Exhibit 99.28
FORM 51-102F3
MATERIAL CHANGE REPORT UNDER
NATIONAL INSTRUMENT 51-102
1. NAME AND ADDRESS OF COMPANY
Points International Ltd. ("Points")
179 John Street, 8th Floor,
Toronto, Ontario M5T 1X4
2. DATE OF MATERIAL CHANGE
March 28, 2005 and April 4, 2005.
3. NEWS RELEASE
News releases with respect to the material change referred to in this
report were issued through newswire services on March 29, 2005 and April 4,
2005 and filed on the system for electronic document analysis and retrieval
(SEDAR).
Copies of the news releases are attached hereto as Schedule A.
4. SUMMARY OF MATERIAL CHANGE
On March 29, 2005, Points announced that it had entered into binding
agreements to issue approximately 18.1 million common shares at $0.683 per
share and one Series Four Preferred Share for approximately $3.5 million
(collectively, the "Private Placement Transaction"). On the same date
Points also announced that CIBC Capital Partners, a division of Canadian
Imperial Bank of Commerce, ("CIBC") agreed to sell to the purchasers in the
Private Placement Transaction an amended version of the $6 million
debenture issued by Points to CIBC in 2001 and the Series One Preferred
Share in the capital of Points held by CIBC (the "Debenture Transaction").
On April 4, 2005, Points announced the closing of the Private Placement
Transaction and the Debenture Transaction.
5. FULL DESCRIPTION OF MATERIAL CHANGE
Private Placement Transaction
On March 29, 2005, Points announced that it had entered into binding
agreements to issue 18,134,300 common shares to a group of accredited
investors and to issue to Points Investments, Inc. one Series Four
Preferred Share. On April 4, 2005, Points announced the closing of the
Private Placement Transaction.
Not for distribution to United States newswire services or for dissemination in
the United States.
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The common shares were issued for $0.683 per share. The Series Four
Preferred Share was issued for $3,454,620.90.
The terms of the Series Four Preferred Share provide as follows:
- Dividends: Points will not be entitled to declare or pay any dividend
on the common shares unless it concurrently declares and pays a
dividend on the Series Four Preferred Share in an amount equal to the
product of the number of common shares comprising the Underlying
Shares (see "Conversion Right" below) and the dividend declared or
paid per common share. Any such dividend will be paid to the holder of
the Series Four Preferred Share in the same form as it is paid to the
holders of the common shares.
- Conversion Right: The holder of the Series Four Preferred Share will
have the right, exercisable at any time prior to 5:00 p.m. (Toronto
time) on March 31, 2013 to convert the Series Four Preferred Share,
for no additional consideration, into 4,504,069 common shares subject
to anti-dilution adjustment (the "Underlying Shares"). In addition to
anti-dilution adjustments for stock splits, consolidations, etc., the
number of common shares issuable on the conversion of the Series Four
Preferred Share will be subject to adjustment in connection with any
issuance of common shares to extinguish rights to acquire securities
in Points' subsidiaries and in connection with the conversion of the
Point's outstanding convertible debenture.
- Automatic Conversion: The Series Four Preferred Share will
automatically convert into one Series Five Preferred Share on the
earlier of the date that (i) the Series Four Preferred Share is
directly or indirectly transferred to a person that is not an
affiliate of InterActiveCorp., and (ii) the holder of the Series Four
Preferred Share ceases to be an affiliate of InterActiveCorp.
- Redemption Right: Unless a notice of conversion has been delivered,
Points will redeem the Series Four Preferred Share upon the earlier of
(i) March 31, 2013 and (ii) the third business day following a "Change
of Control" of Points. For this purpose, a "Change of Control" of
Points will be deemed to have occurred if, before April 11, 2006, any
combination of a person (other than the holder of the Series Four
Preferred Share), its affiliates or associates and persons acting
jointly or in concert with any of them becomes the beneficial owner of
shares of Points sufficient to elect a majority of the board of
directors of Points. In the event of redemption on March 31, 2013, the
amount payable on redemption will equal the greater of (i) the
subscription price of the Series Four Preferred Share plus a return on
that subscription price equal to 7% per annum, calculated from the
date of issue of the Series Four Preferred Share to the date on which
the Series Four Preferred Share is redeemed and (ii) the market value
of the common shares into which the Series Four Preferred Share may
then be converted. In the event of redemption on a Change of Control,
the amount payable on redemption will equal an amount equal to the
greater of (i) 125% of the amount specified in clause (i) of the
preceding sentence and (ii) the greater of (A) the value of the common
shares into which the Series Four Preferred Share then could be
converted on the day immediately prior to public announcement of the
Change of
Not for distribution to United States newswire services or for dissemination in
the United States.
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Control and (B) the product of the common shares into which the Series
Four Preferred Share then could be converted and the fair market value
of the consideration paid per common share in the transaction
resulting in the Change of Control.
- Voting Rights: The holder of the Series Four Preferred Share will be
entitled to receive notice of and attend all meetings of shareholders
of Points. In addition to the right to vote separately as a series and
as part of a class of shares, the holder of the Series Four 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 Four Preferred Share shall be
entitled to cast that number of votes equal to the number of
Underlying Shares (provided that until the warrants previously issued
by Points to an affiliate of InterActiveCorp. on April 11, 2003 have
been exercised in whole or in part, the number of votes will not
exceed 19.9% of the votes that may be cast at meetings of holders of
common shares). Without the approval of the holder of the Series Four
Preferred Share by ordinary resolution, voting separately as a series,
Points shall not and shall not, to the extent permitted by applicable
law, permit its subsidiaries to: (i) create any class or series of
securities of Points (including, without limitation, equity, debt or
hybrid securities); (ii) 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; (iii) redeem, repurchase, purchase for
cancellation or otherwise acquire for value any of its outstanding
securities; (iv) declare or pay any dividends; or (v) amend the
articles of Points.
- Liquidation Entitlement: In the event of the liquidation, dissolution
or winding-up of Points or other distribution of assets of Points
among its shareholders for the purpose of winding-up its affairs, the
holder of the Series Four Preferred Share will be entitled to receive
from the assets of Points an amount equal to the greater of (i) the
subscription price of the Series Four 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 Four Preferred Share to the
date on which the liquidation event occurred and (ii) 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
Four Preferred Share and any other shares (other than the Series Four
Preferred Share) ranking prior to the common shares upon the
liquidation event.
- Board Representation: So long as the Series Four Preferred Share is
outstanding, unless approved of the holder of the Series Four
Preferred Share voting separately as a series, the board of directors
shall include one director elected by the holder of the Series Four
Preferred Share, voting separately and as a series.
The terms of the Series Five Preferred Share into which the Series Four
Preferred Share may convert provide as follows:
Not for distribution to United States newswire services or for dissemination in
the United States.
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- Redemption Right: Points will redeem the Series Five Preferred Share
upon the earlier of (i) March 31, 2013 and (ii) the third business day
following a "Change of Control" of Points. For this purpose, a "Change
of Control" of Points will be deemed to have occurred if, before April
11, 2006, any combination of a person (other than the holder of the
Series Five Preferred Share), its affiliates or associates and persons
acting jointly or in concert with any of them becomes the beneficial
owner of shares of Points sufficient to elect a majority of the board
of directors. In the event of redemption on March 31, 2013, the amount
payable on redemption will equal the subscription price of the Series
Four Preferred Share plus a return on that subscription price equal to
7% per annum, calculated from the date of issue of the Series Four
Preferred Share to the date on which the Series Five Preferred Share
is redeemed. In the event of redemption on a Change of Control, the
amount payable on redemption will equal an amount equal to 125% of the
amount specified in the preceding sentence.
- Liquidation Entitlement: In the event of the liquidation, dissolution
or winding-up of Points or other distribution of assets of Points
among its shareholders for the purpose of winding-up its affairs,
whether voluntary or involuntary, the holder of the Series Five
Preferred Share will be entitled to receive from the assets of Points
an amount equal to the subscription price of the Series Four 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 Four
Preferred Share to the date on which the liquidation event occurred.
In connection with the Private Placement Transaction, the size of the board
of directors of Points will be reduced from eleven to seven. In addition,
Points has agreed to apply to list its common shares on a US market within
200 days of the closing date of the Private Placement Transaction.
Proceeds from the Private Placement Transaction will be used for marketing
purposes, technology development and working capital.
The form of share purchase agreement for the Private Placement Transaction
is attached hereto as Schedule B.
Debenture Transaction
On March 29, 2005, Points announced that CIBC had agreed to sell to the
purchasers in the Private Placement Transaction an amended version of the
$6 million debenture (the "Debenture") issued by Points to CIBC in 2001 and
the Series One Preferred Share in the capital of Points held by CIBC.
In connection with this transaction, the Debenture was amended to, among
other things, (i) reduce the interest rate from 11% to 8%, (ii) eliminate
all negative covenants, (iii) eliminate certain positive covenants, (iv)
remove certain events of default and (v) release all security over the
assets of Points and its subsidiaries. Unless previously repaid, the
Not for distribution to United States newswire services or for dissemination in
the United States.
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Debenture, as amended, will automatically convert in 18,908,070 common
shares in April 2006.
The form of Debenture acquired by each of the purchasers in the Debenture
Transaction is attached hereto as Schedule C.
6. RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102
Not applicable.
7. OMITTED INFORMATION
Not applicable.
8. EXECUTIVE OFFICER
For further information contact Stephen Yuzpe, Chief Financial Officer of
Points at (416) 596-6382.
9. DATE OF MATERIAL CHANGE REPORT
April 5, 2005.
SIGNED at Toronto, Ontario.
Per: /s/ Stephen Yuzpe
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Stephen Yuzpe
Chief Financial Officer
Not for distribution to United States newswire services or for dissemination in
the United States.
SCHEDULE A
NEWS RELEASES
Not for distribution to United States newswire services or for dissemination in
the United States.
SCHEDULE B
SHARE PURCHASE AGREEMENT
Not for distribution to United States newswire services or for dissemination in
the United States.
SCHEDULE C
FORM OF DEBENTURE
Not for distribution to United States newswire services or for dissemination in
the United States.