Mitel/Aastra

Overview

It is proposed that Mitel (a CBCA corporation listed on the TSX and NASDAQ with 53.9M common shares outstanding) acquire all of the outstanding common shares of Aastra (a TSX-listed CBCA corporation with 11.8M shares outstanding) under a CBCA Plan of Arrangement for consideration estimated at $392M and comprising, for each Aastra share, U.S.$6.52 of cash and 3.6 Mitel common shares. Consequently, the outstanding Mitel common shares will increase by 44.3M to 98.3M. Following the Arrangement, Mitel may subsequently amalgamate with Aastra. All outstanding Aastra options are to be rolled into options on Mitel common shares with the exercise price based, in part, on the s. 7(1.4) test.

U.S. securities law

Aastra and Mitel are foreign private issuers, although Mitel has voluntarily determined to file 10-Ks, 10-Qs and 8-Ks. The Mitel shares to be issued will not be registered in reliance on the s. 3(a)(10) rule.

Plan of Arrangement.

1. The Aastra Shareholder Rights Plan will be terminated.
2. Each outstanding Aastra share held by dissenting shareholder will be deemed to be transferred to Mitel.
3. Each outstanding Aastra deferred share unit, and each vested Aastra stock appreciation right, will be cancelled for a cash payment.
4. Simultaneously with the exchange in 5. below, each Aastra option will be exchanged for a replacement option to acquire that number of Mitel common shares (rounded down to the nearest whole number) equal to the product of the number of Aastra common shares under the option, and the Exchange Ratio. The Exchange Ratio is the sum of: 3.6; and $6.52 divided by the 5-day VWAP of Mitel common shares on the NASDAQ immediately preceding the Arrangement Effective Date. The exercise price under the replacement option will equal the greater of: the old exercise price divided by the Exchange Ratio; and "such minimum amount that meets the requirements of paragraph 7(1.4)(c)."
5. Each Aastra share will be transferred to Mitel in exchange for U.S.$6.52 of cash and 3.6 Mitel common shares.

Canadian taxation

S. 85 elections. Non-exempt Canadian residents may make a s. 85(1) election (or s. 85(2) election for a partnership - or the Quebec equivalents) with Mitel provided they provide election forms completed with the number of transferred shares and the agreed amounts to the Depositary within 90 days following the effective date of the Arrangement; and Mitel will sign and return the election forms within 90 days. Full rollover treatment may not be available depending on the adjusted cost base of the holder's Aastra shares.

Non-rollover if no election

In the absence of a s. 85 election, the exchange will be taxable (no s. 85.1 rollover.)

Non-residents

A non-resident Aastra shareholder will not be subject to Canadian capital gains tax on the exchange if the holder's shares are not taxable Canadian property.