Exhibit 99.19
AMENDED AND RESTATED
UNSECURED CONVERTIBLE DEBENTURE
issued by
POINTS INTERNATIONAL LTD.
originally issued on March 15, 2001
and
amended and restated on April 4, 2005
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION................................................... 1
1.1 DEFINITIONS...................................................... 1
1.2 INVALIDITY, ETC.................................................. 3
1.3 HEADINGS, ETC.................................................... 3
1.4 GOVERNING LAW.................................................... 3
1.5 ATTORNMENT....................................................... 4
1.6 CURRENCY......................................................... 4
1.7 ACTIONS ON DAYS OTHER THAN BUSINESS.............................. 4
1.8 INTEREST ACT..................................................... 4
ARTICLE 2 PAYMENTS......................................................... 4
2.1 INTEREST RATE.................................................... 4
2.2 CALCULATION AND PAYMENT OF INTEREST.............................. 4
2.3 REPAYMENT OF THE DEBENTURE....................................... 5
2.4 APPLICATION OF PREPAYMENTS AND REPAYMENTS........................ 5
2.5 PAYMENTS GENERALLY............................................... 5
2.6 MAXIMUM RATE OF INTEREST......................................... 6
ARTICLE 3 CONVERSION OF DEBENTURE.......................................... 6
3.1 CONVERSION RIGHT................................................. 6
3.2 AUTOMATIC CONVERSION............................................. 7
3.3 CONVERSION PRICE................................................. 7
3.4 MANNER OF EXERCISE OF CONVERSION................................. 7
3.5 ADJUSTMENT OF CONVERSION PRICE AND NUMBER OF COMMON SHARES
ISSUABLE UPON CONVERSION...................................... 8
3.6 RULES REGARDING CALCULATION OF ADJUSTMENT OF CONVERSION PRICE
AND NUMBER OF COMMON SHARES ISSUABLE UPON CONVERSION.......... 10
3.7 POSTPONEMENT OF SUBSCRIPTION..................................... 11
3.8 NO REQUIREMENT TO ISSUE FRACTIONAL SHARES........................ 11
3.9 COMPANY TO RESERVE COMMON SHARES................................. 11
3.10 TAXES AND CHARGES ON CONVERSION.................................. 12
3.11 NOTICE OF ADJUSTMENT............................................. 12
ARTICLE 4 COVENANTS AND EVENTS OF DEFAULT.................................. 12
4.1 COVENANTS........................................................ 12
4.2 EVENTS OF DEFAULT................................................ 12
4.3 REMEDIES UPON DEFAULT............................................ 13
4.4 OVERDUE AMOUNTS.................................................. 13
ARTICLE 5 GENERAL.......................................................... 13
5.1 AMENDMENT AND WAIVER............................................. 13
5.2 NOTICES.......................................................... 13
5.3 TIME............................................................. 14
5.4 FURTHER ASSURANCES............................................... 14
5.5 ASSIGNMENT....................................................... 14
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5.6 ENTIRE AGREEMENT................................................. 15
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR
THE BENEFIT OF POINTS INTERNATIONAL LTD. (THE "COMPANY"), THAT THESE SECURITIES
MAY BE OFFERED, SOLD PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
("REGULATION S") UNDER THE 1933 ACT, (C) WITHIN THE UNITED STATES IN ACCORDANCE
WITH (1) RULE 144 UNDER THE 1933 ACT OR (2) IN ANOTHER TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE 1933 ACT OR (D) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, AND IN EACH CASE IN COMPLIANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE LAWS OF ANY OTHER
JURISDICTION, PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (B) ABOVE, A
DECLARATION IN THE FORM PRESCRIBED BY THE COMPANY AND ANY TRANSFER AGENT MUST BE
PROVIDED, AND IN THE CASE OF TRANSFERS PURSUANT TO (C)(1) OR (2) ABOVE, A LEGAL
OPINION SATISFACTORY TO THE COMPANY OR SUCH OTHER DOCUMENTATION SATISFACTORY TO
THE COMPANY MUST FIRST BE PROVIDED.
POINTS INTERNATIONAL LTD.
AMENDED AND RESTATED DEBENTURE
Points International Ltd. (the "Borrower") for value received hereby
acknowledges itself indebted to and unconditionally promises to pay to or to the
order of __________________________________________________ (the "Lender") on
March 15, 2008, or such earlier date as all or any part of the Principal Amount
hereof may become due in accordance with the provisions hereof or such later
date as elected by the Lender in accordance with the provisions hereof (such
date being the "Maturity Date"), the aggregate principal sum of
_________________________________________________ ($_______________________)
(the "Original Principal Amount") in lawful money of Canada, on presentation and
surrender of this Debenture (in the case of payment of all of the Principal
Amount hereof) to the Borrower at its registered office, and to pay interest on
the Principal Amount of this Debenture outstanding from time to time at the rate
and times and in the manner set forth herein.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
For the purposes of this Debenture:
"APPLICABLE LAW" means, in respect of any Person, property, transaction,
event or course of conduct, all applicable laws, statutes, rules, by-laws
and regulations, regulatory
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policies and all applicable official directives, orders, judgments and
decrees of Governmental Authorities;
"BORROWER" means Points International Ltd., a corporation continued under
the laws of Canada and its successors from time to time;
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on which
Canadian chartered banks are open for business in Toronto, Canada;
"CAPITAL REORGANIZATION" has the meaning attributed to such term in Section
3.5(b);
"COMMON SHARES" means the common shares in the capital of the Borrower;
"COMMON SHARE REORGANIZATION" has the meaning attributed to such term in
Section 3.5(a);
"CONVERSION PRICE" has the meaning attributed to such term in Section 3.3;
"CONVERSION RIGHT" has the meaning attributed to such term in Section 3.1;
"DATE OF AUTOMATIC CONVERSION" has the meaning attributed to such term in
Section 3.2;
"DATE OF CONVERSION" means the date upon which the Conversion Right is
exercised by the Lender by surrendering this Debenture in accordance with
Section 3.4(b);
"DEBENTURE" means this convertible debenture and all schedules attached to
this convertible debenture, in each case as they may be amended, restated
or replaced from time to time; the expressions "HEREOF", "HEREIN",
"HERETO", "HEREUNDER", "HEREBY" and similar expressions refer to this
convertible debenture as a whole and not to any particular article,
section, schedule, or other portion hereof;
"EVENT OF DEFAULT" has the meaning attributed to such term in Section 4.2;
"LENDER" means ___________________________________________________, and its
successors and assigns;
"MAXIMUM AMOUNT" has the meaning attributed to such term in Section 3.1;
"OBLIGATIONS" means all indebtedness, liabilities and other obligations of
the Borrower to the Lender hereunder, whether actual or contingent, direct
or indirect, matured or not, now existing or hereafter arising;
"ORIGINAL ISSUE DATE" means March 15, 2001;
"ORIGINAL PRINCIPAL AMOUNT" has the meaning attributed to such term in the
first paragraph of this Debenture;
"PERSON" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or
without share capital, unincorporated
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association, trust, trustee, executor, administrator or other legal
personal representative or governmental authority;
"PRINCIPAL AMOUNT" means the principal amount outstanding under this
Debenture from time to time, being the Original Principal Amount as
increased or decreased pursuant to the terms and conditions of this
Debenture;
"PUBLIC OFFERING" means a sale or other distribution to the public of
treasury shares of the Borrower by way of a prospectus, registration
statement or other similar disclosure document which would result in those
shares being freely tradeable in a jurisdiction in Canada or in the United
States to and between members of the public without the requirement of
filing a further prospectus or similar disclosure document; and
"QUALIFIED PUBLIC OFFERING" means a Public Offering having the following
characteristics:
(a) the Borrower's Common Shares issued pursuant to the Public Offering
are listed for trading on The Toronto Stock Exchange, The Nasdaq Stock
Market or another senior securities exchange satisfactory to the Board
of Directors;
(b) the gross proceeds from the Public Offering to the Borrower are at
least $30,000,000 in the aggregate;
(c) the issue price per Common Share in the Public Offering is at least
four times the Conversion Price; and
(d) the Borrower has an equity value (using the price at which the shares
of the Borrower are being offered pursuant to the Public Offering) of
at least $175,000,000 on a pre-offering basis.
1.2 INVALIDITY, ETC.
Each of the provisions contained in this Debenture is distinct and
severable and a declaration of invalidity, illegality or unenforceability of any
such provision or part thereof by a court of competent jurisdiction shall not
affect the validity or enforceability of any other provision hereof.
1.3 HEADINGS, ETC.
The division of this Debenture into articles, sections and clauses,
the inclusion of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation hereof.
1.4 GOVERNING LAW
This Debenture shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
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1.5 ATTORNMENT
The parties hereto irrevocably submit and attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario for all matters arising
out of or in connection with this Debenture.
1.6 CURRENCY
Except as otherwise specifically provided herein, monetary amounts in
this Debenture are stated in and will be paid in Canadian dollars.
1.7 ACTIONS ON DAYS OTHER THAN BUSINESS
Except as otherwise specifically provided herein, where any payment is
required to be made or any other action is required to be taken on a particular
day and such day is not a Business Day and, as a result, such payment cannot be
made or action cannot be taken on such day, then this Debenture shall be deemed
to provide that such payment shall be made or such action shall be taken on the
first Business Day after such day.
1.8 INTEREST ACT
For the purposes of the Interest Act (Canada) and disclosure under
such act, whenever interest to be paid under this Debenture or any Loan Document
is to be calculated on the basis of a year of 365 days or 360 days or any other
period of time that is less than a calendar year, the yearly rate of interest to
which the rate determined pursuant to such calculation is equivalent is the rate
so determined multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by either 365, 360 or such other
period of time, as the case may be.
ARTICLE 2
PAYMENTS
2.1 INTEREST RATE
Interest shall accrue from the Original Issue Date until March 14,
2005 on the outstanding Principal Amount of this Debenture from time to time at
a rate of 11% per annum. Interest shall accrue from March 15, 2005 on the
outstanding Principal Amount of this Debenture from time to time at a rate of 8%
per annum.
2.2 CALCULATION AND PAYMENT OF INTEREST
Interest on the outstanding Principal Amount shall accrue from day to
day, both before and after default, demand, maturity and judgment, and shall be
calculated on the basis of the actual number of days elapsed and on the basis of
a year of 365 days. Unless payment is otherwise required in accordance with the
terms and conditions of this Debenture, interest shall be payable on this
Debenture in cash on the Maturity Date (for greater certainty, as contemplated
by section 3.4(d), if the Lender prior to or on the Maturity Date exercises its
Conversion Right, interest shall be payable in cash on the Maturity Date only in
respect of interest which has
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accrued over the term of this Debenture on that portion of the Principal Amount
which is not converted pursuant to the exercise of the Conversion Right).
Interest shall compound on an annual basis on the last day immediately
prior to each anniversary of the Original Issue Date (and thereafter interest
shall accrue on such compounded interest at the rate set out in Section 2.1).
2.3 REPAYMENT OF THE DEBENTURE
(a) Subject to the terms and conditions of this Debenture, the Borrower
shall not be required, and shall not be entitled, to make payments of principal
on this Debenture except as set out in the next sentence, unless the Obligations
are declared due and payable in accordance with Section 4.3. Unless payment is
otherwise required or made earlier in accordance with the terms and conditions
of this Debenture, the Principal Amount of this Debenture, together with all
accrued and unpaid interest and other amounts payable under this Debenture,
shall be due and payable in full in cash on the Maturity Date.
(b) Notwithstanding any other provision hereof, in the event of the
exercise of that certain warrant (the "Specified Warrant") held by
InterActiveCorp or an Affiliate thereof dated April 11, 2003, the Borrower shall
be entitled to prepay the Principal Amount of this Debenture together with all
other amounts payable under this Debenture provided, for greater certainty, in
this circumstance the Lender waives repayment of all accrued and unpaid interest
(such that accrued interest is and shall be deemed to be nil). For greater
certainty, the Borrower shall, upon receipt of the proceeds received on the
exercise in full of the Specified Warrant, use such proceeds to repay, on or
before the date that is thirty (30) days following such exercise, all amounts
owing under and in accordance with the terms hereof.
(c) Notwithstanding any other provision hereof, if there shall occur any
event or circumstance which is a Liquidation Event or a Dividend Event as such
terms are defined in the articles of the Borrower relating to the conditions
attaching to the Series One Preferred Share of the Borrower, the Conversion
Right shall automatically terminate and the Borrower shall be entitled to repay
the Principal Amount of this Debenture together with all other amounts payable
under this Debenture.
2.4 APPLICATION OF PREPAYMENTS AND REPAYMENTS
Any amounts prepaid or repaid with the consent of the Lender or where
required pursuant to the terms hereof shall not be reborrowed. All amounts
prepaid or repaid shall be applied firstly in reduction of the accrued and
unpaid interest then outstanding and thereafter in reduction of the principal
amount of this Debenture being prepaid or repaid.
2.5 PAYMENTS GENERALLY
All payments made pursuant to this Debenture (in respect of principal,
interest or otherwise) shall be made by the Borrower to the Lender by way of
deposit by or on behalf of the Borrower to the account specified therefor by the
Lender no later than 3:00 p.m. (Toronto time) on the due date therefor. Any
payments received after such time shall be considered for all
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purposes as having been made on the next following Business Day unless the
Lender otherwise agrees in writing.
2.6 MAXIMUM RATE OF INTEREST
Notwithstanding anything herein to the contrary:
(a) In the event that any provision of this Debenture would oblige the
Borrower to make any payment of interest or other amount payable to
the Lender in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by the Lender of
interest at a criminal or prohibited rate (as such terms are construed
under the Criminal Code (Canada) or any other Applicable Law), then
notwithstanding such provision, such amount or rate shall be deemed to
have been adjusted with the same effect as if adjusted at the Original
Issue Date to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by law or so result in a receipt by
the Lender of interest at a criminal or prohibited rate, such
adjustment to be effected to the extent necessary in each case, as
follows:
(i) by reducing any fees and other amounts which would constitute
interest for the purposes of Section 347 of the Criminal Code
(Canada) or any other applicable law; and
(ii) by reducing the amount or rate of interest exigible under Article
2 of this Debenture.
(b) Any amount or rate of interest referred to in this Section 2.6 shall
be determined in accordance with generally accepted actuarial
practices and principles over the maximum term of this Debenture (or
over such shorter term as may be required by Section 347 of the
Criminal Code (Canada)) and, in the event of a dispute, a certificate
of a Fellow of the Canadian Institute of Actuaries appointed by the
Lender shall be conclusive for the purposes of such determination,
absent manifest error.
ARTICLE 3
CONVERSION OF DEBENTURE
3.1 CONVERSION RIGHT
(a) Upon and subject to the terms and conditions of this Article, the
Lender shall have the right (the "Conversion Right"), at its option, at any time
prior to the close of business on the Maturity Date to convert up to $6,000,000
(the "Maximum Amount") of the Principal Amount hereof into Common Shares at the
Conversion Price.
(b) Notwithstanding any other provision hereof, the Conversion Right shall
(i) not be exercisable for so long as the Specified Warrant is outstanding and
held by InterActiveCorp. or an Affiliate thereof and (ii) terminate on that date
upon which the Specified Warrant is exercised in full provided that the Borrower
has repaid the Debenture in accordance with Section 2.3(b).
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The Borrower shall promptly notify the Lender of the termination of the
Specified Warrant or the exercise thereof in full.
3.2 AUTOMATIC CONVERSION
The Maximum Amount of the Principal Amount of this Debenture shall be
automatically converted at the Conversion Price into Common Shares on the date
(the "Date of Automatic Conversion") that is the earlier of:
(a) in the event that the Specified Warrant has expired without being
exercised in full, April 12, 2006; and
(b) the day immediately preceding one of the following events (each, a
"Liquidity Event"):
(i) all of the outstanding Common Shares are acquired by a Person or
group of Persons acting jointly or in concert for a price per
share of at least four times the Conversion Price;
(ii) all or substantially all of the assets of the Borrower are sold
for a price that, upon distribution of the net proceeds thereof
to the shareholders of the Borrower, (after paying or making
provisions for all creditors of the Borrower), would result in
net proceeds per Common Share to the Lender, after conversion of
the Maximum Amount of this Debenture into Common Shares and
making of such distribution, of at least four times the
Conversion Price; or
(iii) A Qualified Public Offering.
3.3 CONVERSION PRICE
The Conversion Price, subject to adjustment in accordance with this
Article, shall be $0.31732 per Common Share.
3.4 MANNER OF EXERCISE OF CONVERSION
The following rules apply with respect to the conversion of up to the
Maximum Amount of this Debenture:
(a) To exercise the Conversion Right, or to give effect to the conversion
of this Debenture upon Automatic Conversion, the Lender shall
surrender this Debenture at the office of the Borrower in the City of
Toronto together with (in the case of exercise of the Conversion
Right) written notice (which shall be irrevocable) in a form
satisfactory to the Borrower, duly executed by the Lender exercising
the Conversion Right in respect of any amount of this Debenture in
accordance with the provisions of this Article, stating the Principal
Amount which the Lender elects to convert. In the case of exercise of
the Conversion Right the surrender of this Debenture accompanied by
such written notice shall be deemed to constitute
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a contract between the Lender and the Borrower whereby: (i) the Lender
subscribes for the number of Common Shares which the Lender shall be
entitled to receive on such conversion; (ii) the Lender releases the
Borrower from all liability to pay the Principal Amount of this
Debenture to be converted; (iii) the Borrower agrees that the
surrender of this Debenture for conversion constitutes full payment of
the subscription price for the Common Shares issuable upon such
conversion. Thereupon the Lender will be entitled to be entered in the
books of the Borrower as at the Date of Conversion or the Date of
Automatic Conversion, as the case may be, as the holder of the number
of Common Shares into which such Debenture has been converted in
accordance with the provisions of this Article and, as soon as
practicable thereafter, the Borrower will deliver to the Lender a
certificate or certificates for such Common Shares entered.
(b) For the purposes of the exercise of the Conversion Right, this
Debenture will be deemed to be surrendered for conversion on the date
(the "Date of Conversion") on which it is so surrendered in accordance
with the provisions of this Article.
(c) The Lender shall, upon the exercise of the Conversion Right, surrender
this Debenture to the Borrower and the Borrower will cancel the same
and will, without charge, promptly deliver to the Lender a new
Debenture in an aggregate Principal Amount equal to the part of the
Principal Amount of this Debenture that was not converted. For greater
certainty, the Lender shall continue to have the right to convert the
new Debenture into Common Shares until the Maturity Date provided that
in no case shall the aggregate Principal Amount converted exceed the
Maximum Amount.
(d) Upon conversion the Lender shall no longer be entitled to receive
accrued and unpaid interest (other than capitalized interest (but
excluding from capitalized interest compounded interest)) on the part
of this Debenture surrendered for conversion up to but excluding the
Date of Conversion, or the Date of Automatic Conversion, as the case
may be, but Common Shares issued upon such conversion will rank only
in respect of dividends declared in favour of shareholders of record
on and after the Date of Conversion or the Date of Automatic
Conversion, as the case may be, from which applicable date they will
for all purposes be and be deemed to be issued and outstanding fully
paid and non-assessable Common Shares. Interest on the Principal
Amount of this Debenture which is converted (and any compounded
interest in respect of the Principal Amount so converted) shall cease
to accrue from and after the Conversion Date or the Date of Automatic
Conversion, as the case may be.
3.5 ADJUSTMENT OF CONVERSION PRICE AND NUMBER OF COMMON SHARES ISSUABLE UPON
CONVERSION
The Conversion Price (and the number of Common Shares issuable upon
conversion of this Debenture as provided below) is subject to adjustment from
time to time in the events and in the manner provided as follows:
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(a) If and whenever at any time after the Original Issue Date the
Borrower:
(i) subdivides its outstanding Common Shares into a greater number of
shares; or
(ii) consolidates its outstanding Common Shares into a smaller number
of shares; or
(iii) distributes Common Shares or securities exchangeable for or
convertible into Common Shares by way of a stock dividend or
other distribution to all or substantially all holders of Common
Shares, or distributes to all or substantially all holders of
Common Shares any other securities or assets;
(any such events being called a "Common Share Reorganization"), then the
Conversion Price will be adjusted effective immediately after the effective date
or record date for the happening of a Common Share Reorganization, as the case
may be, at which the holders of Common Shares are determined for the purpose of
the Common Share Reorganization by multiplying the Conversion Price in effect
immediately prior to such effective date or record date by a fraction, the
numerator of which is the number of Common Shares (on a fully diluted basis)
outstanding on such effective date or record date before giving effect to such
Common Share Reorganization and the denominator of which is the number of Common
Shares (on a fully diluted basis) outstanding immediately after giving effect to
such Common Share Reorganization.
(b) If and whenever at any time after the Original Issue Date there is a
reclassification of Common Shares outstanding at any time or change of
the Common Shares into other shares or into other securities (other
than a Common Share Reorganization), or a consolidation, amalgamation
or merger of the Borrower with or into any other Borrower or other
entity (other than a consolidation, amalgamation or merger which does
not result in any reclassification of the outstanding Common Shares or
a change of the Common Shares into other shares), or a transfer of the
undertaking or assets of the Borrower as an entirety or substantially
as an entirety to another Borrower or other entity (any of such events
being called a "Capital Reorganization"), the Lender, upon exercise of
its right to convert this Debenture after the effective date of such
Capital Reorganization, will be entitled to receive, and must accept
for the same aggregate consideration in lieu of the number of Common
Shares to which the Lender was theretofore entitled upon such
conversion, the aggregate number of shares, other securities or other
property which the Lender would have been entitled to receive as a
result of such Capital Reorganization as if, on the effective date
thereof, the Lender had been the registered holder of the number of
Common Shares to which the Lender was theretofore entitled upon
conversion. If determined appropriate by the Borrower, adjustments
will be made as a result of any such Capital Reorganization in the
application of the provisions set forth in this Article with respect
to the rights and interests thereafter of the Lender to the end that
the provisions set forth in this Article will thereafter
correspondingly be made applicable as nearly as may reasonably be in
relation to any shares, other securities or other property thereafter
deliverable upon the conversion of this Debenture. Any such
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adjustment must be approved by action by the directors and will for
all purposes be conclusively deemed to be an appropriate adjustment if
so approved by the directors and the Lender.
3.6 RULES REGARDING CALCULATION OF ADJUSTMENT OF CONVERSION PRICE AND NUMBER OF
COMMON SHARES ISSUABLE UPON CONVERSION
For the purposes of Section 3.5:
(a) The adjustments provided in Section 3.5 are cumulative and will, in
the case of Adjustments to the Conversion Price, be computed to the
nearest one-tenth of one cent and will be made successively whenever
an event referred to therein occurs, subject to the following
subsections of this section.
(b) No adjustment in the Conversion Price will be made under Section 3.5
in respect of the issue from time to time of Common Shares issuable on
conversion of this Debenture and any such issue will be deemed not to
be a Common Share Reorganization.
(c) If at any time a dispute arises with respect to the adjustments
provided for in Section 3.5, such dispute will be conclusively
determined by such firm of nationally recognized independent chartered
accountants as may be selected by the Borrower and the Lender (or if
they are unable to agree upon such a firm, then the Borrower and the
Lender shall each select a representative from one such firm and those
two individuals shall select a third firm) and any such determination
will be binding upon the Borrower, the Lender and shareholders of the
Borrower. The Borrower will provide such accountants with access to
all necessary records of the Borrower. If any such determination is
made, the Borrower shall deliver a notice of the Lender describing
such determination.
(d) In case the Borrower after the Original Issue Date takes any action
affecting the Common Shares, other than action described in Section
3.5, which in the opinion of the directors of the Borrower acting in
good faith would materially affect the rights of the Lender, the
Conversion Price or the number of Common Shares issuable upon
conversion will be adjusted in such manner, if any, and at such time,
by action of the directors of the Borrower as may be equitable in the
circumstances.
(e) If the Borrower sets a record date to determine the holders of the
Common Shares for the purpose of entitling them to receive any
dividend or distribution or sets a record date to take any other
action and, thereafter and before the distribution to such
shareholders of any such dividend or distribution or the taking of any
other action, decides not to implement its plan to pay or deliver such
dividend or distribution or take such other action, then no adjustment
in the Conversion Price or the number of Common Shares issuable upon
conversion of this Debenture will be required by reason of the setting
of such record date.
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(f) As a condition precedent to the taking of any action which would
require any adjustment in any of the conversion rights pursuant to
this Debenture, including the Conversion Price and the number and
class of shares or other securities which are to be received upon the
conversion thereof, the Borrower shall take any corporate action which
may, in the opinion of counsel, be necessary in order that the
Borrower have unissued and reserved in its authorized capital and may
validly and legally issue as fully paid and non-assessable all the
shares or other securities which the Lender is entitled to receive on
the full conversion thereof in accordance with the provisions thereof.
3.7 POSTPONEMENT OF SUBSCRIPTION
In any case in which this Article requires that an adjustment be
effective immediately after a record date for an event referred to herein, the
Borrower may defer, until the occurrence of such an event:
(a) issuing to the Lender, if this Debenture is converted after such
record date and before the occurrence of such event, the additional
Common Shares issuable upon such conversion by reason of the
adjustment required by such event; and
(b) delivering to the Lender any distributions declared with respect to
such additional Common Shares after such exercise date and before such
event;
provided, however, that the Borrower delivers to the Lender an appropriate
instrument evidencing the Lender's right, upon the occurrence of the event
requiring the adjustment, to an adjustment in the Conversion Price or the number
of Common Shares issuable on the conversion of this Debenture and to such
distributions declared with respect to any additional Common Shares issuable on
the conversion of this Debenture.
3.8 NO REQUIREMENT TO ISSUE FRACTIONAL SHARES
The Borrower is not required to issue fractional Common Shares upon
the conversion of this Debenture. If any fractional interest in a Common Share
would, but for the provisions of this section, be deliverable upon the
conversion of any Principal Amount of this Debenture, the number of Common
Shares to which the Lender is entitled upon conversion will be rounded up to the
next whole number.
3.9 COMPANY TO RESERVE COMMON SHARES
The Borrower covenants with the Lender that it will at all times
reserve and keep available out of its authorized Common Shares, solely for the
purpose of issue upon conversion of this Debenture, such number of Common Shares
as will then be issuable upon the conversion of the Maximum Amount of this
Debenture. The Borrower covenants with the Lender that all Common Shares which
will be so issuable will, on surrender and conversion of this Debenture in
accordance with the terms hereof, be duly and validly issued as fully paid and
non-assessable.
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3.10 TAXES AND CHARGES ON CONVERSION
The Borrower will from time to time promptly pay any and all taxes and
charges which may be imposed by the laws of Canada or any province thereof
(except income tax or security transfer tax, if any) which are payable by the
Borrower with respect to the issuance and/or delivery to the Lender, upon the
exercise of the Conversion Right, of Common Shares.
3.11 NOTICE OF ADJUSTMENT
The Borrower shall forthwith give notice to the Lender specifying any
event requiring any adjustment or readjustment and the results thereof,
including the resulting Conversion Price.
ARTICLE 4
COVENANTS AND EVENTS OF DEFAULT
4.1 COVENANTS
So long as any Obligations remain outstanding the Borrower shall pay
or cause to be paid all Obligations falling due hereunder on the dates and in
the manner specified herein, maintain its corporate existence, comply with the
requirements of all Applicable Laws and maintain such insurance against loss or
damage of the kinds and in the amounts considered reasonable by the Borrower
having regard to the nature of its business.
4.2 EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an
Event of Default:
(a) DEFAULT IN PAYMENT. If the Borrower defaults in the payment when due
of any of the Obligations which require the payment of money to the
Lender; or
(b) OTHER COVENANTS. If the Borrower defaults in the performance or
observance of any material term hereof that does not require the
payment of money to the Lender unless such default is remedied within
15 Business Days after notice thereof by the Lender to the Borrower;
or
(c) BANKRUPTCY STATUTES. If any proceeding, voluntary or involuntary, is
commenced, or an order or petition is issued, respecting the Borrower
pursuant to any statute relating to bankruptcy, insolvency,
reorganization of debts, liquidation, winding-up or dissolution,
including any proceeding, proposal, notice of intention to make a
proposal, order or petition under the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada), the
Winding-Up and Restructuring Act (Canada) or any similar legislation
in any other jurisdiction and, in the case of any such involuntary
proceeding,
(i) at any time thereafter (A) such proceeding is not being contested
by the Borrower or (B) the effect of such proceeding has not been
stayed; or
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(ii) such proceeding has not been dismissed within 60 days from and
including the day on which it was commenced; or
(iii) any order or petition sought in any such involuntary proceeding
is issued; or
(d) CEASE TO CARRY ON BUSINESS. If the Borrower ceases or threatens to
cease to carry on in the ordinary course its business; or
(e) LIQUIDATION EVENT OR DIVIDEND EVENT. If there shall occur any event or
circumstance which is a Liquidation Event or a Dividend Event as such
terms are defined in the articles of the Borrower relating to the
conditions attaching to the Series One Preferred Shares of the
Borrower.
4.3 REMEDIES UPON DEFAULT
Upon the occurrence of any Event of Default, the Lender may by notice given to
the Borrower declare all Obligations to be immediately due and payable.
4.4 OVERDUE AMOUNTS
All overdue amounts owing or deemed to be owing hereunder ("overdue
amounts"), whether in respect of principal, interest, fees, expenses or
otherwise, both before and after judgment, and in the case of expenses from the
dates such expenses are incurred, shall (to the extent permitted by law) bear
interest thereon at the rate specified in Section 2.1. Such interest on overdue
amounts shall accrue from day to day, be payable in arrears on demand and shall
be compounded monthly on the last Business Day of each calendar month.
ARTICLE 5
GENERAL
5.1 AMENDMENT AND WAIVER
No amendment or waiver of any provision of this Debenture or consent
to any departure by the Borrower from any provision hereof is effective unless
it is in writing and signed by the Lender. Such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it is given.
5.2 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by hand-delivery as hereinafter provided. Any such
notice, if sent by facsimile or other means of electronic communication, shall
be deemed to have been received on the day of sending, or if delivered by hand
shall be deemed to have been received at the time it is delivered to the
applicable address noted below. Notice of change of address shall also be
governed by this section. Notices and other communications shall be addressed as
follows:
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(a) if to the Borrower:
134 Peter Street
Suite 300
Toronto, Ontario
M5V 2H2
Attention: Christopher J.D. Barnard, President
Facsimile number: (416) 595-6444
(b) if to the Lender:
5.3 TIME
Time is of the essence of this Debenture.
5.4 FURTHER ASSURANCES
Whether before or after the happening of an Event of Default, the
Borrower shall at its own expense do, make, execute or deliver all such further
acts, documents and things in connection with this Debenture as the Lender may
reasonably require from time to time for the purpose of giving effect to this
Debenture.
5.5 ASSIGNMENT
(a) This Debenture shall enure to the benefit of the Lender and be binding
upon the Borrower, in each case together with their respective successors and
any permitted assignee.
(b) The Borrower shall not assign all or any part of its obligations under
this Debenture and the Lender shall not assign any of its rights under or
interest in this Debenture without the prior written consent of the other party,
which consent may be arbitrarily withheld.
(c) Subject to section 5.5(d), the Lender shall not assign, transfer or
encumber the Series One Preferred Share or any of its interest therein and the
Borrower shall not recognize as effective any assignment, transfer or
encumbrance of the Series One Preferred Share except in connection with section
5.5(d).
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(d) In the event the Borrower consents to an assignment by the Lender of
its rights under or interest in this Debenture, concurrently with any such
assignment, transfer or encumbrance, the Lender shall assign to the assignee the
same portion of the Debenture and of the beneficial interest in the Series One
Preferred Shares of the Borrower. Upon any such assignment, the Borrower
acknowledges that customary agency arrangements may need to be implemented
between the Lender and the assignee and certain intercreditor arrangements may
need to be implemented between the holders of this Debenture and the assignee
and the Borrower shall enter into any documents reasonably requested by the
Lender to implement such arrangements. Where such assignment relates only to
part of the Principal Amount of this Debenture, the Lender and the assignee
shall be each entitled to receive (upon surrender of this Debenture to the
Borrower for cancellation) a Debenture representing the part of the Principal
Amount then owned by each of them.
5.6 ENTIRE AGREEMENT
This Debenture, together with any written agreements entered into from
time to time between the Borrower and the Lender in connection herewith,
constitute the entire agreement between such parties pertaining to the subject
matter described herein. There are no warranties, conditions, or representations
(including any that may be implied by statute) and there are no agreements in
connection with such subject matter except as specifically set forth or referred
to in this Debenture and such agreements. No reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made either prior to,
contemporaneous with, or after entering into of this Debenture and such
agreements, or any amendment or supplement thereto, by any party to this
Debenture and such agreements or its directors, officers, partners, employees or
agents, where applicable, to any other party to this Debenture or such
agreements or its directors, officers, partners, employees or agents, where
applicable, except to the extent
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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that the same has been reduced to writing and included as a term of this
Debenture or such agreements.
IN WITNESS WHEREOF the Borrower has executed this Amended and Restated
Debenture, this ________________ day of _____________________________, 2005.
POINTS INTERNATIONAL LTD.
by
-------------------------------------
Name: T. Robert MacLean
Title: Chief Executive Officer
----------------------------------------
Name: Stephen Yuzpe
Title: Chief Financial Officer