SHAREHOLDER AGREEMENT
AMONG THE SHAREHOLDERS OF
AVENSYS LABORATORIES INC.
ET AL.
McCarthy Tetrault LLP
April 13, 2006
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TABLE OF CONTENTS
1.
INTERPRETATION...........................................................3
1.1
DEFINITIONS........................................................3
1.2
HEADINGS...........................................................7
1.3 EXTENDED
MEANINGS..................................................7
1.1 STATUTORY
REFERENCES...............................................7
1.4 ACCOUNTING
PRINCIPLES..............................................7
1.5
CURRENCY...........................................................7
1.6 UNANIMOUS
SHAREHOLDER AGREEMENT....................................8
1.7
SCHEDULES..........................................................8
2.
TERMINATION OF ANY PRIOR
AGREEMENT.......................................8
3.
MANAGEMENT...............................................................8
3.1 CARRYING
OUT OF THE AGREEMENT......................................8
3.2
DIRECTORS..........................................................8
3.3 MEETINGS
OF DIRECTORS..............................................9
3.4 APPROVAL
OF MATTERS................................................9
3.5 REPORTING
REQUIREMENTS............................................11
4. DEALING
WITH
SHARES.....................................................12
4.1
REPRESENTATIONS AND WARRANTIES BY
SHAREHOLDERS....................12
4.2 GENERAL
PROHIBITION ON TRANSFER...................................13
4.3 TRANSFERS
TO A CONTROLLED ENTITY..................................13
4.4 TRANSFER TO
AFFILIATES............................................14
4.5 TRANSFERS
BY A LIMITED PARTNERSHIP TO ITS LIMITED PARTNERS........14
4.6 TRANSFER
BY CELTIC................................................15
4.7 RIGHT OF
FIRST REFUSAL OF AVENSYS.................................15
4.8 RIGHT OF
FIRST REFUSAL OF THE PREFERRED HOLDERS...................17
4.9 NO
REGISTRATION OF TRANSFER UNLESS TRANSFEREE IS
BOUND............19
4.10
SPECIFIC PROHIBITIONS ON
TRANSFER.................................20
4.11
NEW
SHAREHOLDERS..................................................20
4.12
ENDORSEMENT ON
CERTIFICATES.......................................21
4.13
PUT
OPTION........................................................21
5.
GENERAL.................................................................22
5.1
NON-SOLICITATION..................................................22
5.2
CONFIDENTIALITY...................................................22
5.3 FURTHER
ASSURANCES................................................23
5.4 BENEFIT OF
THE AGREEMENT..........................................23
5.5 ENTIRE
AGREEMENT..................................................23
5.6 AMENDMENTS
AND WAIVERS............................................23
5.7
ASSIGNMENT........................................................23
5.8
TERMINATION.......................................................23
5.9
SEVERABILITY......................................................24
5.10
NOTICES...........................................................24
5.11
GOVERNING
LAW.....................................................28
5.12
COUNTERPARTS......................................................28
5.13
FACSIMILES........................................................28
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SHAREHOLDER AGREEMENT made as of April 13, 2006.
BETWEEN:
AVENSYS INC., ("Avensys") a company incorporated under Part 1A
of the Companies Act (Quebec), having its head office at 880,
Selkirk, Pointe-Claire, Quebec H9R 3S3, herein acting and
represented by its duly authorized representative as he so
declares,
AND:
INVESTISSEMENT TECHNOLOGIE (3599) INC., ("3599") a company
incorporated under Part 1A of the Companies Act (Quebec)
having its head office at 600, de la Gauchetiere West, Suite
1500, Montreal, Quebec H3B 4L8, herein acting and represented
by its duly authorized representative as he so declares,
AND:
ONTARIO TEACHERS' PENSION PLAN, ("OTPP") a corporation
governed by the laws of the Province of Ontario, having its
head office at 5650, Yonge Street, Toronto, Ontario M2M 4H5,
herein acting and represented by its duly authorized
representative as he so declares,
AND:
CELTIC HOUSE VENTURE PARTNERS FUND IIA LP, ("Celtic") a
limited partnership formed under the laws of the Province of
Ontario having its head office at 303 Terry Fox Drive, Suite
120, Kanata, Ontario K2K 3J1, represented by Celtic House
General Partner (Fund IIA) Inc., its general partner, herein
acting and represented by its duly authorized representative
as he so declares,
AND:
GTI V LIMITED PARTNERSHIP, ("GTI V") a limited partnership
formed under the laws of the Province of Quebec having its
head office at 255 Saint-Jacques Street, 2nd Floor, Montreal,
Quebec H2Y 1M6, represented by its general partner GTI V Inc.,
a corporation incorporated under the laws of the Province of
Quebec, herein acting and represented by its duly authorized
representative as he so declares,
AND:
GTI V (NR) LIMITED PARTNERSHIP, ("GTI V (NR)") a limited
partnership formed under the laws of the Province of Quebec
having its head office at 255 Saint-Jacques Street, 2nd Floor,
Montreal, Quebec H2Y 1M6, represented by its general partner
GTI V (NR) Inc., a corporation incorporated under the laws of
the Province of Quebec, herein acting and represented by its
duly authorized representative as he so declares,
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AND:
BAY TECH VENTURE CAPITAL GMBH & CO. KG., ("Bay Tech") a
limited partnership incorporated under the laws of Germany
having its head office at Brienner Strasse 24, 80333, Munich,
Germany, herein acting and represented by its duly authorized
representative as he so declares, (3599, OTPP, Celtic, GTI V,
GTI V (NR) and Bay Tech collectively referred as the "ITF
Group" and individually as a "Preferred Holder")
AND:
MANARIS CORPORATION, ("Manaris") a corporation incorporated
under the laws of the state of Nevada, having a place of
business at 1155 Rene-Levesque West, Suite 2720, Montreal,
Quebec H3B 2K8, herein acting and represented by its duly
authorized representative as he so declares,
AND INTERVENING:
AVENSYS LABORATORIES INC., (the "Company" or "Avensys Lab") a
company incorporated under Part 1A of the Companies Act
(Quebec), having its head office at 247, boulevard Thibeau,
Trois-Rivieres, Quebec G8T 6X9, herein acting and represented
by its duly authorized representative as he so declares,
WHEREAS ITF Optical Technologies Inc. ("ITF"), Avensys, Avensys Lab
and Manaris
have entered into an asset purchase agreement dated April 4, 2006,
for the sale
by ITF to Avensys of certain assets associated with ITF's all-fiber
photonics
solutions manufacturing business (the "Asset Purchase
Agreement");
AND WHEREAS pursuant to the Asset Purchase Agreement, the purchase
price payable
consists in part of Shares of Avensys Lab to be issued, at the
direction of ITF,
to each Preferred Holder in the proportions set out in Section
2.4.3 of the
Asset Purchase Agreement;
AND WHEREAS it is a condition of closing of the sale of assets
under the Asset
Purchase Agreement that the Shareholders and the Company enter into
this
Agreement;
AND WHEREAS the authorized capital of the Company consists of an
unlimited
number of common shares and of Class A, Class B, Class C, Class D
and Class E
Preferred Shares of which 1,000,000 common shares, 500,000 Class A
Preferred
Shares, and 2,000,000 Class E Preferred Shares are issued and
outstanding;
AND WHEREAS the Shares of the Company are owned as follows:
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<TABLE>
<CAPTION>
Shareholders
Common Shares
Class A Preferred Shares Class E Preferred
Shares
------------
-------------
------------------------
------------------------
<S>
<C>
<C>
<C>
Avensys
420,000
500,000
--
3599
243,600
--
840,000
OTPP
127,600
--
440,000
Celtic
81,200
--
280,000
GTI V
41,296
--
142,400
GTI V (NR)
16,704
--
57,600
Bay
Tech
69,600
--
240,000
TOTAL
1,000,000
500,000
2,000,000
</TABLE>
AND WHEREAS the Shareholders and the Company have agreed to enter
into this
Agreement as being in their respective best interests and for the
purpose of
providing for the operation of the Company;
NOW THEREFORE, in consideration of the premises and the covenants
and agreements
herein contained, the parties agree as follows:
1.
INTERPRETATION
1.1
Definitions
In this Agreement, unless something in the subject matter or
context is inconsistent therewith:
1.1.1
"Accountant" means the auditor or accountant, as the
case may be, of the Company appointed from time to
time.
1.1.2
"CBCA" means the Canada Business Corporations Act.
1.1.3
"Affiliate" means an affiliate within the meaning of
the CBCA.
1.1.4
"Agreement" means this agreement, including its
recitals and schedules, as amended from time to time.
1.1.5
"Business Day" means a day other than a Saturday,
Sunday or statutory holiday in Quebec.
1.1.6
"Competitor" means any Person which conducts a
business anywhere in the world which is similar to or
substantially similar to the business presently
conducted by the Company, that is, research in
connection with and development, manufacture,
marketing and sale of photonic components based on an
all-fiber technology platform (defined as using the
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fiber as the constituent medium) for
telecommunications, fiber lasers or optical sensors
or which competes with the business carried on by the
Company or any of its Subsidiaries, during the term
of this Agreement.
1.1.7
"Control" means:
1.1.7.1 when applied
to the relationship between a
Person and a company, the ownership by such
Person at
the relevant time of shares of
such company carrying more than the greater
of (i) 50% of the voting rights ordinarily
exercisable at meetings of shareholders of
such company and (ii) the percentage of
voting rights ordinarily exercisable at
meetings of shareholders of such company
that are sufficient to elect a majority of
the directors of such company; and
1.1.7.2 when applied
to the relationship between a
Person and a partnership or joint venture,
the beneficial ownership by such Person at
the relevant time of more than 50% of the
ownership interests of the partnership or
joint venture in circumstances where it can
reasonably be expected that such Person
directs the affairs of the partnership or
joint venture;
and the words "Controlled by", "Controlling" and
similar words have corresponding meanings; provided
that a Person (the "first-mentioned Person") who
Controls a company, partnership or joint venture (the
"second-mentioned Person") shall be deemed to Control
a company, partnership or joint venture which is
Controlled by the second-mentioned Person and so on;
and the words "Control Directly", "Directly Control"
and similar words mean Control otherwise than by
reason of the application of the deeming provision
and the words "Control Indirectly" and similar words
mean Control by reason of the application of this
deeming provision.
1.1.8
"Election Notice" has the meaning set out in Section
4.13.1.
1.1.9
"Income Tax Act" means the Income Tax Act (Canada).
1.1.10
"Intellectual Property" means all foreign and
domestic intellectual property rights and the subject
matter thereof, including or arising from, (i)
Patents; (ii) Technical Information; (iii) trademarks
and trademark rights, trade names, service marks,
brand names, certification marks, and other
indications of origin, whether registered or not, and
the goodwill associated therewith; (iv) copyrights,
whether registered or not, including without
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limitation, computer programs and computer software
and all source and object code, algorithms,
architecture, structure, display screens, layouts and
development tools related thereto, promotional
materials and databases; (v) industrial designs,
whether registered or not; (vi) trade secrets and
other confidential or non-public information,
including inventions, designs, samples, schematics,
customer lists, supplier and dealer lists and
marketing research; (vii) internet protocol addresses
and domain names, whether or not used or currently in
service; (viii) any similar intellectual or
industrial property or proprietary rights; (ix)
registrations of, and applications to register or for
any of the foregoing, and any renewal, extension,
reissue, division, continuation or modification
thereof; (x) all documentation and media
constituting, describing or relating to the
foregoing, including without limitation manuals,
memoranda and records and the right to register any
of the foregoing; and "Intellectual Property Right"
shall mean any one of them.
1.1.11 "ITF
Group" has the meaning set out in the preamble.
1.1.12 "Limited
Partner" has the meaning set out in Section
4.5.
1.1.13 "Limited
Partnership" has the meaning set out in
Section 4.5.
1.1.14 "Notice"
has the meaning set out in Sections 4.7.1
and 4.8.1.
1.1.15 "Offered
Shares" has the meaning set out in Sections
4.7.1 and 4.8.1.
1.1.16
"Offerees" has the meaning set out in Section 4.8.1.
1.1.17 "Offeror"
has the respective meanings set out in
Sections 4.7.1 and 4.8.1.
1.1.18 "Patents"
means all registered patents and pending
applications for patents throughout the world, owned
by the Company.
1.1.19
"Permitted Window" has the meaning set out in Section
4.13.1..
1.1.20 "Person"
means an individual, partnership, limited
partnership, joint venture, trustee, trust,
corporation, company, unlimited liability company,
unincorporated organization or other entity or a
government, state or agency or political subdivision
thereof, and pronouns have a similarly extended
meaning.
1.1.21 "Put
Option" has the meaning set out in Section
4.13.1.
1.1.22
"Preferred Holder" has the meaning set out in the
preamble.
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1.1.23 "Rejected
Shares" has the meaning set out in Section
4.8.3.
1.1.24
"Shareholders" means Avensys, 3599, OTPP, Celtic, GTI
V, GTI V (NR) and Bay Tech, together with such other
Persons as may become parties to this Agreement,
collectively and "Shareholder" means any one of such
Persons individually.
1.1.25 "Shares"
means the shares of the Company that the
Shareholders own at the date hereof or hereafter.
1.1.26
"Subsidiary"
means any legal entity Controlled by the
Company.
1.1.27 "Super
Majority" means:
(a) a
resolution passed by not less than 75% of
the votes cast by the Preferred Holders
present in person or represented by proxy
during a meeting called for the passing of
such resolution pursuant to this Agreement;
or
(b) a written
instrument signed by the holders
of not less than 75% of the Shares owned by
the Preferred Holders without the necessity
of any meeting;
provided, however, that for greater clarity, such
percentage of Shares shall be calculated on the basis
of the Shares owned by the Preferred Holders only
without regard to or consideration of any other
shares of the Company that may at any time and from
time to time be issued and outstanding.
1.1.28
"Technical Information" means work in progress, data,
information, know-how, descriptions of unpatented
technology, techniques, systems, product roadmaps,
layouts and development tools related thereto, bills
of material, experience and other technical
information used by the Company, including
proprietary processes, specifications, formulae,
algorithms, models, user interfaces, concepts, ideas,
techniques, methods, source codes, object codes and
methodologies.
1.1.29 "Third
Party Offer" has the meaning set out in
Sections 4.7.1 and 4.8.1.
1.1.30
"Transfer" means any sale, exchange, assignment,
gift, bequest, disposition, mortgage, hypothec,
charge, pledge, encumbrance, grant of security
interest, short sale, grant of any option, hedging or
similar transaction with the same economic effect as
a sale, monetization, securitization,
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collateralization, delegation or other arrangement of
any nature whatsoever by which possession, legal
title, beneficial ownership, voting rights or other
attributes of ownership passes or may pass from one
Person to another, or to the same Person in a
different capacity, whether or not voluntary and
whether or not for value, and any agreement to effect
any of the foregoing and "Transferred",
"Transferring" and similar words have corresponding
meanings.
1.2
Headings
The division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation
of this Agreement. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement
and not to any particular Article, Section or other portion
hereof and include any amendment hereto. Unless something in
the subject matter or context is inconsistent therewith,
references
herein to Articles or Sections are to Articles or
Sections of this Agreement.
1.3 Extended
Meanings
In this Agreement, words importing the singular number only
shall include the plural and vice versa, words importing the
masculine gender shall include the feminine and neuter genders
and vice versa and words importing persons shall include
individuals, partnerships, limited liability companies,
associations, trusts, unincorporated organizations and
companies.
1.1 Statutory
References
In this Agreement, unless something in the subject matter or
context is inconsistent therewith or unless otherwise herein
provided, a reference to any statute is to that statute as now
enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.4 Accounting
Principles
Wherever in this Agreement reference is made to a calculation
to be made in accordance with generally accepted accounting
principles ("GAAP"), such reference shall be deemed to be to
the generally accepted accounting principles in Canada from
time to time approved by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable as at the
date on which such calculation is made or required to be made
in accordance with generally accepted accounting principles
and applied in a manner consistent with prior periods of the
Company.
1.5
Currency
All references to currency herein are to lawful money of
Canada.
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1.6 Unanimous
Shareholder Agreement
To the extent that this Agreement specifies that any matter
must be dealt with or approved by, or requires action by, the
Shareholders or otherwise has the effect of restricting in
whole or in part the powers of the directors to manage or to
supervise the management of the business and affairs of the
Company, the powers of the directors of the Company to manage
and to supervise the management of the business and affairs of
the Company with respect to such matters are correspondingly
restricted.
1.7
Schedules
The
following are the Schedules to this Agreement:
Schedule 4.11 - Intervention Form
2.
TERMINATION OF ANY PRIOR AGREEMENT
Avensys hereby represents and warrants to the Preferred Holders
that
all agreements regarding the organization and affairs of the
Company
and/or the sale of any Shares of the Company under certain
circumstances, whether written or oral, including the
Convention
unanime d'actionnaires dated June 1, 2005, have been validly
terminated.
3.
MANAGEMENT
3.1 Carrying
out of the Agreement
3.1.1 The
Shareholders will at all times carry out and
exercise their voting rights to cause the Company to
carry out the provisions of this Agreement.
3.1.2 The
Shareholders shall each vote their Shares and act
in all other respects and shall cause their
respective nominees to the Board, to the extent
permitted by law, to vote and act in connection with
the corporate proceedings of the Corporation so as to
ensure that the provisions of this Agreement are
complied with.
3.1.3 The
Company will carry out and be bound by the
provisions of this Agreement to the full extent that
it has the capacity and power at law to do so.
3.2
Directors
3.2.1 The
board of directors of the Company will consist of
three directors. Two nominees designated by Super
Majority of the ITF Group and one nominee designated
by Avensys will be the directors of the Company.
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3.2.2 Each
of the ITF Group and Avensys shall be entitled
at any time to remove any director nominated by it by
written notice to such director, to the Company and
to the other Shareholders. Any vacancy occurring on
the board by reason of death, disqualification,
inability to act, resignation or removal of any
director shall only be filled by nomination of the
ITF Group or Avensys, as the case may be, if its
nominee has died, become disqualified, is unable to
act, has resigned or has been removed. Forthwith upon
such nomination, the Shareholders shall elect the
director so nominated, provided he is otherwise
qualified under the CBCA and this Agreement, so as to
always maintain a board consisting of the nominees of
the ITF Group and Avensys as contemplated in Section
3.2.1 above.
3.2.3 The
Company shall purchase and maintain directors'
liability insurance with coverage terms, conditions
and limits customary for similar companies, but in no
event less than $3,000,000.
3.3 Meetings
of Directors
3.3.1 A
minimum of four (4) meetings of the board of
directors shall be held per fiscal year, with at
least one meeting held every fiscal quarter of the
Company.
3.3.2 A
quorum for any and all meetings of the board of
directors shall consist of two directors.
3.4 Approval
of Matters
3.4.1 The
Company may not take any of the following actions
(i) without the written approval of the Shareholders
holding 66 2/3 % or more of the voting rights
attached to the issued and outstanding Shares and
(ii) without having obtained all consents required by
law or by the articles or by-laws of the Company:
3.4.1.1 any change in
the articles or by-laws of the
Company;
3.4.1.2 any change in
the authorized or issued
capital of the Company;
3.4.1.3 the entering
into of any agreement or the
making of any offer or the granting of any
right capable of becoming an agreement to
allot or issue any shares or other
securities of the Company;
3.4.1.4 any action
that may lead to or result in a
material change in the nature of the
business of the Company, including the
change in location of the head office or one
of the principal places of business of the
Company;
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3.4.1.5 the taking of
any steps to wind-up or
terminate the corporate existence of the
Company;
3.4.1.6 the sale,
lease, exchange or disposition of
the entire undertaking or assets of the
Company or any substantial part thereof;
3.4.1.7 the sale,
lease, exchange or disposition of
any assets of the Company to, or the dealing
in any other way with, any person not at
arm's length (as defined in the Income Tax
Act) with the Company unless any transaction
relating thereto is on terms as least as
favourable to the Company as the terms it
would obtain if such transaction were with a
person
dealing at arm's length with the
Company;
3.4.1.8 the sale,
exchange, disposition or license
of any Intellectual Property belonging to
the Company outside of the ordinary course
of business;
3.4.1.9 the making of
loans or advances to, or the
giving of security for, or the guaranteeing
of the debts of, any Person directly or
indirectly;
3.4.1.10 any change in the number of directors;
3.4.1.11 the appointment or change of officers and
management employees of the Company;
3.4.1.12 the declaration or payment of any dividend;
3.4.1.13 the taking, holding, subscribing for or
agreeing to purchase or acquire shares in
the capital of any body corporate;
3.4.1.14 the entering into of an amalgamation, merger
or consolidation with any other body
corporate, or the creation of a Subsidiary;
3.4.1.15 the change in the financial year end of the
Company;
3.4.1.16 any change to the License Agreement to be
entered into concurrently herewith between
Avensys and the Company; and
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3.4.1.17 any consent to the specific prohibitions on
the Transfers of Shares set out in Section
4.10.
3.4.2
In order
to obtain the consents required under
Section 3.4.1, the Company must send to each of the
Shareholders a notice given in accordance with
Section 5.10 detailing the action, decision,
resolution or by-law requiring their consent. The
Shareholders shall exercise their right provided for
in 3.4.1 by notifying the Company of their decision
as soon as possible following the receipt of the
notice. If any Shareholder fails to notify the
Company of its decision within the 15 Business Day
period following the receipt of such notice from the
Company, such Shareholder shall be deemed to have
approved such action, decision, resolution or by-law.
3.4.3 The
Company shall provide to each Shareholder and
each director, promptly following the receipt
thereof, a copy of any notice, letter or other
document informing the Company of the institution or
contestation of any legal proceeding involving the
Company other than actions on account and actions
involving claims of less than $25,000 which are not
related to Intellectual Property.
3.4.4 Upon
the creation of a Subsidiary, this Section 3
shall apply mutatis mutandis to the conduct of the
affairs and business of such Subsidiary.
3.4.5 In
the event that either Avensys or Manaris, as the
case may be, is in default in fulfilling its
obligations under Section 4.13, then Sections 3.4.1
and 3.4.2 shall be deemed automatically terminated in
their entirety upon written notice by any Preferred
Holder to the Company advising the Company of such
default.
3.5 Reporting
Requirements
The Company shall provide to each of the
