To avoid the confrontation, publicly-traded Bridgewater Systems of Ottawa has added the managing director of investor Crescendo Partners, Greg Monahan, immediately to its board and will get another, senior vice-president David Sgro, as part of a joint slate when Bridgewater holds its annual general meeting May 26.

As a result, Crescendo CEO Eric Rosenfeld has withdrawn his demand for a special meeting to replace five of the eight directors with his own people. The new board will have 10 persons.

Rosenfeld, whose company is one of the largest Bridgewater shareholders with 12 per cent of the firm, couldn't be reached for comment, but he has told one Canadian newspaper that he wanted the company sold to a bigger business.

The agreement avoids a confrontation between two of the company's biggest shareholders -- Rosenfeld and Canadian telecomentrepreneur Terry Matthews, a long time Bridgewater investor and chairman of the board.

"We believe this represents an appropriate resolution as it avoids the significant distraction to the company associated with a proxy contest while adding further depth to our Board," Matthews, said in a news release.