Exhibit 99.26
CONSENT AND AMENDMENT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 21st day of March, 2003.
BETWEEN:
CIBC CAPITAL PARTNERS,
a division of CANADIAN IMPERIAL BANK OF COMMERCE
(hereinafter referred to as "CIBC")
- and -
POINTS INTERNATIONAL LTD.,
a corporation continued under the laws of the Province of Ontario
(hereinafter referred to as "Points")
- and -
USA INTERACTIVE,
a corporation incorporated under the laws of Delaware.
(hereinafter referred to as "USAI")
WHEREAS Points has issued to, and CIBC is the holder of, an 11%
$6,000,000 convertible debenture, amended and restated as of February 8, 2002,
(the "CIBC Debenture") and a series one preferred share in the capital of Points
(the "Series One Share");
AND WHEREAS Points proposes to enter into and effect the transactions
(including the relevant agreements and issuance of securities), (the
"Transactions") substantially as set out in the letters to the TSX Venture
Exchange attached hereto as Schedule A;
AND WHEREAS Points is required to obtain the prior written consent of
CIBC under the terms of the CIBC Debenture and the Series One Share in respect
of, and to implement, certain aspects of the Transactions;
AND WHEREAS the parties desire to amend the CIBC Debenture as set out
herein;
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AND WHEREAS the parties desire to set out their agreement as to the
interpretation of certain terms of the CIBC Debenture and the Series One Share;
AND WHEREAS the parties desire to amend the provisions of the Series
One Share pursuant to the Articles of Amendment (as defined in section 2.1(a))
and to provide their agreement to seek approval to amend the provision of the
Series One Share pursuant to Section 4.4;
NOW THEREFORE, in consideration of the premises, covenants and
agreements herein contained and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, the parties covenant and agree as follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS
Except as otherwise expressly set out herein, capitalized terms shall
have the meaning ascribed thereto herein. References in this Agreement to the
"parties" shall mean the parties to this Agreement and a reference to a "party"
shall mean one of the parties to this Agreement.
1.2 CONSTRUCTION
In this Agreement, unless otherwise expressly stated or the context
otherwise requires:
(a) references to "herein", "hereby", "hereunder", "hereof" and similar
expressions are references to this Agreement and not to any particular
Article, Section or Appendix;
(b) references to an "Article", "Section" or "Schedule" are references to
an article, section or schedule of or to this Agreement;
(c) words importing the singular shall include the plural and vice versa,
words importing gender shall include the masculine, feminine and
neuter genders, and references to a "person" or "persons" shall
include individuals, corporations, partnerships, associations, bodies
politic and other entities, all as may be applicable in the context;
(d) the use of headings is for convenience of reference only and shall not
affect the construction or interpretation hereof; and
(e) the word "including", when following any general term or statement, is
not to be construed as limiting the general term or statement to the
specific items or matters set forth or to similar items or matters,
but as referring to all other items or
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matters that could reasonably fall within the broadest possible scope
of the general term or statement.
ARTICLE II
CONSENTS AND WAIVERS
2.1 CONSENTS
CIBC hereby consents to the Transactions and the implementation
thereof. Without limiting the foregoing, CIBC hereby consents:
(a) pursuant to section 5.3.2 of the CIBC Debenture to the change in the
capital structure of Points resulting from the creation of preferred
shares (the "Series Two Share" and "Series Three Share", respectively)
and the amendment of the provisions attaching to the Series One Share
on substantially the terms set out in the articles of amendment (the
"Articles of Amendment") attached as Schedule B;
(b) pursuant to section 5.3.3 of the CIBC Debenture to the issuance of the
Series Two Share and the Series Three Share, and the issuance of
common shares of Points ("Common Shares") from time to time upon the
exercise of the warrant (the "Warrant") to be issued by Points and
upon the conversion of the Series Two Share pursuant to the
Transactions, to the extent that they may constitute sales of shares
of Points from treasury at a price per share less than $0.40 (subject
to adjustment as contemplated by section 5.4(a) of the CIBC
Debenture);
(c) pursuant to section 5.3.5 of the CIBC Debenture to the increase in the
size of the board of directors of Points to eleven (11) persons, the
decrease in the authorized size of the board of directors of Points to
eleven (11) persons and the appointment or election of directors
thereto from time to time pursuant to the terms of the Series Two
Share and otherwise pursuant to the investor's rights agreement (the
"Investor's Agreement") to be entered into between Points and the
holder of the Series Two Share pursuant to the Transactions;
(d) pursuant to section 5.3.8 of the CIBC Debenture to the creation and
issuance of the Series Two Share and Series Three Share;
(e) pursuant to section 5.3.11 of the CIBC Debenture to the amendment of
the articles of Points to create the Series Two Share and the Series
Three Share, to amend the Series One Share on substantially the terms
set out in the Articles of Amendment and to amend the articles to
decrease the authorized size of the board of directors of Points to
eleven (11) persons; and
(f) pursuant to section 5.3.12 of the CIBC Debenture to the entry into of
the subscription agreement, the Investor's Agreement and the warrant
certificates by Points in connection with the Transactions.
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2.2 WAIVER OF RIGHT OF FIRST REFUSAL
For the purposes of, and in connection with, the Transactions CIBC
hereby waives its rights under section 5.3.8 of the CIBC Debenture respecting
the provision to Points of additional capital by way of debt and, for greater
certainty, waives the notice requirements associated therewith.
2.3 CHANGE OF CONTROL
Points and CIBC hereby agree that (i) the issuance of the Series Two
Share and the Warrant do not constitute a "Change of Control" under the
definition of such term as set out in section 1.1 of the CIBC Debenture and (ii)
for purposes of determining whether or not USAI (together with its "Associates"
and "Affiliates" (as such terms are defined in the CIBC Debenture) and any
persons acting jointly or in concert therewith) will acquire greater than 50% of
the equity (by value) of Points, the Series Two Share shall have a value, at any
given point in time, equal to the value of the Common Shares into which it is
convertible at that point in time, and the Warrants will have a value of zero.
This Section 2.3 shall not restrict the interpretation of the definition of
"Change of Control" under section 1.1 of the CIBC Debenture in the event of the
issuance of Common Shares on the exercise of the Warrant such that USAI
(together with its "Associates" and "Affiliates" and any persons acting jointly
or in concert therewith) acquires greater than 50% of the votes attached to
Points' securities entitled to vote for the election of Points' board of
directors.
2.4 IRREVOCABLE APPROVAL
CIBC, as the sole holder of the Series One Share, irrevocably
approves, authorizes and consents to the Articles of Amendment and the filing
thereof with the Director under the Business Corporations Act (Ontario).
ARTICLE III
CIBC DEBENTURE
3.1 AMENDMENT OF CIBC DEBENTURE
Effective upon the issuance of the Series Two Share and the Warrant,
the CIBC Debenture shall be amended as follows automatically and without further
formality:
(a) the text of section 2.3 of the CIBC Debenture is amended by inserting
a new second paragraph as follows:
"Notwithstanding any other provision hereof, in the event of a Change
of Control as a result of the exercise of that certain warrant (the
"Specified Warrant") to be issued to USA Interactive ("USAI") or an
Affiliate thereof pursuant to the terms of a subscription agreement
(the "Subscription Agreement") dated March 21, 2003 entered into
between USAI and the Borrower, the
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Borrower shall be entitled to prepay the Principal Amount of this
Debenture together with all other amounts payable under this Debenture
provided, for greater certainty, in this circumstance the Lender
waives repayment of all accrued and unpaid interest (such that accrued
interest is and shall be deemed to be nil). No Event of Default shall
occur under this Debenture as a result of such Change of Control
(including, for greater certainty, pursuant to Section 7.1.18 as a
result of the exercise of the Specified Warrant) provided that the
Borrower shall have prepaid this Debenture, in accordance with the
preceding sentence, within 30 days of such Change of Control.";
(b) the text of section 3.1 of the CIBC Debenture is amended by inserting
a new second paragraph as follows:
"Notwithstanding any other provision hereof, the Conversion Right
shall (i) not be exercisable for so long as the Specified Warrant is
outstanding and held by USA Interactive or an Affiliate thereof and
(ii) terminate on that date upon which the Specified Warrant is
exercised in full provided that the Borrower has repaid the Debenture
in accordance with the second paragraph of Section 2.3 hereof. The
Borrower shall promptly notify the Lender of the termination of the
Specified Warrant or the exercise thereof in full."; and
(c) the text of section 3.12 of the CIBC Debenture is amended by adding a
subsection (d) as follows:
"Notwithstanding any other provision hereof, if the underwriter in
connection with a Prospectus or a registration under Section 3.12(c)
that is an underwritten offering determines in its sole discretion
that marketing factors make it advisable to limit the number of Common
Shares to be underwritten, the number of Common Shares that may be
included in the underwriting shall be allocated, (i) if such
registration under Section 3.12(c) was initiated by the Borrower in
respect of an offering of treasury securities, then first to the
Borrower and second to the selling securityholder pursuant to a right
to require the Borrower to file a prospectus under the investor's
right agreement (the "Investor's Rights Agreement") between the
Borrower and USAI (or an Affiliate thereof) to be entered into
pursuant to the Subscription Agreement and the Lender on a pro rata
basis, (ii) if such prospectus filing was initiated by the Lender in
respect of a secondary offering pursuant to a right to require the
Borrower to file a prospectus hereunder, then first to the Lender,
second to the
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selling securityholder pursuant to a right to require the Borrower to
file a prospectus under the Investor's Rights Agreement and third to
the Borrower, or (iii) in such manner as may be agreed among the
Borrower and any selling securityholders."
3.2 CONFIRMATION
The parties hereby confirm and agree that, except as amended hereby,
the provisions of the CIBC Debenture remain in full force and effect. CIBC
confirms that, as of the date of this Agreement, to the knowledge of Xxxxxxxxxxx
Xxxxx and Xxxxx Xxxxxxxx (for greater certainty without any investigation of
Points), no "Event of Default" (as such term is defined in the CIBC Debenture)
has occurred and is continuing or would arise through either or both of the
passage of time or giving of notice.
ARTICLE IV
SERIES ONE PREFERRED SHARE
4.1 DETERMINATION OF DIVIDEND AMOUNT
The parties hereto hereby acknowledge and agree for all purposes that
in the event of the occurrence of a "Dividend Event" (as such term is defined in
the terms of the Series One Share) as a result of the exercise of the Warrant,
the operation of the terms of the Series One Share result in the amount payable
to the holder of the Series One Share for purposes of section 3(a) of the terms
of the Series One Share being equal to the lesser of:
(a) $24,000,000 less the amount paid-up on the Series One Share; and
(b) the sum of:
(i) $4,000,000; and
(ii) the amount determined as the number of common shares into which
the CIBC Debenture is then convertible multiplied by the exercise
price paid per share by USAI on the exercise of the Warrants,
less the amount paid-up on the Series One Share.
4.2 CONVERTIBILITY OF CIBC DEBENTURE
Points and CIBC hereby acknowledge and agree that notwithstanding that
the conversion right of CIBC under the CIBC Debenture shall not be exercisable
in the circumstances set out in Section 3.1(b), the CIBC Debenture remains
automatically convertible under section 3.2 thereof and therefore remains
convertible for the purposes of section 5 of the terms of the Series One Share.
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4.3 DIVIDEND EVENT
The parties hereby agree that the issuance of the Series Two Share and
the Warrant do not constitute "Dividend Events" under the definition of such
term as set in section 2 of the terms of the Series One Share and that ownership
of such securities do not constitute beneficial ownership of the Common Shares
underlying such securities. This Section 4.3 shall not restrict the
interpretation of the definition of "Dividend Event" in the event of the
issuance of Common Shares on the exercise of the Warrant and the conversion of
the Series Two Share.
4.4 CONVERSION EVENT
For greater certainty, the parties hereby agree that the waiver of
payment of interest in the circumstances described in the second paragraph of
section 2.3 of the CIBC Debenture results in no accrued interest outstanding and
therefore acknowledge and agree that the repayment of the CIBC Debenture in such
circumstance shall be interpreted under section 2(b)(i) of the terms of the
Series One Share as repayment in full of the principal and accrued interest
owing under the CIBC Debenture.
4.5 NON-DIVIDEND EVENT CHANGE OF CONTROL
(a) The parties hereto hereby acknowledge that, under the terms of the
Series One Share, the holder of the Series One Share is entitled to payment of a
dividend upon the occurrence of, among other things, any person (other than
CIBC) owning greater than 50% of the outstanding Common Shares. The parties
further acknowledge that, by virtue of CIBC consenting to the creation and
issuance of the Series Two Share, it will become possible for a person to have
greater than 50% voting control of Points without owning greater than 50% of the
outstanding Common Shares and that, accordingly, CIBC has suffered a
diminishment of its rights under the Series One Share.
(b) In consideration of CIBC consenting to the creation and issuance of the
Series Two Share, Points hereby agrees that, subject to Sections 4.5(c), in the
event of any Person (and such Person's Affiliates and Associates, and any person
acting jointly or in concert with such Person) acquiring greater than 50% of the
votes attached to Points' securities entitled to vote for the election of
Points' board of directors or greater than 50% of the equity (by value) of
Points (a "New Change of Control"), and provided that such New Change of Control
is not a "Dividend Event" as such term is defined in the terms of the Series One
Share, Points shall pay to the holder of the Series One Share, within 30 days of
the New Change of Control, an amount equal to the amount that would have been
payable to the holder of the Series One Share had the New Change of Control also
constituted a "Dividend Event" under the Series One Share. For the purposes of
this Section 4.5(b), "Affiliate" means an "affiliate" as defined by the Business
Corporations Act (Ontario), "Associate" means an "associate" as defined by the
Business Corporations Act (Ontario), and "Person" means any individual,
partnership, limited partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal personal
representative.
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(c) Notwithstanding any other provision hereof, (i) in no event will an
amount be payable under this Section 4.4 if there has been a "Liquidation Event"
or a "Dividend Event" under the terms of the Series One Share prior to or
contemporaneously with the New Change of Control and (ii) upon the filing of
articles of amendment to give effect to the Amendments (as defined below) the
obligations of Points under Section 4.5(b) shall immediately terminate other
than in respect of any payment obligation arising as a result of a New Change of
Control occurring prior to the filing of such articles of amendment.
(d) Points hereby agrees to propose, at its next annual meeting or special
meeting of shareholders, amendments to the articles of Points (the "Amendments")
to:
(i) amend section 2(c)(ii) of the terms of the Series One Share by
deleting section 2(c)(ii) thereof and inserting in place thereof
"any Person (other than Canadian Imperial Bank of Commerce) (and
such Person's Affiliates and Associates, and any person acting
jointly or in concert with such Person) (collectively, an
"Acquiror") acquiring greater than 50% of the votes attached to
the Corporation' securities entitled to vote for the election of
the Corporation's board of directors or greater than 50% of the
equity (by value) of the Corporation";
(ii) amend section 2 of the terms of the Series One Share by inserting
a new paragraph (d) as follows ""Affiliate" means an "affiliate"
as defined by the Business Corporations Act (Ontario).";
(iii) amend section 2 of the terms of the Series One Share by
inserting a new paragraph (e) as follows ""Associate" means an
"associate" as defined by the Business Corporations Act
(Ontario)."; and
(iv) amend section 2 of the terms of the Series One Share by inserting
a new paragraph (f) as follows ""Person" means any individual,
partnership, limited partnership, joint venture, syndicate, sole
proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor,
administrator or other legal personal representative."
(e) Points and CIBC hereby agree that (i) the issuance of the Series Two
Share and the Warrant do not constitute a New Change of Control and (ii) for
purposes of determining whether or not USAI (together with its "Associates" and
"Affiliates" (as such terms are defined in Section 4.5(b)) and any persons
acting jointly or in concert therewith) will acquire greater than 50% of the
equity (by value) of Points, the Series Two Share shall have a value, at any
given point in time, equal to the value of the Common Shares into which it is
convertible at that point in time, and the Warrants will have a value of zero.
This Section 4.5(e) shall not restrict the interpretation of the definition of
New Change of Control in the event of the issuance of Common Shares on the
exercise of the Warrant such that USAI (together with its "Associates" and
"Affiliates" and any persons acting jointly or in concert therewith) acquires
greater than 50%
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of the votes attached to Points' securities entitled to vote for the election of
Points' board of directors.
4.6 USE OF PROCEEDS - EXERCISE OF WARRANTS
Points shall, upon receipt of the proceeds received on exercise in
full of the Warrants, use such proceeds to repay, on or before the date which is
thirty (30) days following such exercise, all amounts owing under, and in
accordance with, the terms of the CIBC Debenture and the Series One Share or
Section 4.4, as applicable.
ARTICLE V
GENERAL
5.1 BINDING EFFECT
This Agreement shall be binding upon and shall enure to the benefit of
the parties hereto and their respective successors and assigns under section 9.6
of the CIBC Debenture.
5.2 GOVERNING LAW
This Agreement shall governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein and
shall be treated in all respects as an Ontario contract.
5.3 TIME
Time shall be of the essence of this Agreement.
5.4 AMENDMENTS IN WRITING
No amendment, variation or waiver of the provisions of this Agreement
shall be effective unless made in writing and signed by each of the parties
hereto, either individually by counterpart or collectively. Any amendment,
variation or waiver shall take effect on the date specified in the amendment,
variation or waiver or, if not so specified, on the date on which the last party
executes and delivers the amendment, variation or waiver.
5.5 SEVERABILITY
If any portion of this Agreement or the application thereof to any
circumstance shall be held invalid or unenforceable, unless such invalid
provision is fundamental to the efficacy of this Agreement, the remainder of the
provision in question, or its application to any circumstance other than that to
which it has been held invalid or unenforceable, and the remainder of this
Agreement shall not be affected thereby and shall be valid and enforceable to
the fullest extent permitted by law.
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5.6 COUNTERPARTS
This Agreement and any amendment, supplement or restatement thereof
may be executed in one or more counterparts, each of which shall be deemed to
constitute an original.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
CIBC CAPITAL PARTNERS, a division of
CANADIAN IMPERIAL BANK OF COMMERCE
by
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Name:
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Title:
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Name:
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Title:
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POINTS INTERNATIONAL LTD.
by
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Name:
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Title:
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Name:
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Title:
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USA INTERACTIVE
by
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Name:
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Title:
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