general partner, and “Subsidiary” means any one of them; and (d) any limited liability company of which the Corporation or any of its subsidiaries is a managing member;

“Tax” or “Taxes” means all taxes, assessments, duties, fees, levies, or other charges imposed by any Governmental Authority, including, without limitation, all federal, provincial, state, local, foreign and other income, corporation, franchise, profits, capital gains, estimated, sales, use, goods and services, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, environmental, customs, duties, imposts, real property, personal property, capital stock, unemployment, disability,

payroll, license, employee, deficiency assessments, withholding and other taxes, assessments, charges, duties, fees, levies or other charges of any kind whatsoever imposed by any Governmental Authority (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), including any interest, penalties, or additions to tax in respect of the foregoing and shall include any liability for such amounts as a result either of being a member of a combined, consolidated, unitary or Affiliated Group or of a contractual obligation to indemnify any Person or other entity;

“Tax Return” means any return, declaration, report, claim for refund, information return, or other document (including any related or supporting estimates, elections, schedules, statements, or information) filed or required to be filed in connection with the determination, assessment, or collection of any Tax or the administration of any laws, regulations, or administrative requirements relating to any Tax;

“Time of Closing” means 11:00 a.m. (Eastern standard time) on the Closing Date;

“U.S. Employee Plans” means each “employee benefit plan”, as such term is defined in section 3(3) of ERISA, that is maintained or contributed to by the Corporation or any ERISA Affiliate to the extent that any such plan benefits U.S. employees;

“Voting Shares” means shares, interests, participations or other equivalents in the equity interests (however designated) of a Person having ordinary voting power for the election 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; and

     “Warrants” means up to 19,936,071 warrants to purchase Common Shares of the Corporation to be issued by the Corporation to the Investors at the Closing.

1.2 Intellectual Property Definitions

Whenever used in this Agreement, the following words and terms shall have the meanings set out below:

“Business IP”, “Licensed IP” and “Owned IP” shall have the respective meanings set forth in Section 4.21 hereof;

“Commercial Software Licenses” means “shrink-wrap”, “web-wrap”, “click-wrap” or other similar generic licenses for commercially available software available to the public through retail dealers, and which are not, individually or in the aggregate, material to the Business;

“Employee IP Agreement” means the agreements entered into and to be entered into by employees and consultants of the Corporation or the Subsidiaries in favor of the Corporation or a Subsidiary, as the case may be, relating to proprietary information and assignment of inventions;

“Intellectual Property” or “IP” means any or all of the following and all intellectual property and other rights in, arising out of or associated with:

	(a)		all patents and utility models and applications therefor (whether registered or not) and all provisionals, re-issuances, continuations, continuations-in-part, divisions, revisions, supplementary protection certificates, extensions, and re-examinations thereof and all equivalent or similar rights anywhere in the world in inventions and discoveries including invention disclosures (“Patents”),
	(b)		all trade-marks, service marks, trade names, trade dress, logos, business, corporate and product names and slogans and registrations and applications for registration thereof (“Trade-marks”);
	(c)		all copyrights in copyrightable works, and all other rights of authorship, worldwide, and all applications, registrations and renewals in connection therewith (“Copyrights”),
	(d)		all integrated circuit topographies, integrated circuit topography registrations and applications therefor, and any equivalent or similar rights in semiconductor topographies, layouts, architectures or maskworks (“IC Topographies”),
	(e)		all industrial design registration and applications therefor, and any equivalent or similar rights in any features of shape, configuration, pattern or ornament and combination of those features (“Industrial Designs”), and
	(f)		all Internet or world wide web addresses, domain names and sites and applications and registrations therefor (“Domain Names”);

“Registered IP” means all Canadian, United States, international and foreign: (i) Patents, including applications therefor; (ii) registered Trade-marks, applications to register Trade-marks, including intent-to-use applications, or other registrations or applications related to Trade-marks; (iii) Copyrights registrations and applications to register Copyrights; (iv) IC Topography registrations and applications to register IC Topographies; (v) Industrial Design registrations and applications to register Industrial Designs; (vi) Domain Name registrations and applications to register Domain Names; and (vii) any other Technology that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any Governmental Authority, including any federal, state, provincial or foreign government or other public or private legal authority at any time; and

“Technology” means any or all of the following: (i) works of authorship including, without limitation, computer programs, source code and executable code, whether embodied in software, firmware or otherwise, documentation, designs, methods, techniques, processes, files, industrial models, schematics, specifications, net lists, build lists, records and data; (ii) inventions (whether or not patentable), improvements and enhancements; (iii) proprietary and confidential business and technical information, including manufacturing processes, technical data, trade secrets, ideas, research and development and know how; (iv) databases, data compilations and collections and technical data; and (v) all documentation related to the foregoing, including without

limitation installation manuals, operator’s manuals, system manuals, user manuals, conversion and other materials, printout specifications, system test data and error message listings.

1.3 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.
	(b)		Governing Law – This Agreement is a contract made under and shall be construed, interpreted and enforced in accordance with the laws of the State of New York, without giving effect to any choice of law or conflicting provision or rule (whether of the State of New York or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of New York to be applied. Any Legal Proceeding arising out of or relating to this Agreement shall be brought in the courts of New York and each of the Parties hereby irrevocably submits to the 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)		Time – Time is of the essence in the performance of the Parties’ respective obligations under this Agreement.
	(h)		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.
	(i)		Including – Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

	(j)		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.
	(k)		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.

1.4 Knowledge

Any reference to the knowledge or awareness of the Corporation or a Subsidiary or like terms shall mean the actual knowledge of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and any knowledge which any such individual could reasonably have acquired through the exercise of due inquiry regarding the relevant matter, including but not limited to review of the Merger Agreement and disclosure schedules provided in connection therewith.

1.5 Entire Agreement

This Agreement and the Other Agreements together 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 between the Parties. 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, the Fee Letter or the Other Agreements.

1.6 Schedules

The Schedules to this Agreement, as listed below, are an integral part of this Agreement:

	Schedule A		-		Post-Closing Capitalization Table
	Schedule B		-		Disclosure Schedule
	Schedule C		-		Financial Statements
	Schedule D		-		Investors
	Schedule E		-		Restructuring Transactions

1.7 Exhibits

The Exhibits to this Agreement, as listed below, are an integral part of this Agreement:

	Exhibit A		-		Class 1 Share Terms
	Exhibit B		-		Form of Shareholders Agreement

	Exhibit C		-		Form of Registration Rights Agreement
	Exhibit D		-		Form of Legal Opinion of Counsel to the Corporation
	Exhibit E		-		Form of Warrant

ARTICLE II
SHARE SUBSCRIPTION

2.1 Subscription and Issuance of Purchased Shares

Subject to all of the terms and conditions hereof and in reliance on the representations and warranties set forth herein, the Corporation hereby agrees to issue and sell to Investors, severally and not jointly, and Investors, severally and not jointly, agree to purchase from the Corporation an aggregate of 263,087 of the Corporation’s authorized but unissued Class 1 Shares (the “Purchased Shares”) and the Warrants. The Purchased Shares and the Warrants shall be allocated among the Investors as set forth on Schedule D.

2.2 Purchase Price

The purchase price for each Purchased Share shall be US$1,000. The aggregate purchase price (the “Purchase Price”) for the Purchased Shares equals US$263,087,000. The aggregate purchase price (the “Warrant Purchase Price”) for the Warrants equals US$0.01.

2.3 Closing

Subject to the fulfillment of the conditions in Sections 2.5 and 2.6, the Closing shall take place at the Time of Closing on the Closing Date at the offices of the Corporation’s legal counsel, or at such other place as the Corporation and the Investors may agree. At the Closing, the Corporation shall issue and sell, and the Investors, severally and not jointly, shall purchase, the Purchased Shares for the Purchase Price and the Warrants for the Warrant Purchase Price.

2.4 Closing Deliveries

(a)

At the Closing:

	(i)		the Corporation shall deliver to the Investors one or more certificates representing the Purchased Shares and the Warrants, free and clear of all Liens, registered in the name of the Investors (or as directed in writing by the Investors) in the Corporation’s records, in the amounts set forth next to such Investor’s name on Schedule D hereto; and
	(ii)		each of the Investors shall pay to the Corporation (or as it may otherwise direct) its respective portion of the Purchase Price by bank draft or wire transfer of immediately available funds.

(b)

At the Closing, the Corporation shall also deliver or cause to be delivered to the Investors each of the following, together with such other documents as the Investors may reasonably require:

	(i)		a certificate of compliance issued by Industry Canada dated the Closing Date with respect to the legal existence and good standing of the Corporation under the laws of Canada and a similar certificate for each Material Subsidiary dated not more then three Business Days prior to the Closing Date issued by the appropriate authorities with respect to its legal existence and good standing under the laws of its respective jurisdiction;
	(ii)		a certificate of the Corporation’s President or another authorized officer of the Corporation, not in his personal capacity, dated as of the Closing Date, in form reasonably satisfactory to the Investors, certifying: (A) an attached true and complete copy of the Corporation’s articles of incorporation together with all amendments thereto; (B) an attached true and complete copy of the Corporation’s current by-laws; (C) an attached true and complete copy of the resolutions of the Corporation’s board of directors and, if necessary, shareholders, respectively, with respect to the transactions hereby contemplated or otherwise to be effected at the Closing; and (D) the incumbency of the Corporation’s officers;
	(iii)		a certificate of the Corporation’s President or another authorized officer of the Corporation, not in his personal capacity, in a form reasonably satisfactory to the Investors, certifying for and on behalf of the Corporation that the Corporation has complied with all covenants and satisfied all terms and conditions of this Agreement on its part to be complied with or satisfied at or prior to the Time of Closing on the Closing Date, including, without limitation, each of those specified in Section 2.5 below;
	(iv)		a written legal opinion of Osler, ▇▇▇▇▇▇ & Harcourt LLP dated the Closing Date and substantially in the form attached hereto as Exhibit D; and
	(v)		payment of the amounts then due under the Fee Letter and under Section 8.1.

2.5 Closing Conditions in Favor of Investors

The transactions herein contemplated, including the issue and sale of the Purchased Shares and the Warrants in accordance with the terms of this Agreement, are subject to the following terms and conditions, which are inserted for the exclusive benefit of the Investors to be fulfilled or performed at or prior to the Time of Closing on the Closing Date, and the Corporation shall provide such evidence as may be requested by the Investors, acting reasonably, that each such condition has been fulfilled (provided that such evidence is within the power and control of the Corporation to so provide):

(a)

Performance of Obligation. All of the covenants and conditions of this Agreement to be performed and/or to be complied with by the Corporation at or prior to the Time of Closing on the Closing Date shall have been performed or complied with, in all material respects; and all of the Corporation’s representations and warranties in this Agreement shall be accurate in all respects as of the Closing

			Time and as if made at the Time of the Closing other than such inaccuracies, individually and in the aggregate, as would not have or would not reasonably be expected to have a Material Adverse Effect.
	(b)		Approvals and Consents. All approvals or consents shall have been obtained as are required to permit the execution and delivery by the Corporation of this Agreement and each of the Other Agreements to which the Corporation is a party and the consummation by the Corporation of the transactions contemplated hereby and thereby, including:

	(i)		all approvals and consents of the shareholders and directors required with respect to the filing of the Articles of Amendment; and
	(ii)		if a notification is required to be filed pursuant to Part IX of the Competition Act (Canada) in connection with the Investment, (x) the Commissioner of Competition (the “Competition Commissioner”) shall have issued an advance ruling certificate pursuant to section 102 of the Competition Act in respect of the Investment; or (y) the Competition Commissioner shall have waived the obligation to notify and supply information under Part IX of the Competition Act pursuant to subsection 113(c) of the Competition Act and confirmed in writing that she has no intention to file an application under Part VIII of the Competition Act (a “no-action letter”) in respect of the Investment; or (z) the statutory waiting period under section 123 of the Competition Act shall have expired or been terminated and the Competition Commissioner shall have issued a no-action letter in respect of the Investment.

	(c)		Articles of Amendment. The Class 1 Shares shall have been added to the authorized capital of the Corporation pursuant to the Articles of Amendment and the offering, issue and sale of the Purchased Shares and the Warrants shall have been authorized by all necessary corporate action of the Corporation, its shareholders and directors, and the Corporation shall have filed the Articles of Amendment with Industry Canada and received a Certificate of Amendment therefor.
	(d)		Reservation of Converted Shares. The Converted Shares shall have been duly authorized and reserved for issuance.
	(e)		Termination of Existing Shareholders Agreement. The Existing Shareholders Agreement shall have been validly terminated in accordance with its terms.
	(f)		Termination of Registration Rights Agreement. All existing registration rights agreements shall be validly terminated in accordance with their terms.
	(g)		Shareholders Agreement. The Shareholders Agreement substantially in the form annexed hereto as Exhibit B shall have been executed and delivered by the Corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Celtic Tech Jet Limited, EdgeStone and PTIC..

	(h)		Registration Rights Agreement. The Registration Rights Agreement substantially in the form annexed hereto as Exhibit C shall have been executed and delivered by the Corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Celtic Tech Jet Limited and EdgeStone.
	(i)		No Legal Proceedings. No Legal Proceeding shall be pending or threatened by any Person, including any Governmental Authority, to enjoin, restrict or prohibit the purchase and issuance of the Purchased Shares and/or the Warrants or Converted Shares or the Merger.
	(j)		Exemption from Prospectus and Registration Requirements. The issuance of the Purchased Shares pursuant to this Agreement shall be exempt from the prospectus and registration requirements of all applicable securities laws.
	(k)		Other Closing Documents. The Investors shall have received each of the certificates and other documents referred to in Section 2.4(b) and such other opinions, agreements, certificates, affidavits, statutory declarations, and other documentation contemplated by this Agreement.
	(l)		Absence of Company Material Adverse Effect. No Company Material Adverse Effect (as defined in the Merger Agreement) shall have occurred.
	(m)		Merger/Restructuring. All necessary conditions for the consummation of the Merger shall have been satisfied and the Merger shall close contemporaneously with the Closing and in accordance with its terms without any waiver or amendment, other than as agreed to by the Investors. The Corporation shall have provided to Investors a certified and true copy of the Merger Agreement; and such Merger Agreement shall not have been amended without Investors written consent. The Restructuring Transactions shall be consummated contemporaneously with the Closing.
	(n)		Debt Financing. All necessary conditions for the advance of funds pursuant to the Debt Financing shall have been satisfied and the Debt Financing shall close contemporaneously with the Closing and in accordance with its terms.
	(o)		Competition Law. If applicable, any waiting periods (and any extensions thereof) pursuant to applicable antitrust, competition or foreign investment review laws, rules or regulations shall have been terminated or shall have expired.

2.6 Closing Conditions in Favor of the Corporation

The transactions herein contemplated are subject to the following terms and conditions which are inserted for the exclusive benefit of the Corporation to be fulfilled or performed at or prior to the Time of Closing on the Closing Date:

(a)

Performance of Obligations. All of the terms, covenants and conditions of this Agreement to be performed and/or complied with by the Investors at or prior to the Time of Closing on the Closing Date shall have been performed or complied with.

	(b)		Approvals and Consents. All approvals and consents of the shareholders required with respect to the filing of the Articles of Amendment shall have been obtained by the Corporation.
	(c)		Execution of Agreements. The Investors shall have executed and delivered the Shareholders Agreement and the Registration Rights Agreement.
	(d)		Exemption from Prospectus and Registration Requirements. The issuance of the Purchased Shares pursuant to this Agreement shall be exempt from the prospectus and registration requirements of all applicable securities laws.
	(e)		Other Closing Documents. The Corporation shall have received such agreements, certificates, affidavits, statutory declarations, and other documentation contemplated by this Agreement.
	(f)		Restructuring. The Restructuring Transactions shall be completed contemporaneously with the Closing.
	(g)		Merger. All necessary conditions for the consummation of the Merger shall have been satisfied and the Merger shall close contemporaneously with the Closing and in accordance with its terms.
	(h)		Debt Financing. All necessary conditions for the advance of funds pursuant to the Debt Financing shall have been satisfied and the Debt Financing shall close contemporaneously with the Closing and in accordance with its terms.
	(i)		Competition Law. If applicable, any waiting periods (and any extensions thereof) pursuant to applicable antitrust, competition or foreign investment review laws, rules or regulations shall have been terminated or shall have expired.

ARTICLE III
COMPETITION LAW

3.1 Competition Filings

The Corporation and the Investors agree to promptly make any notification filings or other submissions pursuant to any applicable antitrust, competition or foreign investment review law as may be required and to promptly provide each and every federal, state, provincial, local or foreign court or Governmental Authority with jurisdiction over enforcement of any applicable antitrust or competition laws (“Government Antitrust Entity”) non-privileged information and documents requested by any Government Antitrust Entity or that are necessary, proper or advisable to permit consummation of the Investment and the transactions contemplated by this Agreement.

Notwithstanding anything in this Agreement to the contrary, if any objections are asserted with respect to the transactions contemplated hereby by any Government Antitrust Entity, or if any suit, action or proceeding is instituted or threatened by any Government Antitrust Entity challenging any of the transactions contemplated hereby as violative of any applicable antitrust, competition or foreign investment review law, each of the Corporation and the Investors shall

use its reasonable best efforts to resolve such objections, suit, action or proceeding, or in the case of any approval that may be required under any foreign investment review law, the Investors shall use their reasonable best efforts to obtain such approval as expeditiously as reasonably possible, in each case so as to allow the Closing to occur on the Closing Date; provided, that the parties hereto understand and agree that the reasonable best efforts of any party hereto shall not be deemed to require (i) entering into any settlement, undertaking, consent decree, stipulation or agreement with any Governmental Authority in connection with the transactions contemplated hereby or (ii) divesting or otherwise holding separate (including by establishing a trust or otherwise), or taking any other action (or otherwise agreeing to do any of the foregoing) with respect to any of its or any of its Affiliates’ businesses, assets or properties.

3.2 Cooperation

Each of the Investors and the Corporation shall, in connection with the notifications, submissions and filings referred to in Section 3.1, use its reasonable best efforts, subject to all applicable laws relating thereto and to the exchange of privileged, confidential or competitively-sensitive information, to: (i) cooperate with the other party in connection with the preparation of the notifications, submissions and filings, (ii) cooperate with the other party in determining whether any action by or in respect of, or filing with, any Government Antitrust Entity is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement, (iii) cooperate with the other party in taking such actions or making any such filings, furnishing information required in connection with the notifications, submissions and filings referred to in Section 3.1, and seeking timely to obtain any such actions, consents, approvals or waivers; (iv) keep the other party promptly informed of, and provide copies of, any application, notification or material communication received by such party from, or given by such party to, the relevant Government Antitrust Entity and any material communication received or given in connection with any proceeding by a private party; and (v) offer the other party the opportunity to provide comments on draft applications, notifications and other material communications to the relevant Government Antitrust Entity, recognizing that whether or not such comments are appropriate will be determined by the party making such communications, acting reasonably.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

The Corporation represents and warrants to the Investors as of the Time of Closing as follows, and acknowledges that the Investors are relying on such representations and warranties in connection with the transactions contemplated herein:

4.1 Incorporation and Organization

The Corporation is a corporation duly incorporated, organized and validly subsisting under the laws of Canada, and is in good standing under such laws. The Corporation has full corporate power, authority and capacity: (i) to own or lease and operate its properties and assets; (ii) to carry on its Business as presently conducted and proposed to be conducted; and (iii) to execute and deliver this Agreement and the Other Agreements and to perform all obligations contemplated herein or therein, including the filing of the Articles of Amendment, the issue, sale and delivery of the Purchased Shares, the issue and delivery of any and all Converted Shares on the conversion of the Purchased Shares.

4.2 Corporate Records

The minute books of the Corporation and the minute books of each Material Subsidiary are up-to-date and have been maintained in accordance with the applicable law of their respective jurisdictions of incorporation. Such minutes books contain all articles and by-laws and a complete and accurate record of all resolutions and meetings and actions of directors (and committees thereof) and shareholders of the Corporation and each Material Subsidiary since the respective dates of incorporation of the Corporation and each Material Subsidiary, and reflect all transactions referred to in such proceedings accurately up until and including the Closing Date. All such meetings were duly called and held and all such by-laws and resolutions were duly passed or enacted. The share ledgers and registers of the Corporation and each Material Subsidiary as at the Closing Date are complete and reflect all issuances, transfers, repurchases and cancellations of shares in the capital of the Corporation and each Material Subsidiary, as applicable, as at the Closing Date. The full and complete minute books of the Corporation and each Material Subsidiary have been made available to the Investors or its counsel for review, upon request.

4.3 Subsidiaries

The full corporate name, jurisdiction of incorporation and registered and beneficial ownership of the issued and outstanding shares of each direct and indirect Subsidiary is as set forth in Section 4.3 of the Disclosure Schedule. Each of the Subsidiaries is duly incorporated, organized and validly subsisting under the laws of its jurisdiction of incorporation, and, except as disclosed in Section 4.3 of the Disclosure Schedule, is in good standing under such laws. All of the issued and outstanding shares of each Subsidiary have been duly authorized and are validly issued, fully-paid and non-assessable and are free and clear of Liens. Except for the Subsidiaries and except as set forth in Section 4.3 of the Disclosure Schedule, neither the Corporation nor any Subsidiary is or has been a partner in any partnership, participated in a joint venture, or owns or agreed or become bound to acquire any securities issued by, or acquire any equity or other ownership interest in, any other business or Person. The Material Subsidiaries are the only Subsidiaries that hold material assets or have material liabilities or that are otherwise material to the condition (financial or otherwise), operations, business, assets, or prospects of the Corporation and the Subsidiaries, taken as a whole. Each of the Material Subsidiaries has full corporate power, authority and capacity: (i) to own or lease and operate its properties and assets; and (ii) to carry on its Business as presently conducted and proposed to be conducted. None of the Subsidiaries incorporated under the laws of United Kingdom are dormant (within the meaning of section 249AA of the United Kingdom Companies Act 1985).

4.4 Qualification in Foreign Jurisdictions

The Corporation and each Subsidiary is duly qualified to carry on the Business and is in good standing as a foreign corporation in each jurisdiction in which the character of its properties owned or leased or the nature of its activities makes such qualification necessary (other than any jurisdictions in which the failure to so qualify or be in good standing would not, either in any case or in the aggregate, have a Material Adverse Effect).

4.5 Authorized, Issued and Outstanding Capital

(a)

After giving effect to the Restructuring Transactions to occur at Closing:

	(i)		the authorized capital of the Corporation will consist of: (A) unlimited Common Shares; (B) unlimited Class A Convertible Preferred Shares; (C) unlimited Class B Convertible Preferred Shares; (D) unlimited Class 1 Convertible Preferred Shares; and (E) an unlimited number of Class 2 Preferred Shares; and
	(ii)		213,272,400 Common Shares, the 307,087 Class 1 Shares issued pursuant to the terms of this Agreement and in connection with the Restructuring Transactions and no other shares will be issued and outstanding, and all of such issued and outstanding shares, and the Purchased Shares, are or will be at the Time of Closing, duly authorized, validly issued, fully-paid and non-assessable.

	(b)		Other than as set out in Section 4.5(b) of the Disclosure Schedule and other than as contemplated in this Agreement, after giving effect to the Restructuring Transactions to occur at Closing neither the Corporation nor any Subsidiary is bound by, and has any obligation to grant or enter into, any outstanding subscriptions, options, warrants, calls, commitments, or Contracts of any character calling for it to issue, deliver, or sell, or cause to be issued, delivered, or sold, any: (i) shares or any other equity or other security, or (ii) securities convertible (including convertible debt securities) into, exchangeable for, or representing the right to subscribe for, purchase, or otherwise acquire any shares or any other equity or other security in the capital of the Corporation or any Subsidiary, as applicable.
	(c)		An aggregate of 36,046,011 Common Shares (and no other shares) have been reserved for issuance to eligible directors, officers, consultants and employees of the Corporation and the Subsidiaries under the Stock Option Plan and 2006 Equity Compensation Plan. To the date hereof, options to purchase an aggregate of 22,707,591 Common Shares (and no other options) are outstanding under the Stock Option Plan and 2006 Equity Compensation Plan. Except as disclosed in Section 4.5(c) of the Disclosure Schedule, all options vest (subject to earlier termination on termination of service of the grantee) as to 25% of the shares subject to option on the first anniversary of the date of grant, and thereafter at a rate of 25% each year for a period of three years. Except as disclosed in Section 4.5(c) of the Disclosure Schedule, the Corporation has no present intention to re-price or exchange options granted under the Stock Option Plan and 2006 Equity Compensation Plan or change its practice with respect to the vesting of options granted thereunder, nor has it indicated to any Person any such intention. Other than the Stock Option Plan and 2006 Equity Compensation Plan and except as disclosed in Section 4.5(c) of the Disclosure Schedule, neither the Corporation nor any Subsidiary has any stock option plan, restricted share plan, share purchase plan, stock appreciation rights, phantom stock option plan or similar plan or arrangement providing for any equity-based compensation for the benefit of its officers, directors, employees, consultants or other service providers.
	(d)		Except as set forth in Section 4.5(d) of the Disclosure Schedule and except as contemplated in this Agreement and after giving effect to the Restructuring Transactions to occur at Closing, neither the Corporation nor any Subsidiary:

(i) has any outstanding obligation, contingent or otherwise, contractual or otherwise, to repurchase, redeem, or otherwise acquire any of its shares or other equity securities or to pay any dividend or make any distribution to its shareholders; (ii) is a party to or bound by any Contract relating to the voting of any of its securities or that creates a voting trust, voting agreement, pooling agreement, drag-along, right of first refusal, pre-emptive right or proxy, or that restricts the ability of the shareholders to freely transfer or alienate outstanding securities of the Corporation or any Subsidiary or securities which hereafter may be issued; (iii) has knowledge of any Contract relating to the voting of any of its securities or that relates to or restricts the management of the Corporation or any Subsidiary or that creates a voting trust, voting agreement, pooling agreement, drag-along, right of first refusal, pre-emptive right or proxy, or that restricts the ability of the shareholders to freely transfer, alienate, assign or encumber outstanding securities of the Corporation or any Subsidiary or securities which hereafter may be issued; or (iv) is a party to or bound by any Contract under which any Person has the right to require it (x) to effect, or to include any securities held by such Person in, any registration under the Securities Act or any qualification by prospectus under Canadian Securities Laws, or any similar registration or qualification in any other jurisdiction, or (y) to distribute any such securities to the public in Canada, the United States or any other jurisdiction.

	(e)		Except as set forth in Section 4.5 of the Disclosure Schedule and except as contemplated in this Agreement and after giving effect to the Restructuring Transactions to occur at Closing, there are no price protection, price adjustment, anti-dilution or other similar rights (either retrospective or prospective) attached to any outstanding securities of the Corporation or any Subsidiary.
	(f)		The Corporation has duly reserved and shall continue at all times to reserve, solely for the purpose of issuance upon conversion of the Purchased Shares, a number of Converted Shares sufficient to cover the conversion of all such Purchased Shares. The Converted Shares issuable upon conversion of the Purchased Shares have been duly authorized and reserved for issuance and, when issued upon conversion of the Purchased Shares, shall be validly issued, fully paid and non-assessable, and free and clear of Liens.

4.6 Lawful Issuance

Except as set forth in Section 4.6 of the Disclosure Schedule, all of the outstanding shares in the capital of the Corporation and each Subsidiary and all outstanding options, warrants and other securities of the Corporation and each Subsidiary were offered, issued, and sold, and the Purchased Shares have been offered and (as and when issued) shall be issued and sold, in compliance with: (i) all applicable pre-emptive or similar rights of all Persons (except for any non-compliance which has been waived in writing); (ii) all applicable provisions of applicable securities laws in Canada, the United States and the United Kingdom in transactions exempt from the prospectus, registration or analogous requirements of such securities laws (subject to and assuming the accuracy of any representations and warranties made by purchasers of such securities, and the representations of the Investors contained in Article V hereof to the Corporation); and (iii) all other applicable laws. No Person has any valid right to rescind any

purchase of, or any statutory rights of action with respect to, any shares or other securities in the capital of the Corporation or any Subsidiary, except in accordance with this Agreement.

4.7 Corporate Authorization

This Agreement and the Other Agreements, and the transactions contemplated hereby and thereby, have been duly approved and authorized by all requisite corporate action on the part of the Corporation, and this Agreement has been duly authorized, executed and delivered by the Corporation and constitutes, and each of the Other Agreements constitute, a legal, valid, and binding obligation of the Corporation enforceable against it in accordance with its terms (subject to bankruptcy, insolvency and other laws affecting the rights of creditors generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction). The execution, delivery, and performance by the Corporation of this Agreement and the Other Agreements in accordance with their respective terms, and the consummation by the Corporation of the transactions contemplated hereby or thereby, will not result (with or without the giving of notice or the lapse of time or both) in any conflict, violation, breach, or default, or the creation of any Lien, or the termination, acceleration, vesting, or modification of any right or obligation, under or in respect of: (i) the articles or by-laws of the Corporation or any Subsidiary; (ii) any judgment, decree, order, statute, rule, or regulation binding on or applicable to any of them; or (iii) any Contract to which the Corporation or any Subsidiary is a party or by which any of its assets are bound; or (iv) any Permit held by the Corporation or any Subsidiary. Any existing rights of first refusal or pre-emptive rights, or other rights restricting the issuance of securities of the Corporation, pursuant to the Existing Shareholders Agreement or otherwise, will have either been complied with, or duly and validly waived, with respect to the issuance of the Purchased Shares and the Converted Shares prior to the Time of Closing on the Closing Date.

4.8 No Governmental or Third Party Consents

Except as disclosed in Section 4.8 of the Disclosure Schedule, no material consent, approval, authorization, declaration, filing, or registration with any Governmental Authority or other Person is required to be made or obtained by the Corporation in connection with: (i) the execution and delivery of this Agreement or the Other Agreements; or (ii) the performance by the Corporation of its obligations hereunder, thereunder or under the articles of the Corporation, as amended, except as may be required pursuant to applicable securities laws (including Canadian Securities Laws) to report the issuance and sale of securities issued or issuable pursuant to the transactions contemplated in this Agreement and the Other Agreements and except for such filings required to be made with the SEC with respect to the transactions contemplated in this Agreement and the Other Agreements.

4.9 Financial Statements – Absence of Certain Changes

The audited annual financial statements for the years ended April 30, 2006 and April 30, 2007, annexed hereto as Schedule C (collectively, the “Financial Statements”), have been prepared in accordance with U.S. generally accepted accounting principles applied on a basis consistent with that of the preceding period and present fairly: (i) all of the assets, liabilities and financial position of the Corporation on a consolidated basis as at April 30, 2006 and April 30, 2007, respectively; and (ii) the sales, earnings, results of operation and changes in financial position and cash flows of the Corporation on a consolidated basis for the twelve month period ended

April 30, 2007. Except as otherwise described in the Financial Statements or as set forth in Section 4.9 of the Disclosure Schedule or as set forth in Schedule C, since April 30, 2006 and April 30, 2007 (the “Financial Statement Date”) there has not been:

	(a)		other than those in the ordinary course of business consistent with past practice, any acquisition (by purchase, lease as lessee, license as licensee, or otherwise) or disposition (by sale, lease as lessor, license as licensor, or otherwise) by the Corporation or any of the Subsidiaries of any properties or assets;
	(b)		any Material Adverse Effect;
	(c)		any material transaction by the Corporation or any of the Subsidiaries with their respective Affiliates, Insiders or any other Person not at Arm’s Length with the Corporation or any Subsidiary, other than the payment of compensation and reimbursement of reasonable employee travel and other business expenses in accordance with existing employment arrangements and usual past practices;
	(d)		any damage, destruction, or loss, whether or not covered by insurance, that, either in any case or in the aggregate, has caused, or could reasonably be expected to cause, a Material Adverse Effect;
	(e)		any declaration, setting aside, or payment of any dividend or any other distribution (in cash, stock, and/or property or otherwise) in respect of any shares or other securities of the Corporation or any of the Subsidiaries;
	(f)		any issuance of any shares or other securities of the Corporation or any of the Subsidiaries, or any direct or indirect redemption, repurchase, or other acquisition by the Corporation or any of the Subsidiaries of any of its shares or other securities (other than the issuance of shares to optionholders upon the exercise of options granted under the Stock Option Plan or pursuant to any other Employee Plan and the repurchase or redemption of shares from employees terminated involuntarily by the Corporation or any Subsidiary, as described in Section 4.5(d) of the Disclosure Schedule);
	(g)		any change in the officers, directors or key employees of the Corporation or any of the Material Subsidiaries;
	(h)		other than in the ordinary course of business, any increase in the compensation or other benefits payable or to become payable by the Corporation or any of the Subsidiaries to any of its Affiliates, or to any of the respective officers, employees, or independent contractors of the Corporation or any of the Subsidiaries, or any bonus, severance or termination payments or arrangements made to or with any of such officers, employees, or independent contractors;
	(i)		any forgiveness or cancellation of any material debt or claim by the Corporation or any of the Subsidiaries or any waiver by the Corporation or any of the Subsidiaries of any right of material value, other than compromises of accounts receivable in the ordinary course of business;

	(j)		other than in the ordinary course of business, any incurrence, payment, discharge, or satisfaction by the Corporation or any of the Subsidiaries of any other Indebtedness, material obligations or material liabilities, whether absolute, accrued, contingent or otherwise (including, without limitation, liabilities, as guarantor or otherwise, with respect to obligations of others), other than (A) current liabilities to Persons other than Affiliates of the Corporation incurred in the ordinary course of business, and (B) current liabilities to Persons other than Affiliates of the Corporation incurred in connection with the transactions contemplated hereby;
	(k)		other than in the ordinary course of business, any incurrence, discharge or satisfaction of any Lien: (i) by the Corporation or any of the Subsidiaries; or (ii) on any of the shares, other securities, properties, or assets owned or leased by the Corporation or any of the Subsidiaries;
	(l)		any settlement of any Legal Proceeding threatened or pending against the Corporation or any Subsidiary or any of their respective assets that, either in any case or in the aggregate, has caused or could reasonably be expected to cause a Material Adverse Effect;
	(m)		any change of auditor or material change with respect to any method of management operation or accounting in respect of the Business;
	(n)		any conduct of business by the Corporation or any of the Subsidiaries outside the ordinary course of business;
	(o)		any Contract by or on behalf of the Corporation, or by or on behalf of its respective Affiliates, directors, officers, employees, agents, or representatives, whether in writing or otherwise, to do or permit any of the things referred to in this Section 4.9; or
	(p)		to the knowledge of the Corporation any change that would have or reasonably be expected to have a Company Material Adverse Effect as defined under the Merger Agreement.

4.10 Indebtedness

Neither the Corporation nor any of the Subsidiaries is in default with respect to any outstanding material Indebtedness or any Contract relating thereto, and no such Indebtedness or Contract relating thereto purports to limit the issuance of any securities by the Corporation or any of the Subsidiaries or its operation of the Business. Complete and correct copies of all Contracts (including all amendments, supplements, waivers, and consents) relating to any material Indebtedness of the Corporation or any of the Subsidiaries have been made available by the Corporation to the Investors or their counsel for inspection.

Except for items disclosed in Section 4.10 of the Disclosure Schedule that will be repaid in the Restructuring Transactions, neither the Corporation nor any Subsidiary has outstanding any bonds, debentures, notes, mortgages or other indebtedness which mature more than one year after the date of their original creation or issuance and neither the Corporation nor any

Subsidiary has agreed to create or issue any bonds, debentures, notes, mortgages or other indebtedness which will mature more than one year after the date of their creation or issue.

Immediately after the Closing the Corporation shall be in compliance with all financial and other covenants set forth in the Debt Financing documents as if tested at the Time of Closing.

4.11 Absence of Undisclosed Liabilities

Other than as set forth in the Financial Statements or as disclosed in Section 4.11 of the Disclosure Schedule, or as incurred by the Corporation or the any of the Subsidiaries in the ordinary course of business and consistent with past practice since the date of the most recent audited Financial Statements of the Corporation available as of the date of this Agreement, neither the Corporation nor any Subsidiary has any material liabilities or obligations of any nature, whether accrued, absolute, contingent, or otherwise (including liabilities as guarantor or otherwise with respect to obligations of others) and whether due or to become due and whether or not required to be accrued on the Financial Statements of the Corporation.

4.12 Tax Matters

	(a)		Neither the Corporation nor any Subsidiary has any liability, obligation or commitment, actual or contingent, for the payment of any Tax, except such as have arisen since the Financial Statement Date in the usual and ordinary course of its business. Except as disclosed in Section 4.12(a) of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries is in arrears with respect to any required withholdings or instalment payments of any material Tax. There are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment or reassessment of Tax, the filing of any Tax Return or the payment of any Tax by the Corporation or any Subsidiary, as the case may be, under the Income Tax Act (Canada) or any other legislation imposing Tax on the Corporation or any Subsidiary, as the case may be.
	(b)		Except as disclosed in Section 4.12(b) of the Disclosure Schedule, the Corporation and each of the Subsidiaries has filed within the times and in the manner prescribed by law all Tax Returns required to be filed by or with respect to the Corporation or any of the Subsidiaries, as the case may be, and have paid all Taxes required to be paid (whether or not shown on any Tax Return). All such Tax Returns are correct and complete in all material respects and the Corporation and each Subsidiary has made complete and accurate disclosure in such Tax Returns and in all materials accompanying such Tax Returns.
	(c)		Except as disclosed in Section 4.12(c) of the Disclosure Schedule, no material claim (including any claim for refunds or credits) in any Tax Return filed by the Corporation or any Subsidiary has been refused or denied by any relevant Tax authority and all such claims were made in accordance with the relevant provisions of the Income Tax Act (Canada) or any other applicable law. Adequate provision has been made in accordance with U.S. generally accepted accounting principles and, to the knowledge of the Corporation, charges, accruals and reserves on the books of each of the Corporation and the Subsidiaries in respect of any liability for Taxes are sufficient, to meet any reasonable assessment or

			reassessment for instalments and Taxes not yet due and any other claim for the payment of additional Taxes.
	(d)		Except as disclosed in Section 4.12(d) of the Disclosure Schedule, each of the Corporation and the Subsidiaries has withheld from all payments made to its officers, directors, employees, debtholders, shareholders and other Persons the amount of all Taxes including but not limited to income tax, federal or provincial pension and medical plan contributions, unemployment insurance contributions and other deductions required to be withheld therefrom and, where such Taxes are due, have paid the same to the proper receiving officers or Tax authorities on a timely basis.
	(e)		Except as disclosed in Section 4.12(e) of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries is a party to or bound by any Tax sharing or allocation agreement, nor does it have any current or potential contractual obligation to indemnify any other Person with respect to Taxes.
	(f)		The Corporation is eligible for investment tax credits with respect to certain of its research and development activities within the meaning of the Income Tax Act (Canada).
	(g)		With respect to the Corporation’s investment tax credits, the Corporation has complied with applicable provisions and requirements of the Income Tax Act (Canada) and the Corporation has satisfied at all relevant times the relevant criteria and conditions entitling it to any such credits it has claimed.
	(h)		Except as disclosed in Section 4.12(h) of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries has any knowledge of: (x) any liability for any Tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for in the Financial Statements or in its books in respect of any such liabilities arising or accruing since the Financial Statement Date; or (y) any investigations, audits or reassessments initiated or to be initiated against the Corporation or a Subsidiary by any Tax authority. No jurisdiction in which the Corporation or any Subsidiary has not filed Tax Returns has indicated to the Corporation that Tax Returns should have been filed in such jurisdiction.
	(i)		The Corporation has made or obtained records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Income Tax Act (Canada) with respect to transactions and arrangements between the Corporation and any Person with whom the Corporation was not dealing at Arm’s Length.
	(j)		Each of the Corporation and each Subsidiary has complied with all material registration, reporting, collection and remittance requirements in respect of Taxes. Except as disclosed in Section 4.12(j) of the Disclosure Schedule, the Corporation and the Subsidiaries have collected or withheld from each receipt from or in respect of any of their past and present customers (or other Persons paying amounts to the Corporation or the Subsidiaries) the amount of all Taxes (including goods and services tax and provincial, state and foreign sales taxes)

			required to be collected and have remitted such Taxes when due, in the form required under the appropriate legislation or made adequate provision in the books of each of the Corporation and the Subsidiaries for the payment of such amount to the proper receiving Tax authorities.
	(k)		There are no circumstances existing which could result in the application of section 78 of the Income Tax Act (Canada) to the Corporation or a Subsidiary and the Corporation or any Subsidiary has not claimed any reserve that may be included in income for any period ending after the Closing Date.

4.13 Real Property

(a)

Except as described and set forth in Section 4.13(a) of the Disclosure Schedule, neither the Corporation nor any Subsidiary owns or has any interest in, nor is the Corporation or any Subsidiary a party to or bound by or subject to, any Contract respecting the purchase or sale of, any real or immoveable property or any lease, license, sublease, sublicense or any other Contract respecting the occupancy of any real or immovable property. Section 4.13(a) of the Disclosure Schedule accurately specifies the following:

	(i)		with respect to each separate parcel of Owned Real Property (A) the municipal address, (B) a brief description of buildings and structures thereon, and (C) details of any Encumbrances registered against title to such property; and
	(ii)		with respect to each lease for the Leased Real Property (A) the parties to and dates of the lease, (B) the expiry date of the lease, (C) the location (including municipal address) of the Leased Property, (D) the rental payable and any other material payments required under the lease, and (E) the date and details of any amendments or supplement to such leases.

(b)

Each lease for material Leased Real Property listed in Section 4.13(a) of the Disclosure Schedule is valid and subsisting and in good standing, unamended except as disclosed in Section 14.3(a) of the Disclosure Schedule and the Corporation or a Subsidiary is entitled to all rights and benefits under such material leases in accordance with the terms thereof and neither the Corporation nor a Subsidiary has sublet, assigned, licensed or otherwise conveyed any rights in such material leases or the property subject thereto to any other Person, except as set forth in Section 4.13(c) of the Disclosure Schedule. Neither the Corporation nor a Subsidiary nor, to the Corporation’s knowledge, is the landlord or any other party thereto in breach of any of the provisions of any such material lease, nor does there exist any dispute, default, event or occurrence, which with the giving of notice, the lapse of time or the happening of any other event or condition would become a default under such material leases.

4.14 Personal Property

Except with respect to Real Property which is separately addressed in Section 4.13, each of the Corporation and the Subsidiaries has: (i) good and sufficient title to all of the assets and

properties owned by it; (ii) good and sufficient title to the lessee interest in all assets and properties leased by it as lessee; and (iii) full right to hold and use all of the respective assets and properties used in or necessary to the Business, in each case all free and clear of Liens except applicable restrictions on assignment and/or subletting and distress rights and except for any Liens that, in any case or in the aggregate, would not have a Material Adverse Effect. All such assets and properties are, to the knowledge of the Corporation, in good condition and repair, reasonable wear and tear excepted, and are adequate and sufficient in all material respects to carry on the Business as presently conducted and as proposed to be conducted.

4.15 Health, Safety and Environmental Matters

	(a)		To the knowledge of the Corporation, the operations of the Corporation and its Subsidiaries are not in, and have not been in, violation of any applicable Environmental Laws, and neither the Corporation nor any of the Subsidiaries has received any written notice alleging any such violation.
	(b)		Except as disclosed in Section 4.15(b) of the Disclosure Schedule, neither the Corporation nor any Subsidiary has received written notice, or has knowledge of any facts that could give rise to any notice, that it is potentially responsible for any remedial or other corrective action or any work, repairs, construction or capital expenditures to be made under any Environmental Law.
	(c)		The Corporation has no knowledge of any Hazardous Substance originating from any adjoining or neighbouring properties which has migrated or is suspected to be migrating onto, into or under the Real Property.

4.16 Employment Contracts

	(a)		True and complete copies of all Contracts of employment or engagement with each senior officer of the Corporation or any Subsidiary have been made available to the Investors or their counsel. For the purposes of this clause (a), the term “officer” means any officer of the Corporation or any Subsidiary as such term is defined in section 1(1) of the Securities Act (Ontario). Except as disclosed in Section 4.16(a) of the Disclosure Schedule, there is no Contract of employment or engagement entered into with any employee, director, officer, consultant or independent contractor of the Corporation or any Subsidiary which is not terminable on the giving of reasonable notice in accordance with applicable law or in accordance with the terms of the relevant Contract. No individual who is party to an indemnity agreement with the Corporation has made any claim for indemnity under such agreement.
	(b)		The Corporation and each Subsidiary has the approximate number of full-time employees, and has retained the services of the number of independent contractors, set forth next to its name in Section 4.16(b) of the Disclosure Schedule. Other than as disclosed in Section 4.16(b) of the Disclosure Schedule, there is no current labor unrest, threatened labor strike or other material disagreements or difficulties with any of the Corporation’s or the Subsidiaries’ employees or independent contractors. To the knowledge of the Corporation, no officer or key employee of the Corporation or any Subsidiary has stated any

			intention of terminating his or her employment with or services to the Corporation or any Subsidiary, as the case may be, nor does the Corporation or any of the Subsidiaries have any present intention of terminating the employment of any such person, as the case may be.
	(c)		Except as disclosed in Section 4.16(c) of the Disclosure Schedule, the Corporation is not party to or bound by any Contract or policy providing for severance payments, termination payments, or the acceleration of any option or warrant held by any director, officer, employee or consultant of the Corporation or any Subsidiary.
	(d)		To the knowledge of the Corporation, no present or former employee or independent contractor of the Corporation or any Subsidiary is a party to or has violated any term of any employment Contract, consulting agreement, non-competition or non-solicitation agreement, patent or other proprietary information agreement or similar Contract with, or any fiduciary duty in favor of, a former employer of such employee or independent contractor or any other third party. Neither the Corporation nor any Subsidiary has received any notice from any third party alleging that such a violation has occurred. To the knowledge of the Corporation, the continued employment or engagement by the Corporation and the Subsidiaries of their respective present employees and independent contractors will not result in any such violation.
	(e)		Except as set forth in Section 4.16(e) of the Disclosure Schedule, no charge, complaint, grievance, Claim, order (including a work order) or, to the knowledge of the Corporation, investigation, has been filed, made, commenced or, to the knowledge of the Corporation, threatened against the Corporation or any of the Subsidiaries, pursuant to, nor is the Corporation or any of its Subsidiaries in violation in any material respect of:

	(i)		with respect to employees in Ontario, the Ontario Human Rights Code, the Occupational Health & Safety Act (Ontario), the Workplace Safety and Insurance Act (Ontario), the Labour Relations ▇▇▇, ▇▇▇▇, the Employment Standards Act, 2000 (Ontario) or the Pay Equity Act (Ontario); and
	(ii)		with respect to employees in the United States, all applicable laws in the United States relating to wages, hours and collective bargaining or otherwise relating to employees or employee safety, health or security; and
	(iii)		with respect to employees in the United Kingdom, the Trade Union and Labour Relations (Consolidation) ▇▇▇ ▇▇▇▇, the Equal Pay ▇▇▇ ▇▇▇▇, the Sex Discrimination Acts 1975 and 1986, the Race Relations ▇▇▇ ▇▇▇▇, the Employment Rights Act, the Trade Union Reform and Employment Rights ▇▇▇ ▇▇▇▇, the Disability Discrimination ▇▇▇ ▇▇▇▇, the Employment Relations ▇▇▇ ▇▇▇▇, the Social Security and Housing Benefits ▇▇▇ ▇▇▇▇, the Social Security Contributions and Benefits ▇▇▇ ▇▇▇▇, the Transfer of Undertakings (Protection of Employment) Regulations 1981 and the Working Time Regulations 1998.

			Neither the Corporation nor any of the Subsidiaries is, to its knowledge, engaged in any unfair labor practice. There is no work stoppage or to the knowledge of the Corporation any other action, grievance, unfair labor practice complaint or dispute currently existing or to the knowledge of the Corporation threatened against the Corporation or any of the Subsidiaries that could, in the good faith judgment of the Corporation, lead to a work stoppage by the employees of the Corporation or any of the Subsidiaries. Except as disclosed in Section 4.16(e) of the Disclosure Schedule, there are no outstanding decisions or settlements or pending settlements under any legislation referenced in this Section 4.16(e) which place any obligation upon the Corporation or any of the Subsidiaries to do or refrain from doing any act.
	(f)		Except as disclosed in Section 4.16(f) of the Disclosure Schedule, all salary, wages, vacation pay, bonuses, commissions and employee benefit payments have been paid or are accrued but not yet due, and all such accruals are properly reflected in the books and records of the Corporation or the Subsidiaries, as the case may be.
	(g)		Except as disclosed in the Financial Statements or as disclosed in Section 4.16(g) of the Disclosure Schedule, since the Financial Statement Date no payments have been made or authorized by the Corporation to Insiders of the Corporation, except in the ordinary course of the business of the Corporation or at the regular rates payable to them of salary, pension, bonuses, rents or other remuneration of any nature.
	(h)		Except as disclosed in Section 4.16(h) of the Disclosure Schedule, the Corporation has not been and is not currently subject to any audit or investigation relating to the characterization by the Corporation or its Subsidiaries of any individuals as independent contractors.

4.17 Employee Plans

	(a)		Section 4.17(a) of the Disclosure Schedule lists all Employee Plans, including U.S. Employee Plans to which the Corporation or any Subsidiary is party, bound by or in respect of which either has any contingent or actual liability. The Corporation has made available to Investors or their counsel true, correct and complete copies of all the Employee Plans, including U.S. Employee Plans as amended as of the date hereof, together with all related material documentation, including, plan texts, plan summaries, material correspondence, if any, to and from regulatory authorities, funding documents and insurance contracts. With respect to each U.S. Employee Plan, the Corporation has provided to Investors or their counsel the most recently filed Form 5500 under the Code, if applicable.
	(b)		Except as disclosed in Section 4.17(b) of the Disclosure Schedule, to the knowledge of the Corporation all of the Employee Plans are and have been, in all material respects, established, registered, qualified, funded, invested, contributed to and administered in accordance with their terms and the terms of the Collective Agreements and all applicable laws, accounting standards, rules and regulations.

	(c)		Except as disclosed in Section 4.17(c) of the Disclosure Schedule, all employer payments, contributions or premiums required to be remitted or paid to or in respect of each Employee Plan have been remitted or paid in a timely fashion in accordance with the terms thereof, all applicable actuarial reports and all applicable law.
	(d)		Except in the ordinary course of business or as disclosed in Section 4.17(d) of the Disclosure Schedule, no Employee Plan has been amended or improved and no commitment to amend or improve any Employee Plan has been made since the Financial Statement Date except as required by applicable laws and no discretion has been exercised to augment benefits.
	(e)		Section 4.17(a) of the Disclosure Schedule lists all Employee Plans, registered or unregistered, under which employees of the Corporation or any Subsidiary accrue pension benefits or under which benefits are provided to former employees (or to the beneficiaries or dependants of such persons) on or after retirement or termination of employment. As of the date hereof, the deficit under the Employee Plans listed in Section 4.17(a) of the Disclosure Schedule does not exceed $55 million in the aggregate.
	(f)		Except as disclosed in Section 4.17(f) of the Disclosure Schedule, to the knowledge of the Corporation, no fact or circumstance exists which would adversely affect the tax-exempt status of any Employee Plan.
	(g)		Except as disclosed in Section 4.17(g) of the Disclosure Schedule, all benefits under all Employee Plans are either fully insured or accrued and fully and accurately reflected in the books and records of the Corporation or its Subsidiaries, as applicable. Where required pursuant to applicable law or pursuant to Employee Plans, each Employee Plan has been fully funded or fully insured on an on-going, solvency and annuity buy-out basis pursuant to actuarial assumptions and methodology appropriate to the employees or former employees of the Corporation and the Subsidiaries and the Business.
	(h)		Except as disclosed in Section 4.17(h) of the Disclosure Schedule, to the knowledge of the Corporation, there exists no liability in connection with any former benefit plan relating to the employees or former employees of the Corporation or a Subsidiary and their beneficiaries that has terminated and all procedures for termination of each such former benefit plan has been properly followed in accordance with the terms of such former benefit plan and applicable law. In respect of employees or former employees, there is no investigation, examination, Legal Proceeding or Claim (other than routine claims for benefits or remuneration) pending or threatened involving any Employee Plan and to the knowledge of the Corporation no facts or circumstances exist which could reasonably be expected to give rise to any such investigation, examination, Legal Proceeding or Claim (other than routine claims for benefits or remuneration).
	(i)		No non-exempt “prohibited transaction”, as defined in section 406 of ERISA or section 4975 of the Code, has occurred with respect to any U.S. Employee Plan that could reasonably be expected to subject the Corporation or any of its

			Subsidiaries to liability. Neither the Corporation nor any of its ERISA Affiliates have ever sponsored, maintained, or contributed to (i) an employee benefit plan subject to the provisions of Title IV of ERISA; (ii) a “multiemployer plan,” as defined by section 3(37) of ERISA; or (iii) a “multiple employer welfare arrangement,” as defined by section 3(40) of ERISA. Each U.S. Employee Plan which is intended to be qualified under section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and, to the knowledge of the Corporation, each trust forming a part thereof is exempt from tax pursuant to section 501(a) of the Code, except as set forth in Section 4.18(b) of the Disclosure Schedule. The Corporation has made available to Investors or their counsel copies of the most recent Internal Revenue Service determination letters, if any, with respect to each such plan. All U.S. Employee Plans have been maintained in compliance with its terms and with the requirements prescribed by all applicable statutes, orders, rules and regulations.
	(j)		The Corporation has designated a registered — stakeholder pension scheme in accordance with the requirements of the United Kingdom Welfare Reform and Pensions Act 1999 (and Regulations made under it) in relation to all of its “relevant employees” (as defined for the purposes of that Act), and has complied with all obligations pursuant to the United Kingdom Welfare Reform and Pensions Act 1999 (and Regulations made under it).

4.18 Unions

A list of all Collective Agreements is contained in Section 4.18 of the Disclosure Schedule. No Collective Agreement restricts the relocation or closing of any part of the Business. Neither the Corporation nor any Subsidiary is, to the knowledge of the Corporation, currently in breach of any Collective Agreement. There are no written or oral agreements or, to the knowledge of the Corporation, courses of conduct that modify any Collective Agreement, except to the extent otherwise provided under applicable laws. Except as disclosed in Section 4.18 of the Disclosure Schedule:

	(a)		no employee association, trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the Corporation’s or any Subsidiary’s employees by way of certification, interim certification, voluntary recognition, designation or successor rights;
	(b)		no labor representatives have applied to have the Corporation or any Subsidiary declared a related employer pursuant to the Labor Relations Act (Ontario) or any other applicable Law; and
	(c)		there are no current or to the Corporation’s knowledge threatened attempts to organize or establish any trade unions or employee association with respect to the Corporation or any Subsidiary.

4.19 Material Contracts

Except as disclosed in Section 4.19 of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries is a party to or otherwise bound by: (i) any Contract that may affect its ability to consummate the transactions contemplated hereby or by any of the Other Agreements; (ii) any other Contract or Contracts that are individually, or in the aggregate (in the case of a series of related agreements or agreements with the same or related parties), material to the Corporation (considered on a consolidated basis) or its Business, prospects, financial condition, operations, property or affairs (other than those purchase and sale agreements, instruments or commitments for the sale of the products or services of the Corporation entered into in the ordinary course of business); or (iii) any:

	(a)		Contract requiring it to purchase all or substantially all of its requirements for a particular product or service from a particular supplier or suppliers, or requiring it to supply all of a particular customer’s or customers’ requirements for a certain service or product;
	(b)		Contract entered into outside of the ordinary course of business pursuant to which the Corporation or any Subsidiary has agreed to indemnify or hold harmless any other Person from third-party claims beyond the value of the Contract to the Corporation;
	(c)		employment agreement, consulting agreement or other Contract providing for severance payments, acceleration of options or other additional rights or benefits (whether or not optional) in the event of the sale or other change in control of the Corporation or any Subsidiary;
	(d)		Contract with any current or former Affiliate, Insider or other Person not at Arm’s Length with the Corporation or any Subsidiary or with any Person in which any such Affiliate, Insider or other Person has a material interest;
	(e)		joint venture agreement;
	(f)		Contract with any domestic or foreign Governmental Authority or agency or executive office thereof or any subcontract between the Corporation or any Subsidiary and any third party relating to a Contract between such third party and any domestic or foreign Governmental Authority or agency or executive office thereof, in any case the loss of which may reasonably be expected to have a Material Adverse Effect;
	(g)		Contract imposing non-competition or exclusive dealing obligations on the Corporation or any Subsidiary;
	(h)		Contract with respect to the escrow or other deposit or availability of any Business IP; or
	(i)		Contract with respect to the license, distribution, or resale of any of the Business IP or joint developments related thereto (other than customer Contracts on the Corporation’s standard terms entered into in the ordinary course of business) in

any case the loss of which may reasonably be expected to have a Material Adverse Effect.

For purposes of clause (ii) above, a Contract will be considered “material” where the loss of such Contract could reasonably be expected to result in a Material Adverse Effect.

The Corporation has made available to the Investors or their counsel for inspection correct and complete copies (or written summaries of the material terms of oral agreements or understandings) of each Contract listed in Section 4.19 of the Disclosure Schedule, each as amended to date. Each such Contract is a valid, binding and enforceable obligation of the Corporation or a Subsidiary, as the case may be, and to the knowledge of the Corporation, of the other party or parties thereto, and is in full force and effect. None of such Contracts (except for Contracts disclosed in connection with clauses (c) and (d) above) contain any obligation of the Corporation or any Subsidiary that is contingent upon, or that accelerates upon, the change of control of the Corporation or any Subsidiary. Neither the Corporation nor any of the Subsidiaries, nor to the knowledge of the Corporation, any other party thereto, is, or is (to the knowledge of the Corporation) considered by any other party thereto to be, in breach of or non-compliance with any term of any such Contract (nor, to the knowledge of the Corporation, is there any basis for any of the foregoing, including, without limitation, the entering into and performance by the Corporation of this Agreement and the Other Agreements), except for any breaches or non-compliances that singly or in the aggregate would not have a Material Adverse Effect. Neither the Corporation nor any Subsidiary is party to any Contract which it does not have the capacity to perform, including the necessary personnel, equipment and supplies.

4.20 Customers, Licensors and Suppliers

	(a)		Section 4.20(a) of the Disclosure Schedule lists accurately and completely: (i) all Contracts (the “Customer Contracts”) between the Corporation or any Subsidiary and the ten most significant customers (including distributors) of the Corporation or the Subsidiary, as the case may be, considered on a consolidated basis, based on normal sales to such customer in the 24 months preceding the date of this Agreement; and (ii) all Contracts (the “Supplier Contracts”) between the Corporation or any Subsidiary and the ten most significant suppliers (including licensors of Licensed IP) of the Corporation or the Subsidiary, as the case may be, considered on a consolidated basis, based on payments to such supplier or licensor in the 24 months preceding the date of this Agreement.
	(b)		Neither the Corporation nor any Subsidiary is in default or breach of any Customer Contract or Supplier Contract and, to the knowledge of the Corporation, there exists no state of facts, including, without limitation, the execution, delivery and performance of this Agreement or the Other Agreements, which with notice or the passage of time or both would result in a default or breach or, if applicable, acceleration of any rights in the Customer Contracts or Supplier Contracts, except to the extent any such default or breach would not, singly or in the aggregate, be reasonably expected to have a Material Adverse Effect.
	(c)		Complete and accurate copies of all Customer Contracts and Supplier Contracts have been made available to Investors or their counsel by the Corporation.

	(d)		During the 12 month period ended on the date hereof: (i) there has been no cancellation of or adverse modification to any Customer Contract or Supplier Contract except as indicated in Section 4.20(a) of the Disclosure Schedule (including any material decrease to the services, supplies or materials provided to a customer or to a customer’s usage or purchase of the services or products of the Corporation and any material increase in pricing or any material decrease in service levels, supplies or materials provided by a supplier); and (ii) neither the Corporation nor any Subsidiary has received any notice to the effect or has any reason to believe that there will be any cancellation or adverse modification to any Customer Contract or Supplier Contract. To the knowledge of the Corporation, there is at present no state of facts or rate of progress concerning any such obligations which, if it continued, would result in a default or breach of any Customer Contract or Supplier Contract.
	(e)		Except as disclosed in Section 4.20(e) of the Disclosure Schedule, in the event of the termination of, or failure of the licensor or supplier to perform, any Supplier Contract, alternative sources of supply for the products and services previously supplied under such Supplier Contract are readily available on commercially reasonable terms.

4.21 Description of Business Intellectual Property

Section 4.21 of the Disclosure Schedule contains a complete and accurate list of all Intellectual Property and Technology that the Corporation and/or one or more of the Subsidiaries owns, uses or has the right to use in the conduct of its Business and that is individually or in the aggregate material to the conduct of the Business or the loss of which could reasonably be expected to result in a Material Adverse Effect. The listing set forth in Section 4.21 of the Disclosure Schedule specifies, for each item, whether such listed Intellectual Property or Technology is owned by the Corporation or one of the Subsidiaries (“Owned IP”) or whether such listed Intellectual Property or Technology is used by the Corporation or the Subsidiaries under a Contract with another Person (“Licensed IP”), and:

	(i)		in the case of the Owned IP that is Registered IP, contains a list of all the jurisdictions in which such Intellectual Property has been issued or registered or in which an application for such issuance and registration has been filed (including abandoned or rejected applications), including the respective registration or application numbers and the names of all registered owners; and
	(ii)		in the case of the Licensed IP, sets forth all Contracts entered into in connection with the Licensed IP.

The Owned IP and Licensed IP (collectively referred to herein as the “Business IP”) listed in Section 4.21 of the Disclosure Schedule constitutes all of the Intellectual Property and Technology necessary to carry on the Business as presently conducted and as proposed to be conducted by the Corporation and the Subsidiaries.

True and complete copies of each Contract listed in Section 4.21 of the Disclosure Schedule with respect to the Licensed IP have been made available to the Investors or counsel for the Investors.

4.22 Intellectual Property Rights

	(a)		Except as disclosed in Section 4.22(a) or Section 4.22(g) of the Disclosure Schedule, the Corporation or one of the Subsidiaries owns all right, title and interest in and to the Owned IP free and clear of any Liens and Encumbrances and, to the knowledge of the Corporation, has sole and exclusive rights (and is not contractually obligated to pay any compensation to any other Person in respect thereof) to the use thereof or the material covered thereby. Except as disclosed in Section 4.22(a) of the Disclosure Schedule, no portion of the Owned IP was jointly developed or is jointly owned by any other Person. Other than with respect to the Licensed IP and the Commercial Software Licenses, no royalties or other amounts are required to be paid by the Corporation or any Subsidiary in connection with the continued use or exploitation by the Corporation or the Subsidiaries of the Business IP.
	(b)		The Corporation or one of the Subsidiaries has valid and subsisting rights to use and exploit the Licensed IP in the manner currently used or required by the operation of the Business as currently carried on and proposed to be carried on. Each Contract with respect to the Licensed IP is valid and subsisting and in good standing and there is no material default thereunder. The Corporation or one of the Subsidiaries has the right to exploit, sell, license and sub-license the Licensed IP incorporated in or distributed with any existing products and/or products under development to the current and/or proposed distributors, purchasers and end-users thereof. Alternative sources of supply for the Licensed IP are available on commercially reasonable terms.
	(c)		Except as disclosed in Section 4.22(c) of the Disclosure Schedule, none of the Owned IP nor any service rendered by the Corporation or any of the Subsidiaries, nor any product or service currently developed, manufactured, produced, marketed, or sold by the Corporation or the Subsidiaries:

	(i)		to the knowledge of the Corporation, infringes upon the Patent or Trade-▇▇▇▇ rights of any other Person;
	(ii)		infringes upon the Copyright, Domain Name, IC Topography, or Industrial Design rights of any other Person; or
	(iii)		to the knowledge of the Corporation, uses, is derived from or otherwise incorporates any trade secrets or confidential information of any other Person, without such Person’s authorization.

Except as disclosed in Section 4.22(c) of the Disclosure Schedule, to the best of the Corporation’s knowledge, neither the Corporation or any of the Subsidiaries has currently received any charge, complaint, Claim, demand, or notice alleging any interference, infringement, misappropriation or violation with respect to any Business IP (including any claim that the Corporation and/or any Subsidiary must obtain a license or refrain from using any such Business IP), nor does the Corporation know of any valid grounds for any bona fide claims.

	(d)		Except as disclosed in Section 4.22(d) of the Disclosure Schedule, neither the Corporation nor any Subsidiary is a party to or bound by any Contract that limits or impairs its ability to use, sell, transfer, assign, commercially exploit or convey the Owned IP.
	(e)		To the knowledge of the Corporation the Owned IP is not subject to any outstanding Lien, judgment, ruling, order, writ, decree, stipulation, injunction or determination by or with any Governmental Authority, nor is there (or has there been) any pending or, to the knowledge of the Corporation threatened, Legal Proceeding relating to any Owned IP or the ownership, use, enforceability or validity thereof (including any interference, reissue, re-examination or opposition proceeding or proceeding contesting the rights of the Corporation or any Subsidiary to any Owned IP which is Registered IP).
	(f)		Except as disclosed in Section 4.22(f) of the Disclosure Schedule, to the knowledge of the Corporation, there is no unauthorized use, infringement or misappropriation of any Owned IP by any other Person and neither the Corporation nor any of the Subsidiaries has covenanted or agreed with any Person not to ▇▇▇ or otherwise enforce any legal rights with respect to any of the Business IP.
	(g)		Section 4.22(g) of the Disclosure Schedule lists all Contracts entered into by the Corporation or a Subsidiary (other than Contracts between the Corporation or a Subsidiary and end users of their products or services entered into in the ordinary course of business) under which any Person has been granted a license by the Corporation or a Subsidiary with respect to any Business IP, and specifies for each such Contract whether the licenses granted are exclusive or non-exclusive in nature. Except as disclosed in Section 4.22(g) of the Disclosure Schedule, neither the Corporation nor any Subsidiary is bound by, nor has any obligation to enter into, any Contract (other than Contracts entered into in the ordinary course of business) that requires the Corporation or any Subsidiary to transfer or assign any of its rights in the Business IP to any other Person.
	(h)		The Owned IP which is Registered IP has not been used or enforced, or failed to be used or enforced, in a manner that would result, as of the date hereof, in the non-renewal, expiration, modification, abandonment, cancellation or unenforceability thereof. All presently required filing, examination and maintenance fees have been paid and all proofs of working or use have been filed in respect to the Owned IP which is Registered IP (excluding any abandoned or rejected applications set out in Section 4.22(h) of the Disclosure Schedule). The Corporation has obtained valid patent assignments from each of the inventors of the Patents that are comprised in the Owned IP. Except as disclosed in Section 4.22(h) of the Disclosure Schedule, to the knowledge of the Corporation, there is no state of facts which casts doubt on the validity or enforceability of any of the Owned IP.
	(i)		The Corporation and the Subsidiaries have each taken all commercially reasonable steps (including measures to protect secrecy and confidentiality) to protect such company’s right, title and interest in and to all Business IP. All

			agents and representatives of the Corporation and the Subsidiaries who have or have had access to confidential or proprietary information of the Corporation and the Subsidiaries have a legal obligation of confidentiality to the Corporation with respect to such information.
	(j)		Except as disclosed in Section 4.22(j) of the Disclosure Schedule, all of the Owned IP, other than that acquired from third parties, was developed by full-time employees or contractors of the Corporation or a Subsidiary during the time they were employed or engaged with the Corporation or one of the Subsidiaries or predecessors of the Corporation or one of the Subsidiaries as software, information technology or hardware developers or related or supporting roles (the “Developers”). All of the Developers and other current or former employees or contractors of the Corporation and each of the Subsidiaries have duly executed and delivered Employee IP Agreements to the Corporation or a Subsidiary, as the case may be, on or before the date of commencement of their respective employment or engagement with the Corporation or a Subsidiary, as the case may be, pursuant to which they: (A) have agreed to retain in confidence any confidential or proprietary information provided or otherwise made available to them by the Corporation or any Subsidiary (including confidential or proprietary information of the third parties to whom the Corporation or any Subsidiary owes a duty of confidence); (B) have granted, assigned and transferred to the Corporation or one the Subsidiaries or predecessors of the Corporation or one of the Subsidiaries all of their right, title and interest in and to all Intellectual Property and Technology developed, conceived of, reduced to practice, authored or otherwise created by them during the course of their engagement with the Corporation or a Subsidiary; and (C) except as disclosed in Section 4.22(j) of the Disclosure Schedule, have irrevocably and unconditionally waived all moral rights and other non-assignable rights in respect of such Intellectual Property and Technology where applicable. The Corporation is not aware of any material breach of any of the Employee IP Agreements. No current or former employee or contractor of the Corporation or any Subsidiary owns, or to the knowledge of the Corporation, has claimed an interest in, any of the Business IP. Except as disclosed in Section 4.22(j) of the Disclosure Schedule, it will not be necessary to utilize any Intellectual Property or Technology of any current of former employees of or contractors to the Corporation or any Subsidiary (or any Person the Corporation or any Subsidiary currently intends to hire or engage) acquired prior to their employment or engagement by the Corporation or a Subsidiary in order to carry on the Business as presently conducted, or as anticipated to be conducted. There are no Legal Proceedings pending, or to the knowledge of the Corporation threatened, involving the prior employment of any of the employees or contractors of the Corporation or any Subsidiary, or their use in connection with the Business of the Corporation of any information, creation or technique allegedly proprietary to any of their former employers or other Persons.
	(k)		Except to obtain patent or other Intellectual Property protection, any disclosure of confidential or proprietary information by the Corporation, any of the Subsidiaries or any of their respective employees or agents has been pursuant to valid, binding and enforceable non-disclosure agreements, which non-disclosure agreements

			have not and will not result in the deemed acquisitions by any party of any right, title or interest, or the deemed grant of any license, to use any of the Owned IP for any commercial purposes. To the knowledge of the Corporation, no disclosure of the Owned IP has been made in a manner that would prevent the Corporation or a Subsidiary or their respective successors in interest, if any, from obtaining a patent in respect of any Owned IP that would, if not for such disclosure, have been capable of being the subject matter of a Patent. In relation to each Patent application (in preparation or filed) or Patent for an invention comprised in the Owned IP, to the Corporation’s knowledge, after due inquiry, there is no professional opinion, such as the opinion of a patent agent or patent attorney, whether preliminary in nature or in any other manner qualified, to the effect that the chances of obtaining or sustaining valid Patent rights to the invention in any jurisdiction are considered to be unlikely, or less than even, or about even, or in any other manner doubtful.
	(l)		Except as disclosed in Section 4.22(1) of the Disclosure Schedule, no Governmental Authority, national, federal, provincial, state or other regulatory agency or body has provided any funding to the Corporation or any Subsidiary which: (i) would give such Governmental Authority, national, federal, provincial, state or other regulatory agency or body any right, title or interest in or to the Business IP; or (ii) limits or impairs the ability of the Corporation or any Subsidiary to use or to sell, transfer, assign, convey or license the Business IP outside of Canada or otherwise.
	(m)		Neither the Corporation nor any Subsidiary has used Publicly Available Software in whole or in part in the development of any Technology which forms part of the Owned IP in a manner that may subject such Technology or Owned IP in whole or in part, to all or part of the license obligations of any Publicly Available Software. “Publicly Available Software” means any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed pursuant to a licensing and distribution model that requires, as a condition of use, modification, and/or distribution of such software, that such software or other software incorporated into, derived from, or distributed with such software be: (A) disclosed or distributed in source code form; (B) licensed for the purpose of making derivative work; or (C) redistributable at no or minimal charge. Publicly Available Software includes, without limitation, software licensed or distributed under any of the following licenses or distribution models similar to any of the following: (i) GNU General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g. PERL); (iii) the Mozilla Public License; (iv) the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the Sun Industry Source License (SISL); and (vii) the Apache Server License.
	(n)		Except as disclosed in Section 4.22(n) of the Disclosure Schedule, neither the Corporation nor any Subsidiary has provided the source code for the software comprised in the Owned IP to any other Person, directly or indirectly, by license, transfer, sale, escrow, or otherwise, except in the ordinary course of business and subject to appropriate license or confidentiality restrictions. Neither the Corporation nor any Subsidiary is aware that any other Person has reverse

			engineered, disassembled or decompiled the software comprised in the Owned IP to derive such source code.
	(o)		The Corporation and each Subsidiary has complied with all applicable export and import laws and regulations in each jurisdiction in which the Corporation or a Subsidiary export or import Business IP.

4.23 Litigation

Except as disclosed in Section 4.23 of the Disclosure Schedule, (i) there is no material Legal Proceeding against or involving the Corporation or any of the Subsidiaries (whether in progress or, to the knowledge of the Corporation, threatened); (ii) to the knowledge of the Corporation, no event has occurred which could reasonably be expected to give rise to any material Legal Proceeding, or result in litigation; and (iii) there is no material judgment, writ, decree, injunction, rule, award or order of any court, Governmental Authority, arbitrator or similar body outstanding against the Corporation or any of the Subsidiaries. Except as disclosed in Section 4.23 of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries is the plaintiff or complainant in any material Legal Proceeding. The Corporation and its Subsidiaries are not and have not been since the Financial Statement Date engaged in any material dispute with any of its Insiders. No shareholders of the Corporation have exercised or asserted, or to the knowledge of the Corporation, have expressed any intent to exercise or assert, any right of dissent or any oppression or other statutory remedy in connection with the Articles of Amendment or the other transactions contemplated by this Agreement.

4.24 Insurance

Section 4.24 of the Disclosure Schedule lists the policies of theft, fire, liability, worker’s compensation, life, property and casualty, directors’ and officers’, and other insurance owned or held by the Corporation or the Subsidiaries. Such policies of insurance are of the kinds and cover such risks, and are in such amounts and with such deductibles and exclusions, as are consistent with prudent business practice for owners of comparable assets and operators of comparable businesses. To the knowledge of the Corporation, all such policies are, and at all times since the respective dates set forth in Section 4.24 of the Disclosure Schedule, have been, in full force and effect, are sufficient for compliance in all material respects by the Corporation and the Subsidiaries with all requirements of law and of all Contracts (including Contracts relating to Indebtedness) to which the Corporation or any of the Subsidiaries is party, and provide that they will remain in full force and effect through the respective expiry dates set forth in Section 4.24 of the Disclosure Schedule, and will not terminate or lapse or otherwise be affected in any way by reason of the transactions contemplated hereby. Section 4.24 of the Disclosure Schedule sets forth and describes all material pending claims under any of such insurance policies. No notice of cancellation or non-renewal with respect to, or disallowance of any claim under, any of such insurance policies has been received by the Corporation or a Subsidiary. To the knowledge of the Corporation, there are no circumstances or occurrences which would or might form the basis of a material increase in premiums for the current insurance coverage maintained by the Corporation or a Subsidiary.

4.25 Insiders and Conflicts of Interest

	(a)		Except as contemplated by this Agreement, the Existing Shareholders Agreement and the Other Agreements, there are no Contracts between the Corporation or any of the Subsidiaries and any Insiders other than contracts of employment entered into in the ordinary course and those disclosed in Section 4.19 (d) or Section 4.25(a) of the Disclosure Schedule.
	(b)		Except as disclosed in Section 4.25(b) of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries has any currently outstanding material amounts due to or from any of its Insiders.
	(c)		Except as set out in Section 4.25(c) of the Disclosure Schedule, neither the Corporation nor any of the Subsidiaries owns, directly or indirectly, any interest (except passive holdings for investment purposes only of not more than 1% of the securities of any publicly held and traded company) in, or is an Insider of, any Person (other than any Subsidiary) that:

	(i)		is a competitor, lessor, lessee, customer, or supplier of the Corporation or any of the Subsidiaries;
	(ii)		owns, directly or indirectly, any interest in any tangible or intangible property used in or necessary to the Business; or
	(iii)		has any cause of action or other Claim whatsoever against the Corporation or any of the Subsidiaries, or owes any amount to the Corporation or any Subsidiary, except for Claims in the ordinary course of business, such as for accrued vacation pay, accrued benefits under employee benefit plans, and similar matters and agreements.

(d)

To the knowledge of the Corporation, no director or officer of the Corporation has been involved in any Legal Proceeding, offence or disciplinary action that would disqualify, or could reasonably be expected to disqualify, such person from acting as a director or officer of a public company.

4.26 Brokers

Other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Genuity Capital Markets G.P. and any subagent thereof, no finder, broker, agent, or other intermediary has acted for or on behalf of the Corporation or any of its Affiliates in connection with the negotiation or consummation of the transactions contemplated hereby to be completed at the Closing and, other than commission owing to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Genuity Capital Markets G.P. in connection with the Merger and Debt Financing, no fee will be payable by the Corporation or any of its Affiliates to any such Person in connection with such transactions. The Corporation has delivered or made available to the Investors true and correct copies of the engagement letters with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Genuity Capital Markets G.P. entered into in connection with the Merger and Debt Financing.

4.27 No Sale Agreements

Except in respect of inventory to be sold in the ordinary course of business, there are no Contracts, or any right or privilege capable of becoming an agreement, for the purchase of the Business or any of the material assets of the Corporation or any Subsidiary. Neither the Corporation nor any of the Subsidiaries is currently involved in any discussions, conditions or proceedings with respect to its sale, merger, consolidation, liquidation or reorganization.

4.28 Compliance with Other Instruments, Laws, Etc.

Except as disclosed in Section 4.28 of the Disclosure Schedule, the Corporation and each of the Subsidiaries has complied with, and is in compliance with: (i) all laws, statutes, governmental regulations, judicial or administrative tribunal orders, judgments, writs, injunctions, decrees, and similar commands applicable to it and its Business, and all unwaived terms and provisions of all Contracts, agreements, instruments, and commitments to which it is a party or to which it or any of its assets or properties is subject, except for any non-compliances that, both individually and in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect; and (ii) its articles and by-laws, each as amended to date. Neither the Corporation nor any of the Subsidiaries has committed, been charged with, or, to the knowledge of the Corporation, been under investigation with respect to, any violation by the Corporation or any of the Subsidiaries of any provision of any applicable national, federal, state, provincial, foreign, or local law or administrative regulation, except for any violations that, both individually or in the aggregate, do not and could not reasonably be expected to have a Material Adverse Effect. The Corporation and each of the Subsidiaries has complied in all material respects with all applicable laws, statutes, governmental regulations, judicial or administrative tribunal orders, judgments, writs, injunctions, decrees, and similar commands, including without limitation, the Personal Information Protection and Electronic Documents Act (Canada), regarding the Corporation’s and the Subsidiaries’ collection, use and disclosure of information about identifiable individual Persons. The Corporation and each of the Subsidiaries has and maintains all such Permits as are necessary or desirable: (i) for the conduct of the Business as conducted on the date hereof and as anticipated to be conducted; (ii) in connection with the ownership or use of its properties; or (iii) to permit the Corporation to enter into or perform its obligations under this Agreement and the Other Agreements. All of such Permits are in full force and effect and the Corporation and each Subsidiary is in compliance with all of the terms and provisions thereof, except for any non-compliance that, either individually or in the aggregate, does not and could not reasonably be expected to have a Material Adverse Effect. No Legal Proceeding is pending, or to the knowledge of the Corporation threatened, with respect to the cancellation or revocation of any such Permit. True and complete copies of all such Permits have been made available by the Corporation to the Investors or their counsel for inspection.

4.29 Merger Agreement

The Corporation has provided to Investors a true correct and complete copy of the Merger Agreement and all documents executed and delivered in connection therewith. To the knowledge of the Corporation after reasonable investigation, all representations and warranties contained in the Merger Agreement were true and correct when made and are true and correct as if made on the Closing Date.

4.30 Compliance with Securities Law

Subject to and assuming the accuracy of the representations and warranties given by the Investors in Article V, the offer, issuance, and delivery of the Purchased Shares and the Common Shares issuable upon conversion of the Purchased Shares, both, as contemplated by this Agreement, are exempt from the registration requirements of the Securities Act, and are exempt from the prospectus, registration and/or qualification requirements, as applicable, under any applicable states’ securities laws and are exempt from the prospectus and registration requirements under Canadian Securities Laws.

4.31 Full Access

The Investors and their representatives have had full and open access to the management of the Corporation and to such other information as the Investors have requested in considering its decision with respect to the Investment and has had an opportunity to ask questions with respect to the business and affairs of the Corporation and the Investment. The Corporation has complied in good faith with all requests of the Investors and their representatives for documents and information relating to the Corporation, the Subsidiaries and the Business in connection with the transactions contemplated hereby, and has not failed to deliver any available document or other information requested by the Investors or their representatives in connection herewith.

4.32 Disclosure

The Corporation has disclosed to the Investors all facts known to it relating to the Business and assets of the Corporation and the Subsidiaries which could reasonably be expected to be material to a purchaser of the Purchased Shares. No representation or warranty by the Corporation contained in this Agreement or any agreement or instrument contemplated hereby, including the Other Agreements, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not false or misleading. To the knowledge of the Corporation, there is no fact or circumstance relating specifically to the Business or condition of the Corporation and the Subsidiaries, taken as a whole, that could reasonably be expected to result in a Material Adverse Effect and that is not disclosed in this Agreement or the Disclosure Schedule.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

Each Investor, severally and not jointly, represents and warrants to the Corporation as of Closing as follows, and acknowledges that the representations and warranties contained in this Agreement are made by it with the intent that they may be relied upon by the Corporation in determining the Investor’s eligibility to purchase the Purchased Shares and Warrants.

5.1 No Public Sale or Distribution

Such Investor is (i) acquiring the Purchased Shares and Warrants set forth in Schedule A and (ii) upon conversion of the Purchased Shares and Warrants, will acquire the Common Shares for its own account for investment purposes only and not for the benefit of any other person and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of provincial, state or federal securities Laws in Canada or the United States.

5.2 Accredited Investor Status

Such Investor is an “accredited investor” as defined in National Instrument 45-106.

Such Investor is not an entity formed for the sole purpose of acquiring the Securities. Such investor will provide a declaration to the Corporation with respect to its accredited investor status in a form acceptable to the Corporation.

5.3 U.S. Accredited Investor Status

Such Investor is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act pursuant to one of the categories below:

	(a)		Any bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Exchange Act; any insurance company as defined in Section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of US$5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total asset sin excess of US$5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
	(b)		Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
	(c)		Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000;
	(d)		Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person, being defined as a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment;
	(e)		Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds US$1,000,000. As used

			herein, the term “net worth” means the excess of total assets over total liabilities, in computing net worth, the principal residence of the investor must be valued at cost, including cost of improvements, or at recently apprised value by an institutional lender making a secured loan, net of encumbrances. In determining income, an investor should add to adjusted gross income any amount attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to an ▇▇▇ or ▇▇▇▇▇ retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income;
	(f)		Any natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
	(g)		Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; or
	(h)		Any entity in which all of the equity owners are Accredited Investors as set forth above.

5.4 Reliance on Exemptions.

Such Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from (i) the registration requirements of United States federal and state securities laws and (ii) the prospectus and registration requirements of Canadian Securities Laws and that the Corporation is relying upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

5.5 No General Solicitation or Advertising

Such Investor acknowledges that it is not purchasing the Securities as a result of any general solicitation or general advertising, as such terms are used in Rule 502(c) of Regulation D under the Securities Act, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

5.6 Information

Such Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Corporation and materials relating to the offer and sale of the Securities which have been requested by such Investor. Such Investor and its advisors, if any, have been afforded the opportunity to ask questions of, and receive answers from, the Corporation. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors, if any, or its representatives shall modify, amend or affect such

Investor’s right to rely on the Corporation’s representations and warranties contained herein. Such Investor understands that its investment in the Securities involves a high degree of risk and is able to bear the economic risk of a loss of all of such investment. Such Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Securities and has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

5.7 No Governmental Review

Such Investor understands that no United States or Canadian federal, state or provincial agency or any other Governmental Authority has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

5.8 Transfer or Resale

Such Investor understands that: (i) except as provided in the Registration Rights Agreement, the Securities have not been and will not be registered under the Securities Act or any state securities laws or qualified under Canadian Securities Laws; and (ii) such Investor understands and acknowledges that the Securities are “restricted securities” within the meaning of Rule 144 under the Securities Act, and such Investor agrees that if it decides to offer, sell or otherwise transfer any of the Securities, such Securities may be offered, sold or otherwise transferred only: (A) pursuant to an effective registration statement under the Securities Act; (B) to the Corporation; (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act (“Regulation S”) and in compliance with local laws; or (D) within the United States (1) in accordance with the exemption from registration under the Securities Act provided by (i) Rule 144 or (ii) Rule 144A thereunder, if available, and in compliance with any applicable state securities laws or (2) in a transaction that does not require registration under the Securities Act or applicable state securities laws, and the seller shall, in the case of transfers pursuant to D(1)(i) or D(2) above, be required to furnish to the Corporation an opinion to such effect from counsel of recognized standing reasonably satisfactory to the Corporation prior to such offer, sale or transfer.

5.9 Legends

Such Investor understands that upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of the Securities Act or applicable state or provincial securities laws, the certificates or other instruments representing the Purchased Shares and, unless no longer applicable at the time of issuance, the Common Shares, and all certificates or other instruments issued in exchange therefor or in substitution thereof, shall bear the following legend:

“UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF SHALL NOT TRADE SUCH SECURITIES BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (I) AUGUST 16, 2007, AND (II) THE DATE

THE CORPORATION BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF MITEL NETWORKS CORPORATION (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; (B) TO THE CORPORATION; (C) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS; OR (D) WITHIN THE UNITED STATES (1) IN ACCORDANCE WITH AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, SUCH AS THAT PROVIDED BY (I) RULE 144 OR (II) RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR (2) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, AND THE SELLER SHALL, IN THE CASE OF TRANSFERS PURSUANT TO D(1)(1) OR D(2) ABOVE, BE REQUIRED TO FURNISH TO THE CORPORATION AN OPINION TO SUCH EFFECT FROM COUNSEL OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION PRIOR TO SUCH OFFER, SALE OR TRANSFER.

SUBJECT TO THE EXPIRATION OF THE PERIOD DESCRIBED IN THE FIRST PARAGRAPH OF THIS LEGEND, AND PROVIDED THAT THE CORPORATION IS A “FOREIGN ISSUER” WITHIN THE MEANING OF REGULATION S OF THE SECURITIES ACT, A NEW CERTIFICATE, BEARING NO LEGEND MAY BE OBTAINED FROM THE REGISTRAR AND TRANSFER AGENT FOR THESE SECURITIES (THE “TRANSFER AGENT”) UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, THE TRANSFER AGENT MAY ALSO REQUIRE AN OPINION OF COUNSEL IN CONNECTION WITH ANY OFFER, SALE, PLEDGE OR TRANSFER OF THE SECURITIES BY THE HOLDER HEREOF.”

provided, that if the Securities are being sold under Section 5.8(ii)(C) above, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the second and third paragraphs of the legend above may be removed by providing a declaration to the registrar and transfer agent for the Securities (the “Transfer Agent”), as set forth below (or

as the Corporation may from time to time prescribe) and, if required by the Transfer Agent, an opinion of counsel of recognized standing satisfactory to the Transfer Agent, that such legend is no longer required under applicable requirement of the Securities Act or U.S. state securities laws;

“The undersigned (a) acknowledges that the sale of the securities of Mitel Networks Corporation (the “Corporation”) to which this declaration relates is being made in reliance on Rule 904 of Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “Securities Act”) and (b) certifies that (1) it is not an affiliate (as defined in Rule 405 under the Securities Act) of the Corporation (except for any officer or director who is an affiliate solely by virtue of holding such position), (2) the offer of the securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States, or (B) the transaction was executed on or through the facilities of the Toronto Stock Exchange, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any “directed selling efforts” (as such term is defined in Regulation S) in the United States in connection with the offer and sale of the securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the Securities Act), (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S, with fungible unrestricted securities, and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the Securities Act. Terms used herein have the meanings given to them by Regulation S.”

and provided, further, that, if any of the Securities are being sold under Section 5.8(ii)(D)(1)(i) or (D)(ii) above, the second and third paragraphs of the legend above may be removed by delivery to the Transfer Agent of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, that such legend is no longer required under applicable requirements of the Securities Act or U.S. state securities laws.

5.10 Consent

Such Investor consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Common Shares in order to implement the restrictions on transfer set forth and described herein.

5.11 Foreign Issuer

Such Investor understands and acknowledges that the Corporation (i) is not obligated to remain a “foreign issuer” within the meaning of Regulation S under the Securities Act, (ii) may not, at the time the Securities are resold or converted by such Investor, or at any other time, be a foreign issuer; and (iii) may engage in one or more transactions which could cause the Corporation to not be a foreign issuer.

5.12 Compliance with Transfer Restrictions

The Transfer Agent will not be required to accept the registration of transfer of any Securities, except upon presentation of evidence satisfactory to the Corporation that the applicable transfer restrictions have been complied with.

5.13 Filings

If required by applicable securities legislation, regulatory policy or order, or if required or requested by any securities commission, stock exchange or other regulatory authority, at the request of and at the sole expense of the Corporation, such Investor will execute, deliver and file and otherwise assist the Corporation in filing customary reports, questionnaires, undertakings and other documents with respect to the issue of the Securities.

5.14 Validity; Enforcement

This Agreement, the Registration Rights Agreement and the Shareholders Agreement have been duly and validly authorized, executed and delivered on behalf of such Investor and constitute the legal, valid and binding obligations of such Investor enforceable against such Investor in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except that the enforcement of any rights to indemnity and contribution in the Registration Rights Agreement may be limited by federal, provincial and state securities laws and the principles of public policy underlying those laws.

5.15 Residency

For purposes of securities Laws, such Investor is a resident of that jurisdiction specified below its address in Schedule D.

5.16 No Representations Regarding Resale

Except as provided in the Registration Rights Agreement, no Person has made any written or oral representation to such Investor:

	(a)		that the Person will resell or repurchase the Securities;
	(b)		that any Person will refund the purchase price of such Securities;
	(c)		as to the future price or value of such Securities; or
	(d)		that such Securities will be listed on any stock exchange or that application has been or will be made to list such Purchased Shares upon any stock exchange.

5.17 Adverse Actions

To the knowledge of such Investor, neither the Investor nor any Person who

(i)

is owned or controlled by the Investor;

	(ii)		owns or controls the Investor; or
	(iii)		is owned or controlled by a Person that also owns or controls the Investor

is currently engaged in, or has any intention to initiate, any litigation or quasi-judicial proceeding involving any patents of Avaya Inc. or any of its subsidiaries. In this section, a Person owns or controls a second Person if the first Person owns or controls at least 35% of the votes or equity of the second Person or if the first Person has the right to elect a majority of the board of directors of the second Person.

ARTICLE VI
REGISTRATION AND TRANSFER OF SECURITIES

6.1 Transfer and Exchange of Purchased Shares

The Corporation shall maintain at its registered office a register in which shall be entered the names and addresses of the holders of the Corporation’s shares and the particulars of the respective shares held by them and of all transfers of shares or conversions of shares. Upon surrender at such office of any certificate representing shares for registration of conversion, exchange, or transfer (subject to compliance with the applicable provisions of this Agreement, the Shareholders Agreement, any of the Other Agreements and the Corporation’s Articles of Incorporation), the Corporation shall issue, at its expense, one or more new certificates, in such denomination or denominations as may be requested, for such shares registered as such holder may request. Any certificate representing shares surrendered for registration of transfer shall be duly endorsed, or accompanied by a written instrument of transfer duly executed by the holder of such certificate or his attorney duly authorized in writing.

6.2 Replacement of Certificates

In the case of any loss, theft, destruction, or mutilation of the certificate representing any of the Purchased Shares, upon receipt of evidence thereof reasonably satisfactory to the Corporation, and (i) in the case of any such loss, theft, or destruction, upon delivery of an indemnity bond or agreement in such reasonable amount as the Corporation may determine, or (ii) in the case of any such mutilation, upon the surrender to the Corporation at its principal office of such mutilated certificate for cancellation, the Corporation shall execute and deliver, in lieu thereof, new certificates. Any old certificate in lieu of which any such new certificate has been so executed and delivered by the Corporation shall not be deemed to be outstanding for any purpose whatsoever.

6.3 Share Subscription Agreement

The Corporation will not amend this Agreement or the Merger Agreement without the prior written consent of Francisco Partners.

ARTICLE VII
COVENANTS OF THE CORPORATION

7.1 Pre-Closing Covenants.

The Corporation covenants and agrees with the Investors that it will promptly seek to obtain any legal or regulatory approvals required by it to consummate the Investment and the transactions contemplated herein.

7.2 Post-Closing Covenants

The Corporation covenants and agrees with the Investors as follows, which covenants and agreements shall survive the Closing:

(a)

The Corporation hereby agrees that it shall use the proceeds from the sale of the Purchased Shares hereunder as follows:

	(i)		to pay any amounts required to be paid under the Fee Letter and expenses under Section 8.1; and
	(ii)		the remainder of the proceeds of the Investment shall be applied to consummate the Merger and Restructuring Transactions.

	(b)		Neither the Corporation nor anyone acting on its behalf will hereafter offer to sell, solicit offers to buy, or sell any securities of the Corporation so as to subject the offer, issuance, and sale of the Purchased Shares, the Warrants or the Converted Shares to the registration requirements of the Securities Act or the prospectus, registration and/or qualification requirements, as applicable, under any applicable state securities laws or under applicable Canadian Securities Laws.
	(c)		If the Corporation is not required to file with the SEC quarterly and annual reports pursuant to Section 13 or Section 15(d) of the Exchange Act (it being understood that the Corporation will not be required to make voluntary filings), the Corporation will furnish to the holders of the Class 1 Preferred Shares (a) non-audited financial statements (and management, discussion and analysis) within 90 days after the end of each Corporation fiscal quarter (except year-end), and (b) audited financial statements (and management discussion and analysis) within 90 days after the Corporation’s fiscal year end.
	(d)		The Corporation agrees to provide, and to cause each of its Subsidiaries to provide such information as any Investor shall reasonably request, on a timely basis, (including making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder), in connection with the preparation or filing of any Tax Return and any audit, litigation, refund claim, dispute or any other matter in respect of Taxes. Such cooperation and information shall include, without limitation, promptly providing upon request copies of all relevant financial statements of the Corporation or its Subsidiaries as at the close of the Investors tax year, any Tax Returns of the Corporation or its Subsidiaries together with accompanying

schedules and related workpapers, documents relating to rulings or other determinations by Tax authorities, including, without limitation, foreign Tax authorities, and records concerning the ownership and Tax basis of property, which the Corporation or its Subsidiaries may possess.

ARTICLE VIII
EXPENSES

8.1 Reimbursement of Expenses

The Corporation shall pay or reimburse to the Investors, or such other Person as the Investors may direct, as applicable, all reasonable: (i) legal fees; (ii) professional fees and disbursements; (iii) filing fees (including in respect of any filings required under competition laws); and (iv) out of pocket costs (including any applicable Taxes thereon, other than Taxes in respect of which the Investors are entitled to obtain a refund from the relevant Tax authority and which would result in the Investors being reimbursed for more than its actual out-of-pocket expenses) incurred by or for the account of the Investors in connection with the transactions contemplated by this Agreement (the “Expenses”). The Expenses shall be paid on the Closing. At the request of the Corporation, the Investors will arrange, where reasonably practicable, for certain of the Expenses to be invoiced directly to the Corporation by the Person to whom payment is to be made.

8.2 Broker Fees

The Investors shall not be liable for any brokerage commission, finder’s fee or other similar payment in connection with the transactions contemplated hereby because of any action taken by, or agreement or understanding reached by, the Corporation or any its Affiliates or Insiders.

8.3 Put Option

Notwithstanding anything to the contrary in any other provision of this Agreement or the Articles of Amendment, at the time of any Liquidation Event or Change of Control Event (as defined in the Articles of Amendment) or any event that would result in a redemption under Article 7 of the Articles of Amendment of all or part of their Class 1 Shares, the Corporation shall, if requested in writing at least 10 days prior to that time by one or more holders of record of Class 1 Shares who hold collectively more than 10% of the outstanding Class 1 Shares, provide the requesting holders of Class 1 Shares with the option of transferring such Class 1 Shares to a controlled Affiliate of the Corporation in exchange for consideration per Class 1 Share equal to the TR Value (as defined in the Articles of Amendment) or in the case of a redemption at the election of the Class 1 Majority Holders (as defined in the Articles of Amendment) after the Redemption Trigger Date (as defined in the Articles of Amendment) but before the seventh anniversary from the Original Issuance Date (as defined in the Articles of Amendment), the NA Value (as defined in the Articles of Amendment), prior to any redemption of such Class 1 Shares; provided, however, that the Corporation shall have no obligation to do so if, acting reasonably, it determines that providing such option is not permissible under applicable Canadian federal corporate law. The requesting holders shall promptly indemnify the Corporation for any losses, costs and expenses of the Corporation associated with providing this option (including reasonable legal fees and disbursements).

8.4 Withholding

Any and all payments made by the Corporation of dividends or distributions (including deemed dividends, distributions, or the exercise by the Corporation of its rights of first refusal pursuant to Section 6.2 of the Shareholders Agreement) in respect of the Class 1 Shares shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto. If the Corporation is required by law to deduct or withhold any taxes from or in respect of any amount payable in respect of the Class 1 Shares to any holder of Class 1 Shares, (i) the sum payable shall be increased by the Corporation as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.4) such holder of Class 1 Shares shall receive an amount equal to the sum such holder would have received had no such withholding or deduction been made, (ii) the Corporation shall timely pay directly to the relevant authority in accordance with applicable law the full amount required to be so withheld or deducted; and (iii) the Corporation shall promptly forward to each holder of Class 1 Shares an official receipt or other documentation (or copy thereof) reasonably satisfactory to such holder of Class 1 Shares evidencing such payment to such authority. Notwithstanding anything else in this Section 8.4, the Corporation shall not be obligated to pay any amount pursuant to this Section 8.4 to a holder of Class 1 Shares in excess of 5% of the amount of the dividend or distribution paid to such holder.

ARTICLE IX
INDEMNIFICATION

9.1 Non-Merger and Exclusive Remedy

	(a)		The representations, warranties, covenants and other obligations of the Corporation contained in this Agreement and each of the Other Agreements shall not merge on the Closing and, notwithstanding the Closing or any investigation made by the Investors or their agents with respect thereto, shall continue in full force and effect for the benefit of the Investors, each holder of Purchased Shares, and all Permitted Transferees holding any Purchased Shares (but limited in the case of Permitted Transferees to the amounts in respect of which the original holder of such Purchased Shares would be entitled to indemnification under this Article IX). All claims by the Investors, each holder of Purchased Shares, and all Permitted Transferees holding any Purchased Shares in respect of such representations, warranties, covenants and obligations shall be subject to the conditions and limitations set forth in this Article IX and the rights of indemnity in this Article IX shall be the sole and exclusive remedy of such Persons in respect of such claims, except for breach of covenant, fraud, intentional breach or equitable remedies.
	(b)		The representations, warranties, covenants and other obligations of Investors which are contained in this Agreement and each of the Other Agreements shall not merge on the Closing and, notwithstanding the Closing or any investigation made by the Corporation or its agents with respect thereto, shall continue in full force and effect for the benefit of the Corporation. All claims by the Corporation after Closing in respect of such representations, warranties, covenants and obligations shall be subject to the conditions and limitations set forth in this

Article IX and the rights of indemnity in this Article IX shall be the sole and exclusive remedy of the Corporation in respect of such claims.

9.2 General Indemnification

Subject to the limitations in Sections 9.4 and 9.5, (i) the Corporation shall (without duplication in respect of any Loss) indemnify, defend and save harmless the Investors, each holder of Purchased Shares, and all Permitted Transferees holding any Purchased Shares, and each of their partners, shareholders, officers, directors, employees, agents, representatives and successors, and (ii) the Investors, each holder of Purchased Shares, and all Permitted Transferees holding any Purchased Shares shall, severally and not jointly, indemnify, defend and save harmless the Corporation, and each of its shareholders, officers, directors, employees, agents, representatives and successors (the Person or Persons so covenanting and agreeing to indemnify another Person or Persons being referred to in this Article IX as the “Indemnifying Party” and the Person or Persons to be indemnified being referred to collectively as the “Indemnitees” and individually an “Indemnitee”), on an after-tax basis as contemplated by Section 9.13, from and against any and all Losses suffered or incurred by the Indemnitee, as a direct or indirect result of, or arising in connection with or related in any manner whatever to:

	(a)		any misrepresentation or breach of warranty made or given by (or in the case of the representations and warranties in Article V, on behalf of) such Indemnifying Party in this Agreement or any Other Agreement; or
	(b)		any failure by such Indemnifying Party to observe or perform any covenant or obligation contained in this Agreement or any Other Agreement.

9.3 Agency for Representatives

The Investors agree that they accept each indemnity in favor of the Persons identified in clause (i) of Section 9.2, as agent and trustee of such Persons to the extent that they become Indemnitees hereunder. The Corporation agrees that the Investors may enforce an indemnity in favor of the Persons identified in clause (i) of Section 9.2 on behalf of such Persons to the extent they become an Indemnitee hereunder.

9.4 Time Limitations

	(a)		Subject to Section 9.4(b), the Indemnifying Party shall have no liability to any Indemnitee for any Loss arising from any Claim (including any Third Party Claim) relating to a breach of any representation or warranty contained in this Agreement or any Other Agreement unless the Indemnitee gives written notice to the Indemnifying Party specifying in reasonable detail the factual basis of the Claim and a reasonable estimate of the amount thereof on or before that date which is two years after the Closing Date.
	(b)		Despite the provisions of Section 9.4(a), (i) notice with respect to Claims relating to Section 4.1 (Incorporation and Organization), Section 4.5 (Authorized, Issued and Outstanding Capital) or Section 4.7 (Corporate Authorization) may be given at any time after the Closing Date without limitation as to time; and (ii) notice with respect to Claims relating to Section 4.12 (Tax Matters) arising in or in

			respect of a particular period ending on or before the Closing Date may be given at any time after Closing and before a period of 90 days has elapsed after the relevant Tax authorities shall no longer be entitled to assess liability for any Taxes against the Corporation or any of the Subsidiaries for that particular period, having regard, without limitation, to any waivers given by the Corporation or any of the Subsidiaries in respect of any taxation year. All covenants and obligations contained in this Agreement or any Other Agreement, which, by their terms, contemplate performance after the Closing Date, shall survive in accordance with their terms, and notice with respect to Claims relating to such covenants and obligations shall be given within 90 days of the expiration of such terms.
	(c)		For greater certainty, if the Indemnitee has not given notice, in the manner and within the time periods prescribed in Sections 9.4(a) and 9.4(b), to the Indemnifying Party of an alleged Loss arising from any Claim relating to a breach of any representation or warranty contained in this Agreement or any Other Agreement, the Indemnifying Party will have no financial obligation to the Indemnitee in respect of such breach.
	(d)		The Indemnitee will give any notice required pursuant to Sections 9.4(a) or 9.4(b) to the Indemnifying Party reasonably promptly after the Indemnitee determines that it has a claim for indemnity under this Article IX.

9.5 Limitations as to Amount

No Claims may be asserted by any Indemnitee under this Article IX unless and until the aggregate amount of any Losses of the Indemnitees in respect of any and all Claims asserted pursuant to this Article IX collectively exceeds one hundred thousand dollars (US$100,000) in which event the amount of all such Loss including such one hundred thousand dollar (US$100,000) amount may be asserted. Notwithstanding the foregoing, the threshold for any Claims asserted based on a breach of any representation and warranty contained in Section 4.12 hereof shall be five hundred thousand dollars (US$500,000) in which event a claim for the amount of all such Losses, including such US$500,000, may be asserted. Notwithstanding any other provision of this Agreement, (i) no Claims may be asserted by any Indemnitee hereunder and in no event shall the Indemnifying Party be required to indemnify the Indemnitees, collectively, for Losses in an aggregate amount greater than the Purchase Price, and (ii) no Claims may be asserted by any Indemnitee hereunder and in no event shall an Investor, holder of Purchased Shares, or any Permitted Transferees holding any Purchased Shares be required to indemnify the Indemnitees in an amount greater than their pro rata portion of the Purchase Price.

9.6 Notice of Third Party Claims

If an Indemnitee receives notice of the commencement or assertion of any Claim asserted against the Indemnitee that is paid or payable to, or claimed by, any Person who is not a party to this Agreement (a “Third Party Claim”), the Indemnitee shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event no later than 30 days after receipt of such notice of such Third Party Claim. Such notice to the Indemnifying Party shall describe the Third Party Claim in reasonable detail and shall indicate, if reasonably practicable, the estimated amount of the Loss that has been or may be sustained by the Indemnitee.

9.7 Defence of Third Party Claims

The Indemnifying Party may participate in or assume the defence of any Third Party Claim by giving notice to that effect to the Indemnitee not later than 30 days after receiving notice of that Third Party Claim (the “Notice Period”). The Indemnifying Party’s right to do so shall be subject to the rights of any insurer or other party who has potential liability in respect of that Third Party Claim. The Indemnifying Party shall pay all of its own expenses of participating in or assuming such defence. The Indemnitee shall co-operate in good faith in the defence of each Third Party Claim, even if the defence has been assumed by the Indemnifying Party and may participate in such defence assisted by counsel of its own choice at its own expense. If the Indemnitee has not received notice within the Notice Period that the Indemnifying Party has elected to assume the defence of such Third Party Claim, the Indemnitee may, at its option, elect to settle or compromise the Third Party Claim or assume such defence at the expense of the Indemnifying Party, assisted by counsel of its own choosing and the Indemnifying Party shall remain liable for any Loss suffered or incurred by the Indemnitee with respect to such Third Party Claim as contemplated by this Article IX. If the Indemnifying Party elects to assume the defence of a Third Party Claim under this Section 9.7, the Indemnifying Party shall acknowledge in writing its obligation to indemnify the Indemnitee in accordance with the terms contained in this Article IX in respect of that Third Party Claim.

9.8 Assistance for Third Party Claims

The Indemnifying Party and the Indemnitee shall use all reasonable efforts to make available to the person that is undertaking and controlling the defence of any Third Party Claim (the “Defending Party”),

	(a)		those employees and other persons whose assistance, testimony or presence is necessary to assist the Defending Party in evaluating and in defending any Third Party Claim; and
	(b)		all documents, records and other materials in the possession of such party reasonably required by the Defending Party for its use in defending any Third Party Claim,

and shall otherwise cooperate with the Defending Party. All reasonable expenses associated with making such documents, records and materials available and for all reasonable expenses of any employees or other persons made available by the Indemnitee to the Indemnifying Party hereunder may be included in any Loss for which indemnification is sought under this Article IX.

9.9 Settlement of Third Party Claims

If the Indemnifying Party elects to assume the defence of any Third Party Claim as provided in Section 9.7, the Indemnifying Party shall not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defence of such Third Party Claim following the receipt by the Indemnitee of notice of such assumption. However, if in the opinion of the Indemnitee, acting reasonably, there is a conflict between the interests of the Indemnifying Party and the interests of the Indemnitee with respect to such Third Party Claim, or if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third Party Claim within

30 days after receiving notice from the Indemnitee that the Indemnitee believes on reasonable grounds that the Indemnifying Party has failed to take such steps, the Indemnitee may, at its option, elect to assume the defence of and to negotiate, settle or compromise the Third Party Claim assisted by counsel of its own choosing and the Indemnifying Party shall also be liable for all reasonable costs and expenses paid or incurred in connection therewith. The Indemnifying Party shall not, without the prior written consent of the Indemnitee, not to be unreasonably withheld, enter into any compromise or settlement of a Third Party Claim, which would lead to liability or create any other obligation, financial or otherwise, on the Indemnitee.

9.10 Direct Claims

Any Claim other than a Third Party Claim (a “Direct Claim”) shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof. The Indemnifying Party shall then have a period of 30 days within which to respond in writing to such Direct Claim. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such Direct Claim, and in such event the Indemnitee shall be free to pursue such remedies as may be available to the Indemnitee.

9.11 Failure to Give Timely Notice

Other than in respect of the time for giving notices or other limitations set forth in Section 9.4, a failure to give timely or prompt notice as otherwise provided in this Article IX shall not affect the rights or obligations of any party except and only to the extent that, as a result of such failure, any party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise directly and materially damaged as a result of such failure.

9.12 Reductions and Subrogation

If the amount of any Loss at any time subsequent to the making of any payment on account of any Loss required to paid pursuant to this Article IX (an “Indemnity Payment”) in respect of that Loss is reduced by any recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other person, the amount of such reduction (less any costs, expenses (including taxes) or premiums incurred in connection therewith), shall promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making a full Indemnity Payment, the Indemnifying Party shall, to the extent of such Indemnity Payment, be subrogated to all rights of the Indemnitee against any third party in respect of the Loss to which the Indemnity Payment relates. Until the Indemnitee recovers full payment of its Loss, any and all claims of the Indemnifying Party against any such third party on account of such Indemnity Payment shall be postponed and subordinated in right of payment to the Indemnitee’s rights against such third party. Without limiting the generality or effect of any other provision hereof, the Indemnitee and Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect such postponement and subordination.

9.13 Tax Effect

If any Indemnity Payment received by an Indemnitee constitutes taxable income to such Indemnitee or otherwise gives rise to adverse Tax consequences, the Indemnifying Party shall

pay to the Indemnitee, at the same time and on the same terms (as to interest and otherwise) as the Indemnity Payment, an additional amount sufficient to place the Indemnitee in the same after-tax position as it would have been if that were not the case. The amount payable pursuant to this Section 9.13 by the Corporation shall be reduced by the amount of any Tax Benefits related or attributable to the loss that gave rise to such Indemnity Payment. For the purposes of this Agreement, “Tax Benefits” shall mean the sum of any increased deductions, losses or credits allowable or decreases in income, gains or recapture of credits allowable, multiplied by the combined highest marginal federal, state and local tax rate in the applicable jurisdiction.

9.14 Additional Rules and Procedures

	(a)		If any Third Party Claim is of a nature such that the Indemnitee is required by applicable law to make a payment to any Person (a “Third Party”) with respect to such Third Party Claim before the completion of settlement negotiations or related Legal Proceedings, the Indemnitee may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount of any liability under the Third Party Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnitee, the Indemnitee shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Indemnifying Party.
	(b)		The Indemnitee and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available) and shall each designate an officer who shall keep himself informed about and be prepared to discuss the Third Party Claim with his counterpart and with counsel at all reasonable times.

ARTICLE X
GENERAL

10.1 Amendments

This Agreement may only be amended, supplemented, modified or terminated by the agreement in writing of the Corporation and the Investors.

10.2 Waiver

No course of dealing between the Corporation and the Investors or any other Person shall operate as a waiver of any right of the Corporation or the Investors under this Agreement. No waiver of any breach or default hereunder shall be valid unless in written form and signed by the waiving party. No failure or other delay by any Person in exercising any right, power, or privilege hereunder shall be or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.

10.3 Successors and Assigns

This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the Shareholders Agreement, and except as otherwise provided in this Agreement, Investors may assign any of its rights under this Agreement or any of the Other Agreements to any Permitted Transferee of the Purchased Shares, and, as a condition of such assignment, the Permitted Transferee shall assume in writing (in form and in substance acceptable to the Corporation, acting reasonably) the liabilities and obligations of the transferor hereunder and thereunder. The Corporation may not assign any of its rights, or delegate any of its obligations, under this Agreement without the prior written consent of Investors and any such purported assignment by the Corporation without the written consent of Investors shall be void and of no effect.

10.4 Notices

All notices, requests, payments, instructions or other documents to be given hereunder shall be in writing or by written telecommunication, and shall 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 via 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 followed within 24 hours of 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 10.4):

if to the Corporation:

Mitel Networks Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇

Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

With a copy to:

Mitel Networks Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇

Attention: Chief Financial Officer, and VP Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

And with a copy to:

- 59 -

With a copy to:

Mitel Networks Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇

Attention: Chief Financial Officer, and VP Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

And with a copy to:

Mitel Networks Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇

Attention: Senior Corporate Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

With a copy to:

Osler, ▇▇▇▇▇▇ & Harcourt LLP
Suite 1500
50 ▇’▇▇▇▇▇▇
Ottawa, ON
▇▇▇ 6L2

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

if to Francisco Partners:

Arsenal Holdco I, S.a.r.l. and Arsenal Holdco II, S.a.r.l.
▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇

And with a copy to:

Francisco Partners II, L.P.
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

And with a copy to:

O’Melveny & ▇▇▇▇▇ LLP
Suite 2600
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

And with a copy to:

Stikeman Elliott LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇

Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

if to any MS Investor:

c/o Morgan ▇▇▇▇▇▇▇ Principal Investments, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to:

▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Older
                   ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇

10.5 Binding Effect and Benefits

This Agreement shall bind and inure to the benefit of the Parties hereto and their respective successors (including any successor by reason of amalgamation of any Party) and permitted assigns. Except as otherwise provided in this Agreement, the provisions of this Agreement that are for the Investor’s benefit shall inure to the benefit of each holder of Purchased Shares, and all Permitted Transferees holding any Purchased Shares. Except as provided in Article IX, nothing in this Agreement is intended to or shall confer any rights or remedies on any Person other than the parties hereto, their respective successors and permitted assigns.

10.6 Further Assurances

From time to time, on and after the Closing, each Party shall promptly execute and deliver all such further instruments and assurances, and shall promptly take all such further actions, as the other Party may reasonably request in order to effect or confirm the transactions contemplated by this Agreement or any of the Other Agreements and to carry out the purposes hereof and thereof..

10.7 Counterparts

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile and all such counterparts and facsimiles shall together constitute one and the same agreement.

10.8 Language

Each of the undersigned hereby acknowledges that it has consented and requested that all documents evidencing or relating in any way to the sale of the Purchased Shares hereunder be drawn up in the English language only. Nous, soussignés, reconnaissons par les présentes avoir consenti et demande que tous les documents faisant foi ou se rapportant de quelque manière à la vente des actions soient rédigés en anglais seulement.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first mentioned above.

SCHEDULE A

Pro Forma Capitalization

		Common Equivalents				Own %
THM Class 1 Preferred			10,257,579				2.09	%
PTIC Class 1 Preferred			8,737,938				1.78	%
MSPI Class 1 Preferred			32,930,628				6.71	%
FP Group Class 1 Preferred			166,968,315				34.02	%
Edgestone Class 1 Preferred			14,436,593				2.94	%
Shares outstanding (7/31/07)			213,272,401				43.45	%
Edgestone warrants			737,467				0.15	%
TPC warrants			37,174,877				7.57	%
Other warrants			317,995				0.06	%
Treasury method dilutive options			5,990,017				1.22	%
New Class 1 Preferred Warrants			0				0.00	%
			490,823,810				100.00	%

Class 1 Convertible Preferred Share Terms

Class 1 Preferred Conversion Price		$	1.3161
Conversion Ratio			759.8207x
THM Class 1 Preferred value		$	13,500,000
PTIC Class 1 Preferred value		$	11,500,000
MSPI Class 1 Preferred value		$	43,340,000
FP Group Class 1 Preferred value		$	219,747,000
Edgestone Class 1 Preferred value		$	19,000,000
Total Class 1 Preferred value		$	307,087,000

New Class 1 Preferred Warrant

Tranche		Gross				x USD				Net Dilutive
THM			1,022,996			$	1.3161				0
PTIC			871,441			$	1.3161				0
MSPI			3,284,196			$	1.3161				0
FP Group			16,651,875			$	1.3161				0
Total			21,830,508								0

Treasury Method Schedules

Tranche		Gross				x CDN				Net Dilutive
Tranche A			546,305			$	1.24				84,302
Tranche B			702,821			$	1.16				146,801

Tranche		Gross				x CDN				Net Dilutive
Tranche C			536,250			$	2.75				0
Tranche D			128,000			$	2.00				▇
▇▇▇▇▇▇▇ ▇			1,042,247			$	1.55				0
Tranche F			4,019,650			$	1.18				784,771
Tranche G			211,383			$	1.16				44,152
Tranche H			62,987			$	1.13				14,445
Tranche I			15,457,948			$	1.00				4,915,545
Total options			22,707,591								5,990,017

						x CDN
Edgestone warrants			5,000,000			$	1.25				737,467
TPC warrants			37,174,877			$	0.00				37,174,877
Other warrants			1,000,000			$	1.00				317,995

						x USD
Convertible Noteholder Warrants			16,500,000			$	1.28				0
Total warrants			59,674,877								38,230,339

FP Group		Investment				Dilutive Shares				Own %
Arsenal HoldCo I S.a.r.l.		$	205,819,000				156,385,533				31.86	%
Arsenal HoldCo II S.a.r.l.		$	13,928,000				10,582,782				2.16	%
Total		$	219,747,000				166,968,315				34.02	%

SCHEDULE “B”

DISCLOSURE SCHEDULE

This document constitutes the disclosure schedule (the “Disclosure Schedule”) referred to in the Class 1 Convertible Preferred Share Subscription Agreement (the “Subscription Agreement”) dated August 16, 2007 between the Corporation, Arsenal Holdco I, Sarl and Arsenal Holdco II, Sarl and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Unless the context otherwise requires, words and expressions defined in the Subscription Agreement shall have the same meanings in this Disclosure Schedule.

Disclosure in any one section of this Disclosure Schedule shall be deemed to be disclosure for purposes of all other sections of this Disclosure Schedule to the extent such actual disclosure in the one section contains sufficient information so as to constitute adequate disclosure for purposes of that other section or sections and where such actual disclosure would be reasonably apparent to be applicable to such other section or sections. Reference to any matter in any section shall not be deemed to an acknowledgement by the Corporation that such matter meets or exceeds any applicable threshold of materiality or any other relevant threshold.

In some respects, this Disclosure Schedule sets forth conditions, sets of facts or other disclosure not strictly called for by the Subscription Agreement where it was thought that such disclosure might be helpful. No implication shall be drawn that any condition, set of facts or other disclosure set forth herein is necessarily material or is otherwise required to be disclosed or that the inclusion of such disclosure establishes or implies a standard of materiality, a standard for what is or is not in the usual and ordinary course of business or any other standard for disclosure set forth in the Agreement.

The following specific disclosures are made in relation to the Subscription Agreement:

SECTION 4.3

SUBSIDIARIES

List of Subsidiaries:

The full corporate name, jurisdiction of incorporation and registered and beneficial ownership of the issued and outstanding shares of each direct and indirect Subsidiary is as follows:

		Jurisdiction of
Name of Subsidiary		Incorporation		Ownership of Securities
Mitel Networks Holdings Limited		United Kingdom		Wholly-owned by the Corporation
Mitel Networks Asia Pacific Limited		Hong Kong		Wholly-owned by the Corporation
Mitel Networks International Limited		Barbados		Wholly-owned by the Corporation
Mitel Networks Overseas Limited		Barbados		Wholly-owned by the Corporation
Mitel Networks Limited		United Kingdom		Wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Networks SARL		France		Wholly-owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Networks Italia SRL		Italy		Wholly-owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Networks, Inc.		Delaware		Wholly owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Networks Germany GmbH		Germany		Wholly-owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Telecom Limited		United Kingdom		Wholly-owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation
Mitel Financial Services Limited		United Kingdom		25% owned by First Asset Finance PLC; 75% owned by Mitel Networks Limited, which is in turn wholly-owned by Mitel Networks Holdings Limited, which is in turn wholly-owned by the Corporation

		Jurisdiction of
Name of Subsidiary		Incorporation		Ownership of Securities
Mitel Networks (México), S.A. de C.V.		Mexico		Wholly owned by the Corporation
Mitel Comércio e Serviços do Brasil Ltda.		Brazil		Wholly owned by the Corporation

Certain corporate filings have not yet been filed. The following table provides details of the current status, by corporate entity.

Legal Entity Filings Update Q4 2007

Filing Status

Legal Entity

Location

Financial statements

Tax Returns

Corporate Filings

2007

2006

2005

2004

2007

2006

2005

2004

2006

2005

2004

Mitel Networks Corporation

Canada

*

ü

ü

ü

ü

ü

ü

ü

ü

ü

ü

Mitel Networks Overseas Limited

Barbados

*

ü

ü

ü

ü

ü

ü

ü

ü

ü

Mitel Networks International Limited

Barbados

*

ü

ü

ü

ü

ü

ü

ü

ü

ü

Mitel Networks Holdings Limited

UK

*

IP

ü

ü

IP

ü

ü

ü

ü

ü

Mitel Networks Asia Pacific Ltd.

HK

*

IP

ü

ü

IP

ü

ü

ü

ü

ü

Mitel Networks (Mexico)

Mexico

IP

n/a

n/a

IP

n/a

n/a

n/a

n/a

n/a

Mitel Comercio e Servicos do Brasil Ltda.

Brasil

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Mitel Telecom Limited (Inactive)

UK

IP

ü

ü

n/a

n/a

n/a

ü

ü

ü

Mitel Networks Germany GmbH

Germany

ü

ü

ü

ü

ü

ü

n/a

n/a

n/a

Mitel Networks SARL

France

ü

ü

ü

ü

ü

ü

n/a

n/a

n/a

Mitel Networks Italia SRL

Italy

ü

ü

ü

ü

ü

ü

n/a

n/a

n/a

Mitel Financial Services Limited

UK

*

IP

ü

ü

IP

ü

ü

ü

ü

ü

Mitel Networks Inc.

US

ü

ü

ü

ü

ü

ü

ü

ü

ü

Mitel Networks Limited

UK

*

IP

ü

ü

IP

ü

ü

ü

ü

ü

Branch Office

Australia

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Branch Office

Spain

ü

ü

ü

ü

ü

n/a

n/a

n/a

Branch Office

South Africa

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Branch Office

Dubai

n/a

n/a

n/a

n/a

n/a

n/a

Branch Office

Singapore

*

IP

ü

ü

IP

ü

ü

n/a

n/a

n/a

Branch Office

Netherlands

n/a

n/a

n/a

ü

ü

ü

n/a

n/a

n/a

Partnerships, Joint Ventures, etc.:

The Corporation or its Subsidiaries are a partner or participant in the following partnerships or joint ventures, or own or have agreed to acquire securities in the following businesses or Persons:

Name of Joint Venture		Jurisdiction		Ownership of Securities
Tianchi Mitel Telecommunications Corp		China		50 % owned by the Corporation
				•      25% owned by Tricom Tianchi Limited
				•      21.25% owned by Tianjin Zhonghuan Electronic Computer Corporation
				•      3.125% owned by Tianjin Economic Technological Development Area Industrial Investment Company
				•      0.625% owned by Trianjin Post and Telecommunications Administration of China
The Corporation is not a partner in a partnership.

SECTION 4.5

AUTHORIZED, ISSUED AND OUTSTANDING CAPITAL

A.		Stockholder Rights and Restrictions (inter alia, price protection, transfer, preemptive. conversion, redemption, put. and anti-dilution rights).
		Pursuant to an arrangement between the Corporation and Osler, ▇▇▇▇▇▇ & Harcourt LLP (“OHH”) in respect of the provision of legal services to the Corporation, (a) the Corporation may, at its option, issue Common Shares to OHH in partial satisfaction of outstanding accounts with that firm, up to 25% of the value of each eligible invoice capped at a dollar amount of $200,000 per year, and (b) certain “price protection” rights have been granted to OHH such that OHH will be issued additional Common Shares if the Corporation subsequently issues Common Shares (or grants options) at a lower price.
B.		Warrants.

	a)		Warrants to acquire 37,174,887 Common Shares have been granted by the Corporation to the Government of Canada pursuant to the Integrated Communications Solutions R&D Project Agreement dated October 10, 2002, between the Corporation, March Networks Corporation and the Government of Canada (the “TPC Agreement”). The warrants are exercisable on a one-for-one basis for Common Shares of the Corporation for no additional consideration. The TPC Agreement and warrant rights are further described in the Corporation’s most recent SEC filing on Amendment No. 2 to Form F-1 dated November 8, 2006, and as described in and attached as an exhibit to the Corporation’s SEC filing on Form 20-F dated October 31, 2006.
	b)		In favour of CIBC World Markets Inc., warrants to purchase a total of 1,000,000 common shares of the Corporation at an exercise price of CDN$1.00, as set forth in the Warrant Certificate and Amendment Agreement, both of which are attached as Appendix “A” to this Section 3.5.
	c)		In favour of the holders of the convertible Notes, amended and restated warrants to purchase at total (in the aggregate) of 16 million common shares of the Corporation at an exercise price (subject to appropriate adjustments) US$1.28. Each of these warrants have been issued and sold to the noteholders on identical terms and conditions, although the number of warrants granted may vary between noteholders. A copy of the form of amended and restated noteholder warrant is attached as Appendix “B” to this Section 3.5.
	d)		In favour of EdgeStone Capital Equity Fund II-A, L.P., a warrant (the “Series 2 Warrant”) to purchase up to 5 million common shares at an exercise price of CAD$1.25 (subject to appropriate adjustments), which expires on April 23, 2011. A copy of the Series 1 Warrant is attached as Appendix “C” to this Section 3.5.
			A list of the record holders of warrants exercisable for shares of capital stock of the Corporation and its Subsidiaries, as at April 7, 2007, is attached as Appendix “D” to this Section 4.5.

C.

Options

a)

The 2001 Employee Stock Option Plan (“2001 Plan) was initially approved by our shareholders on March 6, 2001, and has since been superseded by the 2006 Equity Incentive Plan (“2006 Plan”) although the options issued under the 2001 Plan continue to be governed by the 2001 Plan All of (a) the Corporation’s non-employee directors, (b) the Corporation’s full-time or permanent

 - 2 -

			part-time employees and officers, (c) employees, officers and directors of any of the Corporation’s subsidiaries and affiliates, and (d) any of its consultants and consultant companies are eligible to participate in the 2006 Plan and UK Sub-plan. A copy of the UK Sub-plan is attached to this Section 4.5 as Appendix “E”. There are no other service requirements or prerequisites to participation in the 2006 Plan. A total of 25,000,000 common shares are authorized for issuance under the 2001 Plan. As of July 31, 2007, there were outstanding options to purchase 22,707,591 common shares under the 2001 Plan and 2006 Plan. An aggregate of 12% of the issued and outstanding shares (on an is-if-converted to common share basis) is reserved for stock options. This 12% includes the total of the outstanding options granted under both plans. Appropriate adjustments will be made to the number of authorized shares under these plans and to the shares subject to outstanding awards in the event of any reorganization, recapitalization, share split, dividend or other change in our capital structure in order to account for the changed circumstances. The 2001 Plan and the 2006 Plan contain change of control provisions which accelerate vesting of options under certain circumstances unless the board of directors or the compensation committee determines in their discretion not to permit such options to vest. No acceleration to the vesting of any of our outstanding options will occur as a result of the completion of this transaction due to a resolution passed by the board of directors passed on April 26, 2007. The board agreed that notwithstanding that the Financing and Merger may constitute a change in control pursuant to the 2001 Plan and the 2006 Plan, any options granted pursuant to either the 2001 Plan or the 2006 Plan which are not exercisable immediately prior to Closing shall not be accelerated as a result of the Closing of the Financing and Merger. As of September 8, 2006, no further options will be granted under the 2001 Plan. A copy of the 2001 Plan is attached as Appendix “F” to this Section 4.5, and is described in the Corporation’s recent SEC filing on Form 20-F (October 31, 2006). As of July 31, 2007, 17,375,828 grants have been made under this plan.
	b)		The 2006 Equity Compensation Plan is attached as Appendix “G” to this Section 4.5. As of July 31, 2007, 5,331,763 grants have been made under this plan.
	c)		A list of options outstanding for shares of capital stock of the Corporation and its Subsidiaries, as at July 31, 2007, is attached as Appendix “H” to this Section 4.5.

F.

Other Plans

	a)		Effective May 14, 2001, the Corporation entered into the Mitel Networks Corporation U.S. Employee Stock Purchase Plan which plan provided a means for employees of Mitel Networks Inc. and Mitel Networks Solutions, Inc. to purchase common shares in the Corporation for a period of one (1) year from the effective date and in accordance with the terms provided therein. Although the plan is no longer active for the issuance of shares, shares remain issued and outstanding under the agreement.
	b)		On December 9, 2004, the Corporation adopted a deferred share unit plan in order to promote a greater alignment of interests among two members of the Corporation’s senior management staff and our shareholders, as set out in Note 22 of the Financial Statements. (One of the senior management participants has since left the Corporation.) The Corporation’s previous supplemental executive retirement plan was wound up and terminated by the Corporation in favour of the deferred share unit plan. Each deferred share unit entitles the holder to receive a cash lump sum payment equal to the market value of our common shares within one year of cessation of employment. Deferred share units are not considered shares, nor is the holder of any deferred share unit entitled to voting rights or any other rights attaching to the ownership of shares. The number of deferred share units that may be awarded to a participant in any calendar year under the deferred share unit plan is equal to 15% of the participant’s annual salary, less the

		maximum amount of the participant’s eligible retirement savings plan contributions in that particular taxable year. Within a year of a participant’s cessation of employment with the Corporation, such participant will receive a lump sum payment in cash having a value equal to the number of deferred share units recorded on his account multiplied by the market value of our common shares, less any applicable withholding taxes. The deferred share unit plan is administered by the Corporation’s Compensation Committee. A copy of the DSUP is attached to this Section 3(s) as Appendix “I”.
G.		Other Redemption Obligations, Shareholder Agreements or Registration Rights Agreements
		As a general practice, the Corporation accepts share subscriptions from certain employees for the purchase of Common Shares, and agrees to advance interest free loans to such employees to purchase such Common Shares. The Corporation has made it a practice, although it is not an obligation, to forgive loans for employees who are terminated involuntarily. In such instances, the Corporation redeems the shares not yet paid for.
		There are currently 3 employees in the UK and 1 in Canada who have outstanding loans. The details are as follows (as at July 31, 2007):

Location		Amount outstanding on loan
UK		<£2400
UK		<£350
UK		<£400
Canada		< CAD$800

Appendices:

Appendix A: CIBC Warrant⁽¹⁾, as amended
Appendix B: Form of Amended and Restated Noteholder Warrant
Appendix C: Series 1 Warrant
Appendix D: Warrant Register
Appendix E: UK Sub-Plan of Equity Incentive Plan
Appendix F: Employee Stock Option Plan
Appendix G: 2006 Equity Incentive Plan⁽²⁾
Appendix H: List of Options Outstanding
Appendix I: Deferred Share Unit Plan⁽³⁾

SECTION 4.6

LAWFUL ISSUANCE

Non-Compliance with Pre-Emptive Rights, Securities Laws or Other Laws:

With respect to prior issuances of securities by the Corporation to Persons resident in jurisdictions other than Canada, the United States or the United Kingdom, the Corporation did not make independent inquiry into whether all such issuances fully complied with all applicable laws in such other jurisdictions. As a result, those securities of the Corporation may not have been offered, issued and sold in compliance with such laws. This Section 4.6 shall not limit the Investors rights to indemnification pursuant to the terms of the Subscription Agreement.

SECTION 4.8

GOVERNMENTAL OR THIRD PARTY CONSENTS

The following consents, approvals, authorizations, declarations, filings or registrations with any Governmental Authority or any other Person have been or will be obtained prior to Closing as follows:

	•		Section 2.8 of the Shareholders Agreement requires the Corporation to obtain the prior written consent of EdgeStone Capital Equity Fund II-B GP, Inc., as agent for EdgeStone Capital Equity Fund II-A, L.P. and its parallel investors, and EdgeStone Capital Equity Fund II Nominee, Inc., as nominee for EdgeStone Capital Equity Fund II-A, L.P. and its parallel investors (collectively, “EdgeStone”), prior to (a) amending the Corporation’s articles; (b) issuing any equity securities or warrants; (c) acquiescing to the assertion of any price protection or anti-dilution rights with respect to any outstanding securities or any securities of the Corporation or any Subsidiary that may hereafter be issued; (d) redeeming or purchasing for cancellation any equity securities of the Corporation, except in certain limited circumstances; (e) incurring or becoming liable for or have outstanding any borrowing or funded indebtedness in excess of $80,000,000 in the aggregate; (f) making any material change in the Business; (g) repaying any debt which exceeds $5,000,000; (h) creating any material Subsidiary, making any business acquisition in excess of $5,000,000, except in the ordinary course of the Business; (j) approving any changes in the size of the Board of Directors; or (k) agreeing to a Change of Control Event (as defined in the Articles) in which the Corporation is a party, or amalgamating or merging with or into any other corporation.
			The Corporation will be required to obtain a waiver from Principal Shareholders (EdgeStone, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Celtic Tech Jet Limited, Power Technology Investment Corporation, Zarlink Semiconductor Inc., and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation) to the Shareholders Agreement if it is unable to comply with the pre-emptive rights notice provisions under Section 4.1 of that agreement.
			Section 8.3(d) of Schedule A to the Articles and Section 8.3(d) of Schedule B to the Articles each provide that the Corporation will not undertake certain matters without the approval of the Series A Majority Holders and the Series B Majority Holders respectively (each, as defined in the Articles), including undertakings to amend the articles of the Corporation to add, change or remove any rights, privileges, restrictions or conditions attached to the Series A Shares or the Series B Shares or otherwise change the Series A Shares or Series B Shares.
			If a notification is required to be filed pursuant to Part IX of the Competition Act (Canada) in connection with the Investment, (x) the Commissioner of Competition (the “Competition Commissioner”) shall have issued an advance ruling certificate pursuant to section 102 of the Competition Act in respect of the Investment; or (y) the Competition Commissioner shall have waived the obligation to notify and supply information under Part IX of the Competition Act pursuant to subsection 113(c) of the Competition Act and confirmed in writing that she has no intention to file an application under Part VIII of the Competition Act (a “no-action letter”) in respect of the Investment; or (z) the statutory waiting period under section 123 of the Competition Act shall have expired or been terminated and the Competition Commissioner shall have issued a no-action letter in respect of the Investment.
			The 2001 Employee Stock Option Plan and the 2006 Equity Incentive Plan contain change of control provisions which accelerate vesting of options under certain circumstances unless the board of directors or the compensation committee determines in their discretion not to permit such options to vest. No acceleration to the vesting of any of our outstanding options will occur as a result of the completion of this transaction due to a resolution passed by the board of

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directors passed on April 26, 2007. The board agreed that notwithstanding that the Financing and Merger may constitute a change in control pursuant to the 2001 Plan and the 2006 Plan, any options granted pursuant to either the 2001 Plan or the 2006 Plan which are not exercisable immediately prior to Closing shall not be accelerated as a result of the Closing of the Financing and Merger.

SECTION 4.9

FINANCIAL STATEMENTS & ABSENCE OF CERTAIN CHANGES

Section 4.9 (c): Material Transaction with Insiders

	•		On April 25, 2006, the Corporation entered into an agreement with Natural Convergence Inc. to purchase prepaid software licenses worth $1.2, payable in four equal installments over the course of fiscal 2007. The Corporation had the option to instead invest any of its four installments in prepaid licenses in secured convertible debentures which were (a) repayable to debenture holders (plus a credit fee of 25% per annum of any outstanding principal) on the earlier of December 31, 2006, or on the occurrence of certain events, or (b) automatically convertible into preferred shares of NCI upon the closing of a qualifying financing of no less that $6.0. The convertible debentures were also issued with warrants to acquire a number of common shares of NCI equal to the dollar amount of the investment divided by $1.00, at an exercise price per common share of C$0.0001. In May 2006, the Corporation purchased $0.3 in prepaid software licenses under the agreement. In August 2006, November 2006 and February 2006, the Corporation exercised its option to invest its second, third and fourth installment payments in convertible debentures totaling $0.9. Since NCI had completed a qualifying financing of $10.0 in November 2006, the Company’s entire $0.9 balance of debentures and $0.1 accrued interest was automatically converted into NCI Class C Preferred Shares at a 5% discount in accordance with terms of the agreement. Following the conversion, and upon exercising its warrants, the Company received 8,467,523 Class C Preferred Shares and acquired 600,000 common shares. At April 30, 2007, the Company had a combined ownership of 5.6% in NCI but did not exert significant influence over NCI. Accordingly, the $1.0 investment recorded on the balance sheet at April 30, 2007 has been accounted for using the cost method.
	•		In addition to the license and financing agreement described above, the Company also purchased $2.1 of products and services from NCI for the year ended April 30, 2007 (2005 — $nil; Transition Period — $nil; 2006 — $0.3). The related net balance payable at April 30, 2007 was $0.5 (April 30, 2006 — $0.2).
	•		Please see Section 4.5 (B)(f)

Section 4.9 (f): Issuance of Shares

•

The Corporation has obligations to grant or has granted/issued the options, warrants and shares as described under Section 4.5(b) of this Disclosure Schedule.

Section 4.9 (g): Officers, Directors and Key Employee

Since the Financial Statement Date, the following changes occurred in the position of the officers, directors and key employees of the Corporation or any of the Material Subsidiaries:

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								Date of
						Date of		Termination/		Replacement
Entity Name		Name of Officer		Title		Appointment		Resignation		Officer
Mitel Networks, Inc.		Christian Na		Corporate Secretary		—		13 Jul 07		▇▇▇▇▇▇ ▇▇▇▇▇

Section 4.9 (h): Compensation

▇▇▇▇▇▇ ▇. ▇▇▇▇▇.

     Effective as of May 5, 2006, the Corporation executed an Agreement to Amending the Amended and Restated Employment Agreement with ▇▇. ▇▇▇▇▇. ▇▇. ▇▇▇▇▇ is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement, as amended. If ▇▇. ▇▇▇▇▇ is terminated without cause, he will receive a severance payment totaling 24 months’ salary and bonus compensation (paid over a 24-month period), plus benefit continuation and continued vesting of options for the same period. Upon death or disability, ▇▇. ▇▇▇▇▇ is entitled to a lump sum payment of one year’s total salary plus bonus, and, in addition, continued vesting of options for one year. ▇▇. ▇▇▇▇▇ receives a base salary of C$750,000, a monthly car allowance of C$1,000, stock options, and fuel and maintenance reimbursement for one vehicle, and he participates in the Corporation’s standard employee benefit plans. ▇▇. ▇▇▇▇▇ is also entitled to receive an annual bonus payment in an amount determined by the Compensation Committee of the Board of Directors of the Corporation. ▇▇. ▇▇▇▇▇’▇ employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property. In the event of a change in control there is accelerated vesting of 100% of any remaining unvested options.

     By way of a letter agreement between ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ dated March 1, 2002, as amended, ▇▇. ▇▇▇▇▇▇▇▇ granted to ▇▇. ▇▇▇▇▇ options to purchase 3,000,000 common shares of the Corporation with an exercise price of C$3.50 from the holdings of ▇▇. ▇▇▇▇▇▇▇▇. All of these options have vested and none have been exercised. These options to ▇▇. ▇▇▇▇▇ expire on March 1, 2012.

▇▇▇▇ A.N. Butcher.

     ▇▇▇▇ ▇▇▇▇▇▇▇ is employed as President and Chief Operating Officer of the Corporation, reporting to the Chief Executive Officer. Effective as of May 5, 2006, the Corporation executed an Agreement Amending the Amended and Restated Employment Agreement with ▇▇. ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇ is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement, as amended. If ▇▇. ▇▇▇▇▇▇▇ is terminated without cause, he will receive a severance payment totaling 18 months’ salary and bonus compensation (paid over an 18-month period), plus benefit continuation and continued vesting of options for the same period. Upon death or disability, ▇▇. ▇▇▇▇▇▇▇ is entitled to a lump sum payment of one year’s total salary plus bonus, and, in addition, accelerated vesting of 25% of any remaining unvested options. ▇▇. ▇▇▇▇▇▇▇ receives a base salary of C$500,000, a monthly car allowance of C$1,500, stock options, and fuel and maintenance reimbursement for one vehicle, and he participates in the Corporation’s standard employee benefit plans. ▇▇. ▇▇▇▇▇▇▇ is also entitled to receive an annual bonus payment in an amount determined by the Compensation Committee, in its sole discretion. ▇▇. ▇▇▇▇▇▇▇’▇ employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property. In the event of a change in control there is accelerated vesting of 100% of any remaining unvested options.

     By way of a letter agreement between ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ dated March 1, 2002, as amended, ▇▇. ▇▇▇▇▇▇▇▇ granted to ▇▇. ▇▇▇▇▇▇▇ options to purchase 1,000,000 common shares of the Corporation with an exercise price of C$3.50 from the holdings of ▇▇. ▇▇▇▇▇▇▇▇. All of these options have vested and none have been exercised. These options to ▇▇. ▇▇▇▇▇▇▇ expire on March 1, 2012.

▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.

     ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is employed as Chief Financial Officer of the Corporation, reporting to our Chief Executive Officer. Effective as of January 1, 2006, the Corporation executed an Employment Agreement with ▇▇. ▇▇▇▇▇▇▇ under which he is employed for an indefinite term, subject to termination in accordance with its terms. If ▇▇. ▇▇▇▇▇▇▇ is terminated without cause, he will receive a severance payment totaling 18 months’ salary and bonus compensation (paid over an 18-month period), plus benefit continuation and continued vesting of options for the same period. Upon death or disability, ▇▇. ▇▇▇▇▇▇▇ is entitled to a lump sum payment of one year’s total salary plus bonus, and, in addition, accelerated vesting of 25% of any remaining unvested options. ▇▇. ▇▇▇▇▇▇▇ receives a base salary of C$300,000 C$335,000, a monthly car allowance of C$1,000, stock options, and fuel and maintenance reimbursement for one vehicle, and he participates in the Corporation’s standard employee benefit plans. ▇▇. ▇▇▇▇▇▇▇ is also entitled to receive an annual bonus payment of up to 50% of his annual base salary, in an amount determined by the Compensation Committee, in its sole discretion. ▇▇. ▇▇▇▇▇▇▇’▇ employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property. In the event of a change in control there is accelerated vesting of 100% of any remaining unvested options.

Section 4.9 (j): Indebtedness, material obligations or material liabilities

The Corporation has the following indebtedness, material obligations or materials liabilities outside the ordinary course of business:

***

•

See accounts receivable financing in 4.10(A).

Section 4.9 (l): Settlement of Legal Proceeding

***

SECTION 4.10

INDEBTEDNESS

A. Indebtedness with at Least One Year Maturity:

     The Corporation or one of its Subsidiaries have incurred Indebtedness which matures more than one year after the date of their original creation or issuance under the following:

	•		certain capital leases of not more than USD$5,000,000, at interest rates varying from 9.0% to 12.0%, payable in monthly instalments, with maturity dates ranging from September, 2007 to August, 2009, and secured by the leased assets.
	•		certain real property leases entered into by the Corporation or its Subsidiaries as set forth in Section 4.13(a) of this Disclosure Schedule.
	•		On April 30, 2007, the Corporation entered into an agreement under which it sold $12.8 million of its non-interest bearing trade accounts receivable to an unaffiliated financial institution at a rate of 7.5% on Canadian dollar receivables and 10.25% on US dollar receivables. Under the Agreement, the Corporation will continue to service, administer and collect the pool of accounts receivable without a fee, on behalf of the purchaser and, in certain events of breach can be required to repurchase the receivables. The Agreement is guaranteed by the Corporation’s principal shareholder, for which a fee of $12,000 was paid, and a reserve of $1.9 million was recorded as restricted cash in connection with the agreement. The Corporation is not considered to have ceded control over the transferred receivables, and so the transfer has not been accounted for as a sale. The agreement does not provide the financial institution with the right to pledge or resell the transferred receivables.

SECTION 4.11

ABSENCE OF UNDISCLOSED LIABILITIES

Interest Rate Hedge

In September 2005, the Corporation entered into a derivative contract with ▇▇ ▇▇▇▇▇▇ (AA- latest S&P rating), in order to limit the impact of a change in LIBOR on interest expense related to the convertible Notes for the period commencing November 1, 2005 to November 1, 2007. The derivative contract, based on $55 million, effectively provides a cap on LIBOR of 5.27% and a floor on LIBOR of 4.00%. At July 31, 2007, the FMV of the derivative contract was $46,994.00.

Outstanding Foreign Exchange Contracts

As at July 31, 2007, the Corporation had the following foreign currency contracts outstanding:

Counter

Transaction

Value

Mitel

Mitel

Party

Date

Date

Currency

Buy (Sell)

Rate

Currency

Buy (Sell)

RBC

12-Apr-07

14-Jun-07

EUR

(7,350

)

1.35220

USD

9,939

RBC

12-Apr-07

14-Jun-07

GBP

6,450

1.97880

USD

(12,763

)

CIBC

24-Apr-07

3-May-07

CAD

(3,000

)

0.89087

USD

2,673

CIBC

24-Apr-07

17-May-07

CAD

(3,000

)

0.89087

USD

2,673

CIBC

24-Apr-07

31-May-07

CAD

(3,000

)

0.89087

USD

2,673

Bonding

As at April 30, 2007, the Corporation had less than USD$5,000,000 in bonds outstanding. These bonds are related to various customer contracts. Potential payments due under these may be related to our performance and/or our resellers’ performance under the applicable contract. Historically, we have not made any payments and we do not anticipate that we will be required to make any material payments under these types of bonds.