Exhibit 99.16
POINTS INTERNATIONAL LTD.
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT INFORMATION CIRCULAR (ALSO REFERRED TO HEREIN AS THIS
"CIRCULAR") IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY OR ON
BEHALF OF THE MANAGEMENT OF POINTS INTERNATIONAL LTD. (THE "CORPORATION") FOR
USE AT THE ANNUAL AND SPECIAL MEETING (THE "MEETING") OF THE SHAREHOLDERS OF THE
CORPORATION TO BE HELD AT STOCK MARKET PLACE, THE EXCHANGE TOWER, 130 KING
STREET WEST, TORONTO, ONTARIO, ON THURSDAY, JUNE 24, 2004, AT 4:30 P.M. (TORONTO
TIME), OR AT ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF, FOR THE PURPOSES SET
OUT IN THE ACCOMPANYING NOTICE OF MEETING. It is expected that solicitation will
be primarily by mail. Proxies also may be solicited personally or by telephone
by officers and directors of the Corporation. The cost of solicitation by or on
behalf of the management will be borne by the Corporation. Except as otherwise
stated, the information contained herein is given as at April 22, 2004.
To be effective, completed proxies must (i) be delivered to Computershare Trust
Corporation of Canada, the registrar and transfer agent for the Common Shares,
at Suite 600, 530 8th Avenue, S.W., Calgary, Alberta, Canada T2P 3S8 or to the
Secretary of the Corporation at the offices of the Corporation, Nash Building,
179 John Street, Suite 800, Toronto, ON M5T 1X4, in either case at least one day
(excluding Saturdays, Sundays and holidays) before the date of the Meeting or
any adjournment(s) or postponement(s) thereof, or (ii) be deposited with the
Chairman of the Meeting on the day of the Meeting, or any adjournment(s) or
postponement(s) thereof, prior to the commencement thereof.
APPOINTMENT OF PROXYHOLDER
The persons named in the enclosed form of proxy are officers and directors of
the Corporation and shall represent management at the Meeting. A SHAREHOLDER
DESIRING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER OF THE
CORPORATION) TO REPRESENT HIM OR HER AT THE MEETING MAY DO SO BY INSERTING SUCH
OTHER PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY.
EXERCISE OF VOTE BY PROXY
The shares of the Corporation represented by properly executed proxies will be
voted or withheld from voting in accordance with the specifications made therein
by the registered shareholder on any ballot that may be called for, and will be
voted for or against any matter to be acted upon where such shareholder
specifies a choice for such matter. For the Meeting, the form of proxy affords a
shareholder an opportunity to specify that the shares registered in his or her
name shall be: (i) voted or withheld from voting in the election of directors,
(ii) voted or withheld from voting on the appointment of auditors and the
authorization of the directors to fix the remuneration of the auditors, (iii)
voted for or against the resolution to continue the Corporation's existence from
the Business Corporations Act (Ontario) (the "OBCA") to the Canada Business
Corporations Act (Canada) (the "CBCA") (the "CONTINUANCE RESOLUTION"), (iv)
voted for or against the resolution confirming the repeal of the existing
by-laws of the Corporation and the adoption of a new by-law of the Corporation
consistent with the CBCA (the "BY-LAW RESOLUTION"), and (v) increasing the
number of Common Shares of the Corporation issuable pursuant to the
Corporation's stock option plan (the "OPTION PLAN RESOLUTION").
IN RESPECT OF PROXIES IN WHICH REGISTERED SHAREHOLDERS HAVE FAILED TO SPECIFY
THAT THE PROXY NOMINEES ARE REQUIRED TO (I) VOTE OR WITHHOLD FROM VOTING IN THE
ELECTION OF DIRECTORS, (II) VOTE OR WITHHOLD FROM VOTING IN THE APPOINTMENT OF
AUDITORS AND THE AUTHORIZATION OF THE DIRECTORS TO FIX THE REMUNERATION OF THE
AUDITORS, (III) VOTE FOR OR AGAINST THE CONTINUANCE RESOLUTION, (IV) VOTE FOR
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AGAINST THE BY-LAW RESOLUTION, OR (V) VOTE FOR OR AGAINST THE OPTION PLAN
RESOLUTION, THE SHARES REPRESENTED BY PROXIES IN FAVOUR OF MANAGEMENT NOMINEES
WILL BE VOTED IN FAVOUR OF SUCH MATTERS.
The form of proxy also confers discretionary authority upon the proxy nominees
in respect of amendments or variations to matters identified in the notice of
Meeting or other matters that may properly come before the Meeting or any
adjournment(s) or postponement(s) thereof. Management knows of no amendments,
variations or other matters to come before the Meeting other than the matters
referred to in the foregoing Notice of Meeting. However, if any amendments,
variations or other matters which are not now known to management should
properly come before the Meeting or any adjournment(s) or postponement(s)
thereof, the shares represented by proxies in favour of management nominees will
be voted on such amendments, variations or other matters in accordance with the
best judgment of the proxy nominee.
The execution or exercise of a proxy does not constitute a written objection for
the purposes of subsection 185(6) of the OBCA in connection with the rights of
dissenting shareholders under the OBCA. For more information on the rights of
dissenting shareholders, see the section below entitled "DISSENTING
SHAREHOLDERS' RIGHTS".
REVOCATION OF PROXIES
Proxies given by shareholders for use at the Meeting may be revoked at any time
prior to their use. In addition to revocation in any other manner permitted by
law, a proxy may be revoked by an instrument in writing executed by a
shareholder or by his or her attorney authorized in writing, or if the
shareholder is a corporation, by an officer or attorney thereof duly authorized,
and deposited either at the offices of Computershare Trust Corporation of
Canada, at any time up to and including the last business day preceding the day
of the Meeting, or any adjournment(s) or postponement(s) thereof, or with the
Chairman of the Meeting on the day of the Meeting, or any adjournment(s) or
postponement(s) thereof.
QUORUM AND RECORD DATE
The presence of at least five shareholders holding or representing by proxy not
less than 15% of the total number of the issued shares of the Corporation
entitled to vote at the Meeting is required to constitute a quorum at the
Meeting. The board of directors of the Corporation (the "BOARD") has fixed May
14, 2004 as the record date (the "RECORD DATE") for the purpose of determining
shareholders entitled to receive notice of and to vote at the Meeting. The
failure of a shareholder to receive notice of the Meeting does not deprive such
shareholder of the right to vote at the Meeting. A person who has acquired
shares after the Record Date is entitled to vote those shares at the Meeting
upon producing properly endorsed share certificates or otherwise establishing
proper ownership and demanding, not later than ten days before the Meeting, that
his or her name be included in the list of shareholders eligible to vote at the
Meeting, in which case the transferee is entitled to vote his or her shares at
the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
As at April 22, 2004, 68,046,319 "Common Shares" and one "Series Two Preferred
Share" were issued and outstanding, and constituted all of the voting shares in
the capital of the Corporation.
The holders of Common Shares and the Series Two Preferred Share are entitled to
vote on all matters brought before a meeting of the shareholders together as a
single class, except in respect of matters where (i) only the holders of shares
of one class or a series of shares are entitled to vote separately pursuant to
applicable law or (ii) the Articles of the Corporation otherwise specify. The
holders of Common Shares are entitled to cast one vote per share and the holder
of the Series Two Preferred Share is entitled to cast that number of votes equal
to the lesser of (i) 21,868,750 and (ii) 19.9% of the total number of votes that
may be cast at the Meeting. As at April 22, 2004, the holder of the Series Two
Preferred Share was entitled to cast up to 16,905,390 votes. Generally, all
matters to be voted on by shareholders must be
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approved by a simple majority of the votes cast in respect of Common Shares and
the Series Two Preferred Share held by persons present in person or by proxy,
voting together as a single class.
As at April 22, 2004 the only persons who, to the knowledge of the Corporation,
its directors or officers, own beneficially, directly or indirectly, or exercise
control or direction over, in excess of 10% of any class of the voting
securities of the Corporation is Points Investments, Inc., an affiliate of
InterActiveCorp ("IAC"), as holder of the Series Two Preferred Share.
BENEFICIAL SHAREHOLDERS
Only registered shareholders or the persons they appoint as their proxyholders
are permitted to vote at the Meeting. A person who beneficially owns shares
through an intermediary such as a bank, trust company, securities dealer,
broker, trustee or administrator (an "INTERMEDIARY") is not a registered
shareholder (a "NON-REGISTERED HOLDER"). In accordance with applicable
securities laws, the Corporation distributes copies of its meeting materials to
Intermediaries and clearing agencies for onward distribution to Non-Registered
Holders who have not waived the right to receive meeting materials. Generally,
Non-Registered Holders who have not waived the right to receive meeting
materials will receive a pre-signed form of proxy or a voting instruction form
from their Intermediary along with the meeting materials.
NON-REGISTERED SHAREHOLDERS RECEIVING A PRE-SIGNED PROXY, VOTING INSTRUCTION
FORM OR SIMILAR INSTRUMENT SHOULD CAREFULLY FOLLOW THE MAILING PROCEDURES AND
SIGNING AND RETURNING INSTRUCTIONS OF THEIR INTERMEDIARY TO ENSURE THEIR SHARES
ARE VOTED AT THE MEETING.
Should a Non-Registered Holder receive a form of proxy, voting instruction form
or similar instrument wish to attend and vote at the Meeting in person (or have
another person attend and vote on behalf of the Non-Registered Holder), such
Non-Registered Holder should contact their Intermediary to determine the steps
necessary to accomplish this.
ELECTION OF DIRECTORS
The present term of office of each director will expire immediately prior to the
election of directors at the Meeting. In accordance with their authority, the
Board has determined that the number of directors to be elected at the Meeting,
to serve until the next annual meeting of shareholders or until his or her
successor is elected or appointed, is eleven, two of whom are to be elected by
the holder of the Series Two Preferred Share, voting separately as a series, and
nine of whom are to be elected by the holders of the Common Shares and the
holder of the Series Two Preferred Share, voting together as a single class.
Unless authority to do so is withheld, the shares represented by the proxies in
favour of management nominees will be voted in favour of the election of the
persons whose names appear below as directors of the Corporation. Although the
Board is not aware of any nominee who would be unwilling or unable to serve if
elected, if any nominee would be unwilling or unable to serve as a director of
the Corporation, the persons named in the form of proxy reserve the right to
nominate and vote for another nominee in their discretion.
The Board does not have an executive committee, however, the Corporation is
required to have an audit committee under the provisions of the OBCA.
The following table provides certain background information with respect to each
nominee for the Board.
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COMMON SHARES
NAME; TERM AS PRINCIPAL OCCUPATION WITHIN THE PRECEDING FIVE YEARS BENEFICIALLY
DIRECTOR CLASSIFICATION DIRECTOR (CURRENT AND FOR PAST FIVE YEARS UNLESS OTHERWISE NOTED) OWNED
- ----------------------- ----------- ----------------------------------------------------------------------------- -------------
Douglas A. Carty(1) Feb. 2002 - Chief Financial Officer, Laidlaw International Ltd., a transportation company 5,000
Glen Ellyn, Illinois present (Jan. 2003 - present); Chief Financial Officer, Atlas Air Worldwide Holdings
Independent Inc., an air cargo company (Jul. 2001 - Dec. 2002); Chief Financial Officer,
Canadian Airlines, an airline (Jul. 1996 - Jul. 2000)
Marc B. Lavine(4) Feb. 2000 - Chief Executive Officer, President and Director of Chrysalis Capital 6,173,290
Paris, France present Corporation, a capital pool company (Oct. 1, 2003 - present); Chief Executive
Independent Officer, Exclamation International Incorporated (Jun. 1999 - Feb. 2002);
President, Exclamation International Incorporated (Dec. 1997 - Jun. 1999)
T. Robert MacLean(3) Feb. 2002 - Chief Executive Officer, Points International Ltd. (Feb. 2002 - present); 220,390
Toronto, Ontario present Chief Executive Officer, Points.com Inc. (Feb. 2000 - present); President,
Insider Points.com Inc. (Feb. 2000 - Feb. 2002); Vice-President, other positions,
Canadian Airlines, an airline (1988 - 2000)
Christopher J.D. Barnard Feb. 2000 - President, Points International Ltd. (Feb. 2000 - present); Points.com Inc. 979,800
Toronto, Ontario present (Feb. 2002 - present); Vice-President, Exclamation International Incorporated
Insider (Jul. 1998 - Feb. 2000)
Rowland W. Fleming(1, 2) Feb. 2002 - Public and private company director (Apr. 1999 - present); President and 5,000
Mississauga, Ontario present Chief Executive Officer, The Toronto Stock Exchange (Jan. 1995 - Apr. 1999)
Independent
John W. Thompson(1, 2) Feb. 2002 - Public company director (Aug. 2000 - present); Managing Director, Kensington 1,018,016
Toronto, Ontario present Capital Partners Limited, an investment and advisory firm (Aug. 2000 - Nov
Independent 2003); Executive Vice-President, Loblaw Companies Limited, a grocery company
(Feb. 1978 - Apr. 1999)
J. Grant McCutcheon(1) Feb. 2000 - Director, Lawrence & Company Incorporated, an investment firm (Dec. 1995 - 6,250
Toronto, Ontario present present)
Independent
Jim W. Kranias Feb. 2000 - President, International Consulting, a private consulting company (Aug. 1998 140,056
London, England present - present);
Independent
Christopher E.M. Payne(2) Feb. 2003 - Managing Director, Financial Services, CIBC World Markets, a merchant bank Nil
Toronto, Ontario present and advisory group (Jun. 2000 - present); Executive Vice-President, Financial
Independent(5) Services, WhatifI.com, an online mutual fund (Jun. 1999 - Jun. 2000);
Executive Vice-President, Financial Services, X.com, an online banking and
payments company (Jan. 1999 - Jun. 1999); Executive Vice-President, Financial
Services, BMO Nesbitt Burns Equity Partners, a merchant banking and advisory
company (Nov. 1996 - Jan. 1999)
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COMMON SHARES
NAME; TERM AS PRINCIPAL OCCUPATION WITHIN THE PRECEDING FIVE YEARS BENEFICIALLY
DIRECTOR CLASSIFICATION DIRECTOR (CURRENT AND FOR PAST FIVE YEARS UNLESS OTHERWISE NOTED) OWNED
- ----------------------- ----------- ----------------------------------------------------------------------------- -------------
Eric A. Korman(2) June 2003 - Vice President, Mergers & Acquisitions, InterActiveCorp, an interactive Nil
New York, New York present commerce company (Nov. 2003 to Present); other positions at InterActiveCorp,
Nominee of the Series Two (Sept. 2001 - Nov. 2003); Principal, and head of business development for
Preferred Share holder(6) ePartners Venture Capital, a $650 million venture fund (Jan. 2000 - Apr.
2001); Senior Analyst, Corporate Business Development for The Coca-Cola Co.,
a consumer products company (Aug. 1997 - Jan. 2000)
Dan Marriott - Senior Vice President, Interactive Development, InterActiveCorp, an Nil
New York, New York interactive commerce company (Dec. 2003 - present); Senior Vice President,
Nominee of the Series Two Strategic Planning, InterActiveCorp (Feb. 2002 - Dec. 2003); Executive Vice
Preferred Share holder(6) President, Corporate Strategy and Development, Ticketmaster, Inc., an online
consumer products company (Feb. 1999 - Feb. 2002)
Notes:
(1) Member of the Audit Committee; Mr. Carty serves as Chairman.
(2) Member of Human Resources Committee; Mr. Fleming Serves as Chairman.
(3) Observer of both the Human Resources and Audit Committees.
(4) Mr. Lavine's holdings include 138,500 Common Shares held directly and
6,034,790 Common Shares held indirectly through The Eyeland Corporation, a
100% owned personal holding company.
(5) In accordance with the terms of a debenture issued by the Corporation to
CIBC Capital Partners, a division of the Canadian Imperial Bank of
Commerce, CIBC Capital Partners is entitled to nominate one representative
to the Board.
(6) Nominee of Points Investments, Inc., an affiliate of IAC.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND SUMMARY COMPENSATION TABLE FOR THE FINANCIAL YEAR
ENDED DECEMBER 31, 2003
The following table sets forth all compensation, for the periods indicated, paid
in respect of the Named Executive Officers of the Corporation as of December 31,
2003. A "Named Executive Officer" means the Chief Executive Officer ("CEO") of
the Corporation, regardless of the amount of compensation of that individual,
and each of the Corporation's four most highly compensated executive officers,
other than the CEO, who are serving as executive officers at the end of the most
recent fiscal year and whose total salary and bonus for the fiscal year amounted
to $100,000 or more and any additional individuals for whom disclosure would
have been provided except that the individual was not serving as an officer of
the Corporation at the end of the most recently completed financial year-end.
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Annual Compensation Long Term Compensation
---------------------------------- ----------------------------------
Other Annual Securities Under Subsidiary All Other
Fiscal Salary Bonus(1) Compensation(2) Option(3) Securities Under Compensation
Name and Principal Position Year ($) ($) ($) (#) Option(4) (#) ($)
- ------------------------------ ------ ------- -------- --------------- ---------------- ---------------- ------------
Robert MacLean 2003 160,000 34,498 26,650 125,000 975,684 --
Chief Executive Officer 2002 146,917 17,360 33,680 125,000 1,275,375
2001 120,000 28,340 -- 125,000 1,275,375
Christopher Barnard 2003 156,800 34,301 -- 1,581,250 75,000 --
President 2002 144,667 17,360 -- 1,181,250 75,000
2001 140,000 55,000 -- 1,181,250 75,000
Stephen Yuzpe 2003 135,844 27,040 -- 183,750 55,000 --
Chief Financial Officer 2002 129,167 7,508 -- 183,750 55,000
2001 125,000 25,000 -- 183,750 55,000
Bill Thompson(5) 2003 146,493 28,872 -- 50,000 142,100 --
Senior Vice President, Partner 2002 155,065 15,403 -- -- 170,100
Relationships 2001 140,768 11,155 -- -- 170,100
Darlene Higbee Clarkin 2003 127,427 27,359 -- 200,000 424,436 --
Vice President and Chief 2002 107,083 12,850 -- -- 509,436
Technology Officer 2001 88,333 5,729 -- -- 509,436
Notes:
(1) Bonuses earned in a fiscal (calendar) year are paid within 6 weeks of year
end in the following fiscal year.
(2) Perquisites and other personal benefits for each Named Executive Officer do
not exceed the lesser of Cdn. $50,000 or 10% of total annual salary and
bonus.
(3) Represents options to acquire Common Shares of the Corporation.
(4) Represents options to acquire common shares of Points.com Inc.
(5) Salary and bonus amounts for Mr. Thompson were converted from U.S. dollars
using the following foreign exchange rate: (2003 - Cdn$1.40 = US$1.00; 2002
- Cdn$1.5796 = US$1.00; 2001 - Cdn$1.5926 = US$1.00).
OPTIONS GRANTED TO NAMED EXECUTIVE OFFICERS DURING THE FINANCIAL YEAR ENDED
DECEMBER 31, 2003
The following table indicates the options granted during the financial year
ended December 31, 2003 to Named Executive Officers.
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Market Value of
% of Total Common Shares on the
Common Shares Under Options Granted Exercise Price per Date Preceding
Options Granted to Employees in Common Share Issuance Expiration
Name (#) Financial Year ($) ($) Date
- ---- ------------------- --------------- ------------------ -------------------- -------------
Robert MacLean -- -- -- -- --
Christopher Barnard 400,000(1) 30% 1.12 1.12 Dec. 16, 2008
Stephen Yuzpe -- -- -- -- --
Bill Thompson 50,000(2) 4% 0.22 0.22 Feb. 16, 2008
Darlene Higbee Clarkin 200,000(3) 15% 1.12 1.12 Dec. 16, 2008
Notes:
(1) Mr. Barnard's options were granted on December 17, 2003 and vest in equal
parts on each of the first, second and third anniversary of the date of
grant.
(2) Mr. Thompson's options were granted on February 17, 2003 and vest in equal
parts on each of the first, second and third anniversary of the date of
grant.
(3) Ms. Higbee Clarkin's options were granted on December 17, 2003 and vest in
full on June 16, 2005.
AGGREGATE OPTIONS EXERCISED DURING THE FINANCIAL YEAR ENDED DECEMBER 31, 2003
AND FINANCIAL YEAR END OPTION VALUES
The following table indicates the options exercised during the financial year
ended December 31, 2003 by each of the Named Executive Officers and the value of
options unexercised at year-end.
Points International Ltd. Options
Common Shares Unexercised Options Value of Unexercised
Acquired on Aggregate Value at Financial In-the-Money Options at
Exercise Realized Year End Financial Year End(1)
Name (#) ($) (#) ($)
- ---- ------------- --------------- ------------------------- -----------------------
Robert MacLean -- -- 125,000 Exercisable 62,500 Exercisable
Nil Unexercisable Nil Unexercisable
Christopher Barnard(2) -- -- 1,181,250 Exercisable 750,000 Exercisable
400,000 Unexercisable Nil Unexercisable
Stephen Yuzpe -- -- 172,478 Exercisable 84,890 Exercisable
11,272 Unexercisable Nil Unexercisable
Bill Thompson -- -- Nil Exercisable Nil Exercisable
50,000 Unexercisable Nil Unexercisable
Darlene Higbee Clarkin -- -- Nil Exercisable Nil Exercisable
200,000 Unexercisable Nil Unexercisable
Notes:
(1) Based upon the closing price of the Common Shares on the TSX Venture
Exchange on December 31, 2003 of $1.00 per Common Share.
(2) Subsequent to year end, Mr Barnard exercised 531,250 options.
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Points.com Inc. Options(1)
Corporation
Common Aggregate Points.com Common Unexercised PCI Value of Unexercised
Shares Acquired Value Shares Acquired Options at In-the-Money PCI Options
on Exercise Realized on Exercise Financial Year End at Financial Year End(2)
Name (#) ($) (#) (#) ($)
- ---- --------------- --------- ----------------- ----------------------- -------------------------
Robert MacLean 750,392 713,621 299,689 975,684 Exercisable 2,410,731 Exercisable
Nil Unexercisable Nil Unexercisable
Christopher Barnard -- -- -- 75,000 Exercisable 183,668 Exercisable
Nil Unexercisable Nil Unexercisable
Stephen Yuzpe -- -- -- 55,000 Exercisable 134,690 Exercisable
Nil Unexercisable Nil Unexercisable
Bill Thompson 70,110 96,614 28,000 142,100 Exercisable 347,988 Exercisable
Nil Unexercisable Nil Unexercisable
Darlene Higbee Clarkin(3) 212,832 272,000 85,000 424,436 Exercisable 1,053,334 Exercisable
Nil Unexercisable Nil Unexercisable
Notes:
(1) The Corporation has granted to holders of options to acquire common shares
of Points.com Inc. the right to put to the Corporation the common shares of
Points.com Inc. in exchange for Common Shares having a fair market value
equal to the fair market value of the common shares of Points.com Inc. so
put. The Corporation has used a ratio of 2.5039 Common Shares per
Points.com Inc. common share for this purpose.
(2) Based upon the closing price of the Common Shares on the TSX Venture
Exchange on December 31, 2003 of $1.00 per Common Share and assuming that
the fair market value of a Points.com Inc. common share is equal to 2.5039
Common Shares, which ratio is consistent with the historical ratio applied
in respect of put rights granted by the Corporation to holders of certain
options exercisable to acquire common shares of Points.com Inc.
(3) Subsequent to year end and up to the date of this Circular, Ms Clarkin
exercised 63,963 Points.com Inc. options and put the common shares acquired
to the Corporation for 160,157 Common Shares.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Securities to be issued Weighted average exercise Number of securities
upon exercise of outstanding price of outstanding remaining available for
options and rights options and rights future issuance under
Plan Category (#) ($) equity compensation plans
------------- ---------------------------- ------------------------- -------------------------
Employee stock option plan(1,2) 5,598,127 0.50 870,774
Put rights on subsidiary shares(3) 7,799,781 0.04 7
Notes:
(1) Subsequent to year end, 685,750 options were exercised and 4,000 were
cancelled.
(2) Subsequent to year end, 869,407 options were granted.
(3) Subsequent to year end, put rights to acquire 465,724 Common Shares were
exercised.
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COMPENSATION OF DIRECTORS DURING THE FINANCIAL YEAR ENDED DECEMBER 31, 2003
Beginning July 1, 2003, the Corporation compensated directors, who are not also
executive officers, for serving on the Board ("outside directors") at a rate of
$1,000 per meeting held in person ($500 per meeting held by conference call) and
$900 per committee meeting held in person ($450 per meeting held by conference
call). In addition, outside directors are paid an annual retainer of $10,000.
The Chairman of the Board is paid an additional annual retainer of $3,000 and
the Chairman of each committee is paid an additional annual retainer of $2,000.
Outside directors are reimbursed for reasonable out-of-pocket expenses for
attending Board and committee meetings. Certain directors who are eligible to
receive directors' fees have waived their right to receive compensation. Board
members who have waived their right to compensation can, at any time, elect to
receive fees for meetings held after notice of such election is made.
Board members are eligible to participate in the Corporation's stock option
plan. No outside director was granted options in 2003. The total cash
compensation paid to the directors for 2003 was $61,250. Directors fees are paid
quarterly, within 30 days of quarter end.
Six outside directors of the Corporation hold, in the aggregate, options to
acquire 1,707,500 Common Shares of the Corporation with a weighted average
exercise price of $0.45. In addition, two outside directors hold, in the
aggregate, 100,600 options to acquire common shares of the Corporation's
subsidiary Points.com Inc. with a weighted average exercise price of $0.055. The
shares issued on the exercise of the Points.com Inc. options may be put to the
Corporation for a maximum of 251,893 Common Shares.
EMPLOYMENT AGREEMENTS
Robert MacLean, the Chief Executive Officer of the Corporation and Points.com
Inc., is employed under an employment agreement made as of January 11, 2000, as
subsequently amended. Mr. MacLean currently receives an annual salary of
$162,000. The employment agreement provides for a compensation package that
includes base salary, bonus, benefits and the right to participate in any
incentive stock option plan of the Corporation. The agreement automatically
renews from year to year, and may be terminated by the Corporation by giving
notice at least 60 days prior to the expiry of the annual term. If the agreement
is terminated on such other notice, and for reasons other than just cause, Mr.
MacLean is entitled to one month of severance pay for each full year of service
to a maximum of 10 months. The agreement also contains provisions related to
confidentiality, intellectual property rights, non-solicitation and
non-competition.
Christopher Barnard, the Corporation's President, is employed under an
employment agreement made as of April 1, 1999, as subsequently amended. Mr.
Barnard currently receives an annual salary of $158,760. The employment
agreement provides for a compensation package that includes base salary, bonus,
benefits and the right to participate in any incentive stock option plan of the
Corporation. In addition to a general bonus entitlement, Mr. Barnard is entitled
to a bonus of up to $1 million payable over a minimum of four years commencing
December 31, 2003 provided certain share ownership requirements are met during
such period. If the agreement is terminated by the Corporation for reasons other
than just cause, Mr. Barnard is entitled to the greater of one year of salary
and an amount which would be awarded under applicable common law principles. In
addition, upon termination for other than just cause, all unvested options held
by Mr. Barnard will immediately vest. The agreement also contains provisions
related to confidentiality, intellectual property rights, non-solicitation and
non-competition.
Stephen Yuzpe, the Corporation's Chief Financial Officer, is employed under an
employment agreement made as of May 1, 2000, as subsequently amended. Mr. Yuzpe
currently receives an annual salary of $136,500. The employment agreement
provides for a compensation package that includes base salary, bonus, benefits
and the right to participate in any incentive stock option plan of the
Corporation. In addition to a general bonus entitlement, Mr. Yuzpe is entitled
to a bonus of up to $130,000, which is
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payable after December 31, 2004 provided certain share ownership requirements
are met. If the agreement is terminated by the Corporation for reasons other
than just cause, Mr. Yuzpe is entitled to the greater of six months of salary
and an amount which would be awarded under applicable common law principles. The
agreement also contains provisions related to confidentiality, intellectual
property rights, non-solicitation and non-competition.
Bill Thompson, the Corporation's Senior Vice President, Partners, is employed
under an employment agreement made as of August 1, 2000. Mr. Thompson currently
receives an annual salary of US$110,000. The employment agreement provides for a
compensation package that includes base salary, bonus, benefits and the right to
participate in any incentive stock option plan of the Corporation. The agreement
automatically renews from year to year, and may be terminated by the Corporation
by giving 60 days notice. The agreement also contains provisions related to
confidentiality, intellectual property rights, non-solicitation and
non-competition.
Darlene Higbee-Clarkin, the Corporation's Vice President, Technology and Chief
Technology Officer, is employed under an employment agreement made as of July
10, 2000. Ms. Higbee-Clarkin currently receives an annual salary of $136,500.
The employment agreement provides for a compensation package that includes base
salary, bonus, benefits and the right to participate in any incentive stock
option plan of the Corporation. The agreement automatically renews from year to
year, and may be terminated by the Corporation by giving 30 days notice. The
agreement also contains provisions related to confidentiality, intellectual
property rights, non-solicitation and non-competition.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Corporation and its subsidiary, Points.com Inc., currently maintain
Directors and Officers Liability Insurance in the amount of US $5,000,000 in the
aggregate (US$5,000,000 per occurrence) for the term ending September 15, 2004.
All directors are entitled to full reimbursement for directors' liability
without deduction. There is a deductible of US$50,000 for each claim where the
Corporation provides indemnification to a director or officer. In addition,
there is a US$100,000 deductible for any security related claims arising against
the Corporation. The aggregate annual premium for the policy is US$75,000. All
costs associated with the premiums shall be bourne by the Corporation.
COMPOSITION OF THE HUMAN RESOURCES COMMITTEE
Executive compensation is determined on an annual basis by the Board upon the
recommendation of the human resources committee of the Board (the "HUMAN
RESOURCES COMMITTEE"). This committee is comprised of four outside directors of
the Corporation: Messrs. Fleming (Chairman), Korman, Payne and Thompson. The
Human Resources Committee reviews the performance of the executive officers, the
performance of the Corporation (including its separate divisions and
subsidiaries) and determines recommended compensation packages for executive
officers and the compensation ranges for all employees.
REPORT BY HUMAN RESOURCES COMMITTEE
ON EXECUTIVE COMPENSATION
The Human Resources Committee is responsible for reviewing and making
recommendations to the Board on compensation paid to executive officers of the
Corporation and on the compensation practices of the Corporation.
The Corporation's compensation packages are designed to encourage, compensate
and reward the employees of the Corporation on the basis of individual and
corporate performance.
The executive compensation system consists of three primary components: salary,
short-term incentives and long-term incentives. It is the intention of the Human
Resources Committee to design the executive
-11-
compensation system such that the sum of the three components by an individual
will be competitive with median compensation levels for similar positions at
comparable companies. The competitiveness of the compensation structure has been
previously determined through a compensation survey at the direction of the
Human Resources Committee. In arriving at what constitutes average or above
average total compensation, the Human Resources Committee exercises its
discretion and good judgment and considers as a reference point, competitive
data for issuers in a similar position. The source data for the comparator are
the survey results of an independent survey conducted by a human resources
consulting group in a prior year. Achieving the appropriate level of total
compensation for an executive year over year is accomplished primarily by
adjusting the amounts of short-term and long-term compensation granted to such
executive.
BASE SALARY
Executives salaries are intended to approximate median competitive levels for
similar positions in comparable companies. The Human Resources Committee will
periodically engage an independent consultant to determine whether the
Corporation's salary, bonus and stock option compensation are appropriate.
To determine a particular executive officer's compensation, the Human Resources
Committee will give consideration to the Corporation's performance, personal
performance, leadership, and achievement of annual specific objectives. Such
annual specific objectives are based on the achievement of financial and
non-financial metrics.
SHORT-TERM COMPENSATION INCENTIVES
Executive officers receive a portion of their annual compensation in the form of
bonuses. Each executive officer is eligible to be paid a bonus of up to 40% of
his or her salary based on the executive's overall contribution and performance
and on the Corporation's achievement of certain financial, strategic and
operating targets. 30% of the executive officer's potential bonus is based on
personal objectives and 70% of the executive officer's potential bonus is based
on corporate objectives.
LONG-TERM COMPENSATION INCENTIVES
The Corporation's long-term incentive compensation for executive officers is
provided through grants of stock options under the Corporation's stock option
plan (the "STOCK OPTION PLAN"). Participation in the Stock Option Plan is
considered to be an important component of compensation in order to focus the
interests of executives on the longer-term interests of the shareholders. The
Board administers the Stock Option Plan subject to option guidelines and
recommendations developed by the Human Resources Committee. The number of stock
options granted is based on each executive's responsibility and personal
performance, and takes into consideration the number and terms of stock options
that have been previously been granted to that executive.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER (T. ROBERT MACLEAN)
Mr. MacLean's compensation is determined in the same fashion as all other
executive officers of the Corporation and consists of base salary, bonuses and
stock options as determined by the Human Resources Committee. In 2003 he was
paid a base salary of $160,000 and received a bonus of approximately $34,500 or
22% of his base salary. Mr. MacLean's maximum target bonus was $64,000 or 40% of
his base salary. The determination of the bonus was based on corporate and
individual performance. Mr. MacLean was not granted any employee stock options
during the year. In 2003, the Human Resources Committee made use of a benchmark
study performed in a prior year to determine the Chief Executive Officer's
salary and bonus.
The report was presented by Messrs Fleming, Korman, Payne and Thompson.
-12-
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder return for the
Common Shares, with the cumulative returns of two Toronto Stock Exchange indices
for the same period, assuming an initial investment in common shares of $100 on
the Corporation's first day of trading on the TSX Venture Exchange, August 9,
1999.
(PERFORMANCE GRAPH)
Aug-99 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
------ ------ ------ ------ ------ ------
Points International Ltd.
Common Shares 100 480.0 120.0 48.0 70.0 200.0
S&P/TSX Small Cap Index 100 106.7 110.8 114.4 109.5 145.6
S&P/TSX Composite Index 100 122.6 130.2 112.0 96.4 119.8
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS
None of the directors, executive officers or senior officers of the Corporation
was indebted to the Corporation or its subsidiaries in the most recently
completed fiscal year, other than Mr. Robert MacLean, the Corporation's Chief
Executive Officer. The following table sets forth certain details of Mr.
MacLean's indebtedness. Mr. MacLean's loan had an initial 18-month term that
commenced on February 24, 2000. The initial term to maturity expired on August
24, 2001 but was extended to December 31, 2004. Interest accrues on the
principal outstanding at the CCRA prescribed interest rate with accrued interest
payable together with principal on the loan maturity date. The purpose of the
loan was to induce Mr. MacLean to relocate from Calgary to Toronto to assume a
leadership position with Points and to assist him with the move.
Largest amount Amount Security Amount forgiven
Name and principal Involvement of outstanding during last outstanding as at for during last completed
position Exclamation Inc. completed fiscal year April 30 2004(1) indebtedness fiscal year(2)
- ------------------ ---------------- ------------------------ ----------------- ------------ ---------------------
Mr. Robert MacLean Lender $50,000 principal plus nil Options in $25,000 principal
Chief Executive $513.29 accrued interest Points.com plus $1,650 accrued
Officer Inc. interest
Notes:
(1) The remaining $25,000 of principal and $825 of accrue interest was forgiven
on April 24, 2004.
(2) $25,000 of principal was forgiven on April 24, 2003 and $1,650 of accrued
interest was forgiven on December 31, 2003.
-13-
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Toronto Stock Exchange (the "TSX") requires that each listed company to
disclose on an annual basis its approach to corporate governance. A description
of the Corporation's approach to corporate governance is set forth in Schedule A
which is cross-referenced to the guidelines of the TSX (the "TSX GUIDELINES")
which are set forth in Section 474 of the TSX Company Manual.
APPOINTMENT OF AUDITORS
Management proposes to nominate Mintz & Partners LLP, as the auditors of the
Corporation to hold office until the close of the next annual meeting of
shareholders and proposes that the shareholders authorize the directors to fix
the remuneration of the auditors. The Common Shares represented by proxies in
favour of management nominees will be voted in favour of the appointment of
Mintz & Partners LLP as auditors of the Corporation, to hold office until the
next annual meeting of shareholders and the authorization of the directors to
fix the remuneration of the auditors, unless authority to do so is withheld.
Mintz & Partners LLP have been the auditors of the Corporation since February
2000.
A copy of the financial statements of the Corporation for the fiscal year-ended
December 31, 2003 has been provided to the shareholders of the Corporation.
INCREASE IN NUMBER OF STOCK OPTIONS
On April 22, 2004, the Board passed a resolution, subject to regulatory and
shareholder approvals, that amends the Corporation's Stock Option Plan by
increasing the maximum number of Common Shares issuable thereunder from
8,030,424 to 10,206,948. Such increased maximum number equals 15% of the
68,046,319 Common Shares issued and outstanding as at April 22, 2004.
Accordingly, this Meeting has been called, in part, to consider and, if thought
fit, to approve with or without variation as an ordinary resolution the Option
Plan Resolution (the text of which is set out as Schedule B hereto) authorizing
such amendment to the Stock Option Plan.
The purpose of the Stock Option Plan is to provide certain directors, officers,
key employees and service providers of the Corporation and its subsidiaries with
an opportunity to purchase Common Shares and to benefit from the appreciation
thereof. This is intended to provide an increased incentive for these directors,
officers, key employees and service providers to contribute to the future
success and prosperity of the Corporation, thus enhancing the value of the
Common Shares for the benefit of all the shareholders and increasing the ability
of the Corporation and its subsidiaries to attract and retain individuals of
exceptional skill. The maximum term of each option under the Stock Option Plan
is ten years and the exercise price of each option is determined based on the
closing price of the Common Shares on the TSX on the business day preceding the
date of the grant of the option.
Currently, 1,367 Common Shares remain available under the Stock Option Plan for
further option grants. Management believes that the additional 2,176,524 Common
Shares to be made available for issue under the Stock Option Plan if the
amendment is approved is desirable in order to preserve flexibility for the
Corporation in continuing to attract and retain those individuals with the
skills and abilities necessary to the future success and prosperity of the
Corporation.
Since the amendment to the Stock Option Plan could result in the number of
shares being reserved for issuance pursuant to stock options granted to
directors and senior officers of the Corporation (including the outstanding
options to acquire Points.com Inc. common shares with associated put rights)
exceeding 10% of the outstanding Common Shares, the amendment requires
disinterested shareholder approval under the rules of the TSX, and is otherwise
subject to the approval of the TSX in accordance with such rules.
-14-
To be approved in accordance with the rules of the TSX, this ordinary resolution
must be passed by a simple majority of the votes cast in person or by proxy at
the Meeting, other than votes attaching to shares beneficially owned by the
directors and senior officers of the Corporation and their associates.
MANAGEMENT RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE OPTION PLAN RESOLUTION.
Unless instructed in the form of proxy to the contrary, the shares represented
by proxies in favour of management nominees will be voted in favour of the
Option Plan Resolution.
CONTINUANCE UNDER THE CANADA BUSINESS CORPORATIONS ACT
The Corporation is currently governed, as to matters of corporate law, by the
OBCA. A corporation subject to the OBCA may, if authorized by special resolution
and the "Director" appointed under the OBCA, apply to the "Director" appointed
under the CBCA for a certificate of continuance under the CBCA. On April 22,
2004, the Board passed a resolution authorizing the Board to submit for approval
to the shareholders of the Corporation at the Meeting the recommendation that
the shareholders pass the Continuance Resolution, the text of which resolution
is set out in Schedule C to this Circular. Upon the issuance of a certificate of
continuance in respect of the Corporation, the OBCA will cease to apply to the
Corporation and the CBCA will become applicable to the Corporation as if it had
been incorporated under the CBCA.
REASONS FOR CONTINUANCE
The principal reason for continuing the Corporation under the CBCA is to enable
the Corporation to benefit from the more flexible corporate procedures provided
for in the CBCA, amongst which are provisions providing for the number of
directors of a corporation organized under that statute who must be resident
Canadians to be at least 25%, thus allowing the Corporation to seek director
candidates from a much broader pool. Currently, as a corporation organized under
the OBCA, a majority of the Corporation's directors are required to be resident
Canadians.
The Corporation is a global company with development and sales operations in
North America and Europe. Customers and potential customers of the Corporation
exist throughout the world. Management of the Corporation believes that the
international nature of the Corporation's business requires that the Corporation
have the flexibility to elect or appoint directors based on merit without the
requirement that a majority of directors be resident Canadians. If the
Continuance Resolution is approved and the Corporation is continued under the
CBCA, in addition to the residency requirements of that statute, as a TSX-listed
company, the Corporation will continue to be required to have at least two
Canadian directors.
SUMMARY COMPARISON OF DIFFERENCES BETWEEN THE OBCA AND CBCA
The CBCA provides shareholders substantially the same rights as are available to
shareholders under the OBCA, including rights of dissent and appraisal, and
rights to bring derivative actions and oppression actions. However, there are
certain differences between the two statutes and the regulations made
thereunder. The following is a summary of certain differences between the OBCA
and the CBCA which management of the Corporation considers to be material to
shareholders. THIS SUMMARY IS NOT AN EXHAUSTIVE REVIEW OF THE TWO STATUTES.
REFERENCE SHOULD BE MADE TO THE FULL TEXT OF BOTH STATUTES AND THE REGULATIONS
THEREUNDER FOR PARTICULARS OF ANY DIFFERENCES BETWEEN THEM, AND SHAREHOLDERS
SHOULD CONSULT THEIR LEGAL OR OTHER PROFESSIONAL ADVISORS WITH REGARD TO THE
IMPLICATIONS OF THE CONTINUANCE WHICH MAY BE OF IMPORTANCE TO THEM.
Director Residency Requirements. Under the OBCA, a majority of a corporation's
directors must be resident Canadians. Under the CBCA, subject to certain
exceptions which do not currently apply to the Corporation, at least 25% of a
corporation's directors must be resident Canadians.
-15-
Residency Requirements for Committee Members. The OBCA requires that a majority
of the members of a committee of the board of directors must be resident
Canadians. The CBCA does not have any residency requirements for members of
committees of the board of directors.
Independent Directors. Under the OBCA, at least one third of the members of the
board of directors of a corporation cannot be officers or employees of the
corporation or its affiliates. Under the CBCA, the requirement is that at least
two of the directors of the corporation not be officers or employees of the
corporation or its affiliates.
Quorum of Directors' Meetings. Both the CBCA and OBCA state that quorum of
directors meetings consists of a majority of directors or the minimum number of
directors required by the articles, although the OBCA also stipulates that in no
case may a quorum be less than two-fifths of the number of directors or the
minimum number of directors. Further, while the OBCA requires that a majority of
the directors present be resident Canadians, the CBCA requires only that 25% of
the directors present (or at least one if less than four directors are
appointed) be resident Canadians.
Place of Shareholders' Meetings. Under the OBCA, a shareholders' meeting may be
held at such place in or outside Ontario (including outside Canada) as the
directors may determine. Under the CBCA, a shareholders' meeting may be held at
any place in Canada provided in the by-laws or, in the absence of such
provision, at a place within Canada that the directors determine.
Notwithstanding the foregoing, a meeting of shareholders of a CBCA corporation
may be held at a place outside Canada if such place is specified in the articles
of the corporation.
Solicitation of Proxies. Under the OBCA, a person who solicits proxies, other
than by or on behalf of management of the corporation, must send a dissident's
proxy circular in prescribed form to the auditor of the corporation, each
shareholder whose proxy is solicited and the corporation. Under the CBCA,
proxies may be solicited, other than by or on behalf of management of the
corporation, without the sending of a dissident's proxy circular if (i) proxies
are solicited from fifteen (15) or fewer shareholders, or (ii) the solicitation
is conveyed by public broadcast, speech or publication containing certain of the
information that would be required to be included in a dissident's proxy
circular. Furthermore, under the CBCA, the definition of "solicit" and
"solicitation" specifically excludes (i) certain public announcements by a
shareholder of how he or she intends to vote and the reasons for that decision,
(ii) communications for the purpose of obtaining the number of shares required
for a shareholder proposal, and (iii) certain other communications made other
than by or on behalf of management of the corporation, including communications
by one or more shareholders concerning the business and affairs of the
corporation or the organization of a dissident's proxy solicitation where no
form of proxy is sent by or on behalf of such shareholders, under certain
prescribed conditions, by financial and other advisers in the ordinary course of
business to shareholders who are their clients, or by any person who does not
seek directly or indirectly the power to act as proxy for a shareholder.
Record Date for Shareholders' Meetings. Under the OBCA, where a corporation
fixes a record date for the determination of shareholders entitled to vote at a
shareholders' meeting and a shareholder transfers shares after the record date,
the transferee of such shares is entitled to vote such shares at the meeting if
the transferee establishes that he or she owns the shares and demands, not later
than ten (10) days before the meeting, that his or her name be included in the
list of shareholders entitled to vote at the meeting. If no record date is fixed
and a list of shareholders entitled to vote at the meeting is prepared as of the
date (the "deemed record date") preceding the date on which notice of the
meeting is given, a transferee of shares after the deemed record date is
entitled to vote such shares under similar circumstances. Under the CBCA,
shareholders are entitled to vote only shares held by them on the record date or
the deemed record date, as the case may be. Transferees of shares after the
record date or the deemed record date, as the case may be, are not entitled to
vote the transferred shares at the meeting.
Notice of Shareholders' Meetings. Under the OBCA, a public corporation must give
notice of a meeting of shareholders not less than twenty-one (21) days and not
more than fifty (50) days before the meeting.
-16-
Under the CBCA, such notice must be provided not less than twenty-one (21) days
and not more than sixty (60) days before the meeting. However, public companies
incorporated under either statute are currently subject to the requirements of
National Instrument 54-101 of the Canadian Securities Administrators which
provides for minimum notice periods of greater than the minimum twenty-one (21)
day period in either statute.
Telephonic or Electronic Meetings. Under the OBCA, unless a corporation's
articles or by-laws provide otherwise, meetings of shareholders may be held by
telephonic or electronic means and shareholders may participate in and vote at
the meeting by such means. Similarly, under the CBCA, unless the articles or
by-laws of the corporation provide otherwise, a meeting of shareholders' may be
held by telephonic or electronic means (and shareholders may participate in and
vote at the meeting by such means) if the corporation provides shareholders with
a telephonic, electronic or other means of communication that permits all
participants to communicate adequately with each other during the meeting. In
addition, under the CBCA, if the corporation's by-laws so provide, a meeting of
shareholders may be held entirely by such means. It is proposed that the
Corporation's by-laws following the continuance will permit a meeting of
shareholders to be held entirely by such means. See "ADOPTION OF NEW BY-LAW NO.
1" below.
Shareholder Proposals. Under the OBCA, a shareholder entitled to vote at a
shareholders' meeting may submit a shareholder proposal relating to matters
which the shareholder wishes to propose at a shareholders' meeting. Under the
CBCA, shareholder proposals may be submitted by both registered and beneficial
owners of shares entitled to be voted at an annual meeting of shareholders,
provided that (i) the shareholder must have been the registered or beneficial
owner, for at least six months prior to the submission of the proposal, of
voting shares at least equal to one percent of the total number of outstanding
voting shares of the corporation or whose fair market value is at least $2,000,
or (ii) the proposal must have the support of persons who in the aggregate have
been the registered or beneficial owner of such number of voting shares for such
period.
Access to Information. Shareholders under the CBCA have a right of access to the
minutes of meetings at which directors make mandatory disclosure of material
interests in transactions and contracts that involve the corporation.
Financial Assistance. Unlike the CBCA, the OBCA requires disclosure to its
shareholders of financial assistance given by a corporation (i) in connection
within the purchase of shares of the corporation or its affiliates, or (ii) to
shareholders, beneficial shareholders, directors, officers or employees of the
corporation, an affiliate of the corporation, or an associate of any of them.
However, regulations under each of the CBCA and the Securities Act (Ontario)
prescribe disclosure of certain financial assistance other than routine
indebtedness to directors, executive officers and senior officers in proxy
circulars.
Registered Office. Under the OBCA, a corporation's registered office must be in
Ontario and may be relocated to a different municipality only with shareholder
approval. Under the CBCA, a corporation's registered office may be at any place
in Canada specified in the articles and may be relocated within a province by
resolution of the directors. The draft articles of continuance attached as
Schedule D to this Circular provide that the registered office of the
Corporation shall be in Ontario.
Corporate Records. The OBCA and related Ontario statutes require records to be
kept in Ontario. The CBCA permits corporate and accounting records to be kept
outside of Canada, although there are still requirements to keep records and
books of account within Canada under the Income Tax Act (Canada) and other
statutes administered by the Minister of National Revenue (such as the Excise
Tax Act). Corporations are also required to provide access to their records kept
outside Canada at a location in Canada, by computer terminal or other
technology.
-17-
ARTICLES OF CONTINUANCE
If the continuance is approved by shareholders at the Meeting (or any
adjournment(s) or postponement(s) thereof), the Corporation intends to file with
the Director under the CBCA articles of continuance in the form of the draft
articles attached as Schedule D to this Circular. The CBCA permits any
amendments to the articles of a corporation that would otherwise be permitted
under the CBCA to be effected by changes made in articles of continuance. Thus,
as part of the continuance, the Corporation proposes to make the following
amendments to the articles of the Corporation:
Series A Preferred Shares. The Corporation is presently authorized to issue up
to 20,000,000 Series A Preferred Shares. There are presently no issued or
outstanding Series A Preferred Shares or options to acquire Series A Preferred
Shares, and thus the Corporation proposes to remove the Series A Preferred
Shares from the authorized capital of the Corporation.
Other Provisions. The Corporation also proposes as part of the continuance to
remove certain other provisions of the articles of the Corporation that (i)
allow for the directors to appoint one or more additional directors between
annual general meetings, and (ii) specifically allow meetings of shareholders to
be held in the City of Toronto and anywhere in Alberta.
ADOPTION OF NEW BY-LAW NO. 1
In conjunction with the continuance, the Board has passed a resolution adopting,
upon the effective date of the continuance (i) By-Law "A" of the Corporation
(the "REPEALING BY-LAW"), being a by-law that repeals the existing By-Law No. 2
and By-Law No. 3 of the Corporation (the "OBCA BY-LAWS"), and (ii) By-Law No. 1
of the Corporation (the "CBCA BY-LAW"), being a by-law relating generally to the
regulation of the business and affairs of the Corporation intended to replace
the OBCA By-Laws, both in the forms attached as Part I and Part II of Schedule E
to this Circular, respectively. The shareholders are being asked to confirm the
Repealing By-Law and the CBCA By-Law approved by Board, to be enacted only upon
the continuance of the Corporation under the CBCA, pursuant to the By-Law
Resolution the text of which is set out in Schedule F attached hereto.
The following is a summary of the significant differences between the CBCA
By-Law and the OBCA By-Laws. Reference should be made to the full text of the
CBCA By-Law attached as Schedule E to this Circular.
References to Statutes. References in the OBCA By-Laws to the OBCA and other
Ontario statutes have been replaced in the CBCA By-Law with references to the
CBCA and the corresponding federal statutes, respectively.
Execution of Instruments. The OBCA By-Laws provide that contracts and other
instruments may be executed on behalf of the Corporation by any officer or
director of the Corporation, unless the Board otherwise directs. The CBCA By-law
provides that contracts and other instruments may be executed on behalf of the
Corporation by any two of the directors and officers of the Corporation, unless
otherwise determined by the Board.
Quorum Requirements for Shareholder Meetings. The OBCA By-laws provide that the
quorum necessary to transact business at a shareholders meeting is not less than
five persons holding or representing by proxy not less than 15% of the total
number of the issued shares of the Corporation enjoying voting rights. The CBCA
By-law provides that the quorum necessary to transact business at a shareholders
meeting is not less than five persons holding or representing by proxy not less
than 15% of the total number of votes represented by the issued shares of the
Corporation enjoying voting rights.
Appointment of Officers. The OBCA By-Laws provide that the Board may determine
and appoint the officers of the Corporation and their duties. The OBCA By-laws
also contain certain provisions relating to the roles and responsibilities of
certain officers of the Corporation should they be appointed by the Board. The
CBCA By-Law contains more flexible provisions in the appointment of officers and
the duties of those officers is substantially at the discretion of the Board.
-18-
Calling Meetings; Chair. As a result of the changes in the CBCA By-Law to the
appointment of officers, certain consequential changes have been made to the
persons entitled to call meetings of the Board and how the chair of Board
meetings and shareholder meetings is selected relative to the OBCA By-Laws.
Lien on Shares. The OBCA By-law provides that the Corporation has a lien on any
share or shares of a shareholder for any debt of that shareholder to the
Corporation. The CBCA By-Law contains no such provisions.
Electronic Meetings and Other Matters. The CBCA By-Law contains certain
provisions not in the OBCA By-Laws relating to the acceptance of proxies, and
the giving of notice by electronic or certain other means. These provisions are
consistent with recent amendments to the CBCA which provide for certain kinds of
corporate activity to be conducted electronically. The CBCA By-Law also provides
that the directors who call a meeting of shareholders of the Corporation may
determine that such meeting shall be held entirely by means of a telephonic,
electronic or other communication facility that permits all participants to
communicate adequately with each other during the meeting.
The Continuance Resolution provides that the Board is authorized, in its sole
and absolute discretion, to abandon the application for a certificate of
continuance, or determine not to proceed with the continuance, for any reason,
without further approval of the Corporation's shareholders. In particular, the
Board may determine not to present the Continuance Resolution to the Meeting or,
if the Continuance Resolution is presented to the Meeting and approved, may
determine not to proceed with completion of the continuance and filing the
articles of continuance under the CBCA.
CIBC Capital Partners, a division of the Canadian Imperial Bank of Commerce, has
consented to the continuance pursuant to the terms of a secured convertible
debenture issued to it by the Corporation, and Points Investments, Inc. has
consented to the continuance pursuant to the terms of an investor's rights
agreement between it and the Corporation dated April 11, 2003.
To be approved, the Continuance Resolution must be passed by at least two-thirds
of the votes cast in person or by proxy at the Meeting and by the holder of the
Series Two Preferred Share voting separately as a series. MANAGEMENT RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE CONTINUANCE RESOLUTION. Unless instructed in the
form of proxy to the contrary, the shares represented by proxies in favour of
management nominees will be voted in favour of the Continuance Resolution.
Points Investments, Inc. has agreed to vote, or cause to be voted, in favour of
the Continuance Resolution all of its votes represented by the Series Two
Preferred Share.
To be approved, the By-Law Resolution must be passed by a simple majority of the
votes cast in person or by proxy at the Meeting by the holders of shares.
MANAGEMENT RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE BY-LAW RESOLUTION. Unless
instructed in the form of proxy to the contrary, the shares represented by
proxies in favour of management nominees will be voted in favour of the By-Law
Resolution.
Under the provisions of the OBCA, shareholders of the Corporation will be
entitled to exercise dissent rights in connection with the adoption of the
Continuance Resolution. See "DISSENTING SHAREHOLDERS' RIGHTS" below.
DISSENTING SHAREHOLDERS' RIGHTS
A registered shareholder of the Corporation is entitled to dissent from the
Continuance Resolution in the manner provided in Section 185 of the OBCA.
Section 185 of the OBCA is reprinted in its entirety as Schedule G to this
Circular. The following summary is qualified in its entirety by the provisions
of Section 185 of the OBCA.
-19-
A holder of Common Shares whose Common Shares are registered in its name on the
share register of the Corporation and who validly exercises the right of dissent
provided for under section 185 of the OBCA in respect of his or her Common
Shares (a "DISSENTING SHAREHOLDER") will be entitled, in the event the
continuance contemplated by the Continuance Resolution becomes effective, to be
paid by the Corporation the fair value of the shares held by such Dissenting
Shareholder determined as at the close of business on the day before the Meeting
or any adjournment(s) or postponement(s) thereof.
A shareholder who wishes to dissent must provide to the Corporation, at or
before the Meeting (or any postponement(s) or adjournment(s) thereof) at the
address set out on page one of this Circular, a written objection to the
Continuance Resolution (a "DISSENT NOTICE"). The filing of a Dissent Notice does
not deprive a shareholder of the right to vote; however, the OBCA provides, in
effect, that a shareholder who has submitted a Dissent Notice and who votes in
favour of the Continuance Resolution will no longer be considered a Dissenting
Shareholder with respect to shares voted in favour of the Continuance
Resolution. The OBCA does not provide, and the Corporation will not assume, that
a vote against the Continuance Resolution constitutes a Dissent Notice. Under
the OBCA, there is no right of partial dissent and, accordingly, a Dissenting
Shareholder may dissent only with respect to all shares held by him or her on
behalf of any one beneficial owner and which are registered in the name of the
Dissenting Shareholder.
The Corporation is required, within 10 days after adoption of the Continuance
Resolution, to notify each Dissenting Shareholder that the Continuance
Resolution has been adopted, but such notice is not required to be sent to any
shareholder who voted for the Continuance Resolution or who has withdrawn his or
her Dissent Notice.
A Dissenting Shareholder must, within 20 days after the Dissenting Shareholder
receives notice that the Continuance Resolution has been adopted or, if the
Dissenting Shareholder does not receive such notice, within 20 days after the
Dissenting Shareholder learns that the Continuance Resolution has been adopted,
send to the Corporation a written notice (a "PAYMENT DEMAND") containing his or
her name and address, the number of the Corporation shares in respect of which
the Dissenting Shareholder dissented, and a demand for payment of the fair value
of such shares. Within 30 days after a Payment Demand, the Dissenting
Shareholder must send to the Corporation's transfer agent at the appropriate
address set out on page one of this Circular, the certificates representing the
shares in respect of which he or she dissented. A Dissenting Shareholder who
fails to send the certificates representing the shares in respect of which he or
she dissented forfeits his or her right to make a claim under Section 185 of the
OBCA. The Corporation's transfer agent will endorse on share certificates
received from a Dissenting Shareholder a notice that the holder is a Dissenting
Shareholder and will forthwith return the share certificates to the Dissenting
Shareholder.
On filing a Payment Demand that is not withdrawn prior to the termination of the
Meeting, a Dissenting Shareholder ceases to have any rights as a shareholder,
other than the right to be paid the fair value of his or her shares as
determined under Section 185 of the OBCA, except where (a) the Dissenting
Shareholder withdraws his or her Demand for Payment before the Corporation makes
an Offer to Pay (as defined in the next paragraph), (b) the Corporation fails to
make a timely Offer to Pay to the Dissenting Shareholder and the Dissenting
Shareholder withdraws his or her Demand for Payment, or (c) the Board revokes
the Continuance Resolution, in which case the Corporation will be required to
reinstate the Dissenting Shareholder's rights as a shareholder.
The Corporation is required, not later than seven days after the later of the
effective date of the continuance or the date on which the Corporation received
the Payment Demand of a Dissenting Shareholder, to send to each Dissenting
Shareholder who has sent a Payment Demand to it a written offer to pay (a "OFFER
TO PAY") for his or her shares in an amount considered by the Board to be the
fair value thereof, accompanied by a statement showing the manner in which the
fair value was determined. Every Offer to Pay, as between shares of the same
class, must be on the same terms. The amount specified in the Offer to Pay which
has been accepted by a Dissenting Shareholder shall be paid by the Corporation
within 10 days after the acceptance by the Dissenting Shareholder of the Offer
to Pay, but any such Offer
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to Pay lapses if the Corporation does not receive an acceptance thereof within
30 days after the Offer to Pay has been made.
If the Corporation fails to make an Offer to Pay or if a Dissenting Shareholder
fails to accept an offer that has been made, the Corporation may, within 50 days
after the effective date of the continuance or within such further period as a
court may allow, apply to a court to fix a fair value for the shares of
Dissenting Shareholders. If the Corporation fails to apply to a court, a
Dissenting Shareholder may apply to a court for the same purpose within a
further period of 20 days or within such further period as a court may allow. A
Dissenting Shareholder is not required to give security for costs in such an
application.
Upon an application to a court, all Dissenting Shareholders whose shares have
not been purchased by the Corporation will be joined as parties and bound by the
decision of the court, and the Corporation will be required to notify each
affected Dissenting Shareholder of the date, place and consequences of the
application and of his or her right to appear and be heard in person or by
counsel. Upon any such application to a court, the court may determine whether
any person is a Dissenting Shareholder who should be joined as a party, and the
court will then fix a fair value for the shares of all Dissenting Shareholders.
The final order of a court will be rendered against the Corporation in favour of
each Dissenting Shareholder and for the amount of the fair value of his or her
shares as fixed by the court. The court may, in its discretion, allow a
reasonable rate of interest on the amount payable to each Dissenting Shareholder
from the effective date of the continuance until the date of payment.
The above is only a summary of Section 185 of the OBCA, which are technical and
complex. It is suggested that any shareholder wishing to avail himself or
herself of his or her rights under those provisions seek his or her own legal
advice as failure to comply strictly with the provisions of the OBCA may
prejudice his or her right of dissent.
ADDITIONAL INFORMATION
Upon request made to the Corporate Secretary of the Corporation at 179 John
Street, Suite 800, Toronto, Ontario, M5T 1X4, the Corporation will provide to
any person, and in the case of a security holder of the Corporation without
charge, one copy of:
(a) the Corporation's most recent annual information form filed with
securities commissions or similar regulatory authorities in Canada,
together with the pertinent pages of any document incorporated by
reference therein;
(b) the Corporation's most recently filed comparative annual financial
statements, together with the report of the Corporation's auditors
thereon, and any interim financial statements filed for any period
after the end of its most recently completed financial year; and
(c) the Corporation's management information circular for its most recent
annual meeting of shareholders at which directors were elected.
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BOARD APPROVAL
The undersigned hereby certifies that the contents, and the sending, of the this
Circular have been approved by the Board for mailing to the shareholders
entitled to receive notice of the Meeting, to each director of the Corporation
and to the auditors of the Corporation.
DATED as at April 22, 2004
[signed]
----------------------------------------
Robert MacLean
Chief Executive Officer
SCHEDULE A
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Corporation's statement of corporate governance practices is set out below:
REQUIREMENT COMMENTS
----------- --------
1. Mandate of the Board
The Board should explicitly assume The Board has adopted a formal mandate pursuant to
responsibility for stewardship of the which it has assumed responsibility for the
Corporation. stewardship of the Corporation.
As part of the overall stewardship Under its mandate, the Board has assumed
responsibility, the Board should assume responsibility specifically for the matters set
responsibility specifically for: out below:
(i) adoption of a strategic planning (i) the adoption of a strategic planning process,
process; including approving the Corporation's
strategic plan, approving its annual capital
and operating plans, and monitoring corporate
performance;
(ii) identification of principal (ii) assisting management in identifying risks and
risks and implementation of monitoring the implementation of systems to
risk-managing systems; manage the risks;
(iii) succession planning, including (iii) succession planning as it relates to the CEO
appointing, training and and President only;
monitoring management;
(iv) communications policy; and (iv) reviewing all material corporate
communications before they are released to
the public; and
(v) the integrity of internal (v) through the Audit Committee, reviewing the
control and management Corporation's internal control systems
information systems. policy.
2. Composition of the Board
Majority of directors should be At the date of this Circular, eight of the eleven
"unrelated" (free from conflicting members of the Board are "unrelated" within the
interest). meaning of the TSX Guidelines.
Board should include a number of directors The Board has two nominees appointed by the holder
unrelated to the corporation or the of Series Two Preferred Share in the capital of
significant shareholder that fairly the Corporation, which is convertible, on a fully
reflects the investment in the corporation diluted basis, into approximately 19.9% of the
by shareholders other than Common Shares
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the significant shareholder. of the Corporation. However, at the date of this
Circular, the holder of the Series Two Preferred
Share is not a "significant shareholder" as that
term is defined in the TSX Guidelines.
3. Determination of Status of Directors
Disclose for each director whether he or The Board has adopted the definitions of "related
she is related, and how that conclusion director" and "unrelated director" used in the TSX
was reached. Guidelines and considered the relationship of each
of its directors to the Corporation on the basis
of these definitions as follows:
Unrelated Directors:
Messer's Carty, Fleming, Kranias, McCutcheon and
Thompson are not members of management and do not
have a relationship with the Corporation that
could be seen to interfere with their ability to
act in the best interests of the Corporation,
other than interests or relationships resulting
from their holding shares in the Corporation.
Messer's Blatchford and Korman, and upon his
appointment to the Board, Mr. Marriott, are not
members of management, but are nominees of the
holder of the Series Two Preferred Share. However,
the board has determined that they do not have a
relationship with the Corporation that could be
seen to interfere with their ability to act in the
best interests of the Corporation, other than
interests or relationships resulting from their
holding shares in the Corporation.
Mr. Payne is not a member of management, but is a
nominee of CIBC Capital Partners. However, the
board has determined that he does not have a
relationship with the Corporation that could be
seen to interfere with his ability to act in the
best interests of the Corporation, other than
interests or relationships resulting from his
holding shares in the Corporation.
Related Directors:
Messer's MacLean and Barnard are the Chief
Executive Officer and President of the
Corporation, respectively.
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Mr. Lavine was the former Chief Executive Officer
of the Corporation from June 1999 to February
2002. Since he has been an officer of the
Corporation in the past three years, the Board has
determined that he is a related director.
4. Nominating/Corporate Governance Committee
Appoint a committee composed of The Corporation does not currently have a
non-management directors, a majority of nominating committee. In accordance with the
whom are unrelated directors, responsible mandate of the Board, a nominating committee will
for the appointment/assessment of be established as and when required.
directors.
5. Board Assessment
Implement a process for assessing the The Corporation does not currently review
effectiveness of the Board, its committees individual or committee contributions to the
and individual directors. Board.
6. Orientation and Education
Provide orientation and education programs In 2003, the Corporation introduced a draft board
for new directors. manual to the Chairman and the Chair of the Human
Resources Committee. The Corporation expects to
introduce the final board manual as part of its
director education and orientation plan to be
implemented in the latter half of 2004.
7. Size and Composition of the Board
Examine the size of the Board with a view The Corporation has not currently initiated a
to determining the impact of the number on process to determine the optimal size of the
effectiveness of decision-making. Board.
8. Compensation
Review the adequacy and form of The Human Resources Committee reviews the adequacy
compensation of directors in light of and form of Board compensation in light of the
risks and responsibilities. time commitment and risks and responsibilities
involved. The Human Resources Committee then
establishes the compensation of the directors.
9. Composition of Committees
Committees should generally be composed of The Board has established two standing committees
non-management directors, the majority of of directors (the Audit Committee and the Human
whom are unrelated. Resources Committee), each with a specific mandate
and each of which is comprised solely of a
majority of unrelated
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directors.
10. Governance Committee
The Board should assume responsibility The Human Resources Committee is responsible for
for, or appoint a committee responsible the Corporation's approach to corporate governance
for, the approach to corporate governance issues, including the Corporation's response to
issues. This committee would, among other the TSX Guidelines.
things, be responsible for the
Corporation's response to the TSX
Guidelines.
11. Position Descriptions
Develop position descriptions for the The Human Resources Committee develops position
Board and for the CEO, including the descriptions and objectives for the CEO and
definition of limits for management's President and measures their performance in
responsibilities. The Board should develop meeting those objectives. The Corporation has not
the corporate objectives which the CEO is currently developed position descriptions for
responsible for meeting. members of the Board.
12. Procedures to Ensure Independence
Establish appropriate procedures to enable The Corporation has a non-management chairman of
the Board to function independently of the Board and has regular non-management sessions
management. An appropriate structure would as part of each meeting of the Board and each
be to (i) appoint a chairman of the Board meeting of the Audit Committee and Human Resources
who is not a member of management with Committee.
responsibility to ensure that the Board
discharges its responsibilities or (ii)
adopt alternate means such as assigning
this responsibility to a committee of the
Board or to a director, sometimes referred
to as the "lead director". Appropriate
procedures may involve the Board meeting
on a regular basis without management
present or may involve expressly assigning
responsibility for administering the
Board's relationship to management to a
committee of the Board.
13. Composition of the Audit Committee
The Audit Committee should be composed The members of the Audit Committee are all outside
only of outside directors. directors.
INTERNAL CONTROLS
Audit Committee duties should include The Audit Committee oversees management reporting
oversight responsibility for management on the Corporation's internal controls in
reporting on internal control. While it is accordance with its current mandate contained in
management's responsibility to design and the draft board manual.
implement an effective system of internal
control, it is the responsibility of the
Audit Committee to ensure that management
has
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done so.
COMMUNICATIONS WITH EXTERNAL AUDITOR
The Audit Committee should have direct The Audit Committee has direct communication
communication channels with the internal channels with the external auditors to discuss and
and external auditors to discuss and review specific issues as appropriate.
review specific issues as appropriate.
14. External Advisors
Implement a system to enable individual Each committee is empowered to engage external
directors to engage outside advisors, at advisors as it sees fit. Any individual director
the corporation's expense. The engagement is entitled to engage an outside advisor provided
of the outside advisor should be subject that such director has obtained the approval of
to the approval of an appropriate the chairman of the Board. The retention of
committee of the Board. external advisors by Board members at the
Corporation's cost and expense where such
retention has been approved by the Chairman.
SCHEDULE B
RESOLUTION APPROVING THE INCREASE IN THE NUMBER OF STOCK OPTIONS
IT RESOLVED THAT:
1. the incentive stock option plan (the "STOCK OPTION PLAN") of the Corporation
be amended to increase the maximum number of common shares reserved for issuance
upon the exercise of options under the Stock Option Plan from 8,030,424 to
10,206,948 common shares; and
2. any officer or director of the Corporation be, and is hereby authorized for
and on behalf of the Corporation, to execute, deliver, and file all such
documents, whether under the corporate seal of the Corporation or otherwise, and
to do all such acts or things as may be necessary or desirable to give effect to
the foregoing resolution.
SCHEDULE C
CONTINUANCE TO THE CANADA BUSINESS CORPORATIONS ACT
IT IS RESOLVED AS A SPECIAL RESOLUTION THAT:
1. the continuance of the Corporation under the Canada Business Corporations Act
(the "CBCA") is authorized and approved;
2. the Corporation is authorized to make application to the Director under the
Business Corporations Act (Ontario) (the "OBCA"), pursuant to section 181 of the
OBCA, for authorization to continue under the CBCA;
3. the Corporation is authorized to make application to the Director under the
CBCA, pursuant to section 187 of the CBCA, for a certificate of continuance
continuing the Corporation under the CBCA;
4. the articles of continuance of the Corporation forming part of the said
application for continuance shall be substantially in the form attached as
Schedule D to the Management Information Circular of the Corporation dated April
22, 2004 and, upon the issuance of a certificate of continuance continuing the
Corporation under the CBCA, the articles of the Corporation shall be replaced in
their entirety by the said articles of continuance;
5. the directors of the Corporation are hereby authorized to, in their sole and
absolute discretion, abandon the application for continuance of the Corporation
under the CBCA at any time for any reason without further approval of the
shareholders of the Corporation; and
6. any director or officer of the Corporation is authorized to execute (whether
under the corporate seal of the Corporation or otherwise) and deliver all such
documents and to do all such other acts and things as such director or officer
may determine to be necessary or advisable in connection with such continuance
(including, without limitation, the execution and delivery of such articles of
continuance and of certificates or other assurances that such continuance will
not adversely affect creditors or shareholders of the Corporation), the
execution of any such document or the doing of any such other act or thing by
any director or officer of the Corporation being conclusive evidence of such
determination.
SCHEDULE D
ARTICLES OF CONTINUANCE
SCHEDULE E
PART I
BY-LAW "A"
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of POINTS
INTERNATIONAL LTD. (hereinafter called the "CORPORATION") as follows:
1. All of the by-laws of the Corporation heretofore in force are hereby
repealed without prejudice to any action heretofore taken thereunder.
2. The numbers designating the by-laws hereby repealed may be allocated to any
by-laws of the Corporation hereafter enacted by the directors of the
Corporation.
PASSED by the directors of the Corporation on _________________, 2004.
CONFIRMED by the shareholders of the Corporation on ______________,
2004.
SCHEDULE E
PART II
BY-LAW NO. 1
A by-law relating generally to the conduct of the affairs of Points
International Ltd. (the "CORPORATION").
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of the Corporation
as follows:
INTERPRETATION
1. Definitions
In this by-law and all other by-laws of the Corporation, unless the
context otherwise specifies or requires:
(a) "Act" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44
and the regulations thereunder, as from time to time amended, and
every statute or regulation that may be substituted therefor and, in
the case of such amendment or substitution, any reference in the
by-laws of the Corporation shall be read as referring to the amended
or substituted provisions;
(b) "by-law" means any by-law of the Corporation from time to time in
force and effect;
(c) all terms contained in the by-laws which are defined in the Act shall
have the meanings given to such terms in the Act;
(d) words importing the singular number only shall include the plural and
vice versa; words importing any gender shall include all genders;
words importing persons shall include partnerships, syndicates, trusts
and any other legal or business entity; and
(e) the headings used in the by-laws are inserted for reference purposes
only and are not to be considered or taken into account in construing
the terms or provisions thereof or to be deemed in any way to clarify,
modify or explain the effect of any such terms or provisions.
2. Unanimous Shareholder Agreements
The provisions of this by-law are subject to the terms of any
unanimous shareholder agreement in effect from time to time in respect of the
Corporation and, to the extent of any inconsistency between this by-law and any
such unanimous shareholder agreement, such unanimous shareholder agreement shall
prevail over this by-law.
REGISTERED OFFICE
3. The Corporation may from time to time (i) by resolution of the directors
change the place and address of the registered office of the Corporation within
the Province in Canada specified in its articles, and (ii) by an amendment to
its articles, change the Province in Canada in which its registered office is
situated.
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SEAL
4. The Corporation may, but need not, have a corporate seal. An instrument or
agreement executed on behalf of the Corporation by a director, an officer or an
agent of the Corporation is not invalid merely because the corporate seal, if
any, is not affixed thereto.
DIRECTORS
5. Number and Powers
The number of directors, or the minimum and maximum number of
directors of the Corporation, is set out in the articles of the Corporation. If
a minimum and maximum number of directors is set out in the articles of the
Corporation, the number of directors of the Corporation shall be the number of
directors elected by the shareholders of the Corporation at the most recent
meeting of shareholders. At least twenty-five per cent of the directors (or one
director, if the Corporation has less than four directors) shall be resident
Canadians. If the Corporation is a distributing corporation and any of its
outstanding securities are held by more than one person, it shall have at least
three directors, at least two of whom are not officers or employees of the
Corporation or its affiliates.
The directors shall manage, or supervise the management of, the
business and affairs of the Corporation and may exercise all such powers and do
all such acts and things as may be exercised or done by the Corporation and are
not by the Act, the articles, the by-laws, any special resolution of the
Corporation, a unanimous shareholder agreement or by statute expressly directed
or required to be done in some other manner.
6. Duties
Every director and officer of the Corporation in exercising their
powers and discharging their duties shall:
(a) act honestly and in good faith with a view to the best interests of
the Corporation; and
(b) exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
Every director and officer of the Corporation shall comply with the
Act, the regulations thereunder, the Corporation's articles and by-laws and any
unanimous shareholder agreement.
7. Qualification
Every director shall be an individual 18 or more years of age and no
one who is of unsound mind and has been so found by a court in Canada or
elsewhere or who has the status of a bankrupt shall be a director.
8. Election of Directors
Directors shall be elected by the shareholders of the Corporation by
ordinary resolution. Whenever at any election of directors of the Corporation
the number or the minimum number of directors required by the articles is not
elected by reason of the lack of consent, disqualification, incapacity or death
of any candidates, the directors elected at that meeting may exercise all the
powers of the directors if the number of directors so elected constitutes a
quorum, but such quorum of directors may not fill the resulting vacancy or
vacancies.
-3-
An individual who is elected or appointed to hold office as a director
is not a director and is deemed not to have been elected or appointed to hold
office as a director unless:
(a) he or she was present at the meeting when the election or appointment
took place and he or she did not refuse to hold office as a director;
or
(b) he or she was not present at the meeting when the election or
appointment took place and:
(i) he or she consented to hold office as a director in writing
before the election or appointment or within 10 days after it, or
(ii) he or she has acted as a director pursuant to the election or
appointment.
9. Term of Office
A director's term of office (subject to the provisions (if any) of the
Corporation's articles and paragraph 12 below), unless such director was elected
for an expressly stated term, shall be from the date of the meeting at which
such director is elected or appointed until the close of the annual meeting of
shareholders next following such director's election or appointment or until
such director's successor is elected or appointed. If qualified, a director
whose term of office has expired is eligible for re-election as a director.
10. Ceasing to Hold Office
A director ceases to hold office if such director:
(a) dies or sends to the Corporation a written resignation and such
resignation, if not effective upon receipt by the Corporation, becomes
effective in accordance with its terms;
(b) is removed from office in accordance with paragraph 12 below;
(c) becomes bankrupt; or
(d) is found by a court in Canada or elsewhere to be of unsound mind.
11. Vacancies
Notwithstanding any vacancy among the directors, the remaining
directors may exercise all the powers of the directors so long as a quorum of
the number of directors remains in office. Subject to subsections 111(1) and (3)
of the Act and to the provisions (if any) of the Corporation's articles, where
there is a quorum of directors in office and a vacancy occurs, such quorum of
directors may appoint a qualified person to fill such vacancy for the unexpired
term of such appointee's predecessor.
12. Removal of Directors
Subject to subsection 109(2) of the Act and unless the articles of the
Corporation provide for cumulative voting, the shareholders of the Corporation
may by ordinary resolution at a special meeting remove any director before the
expiration of such director's term of office and may, by a majority of the votes
cast at the meeting, elect any person in such director's stead for the remainder
of such director's term.
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If a meeting of shareholders was called for the purpose of removing a
director from office as a director, the director so removed shall vacate office
forthwith upon the passing of the resolution for such director's removal.
13. Validity of Acts
An act of a director or officer is valid notwithstanding an
irregularity in their election or appointment or a defect in their
qualification.
MEETINGS OF DIRECTORS
14. Place of Meetings
Meetings of directors and of any committee of directors may be held at
any place.
15. Calling Meetings
A meeting of directors may be convened at any time by the Chairman (if
any), the Vice-Chairman (if any), the Managing Director (if any) or any two or
more directors, and the Secretary shall upon direction of any of the foregoing
convene a meeting of directors.
16. Chair of Meetings
The chair of any meeting of the directors shall be the first mentioned
of such of the following persons as have been appointed and who is present at
the meeting: the Chairman (if any), the Vice-Chairman (if any) or the Managing
Director (if any). If all of the foregoing directors are absent or unable or
refuse or fail to so act, the directors present shall choose one of their number
to be chair of the meeting.
17. Notice
Notice of the time and place for the holding of any such meeting shall
be sent to each director not less than two days (exclusive of the day on which
the notice is sent but inclusive of the day for which notice is given) before
the date of the meeting; provided that meetings of the directors or of any
committee of directors may be held at any time without formal notice if all the
directors are present (except where a director attends a meeting for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called) or if all the absent directors have waived
notice. The notice shall specify any matter referred to in subsection 115(3) of
the Act that is to be dealt with at the meeting.
For the first meeting of directors to be held following the election
of directors at an annual or special meeting of the shareholders or for a
meeting of directors at which a director is appointed to fill a vacancy in the
board, no notice of such meeting need be given to the newly elected or appointed
director or directors in order for the meeting to be duly constituted, provided
a quorum of the directors is present.
18. Waiver of Notice
Notice of any meeting of directors or of any committee of directors or
any irregularity in any meeting or in the notice thereof may be waived in any
manner by any director, and such waiver may be validly given either before or
after the meeting to which such waiver relates. Attendance of a director at a
meeting of directors is a waiver of notice of the meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called.
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19. Electronic Participation
Where all the directors of the Corporation consent thereto (either
before or after the meeting), a director may participate in a meeting of
directors or of any committee of directors by means of a telephonic, electronic
or other communication facility that permits all participants to communicate
adequately with each other during the meeting, and a director participating in a
meeting by such means shall be deemed for the purposes of the Act and the
by-laws to be present at that meeting.
20. Quorum and Voting
A majority of the number of directors of the Corporation, if the
articles of the Corporation provide for a fixed number, or the minimum number of
directors required by the articles of the Corporation shall constitute a quorum
for the transaction of business. Subject to subsections 111(1), 114(4) and
117(1) of the Act, no business shall be transacted by the directors except at a
meeting of directors at which a quorum is present and at which at least
twenty-five per cent of the directors present are resident Canadians or, if the
Corporation has less than four directors, at least one of the directors present
is a resident Canadian. Questions arising at any meeting of directors shall be
decided by a majority of votes. In case of an equality of votes, the chair of
the meeting shall not have a second or casting vote in addition to the chair's
original vote as a director.
21. Adjournment
Any meeting of directors or of any committee of directors may be
adjourned from time to time by the chair of the meeting, with the consent of the
meeting, to a fixed time and place. No notice of the time and place for the
holding of the adjourned meeting need be given to any director if the time and
place of the adjourned meeting is announced at the original meeting. Any
adjourned meeting shall be duly constituted if held in accordance with the terms
of the adjournment and a quorum is present thereat. The directors who form the
quorum at the adjourned meeting need not be the same directors who formed the
quorum at the original meeting. If there is no quorum present at the adjourned
meeting, the original meeting shall be deemed to have terminated forthwith after
its adjournment.
22. Resolutions in Writing
A resolution in writing, signed by all the directors entitled to vote
on that resolution at a meeting of directors or committee of directors, is as
valid as if it had been passed at a meeting of directors or committee of
directors.
COMMITTEES OF DIRECTORS
23. General
The directors may from time to time appoint from their number a
Managing Director or one or more committees of directors. The directors may
delegate to such Managing Director or each such committee any of the powers of
the directors, except that no Managing Director or such committee shall have the
authority to:
(a) submit to the shareholders any question or matter requiring the
approval of the shareholders;
(b) fill a vacancy among the directors or in the office of auditor, or
appoint additional directors;
(c) subject to subsection 189(2) of the Act, issue securities except as
authorized by the directors;
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(d) issue shares of a series under section 27 of the Act except as
authorized by the directors;
(e) declare dividends;
(f) purchase, redeem or otherwise acquire shares issued by the
Corporation;
(g) pay any commission referred to in section 41 of the Act, except as
authorized by the directors;
(h) approve a management proxy circular;
(i) approve a take-over bid circular or directors' circular;
(j) approve any annual financial statements to be placed before the
shareholders of the Corporation; or
(k) adopt, amend or repeal by-laws of the Corporation.
Unless the directors determine otherwise, each committee (except for
the audit committee) shall have power to fix its quorum at not less than a
majority of its members, to elect is chair and to determine its own rules of
procedure. Each member of a committee shall serve during the pleasure of the
board of directors and, in any event, only so long as such member shall be a
director. The directors may fill vacancies in a committee by election from among
their number.
24. Audit Committee
If the Corporation is a distributing corporation and any of its
outstanding securities are held by more than one person, the board of directors
shall elect annually from among their number an audit committee to be composed
of not fewer than three directors, a majority of whom are not officers or
employees of the Corporation or any of its affiliates.
Each member of the audit committee shall serve during the pleasure of
the board of directors and, in any event, only so long as such member shall be a
director. The directors may fill vacancies in the audit committee by election
from among their number.
Subject to the following paragraph and unless the board of directors
determines otherwise, the audit committee shall have power to fix its quorum at
not less than a majority of its members, to elect is chair and to determine its
own rules of procedure.
The auditor of the Corporation is entitled to receive notice of every
meeting of the audit committee and, at the expense of the Corporation, to attend
and be heard thereat; and, if so requested by a member of the audit committee,
shall attend every meeting of the committee held during the term of office of
the auditor. The auditor of the Corporation or any member of the audit committee
may call a meeting of the committee.
The audit committee shall review the financial statements of the
Corporation prior to approval thereof by the board of directors and shall have
such other powers and duties as may from time to time by resolution be assigned
to it by the board.
REMUNERATION OF DIRECTORS, OFFICERS AND EMPLOYEES
25. The remuneration to be paid to the directors of the Corporation shall be
such as the directors shall from time to time by resolution determine and such
remuneration shall be in addition to the salary paid to any officer or employee
of the Corporation who is also a director. The directors may also
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by resolution award special remuneration to any director in undertaking any
special services on the Corporation's behalf other than the normal work
ordinarily required of a director of a corporation. The confirmation of any such
resolution or resolutions by the shareholders shall not be required. The
directors may fix the remuneration of the officers and employees of the
Corporation. The directors, officers and employees shall also be entitled to be
paid their travelling and other expenses properly incurred by them in connection
with the affairs of the Corporation.
FOR THE PROTECTION OF DIRECTORS AND OFFICERS
26. No director or officer for the time being of the Corporation shall be liable
for the acts, receipts, neglects or defaults of any other director or officer or
employee or for joining in any receipt or act for conformity or for any loss,
damage or expense suffered or incurred by the Corporation through the
insufficiency or deficiency of title to any property acquired by the Corporation
or for or on behalf of the Corporation or for the insufficiency or deficiency of
any security in or upon which any of the moneys of or belonging to the
Corporation shall be placed out or invested or for any loss or damage arising
from the bankruptcy, insolvency or tortuous act of any person, firm or
corporation including any person, firm or corporation with whom or which any
moneys, securities or effects shall be lodged or deposited or for any loss,
conversion, misapplication or misappropriation of or any damage resulting from
any dealings with any moneys, securities or other assets belonging to the
Corporation or for any other loss, damage or misfortune whatever which may
happen in the execution of the duties of his or her respective office of trust
or in relation thereto, unless the same shall happen by or through his or her
failure to exercise the powers and to discharge the duties of his or her office
honestly and in good faith with a view to the best interests of the Corporation,
and in connection therewith to exercise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances, provided
that nothing herein contained shall relieve a director or officer from the duty
to act in accordance with the Act or regulations made thereunder or relieve him
from liability for a breach thereof.
INDEMNITIES TO DIRECTORS AND OTHERS
27. Subject to the provisions hereof and subsections 124(3) and (4) of the Act,
the Corporation shall indemnify a director or officer of the Corporation, a
former director or officer of the Corporation or another individual who acts or
acted at the Corporation's request as a director or officer, or an individual
acting in a similar capacity, of another entity, against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by the individual in respect of any civil, criminal,
administrative, investigative or other proceeding in which the individual is
involved because of that association with the Corporation or other entity.
The Corporation may not indemnify an individual pursuant hereto unless
the individual:
(a) acted honestly and in good faith with a view to the best interests of
the Corporation or, as the case may be, to the best interests of the
other entity for which the individual acted as director or officer or
in a similar capacity at the Corporation's request; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, the individual had reasonable
grounds for believing that the individual's conduct was lawful.
Subject to the Act, the Corporation may purchase and maintain
insurance for the benefit of the persons listed in the first paragraph of this
paragraph 27, in such form and amount as the board of directors of the
Corporation may from time to time determine, against any liability incurred by
that person:
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(a) in his or her capacity as a director or officer of the Corporation,
except where the liability relates to that person's failure to act
honestly and in good faith with a view to the best interests of the
Corporation; or
(c) in his or her capacity as a director or officer of another body
corporate where the person acts or acted in that capacity at the
Corporation's request, except where the liability relates to that
person's failure to act honestly and in good faith with a view to the
best interests of the body corporate.
The Corporation is hereby authorized to execute agreements evidencing
its indemnity in favour of the foregoing persons to the full extent permitted by
law.
OFFICERS
28. Appointment of Officers
The directors may annually or as often as may be required appoint such
officers as they shall deem necessary, who shall have such authority and shall
perform such functions and duties as may from time to time be prescribed by
resolution of the directors, delegated by the directors or by other officers or
properly incidental to their offices or other duties, provided that no officer
shall be delegated the power to do anything referred to in paragraph 23 above.
Such officers may include, without limitation, any of a "Chairman", a
"Vice-Chairman", a "Managing Director", a "Chief Executive Officer", a
"President", a "Chief Financial Officer", a "Chief Technology Officer", a
"Controller", a "Secretary", a "Treasurer", one or more "Vice-Presidents", one
or more "Assistant Secretaries" and/or one or more "Assistant Treasurers". None
of such officers (except the Chairman, Managing Director and Vice-Chairman) need
be a director of the Corporation. The Managing Director shall be a resident
Canadian within the meaning of the Act. A director may be appointed to any
office of the Corporation. Two or more of such offices may be held by the same
person.
29. Removal of Officers
All officers shall be subject to removal by resolution of the
directors at any time, with or without cause. The directors may appoint a person
to an office to replace an officer who has been removed or who has ceased to be
an officer for any other reason.
30. Duties of Officers may be Delegated
In case of the absence or inability or refusal to act of any officer
of the Corporation or for any other reason that the directors may deem
sufficient, the directors may delegate all or any of the powers of such officer
to any other officer or to any director for the time being.
SHAREHOLDERS' MEETINGS
31. Annual or Special Meetings
The directors of the Corporation:
(a) shall call an annual meeting of shareholders not later than 18 months
after the Corporation comes into existence and subsequently not later
than 15 months after holding the last preceding annual meeting but no
later than 6 months after the end of the Corporation's preceding
financial year; and
(b) may at any time call a special meeting of shareholders.
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32. Place of Meetings
Meetings of shareholders of the Corporation shall be held at such
place within Canada as the directors may determine, or at a place outside Canada
if the place is specified in the articles or all the shareholders entitled to
vote at the meeting agree that the meeting is to be held at that place.
33. Chair of Shareholders Meeting
The chair of any meeting of shareholders shall be the first mentioned
of such of the following persons as have been appointed and who is present at
the meeting: the Chairman (if any), the Vice-Chairman (if any) or the Managing
Director (if any). If no such director is present within fifteen (15) minutes
from the time fixed for holding the meeting, the shareholders present entitled
to vote shall choose another director as chair of the meeting and if no director
is present or if all the directors present decline to take the chair then the
shareholders present shall choose one of their number to be chair.
34. Electronic Participation and Voting
Subject to the Act, any person entitled to attend a meeting of
shareholders may participate in the meeting by means of a telephonic, electronic
or other communication facility that permits all participants to communicate
adequately with each other during the meeting, if the Corporation makes
available such a communication facility. A person participating in a meeting by
such means is deemed for all purposes of the Act and the by-laws to be present
at the meeting. Subject to the Act, if the directors or the shareholders of the
Corporation call a meeting of shareholders pursuant to the Act, those directors
or shareholders, as the case may be, may determine that the meeting shall be
held entirely by means of a telephonic, electronic or other communication
facility that permits all participants to communicate adequately with each other
during the meeting. Subject to the Act, any vote at a meeting of shareholders
may be held entirely by means of a telephonic, electronic or other communication
facility, if the Corporation makes available such a communication facility, and
any person participating in a meeting of shareholders by means of such facility
and entitled to vote at that meeting may vote by means of such facility,
provided that any such facility made available by the Corporation shall enable
the votes to be gathered in a manner that permits their subsequent verification
and permit the tallied votes to be presented to the Corporation without it being
possible for the Corporation to identify how each shareholder or group of
shareholders voted.
35. Record Dates for Shareholder Meetings
Subject to section 134 of the Act, the directors may fix in advance a
date as the record date for the purpose of determining shareholders entitled to
receive notice of a meeting of shareholders and/or entitled to vote at a meeting
of shareholders, but such record date shall not precede by more than 60 days or
by less than 21 days the date on which the meeting is to be held.
If no record date is fixed, the record date for the determination of
the shareholders entitled to receive notice of a meeting of the shareholders and
to vote shall be:
(a) at the close of business on the day immediately preceding the day on
which the notice is given; or
(b) if no notice is given, the day on which the meeting is held.
36. Shareholder List
The Corporation shall prepare an alphabetical list of the shareholders
entitled to receive notice of a meeting and vote at the meeting, showing the
number of shares held by each shareholder:
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(a) if a record date for determining the shareholder entitled to receive
notice of the meeting and/or entitled to vote at the meeting has been
fixed, not later than 10 days after that date; or
(b) if no record date has been fixed, on the record date established in
accordance with paragraph 35 above.
A shareholder whose name appears on such list is entitled to vote the shares
shown opposite such shareholder's name at the meeting to which the list relates.
37. Notice
A notice stating the day, hour and place of meeting and, if special
business is to be transacted thereat, stating (i) the nature of that business in
sufficient detail to permit the shareholder to form a reasoned judgment thereon,
and (ii) the text of any special resolution to be submitted to the meeting,
shall be sent to each shareholder entitled to vote at the meeting, to each
director of the Corporation and to the auditor (if any) of the Corporation. Such
notice shall be personally delivered or sent by prepaid mail, if the Corporation
is a distributing corporation, not less than 21 days (or, if the Corporation is
not a distributing corporation, not less than such number of days as may be
fixed by the directors) and not more than 60 days (exclusive of the day of
mailing and of the day for which notice is given) before the date of every
meeting, and shall be addressed to the latest address of each such person as
shown in the records of the Corporation or its transfer agent, or if no address
is shown therein, then to the last address of each such person known to the
Secretary. Notwithstanding the foregoing, a meeting of shareholders may be held
for any purpose at any date and time and, subject to subsection 132(2) of the
Act, at any place without notice if all the shareholders and other persons
entitled to notice of such meeting are present in person or represented by proxy
at the meeting (except where a shareholder or such other person attends the
meeting for the express purpose of objecting to the transaction of any business
on the grounds that the meeting is not lawfully called) or if all the
shareholders and other persons entitled to notice of such meeting and not
present in person nor represented by proxy thereat waive notice of the meeting.
Notice of any meeting of shareholders or the time for the giving of any such
notice or any irregularity in any such meeting or in the notice thereof may be
waived in any manner by any shareholder, the duly appointed proxy of any
shareholder, any director or the auditor of the Corporation and any other person
entitled to attend a meeting of shareholders, and any such waiver may be validly
given either before or after the meeting to which such waiver relates.
The auditor (if any) of the Corporation is entitled to receive notice
of every meeting of shareholders of the Corporation and, at the expense of the
Corporation, to attend and be heard thereat on matters relating to the auditor's
duties.
38. Omission of Notice
The accidental omission to give notice of any meeting to or the
non-receipt of any notice by any person shall not invalidate any resolution
passed or any proceeding taken at any meeting of shareholders.
39. Votes
Every question submitted to any meeting of shareholders shall be
decided in the first instance on a show of hands and in case of an equality of
votes the chair of the meeting shall neither on a show of hands nor on a ballot
have a second or casting vote in addition to the vote or votes to which the
chair may be entitled as a shareholder or proxy nominee.
At any meeting, unless a ballot is demanded by a shareholder or
proxyholder entitled to vote at the meeting, either before or after any vote by
a show of hands, a declaration by the chair of the
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meeting that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
evidence of the fact without proof of the number or proportion of votes recorded
in favour of or against the motion.
If at any meeting a ballot is demanded on the election of a chair or
on the question of adjournment or termination, the ballot shall be taken
forthwith without adjournment. If a ballot is demanded on any other question or
as to the election of directors, the ballot shall be taken in such manner and
either at once or later at the meeting or after adjournment as the chair of the
meeting directs. The result of a ballot shall be deemed to be the resolution of
the meeting at which the ballot was demanded. A demand for a ballot may be made
either before or after any vote by show of hands and may be withdrawn.
Where two or more persons hold the same share or shares jointly, any
one of such persons present at a meeting of shareholders has the right, in the
absence of the other or others, to vote such share or shares, but if more than
one of such persons are present or represented by proxy and vote, they shall
vote together as one on the share or shares jointly held by them.
40. Proxies
Votes at meetings of the shareholders may be cast either personally or
by proxy. At every meeting at which a shareholder is entitled to vote, such
shareholder (if present in person) or the proxyholder for such shareholder shall
have one vote on a show of hands. Upon a ballot on which a shareholder is
entitled to vote, such shareholder (if present in person or by proxy) shall
(subject to the provisions, if any, of the Corporation's articles) have one vote
for every share registered in such shareholder's name.
Every shareholder entitled to vote at a meeting of shareholders may by
means of a proxy appoint a proxyholder or proxyholders or one or more alternate
proxyholders, who need not be a shareholder, to attend and act at the meeting in
the manner and to the extent authorized by the proxy and with the authority
conferred by the proxy.
An instrument appointing a proxyholder shall be in writing and
executed by the shareholder or such shareholder's attorney authorized in
writing, or may be an electronic document that satisfies the requirements of
Part XX.1 of the Act, and is valid only at the meeting in respect of which it is
given or at any adjournment thereof.
An instrument appointing a proxyholder may be in the following form or
in any other form which complies with the requirements of the Act:
"The undersigned shareholder of POINTS INTERNATIONAL LTD. hereby
appoints ______________ of ______________, whom failing, ______________ of
______________ as the nominee of the undersigned to attend and act for and on
behalf of the undersigned at the meeting of the shareholders of the said
Corporation to be held on the ______________ day of ______________,
______________ and at any adjournment thereof in the same manner, to the same
extent and with the same power as if the undersigned were present, whether
personally or by telephonic, electronic or other means, at the said meeting or
such adjournment thereof.
DATED
----------------------------------------
Signature of Shareholder
This form of proxy must be signed by a shareholder or such shareholder's
attorney authorized in writing."
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The directors may from time to time pass regulations regarding the
lodging of instruments appointing a proxyholder at some place or places other
than the place at which a meeting or adjourned meeting of shareholders is to be
held and for particulars of such instruments to be sent in writing, faxed or
otherwise communicated by electronic means that produces a written copy before
the meeting or adjourned meeting to the Corporation or any agent of the
Corporation appointed for the purpose of receiving such particulars and
providing that instruments appointing a proxyholder so lodged may be voted upon
as though the instruments themselves were produced at the meeting or adjourned
meeting and votes given in accordance with such regulations shall be valid and
shall be counted. The chair of the meeting of shareholders may, subject to any
regulations made as aforesaid, in the chair's discretion, accept written or
faxed communication, or electronic communication that produces a written copy,
as to the authority of anyone claiming to vote on behalf of and to represent a
shareholder notwithstanding that no instrument of proxy conferring such
authority has been lodged with the Corporation, and any votes given in
accordance with such written, faxed or electronic communication accepted by the
chair of the meeting shall be valid and shall be counted.
41. Adjournment
The chair of the meeting may with the consent of the meeting adjourn
any meeting of shareholders from time to time to a fixed time and place. If the
meeting is adjourned for less than 30 days, no notice of the time and place for
the holding of the adjourned meeting need be given to any shareholder, other
than by announcement at the earliest meeting that is adjourned. If a meeting of
shareholders is adjourned by one or more adjournments for an aggregate of 30
days or more, notice of the adjourned meeting shall be given as for an original
meeting but, unless the meeting is adjourned by one or more adjournments for an
aggregate of more than 90 days, subsection 149(1) of the Act does not apply. Any
adjourned meeting shall be duly constituted if held in accordance with the terms
of the adjournment and a quorum is present thereat. The persons who form the
quorum at the adjourned meeting need not be the same persons who formed the
quorum at the original meeting. If there is no quorum present at the adjourned
meeting, the original meeting shall be deemed to have terminated forthwith after
its adjournment. Any business may be brought before or dealt with at any
adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same.
42. Quorum
Five persons present and each holding or representing by proxy at
least one issued share of the Corporation shall be a quorum of any meeting of
shareholders for the choice of a chair of the meeting (subject to paragraph 33)
and for the adjournment of the meeting to a fixed time and place but may not
transact any other business; for all other purposes a quorum for any meeting
shall be persons present not being less than five in number and holding or
representing by proxy not less than 15% of the total number of votes represented
by the issued shares of the Corporation for the time being enjoying voting
rights at such meeting. If a quorum is present at the opening of a meeting of
shareholders, the shareholders present may proceed with the business of the
meeting, notwithstanding that a quorum is not present throughout the meeting.
Notwithstanding the foregoing, if the Corporation has four or less
shareholders, or four or less shareholders of any class or series of shares,
such shareholders present in person or by proxy constitutes a meeting and a
quorum for such meeting.
43. Persons Entitled to be Present
The only persons entitled to be present at a meeting of the
shareholders shall be those entitled to vote thereat, the directors and auditors
of the Corporation and others who, although not entitled to vote, are entitled
or required under any provision of the Act or the articles or by-laws to be
present at
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the meeting. Any other person may be admitted only on the invitation of the
chair of the meeting or with the consent of the meeting.
SHARES AND TRANSFERS
44. Issuance
Subject to the articles of the Corporation, shares in the Corporation
may be issued at such time and issued to such persons and for such consideration
as the directors may determine.
45. Security Certificates
Security certificates (and the form of transfer power on the reverse
side thereof) shall (subject to compliance with section 49 of the Act) be in
such form as the directors may from time to time by resolution approve and such
certificates shall be signed by a director or officer of the Corporation;
provided that, unless the directors otherwise determine, certificates
representing shares in respect of which a transfer agent and/or registrar has
been appointed shall not be valid unless countersigned by or on behalf of such
transfer agent and/or registrar. A share certificate shall be signed manually by
at least one director or officer of the Corporation or by or on behalf of the
transfer agent and/or registrar of the Corporation. Any additional signatures
required may be printed or otherwise mechanically reproduced. A share
certificate executed as aforesaid shall be valid notwithstanding that one of the
directors or officers whose facsimile signature appears thereon no longer holds
office at the date of issue of the certificate.
46. Agent
The directors may from time to time by resolution appoint or remove an
agent to maintain a central securities register and branch securities registers
for the Corporation.
47. Surrender of Security Certificates
Subject to the Act, no transfer of a security issued by the
Corporation shall be recorded or registered unless and until either (i) the
security certificate representing the security to be transferred has been
surrendered and cancelled, or (ii) if no security certificate has been issued by
the Corporation in respect of such share, a duly executed security transfer
power in respect thereof has been presented for registration.
48. Defaced, Destroyed, Stolen or Lost Security Certificates
The directors or any officer or agent designated by the directors may
in their or its discretion direct the issue of a new share certificate in lieu
of and upon cancellation of a share certificate that has been mutilated or in
substitution for a share certificate claimed to have been lost, destroyed or
wrongfully taken on payment of such reasonable fee and on such terms as to
indemnity, reimbursement of expenses and evidence of loss and of title as the
directors may from time to time prescribe, whether generally or in any
particular case.
DIVIDENDS
49. Declaration and Payment of Dividends
The directors may from time to time by resolution declare and the
Corporation may pay dividends on its issued shares, subject to the provisions
(if any) of the Corporation's articles.
The directors shall not declare and the Corporation shall not pay a
dividend if there are reasonable grounds for believing that:
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(a) the Corporation is, or would after the payment be, unable to pay its
liabilities as they become due; or
(b) the realizable value of the Corporation's assets would thereby be less
than the aggregate of its liabilities and stated capital of all
classes.
The Corporation may pay a dividend by issuing fully paid shares of the
Corporation and, subject to section 42 of the Act, the Corporation may pay a
dividend in money or property.
50. Joint Securityholders
In case several persons are registered as the joint holders of any
securities of the Corporation, any one of such persons may give effectual
receipts for all dividends and payments on account of dividends, principal,
interest and/or redemption payments on redemption of securities (if any) subject
to redemption in respect of such securities.
51. Dividend Cheques
A dividend payable in money shall be paid by cheque drawn on the
Corporation's bank to the order of each registered holder of shares of the class
or series in respect of which it has been declared and mailed by prepaid
ordinary mail to each such person in accordance with the notice provisions of
this by-law, unless such holder otherwise directs. In the case of joint holders
the cheque shall, unless such joint holders otherwise direct, be made payable to
the order of all of such joint holders and mailed to them in accordance with the
notice provisions of this by-law. The mailing of such cheque as aforesaid,
unless the same is not paid on due presentation, shall satisfy and discharge the
liability for the dividend to the extent of the sum represented thereby plus the
amount of any tax which the Corporation is required to and does withhold.
52. Non-Receipt of Dividend Cheques
In the event of non-receipt of any dividend cheque by the person to
whom it is sent as aforesaid, the Corporation shall issue to such person a
replacement cheque for a like amount on such terms as to indemnity,
reimbursement of expenses and evidence of non-receipt and of title as the
directors may from time to time prescribe, whether generally or in any
particular case.
53. Unclaimed Dividends
Notwithstanding anything herein to the contrary, any dividend, whether
by way of shares, money or property, unclaimed or unpaid after a period of six
(6) years from the date on which the same has been declared to be payable shall
be forfeited and shall revert to the Corporation.
RECORD DATES
54. Shareholders' Meetings
Subject to section 134 of the Act, the directors may fix in advance a
date as the record date for the purpose of determining shareholders entitled to
receive notice of a meeting of shareholders and/or entitled to vote at a meeting
of shareholders, but such record date shall not precede by more than 60 days or
by less than 21 days the date on which the meeting is to be held.
If no record date is fixed, the record date for the determination of
the shareholders entitled to receive notice of a meeting of the shareholders and
to vote shall be:
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(a) at the close of business on the day immediately preceding the day on
which the notice is given; or
(b) if no notice is given, the day on which the meeting is held.
55. Dividends, Distributions or Other Purposes
Subject to section 134 of the Act, the directors may fix in advance a
date as the record date for the determination of shareholders (i) entitled to
receive payment of a dividend, (ii) entitled to participate in a liquidation or
distribution, (iii) for any other purpose (other than to establish a
shareholder's right to receive notice of a meeting or to vote), but such record
date shall not precede by more than 60 days the particular action to be taken.
If no record date is fixed, the record date for the determination of
shareholders for any purpose other than to establish a shareholder's right to
receive notice of a meeting or to vote shall be at the close of business on the
day on which the directors pass the resolution relating thereto.
VOTING SECURITIES IN OTHER ISSUERS
56. All securities of any other body corporate or issuer of securities carrying
voting rights held from time to time by the Corporation may be voted at all
meetings of shareholders, bondholders, debenture holders or holders of such
securities, as the case may be, of such other body corporate or issuer and in
such manner and by such person or persons as the directors of the Corporation
shall from time to time determine and authorize by resolution. The duly
authorized signing officers of the Corporation may also from time to time
execute and deliver for and on behalf of the Corporation proxies and/or arrange
for the issuance of voting certificates and/or other evidence of the right to
vote in such names as they may determine without the necessity of a resolution
or other action by the directors.
NOTICES, ETC.
57. Service
Any notice or other document required to be given or sent by the
Corporation to any shareholder or director or the auditor of the Corporation
shall be delivered personally or sent by prepaid mail or by fax, electronic mail
or other electronic means capable of producing a written copy addressed to:
(a) such shareholder at such shareholder's latest address as shown on the
records of the Corporation or its transfer agent;
(b) such director at such director's latest address as shown in the
records of the Corporation or in the last notice filed under section
106 or 113 of the Act; and
(c) the auditor of the Corporation at the auditor's latest address known
to the Corporation.
With respect to every notice or other document sent by prepaid mail, it shall be
sufficient to prove that the envelope or wrapper containing the notice or other
document was properly addressed and put into a post office or into a post office
letter box.
58. Shareholders Who Cannot be Found
If the Corporation sends a notice or document to a shareholder and the
notice or document is returned on two consecutive occasions because the
shareholder cannot be found, the
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Corporation is not required to send any further notices or documents to the
shareholder until the shareholder informs the Corporation in writing of the
shareholder's new address.
59. Shares Registered in More than One Name
All notices or other documents shall, with respect to any shares in
the capital of the Corporation registered in more than one name, be given to
whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice or delivery of
such document to all the holders of such shares.
60. Persons Becoming Entitled by Operation of Law
Every person who by operation of law, transfer or by any other means
whatsoever shall become entitled to any shares in the capital of the Corporation
shall be bound by every notice or other document in respect of such shares which
prior to such person's name and address being entered on the records of the
Corporation shall have been duly given to the person or persons from whom such
person derives title to such shares.
61. Deceased Shareholder
Any notice or other document delivered or sent by post or left at the
address of any shareholder as the same appears in the records of the Corporation
shall, notwithstanding that such shareholder be then deceased and whether or not
the Corporation has notice of such shareholder's death, be deemed to have been
duly served in respect of the shares held by such shareholder (whether held
solely or with other persons) until some other person be entered in such
shareholder's stead in the records of the Corporation as the holder or one of
the holders thereof and such service shall for all purposes be deemed a
sufficient service of such notice or other document on such shareholder's heirs,
executors or administrators and all persons (if any) interested with such
shareholder in such shares.
62. Signatures to Notices
The signature of any director or officer of the Corporation to any
notice may be written, printed or otherwise mechanically reproduced.
63. Computation of Time
Where a given number of days' notice or notice extending over any
period is required to be given under any provisions of the articles or by-laws
of the Corporation, the day of service, posting or other communication of the
notice shall, unless it is otherwise provided, be counted in such number of days
or other period and such notice shall be deemed to have been given or sent on
the day of service, posting or other communication.
64. Proof of Service
A certificate of any officer of the Corporation in office at the time
of the making of the certificate or of an agent of the Corporation as to facts
in relation to the mailing or delivery or service or other communication of any
notice or other documents to any shareholder, director, officer or auditor or as
to the publication of any notice or other document shall be conclusive evidence
thereof and shall be binding on every shareholder, director, officer or auditor
of the Corporation, as the case may be.
65. Omissions and Errors
The accidental omission to give any notice to any shareholder,
director, officer, auditor or member of a committee of the directors or the
non-receipt of any notice by any such person or any error
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in any notice not affecting the substance thereof shall not invalidate any
action taken at any meeting held pursuant to such notice or otherwise founded
thereon.
66. Waiver of Notice
Any shareholder (or such shareholder's duly appointed proxyholder),
director, officer, auditor or member of a committee of the directors may at any
time waive any notice, or waive or abridge the time for any notice, required to
be given to such person under any provisions of the Act, the articles, the
by-laws or otherwise and such waiver or abridgement shall cure any default in
the giving or in the time of such notice, as the case may be. Any such waiver or
abridgement shall be in writing except a waiver of notice of a meeting of
shareholders or of the directors which may be given in any manner.
CHEQUES, DRAFTS, NOTES, ETC.
67. All cheques, drafts or orders for the payment of money and all notes,
acceptances and bills of exchange shall be signed by such officer or officers or
other person or persons, whether or not officers of the Corporation, and in such
manner as the directors, or such officer or officers as may be delegated
authority by the directors to determine such matters, may from time to time
designate.
EXECUTION OF CONTRACTS, ETC.
68. Unless the directors determine otherwise, contracts, documents or
instruments in writing requiring the signature of the Corporation may be signed
by any two of the directors and officers of the Corporation and all contracts,
documents or instruments in writing so signed shall be binding upon the
Corporation without any further authorization or formality. The directors are
authorized from time to time by resolution to appoint any officer or officers,
any director or directors, or any other person or persons on behalf of the
Corporation either to sign contracts, documents or instruments in writing
generally or to sign specific contracts, documents or instruments in writing.
The corporate seal, if any, of the Corporation may, when required, be
affixed to contracts, documents or instruments in writing signed as aforesaid or
by an officer or officers, person or persons appointed as aforesaid by
resolution of the board of directors.
The term "contracts, documents or instruments in writing" as used in
this by-law shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, immovable or movable,
powers of attorney, agreements, releases, receipts and discharges for the
payment of money or other obligations, conveyances, transfers and assignments of
securities and all paper writings.
In particular, without limiting the generality of the foregoing, any
two of the directors and officers of the Corporation are authorized to sell,
assign, transfer, exchange, convert or convey all securities owned by or
registered in the name of the Corporation and to sign and execute (under the
seal of the Corporation or otherwise) all assignments, transfers, conveyances,
powers of attorney and other instruments that may be necessary for the purpose
of selling, assigning, transferring, exchanging, converting or conveying any
such securities.
The signature or signatures of any officer or director of the
Corporation and/or of any other officer or officers, person or persons appointed
as aforesaid by resolution of the directors may, if specifically authorized by
resolution of the directors, be printed, engraved, lithographed or otherwise
mechanically reproduced upon all contracts, documents or instruments in writing
or bonds, debentures or other securities of the Corporation executed or issued
by or on behalf of the Corporation and all contracts, documents or instruments
in writing or securities of the Corporation on which the signature or signatures
of any of the foregoing officers, directors or persons shall be so reproduced,
by authorization by resolution of the directors, shall be deemed to have been
manually signed by such officers, directors or
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persons whose signature or signatures is or are so reproduced and shall be as
valid to all intents and purposes as if they had been signed manually and
notwithstanding that the officers, directors or persons whose signature or
signatures is or are so reproduced may have ceased to hold office at the date of
delivery or issue of such contracts, documents or instruments in writing or
securities of the Corporation.
FINANCIAL YEAR
69. The financial year of the Corporation shall end on such day in each year as
the board of directors may from time to time by resolution determine.
PASSED by the directors of the Corporation on _____________, 2004.
CONFIRMED by the shareholders of the Corporation on ______________,
2004.
SCHEDULE F
CONFIRMATION OF NEW BY-LAW NO. 1
IT IS RESOLVED THAT:
1. effective on the date of the continuance of the Corporation under the Canada
Business Corporations Act, By-Law "A" attached as Part I of Schedule E to the
Management Information Circular of the Corporation dated April 22, 2004 (the
"CIRCULAR"), being a by-law repealing all of the Corporation's by-laws in force,
and By-Law No. 1 attached as Part II of Schedule E to the Circular, being a
by-law regulating the business and affairs of the Corporation, are each
confirmed as made by the directors of the Corporation.
SCHEDULE G
SECTION 185 OF THE OBCA
185. (1) RIGHTS OF DISSENTING SHAREHOLDERS -- Subject to subsection (3) and to
sections 186 and 248, if a corporation resolves to,
(a) amend its articles under section 168 to add, remove or change
restrictions on the issue, transfer or ownership of shares of a class
or series of the shares of the corporation;
(b) amend its articles under section 168 to add, remove or change any
restriction upon the business or businesses that the corporation may
carry on or upon the powers that the corporation may exercise;
(c) amalgamate with another corporation under sections 175 and 176;
(d) be continued under the laws of another jurisdiction under section 181;
or
(e) sell, lease or exchange all or substantially all its property under
subsection 184(3),
a holder of shares of any class or series entitled to vote on the resolution may
dissent.
(2) IDEM -- If a corporation resolves to amend its articles in a manner referred
to in subsection 170(1), a holder of shares of any class or series entitled to
vote on the amendment under section 168 or 170 may dissent, except in respect of
an amendment referred to in,
(a) clause 170(1)(a), (b) or (e) where the articles provide that the
holders of shares of such class or series are not entitled to dissent;
or
(b) subsection 170(5) or (6).
(3) EXCEPTION -- A shareholder of a corporation incorporated before the 29th day
of July, 1983 is not entitled to dissent under this section in respect of an
amendment of the articles of the corporation to the extent that the amendment,
(a) amends the express terms of any provision of the articles of the
corporation to conform to the terms of the provision as deemed to be
amended by section 277; or
(b) deletes from the articles of the corporation all of the objects of the
corporation set out in its articles, provided that the deletion is
made by the 29th day of July, 1986.
(4) SHAREHOLDER'S RIGHT TO BE PAID FAIR VALUE -- In addition to any other right
the shareholder may have, but subject to subsection (30), a shareholder who
complies with this section is entitled, when the action approved by the
resolution from which the shareholder dissents becomes effective, to be paid by
the corporation the fair value of the shares held by the shareholder in respect
of which the shareholder dissents, determined as of the close of business on the
day before the resolution was adopted.
(5) NO PARTIAL DISSENT -- A dissenting shareholder may only claim under this
section with respect to all the shares of a class held by the dissenting
shareholder on behalf of any one beneficial owner and registered in the name of
the dissenting shareholder.
(6) OBJECTION -- A dissenting shareholder shall send to the corporation, at or
before any meeting of shareholders at which a resolution referred to in
subsection (1) or (2) is to be voted on, a written objection
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to the resolution, unless the corporation did not give notice to the shareholder
of the purpose of the meeting or of the shareholder's right to dissent.
(7) IDEM -- The execution or exercise of a proxy does not constitute a written
objection for purposes of subsection (6).
(8) NOTICE OF ADOPTION OF RESOLUTION -- The corporation shall, within ten days
after the shareholders adopt the resolution, send to each shareholder who has
filed the objection referred to in subsection (6) notice that the resolution has
been adopted, but such notice is not required to be sent to any shareholder who
voted for the resolution or who has withdrawn the objection.
(9) IDEM -- A notice sent under subsection (8) shall set out the rights of the
dissenting shareholder and the procedures to be followed to exercise those
rights.
(10) DEMAND FOR PAYMENT OF FAIR VALUE -- A dissenting shareholder entitled to
receive notice under subsection (8) shall, within twenty days after receiving
such notice, or, if the shareholder does not receive such notice, within twenty
days after learning that the resolution has been adopted, send to the
corporation a written notice containing,
(a) the shareholder's name and address;
(b) the number and class of shares in respect of which the shareholder
dissents; and
(c) a demand for payment of the fair value of such shares.
(11) CERTIFICATE TO BE SENT IN -- Not later than the thirtieth day after the
sending of a notice under subsection (10), a dissenting shareholder shall send
the certificates representing the shares in respect of which the shareholder
dissents to the corporation or its transfer agent.
(12) IDEM -- A dissenting shareholder who fails to comply with subsections (6),
(10) and (11) has no right to make a claim under this section.
(13) ENDORSEMENT ON CERTIFICATE -- A corporation or its transfer agent shall
endorse on any share certificate received under subsection (11) a notice that
the holder is a dissenting shareholder under this section and shall return
forthwith the share certificates to the dissenting shareholder.
(14) RIGHTS OF DISSENTING SHAREHOLDER -- On sending a notice under subsection
(10), a dissenting shareholder ceases to have any rights as a shareholder other
than the right to be paid the fair value of the shares as determined under this
section except where,
(a) the dissenting shareholder withdraws notice before the corporation
makes an offer under subsection (15);
(b) the corporation fails to make an offer in accordance with subsection
(15) and the dissenting shareholder withdraws notice; or
(c) the directors revoke a resolution to amend the articles under
subsection 168(3), terminate an amalgamation agreement under
subsection 176(5) or an application for continuance under subsection
181(5), or abandon a sale, lease or exchange under subsection 184(8),
in which case the dissenting shareholders right are reinstated as of the date
the dissenting shareholder sent the notice referred to in subsection (10), and
the dissenting shareholder is entitled, upon presentation and surrender to the
corporation or its transfer agent of any certificate representing the shares
that has been
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endorsed in accordance with subsection (13), to be issued a new certificate
representing the same number of shares as the certificate so presented, without
payment of any fee.
(15) OFFER TO PAY -- A corporation shall, not later than seven days after the
later of the day on which the action approved by the resolution is effective or
the day the corporation received the notice referred to in subsection (10), send
to each dissenting shareholder who has sent such notice,
(a) a written offer to pay for the dissenting shareholder's shares in an
amount considered by the directors of the corporation to be the fair
value thereof, accompanied by a statement showing how the fair value
was determined; or
(b) if subsection (30) applies, a notification that it is unable lawfully
to pay a dissenting shareholders for their shares.
(16) IDEM -- Every offer made under subsection (15) for shares of the same class
or series shall be on the same terms.
(17) IDEM -- Subject to subsection (30), a corporation shall pay for the shares
of dissenting shareholder within ten days after an offer made under subsection
(15) has been accepted, but any such offer lapses if the corporation does not
receive an acceptance thereof within thirty days after the offer has been made.
(18) APPLICATION TO COURT TO FIX FAIR VALUE -- Where a corporation fails to make
an offer under subsection (15) or if a dissenting shareholder fails to accept an
offer, the corporation may, within fifty days after the action approved by the
resolution is effective or within such further period as the court may allow,
apply to the court to fix a fair value for the shares of any dissenting
shareholder.
(19) IDEM -- If a corporation fails to apply to the court under subsection (18),
a dissenting shareholder may apply to the court for the same purpose within a
further period of twenty days or within such further period as the court may
allow.
(20) IDEM -- A dissenting shareholder is not required to give security for costs
in an application made under subsection (18) or (19).
(21) COSTS -- If a corporation fails to comply with subsection (15), then the
costs of a shareholder application under subsection (19) are to be borne by the
corporation unless the court otherwise orders.
(22) NOTICE TO SHAREHOLDERS -- Before making application to the court under
subsection (18) or not later than seven days after receiving notice of an
application to the court under subsection (19), as the case may be, a
corporation shall give notice to each dissenting shareholder who, at the date
upon which the notice is given,
(a) has sent to the corporation the notice referred to in subsection (10);
and
(b) has not accepted an offer made by the corporation under subsection
(15), if such an offer was made,
of the date, place and consequences of the application and of the dissenting
shareholder's right to appear and be heard in person or by counsel, and a
similar notice shall be given to each dissenting shareholder who, after the date
of such first mentioned notice and before termination of the proceedings
commenced by the application, satisfies the conditions set out in clauses (a)
and (b) within three days after the dissenting shareholder satisfies such
conditions.
(23) PARTIES JOINED -- All dissenting shareholders who satisfy the conditions
set out in clauses (22)(a) and (b) shall be deemed to be joined as parties to an
application under subsection (18) or (19) on the later
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of the date upon which the application is brought and the date upon which they
satisfy the conditions, and shall be bound by the decision rendered by the court
in the proceedings commenced by the application.
(24) IDEM -- Upon an application to the court under subsection (18) or (19), the
court may determine whether any other person is a dissenting shareholder who
should be joined as a party, and the court shall fix a fair value for the shares
of all dissenting shareholders.
(25) APPRAISERS -- The court may in its discretion appoint one or more
appraisers to assist the court to fix a fair value for the shares of the
dissenting shareholders.
(26) FINAL ORDER -- The final order of the court in the proceedings commenced by
an application under subsection (18) or (19) shall be rendered against the
corporation and in favour of each dissenting shareholder who, whether before or
after the date of the order, complies with the conditions set out in clauses
(22)(a) and (b).
(27) INTEREST -- The court may in its discretion allow a reasonable rate of
interest on the amount payable to each dissenting shareholder from the date the
action approved by the resolution is effective until the date of payment.
(28) WHERE CORPORATION UNABLE TO PAY -- Where subsection (30) applies, the
corporation shall, within ten days after the pronouncement of an order under
subsection (26), notify each dissenting shareholder that is unable lawfully to
pay dissenting shareholders for their shares.
(29) IDEM -- Where subsection (30) applies, a dissenting shareholder, by written
notice sent to the corporation within thirty days after receiving a notice under
subsection (28), may,
(a) withdraw a notice of dissent, in which case the corporation is deemed
to consent to the withdrawal and the shareholder's full rights are
reinstated; or
(b) retain a status as a claimant against the corporation, to be paid as
soon as the corporation is lawfully able to do so or, in a
liquidation, to be ranked subordinate to the rights of creditors of
the corporation but in priority to its shareholders.
(30) IDEM -- A corporation shall not make a payment to a dissenting shareholder
under this section if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to pay its
liabilities as they become due; or
(b) the realizable value of the corporation's assets would thereby be less
than the aggregate of its liabilities.
(31) COURT ORDER -- Upon application by a corporation that proposes to take any
of the actions referred to in subsection (1) or (2), the court may, if satisfied
that the proposed action is not in all the circumstances one that should give
rise to rights arising under subsection (4), by order declare that those rights
will not arise upon the taking of the proposed action, and the order may be
subject to compliance upon such terms and conditions as the court thinks fit
and, if the corporation is an offering corporation, notice of any such
application and a copy of any order made by the court upon such application
shall be served upon the Commission.
(32) COMMISSION MAY APPEAR -- The Commission may appoint counsel to assist the
court upon the hearing of an application under subsection (31), if the
corporation is an offering corporation.