<PAGE>
For Ministry Use Only Ontario Corporation Number
A L'USAGE EXCLUSIF DU MINISTERE NUMERO DE LA SOCIETE EN ONTARIO 1.
[LOGO] Ministry of Ministere de 1367761
Consumer and la Consommation ---------------------
Commercial Relations et du Commerce
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigueur le
MAY 26 MAI, 2000
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Director / Directeur
Business Corporations Act / Loi sur les societes par actions
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ARTICLES OF AMENDMENT
Form 3 STATUTS DE MODIFICATION
Business
Corporations 1. The name of the corporation is:
Act
DENOMINATION SOCIALE DE LA SOCIETE :
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C H A N G E P O I N T C O R P O R A T I O N
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NUMERO 3
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SOCIETES PAR
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2. The name of the corporation is changed to (if applicable):
NOUVELLE DENOMINATION SOCIALE DE LA SOCIETE (S'IL Y A LIEU) :
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3. Date of incorporation/amalgamation:
DATE DE LA CONSTITUTION OU DE LA FUSION :
31 - JULY - 1999
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(Day, Month, Year)
(JOUR, MOIS, ANNEE)
4. The articles of the corporation are amended as follows:
LES STATUTS DE LA SOCIETE SONT MODIFIES DE LA FACON SUIVANTE.
1. THE ARTICLES OF THE CORPORATION BE AMENDED (a) TO DELETE
THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS
ATTACHING TO THE CLASS A PREFERRED SHARES OF THE
CORPORATION AND TO SUBSTITUTE THEREFOR THE RIGHTS,
PRIVILEGES, RESTRICTIONS AND CONDITIONS SET FORTH IN
EXHIBIT "A" ATTACHED HERETO AND (b) TO INCREASE THE
AUTHORIZED CAPITAL OF THE CORPORATION BY THE CREATION OF
2,873,696 CLASS B PREFERRED SHARES AND BY PROVIDING THAT
THE CLASS B PREFERRED SHARES SHALL HAVE ATTACHED THERETO
THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS SET
FORTH IN EXHIBIT "B" ATTACHED HERETO.
2. ANY DIRECTOR OR OFFICER OF THE CORPORATION BE AND HE OR
SHE IS HEREBY AUTHORIZED AND DIRECTED, FOR AND ON BEHALF OF
THE CORPORATION, TO EXECUTE AND DELIVER ALL SUCH DOCUMENTS
AND TO DO ALL SUCH OTHER ACTS AND THINGS AS HE OR SHE MAY
DETERMINE TO BE NECESSARY OR ADVISABLE TO GIVE EFFECT TO
THIS RESOLUTION (INCLUDING, WITHOUT LIMITATION, THE
DELIVERY OF ARTICLES OF AMENDMENT IN THE PRESCRIBED FORM TO
THE DIRECTOR APPOINTED UNDER THE BUSINESS CORPORATIONS ACT
(ONTARIO)), THE EXECUTION OF ANY SUCH DOCUMENT OR THE DOING
OF ANY SUCH OTHER ACT OR THING BEING CONCLUSIVE EVIDENCE OF
SUCH DETERMINATION.
<PAGE>
EXHIBIT "A"
CLASS A PREFERRED SHARES
1. NUMBER OF SHARES. The class of Preferred Shares designated and known as Class
A Preferred Shares shall consist of 5,983,962 Class A Preferred Shares. Unless
otherwise noted all references to $ and dollars shall refer to Canadian dollars.
2. VOTING.
2A. GENERAL. Except as may be otherwise provided in these terms of
the Class A Preferred Shares or by law, the Class A Preferred
Shares shall vote together with all other classes and series
of stock of the Corporation as a single class on all actions
to be taken by the stockholders of the Corporation. Each Class
A Preferred Share shall entitle the holder thereof to such
number of votes per Class A Preferred Share on each such
action as shall equal the number of Common Shares (including
fractions of Common Shares) into which each Class A Preferred
Share is then convertible.
2B. BOARD SIZE. The Corporation shall not, without the written
consent or affirmative vote of the holders of at least
two-thirds of the then outstanding Class A Preferred Shares
and Class B Preferred Shares (collectively, the "Preferred
Shares"), given in writing or by vote at a meeting, consenting
or voting (as the case may be) together as a single class,
increase the maximum number of directors constituting the
Board of Directors to a number in excess of seven (7).
3. DIVIDENDS. The holders of the Class A Preferred Shares shall be entitled to
receive, out of funds legally available therefor, when and if declared by the
Board of Directors, quarterly dividends at the rate per annum of $0.245 per
share (the "Class A Accruing Dividends"). Class A Accruing Dividends shall
accrue from day to day, whether or not earned or declared, and shall be
cumulative.
4. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Class A
Preferred Shares shall be entitled, before any distribution or payment is made
upon any stock ranking on liquidation junior to the Class A Preferred Shares, to
be paid an amount equal to the greater of (i) $2.45 per share plus, in the case
of each share, an amount equal to all Class A Accruing Dividends unpaid thereon
(whether or not declared) and any other dividends declared but unpaid thereon,
computed to the date payment thereof is made available, or (ii) such amount per
share as would have been payable had each such share been converted to Common
Shares pursuant to paragraph 6 immediately prior to such liquidation,
dissolution or winding up, and the holders of Class A Preferred Shares shall not
be entitled to any further payment, such amount payable with respect to one
share of Class A Preferred Shares being sometimes referred to as the "Class A
Liquidation Preference Payment" and with respect to all shares of Class A
Preferred Shares being sometimes referred to as the " Class A Liquidation
Preference Payments". The Class A Liquidation Preference Payments shall be made
pari passu with any "Class B Liquidation Preference Payments" (as such term is
defined in the terms attaching to the Class B Preferred Shares) to be paid to
the holders of the Class B Preferred Shares of the Corporation. If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of the Class A
Preferred Shares and Class B Preferred Shares shall be insufficient to permit
payment to the holders of the Class A Preferred Shares and Class B Preferred
Shares of the amount distributable with respect to the Class B Preferred Shares
and as aforesaid with respect to the Class A Preferred Shares, then the entire
assets of the Corporation to be so distributed shall be distributed ratably
among the holders of the Class A Preferred Shares and Class B Preferred Shares.
Upon any such liquidation, dissolution or winding up of the Corporation, after
the holders of
<PAGE>
the Class A Preferred Shares and Class B Preferred Shares shall have been paid
in full the amounts to which they shall be entitled, the remaining net assets of
the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Preferred Shares.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the Class A Liquidation Preference Payments and the place
where said Class A Liquidation Preference Payments shall be payable, shall be
delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by telecopier or telex, not less than 20 days prior to the
payment date stated therein, to the holders of record of Class A Preferred
Shares, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. The consolidation, amalgamation, plan of
arrangement or merger of the Corporation into or with any other entity or
entities which results in the exchange of outstanding shares of the Corporation
for securities or other consideration issued or paid or caused to be issued or
paid by any such entity or affiliate thereof (other than a merger to
reincorporate the Corporation in a different jurisdiction), and the sale, lease,
abandonment, transfer or other disposition by the Corporation of all or
substantially all its assets, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of the provisions of this
paragraph 4. For purposes hereof, the Common Shares shall rank on liquidation
junior to the Preferred Shares.
5. RESTRICTIONS. At any time when Preferred Shares are outstanding, except where
the vote or written consent of the holders of a greater number of shares of the
Corporation is required by law or by the Articles of the Corporation, and in
addition to any other vote required by law or the Articles of the Corporation,
without the approval of the holders of at least (i) in the case of subparagraphs
5A, 5B, 5C, 5D, 5E and 5F, two-thirds, (ii) in the case of subparagraph 5G
three-fourths and (iii) in the case of subparagraphs 5H and 5I, a majority, of
the then outstanding Preferred Shares given in writing or by vote at a meeting
of the holders of Preferred Shares, consenting or voting (as the case may be)
together as a single class, the Corporation will not:
5A. Create, authorize or issue the creation of any additional
class or series of shares of stock unless the same ranks
junior to the Preferred Shares as to the distribution of
assets on the liquidation, dissolution or winding up of the
Corporation, the payment of dividends and redemptions, or
increase the authorized amount of the Preferred Shares or
increase the authorized amount of any additional class or
series of shares of stock unless the same ranks junior to the
Preferred Shares as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, the
payment of dividends and redemptions, or create or authorize
any obligation or security convertible into Preferred Shares
or into shares of any other class or series of stock unless
the same ranks junior to the Preferred Shares as to the
distribution of assets on the liquidation, dissolution or
winding up of the Corporation, the payment of dividends and
redemptions, whether any such creation, authorization,
issuance or increase shall be by means of amendment to the
Articles of the Corporation or by merger, consolidation,
amalgamation or otherwise;
5B. Consent to any liquidation, dissolution or winding up of the
Corporation or consolidate, amalgamate or merge into or with
any other entity or entities or sell, lease, abandon, transfer
or otherwise dispose of all or substantially all its assets or
file an application for a plan of arrangement;
5C. Amend, alter or repeal its Articles (including the terms of
the Class A Preferred Shares or Class B Preferred Shares) or
By-laws;
<PAGE>
5D. Declare or pay any dividend or make any distribution on, any
shares of stock , except for (i) the Class A Accruing
Dividend, (ii) the Class B Accruing Dividend, or (iii)
dividends or other distributions payable on the Common Shares
solely in the form of additional Common Shares;
5E. Redeem or otherwise acquire any Class A Preferred Shares
except as expressly authorized in paragraph 7 hereof;
5F. File a registration statement in the United States with
respect to an initial public offering of equity securities;
5G. File or qualify a prospectus in any province or territory of
Canada in connection with a public offering of Common Shares
or the qualification of securities therefor;
5H. Except as permitted under any unanimous shareholder agreement,
purchase or set aside any sums for the purchase of any shares
of stock in the capital of the Corporation other than the
Preferred Shares, except where the aggregate purchase price
paid by the Corporation in any fiscal year in respect of (i)
such share repurchases and (ii) option repurchases referred to
in sub-paragraph 5I, does not exceed $100,000.00; and
5I. Repurchase any stock options previously granted by the
Corporation which have vested in favour of the holders
thereof, except where the aggregate purchase price paid by the
Corporation in any fiscal year in respect of (i) such option
repurchases and (ii) share repurchases referred to in
sub-paragraph 5H, does not exceed $100,000.00.
Notwithstanding any other provision of the Articles of the Corporation, the
Corporation will not (i) in any way amend, modify or alter the respective
definitions herein of the terms "Class A Liquidation Preference Payments", as
set forth in paragraph 4, or "Class A Conversion Price", as set forth in
paragraph 6, or (ii) declare or pay on the Class A Preferred Shares any
dividend, other than the Class A Accruing Dividend, or make any distribution on
the Class A Preferred Shares, other than pursuant to paragraph 4 hereof, without
the approval of the holders of at least two-thirds of the then outstanding Class
B Preferred Shares given in writing or by vote at a meeting of the holders of
Class B Preferred Shares, consenting or voting (as the case may be) as a
separate class.
6. CONVERSIONS. The holders of Class A Preferred Shares shall have the following
conversion rights:
6A. RIGHT TO CONVERT. Subject to the terms and conditions of this
paragraph 6, the holder of any Class A Preferred Shares shall
have the right, at its option at any time, to convert any such
Class A Preferred Shares (except that upon any liquidation of
the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the
amount distributable on the Class A Preferred Shares) into
such number of fully paid and non-assessable Common Shares as
is obtained by (i) multiplying the number of Class A Preferred
Shares so to be converted by $2.45 and (ii) dividing the
result by the conversion price of $2.45 per share or, in case
an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion
price as last adjusted and in effect at the date any Class A
Preferred Shares are surrendered for conversion (such price,
or such price as last adjusted, being referred to as
<PAGE>
the "Class A Conversion Price "). Such rights of conversion
shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of
Class A Preferred Shares into Common Shares and by surrender
of a certificate or certificates for the shares so to be
converted to the Corporation at its principal office (or such
other office or agency of the Corporation as the Corporation
may designate by notice in writing to the holders of the Class
A Preferred Shares) at any time during its usual business
hours on the date set forth in such notice, together with a
statement of the name or
<PAGE>
names (with address) in which the certificate or certificates
for Common Shares shall be issued.
6B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly
after the receipt of the written notice referred to in
subparagraph 6A and surrender of the certificate or
certificates for the Class A Preferred Shares to be converted,
the Corporation shall issue and deliver, or cause to be issued
and delivered, to the holder, registered in such name or names
as such holder may direct, a certificate or certificates for
the number of whole Common Shares issuable upon the conversion
of such Class A Preferred Shares. To the extent permitted by
law, such conversion shall be deemed to have been effected and
the Class A Conversion Price shall be determined as of the
close of business on the date on which such written notice
shall have been received by the Corporation and the
certificate or certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the
rights of the holder of such Class A Preferred Shares shall
cease, and the person or persons in whose name or names any
certificate or certificates for Common Shares be issuable upon
such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
6C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No
fractional shares shall be issued upon conversion of Class A
Preferred Shares into Common Shares and no payment or
adjustment shall be made upon any conversion on account of any
cash dividends on the Common Shares issued upon such
conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all dividends, excluding
Class A Accruing Dividends, accrued and unpaid on the Class A
Preferred Shares surrendered for conversion to the date upon
which such conversion is deemed to take place as provided in
subparagraph 6B. In case the number of Class A Preferred
Shares represented by the certificate or certificates
surrendered pursuant to subparagraph 6A exceeds the number of
shares converted, the Corporation shall, upon such conversion,
execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number
of Class A Preferred Shares represented by the certificate or
certificates surrendered which are not to be converted. If any
fractional Common Shares would, except for the provisions of
the first sentence of this subparagraph 6C, be delivered upon
such conversion, the Corporation, in lieu of delivering such
fractional share, shall pay to the holder surrendering the
Class A Preferred Shares for conversion an amount in cash
equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the
Corporation.
6D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON SHARES. Except as
provided in subparagraph 6E, if and whenever the Corporation
shall issue or sell, or is, in accordance with subparagraphs
6D(1) through 6D(7), deemed to have issued or sold, any Common
Shares for a consideration per share less than the Class A
Conversion Price in effect immediately prior to the time of
such issue or sale, then, forthwith upon such issue or sale,
the Class A Conversion Price shall be reduced to the price
determined by dividing (i) an amount equal to the sum of (a)
the number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing
<PAGE>
Class A
Conversion Price and (b) the consideration, if any, received
by the Corporation upon such issue or sale, by (ii) the total
number of Common Shares outstanding immediately after such
issue or sale.
For purposes of this subparagraph 6D, the following
subparagraphs 6D(1) to 6D(7) shall also be applicable:
6D(1) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly
or by assumption in a consolidation, amalgamation, plan
of arrangement or merger or otherwise) any warrants or
other rights to subscribe for or to purchase, or any
options for the purchase of, Common Shares or any stock
or security convertible into or exchangeable for Common
Shares (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or
securities being called "Convertible Securities")
whether or not such Options or the right to convert or
exchange any such Convertible Securities are
immediately exercisable, and the price per share for
which Common Shares is issuable upon the exercise of
such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) 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 the exercise of all such Options, plus, in the
case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) 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) shall be less than the Class A Conversion
Price in effect immediately prior to the time of 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 shall be deemed to
have been issued for such price per share as of the
date of granting of such Options or the issuance of
such Convertible Securities and thereafter shall be
deemed to be outstanding. Except as otherwise provided
in subparagraph 6D(3), no adjustment of the Class A
Conversion Price shall be made upon the actual issue of
such Common Shares or of such Convertible Securities
upon exercise of such Options or upon the actual issue
of such Common Shares upon conversion or exchange of
such Convertible Securities.
6D(2) ISSUANCE OF CONVERTIBLE SECURITIES. In case the
Corporation shall in any manner issue (whether directly
or by assumption in a consolidation, amalgamation, plan
of arrangement or merger or otherwise) or sell any
Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are
immediately exercisable, and the price per
<PAGE>
share for which Common Shares is issuable upon such
conversion or exchange (determined by dividing (i) 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 (ii) the total maximum number of Common
Shares issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the
Class A Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum
number of Common Shares issuable upon conversion or
exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as
of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise
provided in subparagraph 6D(3), no adjustment of the
Class A Conversion Price shall be made upon the actual
issue of such Common Shares upon conversion or exchange
of such Convertible Securities and (b) if any such
issue or sale of such Convertible Securities is made
upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the
Class A Conversion Price have been or are to be made
pursuant to other provisions of this subparagraph 6D,
no further adjustment of the Class A Conversion Price
shall be made by reason of such issue or sale.
6D(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if
the purchase price provided for in any Option referred
to in subparagraph 6D(1), the additional consideration,
if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible
Securities referred to in subparagraph 6D(1) or 6D(2)
are convertible into or exchangeable for Common Shares
shall change at any time (including, but not limited
to, changes under or by reason of provisions designed
to protect against dilution), the Class A Conversion
Price in effect at the time of such event shall
forthwith be readjusted to the Class A Conversion Price
which 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 conversion rate, as the case may be,
at the time initially granted, issued or sold, but only
if as a result of such adjustment the Class A
Conversion Price then in effect hereunder is thereby
reduced; and on the termination of any such Option or
any such right to convert or exchange such Convertible
Securities, the Class A Conversion Price then in effect
hereunder shall forthwith be increased to the Class A
Conversion Price which would have been in effect at the
time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior
to such termination, never been issued.
6D(4) STOCK DIVIDENDS. In case the Corporation shall declare
a dividend or make any other distribution upon any
stock of the Corporation (other than the Common Shares)
payable in Common Shares, Options or Convertible
<PAGE>
Securities, then any Common Shares, Options or
Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be
deemed to have been issued or sold without
consideration.
6D(5) CONSIDERATION FOR STOCK. In case any Common Shares,
Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor
shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of
any expenses incurred or any underwriting commissions
or concessions paid or allowed by the Corporation in
connection therewith. In case any Common Shares,
Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of
the consideration other than cash received by the
Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the
Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any
Options shall be issued in connection with the issue
and sale of other securities of the Corporation,
together comprising one integral transaction in which
no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined
in good faith by the Board of Directors of the
Corporation.
6D(6) RECORD DATE. In case the Corporation shall take a
record of the holders of its Common Shares for the
purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Shares, Options or
Convertible Securities or (ii) to subscribe for or
purchase Common Shares, Options or Convertible
Securities, then such record date shall 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 the making of such other
distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
6D(7) TREASURY SHARES. The number of Common Shares
outstanding at any given time shall not include shares
owned or held by or for the account of the Corporation,
and the disposition of any such shares shall be
considered an issue or sale of Common Shares for the
purpose of this subparagraph 6D.
6E. CERTAIN ISSUES EXCEPTED. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make
any adjustment of the Class A Conversion Price in the case of
the issuance from and after the date of filing of these terms
of the Class A Preferred Shares of (i) up to an aggregate of
1,146,248 Common Shares (appropriately adjusted to reflect the
occurrence of any event specified in paragraph 6F) or options
or rights to purchase same to directors, officers, employees
or consultants of the Corporation in connection with their
service as directors of the Corporation, their employment by
the Corporation or their retention as consultants by the
Corporation, plus such higher number of Common Shares (or
options or rights to
<PAGE>
purchase same) to such individuals as may be approved by the
prior written consent of the holders of at least a majority in
interest of the Preferred Shares provided that the issuance of
each such security has been approved by the Board of Directors
or its compensation committee (collectively, the "Option
Securities"); (ii) other than the making of the adjustment of
the Class A Conversion Price contemplated by paragraph 6H, up
to 202,442 Common Shares (appropriately adjusted to reflect
the occurrence of any event specified in paragraph 6F) issued
upon exercise of the options granted pursuant to the separate
Amended and Restated Option Agreements made as of September
12, 1996 between the Corporation and each of The VenGrowth
Investment Fund Inc., Torbay & Co. Reference Account
5419-0908702, Carr & Co., Trinity Capital Securities Limited
and Canada Trust Co. Account 058-105-803-2-121E, 3076601
(collectively, "Special Options"); and (iii) Common Shares
upon the conversion of Preferred Shares; provided that if any
of the Special Options are cancelled prior to the exercise
thereof (the "Cancelled Options"), then the number of Option
Securities whose issuance will not require any adjustment of
the Class A Conversion Price even without the prior written
consent of the holders of a majority in interest of the
Preferred Shares shall forthwith upon the cancellation of the
Cancelled Options be automatically increased by that number
which equals the number of Common Shares issuable upon
exercise of the Cancelled Options.
6F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the
Corporation shall at any time subdivide (by any stock split,
stock dividend or otherwise) its outstanding Common Shares
into a greater number of shares, the Class A Conversion Price
in effect immediately prior to such subdivision shall be
proportionately reduced, and, conversely, in case the
outstanding Common Shares shall be combined into a smaller
number of shares, the Class A Conversion Price in effect
immediately prior to such combination shall be proportionately
increased. In the case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 6D(4) by
reason thereof.
6G. REORGANIZATION OR RECLASSIFICATION. If any capital
reorganization or reclassification of the capital stock of the
Corporation shall be effected in such a way that holders of
Common Shares shall be entitled to receive stock, securities
or assets with respect to or in exchange for Common Shares,
then, as a condition of such reorganization or
reclassification, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Class A Preferred
Shares shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and
in lieu of the Common Shares immediately theretofore
receivable upon the conversion of such Class A Preferred
Shares, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number
of outstanding
<PAGE>
Common Shares equal to the number of Common Shares immediately
theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any
such case appropriate provisions shall be made with respect to
the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for
adjustments of the Class A Conversion Price ) shall thereafter
be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
6H. ADJUSTMENT FOR ISSUANCE OF COMMON SHARES UPON EXERCISE OF
CERTAIN OPTIONS. If and whenever the Corporation shall issue,
or become obligated to issue, any Common Shares upon exercise
of the options granted pursuant to the separate Amended and
Restated Option Agreements made as of September 12, 1996
between the Corporation and each of The VenGrowth Investment
Fund Inc., Torbay & Co. Reference Account 5419-0908702, Carr &
Co., Trinity Capital Securities Limited and Canada Trust Co.
Account 058-105-803-2-121E, 3076601, then, immediately upon
such issuance, the Class A Conversion Price shall be adjusted
so that immediately after such issuance the outstanding Class
A Preferred Shares shall continue to represent the same
percentage of the fully-diluted Common Shares of the
Corporation which such outstanding Class A Preferred Shares
represented immediately prior to such issuance (assuming for
such purposes full conversion of the Class A Preferred
Shares).
6I. NOTICE OF ADJUSTMENT. Upon any adjustment of the Class A
Conversion Price , then and in each such case the Corporation
shall give written notice thereof, by delivery in person,
certified or registered mail, return receipt requested, or
telecopier, addressed to each holder of Class A Preferred
Shares at the address of such holder as shown on the books of
the Corporation, which notice shall state the Class A
Conversion Price resulting from such adjustment, setting forth
in reasonable detail the method upon which such calculation is
based.
6J. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend upon its
Common Shares payable in cash or stock or make any
other distribution to the holders of its Common
Shares;
(2) the Corporation shall offer for subscription pro rata
to the holders of its Common Shares any additional
shares of stock of any class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the
Corporation, or a consolidation, amalgamation or
merger of the Corporation with or into another entity
or entities, or a sale, lease, abandonment, transfer
or other disposition of all or substantially all its
assets; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation;
<PAGE>
then, in any one or more of said cases, the Corporation shall
give, by delivery in person, certified or registered mail,
return receipt requested, telecopier or addressed to each
holder of any Class A Preferred Shares at the address of such
holder as shown on the books of the Corporation, (a) at least
20 days' prior written notice of the date on which the books
of the Corporation shall close or a record shall be taken for
such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger,
amalgamation, plan of arrangement, disposition, dissolution,
liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, amalgamation,
plan of arrangement, merger, disposition, dissolution,
liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place. Such notice
in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common
Shares shall be entitled thereto and such notice in accordance
with the foregoing clause (b) shall also specify the date on
which the holders of Common Shares shall be entitled to
exchange their Common Shares for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, amalgamation, merger, disposition, dissolution,
liquidation or winding up, as the case may be.
6K. STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized Common
Shares, solely for the purpose of issuance upon the conversion
of Class A Preferred Shares as herein provided, such number of
Common Shares as shall then be issuable upon the conversion of
all outstanding Class A Preferred Shares. The Corporation
covenants that all Common Shares which shall be so issued
shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with
respect to the issue thereof. The Corporation will take all
such action as may be necessary to assure that all such Common
Shares may be so issued without violation of any applicable
law or regulation, or of any requirement of any national
securities or other exchange upon which the Common Shares may
be listed. The Corporation will not take any action which
results in any adjustment of the Class A Conversion Price if
the total number of Common Shares issued and issuable after
such action upon conversion of the Class A Preferred Shares
would exceed the total number of Common Shares then authorized
by the Articles.
6L. NO REISSUANCE OF CLASS A PREFERRED SHARES. Class A Preferred
Shares which are converted into Common Shares as provided
herein shall not be reissued.
6M. ISSUE TAX. The issuance of certificates for Common Shares upon
conversion of Class A Preferred Shares shall be made without
charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Class A Preferred
Shares which is being converted.
6N. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Class A Preferred
Shares or of any Common Shares issued or issuable upon the
conversion of any Class A Preferred Shares in any manner which
<PAGE>
interferes with the timely conversion of such Class A
Preferred Shares, except as may otherwise be required to
comply with applicable securities laws.
6O. DEFINITION OF COMMON SHARES. As used in this paragraph 6, the
term "Common Shares" shall mean and include the Corporation's
authorized Common Shares, as constituted on the date of filing
of these terms of the Class A Preferred Shares, and shall also
include any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of
assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that
the Common Shares receivable upon conversion of shares of
Preferred Shares shall include only shares designated as
Common Shares of the Corporation on the date of filing of this
instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 6G.
6P. MANDATORY CONVERSION. If at any time the Corporation shall
effect a firm commitment underwritten public offering in the
United States of Common Shares in which (i) the aggregate
price paid to the Corporation for such shares by the public
shall be at least U.S.$20.0 million and (ii) the price paid by
the public for such shares shall be at least the Class B
Conversion Price per share (appropriately adjusted to reflect
the occurrence of any event described in paragraph 6 of the
terms attaching to the Class B Preferred Shares), then
effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding
Class A Preferred Shares shall automatically convert to Common
Shares on the basis set forth in this paragraph 6. Holders of
Class A Preferred Shares so converted may deliver to the
Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by
notice in writing to such holders) during its usual business
hours, the certificate or certificates for the shares so
converted. As promptly as practicable thereafter, the
Corporation shall issue and deliver to such holder a
certificate or certificates for the number of whole Common
Shares to which such holder is entitled, together with any
cash dividends and payment in lieu of fractional shares to
which such holder may be entitled pursuant to subparagraph 6C.
Until such time as a holder of Class A Preferred Shares shall
surrender his or its certificates therefor as provided above,
such certificates shall be deemed to represent the Common
Shares to which such holder shall be entitled upon the
surrender thereof.
7. REDEMPTION. The Class A Preferred Shares shall be redeemed as follows:
7A. MANDATORY REDEMPTION. Upon receipt by the Corporation, at any
time on or after June 1, 2005, of notice in writing from the
holders of at least a majority of the then outstanding Class A
Preferred Shares requesting redemption of the Class A
Preferred Shares, the Corporation shall redeem from each
holder of Class A Preferred Shares, all of the Class A
Preferred Shares held by such holder on a date no more than
forty-five (45) days after the date on which the Corporation
has received such redemption request (the "Redemption Date").
<PAGE>
7B. REDEMPTION PRICE AND PAYMENT. The Class A Preferred Shares to
be redeemed on the Redemption Date shall be redeemed by paying
for each share in cash an amount equal to the greater of (i)
the Class A Liquidation Preference Payment as set forth in
paragraph 4 hereof or (ii) the fair market value of the Class
A Preferred Share as of the Redemption Date, such amount being
referred to as the "Redemption Price". Such payment shall be
made in full on the Redemption Date to the holders entitled
thereto. For the purposes hereof, the term "fair market value
of the Class A Preferred Share" shall mean the fair value of
the Corporation attributable to the Class A Preferred Shares,
as determined by a recognized firm of investment dealers or
investment bankers nationally recognized in the United States
or Canada (selected by the Corporation) in accordance with
generally accepted valuation principles then in effect, as at
the end of the most recent fiscal quarter of the Corporation,
provided that in making such determination, no provision shall
be made for either a control premium or a minority discount.
7C. REDEMPTION MECHANICS. At least 20 but not more than 30 days
prior to the Redemption Date, written notice (the "Redemption
Notice") shall be given by the Corporation by delivery in
person, certified or registered mail, return receipt
requested, telecopier or telex, to each holder of record (at
the close of business on the business day next preceding the
day on which the Redemption Notice is given) of Class A
Preferred Shares notifying such holder of the redemption and
specifying the Redemption Price, the Redemption Date and the
place where said Redemption Price shall be payable. The
Redemption Notice shall be addressed to each holder at his
address as shown by the records of the Corporation. From and
after the close of business on the Redemption Date, unless
there shall have been a default in the payment of the
Redemption Price, all rights of holders of Class A Preferred
Shares (except the right to receive the Redemption Price)
shall cease with respect to such shares, and such shares shall
not thereafter be transferred on the books of the Corporation
or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Corporation legally available for redemption
of Preferred Shares on the Redemption Date are insufficient to
redeem the total number of outstanding Class A Preferred
Shares and Class B Preferred Shares, the holders of Class A
Preferred Shares and Class B Preferred Shares shall share
ratably in any funds legally available for redemption of such
shares according to the respective amounts which would be
payable with respect to the full number of shares owned by
them if all such outstanding shares were redeemed in full. The
Class A Preferred Shares not redeemed shall remain outstanding
and entitled to all rights and preferences provided herein. At
any time thereafter when additional funds of the Corporation
are legally available for the redemption of such Class A
Preferred Shares, such funds will be used, at the end of the
next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE RETIRED. Any Class
A Preferred Shares redeemed pursuant to this paragraph 7 or
otherwise acquired by the Corporation in any manner whatsoever
shall be cancelled and shall not under any circumstances be
reissued; and the Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce
accordingly the number of authorized Class A Preferred Shares.
<PAGE>
7E. NO OTHER REDEMPTIONS. The Corporation shall not redeem,
repurchase or otherwise acquire any shares of its capital
stock until the Class A Preferred Shares have been redeemed in
full pursuant to these Articles unless each holder of the
Class A Preferred Shares consents in writing prior to such
redemption, repurchase or other acquisition.
7F. PURCHASE BY RELATED PARTY. Notwithstanding any provision of
this paragraph 7, but subject to applicable law, in lieu of
redeeming the Class A Preferred Shares, (i) the Corporation
shall be entitled to cause any of its related or affiliated
entities which is a "taxable Canadian corporation" as defined
in the Income Tax Act (Canada) to purchase such Class A
Preferred Shares from the holders thereof on the Redemption
Date unless such purchase of Class A Preferred Shares would
have negative tax consequences to the holder thereof that are
materially greater than the tax consequences to such holder
arising out of the redemption of such Class A Preferred Shares
and (ii) any holder of a Class A Preferred Share shall be
entitled to require the Corporation to cause any of its
related or affiliated entities to purchase any or all of such
holder's Class A Preferred Shares from it on the Redemption
Date and, in each such case, the purchaser thereof shall, and
the Corporation shall cause such purchaser to pay to such
holders the Redemption Price in accordance with the provisions
hereof, and upon the completion of such purchase by such
subsidiary or affiliated entity, the Corporation shall be
relieved from any obligation to redeem the Class A Preferred
Shares so purchased. If any holder of a Class A Preferred
Share requires the Corporation to cause any of its related or
affiliated entities to purchase such holder's Class A
Preferred Shares pursuant to clause (ii) of this subparagraph
7F and the Corporation fails to do so, the Corporation shall
indemnify such holder and hold such holder harmless from and
against any resulting tax liability.
8. AMENDMENTS. No provision of these terms of the Class A Preferred Shares may
be amended (whether by merger, consolidation, amalgamation or otherwise),
modified or waived without the written consent or affirmative vote of the
holders of at least two-thirds of the then outstanding Class A Preferred Shares.
<PAGE>
EXHIBIT "B"
CLASS B PREFERRED SHARES
1. NUMBER OF SHARES. The class of Preferred Shares designated and known as Class
B Preferred Shares shall consist of 2,873,696 Class B Preferred Shares. Unless
otherwise noted all references to $ and dollars shall refer to Canadian dollars.
2. VOTING.
2A. GENERAL. Except as may be otherwise provided in these terms of
the Class B Preferred Shares or by law, the Class B Preferred
Shares shall vote together with all other classes and series
of shares of the Corporation as a single class on all actions
to be taken by the shareholders of the Corporation. Each Class
B Preferred Share shall entitle the holder thereof to such
number of votes per Class B Preferred Share on each such
action as shall equal the number of Common Shares (including
fractions of Common Shares) into which each Class B Preferred
Share is then convertible.
2B. BOARD SIZE. The Corporation shall not, without the written
consent or affirmative vote of the holders of at least
two-thirds of the then outstanding Class A Preferred Shares
and Class B Preferred Shares (collectively, the "Preferred
Shares"), given in writing or by vote at a meeting, consenting
or voting (as the case may be) together as a single class,
increase the maximum number of directors constituting the
Board of Directors to a number in excess of seven (7).
3. DIVIDENDS. The holders of the Class B Preferred Shares shall be entitled to
receive, out of funds legally available therefor, when and if declared by the
Board of Directors, quarterly dividends at the rate per annum of $1.34 per share
(the "Class B Accruing Dividends"). Class B Accruing Dividends shall accrue from
day to day, whether or not earned or declared, and shall be cumulative.
4. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Class B
Preferred Shares shall be entitled, before any distribution or payment is made
upon any stock ranking on liquidation junior to the Class B Preferred Shares, to
be paid an amount equal to the greater of (i) $13.40 per share plus, in the case
of each share, an amount equal to all Class B Accruing Dividends unpaid thereon
(whether or not declared) and any other dividends declared but unpaid thereon,
computed to the date payment thereof is made available, or (ii) such amount per
share as would have been payable had each such Class B Preferred Share been
converted into Common Shares pursuant to paragraph 6 immediately prior to such
liquidation, dissolution or winding up, and the holders of Class B Preferred
Shares shall not be entitled to any further payment, such amount payable with
respect to one share of Class B Preferred Shares being sometimes referred to as
the "Class B Liquidation Preference Payment" and with respect to all shares of
Class B Preferred Shares being sometimes referred to as the "Class B Liquidation
Preference Payments". The Class B Liquidation Preference Payments shall be made
PARI PASSU with any "Class A Liquidation Preference Payments" (as such term is
defined in the terms attaching to the Class A Preferred Shares) to be paid to
the holders of the Class A Preferred Shares of the Corporation. If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of the Class A
Preferred Shares and Class B Preferred Shares shall be insufficient to permit
payment to the holders of the Class A Preferred Shares and Class B Preferred
Shares of the amount distributable with respect to the Class A Preferred Shares
and as aforesaid with respect to the Class B Preferred Shares, then the entire
assets of the Corporation to be so distributed shall be distributed ratably
among the holders of the Class A Preferred Shares and Class B Preferred Shares.
Upon any such liquidation, dissolution or winding up of the Corporation, after
the holders of the Class A Preferred Shares and Class B Preferred Shares
<PAGE>
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Preferred Shares.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the Class B Liquidation Preference Payments and the place
where said Class B Liquidation Preference Payments shall be payable, shall be
delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by telecopier or telex, not less than 20 days prior to the
payment date stated therein, to the holders of record of Class B Preferred
Shares, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. The consolidation, amalgamation, plan of
arrangement or merger of the Corporation into or with any other entity or
entities which results in the exchange of outstanding shares of the Corporation
for securities or other consideration issued or paid or caused to be issued or
paid by any such entity or affiliate thereof (other than a merger to
reincorporate the Corporation in a different jurisdiction), and the sale, lease,
abandonment, transfer or other disposition by the Corporation of all or
substantially all its assets, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of the provisions of this
paragraph 4. For purposes hereof, the Common Shares shall rank on liquidation
junior to the Preferred Shares.
5. RESTRICTIONS. At any time when Preferred Shares are outstanding, except where
the vote or written consent of the holders of a greater number of shares of the
Corporation is required by law or by the Articles of the Corporation, and in
addition to any other vote required by law or the Articles of the Corporation,
without the approval of the holders of at least (i) in the case of subparagraphs
5A, 5B, 5C, 5D, 5E and 5F, two-thirds, (ii) in the case of subparagraph 5G
three-fourths, and (iii) in the case of subparagraphs 5H and 5I, a majority, of
the then outstanding Preferred Shares given in writing or by vote at a meeting
of the holders of Preferred Shares, consenting or voting (as the case may be)
together as a single class, the Corporation will not:
5A. Create, authorize or issue the creation of any additional
class or series of shares of stock unless the same ranks
junior to the Preferred Shares as to the distribution of
assets on the liquidation, dissolution or winding up of the
Corporation, the payment of dividends and redemptions, or
increase the authorized amount of the Preferred Shares or
increase the authorized amount of any additional class or
series of shares of stock unless the same ranks junior to the
Preferred Shares as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, the
payment of dividends and redemptions, or create or authorize
any obligation or security convertible into Preferred Shares
or into shares of any other class or series of stock unless
the same ranks junior to the Preferred Shares as to the
distribution of assets on the liquidation, dissolution or
winding up of the Corporation, the payment of dividends and
redemptions, whether any such creation, authorization,
issuance or increase shall be by means of amendment to the
Articles of the Corporation or by merger, consolidation,
amalgamation or otherwise;
5B. Consent to any liquidation, dissolution or winding up of the
Corporation or consolidate, amalgamate or merge into or with
any other entity or entities or sell, lease, abandon, transfer
or otherwise dispose of all or substantially all its assets or
file an application for a plan of arrangement;
5C. Amend, alter or repeal its Articles (including the terms of
the Class A Preferred Shares or Class B Preferred Shares) or
By-laws;
<PAGE>
5D. Declare or pay any dividend or make any distribution on any
shares of stock except for (i) the Class A Accruing Dividends
or otherwise in accordance with paragraph 4 of the terms
attaching to the Class A Preferred Shares , (ii) the Class B
Accruing Dividends or otherwise in accordance with paragraph 4
hereof, or (iii) dividends or other distributions payable on
the Common Shares solely in the form of additional Common
Shares;
5E. Redeem or otherwise acquire any Class B Preferred Shares
except as expressly authorized in paragraph 7 hereof;
5F. File a registration statement in the United States with
respect to an initial public offering of equity securities;
5G. File or qualify a prospectus in any province or territory of
Canada in connection with a public offering of Common Shares
or the qualification of securities therefor;
5H. Except as permitted under any unanimous shareholder agreement,
purchase or set aside any sums for the purchase of any shares
of stock in the capital of the Corporation other than the
Preferred Shares, except where the aggregate purchase price
paid by the Corporation in any fiscal year in respect of (i)
such share repurchases and (ii) option repurchases referred to
in sub-paragraph 5I, does not exceed $100,000.00; and
5I. Repurchase any stock options previously granted by the
Corporation which have vested in favour of the holders
thereof, except where the aggregate purchase price paid by the
Corporation in any fiscal year in respect of (i) such option
repurchases and (ii) share repurchases referred to in
sub-paragraph 5H, does not exceed $100,000.00.
Notwithstanding any other provision of the Articles of the Corporation,, the
Corporation will not (i) in any way amend, modify or alter the respective
definitions herein of the terms "Class B Liquidation Preference Payments", as
set forth in paragraph 4, or "Class B Conversion Price", as set forth in
paragraph 6, or (ii) declare or pay on the Class B Preferred Shares any
dividend, other than the Class B Accruing Dividends, or make any distribution on
the Class B Preferred Shares, other than pursuant to paragraph 4 hereof, without
the approval of the holders of at least two-thirds of the then outstanding Class
A Preferred Shares given in writing or by vote at a meeting of the holders of
Class A Preferred Shares, consenting or voting (as the case may be) as a
separate class.
6. CONVERSIONS. The holders of Class B Preferred Shares shall have the following
conversion rights:
6A. RIGHT TO CONVERT. Subject to the terms and conditions of this
paragraph 6, the holder of any Class B Preferred Shares shall
have the right, at its option at any time, to convert any such
Class B Preferred Shares (except that upon any liquidation of
the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the
amount distributable on the Class B Preferred Shares) into
such number of fully paid and non-assessable Common Shares as
is obtained by (i) multiplying the number of Class B Preferred
Shares so to be converted by $13.40 and (ii) dividing the
result by the conversion price of $13.40 per share or, in case
an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion
price as last adjusted and in effect at the date any Class B
Preferred Shares are surrendered for
<PAGE>
conversion (such price, or such price as last adjusted, being
referred to as the "Class B Conversion Price"). Such rights of
conversion shall be exercised by the holder thereof by giving
written notice that the holder elects to convert a stated
number of Class B Preferred Shares into Common Shares
and by surrender of a certificate or certificates for the
shares so to be converted to the Corporation at its principal
office (or such other office or agency of the Corporation as
the Corporation may designate by notice in writing to the
holders of the Class B Preferred Shares) at any time during
its usual business hours on the date set forth in such notice,
together with a statement of the name or
<PAGE>
names (with address) in which the certificate or certificates
for Common Shares shall be issued.
6B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly
after the receipt of the written notice referred to in
subparagraph 6A and surrender of the certificate or
certificates for the Class B Preferred Shares to be converted,
the Corporation shall issue and deliver, or cause to be issued
and delivered, to the holder, registered in such name or names
as such holder may direct, a certificate or certificates for
the number of whole Common Shares issuable upon the conversion
of such Class B Preferred Shares. To the extent permitted by
law, such conversion shall be deemed to have been effected and
the Class B Conversion Price shall be determined as of the
close of business on the date on which such written notice
shall have been received by the Corporation and the
certificate or certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the
rights of the holder of such Class B Preferred Shares
shall cease, and the person or persons in whose name or names
any certificate or certificates for Common Shares be issuable
upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
6C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No
fractional shares shall be issued upon conversion of Class B
Preferred Shares into Common Shares and no payment or
adjustment shall be made upon any conversion on account of any
cash dividends on the Common Shares issued upon such
conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all dividends, excluding
Class B Accruing Dividends, accrued and unpaid on the Class B
Preferred Shares surrendered for conversion to the date upon
which such conversion is deemed to take place as provided in
subparagraph 6B. In case the number of Class B Preferred
Shares represented by the certificate or certificates
surrendered pursuant to subparagraph 6A exceeds the number of
shares converted, the Corporation shall, upon such conversion,
execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number
of Class B Preferred Shares represented by the certificate or
certificates surrendered which are not to be converted. If any
fractional Common Shares would, except for the provisions of
the first sentence of this subparagraph 6C, be delivered upon
such conversion, the Corporation, in lieu of delivering such
fractional share, shall pay to the holder surrendering the
Class B Preferred Shares for conversion an amount in cash
equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the
Corporation.
6D. ADJUSTMENT UPON LIQUIDITY EVENT. In the event that the
Corporation has not completed either: (i) an initial public
offering in either or both Canada or the United States (A) for
gross proceeds to the Corporation of not less than U.S.$20
million pursuant to which the Common Shares of the Corporation
are offered to the public at an issue price per Common Share
of at least the Class B Conversion Price per share
(appropriately adjusted to reflect the occurrence of any event
described in paragraph 6); and (B) which provides for the
contemporaneous listing of the Common Shares on the New York
Stock Exchange, The Toronto Stock Exchange or the Nasdaq
National Market of the NASDAQ Stock Market, Inc.; or (ii) the
sale of all or substantially all of the Shares of the
Corporation at a price equal to or greater than the Class B
Conversion Price per share (appropriately adjusted to reflect
the occurrence of any event described in paragraph 6G) (each
such event hereinafter referred to as a "Qualified Liquidity
Event") on or prior to 5:00 p.m. (Toronto time) on May 31,
2001 (the "Liquidity Deadline"), the Class B Conversion Price
shall be adjusted to $11.175 (the "Adjusted Conversion Price")
per Class B Preferred Share, provided that the Adjusted
Conversion Price shall be further
<PAGE>
adjusted by making any other adjustments required to be made
pursuant to this paragraph 6 through the date of the Liquidity
Deadline as if the Adjusted Conversion Price had been
applicable from the date the Class B Preferred Shares were
initially issued, which adjustment shall be deemed effective
immediately after the Liquidity Deadline.
6E. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON SHARES. Except as
provided in subparagraph 6F, if and whenever the Corporation
shall issue or sell, or is, in accordance with subparagraphs
6E(1) through 6E(7), deemed to have issued or sold, any Common
Shares for a consideration per share less than the Class B
Conversion Price in effect immediately prior to the time of
such issue or sale, then, forthwith upon such issue or sale,
the Class B Conversion Price shall be reduced to the price
determined by dividing (i) an amount equal to the sum of (a)
the number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing
<PAGE>
Class B
Conversion Price and (b) the consideration, if any, received
by the Corporation upon such issue or sale, by (ii) the total
number of Common Shares outstanding immediately after such
issue or sale.
For purposes of this subparagraph 6E, the following
subparagraphs 6E(1) to 6E(7) shall also be applicable:
<PAGE>
6E(1) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly
or by assumption in a consolidation, amalgamation, plan
of arrangement or merger or otherwise) any warrants or
other rights to subscribe for or to purchase, or any
options for the purchase of, Common Shares or any
shares or security convertible into or exchangeable for
Common Shares (such warrants, rights or options being
called "Options" and such convertible or exchangeable
stock or securities being called "Convertible
Securities") whether or not such Options or the right
to convert or exchange any such Convertible Securities
are immediately exercisable, and the price per share
for which Common Shares are issuable upon the exercise
of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i)
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 the exercise of all such Options, plus, in the
case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) 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) shall be less than the Class B Conversion
Price in effect immediately prior to the time of 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 shall be deemed to
have been issued for such price per share as of the
date of granting of such Options or the issuance of
such Convertible Securities and thereafter shall be
deemed to be outstanding. Except as otherwise provided
in subparagraph 6E(6), no adjustment of the Class B
Conversion Price shall be made upon the actual issue of
such Common Shares or of such Convertible Securities
upon exercise of such Options or upon the actual issue
of such Common Shares upon conversion or exchange of
such Convertible Securities.
6E(2) ISSUANCE OF CONVERTIBLE SECURITIES. In case the
Corporation shall in any manner issue (whether directly
or by assumption in a consolidation, amalgamation, plan
of arrangement or merger or otherwise) or sell any
Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for
which Common Shares is issuable upon such conversion or
exchange (determined by dividing (i) 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
(ii) the total maximum number of Common Shares issuable
upon the conversion or exchange of all such Convertible
Securities) shall be less than the Class B Conversion
Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of Common
Shares issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the
issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph
6E(6), no adjustment of the Class B Conversion Price
shall be made upon the
<PAGE>
actual issue of such Common Shares upon conversion or
exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is
made upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the
Class B Conversion Price have been or are to be made
pursuant to other provisions of this subparagraph 6E,
no further adjustment of the Class B Conversion Price
shall be made by reason of such issue or sale.
6E(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if
the purchase price provided for in any Option referred
to in subparagraph 6E(1), the additional consideration,
if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph
6E(1) or 6E(2), or the rate at which Convertible
Securities referred to in subparagraph 6E(1) or 6E(2)
are convertible into or exchangeable for Common Shares
shall change at any time (including, but not limited
to, changes under or by reason of provisions designed
to protect against dilution), the Class B Conversion
Price in effect at the time of such event shall
forthwith be readjusted to the Class B Conversion Price
which 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 conversion rate, as the case may be,
at the time initially granted, issued or sold, but only
if as a result of such adjustment the Class B
Conversion Price then in effect hereunder is thereby
reduced; and on the termination of any such Option or
any such right to convert or exchange such Convertible
Securities, the Class B Conversion Price then in effect
hereunder shall forthwith be increased to the Class B
Conversion Price which would have been in effect at the
time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior
to such termination, never been issued.
6E(4) STOCK DIVIDENDS. In case the Corporation shall declare
a dividend or make any other distribution upon any
stock of the Corporation (other than the Common Shares)
payable in Common Shares, Options or Convertible
Securities, then any Common Shares, Options or
Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be
deemed to have been issued or sold without
consideration.
6E(5) CONSIDERATION FOR STOCK. In case any Common Shares,
Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor
shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of
any expenses incurred or any underwriting commissions
or concessions paid or allowed by the Corporation in
connection therewith. In case any Common Shares,
Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of
the consideration other than cash received by the
Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the
Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any
Options shall be issued in connection with the issue
and sale of other securities of the Corporation,
together comprising one integral transaction in which
no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined
in good faith by the Board of Directors of the
Corporation.
6E(6) RECORD DATE. In case the Corporation shall take a
record of the holders of its Common Shares for the
purpose of entitling them (i) to receive a dividend
<PAGE>
or other distribution payable in Common Shares, Options
or Convertible Securities or (ii) to subscribe for or
purchase Common Shares, Options or Convertible
Securities, then such record date shall 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 the making of such other
distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
6E(7) TREASURY SHARES. The number of Common Shares
outstanding at any given time shall not include shares
owned or held by or for the account of the Corporation,
and the disposition of any such shares shall be
considered an issue or sale of Common Shares for the
purpose of this subparagraph 6E.
6F. CERTAIN ISSUES EXCEPTED. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make
any adjustment of the Class B Conversion Price in the case of
the issuance from and after the date of filing of these terms
of the Class B Preferred Shares of (i) up to an aggregate of
1,146,248 Common Shares (appropriately adjusted to reflect the
occurrence of any event specified in paragraph 6G) or options
or rights to purchase same to directors, officers, employees
or consultants of the Corporation in connection with their
service as directors of the Corporation, their employment by
the Corporation or their retention as consultants by the
Corporation, plus such higher number of Common Shares (or
options or rights to
<PAGE>
purchase same) to such individuals as may be approved by the
prior written consent of the holders of at least a majority in
interest of the Preferred Shares provided that the issuance of
each such security has been approved by the Board of Directors
or its compensation committee (collectively, the "Option
Securities"); (ii) other than the making of the
adjustment of the Class B Conversion Price contemplated by
paragraph 6I, up to 202,442 Common Shares (appropriately
adjusted to reflect the occurrence of any event specified in
paragraph 6G) issued upon exercise of the options granted
pursuant to the separate Amended and Restated Option
Agreements made as of September 12, 1996 between the
Corporation and each of The VenGrowth Investment Fund Inc.,
Torbay & Co. Reference Account 5419-0908702, Carr & Co.,
Trinity Capital Securities Limited and Canada Trust Co.
Account 058-105-803-2-121E, 3076601 (collectively, "Special
Options"); and (iii) Common Shares upon the conversion of
Preferred Shares; provided that if any of the Special Options
are cancelled prior to the exercise thereof (the "Cancelled
Options"), then the number of Option Securities whose issuance
will not require any adjustment of the Class B Conversion
Price even
<PAGE>
without the prior written consent of the holders of a majority
in interest of the Preferred Shares shall forthwith upon the
cancellation of the Cancelled Options be automatically
increased by that number which equals the number of Common
Shares issuable upon exercise of the Cancelled Options.
6G. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the
Corporation shall at any time subdivide (by any stock split,
stock dividend or otherwise) its outstanding Common Shares
into a greater number of shares, the Class B Conversion Price
in effect immediately prior to such subdivision shall be
proportionately reduced, and, conversely, in case the
outstanding Common Shares shall be combined into a smaller
number of shares, the Class B Conversion Price in effect
immediately prior to such combination shall be proportionately
increased. In the case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 6E(4) by
reason thereof.
6H. REORGANIZATION OR RECLASSIFICATION. If any capital
reorganization or reclassification of the capital stock of the
Corporation shall be effected in such a way that holders of
Common Shares shall be entitled to receive stock, securities
or assets with respect to or in exchange for Common Shares,
then, as a condition of such reorganization or
reclassification, lawful and adequate provisions shall be made
whereby each holder of Class B Preferred Shares shall
thereupon have the right to receive, upon the basis and upon
the terms and conditions specified herein and in lieu of the
Common Shares immediately theretofore receivable upon the
conversion of such Class B Preferred Shares, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding Common
Shares equal to the number of Common Shares immediately
theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any
such case appropriate provisions shall be made with respect to
the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for
adjustments of the Class B Conversion Price) shall thereafter
be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
6I. ADJUSTMENT FOR ISSUANCE OF COMMON SHARES UPON EXERCISE OF
CERTAIN OPTIONS. If and whenever the Corporation shall issue,
or become obligated to issue, any Common Shares upon exercise
of the options granted pursuant to the separate Amended and
Restated Option Agreements made as of September 12, 1996
between the Corporation and each of The VenGrowth Investment
Fund Inc., Torbay & Co. Reference Account 5419-0908702, Carr &
Co., Trinity Capital Securities Limited and Canada Trust Co.
Account 058-105-803-2-121E, 3076601, then, immediately upon
such issuance, the Class B Conversion Price shall be adjusted
so that immediately after such issuance the outstanding Class
B Preferred Shares shall continue to represent the same
percentage of the fully-diluted Common Shares of the
Corporation which such outstanding Class B Preferred Shares
represented immediately prior to such issuance (assuming for
such purposes full conversion of the Class B Preferred
Shares).
<PAGE>
6J. NOTICE OF ADJUSTMENT. Upon any adjustment of the Class B
Conversion Price, then and in each such case the Corporation
shall give written notice thereof, by delivery in person,
certified or registered mail, return receipt requested, or
telecopier, addressed to each holder of Class B
Preferred Shares at the address of such holder as shown on the
books of the Corporation, which notice shall state the Class B
Conversion Price resulting from such adjustment, setting forth
in reasonable detail the method upon which such calculation is
based.
6K. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend upon its
Common Shares payable in cash or stock or make any
other distribution to the holders of its Common
Shares;
(2) the Corporation shall offer for subscription pro rata
to the holders of its Common Shares any additional
shares of stock of any class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the
Corporation, or a consolidation, amalgamation or
merger of the Corporation with or into another entity
or entities, or a sale, lease, abandonment, transfer
or other disposition of all or substantially all its
assets; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation;
<PAGE>
then, in any one or more of said cases, the Corporation shall
give, by delivery in person, certified or registered mail,
return receipt requested, telecopier or addressed to each
holder of any Class B Preferred Shares at the address of such
holder as shown on the books of the Corporation, (a) at least
20 days' prior written notice of the date on which the books
of the Corporation shall close or a record shall be taken for
such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger,
amalgamation, plan of arrangement, disposition, dissolution,
liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, amalgamation,
plan of arrangement, merger, disposition, dissolution,
liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place. Such notice
in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common
Shares shall be entitled thereto and such notice in accordance
with the foregoing clause (b) shall also specify the date on
which the holders of Common Shares shall be entitled to
exchange their Common Shares for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, amalgamation, merger, disposition, dissolution,
liquidation or winding up, as the case may be.
6L. STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized Common
Shares, solely for the purpose of issuance upon the conversion
of Class B Preferred Shares as herein provided, such
number of Common Shares as shall then be issuable upon the
conversion of all outstanding Class B Preferred Shares. The
Corporation covenants that all Common Shares which shall be so
issued shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with
respect to the issue thereof. The Corporation will take all
such action as may be necessary to assure that all such Common
Shares may be so issued without violation of any applicable
law or regulation, or of any requirement of any national
securities or other exchange upon which the Common Shares may
be listed. The Corporation will not take any action which
results in any adjustment of the Class B Conversion Price if
the total number of Common Shares issued and issuable
<PAGE>
after such action upon conversion of the Class B Preferred
Shares would exceed the total number of Common Shares then
authorized by the Articles.
6M. NO REISSUANCE OF CLASS B PREFERRED SHARES. Class B Preferred
Shares which are converted into Common Shares as provided
herein shall not be reissued.
6N. ISSUE TAX. The issuance of certificates for Common Shares upon
conversion of Class B Preferred Shares shall be made without
charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Class B Preferred
Shares which is being converted.
6O. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Class B Preferred
Shares or of any Common Shares issued or issuable upon the
conversion of any Class B Preferred Shares in any manner which
interferes with the timely conversion of such Class B
Preferred Shares, except as may otherwise be required to
comply with applicable securities laws.
6P. DEFINITION OF COMMON SHARES. As used in this paragraph 6, the
term "Common Shares" shall mean and include the Corporation's
authorized Common Shares, as constituted on the date of filing
of these terms of the Class B Preferred Shares, and shall also
include any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of
assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that
the Common Shares receivable upon conversion of Preferred
Shares shall include only shares designated as Common Shares
of the Corporation on the date of filing of this instrument,
<PAGE>
or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets
provided for in subparagraph 6H.
6Q. MANDATORY CONVERSION. If at any time the Corporation shall
effect a firm commitment underwritten public offering in the
United States of Common Shares in which (i) the aggregate
price paid to the Corporation for such shares by the public
shall be at least U.S.$20.0 million and (ii) the price paid by
the public for such shares shall be at least equal to the
Class B Conversion Price per share (appropriately adjusted to
reflect the occurrence of any event described in paragraph 6),
then effective upon the closing of the sale of such shares by
the Corporation pursuant to such public offering all
outstanding Class B Preferred Shares shall automatically
convert to Common Shares on the basis set forth in this
paragraph 6. Holders of Class B Preferred Shares so converted
may deliver to the Corporation at its principal office (or
such other office or agency of the Corporation as the
Corporation may designate by notice in writing to such
holders) during its usual business hours, the certificate or
certificates for the shares so converted. As promptly as
practicable thereafter, the Corporation shall issue and
deliver to such holder a certificate or certificates for the
number of whole Common Shares to which such holder is
entitled, together with any cash dividends and payment in lieu
of fractional shares to which such holder may be entitled
pursuant to subparagraph 6C. Until such time as a holder of
Class B Preferred Shares shall surrender his or its
certificates therefor as provided above, such certificates
shall be deemed to represent the Common Shares to which such
holder shall be entitled upon the surrender thereof.
7. REDEMPTION. The Class B Preferred Shares shall be redeemed as follows:
7A. MANDATORY REDEMPTION. Upon receipt by the Corporation, at any
time on or after June 1, 2005, of notice in writing from the
holders of at least a majority of the then outstanding
Preferred Shares requesting redemption of the Preferred
Shares, the Corporation shall redeem from each holder of
Preferred Shares, all of the Preferred Shares held by such
holder on a date no more than forty-five (45) days after the
date on which the Corporation has received such redemption
request (the "Redemption Date").
<PAGE>
7B. REDEMPTION PRICE AND PAYMENT. The Class B Preferred Shares to
be redeemed on the Redemption Date shall be redeemed by paying
for each share in cash an amount equal to the greater of (i)
the Class B Liquidation Preference Payment as set forth in
paragraph 4 hereof or (ii) the fair market value of the Class
B Preferred Share as of the Redemption Date, such amount being
referred to as the "Class B Redemption Price". Such payment
shall be made in full on the Redemption Date to the holders
entitled thereto. For the purposes hereof, the term "fair
market value of the Class B Preferred Share" shall mean the
fair value of the Corporation attributable to the Class B
Preferred Shares, as determined by a recognized firm of
investment dealers or investment bankers nationally recognized
in the United States or Canada (selected by the Corporation)
in accordance with generally accepted valuation principles
then in effect, as at the end of the most recent fiscal
quarter of the Corporation, provided that in making such
determination, no provision shall be made for either a control
premium or a minority discount.
7C. REDEMPTION MECHANICS. At least 20 but not more than 30 days
prior to the Redemption Date, written notice (the "Redemption
Notice") shall be given by the Corporation by delivery in
person, certified or registered mail, return receipt
requested, telecopier or telex, to each holder of record (at
the close of business on the business day next preceding the
day on which the Redemption Notice is given) of Preferred
Shares notifying such holder of the redemption and specifying
the Class B Redemption Price, the Redemption Date and the
place where said Class B Redemption Price shall be payable.
The Redemption Notice shall be addressed to each holder at his
address as shown by the records of the Corporation. From and
after the close of business on the Redemption Date, unless
there shall have been a default in the payment of the Class B
Redemption Price, all rights of holders of Class B Preferred
Shares (except the right to receive the Class B Redemption
Price) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available
for redemption of Preferred Shares on the Redemption Date are
insufficient to redeem the total number of outstanding Class A
Preferred Shares and Class B Preferred Shares, the holders of
Class A Preferred Shares and Class B Preferred Shares shall
share ratably in any funds legally available for redemption of
such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by
them if all such outstanding shares were redeemed in full. The
Class B Preferred Shares not redeemed shall remain outstanding
and entitled to all rights and preferences provided herein. At
any time thereafter when additional funds of the Corporation
are legally available for the redemption of such Class B
Preferred Shares, such funds will be used, at the end of the
next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE RETIRED. Any
Preferred Shares redeemed pursuant to this paragraph 7 or
otherwise acquired by the Corporation in any manner whatsoever
shall be cancelled and shall not under any circumstances be
reissued; and the Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce
accordingly the number of authorized Preferred Shares.
<PAGE>
7E. NO OTHER REDEMPTIONS. The Corporation shall not redeem,
repurchase or otherwise acquire any shares of its capital
stock until the Preferred Shares have been redeemed in full
pursuant to these Articles unless each holder of the Preferred
Shares consents in writing prior to such redemption,
repurchase or other acquisition.
7F. PURCHASE BY RELATED PARTY. Notwithstanding any provision of
this paragraph 7, but subject to applicable law, in lieu of
redeeming the Class B Preferred Shares, (i) the Corporation
shall be entitled to cause any of its related or affiliated
entities which is a "taxable Canadian corporation" as defined
in the INCOME TAX ACT (Canada) to purchase such Class B
Preferred Shares from the holders thereof on the Redemption
Date unless such purchase of Class B Preferred Shares would
have negative tax consequences to the holder thereof that are
materially greater than the tax consequences to such holder
arising out of the redemption of such Class B Preferred Shares
and (ii) any holder of a Class B Preferred Share shall be
entitled to require the Corporation to cause any of its
related or affiliated entities to purchase any or all of such
holder's Class B Preferred Shares from it on the Redemption
Date and, in each such case, the purchaser thereof shall, and
the Corporation shall cause such purchaser to pay to such
holders the Class B Redemption Price in accordance with the
provisions hereof, and upon the completion of such purchase by
such subsidiary or affiliated entity, the Corporation shall be
relieved from any obligation to redeem the Class B Preferred
Shares so purchased. If any holder of a Class B Preferred
Share requires the Corporation to cause any of its related or
affiliated entities to purchase such holder's Class B
Preferred Shares pursuant to clause (ii) of this subparagraph
7F and the Corporation fails to do so, the Corporation shall
indemnify such holder and hold such holder harmless from and
against any resulting tax liability.
8. AMENDMENTS. No provision of these terms of the Class B Preferred Shares may
be amended (whether by merger, consolidation, amalgamation or otherwise),
modified or waived without the written consent or affirmative vote of the
holders of at least two-thirds of the then outstanding Class B Preferred Shares.
