1
Exhibit 3.1
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la compagnie en Ontario
1039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
AUGUST 4 AOUT, 1993
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
STATUTS CONSTITUTIFS
1. The name of the corporation is:
Denomination sociale de la compagnie:
MEDIA SYNERGY INC.
2. The address of the registered office is:
Adresse du siege social:
7 Carlton Street, Suite 1404
- --------------------------------------------------------------------------------
(Street & Number or R.R. Number & if Multi-Office Building give Room No.)
(Rue et numero ou numero de la R.R. et, s'il s'agit d'un
edifice a bureax, numero du bureau)
Toronto M5B2M3
- --------------------------------------------------------------------------------
(Name of Municipality or Post Office) (Postal Code)
(Nom de la municipalite ou du bureau de poste) (Code postal)
City of Toronto in the Municipality of Metropolitan Toronto
- ------------------------- -----------------------------------------
(Name of Municipality,
Geographical Township) dans le/la (County, District, Regional Municipality)
(Nom de la municipalite, (Compte, district, municipalite regionale)
du canton)
3. Number (or minimum and maximum number) directors is:
Nombre (ou nombres minimal et maximal) d'administrateurs:
A minimum of one and a maximum of five
4. The first director(s) is/are:
Premire(s) administrateur(s):
Residence address, giving street & No. or R.R. Resident Canadian State
No. or municipality and postal code. Yes or No
First name, initials and surname
Adresse personelle, y compris la rue et le numero, le numero Resident Canadien
Prenom, initiales et nom de famille de la R.R. ou, le nom de la municipalite et le code postal Oui/Non
- ----------------------------------- ------------------------------------------------------------ -----------------------
Paul Chen 22 Edenbrook Court Yes
Nepean, Ontario
K2E 7H4
Sing Li 7 Carlton Street, Suite 1404 Yes
Toronto, Ontario
M5B 2M3
2
2
5. Restrictions, if any, on business the corporation may carry on or on
powers the corporation may exercise.
Limites, s'il y a lieu, imposees aux activites commerciales ou aux
pouvoirs de la compagnie.
NONE
6. The classes and any maximum number of shares that the corporation is
authorized to issue.
Categories at nombre maximal, s'il y a lieu, d'actions que la compagnue
est autorisee a emettre:
THE CORPORATION IS AUTHORIZED TO ISSUE AN UNLIMITED NUMBER OF COMMON
SHARES.
3
3
7. Rights, privileges, restrictions and conditions (if any) attaching to
each class of shares and directors authority with respect to any class
of shares which may be issued in series:
Droits, privileges, restrictions et conditions, s'il y a liey,
rattachee a chaque categorie d'actions et pouvoits des administrateurs
relatifs a chaque categorie d'actions qui peut etre emise en serie:
NOT APPLICABLE
4
4
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows:
L'emission, le transfert ou la propriete d'actions est/n'est pas
restreinte. Les restrictions, s'il y a lieu, sont les suivantes:
No share of the Corporation shall be transferred without the express
consent of the board of Directors evidenced by a resolution passed at a
meeting of directors by the affirmative vote of not less than a
majority of the directors or by instrument or instruments in writing
signed by all of the directors.
5
5
9. Other provisions, if any, are:
Autres dispositions, s'il y a lieu:
(1) That the number of shareholders of the Corporation, exclusive
of persons who are in its employment and exclusive of persons,
who, having been formerly in the employment of the
Corporation, were, while in the employment, and have continued
after the termination of that employment to be shareholders of
the Corporation, is limited to not more than fifty, two or
more persons who are the joint registered owners of one or
more shares being counted as one shareholder.
(2) That any invitation to the public to subscribe for securities
of the Corporation is prohibited.
6
6
10. The names and addresses of the incorporators are
Nom et adresse dea fondateurs
Full residence address of registered office or of principal place of
business giving street & No. or R.R. No. municipality and postal code
First name, initials and surname or corporate name Adresse personnelle au complet, adresse du siege social ou adresse de
l'etablissement principal, y compris la rue et la numero, le
Prenom, initiale et nom de famille ou denomination sociale numero de la R.R., le nom de la municipalite et le code postal
- ---------------------------------------------------------- ----------------------------------------------------------
SING LI 7 Carlton Street, Suite 1404
Toronto, Ontario
M5B 2M3
PAUL CHEN 22 Edenbrook Court
Nepean, Ontario
K2E 7H4
These articles are signed in duplicate
Les presents statuts son signes en double examplaire.
- --------------------------------------------------------------------------------
Signatures of incorporators
(Signature des fondateurs)
/s/ Paul Chen /s/ Sing Li
7
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la compagnie en Ontario
001039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
NOVEMBER 12 NOVEMBRE, 1996
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation is:
Denomination social actuelle de la compagnie:
MEDIA SYNERGY INC.
2. The name of the corporation is changed to (if applicable):
Novelle denomination sociale de la compagnie (s'il y a lieu):
3. Date of incorporation/amalgamation:
Date de la constitution ou de la fusion:
04 08 1993
- --------------------------------------------------------------------------------
(Day, Month, Year)
(jour, mois, annee)
4. The articles of the corporation are amended as follows:
Les statuts de la compagnie sont modifies de la facon suivante:
A. to provide that the existing 100 Common Shares of the Corporation be
divided on a basis of Sixty-One Thousand Two Hundred (61,200) Common
Shares to One (1) Common Share;
B. to increase the authorized capital of the Corporation by the creation
of an unlimited number of Class A Preference Shares and by providing
that the Class A Preference Shares have the rights, privileges,
restrictions and conditions below:
8
1A
1. INTERPRETATION
1.1 Defined Terms
The following words and phrases whenever used in the Preferred
Share Provisions shall have the following meaning, unless
there is something in the context otherwise inconsistent
therewith:
(a) "business day" shall mean a day other than a
Saturday, a Sunday or any other day that is treated
as a holiday in the municipality where the
Corporation's registered office in Canada is
situated;
(b) "Common Shares" shall mean Common Shares of the
Corporation as such shares were constituted on
November 8th, 1996 and shares of any other class
resulting from any reclassification or change of such
shares;
(c) "conversion basis" at any time shall mean the number
of Common Shares of the Corporation into which at
such time one Preferred Share shall be convertible in
accordance with the provisions of section 5 of these
Preferred Share Provisions;
(d) "dividend payment date" shall mean the 1st day of
February, May, August, and November in each calendar
year commencing February 1, 1997.
1.2 Reference to Status
Any reference in the Preferred Share Provisions to any statute
shall be deemed to be a reference to such statute as amended
or re-enacted from time to time.
1.3 Canadian Funds
All amounts payable pursuant hereto shall be payable in lawful
money of Canada.
1.4 Non-Business Day
If any day on which any dividend on the Preferred Shares is
payable or by which any other action is required to be taken
hereunder is not a business day, then such dividend shall be
payable or such other action shall be required to be taken on
the next succeeding day that is a business day.
9
1B
1.5 Herein, hereto, etc
The words "herein", "hereto", "hereof" and similar words
refer, unless the context clearly indicates the contrary, to
the whole of the Preferred Share Provisions and not to any
particular section, clause or paragraph thereof
1.6 Number and Gender
Words importing the singular number only shall include the
plural and vice versa, words importing the use of any gender
shall include all genders and words importing persons shall
include firms and corporations and vice versa.
2. VOTING RIGHTS
The holders of the Preferred Shares shall be entitled to receive notice
of and to attend and vote at all meetings of the shareholders of the
Corporation (except where the holders of a specified class of shares
are entitled to vote separately as a class as provided in the Business
Corporations Act (Ontario) as amended from time to time), and each
Preferred Share shall confer the right to one vote in person or by
proxy at all meetings of shareholders of the Corporation.
3. DIVIDENDS
The holders of the Preferred Shares, in priority to any other class or
type of shares, shall be entitled to receive as and when declared by
the board of directors of the Corporation out of monies of the
Corporation properly applicable to the payment of dividends, fixed,
preferential, cumulative, cash dividends at the rate of 5% per annum on
an amount equal to the stated capital of the Preferred Shares as
recorded in the stated capital account maintained for the Preferred
Shares payable on dates to be fixed from time to time by the directors;
such dividends shall accrue and be cumulative from the respective dates
of issue of the Preferred Shares; if on any dividend payment date the
Corporation shall not have paid the said dividends in full on all
Preferred Shares then issued and outstanding, such dividends on the
unpaid part thereof shall be paid on a subsequent date or dates in
priority to dividends on any other class or type of shares; no dividend
shall be declared or paid or set apart in respect of any other class or
type of shares until such dividends or the unpaid part thereof on all
Preferred Shares then issued and outstanding shall have been declared
and paid or provided for at the date of such declaration or payment or
setting apart.
4. RIGHTS ON LIQUIDATION
In the event of liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, the holders of the
Preferred Shares shall be entitled to receive, in priority to and
before any distribution of any part of the assets of the Corporation
among the holders of any other class or type of shares, for each
10
1C
Preferred Share, an amount per Preferred Share equal to the stated
capital per share of the Preferred Shares as recorded in the stated
capital account maintained for the Preferred Shares together with any
unpaid cumulative dividends, whether or not declared, which shall have
accrued thereon and which, for such purposes, shall be treated as
accruing up to the date of such liquidation, dissolution or winding-up,
to the extent that such unpaid dividends are not reflected in the
stated capital account maintained for the Preferred Shares, and no
more.
5. CONVERSION PRIVILEGE
5.1 Right of Conversion
Holders of Preferred Shares shall have the right at any time
from and after the date of issuance of such shares (the
"conversion period"), subject as hereinafter provided, to
convert any or all of their Preferred Shares into Common
Shares on the following original conversion basis, namely one
Common Share for each Preferred Share converted, until such
time as the original conversion basis shall be adjusted as
hereinafter provided and thereafter on the adjusted conversion
basis.
5.2 Conversion Procedure
The conversion privilege herein provided for may be exercised
by notice in writing given to the transfer agent for the
Preferred Shares in any office for the transfer of the
Preferred Shares or to the Corporation at its registered
office in the City of Toronto accompanied by the certificate
or certificates representing Preferred Shares in respect of
which the holder thereof desires to exercise such right of
conversion. Such notice shall be signed by such holder or by
his duly authorized attorney or agent and shall specify the
number of Preferred Shares which the holder desires to have
converted. The transfer form on the certificate or
certificates in question need not be endorsed, except in the
circumstances hereinafter contemplated. If less than all the
Preferred Shares represented by a certificate or certificates
accompanying any such notice are to be converted, the holder
shall be entitled to receive, at the expense of the
Corporation, a new certificate representing the Preferred
Shares comprised in the certificate or certificates
surrendered as aforesaid which are not to be converted.
On any conversion of Preferred Shares, the share certificates
for Common Shares of the Corporation resulting therefrom shall
be issued in the name of the registered holder of the
Preferred Shares converted or in such name or names as such
registered holder may direct in writing (either in the notice
referred to above or otherwise), provided that such registered
holder shall pay any applicable security transfer taxes; in
any such case the transfer form on the back of the certificate
in question shall be endorsed by the registered holder of the
Preferred Shares or his duly authorized
11
1D
attorney, with signature guaranteed in a manner satisfactory
to the Corporation.
5.3 Effective Date of Conversion
Subject as hereinafter provided in this clause 5.3, the right
of a holder of Preferred Shares to convert the same into
Common Shares shall be deemed to have been exercised, and the
registered holder of Preferred Shares to be converted (or any
person or persons in whose name or names any such registered
holder of Preferred Shares shall have directed certificates
representing Common Shares to be issued as provided in clause
5.2) shall be deemed to have become a holder of record of
Common Shares of the Corporation for all purposes on the date
of surrender of certificates representing the Preferred Shares
to be converted accompanied by notice in writing as provided
in clause 5.2 hereof, notwithstanding any delay in the
delivery of certificates representing the Common Shares into
which such Preferred Shares have been converted.
5.4 Adjustment of Conversion Basis
If and whenever at any time there is a capital reorganization
of the Corporation or a reclassification by the Corporation of
its Common Shares or a subdivision or consolidation by the
Corporation of its outstanding Common Shares into a greater or
lesser number of shares, as the case may be, or an
amalgamation or merger of the Corporation with or into any
other body corporation, trust partnership or other entity, or
a sale or conveyance of the property and assets of the
Corporation as an entity or substantially as an entity to any
other body corporate, trust, partnership or other entity, or
the issuance of any rights or the payment of any stock
dividend (any such event is herein called an "Event"), any
holder of Preferred Shares who has not exercised his right of
conversion prior to the record date where one has been
established, or otherwise, on the effective date of such Event
(the record date or the effective date of such Event is herein
called the "Relevant Date") shall be entitled to receive and
shall accept, upon the exercise of such right at any time
thereafter, in lieu of the number (the "Original Number") of
Common Shares to which he was theretofore entitled upon
conversion, the aggregate number of shares or other securities
or property of the Corporation or of the body corporate,
trust, partnership or other entity resulting from such Event,
that such holder would have been entitled to receive as a
result of such Event if, on the Relevant Date, he had been the
registered holder of the Original Number of Common Shares;
provided that no such Event shall be carried into effect
unless, in the opinion of the directors, all necessary steps
have been taken to ensure that the holders of the Preferred
Shares shall thereafter be entitled to receive such number of
shares or other securities or property of the Corporation or
of the body corporate, trust, partnership or other entity
resulting from such Event, as the case may be, subject to
12
1E
adjustment thereafter in accordance with provisions, as nearly
similar as may be, to those contained in this clause 5.4, as
such holders would be entitled to receive pursuant to the
foregoing provisions of this clause 5.4.
5.5 Conversion Adjustment Rules
The following rules and procedures shall be applicable to
conversion basis adjustments made pursuant to clause 5.4
hereof;
Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding but, for the
purposes of this subclause 5.5(a), any Common Shares owned by
a pension plan or share purchase plan or analogous plan for
employees of the Corporation or its subsidiaries or affiliates
shall not be considered to be owned by or held for the account
of the Corporation;
the adjustment provided for in clause 5.4 hereof shall be made
cumulatively and consecutively in respect of any Event
contemplated by clause 5.4 as giving rise to any adjustment of
the conversion basis;
if any question shall at any time arise with respect to
adjustments in the conversion basis, such question shall be
conclusively determined by the auditors of the Corporation and
any such determination shall be binding upon the Corporation
and any transfer agents and all shareholders of the
Corporation; and
forthwith after any adjustment in the conversion basis
pursuant to the foregoing clause 5.4 the Corporation shall
give written notice to the registered holders of Preferred
Shares of the conversion basis following such adjustment. Any
such notice shall be sufficiently given if delivered or sent
by registered mail, postage prepaid, to the holders of record
of the Preferred Shares at the addresses last recorded by the
Corporation in the register maintained by the Corporation. Any
notice so mailed shall be deemed to have been given on the
third business day after the date of the mailing.
5.6 Entitlement to Dividends
A holder of any Preferred Share on the record date for any
dividend declared payable on any such share shall be entitled
to such dividend notwithstanding that any such share is
converted after such record date and before the payment date
of such dividend, and the registered holder of any Common
Share resulting from any conversion shall be entitled to rank
equally with the registered holders of all Common Shares in
respect of all dividends declared payable to holders of Common
Shares or record on any date after the date of conversion.
Subject as aforesaid, no payment or adjustment will be made on
account of any dividend, accrued or
13
1F
otherwise, on the Preferred Shares converted or the Common
Shares resulting from any conversion.
5.7 Notice of Certain Events
If the Corporation intends to fix a date for any Common Share
reorganization or for any capital reorganization or for any
rights offering or for any special distribution, the
Corporation shall, not less than 21 days prior to such record
date, notify each registered holder of Preferred Shares of
such intention by written notice to the extent that such
particulars have been determined at the time of giving the
notice. Any such notice shall be sufficiently given if
delivered or sent by registered mail, postage prepaid, to the
holders of record of the Preferred Shares at the addresses
last recorded by the Corporation. Any notice so mailed shall
be deemed to have been given on the third business day after
the date of the mailing.
5.8 Avoidance of Fractional Shares
In any case where a fraction of a Common Share would otherwise
be issuable on conversion of one or more Preferred Shares, the
Corporation shall adjust such fractional interest by the
payment by cheque of an amount equal to the then current
market value of such fractional interest computed on the basis
of the last board lot sale price (or the average of the last
bid and ask prices if there has not been board lot sale), on
any stock exchange or quotation system on which such shares
are listed or quoted as may be selected for such purpose by
the directors next preceding the date of surrender of
certificates representing the Preferred Shares to be
converted. In the event that the Common Shares are not listed
or quoted on any stock exchange or quotation system, the then
current market value of such fractional interest shall be
determined by the directors of the Corporation, which
determination shall be conclusive and binding.
5.9 Postponement of Issuance of Shares upon Conversion
In any case where the application of the foregoing provisions
results in an increase of the conversion basis taking effect
immediately after the record date for a specific Event, if any
Preferred Shares are converted after the record date and prior
to completion of the Event, the Corporation may postpone the
issuance to the holder of the additional Common Shares to
which he is entitled by reason of the increase of the
conversion basis but such additional Common Shares shall be so
issued and delivered to that holder upon completion of the
Event and the Corporation shall, in the interim, deliver to
the holder an appropriate instrument evidencing his right to
receive such additional Common Shares.
14
2
5.10 Automatic Conversion upon Shares going Public
Notwithstanding any other term hereof, in the event of an
initial public offering by the Corporation or the commencement
of the offering or trading of shares on a stock exchange,
over-the-counter market or other market such as NASDAQ where
the Common Shares are available on the open market, the
holders of the Preferred Shares shall be deemed to convert all
Preferred Shares into fully paid non-assessable Common Shares
of the Corporation without any further act required by the
holder, at the conversion rate in effect on the date of the
conversion.
5. The amendment has been duly authorized as required by Sections 168 &
170 (as applicable) of the Business Corporations Act.
La modification a ete dument autorisee conformement a l'article 168 et,
s'il y a lieu, a l'article 170 de la Loi sur les compagnies.
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on
Les actionnaires ou les administrateurs (le cas echeant) de la
compagnie ont approuve la resolution autorisant la modification le
12 11 1996
- --------------------------------------------------------------------------------
(Day, Month, Year)
(jour, mois, annee)
These articles are signed in duplicate.
Les presents status sont signes en double exemplaire.
MEDIA SYNERGY INC.
-------------------------------------
(Name of Corporation)
(Denomination social de la compagnie)
By/Par: /s/ Paul Chen
------------------------------
Office: President
15
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la societe en Ontario
1039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
AUGUST 25 AOUT, 1997
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The name of the corporation is:
Denomination sociale de la societe:
MEDIA SYNERGY INC.
2. The name of the corporation is changed to (if applicable):
Novelle denomination sociale de la societe (s'il y a lieu):
3. Date of incorporation/amalgamation:
Date de la constitution ou de la fusion:
1993, August, 4th
- --------------------------------------------------------------------------------
(Year, Month, Day
(annee, mois, jour)
4. The articles of the corporation are amended as follows:
Les statuts de la societe sont modifies de la facon suivante:
To provide that the existing Six Million One Hundred Twenty Thousand
(6,120,000) Common Shares of the Corporation and the existing Two
Million Eight Hundred and Eighty Thousand (2,880,000) Class A
Preference Shares of the Corporation be divided on a basis of Three (3)
Common Shares to One (1) Common Share and Three (3) Class A Preference
Shares to One (1) Class A Preference Share.
16
2
5. The amendment has been duly authorized as required by Sections 168 &
170 (as applicable) of the Business Corporations Act.
La modification a ete dument autorisee conformement a l'article 168 et
170 (selon le cas) de la Loi sur les socie tes par actions.
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on
Les actionnaires ou les administrateurs (selon le cas) de la socie te
ont approuve la resolution autorisant la modification le
1997, July, 30th
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in duplicate.
Les presents status sont signes en double exemplaire.
MEDIA SYNERGY INC.
-------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By/Par: /s/ Wilson Lee
---------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
WILSON LEE, Secretary
17
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la societe en Ontario
1039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
NOVEMBER 20 NOVEMBRE, 1998
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The name of the corporation is:
Denomination sociale actuelle de la societe:
MEDIA SYNERGY INC.
2. The name of the corporation is changed to (if applicable):
Novelle denomination sociale de la societe (s'il y a lieu):
3. Date of incorporation/amalgamation:
Date de la constitution ou de la fusion:
1993 Aug 4
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
4. The articles of the corporation are amended as follows:
Les statuts de la societe sont modifies de la facon suivante:
See pages 1A to 1J attached hereto.
18
1A
The Articles of the Corporation are amended as follows:
The maximum number of allowable directors be increased from five (5) to ten
(10).
The issued and outstanding 8,640,000 Class A Preference Shares of the
Corporation are exchanged for 8,640,000 Class B Preferred Shares described below
in these articles, and all issued and outstanding Class A Preference Shares, and
the authorized class of Class A Preference Shares, are hereby cancelled upon the
issuance and exchange for the Class B Preferred Shares.
To increase and amend the authorized capital of the Corporation by the creation
of an unlimited number of Class A Preferred Shares and an unlimited number of
Class B Preferred Shares, having the following rights, privileges, restrictions
and conditions attaching thereto:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS
In these Preferred Share Conditions, the following words and phrases
shall have the following meanings:
"ACT" means the Business Corporations Act (Ontario);
"BUSINESS DAY" means a day other than a Saturday, a Sunday or any other
day that is treated as a holiday in the municipality where the
Corporation's registered office in Canada is situated;
"COMMON SHARES" means common shares in the capital of the Corporation
and shares of any other class resulting from any reclassification or
change of such shares;
"DIVIDEND PAYMENT DATE" shall mean the first day of February, May,
August and November in each calendar year;
"IPO" means the successful completion of an offering of treasury
securities of the Corporation to the public led by an underwriter
chosen solely by the board of directors of the Corporation pursuant to
a prospectus filed with applicable securities regulatory authorities
including the Ontario Securities Commission and/or the Securities &
Exchange Commission of the United States and a listing on NASDAQ
National Market, The Toronto Stock Exchange, the New York Stock
Exchange or on some other exchange or market acceptable to the holder,
with net proceeds from the sale of such treasury securities and
secondary securities of at least Twenty Million Dollars (Cdn) with a
pre-money valuation of not less than Thirty-Five Million Dollars (Cdn).
19
1B
"IPO UNDERWRITER" means the underwriter who led the IPO;
"REDEMPTION AMOUNT" of each Class A Preferred Share means the sum of
$10.00;
"CLASS A CONVERSION RATE" means the number obtained by dividing the
Redemption Amount by the issue price of the Corporation's treasury
securities under the IPO; and
"CLASS B CONVERSION BASIS" at any time shall mean the number of Common
Shares of the Corporation into which at such time one Class B Preferred
Share shall be convertible in accordance with the provisions of section
4.5 of these Preferred Share Conditions.
1.2 REFERENCE TO STATUTES
Any reference in these Preferred Share Conditions to any statute shall
be deemed to be a reference to such statute as amended or re-enacted from time
to time.
1.3 CANADIAN FUNDS
All amounts payable pursuant hereto shall be payable in lawful money of
Canada.
1.4 NON-BUSINESS DAY
If any day on which or by which any action is required to be taken
hereunder is not a Business Day, then such action shall be required to be taken
on the next succeeding day that is a Business Day.
1.5 HEREIN, HERETO, ETC.
The words "herein", "hereto", "hereof" and similar words refer, unless
the context clearly indicates the contrary, to the whole of these Preferred
Share Conditions and not to any particular section, clause or paragraph thereof.
1.6 NUMBER AND GENDER
Words importing the singular number only shall include the plural and
vice versa, words importing the use of any gender shall include all genders and
words importing persons shall include individuals, firms and corporations and
vice versa.
20
1C
ARTICLE 2
CLASS A PREFERRED SHARES
2.1 NAME
The first class of preferred shares having the rights, privileges,
restrictions and conditions set forth in this Article 2 shall be designated as
Class A Preferred Shares (the "Class A Preferred Shares").
2.2 VOTING RIGHTS
Subject to the Act, the holders of the Class A Preferred Shares shall
not, as such, be entitled to receive notice of or to attend any meeting of the
shareholders of the Corporation or to vote at any such meeting, but shall be
entitled to receive notice of and to attend, but not to vote at, any meeting of
the shareholders called for the purpose of authorizing the dissolution of the
Corporation or the sale, lease or exchange of all or substantially all the
property of the Corporation other than in the ordinary course of business.
2.3 DIVIDENDS
The holders of the Class A Preferred Shares shall not be entitled to
any dividends.
2.4 REDEMPTION AT OPTION OF CORPORATION
Subject to the Act, the Corporation may at any time or from time to
time redeem the whole or any part of the issued Class A Preferred Shares on
payment for each share to be redeemed of the redemption amount. Unless all the
holders of the Class A Preferred Shares to be redeemed shall have waived notice
of such redemption, the Corporation shall give not less than 30 days' notice in
writing of such redemption, specifying the date and place of redemption.
2.5 MANDATORY REDEMPTION BY THE CORPORATION
(1) General. Subject to the Act, the Corporation shall redeem, at
the option of the registered holder of Class A Preferred
Shares the whole of the Class A Preferred Shares held by such
holder at the earlier of November 19, 2003 or at the time of
completion of an IPO (the "Redemption Date").
(2) Redemption Procedure. The Corporation shall have 120 days from
the Redemption Date to redeem the Class A Preferred Shares by
paying to such registered holder an amount equal to the
Redemption Amount. Such payment shall be made in cash or
certified cheque or in such other manner acceptable to each
registered holder its sole discretion.
(3) Failure to Redeem. If the Corporation fails to redeem in full
the Class A Preferred Shares within 120 days of the Redemption
Date, any amount then outstanding shall be converted into
debenture(s) (the "Debenture(s)").
21
1D
The Debenture(s) shall bear interest at the Prime Rate plus
four percent (4%) (where Prime Rate means the rate posted from
time to time by the Bank of Montreal for its Canadian Dollar
loans), payable semi-annually. The Debenture(s) will be
repayable in four equal semi-annual installments, with the
first payment being due 120 days from the Redemption Date, and
the remaining three payments at six month intervals
thereafter. In the event the Corporation fails to make a
semi-annual payment of principal, the holders of the
Debenture(s) shall have the right to jointly appoint a
majority of the board of directors of the Corporation, which
right shall continue until the Debenture(s) have been repaid
in full.
(4) Conversion in Lieu of Redemption. If in the opinion of the IPO
Underwriter, the redemption required by subsection (a) above
at the time of completion of such IPO would not be in the best
interests of the Corporation, then the Class A Preferred
Shares shall be converted into that number of Common Shares
determined by multiplying the number of Class A Preferred
Shares by the Class A Conversion Rate, which Common Shares
shall have been qualified by such IPO.
2.6 DISTRIBUTION RIGHTS
In the event of the liquidation, dissolution or winding up or the sale,
consolidation, merger or reorganization of the Corporation, whether voluntary or
involuntary, the holders of the Class A Preferred Shares shall be entitled to
receive, before and in priority to any distribution of any part of the assets of
the Corporation among the holders of the Common Shares or the Class B Preferred
Shares, an amount equal to the Redemption Amount for such shares and no more.
2.7 AMENDMENT TO CLASS A PREFERRED SHARE PROVISIONS
The designation, rights, privileges, restrictions and conditions of the
Class A Preferred Shares may not be amended without the affirmative vote of
holders of all of the Class A Preferred Shares then outstanding.
ARTICLE 3
CLASS B PREFERRED SHARES
3.1 NAME
The class of preferred shares having the rights, privileges,
restrictions and conditions set forth in this Article 3 shall be designated as
Class B Preferred Shares (the "Class B Preferred Shares").
22
1E
3.2 VOTING RIGHTS
The holders of the Class B Preferred Shares shall be entitled to
receive notice of and to attend and vote at all meetings of the shareholders of
the Corporation (except where the holders of a specified class of shares are
entitled to vote separately as a class as provided in the Act), and each Class B
Preferred Share shall confer the right to one vote in person or by proxy at all
meetings of shareholders of the Corporation.
3.3 DIVIDENDS
The holders of the Class B Preferred Shares, in priority to any other
class or type of shares, shall be entitled to receive as and when declared by
the board of directors of the Corporation out of monies of the Corporation
properly applicable to the payment of dividends, fixed, preferential,
cumulative, cash dividends at the rate of 5% per annum on an amount equal to the
stated capital of the Class B Preferred Shares as recorded in the stated capital
account maintained for the Class B Preferred Shares payable on dates to be fixed
from time to time by the directors; such dividends shall accrue and be
cumulative from the respective dates of issue of the Class B Preferred Shares;
if on any Dividend Payment Date the Corporation shall not have paid the said
dividends in full on all Class B Preferred Shares then issued and outstanding,
such dividends on the unpaid part thereof shall be paid on a subsequent date or
dates in priority to dividends on any other class or type of shares; no dividend
shall be declared or paid or set apart in respect of any other class or type of
shares until such dividends or the unpaid part thereof on all Class B Preferred
Shares then issued and outstanding shall have been declared and paid or provided
for at the date of such declaration or payment or setting apart.
3.4 DISTRIBUTION RIGHTS
In the event of liquidation, dissolution, winding-up, or the sale,
consolidation, merger or reorganization of the Corporation, whether voluntary or
involuntary, the holders of the Class B Preferred Shares shall be entitled to
receive, in priority to and before any distribution of any part of the assets of
the Corporation among the holders of Common Shares, for each Class B Preferred
Share, an amount per Class B Preferred Share equal to the stated capital per
share of the Class B Preferred Shares as recorded in the stated capital account
maintained for the Class B Preferred Shares together with any unpaid cumulative
dividends, whether or not declared, which shall have accrued thereon and which,
for such purposes, shall be treated as accruing up to the date of such
liquidation, dissolution, winding-up, sale, consolidation, merger or
reorganization, to the extent that such unpaid dividends are not reflected in
the stated capital account maintained for the Class B Preferred Shares, and no
more.
23
1F
3.5 CONVERSION PRIVILEGE
(1) Right of Conversion. Holders of Class B Preferred Shares shall
have the right at any time from and after the date of issuance
of such shares (the "Conversion Period"), subject as
hereinafter provided, to convert any or all of their Class B
Preferred Shares into Common Shares on the following original
Class B Conversion Basis, namely one Common Share for each
Class B Preferred Shares converted, until such time as the
original Class B Conversion Basis shall be adjusted as
hereinafter provided and thereafter on the adjusted Class B
Conversion Basis.
(2) Conversion Procedure. The conversion privilege herein provided
for may be exercised by notice in writing given to the
transfer agent for the Class B Preferred Shares in any office
for the transfer of the Class B Preferred Shares or to the
Corporation at its registered office in the City of Toronto
accompanied by the certificate or certificates representing
Class B Preferred Shares in respect of which the holder
thereof desires to exercise such right of conversion. Such
notice shall be signed by such holder or by his duly
authorized attorney or agent and shall specify the number of
Class B Preferred Shares which the holder desires to have
converted. The transfer form on the certificate or
certificates in question need not be endorsed, except in the
circumstances hereinafter contemplated. If less than all the
Class B Preferred Shares represented by a certificate or
certificates accompanying any such notice are to be converted,
the holder shall be entitled to receive, at the expense of the
Corporation, a new certificate representing the Class B
Preferred Shares comprised in the certificate or certificates
surrendered as aforesaid which are not to be converted.
On any conversion of Class B Preferred Shares, the share
certificates for Common Shares of the Corporation resulting
therefrom shall be issued in the name of the registered holder
of the Class B Preferred Shares converted or in such name or
names as such registered holder may direct in writing (either
in the notice referred to above or otherwise), provided that
such registered holder shall pay any applicable security
transfer taxes; in any such case the transfer form on the back
of the certificate in question shall be endorsed by the
registered holder of the Class B Preferred Shares or his duly
authorized attorney, with signature guaranteed in a manner
satisfactory to the Corporation.
24
1G
(3) Effective Date of Conversion. Subject as hereinafter provided
in this clause 3.5(3), the right of a holder of Class B
Preferred Shares to convert the same into Common Shares shall
be deemed to have been exercised, and the registered holder of
Class B Preferred Shares to be converted (or any person or
persons in whose name or names any such registered holder of
Class B Preferred Shares shall have directed certificates
representing Common Shares to be issued as provided in clause
3.5(2)) shall be deemed to have become a holder of record of
Common Shares of the Corporation for all purposes on the date
of surrender of certificates representing the Class B
Preferred Shares to be converted accompanied by notice in
writing as provided in clause 3.5(2) hereof, notwithstanding
any delay in the delivery of certificates representing the
Common Shares into which such Class B Preferred Shares have
been converted.
(4) Adjustment of Class B Conversion Basis. If and whenever at any
time there is a capital reorganization of the Corporation or a
reclassification by the Corporation of its Common Shares or a
subdivision or consolidation by the Corporation of its
outstanding Common Shares into a greater or lesser number of
shares, as the case may be, or an amalgamation or merger of
the Corporation with or into any other body corporation, trust
partnership or other entity, or a sale or conveyance of the
property and assets of the Corporation as an entity or
substantially as an entity to any other body corporate, trust,
partnership or other entity, or the issuance of any rights or
the payment of any stock dividend (any such event is herein
called an "event"), any holder of Class B Preferred Shares who
has not exercised his right of conversion prior to the record
date where one has been established, or otherwise, on the
effective date of such Event (the record date or the effective
date of such Event is herein called the "Relevant Date") shall
be entitled to receive and shall accept, upon the exercise of
such right at any time thereafter, in lieu of the number (the
"Original Number") of Common Shares to which he was
theretofore entitled upon conversion, the aggregate number of
shares or other securities or property of the Corporation or
of the body corporate, trust, partnership or other entity
resulting from such Event, that such holder would have been
entitled to receive as a result of such Event if, on the
Relevant Date, he had been the registered holder of the
Original Number of Common Shares; provided that no such Event
shall be carried into effect unless, in the opinion of the
directors, all necessary steps have been taken to ensure that
the holders of the Class B Preferred Shares shall thereafter
be entitled to receive such number of shares or other
securities or property of the Corporation or of the body
corporate, trust, partnership or other entity resulting from
such Event, as the case may be, subject to adjustment
thereafter in accordance with provisions, as nearly similar as
may be, to those contained in this clause 3.5(4), as such
holders would be
25
1H
entitled to receive pursuant to the foregoing provisions of
this clause 3.5(4).
(5) Conversion Adjustment Rules. The following rules and
procedures shall be applicable to Class B Conversion Basis
adjustments made pursuant to clause 3.5(4):
(i) Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding
but, for the purposes of this subclause 3.5(5)(i),
any Common Shares owned by a pension plan or share
purchase plan or analogous plan for employees of the
Corporation or its subsidiaries or affiliates shall
not be considered to be owned by or held for the
account of the Corporation;
(ii) the adjustment provided for in clause 3.5(4) hereof
shall be made cumulatively and consecutively in
respect of any Event contemplated by clause 3.5(4) as
giving rise to any adjustment of the Class B
Conversion Basis;
(iii) if any question shall at any time arise with respect
to adjustments in the Class B Conversion Basis, such
question shall be conclusively determined by the
auditors of the Corporation and any such
determination shall be binding upon the Corporation
and any transfer agents and all shareholders of the
Corporation; and
(iv) forthwith after any adjustment in the Class B
Conversion Basis pursuant to the foregoing clause
3.5(4) the Corporation shall give written notice to
the registered holders of Class B Preferred Shares of
the Class B Conversion Basis following such
adjustment. Any such notice shall be sufficiently
given if delivered or sent by registered mail,
postage prepaid, to the holders of record of the
Class B Preferred Shares at the addresses last
recorded by the Corporation in the register
maintained by the Corporation. Any notice so mailed
shall be deemed to have been given on the third
business day after the date of the mailing.
(6) Entitlement to Dividends. A holder of any Class B Preferred
Share on the record date for any dividend declared payable on
any such share shall be entitled to such dividend
notwithstanding that any such share is converted after such
record date and before the payment date of such dividend, and
the registered holder of any Common Share resulting from any
conversion shall be entitled to rank equally with the
registered holders of all Common Shares in respect of all
dividends declared payable to holders of Common Shares or
record on any date after the date of conversion. Subject as
aforesaid, no payment or adjustment will be made on account of
any
26
1I
dividend, accrued or otherwise, on the Class B Preferred
Shares converted or the Common Shares resulting from any
conversion.
(7) Notice of Certain Events. If the Corporation intends to fix a
date for any Common Share reorganization or for any capital
reorganization or for any rights offering or for any special
distribution, the Corporation shall, not less than 21 days
prior to such record date, notify each registered holder of
Class B Preferred Shares of such intention by written notice
to the extent that such particulars have been determined at
the time of giving the notice. Any such notice shall be
sufficiently given if delivered or sent by registered mail,
postage prepaid, to the holders of record of the Class B
Preferred Shares at the addresses last recorded by the
Corporation. Any notice so mailed shall be deemed to have been
given on the third business day after the date of the mailing.
(8) Avoidance of Fractional Shares. In any case where a fraction
of a Common Share would otherwise be issuable on conversion of
one or more Class B Preferred Shares, the Corporation shall
adjust such fractional interest by the payment by cheque of an
amount equal to the then current market value of such
fractional interest computed on the basis of the last board
lot sale price (or the average of the last bid and ask prices
if there has not been board lot sale), on any stock exchange
or quotation system on which such shares are listed or quoted
as may be selected for such purpose by the directors next
preceding the date of surrender of certificates representing
the Class B Preferred Shares to be converted. In the event
that the Common Shares are not listed or quoted on any stock
exchange or quotation system, the then current market value of
such fractional interest shall be determined by the directors
of the Corporation, which determination shall be conclusive
and binding.
(9) Postponement of Issuance of Shares upon Conversion. In any
case where the application of the foregoing provisions results
in an increase of the Class B Conversion Basis taking effect
immediately after the record date for a specific Event, if any
Class B Preferred Shares are converted after the record date
and prior to completion of the Event, the Corporation may
postpone the issuance to the holder of the additional Common
Shares to which he is entitled by reason of the increase of
the Class B Conversion Basis but such additional Common Shares
shall be so issued and delivered to that holder upon
completion of the Event and the Corporation shall, in the
interim, deliver to the holder an appropriate instrument
evidencing his right to receive such additional Common Shares.
(10) Automatic Conversion upon Shares going Public. Notwithstanding
any other term hereof, in the event of an IPO the holders of
the Class B Preferred Shares shall be deemed to convert all
Class B Preferred Shares into fully paid non-assessable Common
Shares of the Corporation without
27
1J
any further act required by the holder, at the Class B
Conversion Basis in effect on the date of the conversion.
3.6 AMENDMENT TO CLASS A PREFERRED SHARE PROVISIONS
The designation, rights, privileges, restrictions and conditions of the
Class B Preferred Shares may not be amended without the affirmative vote of
holders of all of the Class B Preferred Shares then outstanding.
28
2
5. The amendment has been duly authorized as required by Sections 168 &
170 (as applicable) of the Business Corporations Act.
La modification a ete dument autorisee conformement a l'articles 168 et
170 (selon le cas) de la Loi sur les socie tes par actions.
6. The resolution authorizing the amendment was approved by the
shareholders (as applicable) of the corporation on
Les actionnaires (selon le cas) de la socie te ont approuve la
resolution autorisant la modification le
1998, 11, 20
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in duplicate.
Les presents status sont signes en double exemplaire.
MEDIA SYNERGY INC.
---------------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By/Par: /s/ Wilson Lee CFO
--------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
29
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la societe en Ontario
1039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
SEPTEMBER 15 SEPTEMBRE, 1999
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The name of the corporation is:
Denomination sociale actuelle de la societe:
MEDIA SYNERGY INC.
2. The name of the corporation is changed to (if applicable):
Novelle denomination sociale de la societe (s'il y a lieu):
3. Date of incorporation/amalgamation:
Date de la constitution ou de la fusion:
1993 Aug 4
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
4. The articles of the corporation are amended as follows:
Les statuts de la societe sont modifies de la facon suivante:
To increase and amend the authorized capital of the Corporation by the
creation of an unlimited number of Class C Preferred Shares, having the
rights, privileges, restrictions and conditions set out in the attached
pages 1A through to 1K.
30
1A
ARTICLE 1
CLASS C PREFERRED SHARES
1.1 NAME
The class of preferred shares having the rights, privileges,
restrictions and conditions set forth in this Article 1 shall be
designated as Class C Preferred Shares (the "Class C Preferred
Shares").
1.2 VOTING RIGHTS
The holders of the Class C Preferred Shares shall be entitled to
receive notice of and to amend and vote at all meetings of the
shareholders of the Corporation (except where the holders of a
specified class of shares are entitled to vote separately as a class as
provided in the Act), and each Class C Preferred Share shall confer the
right to one vote in person or by proxy at all meetings of shareholders
of the Corporation.
1.3 DIVIDENDS
The holders of Class C Preferred Shares, shall rank equally with the
holders of Common Shares and Class B Shares in respect of the
declaration and payment of dividends and shall be entitled to receive,
and the Corporation shall pay thereon, if, as and when declared by the
directors of the Corporation, out of monies of the Corporation properly
applicable to the payment of dividends, dividends in such amount as the
directors may, in their discretion, declare from time to time. If, in
any year, the directors of the Corporation in their discretion shall
not have declared and paid or set apart for payment dividends on the
Common Shares and Class C Preferred Shares, then no dividends shall be
paid or payable to the holders of Class C Preferred Shares for such
period.
1.4 DISTRIBUTION RIGHTS
In the event of liquidation, dissolution, winding-up, or the sale,
consolidation, merger or reorganization of the Corporation, whether
voluntary or involuntary, the holders of the Class C Preferred Shares
shall be entitled to receive, in priority to and before any
distribution of any part of the assets of the Corporation among the
holders of Common Shares, the Class A Shares or the Class B Shares, an
amount per Class C Preferred Share equal to the stated capital per
share of the Class C Preferred Shares as recorded in the stated capital
account maintained for the Class C Preferred Shares together with any
declared but unpaid dividends, to the extent that such unpaid dividends
are not reflected in the stated capital account maintained for the
Class C Preferred Shares, and no more.
1.5 CONVERSION PRIVILEGE
(1) Right of Conversion. Holders of Class C Preferred Shares shall
have the right at any time from and after the date of issuance
of such shares (the "Conversion Period"), subject as
hereinafter provided, to convert any or all of their Class C
Preferred Shares into Common Shares on the following Class C
Conversion
31
1B
Basis, namely for each Class C Preferred Share converted, that
number of Common Shares equal to 1 multiplied by a fraction,
the denominator of which will be $0.3972 US and the numerator
of which will be the Conversion Price in effect at the time of
such conversion.
(2) Conversion Procedure. The conversion privilege herein provided
for may be exercised by notice in writing given to the
transfer agent for the Class C Preferred Shares in any office
for the transfer of the Class C Preferred Shares or to the
Corporation at its registered office in the City of Toronto
accompanied by the certificate or certificates representing
Class C Preferred Shares in respect of which the holder
thereof desires to exercise such right of conversion. Such
notice shall be signed by such holder or by his duly
authorized attorney or agent and shall specify the number of
Class C Preferred Shares which the holder desires to have
converted. The transfer form on the certificate or
certificates in question need not be endorsed, except in the
circumstances hereinafter contemplated. If less than all the
Class C Preferred Shares represented by a certificate or
certificates accompanying any such notice are to be converted,
the holder shall be entitled to receive, at the expense of the
Corporation, a new certificate representing the Class C
Preferred Shares comprised in the certificate or certificates
surrendered as aforesaid which are not to be converted.
On any conversion of Class C Preferred Shares, the share
certificates for Common Shares of the Corporation resulting
therefrom shall be issued in the name of the registered holder
of the Class C Preferred Shares converted or in such name or
names as such registered holder may direct in writing (either
in the notice referred to above or otherwise), provided that
such registered holder shall pay any applicable security
transfer taxes; in any such case the transfer form on the back
of the certificate in question shall be endorsed by the
registered holder of the Class C Preferred Shares or his duly
authorized attorney, with signature guaranteed in a manner
satisfactory to the Corporation.
(3) Effective Date of Conversion. Subject as hereinafter provided
in this clause 1.5(3), the right of a holder of Class C
Preferred Shares to convert the same into Common Shares shall
be deemed to have been exercised, and the registered holder of
Class C Preferred Shares to be converted (or any person or
persons in whose name or names any such registered holder of
Class C Preferred Shares shall have directed certificates
representing Common Shares to be issued as provided in clause
1.5(2)) shall be deemed to have become a holder of record of
Common Shares of the Corporation for all purposes on the date
of surrender of certificates representing the Class C
Preferred Shares to be converted accompanied by notice in
writing as provided in clause 1.5(2) hereof, notwithstanding
any delay in the delivery of certificates representing the
Common Shares into which such Class C Preferred Shares have
been converted.
(4) Issue of Additional Shares.
(i) Conversion Price Adjustment. For purposes of
determining the Class C Conversion Basis pursuant to
these Class C Preferred Shares Conditions, the Class
C Shares shall be deemed to have a "Conversion Price"
of
32
1C
$0.3972 US per share of Class C Preferred Shares. In
order to prevent dilution of the conversion rights
granted under this subdivision, the Conversion Price
will be subject to adjustment from time to time
pursuant to this clause 1.5(4).
(ii) Conversion Price Adjustment Calculation. If and
whenever, on or after the original date of issuance
of the Class C Preferred Shares, the Corporation
issues or sells, or is deemed to have issued or sold,
any of its Common Shares for consideration per share
less than the Conversion Price in effect immediately
prior to the time of such issue or sale, then
immediately after such issue or sale the Conversion
Price of Class C Preferred Shares will be reduced to
the price determined by multiplying the Conversion
Price by a fraction, the numerator of which will be
(a) the number of Common Shares outstanding
immediately prior to such issue or sale (assuming the
exercise or conversion of all Options (as defined
below) and Convertible Securities (as defined below)
that are then exercisable or convertible, including,
without limitation, all Options outstanding under any
employee share ownership plan and all outstanding
Class C Preferred Shares), plus (b) the number of
Common Shares that the aggregate consideration
received by the Corporation for the total number of
additional Common Shares so issued or sold would
purchase at such Conversion Price, and the
denominator of which will be the number of Common
Shares outstanding immediately prior to such issue or
sale (assuming the exercise or conversion of all
Options and Convertible Securities that are then
exercisable or convertible, including, without
limitation, all Options outstanding under any
employee stock ownership plan and all outstanding
Class C Preferred Shares) plus the number of
additional Common Shares actually issued.
It is the intention of the Corporation that the
Conversion Price shall apply only in respect of
transactions in which the Corporation raises
additional equity financing. Accordingly,
notwithstanding the foregoing, the Conversion Price
will not be adjusted by reason of the issuance of
Common Shares if such issuance is (i) upon conversion
of any presently outstanding shares or exercise of
presently outstanding warrants or other rights to
acquire shares (including the options granted to
CNET, Inc., pursuant to the Option Agreement dated
September 15, 1999), (ii) as a dividend or
distribution on the Class C Preferred or Common
Shares, (iii) pursuant to any employee stock
ownership plan or agreement that is approved from
time to time by the Board of Directors or (iv) in
connection with an acquisition transaction, building
or equipment lease transaction, strategic alliance or
partnering arrangement that is approved by the Board
of Directors.
(5) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under clause 1.5(4),
the following will be applicable:
(i) Deemed Issuance of Underlying Common Shares on Grant
of Options. If the Corporation in any manner issues
or grants any additional options,
33
1D
warrants or similar rights to purchase or acquire
Common Shares ("Options") or additional securities
convertible or exchangeable, with or without
consideration, into or for Common Shares
("Convertible Securities") and the price per share
for which Common Shares are issuable upon the
exercise of such Options or upon conversion or
exchange of such Convertible Securities is less than
the Conversion Price in effect immediately prior to
the granting of such Options, then the total maximum
number of Common Shares issuable upon the exercise of
such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities
issuable upon the exercise of such Options will be
deemed to be outstanding and to have been issued and
sold by the Corporation for such price per share. For
purposes of this paragraph, the "price per share for
which Common Shares are issuable" will be determined
by dividing (a) the total amount, if any, received or
receivable by the Corporation as consideration for
the granting of such Options, plus the minimum
aggregate amount of additional consideration payable
to the Corporation upon exercise of all such Options,
plus, in the case of such Options that relate to
Convertible Securities, the minimum aggregate amount
of additional consideration, if any, payable to the
Corporation upon the issuance of sale or such
Convertible Securities and the conversion or exchange
thereof, by (b) the total maximum number of Common
Shares issuable upon the exercise of such Options or
upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of
such Options. No further adjustment of the Conversion
Price will be made when Convertible Securities are
actually issued upon the exercise of such Options or
when Common Shares are actually issued upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities.
34
1E
(ii) Deemed Issuance of Underlying Common Shares Upon
Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any
additional Convertible Securities and the price per
share for which Common Shares are issuable upon such
conversion or exchange is less than the Conversion
Price in effect immediately prior to the time of such
issue or sale, then the maximum number of Common
Shares issuable upon conversion or exchange of such
Convertible Securities will be deemed to be
outstanding and to have been issued and sold by the
Corporation for such, price per share. For the
purposes of this paragraph, the "price per share for
which Common Shares are issuable" will be determined
by dividing (a) the total amount received or
receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation
upon the conversion or exchange thereof, by (b) the
total maximum number of shares of Common Shares
issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment of the
Conversion Price will be made when Common Shares are
actually issued upon the conversion or exchange of
such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the
Conversion Price had been or are to be made pursuant
to other provisions of this clause 1.5(5), no further
adjustment of the Conversion Price will be made by
reason of such issue or sale.
(iii) Changes in Pricing of Previously Issued Options or
Convertible Securities. If the purchase price
provided for in any Options, or the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into
or exchangeable for Common Shares changes at any
time, the Conversion Price in effect at the time of
such change will be readjusted to the Conversion
Price that would have been in effect at such time had
such Options or Convertible Securities still
outstanding provided for such changed purchase price,
additional consideration or changed conversion rate,
as the case may be, at the time initially granted,
issued or sold.
(iv) Reverse Adjustment on Expiry of Unexercised Options
or Convertible Securities. Upon the expiration of any
Option or the termination of any right to convert or
exchange any Convertible Security without the
exercise of any such Option or right, the Conversion
Price then in effect hereunder will be adjusted to
the Conversion Price that would have been in effect
at the time of such expiration or termination had
such Option or Convertible Security, to the extent
outstanding immediately prior to such expiration or
termination, never been issued.
35
1F
(v) Non-Cash Consideration. If the Corporation issues or
sells, or is deemed to have issued or sold, for cash
any additional Common Shares, Option or Convertible
Security, the consideration received therefor will be
deemed to be the net amount received by the
Corporation therefor.
(vi) Deemed Price of Options Not Otherwise Priced. In case
any Option is issued in connection with the issue or
sale of other securities of the Corporation, together
comprising one integrated transaction in which no
specific consideration is allocated to such Option by
the parties thereto, the Option will be deemed to
have been issued for a consideration of $0.01.
(vii) Shares Held by Corporation. The number of Common
Shares outstanding at any given time does not include
shares owned or held by or for the account of the
Corporation or any Subsidiary, and the disposition of
any shares so owned or held will be considered an
issue or sale of Common Shares by the Corporation.
(viii) Record Date. If the Corporation takes a record of the
holders of Common Shares for the purpose of entitling
them (a) to receive a dividend or other distribution
payable in Common Shares, Options or Convertible
Securities or (b) to subscribe for or purchase Common
Shares, Options or Convertible Securities, then such
record date will be deemed to be the date of the
issue or sale of the Common Shares deemed to have
been issued or sold upon the declaration of such
dividend or upon the making of such other
distribution or the date of the granting of such
right of subscription or purchase, as the case may
be.
(6) Adjustment of Class C Conversion Basis. If and whenever at any
time there is a capital reorganization of the Corporation or a
reclassification by the Corporation of its Common Shares or a
subdivision or consolidation by the Corporation of its
outstanding Common Shares into a greater or lesser number of
shares, as the case may be, or an amalgamation or merger of
the Corporation with or into any other body corporation, trust
partnership or other entity, or a sale or conveyance of the
property and assets of the Corporation as an entity or
substantially as an entity to any other body corporate, trust,
partnership or other entity, or the issuance of any rights or
the payment of any stock dividend (any such event is herein
called an "event"), any holder of Class C Preferred Shares who
has not exercised his right of conversion prior to the record
date where one has been established, or otherwise, on the
effective date of such Event (the record date or the effective
date of such Event is herein called the "Relevant Date") shall
be entitled to receive and shall accept, upon the exercise of
such right at any time thereafter, in lieu of the number (the
"Original Number") of Common Shares to which he was
theretofore entitled upon conversion, the aggregate number of
shares or other securities or property of the Corporation or
of the body corporate, trust, partnership or other entity
resulting from such Event, that such holder would have been
entitled to receive as a result of such Event if, on the
Relevant Date, he had been the registered holder of the
Original Number of Common Shares; provided that no such Event
shall be carried into effect unless, in the opinion of
36
1G
the directors, all necessary steps have been taken to ensure
that the holders of the Class C Preferred Shares shall
thereafter be entitled to receive such number of shares or
other securities or property of the Corporation or of the body
corporate, trust, partnership or other entity resulting from
such Event, as the case may be, subject to adjustment
thereafter in accordance with provisions, as nearly similar as
may be, to those contained in this clause 1.5(6), as such
holders would be entitled to receive pursuant to the foregoing
provisions of this clause 1.5(6).
(7) Conversion Adjustment Rules. The following rules and
procedures shall be applicable to Class C Conversion Basis
adjustments made pursuant to clause 1.5(6):
(i) Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding
but, for the purposes of this subclause 1.5(7)(i),
any Common Shares owned by a pension plan or share
purchase plan or analogous plan for employees of the
Corporation or its subsidiaries or affiliates shall
not be considered to be owned by or held for the
account of the Corporation;
(ii) the adjustment provided for in clause 1.5(6) hereof
shall be made cumulatively and consecutively in
respect of any Event contemplated by clause 1.5(6) as
giving rise to any adjustment of the Class C
Conversion Basis
(iii) if any question shall at any time arise with respect
to adjustments in the Class C Conversion Basis, such
question shall be conclusively determined by the
auditors of the Corporation and any such
determination shall be binding upon the Corporation
and any transfer agents and all shareholders of the
Corporation; and
(iv) forthwith after any adjustment in the Class C
Conversion Basis pursuant to the foregoing clause
1.5(6) the Corporation shall give written notice to
the registered holders of Class C Preferred Shares of
the Class C Conversion Basis following such
adjustment. Any such notice shall be sufficiently
given if delivered or sent by registered mail,
postage prepaid, to the holders of record of the
Class C Preferred Shares at the addresses last
recorded by the Corporation in the register
maintained by the Corporation. Any notice so mailed
shall be deemed to have been given on the third
business day after the date of the mailing.
(8) Entitlement to Dividends. A holder of any Class C Preferred
Share on the record date for any dividend declared payable on
any such share shall be entitled to such dividend
notwithstanding that any such share is converted after such
record date and before the payment date of such dividend, and
the registered holder of any Common Share resulting from any
conversion shall be entitled to rank equally with the
registered holders of all Common Shares in respect of all
dividends declared payable to holders of Common Shares or
record on any date after the date of conversion. Subject as
aforesaid, no payment or adjustment will be made
37
1H
on account of any dividend, accrued or otherwise, on the Class
C Preferred Shares converted or the Common Shares resulting
from any conversion.
(9) Notice of Certain Events. If the Corporation intends to fix a
date for any Common Share reorganization or for any capital
reorganization or for any rights offering or for any special
distribution, the Corporation shall, not less than 21 days
prior to such record date, notify each registered holder of
Class C Preferred Shares of such intention by written notice
to the extent that such particulars have been determined at
the time of giving the notice. Any such notice shall be
sufficiently given if delivered or sent by registered mail,
postage prepaid, to the holders of record of the Class C
Preferred Shares at the addresses last recorded by the
Corporation. Any notice so mailed shall be deemed to have been
given on the third business day after the date of the mailing.
(10) Avoidance of Fractional Shares. In any case where a fraction
of a Common Share would otherwise be issuable on conversion of
one or more Class C Preferred Shares, the Corporation shall
adjust such fractional interest by the payment by cheque of an
amount equal to the then current market value of such
fractional interest computed on the basis of the last board
lot sale price (or the average of the last bid and ask prices
if there has not been board lot sale), on any stock exchange
or quotation system on which such shares are listed or quoted
as may be selected for such purpose by the directors next
preceding the date of surrender of certificates representing
the Class C Preferred Shares to be converted. In the event
that the Common Shares are not listed or quoted on any stock
exchange or quotation system, the then current market value of
such fractional interest shall be determined by the directors
of the Corporation, which determination shall be conclusive
and binding.
(11) Postponement of Issuance of Shares upon Conversion. In any
case where the application of the foregoing provisions results
in an increase of the Class C Conversion Basis taking effect
immediately after the record date for a specific Event, if any
Class C Preferred Shares are converted after the record date
and prior to completion of the Event, the Corporation may
postpone the issuance to the holder of the additional Common
Shares to which he is entitled by reason of the increase of
the Class C Conversion Basis but such additional Common Shares
shall be so issued and delivered to that holder upon
completion of the Event and the Corporation shall, in the
interim, deliver to the holder an appropriate instrument
evidencing his right to receive such additional Common Shares.
(12) Automatic Conversion upon Shares going Public. Notwithstanding
any other term hereof, in the event of an IPO the holders of
the Class C Preferred Shares shall be deemed to convert all
Class C Preferred Shares into fully paid non-assessable Common
Shares of the Corporation without any further act required by
the holder, at the Class C Conversion Basis in effect on the
date of the conversion.
38
1I
1.6 AMENDMENT TO CLASS C PREFERRED SHARE PROVISIONS
The designation, rights, privileges, restrictions and conditions of the
Class C Preferred Shares may not be amended without the affirmative vote of
holders of all of the Class C Preferred Shares then outstanding.
39
1J
ARTICLE 2
AMENDMENT TO CLASS A PREFERRED SHARES
2.1 DISTRIBUTION RIGHTS
Section 2.6 of the provisions attaching to the Class A Preferred Shares
is hereby amended by adding the following words immediately after "Class B
Preferred Shares," in the last line thereof:
"but after any distribution of any part of the assets of the
Corporation among the holders of the Class C Preferred Shares,".
40
1K
ARTICLE 3
AMENDMENT TO CLASS B PREFERRED SHARES
3.1 DISTRIBUTION RIGHTS
Section 3.4 of the provisions attaching to the Class B Preferred Shares
is hereby amended by adding the following words immediately after "Common
Shares," in the fourth line thereof:
"but after any distribution of any part of the assets of the
Corporation among the holders of the Class C Preferred Shares
and the Class A Preferred Shares,".
41
2
5. The amendment has been duly authorized as required by Sections 168 &
170 (as applicable) of the Business Corporations Act.
La modification a ete dument autorisee conformement aux articles 168 et
170 (selon le cas) de la Loi sur les socie tes par actions.
6. The resolution authorizing the amendment was approved by the
shareholders (as applicable) of the corporation on
Les actionnaires (selon le cas) de la socie te ont approuve la
resolution autorisant la modification le
1999, Sept 15
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in duplicate.
Les presents status sont signes en double exemplaire.
MEDIA SYNERGY INC.
-----------------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By/Par: /s/ Wilson Lee CFO
---------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
42
1
For Ministry Use Only Ontario Corporation Number
A l'usage exclusif du ministere Numero de la societe en Ontario
1039951
Ministry of Ministere de
Consumer and la Consummation
Commercial et du Commerce
Ontario Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigeur les
NOVEMBER 24 NOVEMBRE, 1999
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The name of the corporation is:
Denomination sociale de la societe:
MEDIA SYNERGY INC.
2. The name of the corporation is changed to (if applicable):
Novelle denomination sociale de la societe (s'il y a lieu):
FLONETWORK INC.
3. Date of incorporation/amalgamation:
Date de la constitution ou de la fusion:
1993 AUGUST 04
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
4. The articles of the corporation are amended as follows:
Les statuts de la societe sont modifies de la facon suivante:
1. The name of the Corporation is changed to:
FloNetwork Inc.
2. The authorized capital of the Corporation is amended to
increase the authorized capital of the Corporation by creating
an unlimited by creating an unlimited number of Class D
Preferred Shares which shall have the rights, privileges,
restrictions and conditions set out in the annexed Schedule 1
which is incorporated in this form.
3. Item 8 - Restrictions on Transfer of Shares is deleted in its
entirety.
4. Item 9 - Other provisions is deleted in its entirety.
43
1A
SCHEDULE 1
1. Dividends:
1.1 Subject to the Business Corporations Act (Ontario) (the "Act"), the
holders of the Class D Preferred Shares shall be entitled to receive, if, as and
when declared in the discretion of the Board of Directors out of funds of the
Company legally available therefor (but in any event pari passu with any
dividends paid to holders of the Class A Preferred Shares, Class B Preferred
Shares and the Class C Preferred Shares and in preference and priority to any
payment of dividends on the Common Shares), cash dividends at the rate of
US$0.124647 per share per annum from the date of issue (computed on the basis of
a 360-day year, 30-day month), payable commencing on December 30, 1999 and
thereafter quarterly on the last day of March, June, September and December in
each year to shareholders of record on such dates, not exceeding 60 days
preceding such dividend dates, as shall be fixed for such purpose by the Board
of Directors in advance of payment of each particular dividend. Dividends shall
not be cumulative, provided that if in any year the Board of Directors in their
discretion shall not have declared or set apart for payment dividends on the
Common Shares or the Class D Preferred Shares, then no dividends shall be paid
or payable or owing to the holders of the Class D Preferred Shares for such
period. Arrears of dividends shall not bear interest.
1.2 So long as any Class D Preferred Shares are outstanding, no
dividend shall be declared or paid or other distribution made on the Class A
Preferred Shares, Class B Preferred Shares, the Class C Preferred Shares or the
Common Shares nor shall the Company purchase or otherwise acquire, or permit any
subsidiary of the Company to purchase or otherwise acquire, any Common Shares
unless all dividends on the Class D Preferred Shares for the current and all
past quarterly dividend periods that have been declared but are unpaid shall
have been paid in full or sums set apart for the payment thereof and there shall
exist no default with respect to the redemption provisions for the Class D
Preferred Shares.
1.3 The holders of Class D Preferred Shares shall be entitled to
receive dividends pari passu with any dividends paid to the holders of the
Common Shares, as if the Class D Preferred Shares had been converted to Common
Shares in accordance with Section 4 below, on the record date for each such
dividend payable to holders of the Common Shares, such dividends as the Board of
Directors may from time to time determine in its discretion to pay to such
holders of Common Shares, notwithstanding any other dividend payments which may
have been made to the holders of Class D Preferred Shares pursuant to this
Section 1.
2. Liquidation:
2.1 In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, then out of the assets of the Company
available for distribution to its shareholders before any distribution or
payment to the holders of the Class A Preferred Shares, the Class B Preferred
Shares, the Class C Preferred Shares or the Common Shares, the holders of the
Class D Preferred Shares shall
44
1B
be entitled to be paid the sum of US$1.24647 per share, together with any
dividends declared and unpaid to and including the date of such liquidation,
dissolution or winding up; and the holders of the Class D Preferred Shares shall
be entitled to no other or further distribution.
2.2 After payment in full to the holders of the Class D Preferred
Shares of the sums which such holders are entitled to receive hereunder or the
setting apart of such sums for such payment, the remaining assets of the Company
available for distribution shall be distributed among and paid to the holders of
the Class A Preferred Shares, the Class B Preferred Shares, the Class C
Preferred Shares and the Common Shares in accordance with the rights attaching
thereto.
2.3 If the assets of the Company available for distribution to its
Shareholders shall be insufficient to permit payment in full to the holders of
the Class D Preferred Shares of the sums which such holders are entitled to
receive pursuant to Section 2.1, then all of the assets available for
distribution to the shareholders shall be distributed among and paid to the
holders of the Class D Preferred Shares ratably in proportion to the respective
amounts that would be payable per share if such assets were sufficient to permit
such payment in full.
2.4 The consolidation or merger of the Company with or into any other
corporation or corporations (other than a consolidation or merger where the
shareholders of the Company immediately prior to the consolidation or merger
continue to own voting power of at least 50% of the surviving entity immediately
following such consolidation or merger) or the sale of all or substantially all
of the assets of the Company shall be deemed a liquidation, dissolution or
winding up of the Company within the meaning of this Section 2, unless such
consolidation or merger or sale shall have been consented to by the holders of a
majority of the Class D Preferred Shares at the time outstanding in the manner
provided in Section 3.2 of this Article.
3. Voting Rights:
3.1 Each holder of the Class D Preferred Shares shall be entitled to
one vote for each whole Common Share into which the Class D Preferred Shares
registered as of the record date in the name of such holder on the books of the
Company is convertible pursuant to Section 4.1 immediately prior to the time of
any meeting of holders of shares of the Company of which voting rights attaching
to the Common Shares are exercisable. Except as otherwise provided hereinafter
in this Section 3 or as otherwise required by the Act, the holders of the Class
D Preferred Shares, the Class B Preferred Shares, the Class C Preferred Shares
and the Common Shares shall vote together as if holders of one class of shares.
3.2 As long as a number of Class D Preferred Shares equal to at least
33 1/3 % of the total number Class D Preferred Shares ever issued by the Company
remain outstanding (subject to adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares), the Company shall not at any time without the consent of the holders of
at least a majority of the Class D
45
1C
Preferred Shares at the time outstanding, given in person or by proxy, either in
writing or at a meeting called for the purpose, at which the holders of the
Class D Preferred Shares shall vote separately as a class (unless the consent of
the holders of a greater number of such shares shall be required by statute):
(a) effect any change described in Section 170(l) of the Business
Corporations Act (Ontario);
(b) create, authorize or issue any additional class of shares ranking
prior to or on a parity with the Class D Preferred Shares, or create or
authorize any obligation or security exercisable or exchangeable for or
convertible into shares of any class ranking prior to or on a parity with the
Class D Preferred Shares;
(c) amend, alter or repeal any provision of the Articles of
Incorporation or By-Laws of the Company which would affect adversely the rights,
privileges restrictions or conditions attaching to the Class D Preferred Shares
or of the holders thereof,
(d) sell, lease or convey all or substantially all of the assets or
business of the Company or of the capital stock or the assets or business of any
subsidiary of the Company or consolidate or merge the Company or any subsidiary
of the Company with any other corporation (except a consolidation or merger of
the Company with any wholly-owned subsidiary of the Company), or in any way
reorganize the capital of the Company, or voluntarily liquidate, dissolve or
wind up the Company;
(e) purchase or otherwise acquire all or substantially all of the
shares or any other securities of any other entity or person or all or
substantially all of the assets or properties of any other entity or person;
(f) redeem any Common Shares (other than pursuant to equity incentive
agreements with service providers giving the Company the rights to repurchase
such Common Shares upon the termination of such services, or as required under
the Articles of Incorporation of the Company or any agreements to which the
Company is a party existing as of the date hereof,
(g) change the minimum or maximum number of members of the Board of
Directors of the Company set forth in the Articles of Incorporation of the
Company as amended by Articles of Amendment dated November 20, 1998; or
(h) pay or declare any dividend on the Class A Preferred Shares, the
Class B Preferred Shares, the Class C Preferred Shares or the Common Shares.
4. Conversion of the Class D Preferred Shares:
4.1 Each Class D Preferred Share may be converted at the option of the
holder thereof, at any time and from time to time, in the manner and upon the
terms and conditions hereinafter in this Section 4 set forth into such number of
fully paid and non-assessable Common Shares of the Company equal to US$1.24647
divided by the
46
1D
conversion price (the "Conversion Price") in effect at the time of conversion.
The Class D Preferred Shares shall be automatically converted as set forth
hereinabove:
(a) upon the consent of the holders of a majority of the outstanding
Class D Preferred Shares, at any time and from time to time, in the manner and
upon the terms and conditions hereinafter in this Section 4 set forth; or
(b) upon the consummation of an underwritten public offering of its
Common Shares which is priced so as to reflect a pre-money valuation (understood
as the total number of fully diluted Equity Securities outstanding (as defined
in Section 4.3 and including for this purpose shares issued under a stock option
or purchase plan approved by the Board of Directors of the Company) immediately
prior to such offering multiplied by the price per share at which such Common
Shares are sold to the public in such offering) of not less than US$125,000,000
and results in gross proceeds of not less than US$20,000,000 in cash, in the
manner and upon the terms and conditions hereinafter in this Section 4 set
forth.
4.2 The Conversion Price shall be US$1.24647 per Common Share until
adjusted (to the nearest cent, a half-cent being considered a full cent) as
hereinafter set forth in this Section 4 and thereafter the Conversion Price
shall be further adjusted and readjusted from time to time as hereinafter in
this Section 4 provided, each such adjustment or readjustment to remain in
effect until a further adjustment or readjustment is required by this Section 4.
4.3 If at any time or from time to time after the date on which the
Class D Preferred Shares were originally issued (hereinafter called the
"Original Issue Date"), the Company shall issue or sell any of its Common
Shares, options, warrants, rights or agreements for the purchase or acquisition
from the Company of any Common Shares or Convertible Securities (as defined
below) ("Options") or shares or other securities directly or indirectly
convertible into or exchangeable for Common Shares (excluding Options,
"Convertible Securities") (other than (i) Common Shares issued upon conversion
of any of the Class A Preferred Shares, the Class B Preferred Shares, the Class
C Preferred Shares or the Class D Preferred Shares or Convertible Securities or
upon exercise of Options outstanding prior to the Original Issue Date; (ii)
Options, including shares issued upon exercise of Options, or shares issued to
directors, officers and employees of and consultants to the Company or a
subsidiary of the Company pursuant to a stock option or purchase plan approved
by the Board of Directors of the Company, (iii) securities issued pursuant to a
dividend or distribution or (iv) Common Shares, Convertible Securities or
Options issued (or shares issued upon conversion or exercise thereof) in
connection with an acquisition transaction, building or equipment lease
transaction, strategic alliance or partnering arrangement that is approved by
the Board of Directors) (the Common Shares, Convertible Securities and Options
to be referred to collectively as the "Equity Securities") for a consideration
per Common Share less than the Conversion Price in effect immediately prior to
such issue or sale, then in each such case the Conversion Price shall be
adjusted (to the nearest cent, a half cent being considered a full cent) to
equal the result of dividing
47
1E
(a) the sum of (x) the result obtained by multiplying the number of
Common Shares of the Company outstanding immediately prior to such issue or sale
by the Conversion Price in effect immediately prior to such issue or sale, and
(y) the consideration, if any, received by the Company upon such issue or sale,
by
(b) the aggregate number of Common Shares of the Company outstanding
immediately after such issue or sale,
provided that, (i) for the purpose of this Subsection 4.3, all Common Shares
issuable upon conversion or exchange of Convertible Securities or exercise of
Options outstanding at the time of determination of the number of Common Shares
outstanding shall be deemed to be outstanding, and (ii) for the purpose of
determining the number of Common Shares issuable upon conversion or exchange of
such Convertible Securities or exercise of Options at the time of determination
or the number of Common Shares outstanding no effect shall be given to any
adjustments to the conversion or exchange price or conversion or exchange rate
of such Convertible Securities or Options resulting from the issuance of Equity
Securities that is the subject of the calculation set forth above.
4.4 For purposes of determining the consideration per Common Share
received by the Company upon the issuance of an Equity Security:
(a) If after the Original Issue Date the Company shall (i) grant any
Options, or (ii) issue or sell any Convertible Securities, then in each such
case the price per Common Share issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities shall be determined by
dividing (x) the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options or the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, by (y) the maximum number
of Common Shares issuable upon such exercise, conversion or exchange, as the
case may be. If the price per share so determined is less than the Conversion
Price in effect immediately prior to the granting of such Options or the issue
or sale of such Convertible Securities, such granting or issue or sale shall be
deemed to be an issue or sale for cash of such maximum number of Common Shares
at such price per share and such maximum number of Common Shares shall be deemed
to be outstanding, provided that (1) if such Options or Convertible Securities
by their terms provide, with the passage of time or otherwise, for any increase
in the amount of additional consideration payable to the Company or decrease in
the number of Common Shares issuable upon such exercise, conversion or exchange
(by change of rate or otherwise), the Conversion Price shall, upon each such
increase or decrease becoming effective, be readjusted to reflect such increase
or decrease insofar as it affects rights of exercise, exchange or conversion
which have not theretofore expired, and (2) upon the expiration of such Options
or the rights of conversion or exchange of such Convertible Securities, if any
thereof shall not have been exercised, the Conversion Price shall, upon such
expiration, be readjusted and shall thereafter be such as it would have been had
it been originally adjusted (or had the original adjustment not been required,
as the case
48
1F
may be) on the basis that (xx) the only Common Shares so issued were the Common
Shares, if any, actually issued or sold upon the exercise of such Options or the
rights of conversion or exchange of such Convertible Securities, and (yy) such
Common Shares, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the consideration, if any,
actually received by the Company for the granting of all of such Options,
whether or not exercised, or for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged, provided, further, that
no such readjustment shall have the effect of increasing the Conversion Price by
an amount in excess of the amount of the adjustment thereof initially made in
respect of the granting of such Options or the issue or sale of such Convertible
Securities.
(b) If the Company shall pay a dividend or make a distribution on or in
respect of any shares of the Company other than the Class D Preferred Shares,
which dividend or distribution is payable in Common Shares or Convertible
Securities, such Common Shares or Convertible Securities shall be deemed to have
been issued or sold for no consideration.
(c) In case of a consideration consisting in whole or in part of cash,
the cash consideration shall be deemed to be the amount of cash constituting or
included in such consideration. In case of a consideration consisting in whole
or in part of property other than cash, the amount of the consideration other
than cash shall be deemed to be the fair value thereof as determined in good
faith by the Board of Directors of the Company. In case Common Shares or
Convertible Securities are issued or sold or rights or options to purchase or
otherwise acquire Common Shares or Convertible Securities are granted together
with other stock or securities or assets of the Company for a consideration
which covers a combination of them, the portion of such consideration allocable
to the Common Shares, Convertible Securities, rights or options shall be as
determined in good faith by the Board of Directors of the Company.
(d) The issuance of Common Shares on the exercise of any Options or the
conversion or exchange of any Equity Securities issued, sold or granted after
the Original Issue Date shall not be deemed to be an issuance of Equity
Securities.
4.5 If the Company shall subdivide or reclassify the then outstanding
Common Shares into a greater number of Common Shares or combine or reclassify
the then outstanding Common Shares into a smaller number of Common Shares, the
Conversion Price in effect immediately prior to such subdivision, combination or
reclassification, as the case may be, shall be proportionately adjusted as of
the effective date thereof so that the holder of any Class D Preferred Shares
thereafter surrendered for conversion shall be entitled to receive the number of
Common Shares which he would have owned after the happening of such event had
such Class D Preferred Shares been converted immediately prior to the happening
of such event.
4.6 Subject to Section 2.4, in case of any capital reorganization of
the Company, or any consolidation or merger of the Company with or into another
corporation in which the Common Shares are converted into or exchanged for
securities, cash or other property, the holder of each Class D Preferred Share
then outstanding shall
49
1G
have the right thereafter to convert such share into the kind and amount of
shares and other securities and property receivable upon such reorganization,
consolidation or merger by a holder of the number of Common Shares of the
Company into which such Class D Preferred Share might have been converted
immediately prior to such reorganization, consolidation or merger; and effective
provision shall be made in the Articles of Incorporation of the resulting or
surviving corporation or otherwise so that the provisions set forth in this
Section 4 for the protection of the conversion rights of the Class D Preferred
Shares shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares and other securities and property deliverable upon conversion
of the Class D Preferred Shares remaining outstanding or other convertible
securities received by the holders in place thereof, and any such resulting or
surviving corporation shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities or property as the
holders of the Class D Preferred Shares, or other convertible securities
received by the holders in place thereof, shall be entitled to receive pursuant
to the provisions hereof, and to make provisions for the protection of the
conversion right as above provided. In case securities or property other than
Common Shares shall be issuable or deliverable upon conversion as aforesaid,
then all references in this Section 4 to Common Shares shall be deemed to apply,
so far as appropriate and as nearly as may be, to such other securities or
property.
4.7 In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend at the same rate as
the rate of the last cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of any
class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or consolidation or merger
of the Company with or into another corporation other than one in which the
Company is the surviving entity and its Common Shares are not converted into or
exchanged for securities, cash or other property, or
(c) any voluntary or involuntary dissolution, liquidation or winding up
of the Company;
then and in each such event the Company will mail to each holder of the Class, D
Preferred Shares then outstanding at such holder's address as it appears on the
records of the Company a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up is to
take place, and the time, if any is to be fixed, of which the holders of record
of Common Shares shall be entitled to exchange their Common Shares for
securities or other properties deliverable upon such event, and (iii) the amount
and
50
1H
character of any shares or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant, and the person or class of person to whom such proposed issue or grant is
to be offered or made. Such notice shall be mailed at least 20 days prior to the
date therein specified.
4.8 Upon each adjustment or readjustment in the Conversion Price, the
Company at its expense will cause the Chief Financial Officer to compute, and
will have the independent accountants who regularly audit the books and accounts
of the Company or other independent accountants of recognized standing selected
by the Company certify, such adjustment or readjustment in accordance with the
provisions of this Section 4 and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (i) the
consideration received or to be received by the Company for any additional
Common Shares issued or sold or deemed to have been issued or sold, (ii) the
number of Common Shares outstanding or deemed to be outstanding, and (iii) the
Conversion Price in effect immediately prior to such issue or sale and as
adjusted and readjusted (if required) on account thereof. The Company forthwith
shall file such certificate with its corporate records and mail a copy to each
holder of the Class D Preferred Shares then outstanding at such holder's address
as it appears on the records of the Company.
4.9 In order to convert the Class D Preferred Shares into Common
Shares, the holder thereof shall surrender at the principal office of the
Company (or at such other place as the Board of Directors shall have designated
for the purpose) the certificate or certificates for such Class D Preferred
Shares properly endorsed in blank for transfer or accompanied by a proper
instrument of assignment or transfer in blank and bearing any necessary transfer
tax stamps thereto affixed and canceled, together with a written request for
conversion in which shall be stated the name or names in which such holder
wishes the certificate or certificates for Common Shares to be issued. The
Company will, as soon as practicable thereafter, deliver at said office to such
holder of the Class D Preferred Shares, or to his nominee or nominees, a
certificate or certificates for the number of full Common Shares to which he
shall be entitled as aforesaid, together with a cash payment in lieu of any
fraction of a Common Share. No fraction of a Common Share shall be issued upon
any conversion but, in lieu thereof, shall be paid upon such conversion an
amount in cash equal to the same fraction of the Conversion Price at the time of
conversion. No payment or adjustment for dividends on any Class D Preferred
Share converted into Common Shares or any Common Share that shall be issuable
upon conversion of the Class D Preferred Shares shall be made. The Class D
Preferred Shares shall be deemed to be converted and the person or persons in
whose name or names any certificate or certificates for Common Shares shall be
issuable upon such conversion shall be deemed to have become a holder or holders
of record of the Common Shares at the close of business on the date upon which
the certificate representing the Class D Preferred Shares has been surrendered
to the Company for conversion. The Company will pay all issue taxes, if any,
incurred upon the issuance of Common Shares upon conversion of the Class D
Preferred Shares, provided that the Company will not pay any transfer or other
taxes incurred by reason of the issuance of such Common Shares in a
51
1I
name or names other than that in which the Class D Preferred Shares so converted
were registered.
4.10 All Class D Preferred Shares which shall have been converted as
provided in this Section 4 shall no longer be deemed to be outstanding and all
rights with respect to such shares shall forthwith cease and terminate except
for the right of the holders thereof to receive full Common Shares, together
with a cash payment in lieu of any fraction of a Common Share. All Class D
Preferred Shares surrendered for conversion shall be canceled and shall not be
reissued.
4.11 The Company will at all times reserve and keep available out of
its authorized but unissued Common Shares, solely for the purpose of effecting
the conversion of all the Class D Preferred Shares, the full number of Common
Shares from time to time issuable upon conversion of all the Class D Preferred
Shares then outstanding.
52
2
5. The amendment has been duly authorized as required by Sections 168 &
170 (as applicable) of the Business Corporations Act.
La modification a ete dument autorisee conformement aux articles 168 et
170 (selon le cas) de la Loi sur les socie tes par actions.
6. The resolution authorizing the amendment was approved by the
shareholders (as applicable) of the corporation on
Les actionnaires ou les administrateurs (selon le cas) de la socie te
ont approuve la resolution autorisant la modification le
November 24, 1999
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in duplicate.
Les presents status sont signes en double exemplaire.
MEDIA SYNERGY INC.
-----------------------------------------------------
(Name of Corporation)
(Denomination sociale de la societe)
By/Par: /s/ Wilson Lee CFO
---------------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)
By/Par: /s/ Chris Keevill President and COO
---------------------------------------------
(Signature) (Description of Office)
(Signature) (Fonction)