Document:

Ltr to Edward L. Brewington

	December 20, 2004
	 
	Edward L. Brewington

Senior Vice President, Human Resources

  and Education

KinderCare Learning Centers, Inc.

650 NE Holladay, Suite 1400

Portland, OR 97232
	 
	Dear Edward:
	As you are aware, KinderCare Learning Centers, Inc. (the
“Company”) has entered into an Agreement and Plan of Merger
dated as of November 5, 2004 (the “Merger Agreement”) with KU
Education LLC (“Parent”), KUE Merger Sub Inc. and the Company’s
principal stockholders. This Letter Agreement, which will only become effective
upon the closing of the transactions contemplated by the Merger Agreement, sets
forth certain modifications to the Severance Agreement between you and the
Company, dated as of November 12, 2004 (the “Severance
Agreement”)
	 
	Notwithstanding your right to terminate your employment under the Severance
Agreement and subject to your continued right to terminate your employment under
the Severance Agreement, you have agreed to assist the Company and Parent in
effecting the post-merger transition for a period of up to six months (such
period based on needs of the Company as determined by Company and Parent) (the
“Continuation Period”) following the Closing Date (as defined in the
Merger Agreement). In consideration for your agreement to assist in the
transition and notwithstanding that your employment with the Company will
continue after the Closing Date, the Company will maintain your compensation
(including salary, bonus target and all fringe benefits, but excluding stock
options) at levels no less favorable than those currently in effect during the
Continuation Period and will pay to you the Termination Payment (as defined in
the Severance Agreement) on the Closing Date. In the event of a Termination
(as defined in the Severance Agreement) following the Closing Date, you shall be
entitled to the payments and benefits in accordance with the terms of the
Severance Agreement (other than the Termination Payment provided for in Section
3(b) of the Severance Agreement), which terms include execution and delivery to
the Company of the Release of Claims provided for in Section 3 of the Severance
Agreement and you hereby agree to execute such Release of Claims upon a
Termination in exchange for such payments and benefits. As amended by this
letter agreement, the Severance Agreement shall continue in full force and
effect in accordance with its terms. 
	 
	This letter agreement shall not be assignable by you or the Company
(including by operation of law) without the prior written consent of the other,
and any attempted assignment in violation of this provision shall be void. This
letter agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law provisions thereof. The Severance Agreement, as modified by
this letter agreement, constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes any prior written or
oral agreement between the Company and you with respect to the subject matter
hereof; neither you nor the Company shall be deemed to have made any agreement
or covenant, express or implied, to the other, except for the agreements and
covenants that are expressly set forth in the Severance Agreement, as modified
by this letter agreement; and any such prior written or oral agreement between
the Company and you is hereby terminated and shall be of no force or effect.
	 
	This letter agreement may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute one and the same
instrument.
	 
	If this letter agreement reflects our mutual agreement as to the matters set
forth herein, please indicate by signing below.
	 
	Accepted and agreed on behalf of

KinderCare Learning Centers, Inc. as of  December 20, 2004:
	 
	 
	/s/ DAVID J. JOHNSON

David J. Johnson, Chief Executive Officer and

Chairman of the Board of Directors
	 
	 
	Accepted and agreed to as of December 20, 2004:
	 
	 
	/s/ EDWARD L. BREWINGTON

Name: Edward L. BrewingtonLtr to Eva M. Kripalani

	December 20, 2004
	 
	 
	Eva M. Kripalani

Senior Vice President, General Counsel

  and Corporate Secretary

KinderCare Learning Centers, Inc.

650 NE Holladay, Suite 1400

Portland, OR 97232
	 
	Dear Eva:
	 
	As you are aware, KinderCare Learning Centers, Inc. (the
“Company”) has entered into an Agreement and Plan of Merger
dated as of November 5, 2004 (the “Merger Agreement”) with KU
Education LLC (“Parent”), KUE Merger Sub Inc. and the Company’s
principal stockholders. This Letter Agreement, which will only become effective
upon the closing of the transactions contemplated by the Merger Agreement, sets
forth certain modifications to the Severance Agreement between you and the
Company, dated as of November 12, 2004 (the “Severance
Agreement”)
	 
	Notwithstanding your right to terminate your employment under the Severance
Agreement and subject to your continued right to terminate your employment under
the Severance Agreement, you have agreed to assist the Company and Parent in
effecting the post-merger transition for a period of up to six months (such
period based on needs of the Company as determined by Company and Parent) (the
“Continuation Period”) following the Closing Date (as defined in the
Merger Agreement). In consideration for your agreement to assist in the
transition and notwithstanding that your employment with the Company will
continue after the Closing Date, the Company will maintain your compensation
(including salary, bonus target and all fringe benefits, but excluding stock
options) at levels no less favorable than those currently in effect during the
Continuation Period and will pay to you the Termination Payment (as defined in
the Severance Agreement) on the Closing Date. In the event of a Termination (as
defined in the Severance Agreement) following the Closing Date, you shall be
entitled to the payments and benefits in accordance with the terms of the
Severance Agreement (other than the Termination Payment provided for in Section
3(b) of the Severance Agreement), which terms include execution and delivery to
the Company of the Release of Claims provided for in Section 3 of the Severance
Agreement and you hereby agree to execute such Release of Claims upon a
Termination in exchange for such payments and benefits. As amended by this
letter agreement, the Severance Agreement shall continue in full force and
effect in accordance with its terms.
	 
	This letter agreement shall not be assignable by you or the Company
(including by operation of law) without the prior written consent of the other,
and any attempted assignment in violation of this provision shall be void. This
letter agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law provisions thereof. The Severance Agreement, as modified by
this letter agreement, constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes any prior written or
oral agreement between the Company and you with respect to the subject matter
hereof; neither you nor the Company shall be deemed to have made any agreement
or covenant, express or implied, to the other, except for the agreements and
covenants that are expressly set forth in the Severance Agreement, as modified
by this letter agreement; and any such prior written or oral agreement between
the Company and you is hereby terminated and shall be of no force or effect.
	 
	This letter agreement may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute one and the same
instrument.
	 
	If this letter agreement reflects our mutual agreement as to the matters set
forth herein, please indicate by signing below.
	 
	Accepted and agreed on behalf of

KinderCare Learning Centers, Inc. as of  December 20, 2004:
	 
	 
	/s/ DAVID J. JOHNSON

David J. Johnson, Chief Executive Officer and

Chairman of the Board of Directors
	 
	 
	Accepted and agreed to as of December 20, 2004:
	 
	 
	/s/ EVA M. KRIPALANI

Name: Eva M. KripalaniExhibit 4.2

                           MITEL NETWORKS CORPORATION
                           --------------------------

--------------------------------------------------------------------------------

                       CLASS A CONVERTIBLE PREFERRED SHARE
                             SUBSCRIPTION AGREEMENT

--------------------------------------------------------------------------------

                                 April 23, 2004

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

MITEL NETWORKS CORPORATION.....................................................1

ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION.........................2

   1.1   DEFINITIONS...........................................................2
   1.2   INTELLECTUAL PROPERTY DEFINITIONS....................................10
   1.3   CERTAIN RULES OF INTERPRETATION......................................12
   1.4   KNOWLEDGE............................................................13
   1.5   ENTIRE AGREEMENT.....................................................13
   1.6   SCHEDULES............................................................14
   1.7   EXHIBITS.............................................................14

ARTICLE 2 SHARE AND WARRANT SUBSCRIPTION......................................14

   2.1   SUBSCRIPTION AND ISSUANCE OF PURCHASED SHARES AND
           EDGESTONE WARRANTS.................................................14
   2.2   PURCHASE PRICE.......................................................15
   2.3   CLOSING..............................................................15
   2.4   CLOSING DELIVERIES...................................................15
   2.5   CLOSING CONDITIONS IN FAVOUR OF EDGESTONE............................16
   2.6   CLOSING CONDITIONS IN FAVOUR OF THE CORPORATION......................19

ARTICLE 3 ADDITIONAL EQUITY INVESTMENT........................................21

   3.1   ADDITIONAL INVESTMENT................................................21
   3.2   EDGESTONE OPTION.....................................................21
   3.3   ADJUSTMENTS..........................................................22
   3.4   ADDITIONAL COMMON SHARES.............................................22

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION...................22

   4.1   INCORPORATION AND ORGANIZATION.......................................23
   4.2   CORPORATE RECORDS....................................................23
   4.3   SUBSIDIARIES.........................................................23
   4.4   QUALIFICATION IN FOREIGN JURISDICTIONS...............................24
   4.5   AUTHORIZED, ISSUED AND OUTSTANDING CAPITAL...........................24
   4.6   LAWFUL ISSUANCE......................................................26
   4.7   CORPORATE AUTHORIZATION..............................................26
   4.8   NO GOVERNMENTAL OR THIRD PARTY CONSENTS..............................27
   4.9   FINANCIAL STATEMENTS - ABSENCE OF CERTAIN CHANGES....................27
   4.10  INVENTORY VALUATION..................................................29
   4.11  ACCOUNTS RECEIVABLE..................................................29
   4.12  ACCOUNTS PAYABLE.....................................................30
   4.13  INDEBTEDNESS.........................................................30
   4.14  ABSENCE OF UNDISCLOSED LIABILITIES...................................30
   4.15  CASH AND CASH EQUIVALENTS............................................30
   4.16  TAX MATTERS..........................................................31
   4.17  REAL PROPERTY........................................................32
   4.18  PERSONAL PROPERTY....................................................33
   4.19  HEALTH, SAFETY AND ENVIRONMENTAL MATTERS.............................34
   4.20  EMPLOYMENT CONTRACTS.................................................34
   4.21  EMPLOYEE PLANS.......................................................36
   4.22  UNIONS...............................................................38
   4.23  MATERIAL CONTRACTS...................................................38
   4.24  CUSTOMERS, LICENSORS AND SUPPLIERS...................................40
   4.25  DESCRIPTION OF BUSINESS INTELLECTUAL PROPERTY........................41

                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                            Page

   4.26  INTELLECTUAL PROPERTY RIGHTS.........................................41
   4.27  LITIGATION...........................................................46
   4.28  INSURANCE............................................................46
   4.29  INSIDERS AND CONFLICTS OF INTEREST...................................47
   4.30  BROKERS..............................................................48
   4.31  NO SALE AGREEMENTS...................................................48
   4.32  PAYMENT OF BRECONRIDGE NOTE..........................................48
   4.33  COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.........................48
   4.34  PUBLIC DISCLOSURES...................................................49
   4.35  COMPLIANCE WITH SECURITIES LAW.......................................49
   4.36  FULL ACCESS..........................................................50
   4.37  DISCLOSURE...........................................................50

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR......................50

   5.1   REPRESENTATIONS AND WARRANTIES OF INVESTOR...........................50
   5.2   INVESTOR ACKNOWLEDGEMENTS............................................52
   5.3   RELIANCE UPON REPRESENTATIONS AND WARRANTIES.........................54

ARTICLE 6 REGISTRATION AND TRANSFER OF SECURITIES.............................54

   6.1   TRANSFER AND EXCHANGE OF PURCHASED SHARES AND
           EDGESTONE WARRANTS.................................................54
   6.2   REPLACEMENT OF CERTIFICATES..........................................54

ARTICLE 7 COVENANTS OF THE CORPORATION........................................55

   7.1   POST-CLOSING COVENANTS...............................................55

ARTICLE 8 LEAD WORK FEE AND EXPENSES..........................................56

   8.1   PAYMENT OF LEAD WORK FEE.............................................56
   8.2   REIMBURSEMENT OF EXPENSES............................................56
   8.3   BROKER FEES..........................................................56

ARTICLE 9 INDEMNIFICATION.....................................................57

   9.1   NON-MERGER AND EXCLUSIVE REMEDY......................................57
   9.2   GENERAL INDEMNIFICATION..............................................57
   9.3   AGENCY FOR REPRESENTATIVES...........................................58
   9.4   TIME LIMITATIONS.....................................................58
   9.5   LIMITATIONS AS TO AMOUNT.............................................59
   9.6   NOTICE OF THIRD PARTY CLAIMS.........................................59
   9.7   DEFENCE OF THIRD PARTY CLAIMS........................................59
   9.8   ASSISTANCE FOR THIRD PARTY CLAIMS....................................60
   9.9   SETTLEMENT OF THIRD PARTY CLAIMS.....................................60
   9.10  DIRECT CLAIMS........................................................60
   9.11  FAILURE TO GIVE TIMELY NOTICE........................................61
   9.12  REDUCTIONS AND SUBROGATION...........................................61
   9.13  TAX EFFECT...........................................................61
   9.14  ADDITIONAL RULES AND PROCEDURES......................................61

ARTICLE 10 GENERAL............................................................62

   10.1  AMENDMENTS...........................................................62
   10.2  WAIVER...............................................................62
   10.3  SUCCESSORS AND ASSIGNS...............................................62
   10.4  NOTICES..............................................................62
   10.5  BINDING EFFECT AND BENEFITS..........................................64

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                            Page

   10.6  FURTHER ASSURANCES...................................................64
   10.7  ARBITRATION..........................................................64
   10.8  EQUITABLE RELIEF.....................................................65
   10.9  CONFIDENTIALITY......................................................65
   10.10 PUBLICITY............................................................65
   10.11 COUNTERPARTS.........................................................65
   10.12 LANGUAGE.............................................................65

                                     -iii-
<PAGE>

           CLASS A CONVERTIBLE PREFERRED SHARE SUBSCRIPTION AGREEMENT

      THIS AGREEMENT is made this 23rd day of April, 2004,

BETWEEN:

      MITEL NETWORKS CORPORATION,  a corporation  incorporated under the laws of
      Canada (the "Corporation")

                                     - and -

      EDGESTONE  CAPITAL  EQUITY  FUND II-B GP,  INC.,  as agent  for  EdgeStone
      Capital  Equity Fund II-A,  L.P. and its parallel  investors (as listed on
      Schedule  D), and  EDGESTONE  CAPITAL  EQUITY  FUND II NOMINEE,  INC.,  as
      nominee for  EdgeStone  Capital  Equity Fund II-A,  L.P.  and its parallel
      investors  (as listed on  Schedule  D)  (collectively  "EdgeStone"  or the
      "Investor")

--------------------------------------------------------------------------------

RECITALS:

A.    The authorized capital of the Corporation  consists of an unlimited number
      of Common Shares.

B.    The issued  capital of the  Corporation  consists  of  141,317,207  Common
      Shares and no other shares.

C.    Prior to Closing,  the  Corporation  shall file articles of amendment (the
      "Articles of  Amendment")  to create:  (i) an unlimited  number of Class A
      Convertible  Preferred  Shares,  issuable  in series,  of which one series
      shall be designated as Class A Convertible Preferred Shares, Series 1; and
      (ii) an unlimited number of Class B Convertible Preferred Shares, issuable
      in series,  of which one series shall be designated as Class B Convertible
      Preferred Shares, Series 1.

D.    In  conjunction  with the Closing and after the filing of the  Articles of
      Amendment:  (i) the Common Shares of the Corporation  held by WCC and PTIC
      (as  such  terms  are  defined  below)  shall  be  exchanged  for  Class B
      Convertible  Preferred Shares, Series 1; and (ii) the Common Shares of the
      Corporation held by each of the Converted  Debenture Holders (as such term
      is defined  below) that has executed a Debenture  Holder  Consent (as such
      term is  defined  below)  shall  be  converted  into  Class B  Convertible
      Preferred Shares, Series 1, on the basis hereinafter provided.

E.    The Corporation  wishes to issue and sell an aggregate of 20,000,000 Class
      A Convertible Preferred Shares, Series 1 in the capital of the Corporation
      to EdgeStone and  EdgeStone  wishes to purchase such shares upon the terms
      and conditions set forth in this Agreement (the "Investment").

F.    As the lead investor by virtue of the Investment,  the Corporation  wishes
      to also issue to EdgeStone the EdgeStone Warrants on the basis hereinafter
      provided.

<PAGE>
                                      -2-

G.    Immediately upon completion of the  transactions  referred to or otherwise
      contemplated  by this  Agreement and the Other  Agreements,  including the
      completion of the  Investment  and the issuance of the Class B Convertible
      Preferred Shares,  Series 1 described above (but excluding the issuance of
      securities in relation to the Additional Investment,  and the Common Share
      offering  contemplated in Section 3.4), the issued and outstanding capital
      of the Corporation shall be as set out in Schedule A.

THEREFORE the parties agree as follows:

                                   Article 1
                  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:

      "Act" means the Canada Business Corporations Act;

      "Additional  Investment"  has the  meaning  ascribed  thereto  in  Section
      3.1(a);

      "Affiliate"  of a Person  means any  Person  that would be deemed to be an
      "affiliated  entity"  of such first  mentioned  Person  under Rule  45-501
      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;

      "Aggregate  Purchase  Price" means the sum of the Share Purchase Price and
      the Warrant Purchase Price;

      "Agreement"  means this Class A 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;

      "Annual Budget" has the meaning  ascribed to such term in the Shareholders
      Agreement;

      "Articles of Amendment" has the meaning  ascribed  thereto in the Recitals
      hereto;

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

      "August 2002 Debentures" means the mandatory convertible debentures issued
      by  the  Corporation  in  August  2002  evidencing   indebtedness  of  the
      Corporation to the holders  thereof in the aggregate  principal  amount of
      $10,089,003;

<PAGE>
                                      -3-

      "August 2002  Debenture  Shares"  means an  aggregate of 5,445,775  Common
      Shares  issued on or about  October  31, 2003 upon the  conversion  of the
      August 2002 Debentures;

      "Business"   means  the  business  of  developing,   selling,   licensing,
      distributing,  servicing and  maintaining,  as applicable,  enterprise and
      customer   premises  business   communications   solutions  and  services,
      including  advanced voice,  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);

      "Business  Day" means any day,  other than a Saturday or Sunday,  on which
      chartered  banks  in  Ottawa,  Ontario  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  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
      9;

      "Closing"  means the  completion  of the  subscription  for the  Purchased
      Shares and  EdgeStone  Warrants by the  Investor as  contemplated  in this
      Agreement;

      "Closing  Date" means April 23, 2004 or such  earlier or later date as the
      Corporation and the Investor 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
      labour 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  4.22  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,
      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 4.23,
      the term  "Contracts"  shall not  include  any  Contracts  as between  the
      Corporation and its Subsidiaries;

      "Converted  Debenture  Holders"  means  the  holders  of the  August  2002
      Debenture Shares;

<PAGE>
                                      -4-

      "Converted  Shares"  means the Common  Shares  issued or issuable upon the
      conversion of the Series A Shares;

      "Debenture  Holder  Consent" means the consent and notice of conversion to
      be executed by  Converted  Debenture  Holders,  substantially  in the form
      attached as Exhibit F-1;

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

      "EdgeStone Group" means:

            (a)   any Affiliate of EdgeStone;

            (b)   any other  Person,  provided  that  EdgeStone or any Affiliate
                  thereof  has the  exclusive  right to  exercise  all rights of
                  EdgeStone transferred hereunder on behalf of such Person;

            (c)   any  Person  whose  funds  are  managed  by  EdgeStone  or  an
                  Affiliate of EdgeStone;

            (d)   upon the termination or dissolution of any limited partnership
                  or other  entity  that is a Person  referred to in clause (b),
                  (A) the  beneficial  holders of interests in such Person,  and
                  (B) any other  Person  referred to in clause  (b),  whether or
                  not, in either case, an Affiliate  described in clause (a) has
                  the  exclusive  right to  exercise  the  rights  of  EdgeStone
                  transferred  hereunder on behalf of such beneficial  holder or
                  Persons; and

            (e)   EdgeStone  Capital  Equity Fund II-A,  L.P.  and/or any Person
                  which agrees to invest with it on a parallel or  co-investment
                  basis (and the  respective  partners  thereof,  if any) in the
                  manner  contemplated in the constating  documents of EdgeStone
                  Capital Equity Fund II-A, L.P.

      "EdgeStone  Purchase  Option" has the meaning  ascribed thereto in Section
      3.2(a);

      "EdgeStone  Warrants"  means  the  Series  1  Warrants  and the  Series  2
      Warrants;

      "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,

<PAGE>
                                      -5-

            (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, 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 conditional  sales  agreement or any other title  retention  agreement
      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;

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

      "Equity Fund" means EdgeStone Capital Equity Fund II-A, L.P.;

      "ERISA" means the United States Employment  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  Amended  and  Restated
      Shareholders Agreement made as of August 31, 2001 between the Corporation,
      Mitel Systems Corporation, Zarlink and PTIC;

      "Expenses" has the meaning ascribed thereto in Section 8.2(a);

      "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;

      "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

<PAGE>
                                      -6-

      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 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;

      "Lead Work Fee" has the meaning ascribed thereto in Section 8.1;

      "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  4.17(a)  of the  Disclosure
      Schedule;

<PAGE>
                                      -7-

      "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, with reference to the Corporation or any
      of the Subsidiaries, a material adverse effect on the condition (financial
      or  otherwise),   operations,   business,  assets,  or  prospects  of  the
      Corporation  and the  Subsidiaries  taken  as a whole,  the  Corporation's
      ability to consummate the transactions hereby  contemplated,  or the value
      of the Purchased Shares or the Converted  Shares,  other than any Material
      Adverse  Effect  resulting  from  industry-wide  conditions  affecting the
      industry  in which the  Corporation  or any of the  Subsidiaries  carry on
      business or conditions affecting the economy in general;

      "Material  Subsidiary"  means  each  of  Mitel  Networks  Limited,   Mitel
      Networks,  Inc., Mitel Networks  International  Limited and Mitel Networks
      Overseas Limited;

      "Other Agreements" means all of the agreements, instruments, certificates,
      and  other   documents,   including  the   Shareholders   Agreement,   the
      Registration  Rights  Agreement and the EdgeStone  Warrants,  executed and
      delivered by or on behalf of the  Corporation or EdgeStone 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  4.17(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;

<PAGE>
                                      -8-

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

      "Person" means any individual,  sole  proprietorship,  partnership,  firm,
      entity,    unincorporated    association,     unincorporated    syndicate,
      unincorporated organization, trust, body corporate, government, government
      regulatory authority,  governmental department, agency, commission, board,
      tribunal, dispute settlement panel or body, bureau or court, and where the
      context  requires  any of the  foregoing  when they are acting as trustee,
      executor, administrator or other legal representative;

      "Purchased Shares" has the meaning ascribed thereto in Section 2.1(a);

      "PTIC" means Power Technology Investment Corporation;

      "PTIC  Exchange  and Release  Agreement"  means the  Exchange  and Release
      Agreement  to  be  entered  into   between  the   Corporation   and  PTIC,
      substantially in the form attached hereto as Exhibit F-2;

      "PTIC Shares" means an aggregate of 4,000,000 Common Shares issued to PTIC
      pursuant to the PTIC Subscription Agreement;

      "PTIC  Subscription  Agreement" means the subscription  agreement  between
      PTIC and the  Corporation  dated August 31, 2001,  as amended by Amendment
      No. 1 dated May 3, 2002;

      "Real  Property"  means  the  Leased  Real  Property  and the  Owned  Real
      Property;

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

      "SEC" means the United States Securities and Exchange Commission;

      "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;

      "Senior Bank Debt" means all Indebtedness owed to the Senior Lender;

      "Senior Lender" means Bank of Montreal;

      "Series 1 Warrants" means warrants to purchase certain Common Shares to be
      issued to EdgeStone in accordance  with this Agreement,  substantially  in
      the form annexed hereto as Exhibit D-1;

      "Series 2 Warrants" means warrants to purchase certain Common Shares to be
      issued to EdgeStone in accordance  with this Agreement,  substantially  in
      the form annexed hereto as Exhibit D-2;

<PAGE>
                                      -9-

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

      "Series B Shares" means the Class B Convertible Preferred Shares, Series 1
      in the  capital  of  the  Corporation  having  substantially  the  rights,
      privileges, restrictions and conditions set forth in Exhibit A-2;

      "Share Purchase Price" has the meaning ascribed thereto in Section 2.2(a);

      "Shareholders  Agreement" means the  shareholders  agreement to be entered
      into by the  Corporation,  EdgeStone,  Mitel  Systems  Corporation,  Mitel
      Knowledge  Corporation,  Zarlink,  PTIC,  WCC and Dr. Terence H. Matthews,
      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 and June 13, 2003;

      "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;  and (c) any limited partnership of which the Corporation or
      any of its Subsidiaries is a general partner,  and "Subsidiary"  means any
      one of them;

      "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,  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;

<PAGE>
                                      -10-

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

      "TPC" means Her Majesty the Queen in Right of Canada,  as  represented  by
      the Minister of Industry;

      "TPC Agreement" means TPC Agreement No.  720-481443 dated October 10, 2002
      between  the  Corporation  TPC,  March  Networks   Corporation  and  Mitel
      Knowledge Corporation;

      "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;

      "Warrant  Purchase  Price"  has the  meaning  ascribed  thereto in Section
      2.2(c);

      "Warrant  Shares" means the Common Shares issued or issuable upon exercise
      of the EdgeStone Warrants;

      "WCC" means Wesley Clover Corporation;

      "WCC  Exchange  and  Release  Agreement"  means the  Exchange  and Release
      Agreement   to  be  entered  into   between  the   Corporation   and  WCC,
      substantially in the form attached hereto as Exhibit F-3;

      "WCC Note Shares"  means  20,448,875  Common Shares issued to WCC upon the
      conversion of certain  indebtedness  of the  Corporation  in the aggregate
      principal amount of $40,897,750;

      "Zarlink" means Zarlink Semiconductor Inc.; and

      "Zarlink Supply Agreement" means the supply agreement entered into between
      the Corporation and Zarlink dated February 16, 2001.

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 4.25 hereof;

      "Commercial   Software   Licenses"   means   "shrink-wrap",    "web-wrap",
      "click-wrap" or other similar generic licenses for commercially  available
      software available to the public

<PAGE>
                                      -11-

      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 favour 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 registered 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 and Domain Name registrations;  (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;  and (vi)
      any other  Technology that is the subject of an application,  certificate,
      filing,  registration or other document issued by, filed with, or recorded
      by, any

<PAGE>
                                      -12-

      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 Canada.

      (b)   Governing Law - This Agreement is a contract made under and shall be
            construed,  interpreted  and enforced in accordance with the laws of
            the Province of Ontario and the federal laws of Canada applicable in
            the  Province  of Ontario  (excluding  any  conflict  of law rule or
            principle  of such laws that  might  refer  such  interpretation  or
            enforcement  to the laws of  another  jurisdiction).  Subject to the
            provisions of Section 10.7, any Legal  Proceeding  arising out of or
            relating  to this  Agreement  shall be  brought in the courts of the
            Province  of  Ontario  and each of the  Parties  hereby  irrevocably
            submits to the non-exclusive jurisdiction of such courts.

      (c)   Headings - Headings  of  Articles  and  Sections  are  inserted  for
            convenience of reference only and shall not affect the  construction
            or interpretation of this Agreement.

      (d)   Number and Gender - Unless the  context  otherwise  requires,  words
            importing  the singular  include the plural and vice versa and words
            importing gender include all genders.

      (e)   Statutory  References  - A  reference  to  a  statute  includes  all
            regulations  made  pursuant to such  statute and,  unless  otherwise
            specified, the provisions of any statute or regulation which amends,
            supplements or supersedes any such statute or any such regulation.

      (f)   Time - Time is of the  essence in the  performance  of the  Parties'
            respective obligations under this Agreement.

<PAGE>
                                      -13-

      (g)   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.

      (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 Don Smith, Paul Butcher, Steven
Spooner, Ed Silberhorn, Greg Hiscock and, with respect to Sections 4.25 and 4.26
only, Jim Davies,  and any knowledge which any such individual  could reasonably
have acquired through the exercise of due inquiry regarding the relevant matter.

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,  whether  oral or written,  including,  without  limitation,  those
contained  in a term sheet dated  January 23, 2004 between the  Corporation  and
EdgeStone Capital Equity Fund II-A GP, Inc., and any amendments  thereto.  There
are no covenants,  promises,  representations,  warranties,  terms,  conditions,
undertakings,  understandings  or other  agreements,  oral or written,  express,
implied or collateral, between the Parties in connection with the subject matter
of this Agreement and the Other  Agreements other than as expressly set forth or
referred to in this Agreement or the Other Agreements.  No reliance is placed on
any representation,  warranty,  opinion, advice or assertion of fact made by any
Party hereto or its directors,  officers,  employees, legal counsel, accountants
or other representatives, except to the

<PAGE>
                                      -14-

extent that the same has been  reduced to writing and included as a term of this
Agreement or the Other  Agreements  or included as a term of any other  document
delivered pursuant to this Agreement or the Other Agreements. Accordingly, there
shall be no  liability,  either in tort or  contract,  assessed  to any Party in
relation to any such representation,  warranty,  opinion, advice or assertion of
fact,  except  to the  extent  that the same has been  reduced  to  writing  and
included as a term of this  Agreement or the Other  Agreements  or included as a
term of any other document  delivered by the Parties  pursuant to this Agreement
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        -       Parallel Investors

1.7   Exhibits

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

   Exhibit A-1       -       Series A Share Terms
   Exhibit A-2       -       Series B Share Terms
   Exhibit B         -       Form of Shareholders Agreement
   Exhibit C         -       Form of Registration Rights Agreement
   Exhibit D-1       -       Form of Series 1 Warrants
   Exhibit D-2       -       Form of Series 2 Warrants
   Exhibit E         -       Form of Legal Opinion of Counsel to the Corporation
   Exhibit F-1       -       Form of Debenture Holder Consent
   Exhibit F-2       -       Form of PTIC Exchange and Release Agreement
   Exhibit F-3       -       Form of WCC Exchange and Release Agreement

                                   ARTICLE 2
                         SHARE AND WARRANT SUBSCRIPTION

2.1   Subscription and Issuance of Purchased Shares and EdgeStone Warrants

      (a)   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 EdgeStone,  and EdgeStone  agrees
            to purchase  from the  Corporation  an aggregate  of twenty  million
            (20,000,000) of the  Corporation's  authorized but unissued Series A
            Shares (the "Purchased Shares").

      (b)   As the lead investor by virtue of the Investment,  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 EdgeStone the EdgeStone Warrants.

<PAGE>
                                      -15-

2.2   Purchase Price

      (a)   The  purchase  price for each  Purchased  Share shall be $1.00.  The
            aggregate  purchase  price  (the  "Share  Purchase  Price")  for the
            Purchased Shares equals twenty million dollars ($20,000,000).

      (b)   The aggregate purchase price (the "Series 1 Warrant Purchase Price")
            for the Series 1 Warrants shall be one dollar ($1.00).

      (c)   The aggregate purchase price (the "Series 2 Warrant Purchase Price",
            and together with the Series 1 Warrant  Purchase Price, the "Warrant
            Purchase  Price")  for the  Series 2  Warrants  shall be one  dollar
            ($1.00).

2.3   Closing

Subject to the fulfilment 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 Investor may agree. At the Closing, the Corporation shall issue and sell and
the Investor shall purchase the Purchased Shares and EdgeStone  Warrants for the
Aggregate Purchase Price.

2.4   Closing Deliveries

      (a)   At the Closing:

            (i)   the  Corporation  shall  deliver to the  Investor  one or more
                  certificates representing the Purchased Shares, free and clear
                  of all Liens,  registered  in the name of the  Investor (or as
                  directed  in writing  by the  Investor)  in the  Corporation's
                  records;

            (ii)  the  Corporation  shall  deliver to the  Investor  one or more
                  warrant  certificates,  substantially  in  the  form  attached
                  hereto as Exhibit  D-1,  representing  the Series 1  Warrants,
                  free  and  clear  of  all  Liens,  and  one  or  more  warrant
                  certificates,  substantially  in the form  attached  hereto as
                  Exhibit  D-2,  representing  the Series 2  Warrants,  free and
                  clear of all Liens; and

            (iii) the  Investor  shall  pay  to  the  Corporation  (or as it may
                  otherwise  direct) the Aggregate  Purchase  Price by certified
                  cheque,  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 Investor each of the following,  together with such
            other documents as the Investor 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

<PAGE>
                                      -16-

                  Material  Subsidiary (other than Mitel Networks Limited) 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  senior  officer  of  the  Corporation,  not in his
                  personal  capacity,  dated  as of the  Closing  Date,  in form
                  reasonably  satisfactory to the Investor,  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  senior  officer  of  the  Corporation,  not in his
                  personal  capacity,  in a form reasonably  satisfactory to the
                  Investor, 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;

            (iv)  a written legal opinion of Osler,  Hoskin & Harcourt LLP dated
                  the Closing Date and substantially in the form attached hereto
                  as Exhibit E; and

            (v)   payment of the amounts contemplated in Sections 8.1 (Lead Work
                  Fee) and 8.2(a)  (Expenses)  to EdgeStone or as EdgeStone  may
                  direct in  writing  (which  payment  may be  satisfied  by the
                  Corporation  by the  delivery  of a written  direction  to the
                  Investor, as contemplated in Section 2.4(a)(iii),  to pay such
                  amounts out of the Aggregate Purchase Price).

2.5   Closing Conditions in Favour of EdgeStone

The  transactions  herein  contemplated,  including  the  issue  and sale of the
Purchased Shares and the EdgeStone 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  Investor 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 Investor,  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  terms,   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.

<PAGE>
                                      -17-

      (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)  the consent of Zarlink to the Articles of Amendment, as may be
                  required pursuant to the Zarlink Supply Agreement.

      (c)   Dissents.   Holders  of  no  more  than  two  percent  (2%)  of  the
            outstanding  Common  Shares shall have  exercised,  or expressed the
            intent  in  accordance  with  the Act to  exercise,  their  right of
            dissent or appraisal with respect to the Articles of Amendment.

      (d)   Articles of  Amendment.  The Series A Shares and the Series B 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 EdgeStone  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.

      (e)   Reservation of Converted  Shares and Warrant  Shares.  The Converted
            Shares and the Warrant  Shares shall have been duly  authorized  and
            reserved for issuance.

      (f)   Zarlink Supply  Agreement.  The Zarlink Supply  Agreement shall have
            been duly and validly  amended,  as may be  required,  to remove any
            requirement for Zarlink to consent or otherwise agree to any changes
            to the constating documents of the Corporation.

      (g)   Conditions with respect to Converted Debenture Holders.

            (i)   Holders of not less than  ninety  percent  (90%) of the August
                  2002 Debenture Shares shall have executed and delivered to the
                  Corporation a Debenture  Holder  Consent (which shall provide,
                  among other things,  that any price protection,  anti-dilution
                  or similar rights of the Converted  Debenture Holders shall be
                  terminated),  and all of the August 2002 Debenture Shares held
                  by such Persons shall have been duly  converted  into Series B
                  Shares in accordance  with the terms of such Debenture  Holder
                  Consents.

            (ii)  Each Converted  Debenture Holder that has executed a Debenture
                  Holder  Consent  and who is a  non-resident  of Canada for the
                  purposes of the Income Tax Act  (Canada)  shall have  obtained
                  (or the  Corporation  shall  have  obtained  on behalf of such
                  Converted Debenture Holders) a

<PAGE>
                                      -18-

                  certificate  issued  pursuant to section 116 of the Income Tax
                  Act  (Canada)  in respect of the  disposition  of  his/her/its
                  August 2002  Debenture  Shares upon  conversion of such shares
                  into Series B Shares  containing a certificate  limit at least
                  equal  to  the  value  of  the  Converted  Debenture  Holder's
                  entitlement to Series B Shares, or, if in the case of any such
                  Converted  Debenture  Holder  such  certificate  has not  been
                  obtained, the Corporation shall have withheld and remitted the
                  full amount of Tax for which the  Corporation may be liable in
                  respect of such  disposition as provided in section 116 of the
                  Income Tax Act (Canada).

            (iii) The conversion of the August 2002 Debenture Shares into Series
                  B Shares pursuant to the Debenture Holder Consents received by
                  the  Corporation  shall have been effected in compliance  with
                  applicable  securities  laws and all  notices  and  filings in
                  respect  thereof due on or before the Closing  Date shall have
                  been  delivered  or filed by the  Corporation  within the time
                  periods and in the manner  required by  applicable  securities
                  laws.

      (h)   Conditions  with respect to WCC. The  Corporation and WCC shall have
            executed and delivered the WCC Exchange and Release Agreement (which
            shall  provide,  among  other  things,  that any  price  protection,
            anti-dilution or similar rights of WCC shall be terminated), and the
            WCC Note Shares shall have been duly  exchanged  for an aggregate of
            40,897,750  Series B Shares in accordance  with the terms of the WCC
            Exchange and Release Agreement.

      (i)   Conditions with respect to PTIC.

            (i)   The Corporation and PTIC shall have executed and delivered the
                  PTIC  Exchange and Release  Agreement  (which  shall  provide,
                  among  other  things,  that  any  existing  price  protection,
                  anti-dilution  or similar rights of PTIC shall be terminated),
                  and the PTIC  Shares  shall  have been duly  exchanged  for an
                  aggregate of 16,000,000 Series B Shares in accordance with the
                  terms of the PTIC Exchange and Release Agreement.

            (ii)  The PTIC  Subscription  Agreement  shall  have  been  duly and
                  validly terminated.

      (j)   Conditions with respect to TPC. Not less than  $10,000,000  shall be
            remaining  available for  disbursement  to the  Corporation  for the
            period up to September 30, 2004 pursuant to the TPC Agreement.

      (k)   Conditions with respect to Senior Lender.

            (i)   The  Corporation's  existing credit facilities with the Senior
                  Lender  shall  have been  renegotiated  or  replaced  on terms
                  satisfactory to EdgeStone, acting reasonably.

            (ii)  Neither the Corporation nor any Subsidiary  shall be in breach
                  of or in default  under any of their  respective  covenants in
                  favour of the Senior

<PAGE>
                                      -19-

                  Lender or with  respect to the Senior  Bank Debt  (except  any
                  such  breach or  default  that has been  waived by the  Senior
                  Lender),  nor shall  there exist any state of facts that would
                  constitute  a  breach  or  default  but for the  rectification
                  thereof  by  a  waiver  or  letter  of  forbearance,  and  the
                  consummation   of  the   transactions   contemplated  by  this
                  Agreement will not result in any such breach or default.

      (l)   Termination  of  Existing  Shareholders   Agreement.   The  Existing
            Shareholders   Agreement  shall  have  been  validly  terminated  in
            accordance with its terms.

      (m)   Shareholders Agreement.  The Shareholders Agreement substantially in
            the form  annexed  hereto as Exhibit B shall have been  executed and
            delivered by the  Corporation  and each of the other parties thereto
            (other than the Investor), to the satisfaction of the Investor.

      (n)   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 and each of the other
            parties  thereto (other than the Investor),  to the  satisfaction of
            the Investor.

      (o)   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 EdgeStone Warrants contemplated herein.

      (p)   Exemption  from  Prospectus  and  Registration   Requirements.   The
            issuance of the Purchased Shares and EdgeStone  Warrants pursuant to
            this Agreement shall be exempt from the prospectus and  registration
            requirements of all applicable securities laws.

      (q)   Other Closing  Documents.  The Investor  shall have received each of
            the  certificates  referred  to in  Section  2.4(b)  and such  other
            opinions,   agreements,    certificates,    affidavits,    statutory
            declarations,   and  other  documentation  as  are  customary  in  a
            transaction  of this  nature and may be  reasonably  required by the
            Investor,  all of which shall be  satisfactory in form and substance
            to counsel for the Investor, acting reasonably.

2.6   Closing Conditions in Favour 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  Investor at or prior to the Time of Closing on the Closing Date
            shall have been performed or complied with.

<PAGE>
                                      -20-

      (b)   Approvals and Consents.  The following  approvals or consents  shall
            have been obtained by the Corporation:

            (i)   all approvals and consents of the  shareholders  required with
                  respect to the filing of the Articles of Amendment; and

            (ii)  the consent of Zarlink to the Articles of Amendment, as may be
                  required pursuant to the Zarlink Supply Agreement.

      (c)   Dissents.   Holders  of  no  more  than  two  percent  (2%)  of  the
            outstanding  Common  Shares shall have  exercised,  or expressed the
            intent  in  accordance  with  the Act to  exercise,  their  right of
            dissent or appraisal with respect to the Articles of Amendment.

      (d)   Conditions with respect to Converted  Debenture Holders.  Holders of
            not less than  ninety  percent  (90%) of the August  2002  Debenture
            Shares  shall have  executed  and  delivered  to the  Corporation  a
            Debenture Holder Consent.

      (e)   Conditions  with  respect  to  WCC.  WCC  shall  have  executed  and
            delivered the WCC Exchange and Release Agreement.

      (f)   Conditions  with  respect  to PTIC.  PTIC shall  have  executed  and
            delivered  the PTIC  Exchange  and  Release  Agreement  and the PTIC
            Subscription Agreement shall have been duly and validly terminated.

      (g)   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 EdgeStone Warrants contemplated herein.

      (h)   Execution  of  Agreements.  The  Investor  shall have  executed  and
            delivered the  Shareholders  Agreement and the  Registration  Rights
            Agreement.

      (i)   Exemption  from  Prospectus  and  Registration   Requirements.   The
            issuance of the Purchased Shares and EdgeStone  Warrants pursuant to
            this Agreement shall be exempt from the prospectus and  registration
            requirements of all applicable securities laws.

      (j)   Other Closing  Documents.  The Corporation  shall have received such
            agreements,  certificates,  affidavits,  statutory declarations, and
            other documentation as are customary in a transaction of this nature
            and may be  reasonably  required  by the  Corporation,  all of which
            shall be  satisfactory  in form and  substance  to  counsel  for the
            Corporation, acting reasonably.

<PAGE>
                                      -21-

                                   ARTICLE 3
                          ADDITIONAL EQUITY INVESTMENT

3.1   Additional Investment

      (a)   The  Corporation  shall have the right to issue and sell:  (i) up to
            five million  (5,000,000)  additional Series A Shares at a price per
            share  of not  less  than  $1.00  and  otherwise  on  terms  no more
            favourable than the terms set forth in this Agreement;  and (ii) any
            Series A Shares issuable upon the exercise of the EdgeStone Purchase
            Option  pursuant to Section 3.2 (the issuance of the Series A Shares
            contemplated  in clause  (i) and (ii)  together  being  referred  to
            herein as the "Additional Investment").

      (b)   The  Additional  Investment  shall  be  completed,  in one  or  more
            closings,  on  such  date  or  dates  as  may  be  selected  by  the
            Corporation;  provided  that,  the last day on  which  any  Series A
            Shares may be issued or sold pursuant to the  Additional  Investment
            shall be (A)  August  31,  2004,  or (B) such  later  date as may be
            agreed  to  in  writing  by  the   Corporation  and  EdgeStone  (the
            applicable  date  in  clause  (A) or  (B)  above  being  hereinafter
            referred to as the "Expiry Date").

      (c)   Notwithstanding  the foregoing,  the Parties  acknowledge  and agree
            that:  (i) the EdgeStone  Purchase  Option;  (ii) the payment of the
            Lead Work Fee  contemplated by Section 8.1; (iii) the  reimbursement
            of Expenses contemplated by Section 8.2; and (iv) the entitlement to
            receive  the  EdgeStone  Warrants  are  entitlements   exclusive  to
            EdgeStone as the lead investor with respect to the  Investment,  and
            shall not be  extended  to  purchasers  pursuant  to the  Additional
            Investment  (except for EdgeStone and/or its permitted  assignees on
            the  exercise  of the  EdgeStone  Purchase  Option,  to  the  extent
            provided in this Agreement) or to any purchasers of Common Shares as
            contemplated in Section 3.4.

3.2   EdgeStone Option

      (a)   EdgeStone or its permitted  assignees,  as provided herein, shall be
            entitled,  at any time or times on or before  the  Expiry  Date,  to
            purchase  from  the  Corporation  up to an  aggregate  of  5,000,000
            additional  Series A Shares,  at a purchase price of $1.00 per share
            (the "EdgeStone Purchase Option").

      (b)   On each closing of the  purchase of Series A Shares  pursuant to the
            exercise of the EdgeStone Purchase Option:

            (i)   EdgeStone  or its  permitted  assignees,  as provided  herein,
                  shall be  entitled  to  payment  of the Lead Work Fee  payable
                  pursuant Section 8.1 and reimbursement of Expenses as provided
                  in Section 8.2; and

            (ii)  each  purchaser or purchasers  of Series A Shares  pursuant to
                  the EdgeStone  Purchase  Option shall:  (A) receive a Series 1
                  Warrant,  substantially  in the form annexed hereto as Exhibit
                  D-1, to purchase certain Common Shares at a price of $1.25 per
                  share (subject to

<PAGE>
                                      -22-

                  adjustment)  based on the number of Series A Shares  purchased
                  on the exercise of the EdgeStone  Purchase Option; (B) receive
                  a Series 2 Warrant,  substantially  in the form annexed hereto
                  as Exhibit  D-2,  to  purchase  certain  Common  Shares for no
                  additional  consideration  on the happening of certain events;
                  (C)  receive  the  benefit  of  all  of  the  representations,
                  warranties,  covenants and  indemnities of the  Corporation in
                  this Agreement,  which shall apply mutatis mutandis as if such
                  purchaser or purchasers were the original Investor  hereunder;
                  (D) be joined as a party to the Registration  Rights Agreement
                  as an "Investor"  thereunder,  in accordance with the terms of
                  the  Registration  Rights  Agreement;  and (E) be  joined as a
                  party  to  the  Shareholders   Agreement  as  a  "Shareholder"
                  thereunder,  in accordance with the terms of the  Shareholders
                  Agreement.

      (c)   The EdgeStone  Purchase Option may be assigned by EdgeStone in whole
            or in part to: (A) any Person that is acceptable to the Corporation,
            acting reasonably; and/or (B) any member or members of the EdgeStone
            Group.

3.3   Adjustments

The number and purchase price of the Series A Shares and EdgeStone  Warrants (if
applicable) which are subject to issuance pursuant to the Additional  Investment
shall be subject to appropriate  adjustments  for stock splits,  consolidations,
stock dividends, and recapitalizations and the like.

3.4   Additional Common Shares

In addition to the Additional  Investment,  the Investor acknowledges and agrees
that the  Corporation  shall also have the right to issue and sell  (without the
engagement  of an agent or  intermediary)  for a period of nine months after the
Closing Date, without any further consent from EdgeStone,  Common Shares with an
aggregate  purchase price of up to $10,000,000 at a price per share equal to the
fair market value  thereof (and for such  purpose,  the fair market value of the
Common Shares shall be determined by the Board of Directors).  The purchasers of
such Common Shares shall be restricted to: (i) employees, officers and directors
of  the  Corporation  or  any  Subsidiary;  (ii)  existing  shareholders  of the
Corporation;  (iii) distributors or resellers with a business  relationship with
the Corporation or any Subsidiary;  (iv) high net worth individuals  (other than
institutional investors); and (v) any such other Persons acceptable to EdgeStone
and the Corporation.

                                   ARTICLE 4
                REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

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

<PAGE>
                                      -23-

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 and EdgeStone
Warrants,  the  issue  and  delivery  of any and  all  Converted  Shares  on the
conversion  of the  Purchased  Shares and the issue and  delivery of any and all
Warrant Shares on the exercise of the EdgeStone Warrants.

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  have been made available
to the Investor or its counsel for review.

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.  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).

<PAGE>
                                      -24-

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)   Immediately prior to Closing,  but after giving effect to the filing
            of the Articles of Amendment  and to the issuance of Series B Shares
            to the  Converted  Debenture  Holders that have executed a Debenture
            Holder Consent,  WCC and PTIC, as  contemplated in Sections  2.5(g),
            2.5(h) and 2.5(i), respectively:

            (i)   the authorized capital of the Corporation will consist of: (A)
                  an unlimited number of Common Shares;  (B) an unlimited number
                  of Class A Convertible  Preferred Shares,  issuable in series,
                  of which an unlimited  number of the first  series,  being the
                  Series A Shares, shall have been created; and (C) an unlimited
                  number of Class B Convertible  Preferred  Shares,  issuable in
                  series,  of which an  unlimited  number of the  first  series,
                  being the Series B Shares, shall have been created; and

            (ii)  111,786,713  Common  Shares,  no Series A  Shares,  67,060,988
                  Series  B  Shares  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,  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 25,000,000  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. To the date hereof, options to purchase
            an aggregate of 4,519,219  Common Shares (and no other  options) are
            outstanding  under the Stock  Option  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

<PAGE>
                                      -25-

            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 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  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,  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(e) of the Disclosure Schedule and
            except  as  contemplated  in  this  Agreement,  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.  On the fulfillment
            of the closing conditions referred to in Sections 2.5(g), 2.5(h) and
            2.5(i),  except as contained in the terms of the Series A Shares and
            the  Series B Shares,  as set forth in the  Other  Agreements  or as
            disclosed in Section 4.5(e) of the Disclosure  Schedule,  there will
            be 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 or any
            securities of the Corporation or any Subsidiary  which may hereafter
            be issued.

<PAGE>
                                      -26-

      (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.

      (g)   The Corporation has duly reserved and shall continue at all times to
            reserve,  solely for the  purpose of issuance  upon  exercise of the
            EdgeStone  Warrants,  a number of Warrant Shares sufficient to cover
            the  exercise of all such  EdgeStone  Warrants.  The Warrant  Shares
            issuable  upon  exercise of the  EdgeStone  Warrants  have been duly
            authorized and reserved for issuance and, when issued upon the valid
            exercise of the EdgeStone Warrants,  shall be validly issued,  fully
            paid and non-assessable, and free and clear of Liens.

4.6   Lawful Issuance

Except as  disclosed  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,  the
Converted  Shares,  the EdgeStone  Warrants and Warrant 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  Investor  contained  in  Article  5 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 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

<PAGE>
                                      -27-

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.  There  are  no  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,
that have not either been complied with or duly and validly  waived with respect
to the issuance of the Purchased  Shares,  the Converted  Shares,  the EdgeStone
Warrants, the Warrant Shares and the EdgeStone Purchase Option 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 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 year ended April 27, 2003 and
the  unaudited  interim  financial  statements  for the nine month  period ended
January 25, 2004,  annexed  hereto as Schedule C  (collectively,  the "Financial
Statements"),  have been prepared in accordance with Canadian 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 27, 2003; and
(ii) the sales, earnings, results of operation and changes in financial position
of the  Corporation  on a  consolidated  basis for the nine month  period  ended
January 25, 2004. Except as otherwise  described in the Financial  Statements or
as disclosed in or contemplated by this Agreement or as set forth in Section 4.9
of the  Disclosure  Schedule,  since  April 27, 2003 (the  "Financial  Statement
Date") there has not been:

      (a)   other than those in the ordinary course of business, 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)   to the  knowledge of the  Corporation,  any change in the  condition
            (financial   or   otherwise),   properties,   assets,   liabilities,
            investments,  revenues,  expenses, income, operations,  Business, or
            prospects of the Corporation or any of the  Subsidiaries,  or in any
            of its relationships with any suppliers, customers, key employees or

<PAGE>
                                      -28-

            other third parties with whom it has financial, commercial, or other
            business relationships, other than changes in the ordinary course of
            business that have not caused and cannot be  reasonably  expected to
            cause, in any case or in the aggregate, a 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)

<PAGE>
                                      -29-

            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; or

      (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.

4.10  Inventory Valuation

Except as  disclosed  in Section 4.10 of the  Disclosure  Schedule,  neither the
Corporation  nor any Subsidiary has material  obsolete or unusable  inventory as
reflected on the balance  sheets  forming part of the Financial  Statements,  or
otherwise.  The  finished  goods,  work in  process,  raw  materials  and  other
materials and supplies included in such inventory are of a standard which is not
lower than the  generally  accepted  standard  prevailing  in the  Corporation's
industry.

4.11  Accounts Receivable

The  accounts  receivable  reflected  on  the  balance  sheets  included  in the
Financial  Statements  and all accounts  receivable  arising after the Financial
Statement Date and prior to the Closing are bona fide and are, in the good faith
judgment of the  Corporation,  collectible  in the  ordinary  course of business
(other than those accounts receivable which are doubtful accounts and in respect
of which a reasonable allowance not exceeding  $8,000,000,  consistent with past
practice,  has been made), no material set-off or counterclaim has been asserted
with  respect  to  such  accounts  receivable,  and,  to  the  knowledge  of the
Corporation, there is no basis for any such set-off or counterclaim.

<PAGE>
                                      -30-

4.12  Accounts Payable

The accounts  payable  reflected on the balance sheets included in the Financial
Statements and all accounts  payable arising after the Financial  Statement Date
and prior to the Closing are bona fide.

4.13  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 Investor or its counsel for inspection.

Except  as  disclosed  in  Section  4.13 of the  Disclosure  Schedule  or in the
Financial Statements, 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.

The total Indebtedness of the Corporation and the Subsidiaries,  considered on a
consolidated  basis,  including  all capital  leases and revolving or short-term
credit  facilities,  as at the  date  of  this  Agreement  is not  greater  than
$80,000,000.

Except for invoiced fees and  disbursements  and  work-in-progress  totaling not
more than $100,000 (all of which has been incurred on account of legal  services
provided to the Corporation), neither the Corporation nor any Subsidiary has any
Indebtedness  to Gowling  Lafleur  Henderson  LLP  ("Gowlings").  Except for the
retainer  letter  between the  Corporation  and Gowlings dated January 21, 2002,
there is no Contract  between  Gowlings and the Corporation or any Subsidiary to
issue any shares or other  securities  to  Gowlings  on  account of  outstanding
Indebtedness or Indebtedness that may hereafter be incurred.

4.14  Absence of Undisclosed Liabilities

Other than as set forth in the  Financial  Statements or as disclosed in Section
4.14 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,   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.

4.15  Cash and Cash Equivalents

As of the date of this Agreement,  the Corporation had cash and cash equivalents
of not less than $10,000,000.

<PAGE>
                                      -31-

4.16  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 4.16(a) of the Disclosure Schedule, neither the
            Corporation  nor any of the  Subsidiaries is in arrears with respect
            to any required  withholdings  or  installment  payments of any 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  4.16(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  shown as
            accruing  therein.  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  4.16(c) of the Disclosure  Schedule,
            no 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. Adequate provision has been
            made in  accordance  with  Canadian  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
            installments and Taxes not yet due.

      (d)   Except as disclosed in Section  4.16(d) of the Disclosure  Schedule,
            each of the Corporation and the Subsidiaries  have 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.

      (e)   Except as disclosed in Section  4.16(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.

<PAGE>
                                      -32-

      (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).

      (h)   Except as disclosed in Section  4.16(h) of the Disclosure  Schedule,
            neither  the  Corporation  nor  any of  the  Subsidiaries  have  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.

      (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
            registration,  reporting,  collection and remittance requirements in
            respect of Taxes.  Except as  disclosed  in  Section  4.16(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.

4.17  Real Property

      (a)   Except  as  described  and  set  forth  in  Section  4.17(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 right of
            occupancy with respect  thereto.  Section  4.17(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
                  mortgages/charges registered such property; and

<PAGE>
                                      -33-

            (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 Real  Property,  and (D) the rental payable and any
                  other material payments required under the lease.

      (b)   Mitel  Networks  Limited  is the owner of the Owned  Real  Property.
            Except as disclosed in Section  4.17(b) of the Disclosure  Schedule,
            there are no  Contracts  to sell,  transfer  or dispose of the Owned
            Real  Property or any interest  therein or which would  restrict the
            ability  of Mitel  Networks  Limited  to  transfer  the  Owned  Real
            Property,  and no  person  has any right to occupy or use any of the
            Owned Real Property or any part thereof  other than the  Corporation
            or a Subsidiary.

      (c)   Each lease for the Leased Real Property listed in Section 4.17(a) of
            the  Disclosure  Schedule  is  valid  and  subsisting  and  in  good
            standing,  and the  Corporation  or a Subsidiary  is entitled to all
            rights and benefits  under such 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 leases
            or the property  subject thereto to any other Person,  except as set
            forth in Section  4.17(c) of the  Disclosure  Schedule.  Neither the
            Corporation  nor a Subsidiary nor, to the  Corporation's  knowledge,
            any other party thereto is in breach of any of the provisions of any
            such lease,  nor is there any dispute between the Corporation or any
            Subsidiary and any landlord or tenant under any such lease.

      (d)   All of the plant, buildings,  structures,  erections,  improvements,
            appurtenances  and  fixtures  (collectively  in  this  Section  4.17
            "buildings and  structures")  situate on or forming part of the Real
            Property are, to the knowledge of the Corporation, in good operating
            condition  and in a state of good  maintenance  and  repair  and are
            adequate and suitable for the purposes for which they are  currently
            being used.

      (e)   To the  knowledge  of the  Corporation,  none of the  buildings  and
            structures,  or the operation or maintenance  thereof,  violates any
            restrictive  covenant  or any  provision  of any  applicable  law or
            encroaches on any property owned by others, or, if there is any such
            violation,  such  violation  would not result in a Material  Adverse
            Effect.

4.18  Personal Property

Except as disclosed in Schedule 4.18 of the Disclosure Schedule, and except with
respect to Real Property which is separately  addressed in Section 4.17, 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

<PAGE>
                                      -34-

excepted,  and are adequate and sufficient in all material  respects to carry on
the Business as presently conducted and as proposed to be conducted.

4.19  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  4.19(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.

4.20  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 Investor or its counsel,
            where specifically  requested.  For the purposes of this clause (a),
            the  term  "senior   officer"   means  any  senior  officer  of  the
            Corporation  or any  Subsidiary  as such term is  defined in section
            1(1) of the  Securities  Act  (Ontario).  There  is no  Contract  of
            employment or engagement entered into with any employee, director 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.

      (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
            4.20(b)  of the  Disclosure  Schedule.  Other than as  disclosed  in
            Section  4.20(b)  of the  Disclosure  Schedule,  there is no current
            labour   unrest,   threatened   labour  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  senior  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  4.20(c) of the Disclosure  Schedule,
            the  Corporation  is not party to or bound by any Contract or policy
            providing for

<PAGE>
                                      -35-

            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 favour 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  4.20(e) of the Disclosure  Schedule,
            no complaint,  grievance,  claim, 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 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; and

            (iii) with  respect to employees  in the United  Kingdom,  the Trade
                  Union and Labour Relations (Consolidation) Act 1992, the Equal
                  Pay Act 1970, the Sex  Discrimination  Acts 1975 and 1986, the
                  Race Relations Act 1986, the Employment  Rights Act, the Trade
                  Union Reform and  Employment  Rights Act 1993,  the Disability
                  Discrimination  Act 1995, the  Employment  Relations Act 1999,
                  the Social Security and Housing  Benefits Act 1982, the Social
                  Security  Contributions and Benefits Act 1992, 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 labour practice.  There is no work
            stoppage or, to the knowledge of the Corporation,  any other action,
            grievance or dispute  currently  existing or 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

<PAGE>
                                      -36-

            4.20(e)  of  the  Disclosure  Schedule,  there  are  no  outstanding
            decisions or settlements or pending settlements under any employment
            standards   legislation   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  4.20(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  4.20(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.

4.21  Employee Plans

      (a)   Section 4.21(a) of the Disclosure  Schedule lists all Employee Plans
            and 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 EdgeStone
            or its counsel true, correct and complete copies of all the Employee
            Plans and 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  EdgeStone or its counsel the most  recently  filed Form
            5500 under the Code, if applicable.

      (b)   Except as disclosed in Section  4.21(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  4.21(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
            4.21(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.

<PAGE>
                                      -37-

      (e)   Section 4.21(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 4.21(a) of the Disclosure  Schedule does not
            exceed (pound)12,000,000 in the aggregate.

      (f)   Except as disclosed in Section  4.21(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  4.21(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  4.21(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, proceeding, action, suit 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,
            proceeding,  action,  suit 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 4.21(b)

<PAGE>
                                      -38-

            of the Disclosure  Schedule.  The  Corporation has made available to
            EdgeStone or its 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).

4.22  Unions

A list  of all  Collective  Agreements  is  contained  in  Section  4.22  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 4.22 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 labour  representatives  have applied to have the  Corporation or
            any Subsidiary  declared a related  employer  pursuant to the Labour
            Relations Act (Ontario); 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.

4.23  Material Contracts

Except as  disclosed  in Section 4.23 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:

<PAGE>
                                      -39-

      (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  government  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 government 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 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 Investor or its 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 4.23 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

<PAGE>
                                      -40-

Contracts  disclosed in connection with clause (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.

4.24  Customers, Licensors and Suppliers

      (a)   Section  4.24(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 annual
            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 Contracts 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  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 EdgeStone or its 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 thereon (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  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

<PAGE>
                                      -41-

            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  4.24(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.

4.25  Description of Business Intellectual Property

Section 4.25 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 4.25 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 4.25 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  4.25 of the
Disclosure  Schedule with respect to the Licensed IP have been made available to
the Investor or counsel for the Investor.

4.26  Intellectual Property Rights

      (a)   Except as  disclosed  in Section  4.26(a) or Section  4.26(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  4.26(a) of the  Disclosure  Schedule,  no
            portion of the Owned IP was

<PAGE>
                                      -42-

            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  4.26(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  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-mark 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  4.26(c) of the Disclosure  Schedule,
            neither the Corporation or any of the Subsidiaries has ever 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  4.26(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)   Except as disclosed in Section  4.26(e) of the Disclosure  Schedule,
            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

<PAGE>
                                      -43-

            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 to any Owned IP
            which is Registered IP).

      (f)   To the knowledge of the Persons  named in Section 1.4 hereof,  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 sue
            or  otherwise  enforce any legal  rights with  respect to any of the
            Owned IP.

      (g)   Section  4.26(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 Owned  IP,  and
            specifies  for each such Contract  whether the licenses  granted are
            exclusive or non-exclusive in nature. Except as disclosed in Section
            4.26(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 Owned IP to any other
            Party.

      (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 4.25(i) 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  4.26(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 Owned 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.

<PAGE>
                                      -44-

      (j)   Except as disclosed in Section  4.26(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  4.26(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
            4.26(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 IP  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

<PAGE>
                                      -45-

            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  4.26(l) of the Disclosure  Schedule,
            no 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 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)   Pursuant to the Zarlink Supply  Agreement,  one copy of the Escrowed
            Intellectual  Property (as defined in the Zarlink Supply  Agreement)
            has been placed in escrow and the Corporation is entitled to release
            of the Escrowed  Intellectual  Property in accordance with the terms
            and  conditions  of the escrow  agreement  between the  Corporation,
            Zarlink  and  Royal  Trust  Corporation  of  Canada  made  effective
            February 16, 2001. A complete copy of such escrow agreement has been
            made available to the Investor or its counsel.

      (n)   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.

<PAGE>
                                      -46-

      (o)   Except as disclosed in Section  4.26(o) 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.

      (p)   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.

4.27  Litigation

Except as disclosed in Section 4.27 of the Disclosure Schedule:  (i) there is no
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  Legal  Proceeding,  or result in
litigation;  and (iii) there is no judgment,  writ,  decree,  injunction,  rule,
award or order of any court, government department,  board, commission,  agency,
arbitrator or similar body  outstanding  against the  Corporation  or any of the
Subsidiaries.  Without  limiting  the  generality  of the  foregoing,  except as
disclosed  in  Section  4.27  of the  Disclosure  Schedule,  there  is no  Legal
Proceeding involving any product liability claim in progress, pending or, to the
Corporation's knowledge,  threatened against or affecting the Corporation or any
Subsidiary  alleging any defect in the design or manufacture of or the materials
used in any of the products of the  Corporation  or any  Subsidiary or breach of
any express or implied  warranty.  Except as  disclosed  in Section  4.27 of the
Disclosure Schedule,  neither the Corporation nor any of the Subsidiaries is the
plaintiff or complainant in any Legal Proceeding. The Corporation is not and has
not been since the Financial  Statement  Date engaged in any dispute with any of
its Insiders. Except as disclosed in Section 4.27 of the Disclosure Schedule, 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.

In the good faith opinion of the Corporation,  the maximum  aggregate  potential
liability of the Corporation and any Subsidiary to all Persons included,  or who
may be included,  in the class of plaintiffs  pursuant to the statement of claim
filed under Court File No.  03-CU-25673  does not exceed  $2,800,000  (excluding
legal costs or expenses).

4.28  Insurance

Section  4.28 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

<PAGE>
                                      -47-

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 4.28 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  4.28 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 4.28 of the
Disclosure  Schedule set 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.

4.29  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 the  Subsidiaries  and any Insiders  other than
            contracts of  employment  entered  into in the  ordinary  course and
            those  disclosed  in  Section  4.23(e)  or  Section  4.29(a)  of the
            Disclosure Schedule.

      (b)   Except as disclosed in Section  4.29(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  4.29(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,  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 senior officer
            of the  Corporation  has  been  involved  in any  Legal  Proceeding,
            offence or disciplinary

<PAGE>
                                      -48-

            action that would  disqualify,  or could  reasonably  be expected to
            disqualify,  such  person  from acting as a director or officer of a
            public company.

4.30  Brokers

Other than CIBC World Markets Inc. 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 CIBC World  Markets  Inc.  and any  subagent  thereof in an
amount not  exceeding  $1,350,000  in the  aggregate  and warrants to purchase a
total of 1,000,000 Common Shares at an exercise price of $1.00 per share, no fee
will be payable by the  Corporation  or any of its Affiliates to any such Person
in connection with such transactions.

4.31  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.

4.32  Payment of BreconRidge Note

The promissory note issued by BreconRidge Manufacturing Solutions, Inc. to Mitel
Networks,  Inc. on August 31, 2001 in the principal amount of US$511,637.13  has
been paid and satisfied in full.

4.33  Compliance with Other Instruments, Laws, Etc.

Except as disclosed in Section 4.33 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
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, 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

<PAGE>
                                      -49-

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
Investor or its counsel for inspection.

4.34  Public Disclosures

No event or circumstance  has occurred or exists with respect to the Corporation
or  any  Subsidiary  or  their  respective  businesses,  properties,  prospects,
operations or financial  condition,  which,  under any  applicable  law, rule or
regulation,  requires  public  disclosure or announcement by the Corporation but
which has not been so publicly  announced or  disclosed.  The  Corporation  is a
"foreign  private  issuer" as  defined  Rule 3b-4 under the  Exchange  Act.  All
documents  filed  by the  Corporation  (or  its  agents)  with  the  SEC and all
materials incorporated or deemed to be incorporated by reference therein, as and
when filed,  complied in all material respects with all applicable  requirements
of the Exchange Act and the rules and  regulations  of the SEC  thereunder.  The
annual report of the Corporation for the Corporation's  most recently  completed
financial  year,  as filed with the SEC on Form 20-F and all other reports filed
by it with the SEC under the Exchange Act since July 31, 2003 (collectively, the
"Reports")  did not at the time filed with the SEC contain any untrue  statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not  misleading.  Each of the financial  statements,  and other  financial
information  included  in the  Reports,  has been  prepared in  accordance  with
generally accepted  accounting  principles applied on a consistent basis (except
as may be indicated  therein or in the notes  thereto) and fairly present in all
material respects the financial condition,  results of operations and cash flows
of the  Corporation  as of, and for, the periods  presented.  The  Corporation's
disclosure  controls and procedures (as defined in Exchange Act Rules  13a-15(e)
and 15d-15(e))  and internal  controls over  financial  reporting  comply in all
material  respects  with all  applicable  securities  laws,  including,  without
limitation,  the  provisions  of the United  States  Sarbanes-Oxley  Act of 2002
applicable to foreign private issuers.

4.35  Compliance with Securities Law

Subject to and assuming the accuracy of the representations and warranties given
by the Investor in Article 5, the offer, issuance, and delivery of the Purchased
Shares and EdgeStone  Warrants as  contemplated by this Agreement is exempt from
the  registration  requirements  of the  Securities  Act, and is exempt from the
prospectus, registration and/or qualification requirements, as applicable, under
any  applicable  states'  securities  laws and is exempt from the prospectus and
registration requirements under Canadian Securities Laws.

<PAGE>
                                      -50-

4.36  Full Access

The  Investor  and its  representatives  have had full  and open  access  to the
management of the Corporation and to such other  information as the Investor has
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  Investor  and  its  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 Investor or
its representatives in connection herewith.

4.37  Disclosure

The  Corporation has disclosed to the Investor 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,
the  Converted  Shares,  the  EdgeStone  Warrants  or  the  Warrant  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  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 5
                 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

5.1   Representations and Warranties of Investor

By executing this Agreement, EdgeStone acknowledges and agrees that the sale and
delivery of the Purchased Shares and EdgeStone  Warrants in accordance with this
Agreement are conditional upon the sale being exempt from the prospectus  filing
requirements of any applicable securities  legislation,  statutes,  regulations,
policies and stock  exchanges  relating to the sale of the Purchased  Shares and
EdgeStone  Warrants or upon the issuance of such  rulings,  orders,  consents or
approvals  as may be required  to permit the sale  without  the  requirement  of
filing a  prospectus.  EdgeStone,  on its own behalf and on behalf of the Equity
Fund and its  parallel  investors  (on whose  behalf  the  Purchased  Shares and
EdgeStone Warrants are being purchased  hereunder) further represents,  warrants
and covenants to the Corporation (and  acknowledges that the Corporation and its
counsel are relying thereon) that:

      (a)   each of EdgeStone and the Equity Fund is resident in the Province of
            Ontario;

      (b)   neither  EdgeStone  nor the Equity Fund is a "U.S.  Person" (as that
            term is defined in Rule 902(k) of Regulation S under the  Securities
            Act) and  neither  EdgeStone  nor the Equity Fund is  acquiring  the
            Purchased  Shares and EdgeStone  Warrants for the account or benefit
            of a U.S. Person;

<PAGE>
                                      -51-

      (c)   EdgeStone  has  obtained  a  ruling  from  the  Ontario   Securities
            Commission  dated  August 30, 2002 (the  "Original  Ruling"),  which
            ruling  was  revoked  and  restated  pursuant  to a  revocation  and
            restatement  ruling dated November 5, 2002 (the "Restated  Ruling").
            Copies of the  Original  Ruling and the  Restated  Ruling  have been
            provided to the  Corporation.  The Restated  Ruling  provides  that,
            among other  things,  the  acquisition  of portfolio  securities  by
            EdgeStone  and/or the Equity Fund is not subject to the registration
            and  prospectus  requirements  set out in  sections 25 and 53 of the
            Securities  Act  (Ontario).   The  Purchased  Shares  and  EdgeStone
            Warrants  are  "portfolio  securities"  within  the  meaning  of the
            Restated Ruling. The Restated Ruling has not been revoked,  restated
            or otherwise amended and remains in full force and effect;

      (d)   each of  EdgeStone  Capital  Equity  Fund  II-B  GP,  Inc.  and each
            parallel investor is a resident of the Province of Ontario and is an
            "accredited  investor" as defined in Ontario  Securities  Commission
            Rule 45-501;

      (e)   EdgeStone is purchasing the Purchased Shares and EdgeStone  Warrants
            as agent or nominee on behalf and for the benefit of the Equity Fund
            and its  parallel  investors  and  such  beneficial  purchasers  are
            acquiring the Purchased Shares and EdgeStone Warrants for investment
            only, and not with a view to the resale or distribution thereof;

      (f)   no  Person   has  made  to  the   Investor   any   written  or  oral
            representation  (i) that any Person  will resell or  repurchase  the
            Purchased  Shares or the EdgeStone  Warrants,  (ii) as to the future
            price or value of the Purchased Shares or the EdgeStone Warrants, or
            (iii) as to the listing of any securities of the  Corporation on any
            stock exchange or other market;

      (g)   EdgeStone  acknowledges  that the  Corporation is required by law to
            disclose  to certain  regulatory  authorities  the  identity  of the
            Equity Fund and its parallel investors as the beneficial  purchasers
            of the  Purchased  Shares  and  EdgeStone  Warrants  and  that it is
            purchasing  as agent or nominee the  Purchased  Shares and EdgeStone
            Warrants on behalf of the Equity Fund and its parallel investors;

      (h)   EdgeStone is duly  authorized to execute and deliver this  Agreement
            and  all  other  necessary  documentation  in  connection  with  the
            purchase of the Purchased  Shares and  EdgeStone  Warrants on behalf
            and for the benefit of the Equity Fund and its  parallel  investors,
            and this Agreement has been duly authorized,  executed and delivered
            by and on behalf of, and  constitutes  the legal,  valid and binding
            agreement of, the Equity Fund and its parallel investors (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);

      (i)   EdgeStone,  on its own behalf  and on behalf of the Equity  Fund and
            its parallel  investors,  agrees that the above  representations and
            warranties  will  survive  the  completion  of the  issuance  of the
            Purchased Shares and EdgeStone Warrants and

<PAGE>
                                      -52-

            shall  continue  in  full  force  and  effect   notwithstanding  any
            subsequent  disposition by it of the Purchased  Shares and EdgeStone
            Warrants;

      (j)   EdgeStone,  on its own behalf  and on behalf of the Equity  Fund and
            its parallel  investors,  agrees not to resell the Purchased Shares,
            EdgeStone  Warrants and the securities to be issued upon exercise of
            the  EdgeStone  Warrants  in the United  States or to a U.S.  Person
            except (i) pursuant to  registration  under the Securities Act, (ii)
            only in  accordance  with the  provisions  of Regulation S under the
            Securities  Act, or (iii)  pursuant to an available  exemption  from
            registration under the Securities Act; and

      (k)   EdgeStone,  on its own behalf  and on behalf of the Equity  Fund and
            its parallel investors, agrees not to engage in hedging transactions
            in the  United  States  with  regard  to the  Purchased  Shares  and
            EdgeStone Warrants unless in compliance with the Securities Act.

5.2   Investor Acknowledgements

EdgeStone,  on its own behalf and on behalf of the Equity Fund and its  parallel
investors (on whose behalf the Purchased Shares and EdgeStone Warrants are being
purchased hereunder) acknowledges and agrees that:

      (a)   the Investor has not been provided with a prospectus or registration
            statement  or with an offering  memorandum  (all as defined in or as
            contemplated  by the  Securities  Act or under  Canadian  Securities
            Laws) or any similar document  (including any document purporting to
            describe the business and affairs of the  Corporation  that has been
            prepared  primarily  for  delivery  to  and  review  by  prospective
            investors  so as to assist  those  investors  to make an  investment
            decision in respect of securities being sold) in connection with the
            purchase of the Purchased Shares and the EdgeStone Warrants pursuant
            to this Agreement;

      (b)   the  Purchased  Shares  and the  EdgeStone  Warrants  have  not been
            registered under the Securities Act;

      (c)   at present there is no market through which the Purchased  Shares or
            the  EdgeStone  Warrants may be resold and there can be no assurance
            that such a market will develop in the future;

      (d)   the resale of the Purchased  Shares and the EdgeStone  Warrants will
            be subject to certain resale restrictions provided for in applicable
            securities  laws, and the holder of such securities will comply with
            such resale restrictions;

      (e)   the  certificates  evidencing the Purchased Shares and the EdgeStone
            Warrants   received   pursuant   to  the  terms   hereof  will  bear
            substantially the following legend:

                  "Unless permitted under securities legislation,  the holder of
                  this security must not trade the security before the date that
                  is 4 months

<PAGE>
                                      -53-

                  and a day  after  the later of (i)  [insert  the  distribution
                  date],  and (ii) the date the issuer became a reporting issuer
                  in any province or territory.";

      (f)   the certificates evidencing the EdgeStone Warrants received pursuant
            to the terms hereof will bear substantially the following legend:

                  "This  Warrant  and  the  securities  to be  issued  upon  its
                  exercise  have not been  registered  under the  United  States
                  Securities Act of 1933 (the  "Securities  Act").  This Warrant
                  may not be exercised by or on behalf of any U.S. Person unless
                  registered  under the Securities Act or an exemption from such
                  registration is available."

      (g)   the certificates  evidencing the Purchased Shares received  pursuant
            to the terms hereof will bear substantially the following legend:

                  The securities  represented by this  instrument  have not been
                  registered  under the Securities Act of 1933 (the  "Securities
                  Act").  Any transfer of such  securities  is prohibited in the
                  United  States or to a U.S.  Person  except  (i)  pursuant  to
                  registration under the Securities Act, (ii) in accordance with
                  the  provisions of Regulation S under the  Securities  Act, or
                  (iii)  pursuant to an available  exemption  from  registration
                  under the Securities Act."

      (h)   the  Investor  (or  others  for whom  the  Investor  is  contracting
            hereunder): (i) has been advised to consult the Investor's own legal
            advisors  with  respect  to  trading in the  Purchased  Shares,  the
            EdgeStone Warrants, the Converted Shares and the Warrant Shares with
            respect to resale restrictions imposed by applicable securities laws
            in the jurisdiction in which the Investor resides, (ii) acknowledges
            that no representation  has been made respecting the applicable hold
            periods or other resale restrictions  applicable to such securities,
            (iii)  that  the  Investor  (or  others  for whom  the  Investor  is
            contracting hereunder) is solely responsible (and the Corporation is
            in  no  way  responsible)  for  compliance  with  applicable  resale
            restrictions,  and (iv) is aware  that the  Investor  (or others for
            whom  the  Investor  is  contracting  hereunder)  may not be able to
            resell such securities except in accordance with limited  exemptions
            under applicable securities laws;

      (i)   the  Corporation's   actual   performance  and  results  may  differ
            materially from any financial  projections or forecasts  provided by
            or on behalf of the Corporation; and

      (j)   the  Investor  (or  others  for whom  the  Investor  is  contracting
            hereunder)  will provide the Corporation  with such  information and
            execute such documents,

<PAGE>
                                      -54-

            including   certificates   and   statutory   declarations,   as  the
            Corporation  may  reasonably  require  from time to time in order to
            comply with applicable securities laws.

5.3   Reliance Upon Representations and Warranties

EdgeStone,  on its own behalf and on behalf of the Equity Fund and its  parallel
investors,   acknowledges  that  the   acknowledgements,   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 (and others
for whom the  Investor is  contracting  hereunder)  eligibility  to purchase the
Purchased Shares and EdgeStone Warrants.

                                   ARTICLE 6
                     REGISTRATION AND TRANSFER OF SECURITIES

6.1   Transfer and Exchange of Purchased Shares and EdgeStone Warrants

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 EdgeStone  Warrants and the particulars of the respective  shares
(and  warrants)  held by them and of all  transfers  of shares (or  warrants) or
conversions  of shares  (or  warrants).  Upon  surrender  at such  office of any
certificate  representing  shares (or warrants) 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),  the Corporation  shall issue, at its expense,  one or
more  new  certificates,  in  such  denomination  or  denominations  as  may  be
requested,  for such shares (or warrants) registered as such holder may request.
Any certificate  representing shares (or warrants)  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 or EdgeStone Warrants,  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 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.

<PAGE>
                                      -55-

                                   ARTICLE 7
                          COVENANTS OF THE CORPORATION

7.1   Post-Closing Covenants

The  Corporation  covenants  and agrees  with the  Investor  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 and EdgeStone Warrants hereunder as
            follows:

            (i)   to pay the Lead Work Fee,  as  contemplated  by Section 8.1 of
                  this Agreement;

            (ii)  to pay the  Expenses  as  contemplated  by Section 8.2 of this
                  Agreement; and

            (iii) the  remainder  of the  proceeds  of the  Investment  shall be
                  applied,  with  respect to the current  financial  year of the
                  Corporation,  in accordance  with the business plan and budget
                  for  such  year  (a  copy  of  which  has  been   provided  to
                  EdgeStone), and with respect to subsequent financial years, in
                  accordance with the Annual Budget.

      (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  and  EdgeStone  Warrants  to the
            registration  requirements  of the Securities Act or the prospectus,
            registration and/or qualification requirements, as applicable, under
            any applicable state  securities laws and under applicable  Canadian
            Securities Laws.

      (c)   The  Corporation  agrees to file with the SEC in a timely manner all
            reports and other documents  required of the  Corporation  under the
            Securities Act and the Exchange Act,  including any reports required
            by such laws to be filed with the SEC as a foreign  private  issuer,
            and to furnish to the Investor forthwith upon request: (i) a written
            statement by the Corporation that it has complied with the reporting
            requirements  of the  Exchange  Act;  (ii) such  other  reports  and
            documents so filed by the Corporation as may be reasonably requested
            by the Investor to make  available to it any rule or  regulation  of
            the SEC  permitting  the  sale of any of the  Purchased  Shares  and
            EdgeStone  Warrants  without  registration;  and  (iii)  such  other
            documents,   including   opinions  of  counsel   addressed   to  the
            Corporation's  transfer agent (subject to such counsel being able to
            render  such  opinion  based upon facts  then-presented),  as may be
            reasonably  necessary to enable the Investor to sell or transfer its
            Purchased Shares and EdgeStone  Warrants  pursuant to Rule 144 under
            the Securities Act. The  Corporation  shall disclose the issuance of
            the  Purchased  Shares and EdgeStone  Warrants  with all  applicable
            regulatory agencies in accordance with applicable regulations.

<PAGE>
                                      -56-

                                   ARTICLE 8
                           LEAD WORK FEE AND EXPENSES

8.1   Payment of Lead Work Fee

At the Closing, the Corporation agrees to pay the Investor, or such other Person
as the Investor may direct, a lead work fee of three percent (3.0%) of the Share
Purchase  Price (the "Lead  Work  Fee") in cash or other  immediately  available
funds.  In addition,  a fee equal to three percent (3.0%) of the aggregate share
purchase  price for any Series A Shares  issued  pursuant to the exercise of the
EdgeStone  Purchase Option shall also be payable to the Investor,  or such other
Person as the Investor may direct, in cash or other immediately available funds,
on the closing of the issuance and sale of such Series A Shares.

8.2   Reimbursement of Expenses

      (a)   The  Corporation  shall pay or  reimburse to the  Investor,  or such
            other  Person  as  the  Investor  may  direct,  as  applicable,  all
            reasonable:   (i)   legal   fees;   (ii)   professional   fees   and
            disbursements;   and  (iii)  out  of  pocket  costs  (including  any
            applicable  Taxes thereon,  other than Taxes in respect of which the
            Investor  is  entitled  to  obtain a refund  from the  relevant  Tax
            authority  and which would result in the Investor  being  reimbursed
            for more than its actual out-of-pocket  expenses) incurred by or for
            the  account  of  the  Investor  (or by or for  the  account  of the
            purchaser of the Series A Shares issued  pursuant to the exercise of
            the EdgeStone Purchase Option, as applicable) in connection with the
            transactions  contemplated  by this  Agreement or the closing of any
            Additional  Investment  (the  "Expenses").  The Expenses (other than
            Expenses  incurred in  connection  with the closing of an Additional
            Investment)  shall be paid on the Closing.  The Expenses incurred in
            connection  with  the  Additional  Investment  shall  be paid on the
            closing  of  such  Additional  Investment.  At  the  request  of the
            Corporation,   the   Investor   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.

      (b)   The Investor shall use all reasonable efforts to manage the Expenses
            incurred in a prudent  manner and will consult with the  Corporation
            on the Investor's  intended work plan and budget with respect to the
            Expenses that may be incurred in connection  with the Closing or the
            closing of any Additional Investment.

8.3   Broker Fees

The Investor 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.

<PAGE>
                                      -57-

                                   ARTICLE 9
                                 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 Investor or its agents with
            respect  thereto,  shall  continue  in full force and effect for the
            benefit of the  Investor,  each  holder of  Purchased  Shares,  each
            holder of EdgeStone Warrants and all Permitted  Transferees  holding
            any Purchased Shares and EdgeStone Warrants (but limited in the case
            of  Permitted  Transferees  to the  amounts  in respect of which the
            original  holder of such  Purchased  Shares and  EdgeStone  Warrants
            would be  entitled  to  indemnification  under this  Article 9). All
            claims by the Investor, each holder of Purchased Shares, each holder
            of EdgeStone  Warrants  and all  Permitted  Transferees  holding any
            Purchased   Shares  and  EdgeStone   Warrants  in  respect  of  such
            representations,  warranties,  covenants  and  obligations  shall be
            subject to the conditions and  limitations set forth in this Article
            9 and the rights of  indemnity  in this  Article 9 shall be the sole
            and exclusive remedy of such Persons in respect of such claims.

      (b)   The representations,  warranties, covenants and other obligations of
            EdgeStone  (on its own behalf  and on behalf of the Equity  Fund and
            its parallel  investors  (on whose behalf the  Purchased  Shares and
            EdgeStone  Warrants  are  being  purchased   hereunder))  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 9 and the rights of indemnity in this Article
            9 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 Investor, each holder of Purchased Shares, each holder of EdgeStone Warrants
and all  Permitted  Transferees  holding  any  Purchased  Shares  and  EdgeStone
Warrants,  and  each  of  their  partners,  shareholders,  officers,  directors,
employees,  agents,  representatives and successors, and (ii) the Investor, each
holder of Purchased Shares,  each holder of EdgeStone Warrants and all Permitted
Transferees holding any Purchased Shares and EdgeStone Warrants shall 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 9 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

<PAGE>
                                      -58-

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 5, on
            behalf of) the  Indemnifying  Party in this  Agreement  or any Other
            Agreement; or

      (b)   any  failure by the  Indemnifying  Party to  observe or perform  any
            covenant or  obligation  contained  in this  Agreement  or any Other
            Agreement.

9.3   Agency for Representatives

The  Investor  agrees that it accepts  each  indemnity  in favour 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 Investor may enforce an  indemnity  in favour 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 or of any  covenant or other  obligation
            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) 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 4.16 (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.

      (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 or of any  covenant or other  obligation  contained in this
            Agreement or any Other Agreement,  the Indemnifying  Party will have
            no financial obligation to the Indemnitee in respect of such breach.

<PAGE>
                                      -59-

      (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 9.

9.5   Limitations as to Amount

No Claims may be  asserted  by any  Indemnitee  under this  Article 9 unless and
until the aggregate  amount of any Losses of the  Indemnitees  in respect of any
and all Claims  asserted  pursuant to this  Article 9  collectively  exceeds one
hundred thousand  dollars  ($100,000) in which event the amount of all such Loss
including such one hundred  thousand dollar  ($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 4.16 hereof shall
be five hundred thousand dollars ($500,000). Notwithstanding any other provision
of this Agreement,  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 Share Purchase
Price plus the aggregate  purchase price for any Series A Shares issued pursuant
to the EdgeStone Purchase Option.

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,  assisted by counsel of its own  choosing  and the  Indemnifying  Party
shall be  liable  for any Loss  relating  to a breach of any  representation  or
warranty or of any covenant or other  obligation of the  Indemnifying  Party (as
contemplated in Section 9.2) suffered or incurred by the Indemnitee with respect
to such  Third  Party  Claim.  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

<PAGE>
                                      -60-

indemnify the Indemnitee in accordance  with the terms contained in this Article
9 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 9.

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.

<PAGE>
                                      -61-

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 9 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 9 (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  would  constitute  taxable
income to such Indemnitee,  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 the Indemnity  Payment had
been received tax-free.

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.

<PAGE>
                                      -62-

      (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  a senior  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 10
                                     GENERAL

10.1  Amendments

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

10.2  Waiver

No course of dealing  between  the  Corporation  and the  Investor  or any other
Person shall operate as a waiver of any right of the Corporation or the Investor
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, EdgeStone may assign any of its rights under this Agreement or any of
the Other Agreements to any Permitted  Transferee of the Purchased  Shares,  the
EdgeStone  Warrants,  the  Warrant  Shares or the  Converted  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 EdgeStone
and any such purported assignment by the Corporation without the written consent
of EdgeStone 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

<PAGE>
                                      -63-

(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
                     350 Legget Drive
                     Ottawa, ON
                     K2K 2W7

                     Attention:  Chief Executive Officer
                     Fax:  (613) 592-7838

                     With a copy to:
                     --------------

                     Mitel Networks Corporation
                     350 Legget Drive
                     Ottawa, ON
                     K2K 2W7

                     Attention:  Chief Financial Officer, and VP Finance
                     Fax:  (613) 592-7838

                     And with a copy to:
                     ------------------

                     Mitel Networks Corporation
                     350 Legget Drive
                     Ottawa, ON
                     K2K 2W7

                     Attention:  Corporate Legal Counsel
                     Fax:  (613) 592-7803

                     And with a copy to:
                     ------------------

                     Osler, Hoskin & Harcourt LLP
                     Suite 1500
                     50 O'Connor Street
                     Ottawa, ON
                     K1P 6L2

                     Attention: J. Craig Wright
                     Fax:  (613) 235-2867

<PAGE>
                                      -64-

            if to EdgeStone:

                     c/o EdgeStone Capital Equity Fund Nominee Inc.
                     130 King St. West
                     Toronto, ON

                     Attention:  Sandra Cowan
                     Fax:  (416) 860-9838

                     With a copy to:
                     --------------

                     1010 Sherbrooke Street West
                     Suite 500
                     Montreal, QC
                     H3A 2R7

                     Attention: Guthrie Stewart and Sandra Cowan
                     Fax:  (514) 282-1944

10.5  Binding Effect and Benefits

This  Agreement  shall bind and enure 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 enure to the benefit of each holder of  Purchased  Shares,  each holder of
EdgeStone  Warrants and all Permitted  Transferees  holding any Purchased Shares
and EdgeStone Warrants. 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  Arbitration

Subject to the Parties  entitlement to the remedies set forth in Section 10.8 to
prevent the breach of a Party's  obligations  under this  Agreement all disputes
arising out of or in connection with this Agreement,  or in respect of any legal
relationship associated with or derived from this Agreement, shall be arbitrated
and finally  resolved  pursuant to the  Arbitration  Act, 1991  (Ontario).  Such
arbitration shall be conducted by a single  arbitrator.  The arbitrator shall be
appointed  by  agreement  between  the  parties  or,  failing  agreement,   such
arbitrator  shall be appointed in accordance  with section 10 of the Arbitration
Act, 1991  (Ontario).  The place of arbitration  shall be the City of Toronto in
the Province of Ontario.  The language of the arbitration shall be English.  Any
notice or other document, including a notice commencing

<PAGE>
                                      -65-

arbitration,  may be served by  sending  it to the  addressee  by  facsimile  in
accordance with Section 10.4 hereof.  The decision arrived at by the arbitrator,
howsoever  constituted,  shall be final  and  binding  and no  appeal  shall lie
therefrom.

10.8  Equitable Relief

Each of the Parties  acknowledges  that any breach by such party of his, her, or
its  obligations  under this Agreement  would cause  substantial and irreparable
damage to the other Party and that money damages  would be an inadequate  remedy
therefor.  Accordingly, each Party agrees that the other Party shall be entitled
to seek an injunction,  specific  performance,  and/or other equitable relief to
prevent the breach of such obligations.

10.9  Confidentiality

The Parties each  covenant  and agree that they will comply with the  applicable
confidentiality covenants under the Shareholders Agreement.

10.10 Publicity

Either Party shall have the right to publicize the Investment in the Corporation
as  contemplated  hereby  by  means  of a  "tombstone"  advertisement  or  other
customary  advertisement  in newspapers and other media provided that such Party
first provides the other Party with a copy thereof and an opportunity to comment
thereon and each Party pays its own expenses in connection therewith.

10.11 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.

10.12 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 and  EdgeStone  Warrants  hereunder be drawn up in the English
language only. Nous, soussignes,  reconnaissons par les presentes avoir consenti
et  demande  que tous les  documents  faisant  foi ou se  rapportant  de quelque
maniere a la vente des actions soient rediges en anglais seulement.

               The rest of this page is intentionally left blank.

<PAGE>

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

                                      MITEL NETWORKS CORPORATION

                                      By: /s/ Steven Spooner
                                          -----------------------------------
                                          Name:    Steven Spooner
                                          Title:   C.F.O.

                                      EDGESTONE CAPITAL EQUITY FUND
                                      II-B GP, INC., as agent for EdgeStone
                                      Capital Equity Fund II-A, L.P. and its
                                      parallel investors

                                      By: /s/ Guthrie Stewart
                                          -----------------------------------
                                          Name: Guthrie Stewart
                                          Title:   Officer

                                      EDGESTONE CAPITAL EQUITY FUND II
                                      NOMINEE, INC., as nominee for EdgeStone
                                      Capital Equity Fund II-A, L.P. and its
                                      parallel investors

                                      By: /s/ Guthrie Stewart
                                          -----------------------------------
                                          Name:    Guthrie Stewart
                                          Title:   Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]