.
.
.
Exhibit 99.24
(INDUSTRY CANADA LOGO) Industrie Canada FORM 11 FORMULE 11
ARTICLES OF CONTINUANCE CLAUSES DE PROROGATION
Canada Business Lol canadlenne sur les (SECTION 187) (ARTICLE 187)
Corporations Act societes par actions
1 -- Name of the Corporation Denomination sociale de la societe
Points International Ltd.
2 -- The province or territory in Canada where the La province ou le territoire au Canada ou se situera le siege
registered office is to be situated social
Ontario
3 -- The classes and the maximum number of shares that Categories et le nombre maximal d'actions que la societe
the corporation is authorized to issue est autorisee a emettre
See Schedule A annexed hereto.
4 -- Restrictions, if any, on share Restrictions sur le transfert des actions, s'il y a lieu
transfers
None.
5 -- Number (or minimum and maximum number) of Nombre (ou nombre minimal et maximal) d'administrateurs
directors
Minimum: 3, Maximum: 11
6 -- Restrictions, if any, on business the corporation Limites imposees a i'activite commerciale de la societe, s'il y
may carry on a lieu
None.
7 -- (1) If change of name effected, previous name (1) S'il y a changement de denomination sociale, indiquer la
denomination sociale anterleure
(2) Details of Incorporation (2) Details de la constitution
January 5, 1999
Business Corporations Act (Alberta)
8 -- Other provisions, if any Autres dispositions, s'il y a lieu
None.
Date Signature 7 -- Capacity of - En quallte de
2004, November 4 /s/ Illegible Corporate Secretary
--------------------------------------
For Departmental Use Only Printed Name - Nom en lettres moulees
A l'usage du ministere seulement
Stephen M. Yuzpe
Corporation No. DEC 13 2004
No de la societe
(CANADA CORPORATEK LOGO)
IC 3247(2001/11)
SCHEDULE A
1. an unlimited number of shares designated as Preferred Shares, issuable in
series of which:
(a) one (1) consists of a series designated as the Series One Preferred
Share;
(b) one (1) consists of a series designated as the Series Two Preferred
Share (the "Series 2 Preferred Share");
(c) one (1) consists of a series designated as the Series Three Preferred
Share (the "Series 3 Preferred Share"); and
2. an unlimited number of shares designated as Common Shares;
PREFERRED SHARES
1. PRIVILEGES OF PREFERRED SHARES. The Preferred Shares shall have attached to
them, as a class, the rights, privileges, restrictions and conditions as
hereinafter set forth.
(a) The Preferred Shares may from time to time be issued in one or more
series and, subject to the following provisions, and subject to the
sending of articles of amendment in prescribed form and the issuance
of a certificate of amendment in respect thereof, the directors may
fix from time to time and before issue of a series of Preferred
Shares, the number of shares which are to comprise that series and the
designation, rights, privileges, restrictions and conditions to be
attached to that series of Preferred Shares including, without
limiting the generality of the foregoing, the rate or amount of
dividends or the method of calculating dividends, the dates of payment
of dividends, the redemption, purchase and/or conversion prices and
terms and conditions of redemption, purchase and/or conversion, and
any sinking fund or other provisions.
(b) The Preferred Shares of each series shall, with respect to the payment
of dividends and the distribution of assets or return of capital in
the event of liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other return of
capital or distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, rank on a
parity with the Preferred Shares of every other series and be entitled
to preference over the Common Shares and over any other shares of the
Corporation ranking junior to the Preferred Shares. The Preferred
Shares of any series may also be given other preferences, not
inconsistent with these articles, over the Common Shares and any other
shares of the Corporation ranking junior to the Preferred Shares of a
series as may be fixed in accordance with clause 1(a).
(c) If any cumulative dividends or amounts payable on the return of
capital in respect of a series of Preferred Shares are not paid in
full, all series of Preferred Shares shall participate rateably in
respect of accumulated dividends and return of capital.
-2-
(d) Unless the directors otherwise determine in the articles of amendment
designating a series of Preferred Shares, the holder of each share of
a series of Preferred Shares shall not, as such, be entitled to
receive notice of or vote at any meeting of shareholders, except as
otherwise specifically provided in the Canada Business Corporations
Act.
SERIES ONE PREFERRED SHARES
The rights, privileges, restrictions and conditions attaching to the
Series One Preferred Shares are as follows:
1. Intentionally deleted.
2. CERTAIN DEFINITIONS. For the purposes of these Series One Preferred Share
provisions, the following terms shall have the following meanings:
(a) "Amended and Restated CIBC Debenture" means that certain debenture
issued by the Corporation to CIBC Capital Partners, a division of the
Canadian Imperial Bank of Commerce, on March 15, 2001 as such
debenture may be amended and restated from time to time;
(b) "Conversion Event" means any of:
(i) the repayment in full of the principal and accrued interest owing
under the Amended and Restated CIBC Debenture (other than in
connection with a Liquidation Event or where a dividend is or
remains payable pursuant to section 3(a));
(ii) the conversion of greater than $2,000,000 principal amount of the
Amended and Restated CIBC Debenture into common shares of the
Corporation; or
(iii) the payment in full of a dividend pursuant to section 3 (a); and
(c) "Dividend Event" means any of:
(i) any merger or consolidation of the Corporation (or a subsidiary
of the Corporation which owns all or substantially all of the
assets of the Corporation) into or with another corporation
(except one in which the holders of shares of the Corporation
immediately prior to such merger or consolidation continue to
hold at least a majority of the voting power of the shares of the
surviving or acquiring corporation);
(ii) any Person (other than Canadian Imperial Bank of Commerce) (and
such Person's Affiliates and Associates, and any Person acting
jointly or in concert with such Person) (collectively, an
"Acquiror") acquiring greater than 50% of the votes attached to
the Corporation's securities entitled to
-3-
vote for the election of the Corporation's board of directors or
greater than 50% of the equity (by value) of the Corporation; or
(iii) any sale of all or substantially all of the assets of the
Corporation;
(d) "Affiliate" means an "affiliate" as defined by the Canada Business
Corporations Act;
(e) "Associate" means an "associate" as defined by the Canada Business
Corporations Act; and
(f) "Person" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee,
executor, administrator or other legal personal representative.
3. DIVIDENDS UPON CERTAIN MERGERS, CONSOLIDATIONS AND ASSET SALES.
(a) Upon the occurrence of a Dividend Event, the Corporation will pay a
cash dividend to the holders of the Series One Preferred Shares in an
aggregate amount equal to the amount, if any, by which "A" exceeds "B"
where:
(i) "A" is the aggregate amount which would be payable to the holders
of Series One Preferred Shares pursuant to section 5 assuming the
Corporation dissolved on the date of such Dividend Event; and
(ii) "B" is the amount paid-up on the Series One Preferred Shares.
For the purposes of section 3(a)(i), the value of the assets of the
Corporation available for distribution among its shareholders on the
dissolution shall be the value attributable to the equity of the
Corporation implied by the transaction giving rise to the Dividend
Event, as agreed by the Corporation and the holders of the Series One
Preferred Shares or, failing such agreement, as determined by a
nationally recognized business valuator agreed to by the Corporation
and the holders of the Series One Preferred Shares or appointed by a
court. For greater certainty, in the case of a transaction described
in either (i) or (ii) of the definition of Dividend Event, it is
acknowledged that the specific transaction only values the common
shares of the Corporation (as opposed to the equity of the
Corporation) and appropriate additions are required to value the
equity of the Corporation.
(b) In connection with section 3(a):
(i) the Corporation shall not enter into an agreement of merger or
consolidation unless such agreement provides for a payment of the
dividend to the holders of the Series One Preferred Shares of the
amount required by section 3(a);
-4-
(ii) if an Acquiror beneficially owns greater than 50% of the
outstanding common shares, in aggregate, but the Corporation
cannot legally pay to the holder of the Series One Preferred
Shares the dividend required by section 3 (a), the Corporation
shall pay such amount (or any part thereof) when it is legally
able to do so and the unpaid amount shall increase at a rate of
11% per annum, compounded annually; and
(iii) the Corporation shall not sell all or substantially all of its
assets unless it pays the dividend required by section 3(a)
immediately following completion of such sale.
(c) Other than pursuant to section 3 (a), the holders of the Series One
Preferred Shares shall not be entitled to receive any dividends.
4. VOTING RIGHTS. Except as provided for in the Canada Business Corporations
Act, the holders of Series One Preferred Shares shall not be entitled to any
voting rights in respect of their Series One Preferred Shares.
5. LIQUIDATION, DISSOLUTION OR WINDING-UP. In the event of the liquidation,
dissolution or winding-up of the Corporation or other distribution of assets of
the Corporation among its shareholders for the purpose of winding-up its affairs
(a "Liquidation Event") prior to a Conversion Event, the holders of the Series
One Preferred Shares shall be entitled to receive from the assets of the
Corporation an aggregate of the amount paid-up thereon and $4,000,000 before any
amount shall be paid or any assets of the Corporation distributed to the holders
of any common shares or shares of any other class ranking junior to the Series
One Preferred Shares. After payment to the holders of the Series One Preferred
Shares of the amount so payable to them as provided herein, the holders of the
Series One Preferred Shares shall be entitled to share in further distributions
of the assets of the Corporation pro rata with the holders of the common shares
and any participating shares ranking junior to the Series One Preferred Shares;
provided, however, that in no event shall the holders of the Series One
Preferred Shares be entitled to receive in excess of $24,000,000 pursuant to
this section 5. For the purposes of determining, in this section 5, pro rata
sharing between the holders of Series One Preferred Shares, the holders of the
common shares and the holders of any other participating shares ranking junior
to the Series One Preferred Shares, the Series One Preferred Shares shall be
regarded as being that number of common shares into which the Amended and
Restated CIBC Debenture is convertible immediately prior to the Liquidation
Event. The payment under this section 5 in excess of the amount paid-up on the
Series One Preferred Shares shall be reduced by the amount of any dividends
(other than amounts in respect of the increase in the unpaid amount provided in
section 3(b)(ii)) previously paid in accordance with section 3.
6. AUTOMATIC CONVERSION. On the occurrence of a Conversion Event, all
outstanding Series One Preferred Shares shall be deemed, as at the time of such
Conversion Event, to be converted into a like number of fully paid and
non-assessable common shares of the Corporation and the holders thereof shall be
deemed to be the holders of such common shares as of and from such time.
Notwithstanding that any such holder shall then be deemed to be the holder of
the appropriate number of common shares, the Corporation and the transfer agent
shall not be
-5-
required to deliver certificates representing the common shares until surrender
of the certificates representing the Series One Preferred Shares that have been
so deemed to have been converted.
7. ELECTION. The Corporation shall elect, in the manner and within the time
provided under section 191.2 of the Income Tax Act (Canada) or any successor or
replacement provision of similar effect, to pay tax at a rate such that no
holder of Series One Preferred Shares shall be required to pay tax on dividends
received on the Series One Preferred Shares under section 187.2 of Part IV.1 of
such Act or any successor or replacement provision of similar effect.
SERIES 2 PREFERRED SHARE
The Series 2 Preferred Share shall have the following rights, privileges,
restrictions and conditions:
1. DEFINITIONS
For the purposes of these Series 2 Preferred Share provisions:
(a) "ACT" shall mean the Canada Business Corporations Act;
(b) "AFFILIATE" shall be construed such that one person shall be deemed to
be an affiliate of another person if one of them is controlled
(directly or indirectly) by the other or both are controlled (directly
or indirectly) by the same person or group of persons, and for this
purpose "CONTROL" shall be construed such that any combination of a
person, its affiliates and persons acting jointly or in concert with
either of them (the "CONTROL GROUP") shall control another person if
the Control Group is the beneficial owner of securities of such person
sufficient to elect a majority of the board of directors (or, if the
person is not a corporation, any comparable body) of such person;
(c) "AGENCY" shall mean any domestic or foreign court, tribunal, federal,
state, provincial, or local government or governmental agency or
authority or other regulatory authority (include stock exchange and
similar regulatory authorities) or administrative agency or commission
(including the Ontario Securities Commission and the Securities
Exchange Commission) or any elected or appointed public official;
(d) "ASSOCIATE" shall have the meaning attributed to it for the purposes
of the Securities Act (Ontario);
(e) "BUSINESS DAY" shall mean every day except a Saturday, Sunday or a day
that is a statutory holiday in Toronto, Ontario or a federal holiday
in the United States of America;
(f) a "CHANGE OF CONTROL" shall be deemed to have occurred if, before the
expiry of the Warrants any combination of a person (other than the
holder of the Series 2 Preferred Share), its affiliates or associates
and persons acting jointly or in concert
-6-
with any of them becomes the beneficial owner of shares of the
Corporation or any successor to the Corporation sufficient to elect a
majority of the board of directors;
(g) "CIBC DEBENTURE" shall mean the 11% $6,000,000 convertible debenture,
amended and restated as of February 8, 2002, issued by the Corporation
to CIBC Capital Partners, a division of Canadian Imperial Bank of
Commerce;
(h) "COMMON SHARES" shall mean common shares in the capital of the
Corporation;
(i) "CURRENT MARKET PRICE" shall mean, at any date:
(i) if the Common Shares are listed on any Canadian stock exchange,
the price per share that is equal to the weighted average of the
prices at which the Common Shares have traded in board lots on
the TSX Venture Exchange for each of the trading days on which
those shares traded falling not more than 20 business days before
that date or, if the common shares are not then listed on the TSX
Venture Exchange, on the stock exchange on which the Common
Shares are then listed and have traded in the greatest volume
during the relevant period;
(ii) if the Common Shares are not listed on any stock exchange, the
weighted average of the prices at which the Common Shares have
traded in the over-the-counter market for each of the trading
days on which those shares traded falling not more than 20
business days before that date, and
(iii) if the Common Shares are not listed on any stock exchange and
are not traded in the over-the-counter market, $0.67 per Common
Share (as constituted at the date of the issuance of the Series 2
Preferred Share). If, subsequent to the date of the issuance of
the Series 2 Preferred Share, the Corporation takes any action
affecting the Common Shares that, in the opinion of the board of
directors of the Corporation or the holder of the Series 2
Preferred Share, would aversely affect the rights of the holders
of the Series 2 Preferred Share, the Current Market Price shall
be adjusted as the board of directors, acting in good faith
determines after consultation with an investment dealer or
investment bank approved by the holder of the Series 2 Preferred
Share (such approval not to be withheld unreasonably), but
subject in all cases to any necessary regulatory approvals.
(j) "EQUITY SHARES" shall mean any shares of the Corporation (other than
Common Shares) that confer upon the holder the right to participate in
the distribution of assets upon a Liquidation Event and are not
restricted to a fixed sum (or to a fixed sum plus accrued but unpaid
dividends) on that distribution.
(k) "LAWS" means all laws, statutes, by-laws, rules, regulations, orders,
decrees, ordinances, protocols, codes, guidelines, policies, notices,
directions and judgements of any Agency;
-7-
(l) "LIQUIDATION ENTITLEMENT" shall mean an amount equal to the greater of
(a) the subscription price of the Series 2 Preferred Share plus a
return on that subscription price equal to 7% per annum, calculated on
a daily basis from the date of issue of the Series 2 Preferred Share
to the date of the Liquidation Event and (b) the product of the number
of Underlying Shares and the per share amount to be distributed to the
holders of the Common Shares upon the Liquidation Event after giving
effect to any payments to be paid on the Series 2 Preferred Share and
any other shares (other man the Series 2 Preferred Share) ranking
prior to the Common Shares upon the Liquidation Event;
(m) "LIQUIDATION EVENT" shall mean the liquidation, dissolution or
winding-up of the Corporation or other distribution of assets of the
Corporation among its shareholders for the purpose of winding-up its
affairs, whether voluntary or involuntary;
(n) "PARENT" means USA Interactive, a corporation incorporated under the
laws of Delaware, and any successors thereto;
(o) "PERSON" shall mean an individual, corporation, partnership, trust,
unincorporated organization, limited liability company, government or
any agency or political subdivision thereof or any other entity that
may be treated as a person under applicable law;
(p) "REDEMPTION AMOUNT" shall mean (a) in the event of redemption on March
31, 2013, an amount equal to the greater of (i) the subscription price
of the Series 2 Preferred Share plus a return on that subscription
price equal to 7% per annum, calculated on a daily basis from the date
of issue of the Series 2 Preferred Share to the date on which the
Series 2 Preferred Share is redeemed in accordance with section 7, and
(ii) the product of the number of Underlying Shares and the Current
Market Price of the Common Shares on March 31, 2013, and (b) in the
event of redemption upon a Change of Control, an amount equal to the
greater of (i) 125% of the amount specified in (a)(i), and (ii) the
product of the number of Underlying Shares and the greater of (A) the
weighted average closing price of the Common Shares on the principal
stock exchange on which the Common Shares then are traded for the 10
days ending on the trading day immediately prior to public
announcement of the Change of Control, and (B) the fair market value
of the consideration paid per Common Share in the transaction
resulting in the Change of Control;
(q) "SERIES ONE PREFERRED SHARE" shall mean the Series One Preferred Share
in the capital of the Corporation;
(r) "SERIES 3 PREFERRED SHARE" shall mean the Series 3 Preferred Share in
the capital of the Corporation;
-8-
(s) "TRANSFER" shall mean any direct or indirect sale, gift, transfer,
assignment, pledge, encumbrance, hypothecation or other disposition in
any manner whatsoever;
(t) "UNDERLYING SHARES" shall mean, subject to adjustment in accordance
with section 10, 18,432,427 Common Shares; and
(u) "WARRANTS" shall mean the warrants represented by the common share
warrant certificate issued by the Corporation pursuant to the
subscription agreement between the Corporation and the Parent dated
March 21, 2003.
2. RANKING
The Series 2 Preferred Share shall in all respects (including the payment
of dividends and distribution of assets upon a Liquidation Event) rank
equally with the Series One Preferred Share. If the Corporation would be
unable to make any payment or distribution in full in accordance with the
terms of the Series One Preferred Share and the Series 2 Preferred Share,
that payment or distribution shall be made on a pro rata basis, calculated
by reference to the amounts that would be received by the holders of the
Series One Preferred Share and the Series 2 Preferred Share assuming the
payment or distribution of the full amount to be paid or distributed in
respect of those shares in accordance with their terms and without any such
pro ration.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of a Liquidation Event, the holder of the Series 2 Preferred
Share shall be entitled to receive from the assets of the Corporation an
amount equal to the Liquidation Entitlement.
4. DIVIDENDS
The Corporation shall not declare or pay any dividend on the Common Shares
unless it concurrently declares and pays a dividend on the Series 2
Preferred Share in an amount equal to the product of the number of Common
Shares comprising the Underlying Shares and the dividend declared or paid
per Common Share. Any such dividend shall be paid to the holder of the
Series 2 Preferred Share in the same form (cash, shares, other securities
or other property) as it is paid to the holders of the Common Shares.
5. CONVERSION RIGHT
The holder of the Series 2 Preferred Share shall have the right,
exercisable at any time prior to 5:00pm (local time in Toronto) on March
31, 2013 (and thereafter if the Corporation fails to redeem the Series 2
Preferred Share pursuant to section 7) to convert the Series 2 Preferred
Share into the Underlying Shares. All of the Underlying Shares shall be
issued as fully paid and non-assessable. This conversion right may be
exercised by the holder of the Series 2 Preferred Share
-9-
delivering to the Corporation the certificate for the Series 2 Preferred
Share together with a notice in writing (the "CONVERSION NOTICE")
confirming the intention of the holder to convert the Series 2 Preferred
Share and specifying the date (which shall be at least two business days
following the delivery of the notice) on which that conversion is to be
effective (the "CONVERSION DATE") and the address to which the certificates
for the Underlying Shares are to be delivered. The Underlying Shares shall
be, and shall be deemed to be, issued to the holder of the Series 2
Preferred Share on the Conversion Date and the holder of the Series 2
Preferred Share shall be deemed to be the registered holder of the
Underlying Shares, and shall be deemed to have ceased to be the registered
holder of the Series 2 Preferred Share, for all purposes effective the
Conversion Date. The Corporation shall promptly, and in any event within
three business days after the Conversion Date, deliver to the address
specified by the holder of the Series 2 Preferred Share in the Conversion
Notice certificates evidencing the Underlying Shares.
6. AUTOMATIC CONVERSION
The Series 2 Preferred Share shall be (and shall be deemed to be)
automatically converted into one Series 3 Preferred Share on the date that
the Series 2 Preferred Share is Transferred by the holder to a person that
is not an affiliate of the Parent or the holder ceases to be an affiliate
of the Parent. The Series 3 Preferred Share shall be, and shall be deemed
to be, issued to the former holder of the Series 2 Preferred Share on the
date of automatic conversion, and the former holder of the Series 2
Preferred Share shall be deemed to be the registered holder of the Series 3
Preferred Share and shall be deemed to have ceased to be the registered
holder of the Series 2 Preferred Share for all purposes effective the date
of automatic conversion. Notwithstanding that the holder shall then be
deemed to be the holder of the Series 3 Preferred Share, the Corporation
and the transfer agent shall not be required to deliver a certificate
representing the Series 3 Preferred Share until three business days
following surrender of the certificate representing the converted Series 2
Preferred Share.
7. REDEMPTION
Unless a Conversion Notice has been delivered to the Corporation or the
Series 2 Preferred Share has been converted under section 6, the
Corporation shall, subject to subsection 32(2) of the Act, redeem the
Series 2 Preferred Share upon the earlier of March 31, 2013 and the third
business day following a Change of Control. If the Corporation is precluded
from redeeming the Series 2 Preferred Share on that date as a result of
subsection 32(2) of the Act, it shall redeem the Series 2 Preferred Share
as soon as it ceases to be precluded from doing so pursuant to that
subsection. At least three business days before the date specified for
redemption (the "REDEMPTION DATE") of the Series 2 Preferred Share, the
Corporation shall deliver to the holder a notice in writing (the
"REDEMPTION NOTICE") of the intention of the Corporation to redeem the
Series 2 Preferred Share. The Redemption Notice shall set out the
Redemption Amount, the details
-10-
of its calculation and the Redemption Date. On the Redemption Date, the
Corporation shall deliver to the holder of the Series 2 Preferred Share at
its address on the register maintained by the Corporation or such other
address as the holder of the Series 2 Preferred Share may have notified the
Corporation in writing a certified cheque or bank draft payable to the
holder in an amount equal to the Redemption Amount. On and after the
Redemption Date, the Series 2 Preferred Share shall cease to be entitled to
dividends or any other participation in the assets of the Corporation and
the holder shall cease to be a shareholder in respect of the Series 2
Preferred Share and shall not be entitled to exercise any of the rights of
shareholders in respect of the Series 2 Preferred Share, unless the
Redemption Amount is not paid as provided in this section, in which case
the rights of the holder shall remain unaffected. The holder of the Series
2 Preferred Share may, in its sole discretion, waive or consent to the
abridgment of the Redemption Notice
8. VOTING RIGHTS
The holder of the Series 2 Preferred Share shall be entitled to receive,
concurrently with its first dissemination, notice of all meetings of
shareholders of the Corporation and to attend all meetings of shareholders
of the Corporation. In addition to the right to vote separately as a series
and as part of a class of shares to the fullest extent permitted under
applicable law and the right provided in section 9(b), the holder of the
Series 2 Preferred Share shall be entitled to vote, together with the
holders of Common Shares, on all matters at all meetings of holders of
Common Shares. In each case, the holder of the Series 2 Preferred Share
shall be entitled to cast that number of votes equal to the number of
Underlying Shares, provided that until Warrants have been exercised, in
whole or in part, that number of votes shall not exceed 19.9% of the total
number of votes that then may be cast at meetings of holders of Common
Shares.
9. BOARD REPRESENTATION
So long as the Series 2 Preferred Share is outstanding, unless otherwise
approved the holder of the Series 2 Preferred Share, voting separately and
as a series:
(a) the board of directors of the Corporation shall be comprised of not
more than the maximum number of directors permitted under the Articles
of the Corporation and, subject to compliance with applicable Laws,
each committee of the board of directors of the Corporation, other
than any independent committee formed in connection with matters that
relate to the holder of the Series 2 Preferred Share or its
affiliates, shall be comprised of not more than four directors, and
the Corporation shall not permit any committee of the board of
directors of any subsidiary of the Corporation, other than any
independent committee formed in connection with matters that relate to
the holder of the Series 2 Preferred Share or its affiliates, to be
comprised of more than four directors;
-11-
(b) the board of directors of the Corporation shall include two directors
(who need not be "resident Canadians", as defined in the Act) elected
by the holder of the Series 2 Preferred Share, voting separately and
as a series;
(c) except as required by applicable Laws, every committee of the board of
directors of the Corporation, other than any independent committee
formed in connection with matters that relate to the holder of the
Series 2 Preferred Share or its affiliates, shall include one of the
directors elected by the holder of the Series 2 Preferred Share;
(d) except as required by applicable Laws, the Corporation shall not
permit the board of directors of any subsidiary of the Corporation to
be constituted without one of the individuals elected by the holder of
the Series 2 Preferred Share as a director of the Corporation; and
(e) except as required by applicable Laws, the Corporation shall not
permit any committee of the board of directors of any subsidiary of
the Corporation, other than any independent committee formed in
connection with matters that relate to the holder of the Series 2
Preferred Share or its affiliates, to be constituted without one of
the individuals elected by the holder of the Series 2 Preferred Share
as a director of the Corporation.
10. ANTI-DILUTION
(a) If, before the Conversion Date, the Corporation:
(i) issues Common Shares or securities exchangeable for or
convertible into Common Shares to all or substantially all the
holders of the Common Shares as a stock dividend;
(ii) makes a distribution on the Common Shares payable in Common
Shares or securities exchangeable for or convertible into Common
Shares (other than as dividends paid in the ordinary course);
(iii) divides its outstanding Common Shares into a greater number of
shares; or
(iv) consolidates its outstanding Common Shares into a smaller number
of shares,
(any of these events being a "COMMON SHARE REORGANIZATION"), the
holder of the Series 2 Preferred Share shall be entitled to receive
and shall accept in lieu of the Underlying Shares that it would have
received on the Conversion Date, the aggregate number of shares that
it would have been entitled to receive as a result of the Common Share
Reorganization if, on the effective date of the Common Share
Reorganization, the holder the Series 2 Preferred Share had been the
holder of the Underlying Shares that it otherwise would have received
on the Conversion Date.
-12-
(b) If, before the Conversion Date, the Corporation fixes a record date
for the issue of rights, options or warrants to all or substantially
all of the holders of the Common Shares or to all or substantially all
of the holders of the Common Shares resident in Canada under which
those holders are entitled, during a period expiring not more than
forty-five days after the record date for that issue (the "RIGHTS
PERIOD"), to subscribe for or purchase Common Shares or securities
exchangeable for or convertible into Common Shares at a price per
share (or an exchange or conversion price per share during the Rights
Period in the case of securities exchangeable or convertible into
Common Shares) of less than 95% of the Current Market Price for the
Common Shares on that record date (any of these events being a "RIGHTS
OFFERING"), the number of Underlying Shares shall be adjusted
effective immediately after the end of the Rights Period to a number
determined by multiplying the number of Underlying Shares in effect
immediately prior to the end of the Rights Period by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding, or the number of Common Shares that would be
outstanding if the convertible or exchangeable securities issued
in connection with the Rights Offering were converted into or
exchanged for Common Shares during the Rights Period, in both
cases after giving effect to the Rights Offering and including
the number of Common Shares actually issued or subscribed for
during the Rights Period upon exercise of the rights, warrants or
options under the Rights Offering; and
(ii) the denominator of which shall be the aggregate of:
(A) the number of Common Shares outstanding as of the record
date for the Rights Offering; and
(B) a number determined by dividing: (1) either: (a) the product
of the number of Common Shares issued or subscribed for
during the Rights Period upon the exercise of the rights,
warrants, or options under the Rights Offering and the price
at which those Common Shares are offered, or (b) the product
of the exchange or conversion price of the securities
offered and the number of Common Shares for or into which
the securities offered pursuant to the Rights Offering could
have been exchanged or converted during the Rights Period;
by (2) the Current Market Price of the Common Shares as of
the fifth trading day preceding the record date for the
Rights Offering.
Any Common Shares owned by or held for the account of the Corporation
or any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of this computation.
(c) If, before the Conversion Date, the Corporation fixes a record date
for the issue or the distribution to all or substantially all the
holders of the Common Shares or all
-13-
or substantially all of the holders of the Common Shares resident in
Canada of securities of the Corporation (including rights, options or
warrants to acquire Equity Shares or securities exchangeable for or
convertible into Equity Shares or property or assets and including
evidences of indebtedness) or any property or other assets (including
cash and securities of other persons) and that issuance or
distribution does not constitute a dividend paid in the ordinary
course, a Common Share Reorganization or a Rights Offering (any of
these non-excluded events being a "SPECIAL DISTRIBUTION"), the number
of Underlying Shares shall be adjusted effective immediately after
that record date to a number determined by multiplying the number of
Underlying Shares in effect on that record date by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on that record date multiplied by the Current Market
Price of the Common Shares on that record date; and
(ii) the denominator of which shall be:
(A) the product of the number of Common Shares outstanding on
that record date and the Current Market Price of the Common
Shares on that record date; less
(B) the fair market value, as determined by the board of
directors of the Corporation after consultation with a
qualified and independent valuator approved by the holder of
the Series 2 Preferred Share (such approval not to be
withheld unreasonably), of those securities or property or
other assets issued or distributed in the Special
Distribution to the holders of the Common Shares.
Any Common Shares owned by or held for the account of the Corporation
or any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of this computation.
(d) If, before the Conversion Date, the Common Shares are reclassified or
changed into other shares or other securities (other than pursuant to
a Common Share Reorganization), or there is a consolidation,
amalgamation or merger of the Corporation with or into any other
corporation or other person (other than a consolidation, amalgamation
or merger that 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 Corporation
as an entirety or substantially as an entirety to another corporation
or other entity (any of these events being a "CAPITAL
REORGANIZATION"), if the Series 2 Preferred Share is to be converted
after the effective date of that Capital Reorganization, the holder of
the Series 2 Preferred Share shall be entitled to receive and shall
accept in lieu of the Underlying Shares to which it otherwise was
entitled, the aggregate number of shares, other securities or other
property that it would have been entitled to receive as a result of
that Capital Reorganization if, on the effective date of that
-14-
Capital Reorganization, the holder of the Series 2 Preferred Share had
been the registered holder of the number of Common Shares to which the
holder otherwise was entitled upon conversion of the Series 2
Preferred Share. If, in the opinion of the board of directors of the
Corporation or the holder of the Series 2 Preferred Share, the rights
of the holder of the Series 2 Preferred Share otherwise would be
adversely affected, the appropriate adjustments as determined by the
board of directors, acting in good faith after consultation with an
investment dealer or an investment bank approved by the audit
committee of the board of directors of the Corporation (or, if no
audit committee is extant, the board of directors of the Corporation)
and the holder of the Series 2 Preferred Share (such approvals not to
be withheld unreasonably) shall be made in respect of any such Capital
Reorganization in the application of the provisions set out in this
section 10 with respect to the rights and provisions set out in this
section with respect to the rights and interests thereafter of the
holder of the Series 2 Preferred Share so that these provisions shall
continue to result in corresponding adjustments, in relation to any
shares, other securities or other property thereafter deliverable upon
the conversion of the Series 2 Preferred Share.
(e) If, before the Conversion Date, the Corporation grants or issues (or
agrees to grant or issue) Common Shares (other than Common Shares
issued pursuant to rights granted or issued by the Corporation prior
to March 21, 2003) or securities exchangeable for or convertible into
Common Shares to any holders of securities of any of its subsidiaries
or issues Common Shares on any conversion of the CIBC Debenture (each
such grant or issue being an "ADJUSTING TRANSACTION"), the number of
Underlying Shares shall be adjusted effective immediately after the
time of each such Adjusting Transaction (each such time being a "TIME
OF GRANT") to a number determined by adding to the number of
Underlying Shares immediately prior to the Time of Grant a number of
Underlying Shares equal to (A) the product of (x) the number (the
"AGGREGATE NUMBER") that is the aggregate of (aa) the number of
Underlying Shares in effect immediately prior to the Time of Grant and
(bb) the aggregate number of Common Shares in respect of which
subscription forms and the requisite consideration have been delivered
to the Corporation pursuant to the Warrants prior to the Time of
Grant, and (y) a fraction:
(A) the numerator of which shall be the number of Common Shares
outstanding after the Time of Grant if the Corporation
issued Common Shares, or the number of Common Shares that
would be outstanding if the convertible or exchangeable
securities granted or issued (or agreed to be granted or
issued) at the Time of Grant were immediately converted into
or exchanged for Common Shares; and
(B) the denominator of which shall be the number of Common
Shares outstanding immediately prior to the Time of Grant,
minus (B) the Aggregate Number.
-15-
Any Common Shares owned by or held for the account of the Corporation
or any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of this computation.
(f) The adjustments provided for in this section 10 are cumulative and
shall be made successively whenever an event referred to therein shall
occur, subject to the following:
(i) No adjustment shall be required to be made in the number of
Common Shares issuable upon conversion of the Series 2 Preferred
Share unless it would result in a change of at least one share,
provided, however, that any adjustments which, except for the
provisions of this paragraph (i) would otherwise have been
required to be made, shall be carried forward and taken into
account in any subsequent adjustment.
(ii) No adjustment in the number of Common Shares issuable upon the
conversion of the Series 2 Preferred Share shall be made in
respect of any event described in section 10 (other than the
subdivision or consolidation of Common Shares as part of a Common
Share Reorganization), if the holder of the Series 2 Preferred
Share is entitled to participate in that event on the same terms
as it had converted the Series 2 Preferred Share prior to or on
the effective date or record date of the event.
(iii) The issue from time to time of Common Shares as dividends paid
in the ordinary course of Common Shares to holders of Common
Shares who exercise an option or election to receive
substantially equivalent dividends in Common Shares in lieu of
receiving a cash dividend, shall not to be a Common Share
Reorganization.
(iv) If there is a dispute with respect to adjustments provided for in
section 10, that dispute shall be conclusively determined by the
Corporation's auditors, or if they are unable or unwilling to
act, by such other firm of independent chartered accountants as
may be approved by the audit committee of the board of directors
of the Corporation (or, if no audit committee is extant, the
board of directors of the Corporation) and the holder of the
Series 2 Preferred Share (such approvals not to be withheld
unreasonably) and the resulting determination shall be binding
upon the Corporation, the holder of the Series 2 Preferred Share
and all other shareholders of the Corporation.
(v) If, before the Conversion date, the Corporation takes any action
affecting the Common Shares that is not contemplated in section
10 and that in the opinion of the board of directors of the
Corporation or the holder of the Series 2 Preferred Share would
aversely affect the rights of the holder of the Series 2
Preferred Share, the number of Common Shares issuable upon
conversion shall be adjusted as the board of directors, acting in
good faith determines after consultation with an investment
dealer or investment
-16-
bank approved by the audit committee of the board of directors of
the Corporation (or, if no audit committee is extant, the board
of directors of the Corporation) and the holder of the Series 2
Preferred Share (such approvals not to be withheld unreasonably),
but subject in all cases to any necessary regulatory approvals or
consents.
(vi) If the Corporation 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 any subscription or purchase
rights and shall, after that date and before the distribution to
those shareholders of any such dividend, distribution or
subscription or purchase rights, legally abandon its plan to pay
or deliver that dividend, distribution or subscription or
purchase rights, no adjustment in the number of Common Shares
issuable upon conversion of the Series 2 Preferred Share shall be
required by reason of the setting of such record date.
(vii) In the absence of a resolution of the directors fixing a record
date for a Special Distribution, the Corporation shall be deemed
to have fixed as the record date for that Special Distribution
the date on which it is effected.
At least twenty-one days (or such shorter period as may be agreed in
writing by the holder of the Series 2 Preferred Share) prior to the
effective date or record date, as the case maybe, of any event that
requires or might require adjustment in any of the rights of the
Series 2 Preferred Share (including an adjustment of the number of
Underlying Shares), the Corporation shall give notice to the holder of
the Series 2 Preferred Share of the particulars of that event and, if
determinable, the required adjustment.
11. APPROVAL RIGHTS
So long as the Series 2 Preferred Share is outstanding, unless otherwise
approved by the holder of the Series 2 Preferred Share, voting separately
and as a series, the Corporation shall not, and shall not permit any of its
subsidiaries to:
(a) create any class or series of securities of the Corporation
(including, without limitation, equity, debt or hybrid securities);
(b) create, incur, assume, or otherwise become directly or indirectly
liable upon or in respect of, or suffer to exist, any indebtedness for
borrowed money, other than in the ordinary course of business;
(c) redeem, repurchase, purchase for cancellation or otherwise acquire for
value any of its outstanding securities;
(d) declare or pay dividends or declare or make other distributions on its
outstanding securities; or
(e) amend the Articles of the Corporation,
-17-
provided that no such approval shall be required for the Corporation
to comply with its legal obligations under the terms (as they exist on
the date of issue of the Series 2 Preferred Share and as modified by
the CIBC Consent Agreement dated March 21, 2003) of the Series One
Preferred Share and the CIBC Debenture, or for the holder of the
Series One Preferred Share or the CIBC Debenture to exercise their
rights thereunder.
12. ELECTION
The Corporation shall elect, in the manner and within the time provided
under section 191.2 of the Income Tax Act (Canada) or any successor or
replacement provision of similar effect, to pay tax at a rate such that no
holder of a Series 2 Preferred Share shall be required to pay tax on
dividends received, or deemed to be received, on the Series 2 Preferred
Share under section 187.2 of Part IV.I of such act or any successor or
replacement provision of similar effect.
SERIES 3 PREFERRED SHARE
The Series 3 Preferred Share shall have the following rights, privileges,
restrictions and conditions:
1. DEFINITIONS
For the purposes of these Series 3 Preferred Share provisions:
(a) "ACT" shall mean the Canada Business Corporations Act;
(b) "AFFILIATE" shall be construed such that one person shall be deemed to
be an affiliate of another person if one of them is controlled
(directly or indirectly) by the other or both are controlled (directly
or indirectly) by the same person or group of persons, and for this
purpose "CONTROL" shall be construed such that any combination of a
person, its affiliates and persons acting jointly or in concert with
either of them (the "CONTROL GROUP") shall control another person if
the Control Group is the beneficial owner of securities of such person
sufficient to elect a majority of the board of directors (or, if the
person is not a corporation, any comparable body) of such person;
(c) "ASSOCIATE" shall have the meaning attributed to it for the purposes
of the Securities Act (Ontario);
(d) "BUSINESS DAY" shall mean every day except a Saturday, Sunday or a day
that is a statutory holiday in Toronto, Ontario or a federal holiday
in the United States of America;
(e) a "CHANGE OF CONTROL" shall be deemed to have occurred if, before the
expiry of the Warrants any combination of a person (other than the
holder of the Series 3 Preferred Share), its affiliates or associates
and persons acting jointly or in concert
-18-
with any of them becomes the beneficial owner of shares of the
Corporation or any successor to the Corporation sufficient to elect a
majority of the board of directors;
(f) "LIQUIDATION ENTITLEMENT" shall mean an amount equal to the
subscription price of the Series 2 Preferred Share plus a return on
that subscription price equal to 7% per annum, calculated on a daily
basis from the date of issue of the Series 2 Preferred Share to the
date of the Liquidation Event;
(g) "LIQUIDATION EVENT" shall mean the liquidation, dissolution or
winding-up of the Corporation or other distribution of assets of the
Corporation among its shareholders for the purpose of winding-up its
affairs, whether voluntary or involuntary;
(h) "PERSON" shall mean an individual, corporation, partnership, trust,
unincorporated organization, limited liability company, government or
any agency or political subdivision thereof or any other entity that
may be treated as a person under applicable law;
(i) "REDEMPTION AMOUNT" shall mean (a) in the event of redemption on March
31, 2013, an amount equal to the subscription price of the Series 2
Preferred Share plus a return on that subscription price equal to 7%
per annum, calculated on a daily basis from the date of issue of the
Series 2 Preferred Share to the date on which the Series 3 Preferred
Share is redeemed in accordance with section 4, and (b) in the event
of redemption upon a Change of Control, an amount equal to 125% of the
amount specified in (a);
(j) "SERIES ONE PREFERRED SHARE" shall mean the Series One Preferred Share
in the capital of the Corporation;
(k) "SERIES 2 PREFERRED SHARE" shall mean the Series 2 Preferred Share in
the capital of the Corporation; and
(1) "WARRANTS" shall mean the warrants represented by the common share
warrant certificate issued by the Corporation pursuant to the
subscription agreement between the Corporation and USA Interactive
dated March 21, 2003.
2. RANKING
The Series 3 Preferred Share shall in all respects (including the
distribution of assets upon a Liquidation Event) rank equally with the
Series One Preferred Shares. If the Corporation would be unable to make any
payment or distribution in full in accordance with the terms of the Series
One Preferred Shares and the Series 3 Preferred Share, that payment or
distribution shall be made on a pro rata basis, calculated by reference the
amounts that would be received by the holders of the Series One Preferred
Shares and the Series 3 Preferred Share assuming the payment or
distribution of the full amount to be paid or distributed in respect of
those shares in accordance with their terms and without any such pro
ration.
-19-
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of a Liquidation Event, the holder of the Series 3 Preferred
Share shall be entitled to receive from the assets of the Corporation an
amount equal to the Liquidation Entitlement.
4. REDEMPTION
The Corporation shall, subject to subsection 32(2) of the Act, redeem the
Series 3 Preferred Share upon the earlier of March 31, 2013 and the third
business day following a Change of Control. If the Corporation is precluded
from redeeming the Series 3 Preferred Share on that date as a result of
subsection 32(2) of the Act, it shall redeem the Series 3 Preferred Share
as soon as it ceases to be precluded from doing so pursuant to that
subsection. At least three business days before the date specified for
redemption (the "REDEMPTION DATE") of the Series 3 Preferred Share, the
Corporation shall deliver to the holder a notice in writing (the
"REDEMPTION NOTICE") of the intention of the Corporation to redeem the
Series 3 Preferred Share. The Redemption Notice shall set out the
Redemption Amount, the details of its calculation and the Redemption Date.
On the Redemption Date, the Corporation shall deliver to the holder of the
Series 3 Preferred Share at its address on the register maintained by the
Corporation or such other address as the holder of the Series 3 Preferred
Share may have notified the Corporation in writing a certified cheque or
bank draft payable to the holder in an amount equal to the Redemption
Amount. On and after the Redemption Date, the Series 3 Preferred Share
shall cease to be entitled to dividends or any other participation in the
assets of the Corporation and the holder shall cease to be a shareholder in
respect of the Series 3 Preferred Share and shall not be entitled to
exercise any of the rights of shareholders in respect of the Series 3
Preferred Share, unless the Redemption Amount is not paid as provided in
this section, in which case the rights of the holder shall remain
unaffected. The holder of the Series 3 Preferred Share may, in its sole
discretion, waive or consent to the abridgment of the Redemption Notice.
5. VOTING RIGHTS
The holder of the Series 3 Preferred Share shall be entitled to vote
separately as a series and as part of a class of shares to the fullest
extent permitted under applicable law.
6. ELECTION
The Corporation shall elect, in the manner and within the time provided
under section 191.2 of the Income Tax Act (Canada) or any successor or
replacement provision of similar effect, to pay tax at a rate such that no
holder of a Series 3 Preferred Share shall be required to pay tax on
dividends received, or deemed to be received, on the Series 3 Preferred
Share under section 187.2 of Part IV.I of such act or any successor or
replacement provision of similar effect.
-20-
COMMON SHARES
1. PRIVILEGES OF COMMON SHARES. The Common Shares shall have attached to them
the rights, privileges, restrictions and conditions as hereinafter set forth.
(a) Except for meetings at which only holders of another specified class
or series of shares of the Corporation are entitled to vote separately
as a class or series, each holder of a Common Share is entitled to
receive notice of, to attend and to vote at all meetings of the
shareholders of the Corporation.
(b) Subject to the rights, privileges, restrictions and conditions
attached to any other class of shares of the Corporation, the holders
of the Common Shares are entitled to receive dividends if, as and when
declared by the directors of the Corporation.
(c) Subject to the rights, privileges, restrictions and conditions
attached to any other class of shares of the Corporation, the holders
of the Common Shares are entitled to share equally in the remaining
property of the Corporation upon liquidation, dissolution or
winding-up of the Corporation.