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EXHIBIT 4.8
SOFTKEY SOFTWARE PRODUCTS INC.
AND
CIBC MELLON TRUST COMPANY
-------------------------
SPECIAL WARRANT INDENTURE
PROVIDING FOR THE ISSUE OF
8,687,500 SPECIAL WARRANTS
-------------------------
MARCH 12, 1998
XXXXXX, XXXX & XXXX
XXXXXXX XXXXX & XXXXXXXXX
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ARTICLE ONE
INTERPRETATION
Section 1.01 - Definitions....................................................2
Section 1.02 - Number and Gender..............................................7
Section 1.03 - Interpretation Not Affected by Headings, Etc...................7
Section 1.04 - Business Day...................................................8
Section 1.05 - Time of the Essence............................................8
Section 1.06 - Applicable Law.................................................8
Section 1.07 - Severability...................................................8
ARTICLE TWO
ISSUE OF WARRANTS
Section 2.01 - Issue of Warrants..............................................8
Section 2.02 - Form and Terms of Warrants.....................................8
Section 2.03 - Signing of Warrant Certificates...............................10
Section 2.04 - Certification by the Trustee..................................10
Section 2.05 - Warrantholder Not a Shareholder, Etc..........................10
Section 2.06 - Issue in Substitution for Lost Warrant Certificates...........10
Section 2.07 - Warrants to Rank Pari Passu...................................11
Section 2.08 - Registers for Warrants........................................11
Section 2.09 - Transferee Entitled to Registration...........................12
Section 2.10 - Registers Open for Inspection.................................12
Section 2.11 - Exchange of Warrants..........................................12
Section 2.12 - Ownership of Warrants.........................................13
Section 2.13 - Adjustment of Exercise Rights.................................13
Section 2.14 - Adjustment Rules..............................................14
Section 2.15 - Proceedings Prior to Any Action Requiring Adjustment..........15
Section 2.16 - Notice of Adjustment of Exercise Rights.......................16
Section 2.17 - No Duty to Inquire, Liability.................................16
ARTICLE THREE
ESCROW OF NET PROCEEDS AND REDEMPTION OF SPECIAL WARRANTS
Section 3.01 - Deposit of Net Proceeds in Escrow.............................17
Section 3.02 - Investment of Net Proceeds....................................17
Section 3.03 - Release of Escrowed Funds to the Corporation..................17
Section 3.04 - Redemption of Warrants........................................18
Section 3.05 - Corporation to Fund Shortfall.................................19
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ARTICLE FOUR
TRIGGERING EVENT
Section 4.01 - Triggering Event..............................................19
Section 4.02 - Change in Exercise Rights.....................................20
ARTICLE FIVE
EXERCISE OF WARRANTS
Section 5.01 - Method of Exercise of Warrants................................20
Section 5.02 - Automatic Exercise............................................21
Section 5.03 - Effect of Exercise of Warrants................................21
Section 5.04 - Cancellation of Warrant Certificates..........................22
Section 5.05 - Notice of Extension of Qualification Deadline.................22
Section 5.06 - Legend on Exchangeable Shares.................................22
ARTICLE SIX
COVENANTS
Section 6.01 - General Covenants.............................................23
Section 6.02 - Notice to Securities Commissions..............................24
Section 6.03 - Trustee's Remuneration and Expenses...........................25
Section 6.04 - Performance of Covenants by Trustee...........................25
Section 6.05 - Right to Dividends or Distributions...........................25
ARTICLE SEVEN
ENFORCEMENT
Section 7.01 - Suits by Warrantholders.......................................26
Section 7.02 - Immunity of Shareholders, Etc.................................26
Section 7.03 - Limitation of Liability.......................................26
ARTICLE EIGHT
MEETINGS OF WARRANTHOLDERS
Section 8.01 - Right to Convene Meetings.....................................26
Section 8.02 - Notice........................................................27
Section 8.03 - Chair.........................................................27
Section 8.04 - Quorum........................................................27
Section 8.05 - Power to Adjourn..............................................28
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Section 8.06 - Show of Hands................................................28
Section 8.07 - Poll and Voting..............................................28
Section 8.08 - Regulations..................................................28
Section 8.09 - Corporation, Trustee and Counsel May Be Represented..........29
Section 8.10 - Powers Exercisable by Extraordinary Resolution...............29
Section 8.11 - Meaning of Extraordinary Resolution..........................30
Section 8.12 - Powers Cumulative............................................31
Section 8.13 - Minutes......................................................31
Section 8.14 - Instruments in Writing.......................................32
Section 8.15 - Binding Effect of Resolutions................................32
Section 8.16 - Holdings by the Corporation or Subsidiaries
of the Corporation Disregarded...................32
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01 - Supplemental Indentures......................................33
Section 9.02 - Successor Corporations.......................................34
ARTICLE TEN
CONCERNING THE TRUSTEE
Section 10.01 - Trust Indenture Legislation.................................34
Section 10.02 - Rights and Duties of Trustee................................34
Section 10.03 - Evidence, Experts and Advisers..............................35
Section 10.04 - Documents, Money, Etc. Held by Trustee......................36
Section 10.05 - Actions by Trustee to Protect Interests.....................37
Section 10.06 - Trustee Not Required to Give Security.......................37
Section 10.07 - Protection of Trustee.......................................37
Section 10.08 - Replacement of Trustee......................................37
Section 10.09 - Conflict of Interest........................................38
Section 10.10 - Acceptance of Trusts........................................39
Section 10.11 - Trustee Not to Be Appointed Receiver........................39
Section 10.12 - Indemnity of Trustee........................................39
ARTICLE ELEVEN
GENERAL
Section 11.01 - Notice ......................................................39
Section 11.02 - Accidental Failure to Give Notice to Warrantholders..........41
Section 11.03 - Counterparts and Formal Date.................................41
Section 11.04 - Satisfaction and Discharge of Indenture......................41
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Section 11.05 - Provisions of Indenture and Warrants for the
Sole Benefit of Parties and Warrantholders...................41
Section 11.06 - Language.....................................................42
SCHEDULE A - Form of Warrant Certificate
SCHEDULE B - Form of Release Certificate
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THIS SPECIAL WARRANT INDENTURE made as of March 12, 1998.
B E T W E E N:
SOFTKEY SOFTWARE PRODUCTS INC.
a corporation existing under the laws
of the Province of Ontario,
(hereinafter called the "CORPORATION"),
OF THE FIRST PART,
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CIBC MELLON TRUST COMPANY, a trust company
incorporated under the laws of Canada and having
an office in the City of Xxxxxxx, Xxxxxxx,
(hereinafter called the "TRUSTEE"),
OF THE SECOND PART.
WHEREAS the Corporation proposes to issue and sell 8,687,500 special
warrants (the "Warrants") entitling the holders thereof to acquire upon exercise
thereof without additional payment exchangeable non-voting shares in the capital
of the Corporation upon the terms and subject to the conditions contained
herein;
AND WHEREAS for such purpose the Corporation deems it necessary to
create and issue Warrants to be constituted and issued in the manner hereinafter
set forth;
AND WHEREAS the Corporation is duly authorized to create and issue the
Warrants to be issued as herein provided;
AND WHEREAS all things necessary have been done and performed to make
the Warrants, when certified by the Trustee and issued as in this Indenture
provided, legal, valid and binding upon the Corporation with the benefits of and
subject to the terms of this Indenture;
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AND WHEREAS the Trustee has agreed to enter into this Indenture and to
hold all rights, interests and benefits contained herein for and on behalf of
those persons who from time to time become holders of Warrants issued pursuant
to this Indenture;
AND WHEREAS the foregoing recitals are made as representations and
statements of fact by the Corporation and not by the Trustee;
NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable
consideration mutually given, the receipt and sufficiency of which are hereby
acknowledged, the Corporation hereby appoints the Trustee as warrant trustee for
the holders of Warrants, to hold all rights, interests and benefits contained
herein for and on behalf of those persons who from time to time become holders
of Warrants issued pursuant to this Indenture, and it is hereby agreed and
declared as follows:
ARTICLE ONE
INTERPRETATION
SECTION 1.01 - DEFINITIONS
In this Indenture, unless there is something in the subject matter or
context inconsistent therewith, the following phrases and words shall have the
following meanings:
"AGGREGATE PURCHASE PRICE" means the aggregate Purchase Price received by the
Corporation upon the issue and sale of the Warrants by the Corporation on the
Closing Date, being $198,075,000;
"APPLICABLE LEGISLATION" has the meaning ascribed thereto in subsection
10.01(1);
"BUSINESS DAY" means a day other than a Saturday, Sunday or statutory or banking
holiday in Toronto, Ontario;
"CAPITAL REORGANIZATION" has the meaning ascribed thereto in Section 2.13;
"CLEARANCE DATE" means, in respect of a Warrantholder, the date on which a
receipt for the Final Prospectus has been issued by the Securities Commission of
the Designated Province in which such Warrantholder resides or is deemed to
reside, as herein provided;
"CLOSING DATE" means the date hereof;
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"CLOSING TIME" means 10:00 a.m. (Toronto time) on the Closing Date or such other
time on the Closing Date as the Corporation and the Underwriters may agree
pursuant to the Underwriting Agreement;
"CORPORATION" means SoftKey Software Products Inc., a corporation existing under
the laws of the Province of Ontario, and its successors from time to time;
"CORPORATION'S AUDITORS" means the independent chartered accountant or firm of
chartered accountants duly appointed as auditor or auditors of the Corporation
from time to time;
"COUNSEL" means a barrister or solicitor or a firm of barristers or solicitors
(who may be counsel for the Corporation) acceptable to the Trustee, acting
reasonably;
"DESIGNATED PROVINCES" means the Provinces of Manitoba, Ontario and Quebec;
"DIRECTOR" means a director of the Corporation for the time being and, unless
otherwise specified herein, reference herein to an "ACTION BY THE DIRECTORS"
means an action by the directors of the Corporation as a board or, whenever duly
empowered, an action by a committee of directors;
"ESCROWED FUNDS" means the Net Proceeds and all proceeds of investment and
reinvestment thereof from time to time;
"EVENT OF FORCE MAJEURE" means any event resulting from a cause beyond the
Corporation's control which prevents the Corporation from obtaining a receipt
for the Final Prospectus from any of the Securities Commissions in the
Designated Provinces by 5:00 o'clock p.m. on the Qualification Deadline
including, without limitation, an act of God, war, riot, sabotage, flood, fire
or other like event or any general strike or lockout of the Securities
Commissions in any of the Designated Provinces, but for greater certainty does
not include any administrative action or inaction by any of such Securities
Commissions.
"EXCHANGEABLE SHARES" means the fully paid and non-assessable exchangeable
non-voting shares without nominal or par value in the capital of the
Corporation, as currently constituted;
"EXERCISE DATE" means, with respect to any Warrant, the date during the Exercise
Period on which such Warrant is surrendered for exercise or the date upon which
such Warrant is automatically exercised, in each case, in accordance with the
provisions of Article Five;
"EXERCISE PERIOD" means, with respect to any Warrant, the period beginning on
the Business Day following the date on which Transaction Approval is obtained
and ending at the Time of Expiry;
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"EXPIRY DATE" means, in respect of a Designated Province, the date that is the
first to occur of (i) the sixth Business Day following the Clearance Date and
(ii) the first anniversary of the Closing Date;
"EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in Section 8.11;
"FINAL PROSPECTUS" means the (final) prospectus of the Corporation relating to
the distribution of the Underlying Shares;
"INTEREST AMOUNT" means, at any time and with respect to the determination of
the Redemption Amount:
(a) if at such time all of the Net Proceeds remain in escrow with the
Trustee pursuant to Article Three hereof:
(i) interest on the Purchase Price in an amount equal to (a) the
aggregate interest or other return actually earned (expressed as
a dollar amount) on the Permitted Investments in which the Net
Proceeds were invested during the Redemption Period divided by
(b) 8,687,500 plus;
(ii) interest on the Purchase Price in an amount equal to (A) the
weighted average annual interest rate or other annual rate of
return (expressed as a percentage) applicable to the Permitted
Investments in which the Net Proceeds were invested during the
Redemption Period multiplied by (B) the Underwriters' Fees and
Expenses, which product shall then be multiplied by (C) the
number of days in the Redemption Period, which resulting product
shall then be divided by (D) 365, which quotient shall be then
divided by (E) 8,687,500; and
(b) if at such time less than all of the Net Proceeds remain in escrow
pursuant to Article Three hereof, interest on the Purchase Price in an
amount equal to (A) the annual interest rate applicable to that
Government of Canada treasury xxxx which could have been purchased on
the Closing Date with an original term to maturity which most closely
approximates the Redemption Period multiplied by (B) the Aggregate
Purchase Price, which product shall then be multiplied by (C) the
number of days in the Redemption Period, which resulting product shall
then be divided by (D) 365, which quotient shall then be divided by
(E) 8,687,500;
"MINDSCAPE ACQUISITION" means the acquisition of Mindscape, Inc. and certain
affiliates contemplated by that certain stock purchase agreement dated as of
March 5, 1998 between TLC, Mindscape Holding Company, Pearson Overseas Holding,
Ltd. and Xxxxxxx Netherlands, B.V.;
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"NET PROCEEDS" means the Aggregate Purchase Price less the Underwriters' Fees
and Expenses, such Net Proceeds being $190,002,000;
"NOTICE DATE" has the meaning ascribed thereto in subsection 3.04(1);
"PERMITTED INVESTMENTS" means Government of Canada treasury bills or such other
investments rated at least R1 middle by DBRS Inc. and having an original term to
maturity of 120 days or less;
"PERSON" includes an individual, a corporation, a partnership, a trustee, any
unincorporated organization or any other juridical entity and words importing
persons have a similar meaning;
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2.01;
"QUALIFICATION DEADLINE" means July 10, 1998 or such later date as may be agreed
upon in writing by the Corporation and the Underwriters and notified to the
Trustee and the Warrantholders;
"REDEMPTION AMOUNT" means an amount per Warrant equal to the Purchase Price plus
the Interest Amount;
"REDEMPTION PERIOD" means the period from the Closing Date to but excluding the
first date of mailing by the Trustee of a cheque or bank draft in payment of the
Redemption Amount pursuant to subsection 3.04(1);
"RELEASE CERTIFICATE" means a certificate and request for payment substantially
in the form of Schedule B hereto, executed and delivered to the Trustee by the
Corporation and by Xxxxxxxxx XxXxxxxx & Partners on behalf of the Underwriters;
"SECURITIES COMMISSIONS" means, collectively, the securities commission or
comparable securities regulatory authority in each of the Designated Provinces
and "SECURITIES COMMISSION" means any such authority;
"SECURITIES LAWS" means, collectively, the applicable securities laws of each of
the Designated Provinces and the respective regulations and rules made and forms
prescribed thereunder together with all applicable published policy statements
and blanket orders and rulings of the Securities Commissions;
"SHAREHOLDER" means a holder of record on the books of the Corporation of one or
more Exchangeable Shares;
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"SUBSCRIPTION AGREEMENTS" means, collectively, the subscription agreements or
other agreements entered into between the Corporation, the Underwriters and each
Warrantholder pursuant to which the Warrantholders agree to purchase Warrants
from the Corporation;
"SUCCESSOR" has the meaning ascribed thereto in Section 9.02;
"THIS WARRANT INDENTURE", "THIS INDENTURE", "HEREIN", "HEREBY" and similar
expressions mean and refer to this indenture and any indenture, deed or
instrument supplemental or ancillary hereto; and the expressions "ARTICLE",
"SECTION", "SUBSECTION" and "CLAUSE" followed by a number mean and refer to the
specified Article, Section, subsection or clause of this Indenture;
"TIME OF EXPIRY" means 5:00 p.m. (local time) on the Expiry Date;
"TLC" means The Learning Company, Inc., a corporation organized and existing
under the State of Delaware, United States of America;
"TLC COMMON STOCK" means the Common Stock, US$0.01 par value per share, of TLC;
"TRANSACTION APPROVAL" means all such consents and approvals necessary to ensure
that the rights and benefits of the holders of Underlying Shares are
substantially equivalent to the rights and benefits of the holders of the
existing Exchangeable Shares (subject to the securities laws of the United
States); provided that, for greater certainty, Transaction Approval shall not
include the filing of, or the obtaining of a receipt for, the Final Prospectus;
"TRIGGERING EVENT" has the meaning ascribed thereto in Section 4.01;
"TRUSTEE" means CIBC Mellon Trust Company, a corporation incorporated under the
laws of Canada, or its successors for the time being in the trusts hereby
created;
"UNDERLYING SHARES" means the Exchangeable Shares issuable upon the exercise or
deemed exercise of the Warrants, including any other shares, securities or
property issuable upon the exercise of the Warrants as a result of any
adjustment of exercise rights pursuant to Section 2.13 and 2.14;
"UNDERWRITERS" means, collectively, Xxxxxxxxx XxXxxxxx & Partners and First
Marathon Securities Limited;
"UNDERWRITERS' FEES AND EXPENSES" means the fee of $7,923,000 together with the
Underwriters' estimated expenses in the amount of $150,000, paid to the
Underwriters by the Corporation in connection with the issue and sale of the
Warrants, being the aggregate amount of $8,073,000;
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"UNDERWRITING AGREEMENT" means the underwriting agreement dated March 12, 1998
between the Corporation, The Learning Company, Inc. and the Underwriters;
"U.S. SECURITIES LAWS" means, collectively, the applicable federal and state
securities laws of the United States of America and the rules and regulations
promulgated thereunder, and including without limitation the Securities Act of
1933, as amended.
"WARRANT CERTIFICATES" has the meaning ascribed thereto in subsection 2.02(1);
"WARRANTHOLDER" or "HOLDER" means a person whose name is entered for the time
being in the register maintained pursuant to clause 2.08(2)(a) and, for greater
certainty, in respect of any action to be taken by a holder in respect of his
Warrants, means the holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by instrument in writing
in form, substance and execution satisfactory to the Trustee with signatures
guaranteed by a Canadian chartered bank, a Canadian trust company or a member
firm of The Toronto Stock Exchange;
"WARRANTHOLDERS' REQUEST" means an instrument signed in one or more counterparts
by Warrantholders holding in the aggregate not fewer than 25% of the then
outstanding Warrants, requesting the Trustee to take some action or proceeding
specified therein;
"WARRANTS" means the special warrants of the Corporation entitling registered
holders thereof upon exercise thereof in accordance herewith to acquire
Underlying Shares; and
"WRITTEN ORDER OF THE CORPORATION", "WRITTEN REQUEST OF THE CORPORATION",
"WRITTEN CONSENT OF THE CORPORATION", "CERTIFICATE OF THE CORPORATION" and any
other document required to be signed by the Corporation means, respectively, a
written order, request, consent, certificate or other document signed in the
name of the Corporation by any one of the chairman of the board, the
vice-chairman of the board, the president or a vice-president of the
Corporation, and may consist of one or more instruments so executed.
SECTION 1.02 - NUMBER AND GENDER
Unless elsewhere herein otherwise expressly provided or unless
the context otherwise requires, words importing the singular include the plural
and vice versa and words importing the masculine gender include the feminine and
neuter genders.
SECTION 1.03 - INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Indenture into Articles, Sections,
subsections and clauses, the provision of a table of contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Indenture.
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SECTION 1.04 - BUSINESS DAY
In the event that any day on or before which any action is required or
permitted to be taken hereunder is not a Business Day, then such action shall be
required or permitted to be taken on or before the requisite time on the next
succeeding day that is a Business Day.
SECTION 1.05 - TIME OF THE ESSENCE
Time shall be of the essence in all respects in this Indenture and the
Warrants.
SECTION 1.06 - APPLICABLE LAW
This Indenture and the Warrants shall be governed by and construed and
enforced in accordance with the laws of Ontario and shall be treated in all
respects as Ontario contracts.
SECTION 1.07 - SEVERABILITY
The invalidity or unenforceability of any particular provision of this
Indenture shall not affect or limit the validity or enforceability of the
remaining provisions of this Indenture.
ARTICLE TWO
ISSUE OF WARRANTS
SECTION 2.01 - ISSUE OF WARRANTS
8,687,500 Warrants entitling the holders thereof to acquire, on the
terms and subject to the conditions herein provided, 8,687,500 Exchangeable
Shares (or, in the circumstances described in Article Four, 9,295,625
Exchangeable Shares), or such other kind and amount of Underlying Shares as may
be herein provided, are hereby created and authorized to be issued hereunder
upon the terms and conditions set forth herein at a purchase price of $22.80 per
Warrant (the "Purchase Price"). Certificates evidencing the Warrants shall be
executed by the Corporation and certified by or on behalf of the Trustee upon
the written order of the Corporation and delivered by the Corporation in
accordance with Sections 2.03 and 2.04 against payment of the Aggregate Purchase
Price.
SECTION 2.02 - FORM AND TERMS OF WARRANTS
(1) The certificates representing the Warrants (the "Warrant
certificates") shall be substantially in the form set out in Schedule A hereto,
shall be dated as of the date hereof (regardless
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of their actual date of issue) and shall have such distinguishing letters and
numbers as the Corporation may prescribe with the approval of the Trustee.
Warrant certificates may be engraved, lithographed, printed or typewritten or
partly in one form and partly in another, as the Corporation with the approval
of the Trustee may determine.
(2) Each Warrant authorized to be issued hereunder shall entitle the
holder thereof to acquire (subject to subsection 5.01(2)), at no additional
cost, one Exchangeable Share (or, in the circumstances described in Article
Four, 1.07 Exchangeable Shares) or such other kind and amount of Underlying
Shares as may be provided in accordance with the provisions of this Indenture.
(3) Fractional Warrants shall not be issued or otherwise provided for.
(4) Any legends to be typed onto the Warrant certificates or the
Underlying Shares shall be typed thereon in accordance with the provisions of
this Indenture upon the written direction of the Corporation. The Trustee and
the Corporation have no duty to ensure that the Warrantholders comply with the
provisions of any such legend.
(5) All Warrant certificates shall have typed thereon the following
legend:
"This Special Warrant, the Exchangeable Shares issuable upon exercise
hereof and the shares of Common Stock, par value US$0.01 per share, of
The Learning Company, Inc. (the "Common Stock") issuable upon exchange
of the Exchangeable Shares have not been registered under the
Securities Act of 1933, as amended, of the United States of America
(the "U.S. Securities Act"); the Special Warrant, the Exchangeable
Shares and the Common Stock may not be offered, sold or otherwise
transferred within the United States or to, or for the account or
benefit of, any U.S. person (as such terms are defined in Regulation S
promulgated under the U.S. Securities Act) unless such offer, sale or
transfer is covered by or made pursuant to an effective registration
statement under the U.S. Securities Act or pursuant to an exemption
from registration under the U.S. Securities Act, nor may any Special
Warrant or Exchangeable Share be offered, sold or otherwise
transferred within the United States or to, or for the account or
benefit of, any U.S. person unless the issuance of the Common Stock is
registered under an effective registration statement under the U.S.
Securities Act or an exemption from registration under the U.S.
Securities Act is available for the exchange of the Exchangeable
Shares. Any holder that surrenders the Special Warrant for
Exchangeable Shares or the Exchangeable Shares in exchange for Common
Stock prior to effectiveness of a registration statement filed under
the U.S. Securities Act covering such exercise or exchange, or
availability of an exemption from registration under the U.S.
Securities Act, must certify that the holder is not a U.S. person and
that the Special Warrants are not being
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exercised and the Exchangeable Shares are not being exchanged on
behalf of a U.S. person."
SECTION 2.03 - SIGNING OF WARRANT CERTIFICATES
The Warrant certificates shall be signed by any of the chairman, chief
executive officer, president, secretary or a vice-president of the Corporation
and may but need not be under the corporate seal of the Corporation or a
reproduction thereof. The signature of such officer may be mechanically
reproduced in facsimile and Warrant certificates bearing such facsimile
signatures shall be binding upon the Corporation as if they had been manually
signed by such officer. Notwithstanding that the person whose manual or
facsimile signature appears on any Warrant certificate as such officer may no
longer hold office at the date of issue of such Warrant certificate or at the
date of certification or delivery thereof, any Warrant certificate signed as
aforesaid shall, subject to Section 2.04, be valid and binding upon the
Corporation and the registered holder thereof shall be entitled to the benefits
of this Indenture.
SECTION 2.04 - CERTIFICATION BY THE TRUSTEE
(1) No Warrant certificate shall be issued or, if issued, shall be valid
for any purpose or entitle the registered holder to the benefit hereof or
thereof until it has been certified by manual signature by or on behalf of the
Trustee in the form of the Warrant certificate set out in Schedule A and such
certification by the Trustee upon any Warrant certificate shall be conclusive
evidence as against the Corporation that the Warrant certificate so certified
has been duly issued hereunder and the holder is entitled to the benefits
hereof.
(2) The certification of the Trustee on Warrant certificates issued
hereunder shall not be construed as a representation or warranty by the Trustee
as to the validity of this Indenture or the Warrants (except the due
certification thereof) and the Trustee shall in no respect be liable or
answerable for the use made of the Warrants or any of them or of the
consideration therefor except as otherwise specified herein.
SECTION 2.05 - WARRANTHOLDER NOT A SHAREHOLDER, ETC.
The holding of a Warrant shall not be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder nor entitle the
holder to any right or interest in respect thereof except as expressly provided
herein and in the Warrants.
SECTION 2.06 - ISSUE IN SUBSTITUTION FOR LOST WARRANT CERTIFICATES
(1) In the case where any Warrant certificate shall become mutilated or be
lost, destroyed or stolen, the Corporation, subject to applicable law and
subsection 2.06(2), shall issue and
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thereupon the Trustee shall certify and deliver a new Warrant certificate of
like tenor as the one mutilated, lost, destroyed or stolen in exchange for and
in place of and upon cancellation of such mutilated Warrant certificate, or in
lieu of and in substitution for such lost, destroyed or stolen Warrant
certificate, and the substituted Warrant certificate shall be in a form approved
by the Trustee and shall entitle the holder to the benefits hereof and shall
rank equally in accordance with its terms with all other Warrant certificates
issued or to be issued hereunder.
(2) The applicant for the issue of a new Warrant certificate pursuant to
this Section 2.06 shall bear the cost of the issue thereof and in case of loss,
destruction or theft shall furnish to the Corporation and to the Trustee, as a
condition precedent to the issue thereof, such evidence of ownership and of the
loss, destruction or theft of the Warrant certificate so lost, destroyed or
stolen as shall be satisfactory to the Corporation and to the Trustee in their
sole discretion, and such applicant may also be required to furnish an indemnity
bond or security in amount and form satisfactory to the Corporation and the
Trustee in their sole discretion and shall pay the reasonable charges of the
Corporation and the Trustee in connection therewith.
SECTION 2.07 - WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of Warrant certificates evidencing the same.
SECTION 2.08 - REGISTERS FOR WARRANTS
(1) The Corporation hereby appoints the Trustee as transfer agent and
registrar of the Warrants. The Corporation may appoint hereafter, with the
consent of the Trustee, one or more additional transfer agents and/or registrars
of the Warrants.
(2) The Corporation shall cause to be kept by the Trustee at its principal
office in the City of Toronto (a) a register of Warrantholders in which shall be
entered the names and addresses of the Warrantholders and of the number of
Warrants held by them and (b) a register of transfers of Warrants in which shall
be entered the date and other particulars of each transfer of Warrants.
(3) No transfer of a Warrant shall be valid unless made by:
(a) the holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the
Trustee with signatures guaranteed by a Canadian chartered bank, a
Canadian trust company or a member firm of The Toronto Stock Exchange;
or
(b) the liquidator of, or a trustee in bankruptcy for, a Warrantholder,
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upon compliance with such reasonable requirements as the Trustee and the
Corporation may prescribe (including, without limitation, the requirement to
provide evidence of satisfactory compliance with applicable Securities Laws),
and unless recorded on the register of transfers maintained by the Trustee
pursuant to clause 2.08(2)(b), nor until all stamp taxes or governmental or
other charges arising by reason of such transfer have been paid.
(4) In all cases, no transfer of a Warrant shall be valid if made to, and
no Warrant may be transferred to, a person resident in any Province of Canada
other than a Designated Province. In addition, no transfer of a Warrant shall be
valid, and no Warrant may be transferred, unless at the time of surrender, the
Warrantholder agrees that if such transfer is prior to effectiveness of a
registration statement filed under the U.S. Securities Act covering the exercise
of the Warrants for Underlying Shares and the exchange of the Underlying Shares
for TLC Common Stock, or in each case an exemption from registration under the
U.S. Securities Act is available, the Warrantholder will certify that the
Warrantholder is not a U.S. person and that the Warrants are not being
transferred on behalf of a U.S. person.
SECTION 2.09 - TRANSFEREE ENTITLED TO REGISTRATION
The transferee of a Warrant shall be entitled to have his name entered
on the register of holders as the owner of such Warrant free from all equities
or rights of set-off or counterclaim between the Corporation and the transferor
or any previous holder of such Warrant, save in respect of equities of which the
Corporation or the transferee is required to take notice by statute or by order
of a court of competent jurisdiction after the transfer form attached to the
Warrant and any other form of transfer acceptable to the Trustee (which may
include the obligation of the transferee to provide representations and
warranties equivalent to those contained in Schedule C of the Subscription
Agreements) is duly completed and the Warrant is lodged with the Trustee and
upon compliance with all other conditions in that regard required by this
Indenture or by law.
SECTION 2.10 - REGISTERS OPEN FOR INSPECTION
The registers hereinbefore referred to shall be open during normal
business hours for inspection by the Corporation, the Trustee or any
Warrantholder. The Trustee shall furnish the Corporation with a list of the
names and addresses of holders of Warrants entered in the register of holders
kept by the Trustee and showing the number of Underlying Shares that might be
acquired upon the exercise of the Warrants held by each such holder from time to
time when requested to do so in writing by the Corporation.
SECTION 2.11 - EXCHANGE OF WARRANTS
(1) Warrant certificates may be exchanged for Warrant certificates in any
other authorized denomination representing in the aggregate the same number of
Warrants upon
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compliance with the reasonable requirements of the Trustee. The Corporation
shall sign and the Trustee shall certify, in accordance with Sections 2.03 and
2.04, all Warrant certificates necessary to carry out the exchanges contemplated
herein.
(2) Warrant certificates may be exchanged only at the principal office of
the Trustee in the City of Toronto or at any other place that is designated by
the Corporation with the approval of the Trustee. Any Warrant certificates
tendered for exchange shall be surrendered to the Trustee and cancelled.
(3) No charge will be levied by the Corporation or the Trustee upon a
presenter of a Warrant certificate pursuant to this Indenture for the transfer
of any Warrant or for the exchange of any Warrant certificate, however
reimbursement of the Trustee or the Corporation for any and all taxes or
governmental or other charges required to be paid shall be made by the person
requesting such exchange as a condition precedent to such exchange.
SECTION 2.12 - OWNERSHIP OF WARRANTS
The Corporation and the Trustee shall deem and treat the registered
holder of any Warrant certificate as the absolute owner of the Warrant
represented thereby for all purposes, and the Corporation and the Trustee shall
not be affected by any notice or knowledge to the contrary except where the
Corporation or the Trustee is required to take notice by statute or by order of
a court of competent jurisdiction. A Warrantholder shall be entitled to the
rights evidenced by such Warrant free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate holder
thereof and all persons may act accordingly and the receipt by any such
Warrantholder of Underlying Shares pursuant to such Warrant shall be a good
discharge to the Corporation and the Trustee for the same and neither the
Corporation nor the Trustee shall be bound to inquire into the title of any such
holder except where the Corporation or the Trustee is required to take notice by
statute or by order of a court of competent jurisdiction.
SECTION 2.13 - ADJUSTMENT OF EXERCISE RIGHTS
Subject to Sections 2.14 and 2.15, if at any time after the date
hereof and prior to the Time of Expiry, and provided any Warrants remain
outstanding, there shall occur:
(a) a reclassification of the Exchangeable Shares outstanding at any time
or a change of the Exchangeable Shares into other shares or securities
or a subdivision or consolidation of the Exchangeable Shares into a
greater or lesser number of shares or any other capital
reorganization;
(b) a consolidation, amalgamation or merger of the Corporation with or
into any other person (other than a consolidation, amalgamation or
merger that does not result in
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any reclassification of the outstanding Exchangeable Shares or a
change of the Exchangeable Shares into other shares or securities);
(c) a transfer of the undertaking or assets of the Corporation as an
entirety or substantially as an entirety to another corporation or
other entity; or
(d) an issue or distribution to the holders of all or substantially all
the Corporation's outstanding Exchangeable Shares of securities of the
Corporation, including rights, options or warrants to acquire
Exchangeable Shares, or securities convertible into or exchangeable
for Exchangeable Shares or any property or assets and any evidences of
indebtedness, excluding dividends (other than stock dividends) or
other distributions made in the ordinary course by the Corporation and
excluding securities issued pursuant to a stock option or stock
purchase plan of the Corporation or other stock acquisition
arrangements of the Corporation in effect as of the date hereof,
any of such events being called a "Capital Reorganization", the holder of any
Warrant who thereafter shall exercise his right to acquire Underlying Shares
shall be entitled to receive, and shall accept for no extra cost, in lieu of the
number of Underlying Shares that he was theretofore entitled upon such exercise,
the kind and amount of Exchangeable Shares or other shares, securities or
property which such holder would have received had he been the registered holder
of the Underlying Shares in respect of his Warrants on such effective date or
record date, as the case may be. If determined appropriate by the Corporation,
acting reasonably, appropriate adjustments shall be made as a result of any such
Capital Reorganization in the application of the provisions set forth
hereinafter in this Article Two with respect to the rights and interests
thereafter of Warrantholders with the result that the provisions set forth
hereinafter in this Article Two shall thereafter correspondingly be made
applicable as nearly as may be reasonably possible in relation to any other
shares, securities or property thereafter deliverable upon the exercise of any
Warrant. Any such adjustments shall be made by and set forth in an indenture
supplemental hereto approved by the directors and the Trustee and shall for all
purposes be conclusively deemed to be an appropriate adjustment absent manifest
error.
SECTION 2.14 - ADJUSTMENT RULES
(1) The adjustments provided for in Section 2.13 are cumulative and shall
apply (without duplication) to successive Capital Reorganizations or other
events resulting in any adjustment under the provisions of Section 2.13 provided
that, notwithstanding any other provision of this Article Two, no adjustment
shall be made in the number of Underlying Shares that may be acquired on the
exercise of a Warrant unless it would result in a change of at least one
one-hundredth of an Underlying Share (provided, however, that any adjustments
that by reason of this subsection 2.14(1) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment).
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(2) If any question shall arise with respect to the adjustments provided
for in this Article Two, such question, absent manifest error and subject to the
prior consent of The Toronto Stock Exchange, shall be conclusively determined by
a firm of chartered accountants appointed by the Corporation (who may be the
Corporation's auditors) and acceptable to the Trustee, acting reasonably; such
chartered accountants shall have access to all necessary records of the
Corporation and such determination shall be binding upon the Corporation, the
Trustee and the Warrantholders, absent manifest error. In the event that any
such determination is made, the Corporation shall deliver a certificate to the
Trustee describing such determination and confirming such consent.
(3) No adjustment in the number of Underlying Shares that may be acquired
upon exercise of a Warrant shall be made in respect of any event described in
Section 2.13 if Warrantholders are entitled to participate in such event on the
same terms mutatis mutandis as if Warrantholders had exercised their Warrants
prior to or on the effective date or record date of such event, such
participation being subject to the prior consent of The Toronto Stock Exchange.
(4) In case the Corporation after the date of this Indenture shall take
any action affecting the Exchangeable Shares other than an action described in
this Article Two, which in the opinion of the directors would materially affect
the rights of Warrantholders, the number of Underlying Shares that may be
acquired upon exercise of a Warrant shall be adjusted in such manner and at such
time, by action of the directors, in their sole discretion as they may determine
to be equitable in the circumstances, provided that no such adjustment will be
made unless prior approval of The Toronto Stock Exchange and any other stock
exchange on which the Exchangeable Shares are listed for trading or quoted has
been obtained. Failure of the directors to make such an adjustment shall be
prima facie evidence that the directors have determined that it is equitable to
make no adjustment in the circumstances.
(5) If the Corporation shall set a record date to determine the holders of
the Exchangeable Shares for the purpose of entitling them to receive any
issuance or distribution or for the issuance of any rights, options or warrants
and shall thereafter and before such distribution or issuance to such
shareholders abandon its plan to make such distribution or issuance, then no
adjustment in the number of Underlying Shares that may be acquired upon exercise
of any Warrant shall be required by reason of the setting of such record date.
(6) The Corporation shall not be required to issue fractional securities
in satisfaction of its obligations hereunder. If any fractional interest in an
Underlying Share would, except for the provisions of this subsection, be
deliverable upon the exercise of a Warrant, the Corporation shall make a cash
payment equal to the fair value of the fraction of such Underlying Share not so
issued as determined by the board of directors in its sole discretion, acting
reasonably.
SECTION 2.15 - PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT
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As a condition precedent to the taking of any action which would
require an adjustment pursuant to Section 2.13, the Corporation shall take any
action that, in the opinion of counsel, may be necessary in order that the
Corporation may validly and legally issue as fully paid and non-assessable all
the Underlying Shares that the holders of the Warrants are entitled to receive
on the full exercise thereof in accordance with the provisions hereof.
SECTION 2.16 - NOTICE OF ADJUSTMENT OF EXERCISE RIGHTS
(1) At least seven days prior to the effective date or record date, as the
case may be, of any event that requires or that may require an adjustment in any
of the exercise rights pursuant to any of the Warrants, including the number of
Underlying Shares that may be acquired upon the exercise thereof, the
Corporation shall:
(a) file with the Trustee a certificate of the Corporation specifying the
particulars of such event and, if determinable, the required
adjustment and the computation of such adjustment; and
(b) give notice to the Warrantholders of the particulars of such event
and, if determinable, the required adjustment.
(2) In case any adjustment for which a notice in subsection 2.16(1) has
been given is not then determinable, the Corporation and not the Trustee shall
promptly after such adjustment is determinable:
(a) file a certificate of the Corporation with the Trustee showing how
such adjustment was computed; and
(b) give notice to the Warrantholders of the adjustment.
(3) The Trustee may act and rely for all purposes upon any certificates
and any other documents filed by the Corporation pursuant to this Section 2.16.
SECTION 2.17 - NO DUTY TO INQUIRE, LIABILITY
(1) Except as provided in Section 9.02, the Trustee shall not at any time
be under any duty or responsibility to any Warrantholder to determine whether
any facts exist which may require any adjustment contemplated by Sections 2.13
and 2.14 or with respect to the nature or extent of any such adjustment when
made or with respect to the method employed in making the same.
(2) In case of any adjustment contemplated by Sections 2.13 and 2.14, the
Corporation shall:
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(a) be accountable with respect to the validity or value (or the kind or
amount) of any securities or property which may at any time be issued
or delivered upon the exercise or deemed exercise of any Warrant; and
(b) be responsible for any failure to make any cash payment or to issue,
transfer or deliver security certificates upon the surrender of any
Warrant for the purpose of exercise or deemed exercise, or to comply
with any of the covenants contained in this Article Two.
ARTICLE THREE
ESCROW OF NET PROCEEDS AND REDEMPTION OF SPECIAL WARRANTS
SECTION 3.01 - DEPOSIT OF NET PROCEEDS IN ESCROW
The Corporation hereby deposits the Net Proceeds in escrow with the
Trustee, and the Trustee hereby acknowledges receipt thereof. The Corporation
hereby irrevocably authorizes and instructs the Trustee to hold and deal with
the Net Proceeds in trust for the benefit of the Warrantholders and the
Corporation as their respective interests may appear and in accordance with and
subject to the provisions of this Article.
SECTION 3.02 - INVESTMENT OF NET PROCEEDS
The Net Proceeds deposited with the Trustee hereunder, pending any
release or application thereof as required in accordance with the provisions of
this Article, shall be invested by the Trustee in its name in Permitted
Investments in accordance with any written directions of the Corporation from
time to time given to the Trustee or, in the absence of any such directions,
shall be invested by the Trustee in its name in accordance with Section 10.04.
SECTION 3.03 - RELEASE OF ESCROWED FUNDS TO THE CORPORATION
(1) The Trustee shall release the Escrowed Funds to the Corporation, for
the purpose of completing the Mindscape Acquisition, immediately following the
execution and delivery to the Trustee by the Corporation and Xxxxxxxxx XxXxxxxx
& Partners on behalf of the Underwriters of the Release Certificate.
(2) If the Corporation fails to complete the Mindscape Acquisition within
five Business Days following the release of the Escrowed Funds pursuant to
subsection 3.03(1), the Corporation shall redeposit such funds in escrow with
the Trustee in trust for the benefit of the Warrantholders and the Corporation
in accordance with this Article Three. The Trustee shall thereafter release the
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Escrowed Funds to the Corporation at any time for the purpose of completing the
Mindscape Acquisition in accordance with subsection 3.03(1).
(3) If, on or before the Qualification Deadline, the Escrowed Funds are
not released to the Corporation pursuant to subsection 3.03(1), then the
Warrants shall be redeemed by the Corporation in accordance with Section 3.04
and the Trustee shall use the Escrowed Funds to effect such redemption in
accordance with Section 3.04.
SECTION 3.04 - REDEMPTION OF WARRANTS
(1) If the Corporation fails to complete the Mindscape Acquisition on or
prior to the Qualification Deadline, the Corporation shall forthwith after such
failure (but in any event within five business days following the Qualification
Deadline) give notice thereof to each of the Warrantholders and to the Trustee
(the date of such notice being hereafter referred to as the "Notice Date"). Such
notice shall specify (i) that the Corporation shall be deemed to have redeemed
all of the Warrants on the Notice Date, and that each Warrantholder shall be
deemed to have sold his Warrants to the Corporation on the Notice Date and, in
connection therewith, to have surrendered his Warrants for cancellation, in each
case, for a redemption price per Warrant equal to the Redemption Amount and (ii)
that the Trustee shall, not later than three Business Days after the Notice
Date, send by ordinary mail to each such Warrantholder, or to such person as
such holder may otherwise specify by written notice to the Trustee prior to such
mailing, at the address of such holder or, if so specified, of such person, a
cheque or bank draft made payable to or to the order of such holder or, if so
specified, such person, in an aggregate amount equal to the Redemption Amount
for each unexercised Warrant held by such Warrantholder less applicable
withholding taxes, if any.
(2) If the Corporation fails to complete the Mindscape Acquisition on or
prior to the Qualification Deadline as contemplated by subsection 3.04(1), on
the Notice Date the Corporation shall redeem, and shall be deemed to have
redeemed, all of the Warrants outstanding on such date and each Warrantholder
shall sell, and be deemed to have sold, his Warrants to the Corporation on such
date and, in connection therewith, to have surrendered his Warrants for
cancellation, in each case, for a redemption price per Warrant equal to the
Redemption Amount and, in each case, without any further action on the part of
the Corporation or any Warrantholder. Within three Business Days of the
Corporation having given the notice contemplated by subsection 3.04(1), the
Trustee shall send by ordinary mail to each Warrantholder, or to such person as
such holder may otherwise specify by written notice to the Trustee prior to such
mailing, at the address of such holder or, if so specified, such person, a
cheque or bank draft made payable to or to the order of such holder or, if so
specified, such person, in an aggregate amount equal to the Redemption Amount
for each unexercised Warrant held by such Warrantholder less applicable
withholding taxes, if any. Subject to the Corporation's obligations pursuant to
Section 3.05, the Corporation hereby authorizes and directs the Trustee, and the
Trustee is hereby authorized and directed, to use the Escrowed Funds to
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satisfy all such cheques and/or bank drafts issued in payment of the aggregate
Redemption Amount as aforesaid.
(3) Upon such payment and the cheque or bank draft being satisfied at par
on presentation, all rights under any Warrant in respect of which such payment
has been made will wholly cease and terminate and the Warrant certificate
therefor will be void and of no further force or effect.
(4) If a Warrantholder requests that a cheque or bank draft referred to
above be made payable to a person other than the registered Warrantholder, the
Warrantholder's signature on his written notice to the Trustee specifying such
other person should be guaranteed by a Canadian chartered bank, by a trust
company or a member firm of The Toronto Stock Exchange.
(5) Any payment made in accordance with these provisions shall, to the
extent of the sum represented thereby, satisfy and discharge all liability of
the Corporation with respect to such payment, unless the cheque or bank draft is
not paid at par on presentation. In the event of non-receipt of any cheque or
bank draft by a person to whom it is so sent as aforesaid, or the loss or
destruction thereof, the Trustee will issue to such person a replacement cheque
or bank draft for like amount upon being furnished with such evidence of
non-receipt, loss or destruction and with such indemnity as the Trustee may
reasonably require. The balance of the funds held by the Trustee, if any, after
any payments referred to above, will be paid to the Corporation not later than
12:00 (noon) (Toronto time) on October 1, 1998.
SECTION 3.05 - CORPORATION TO FUND SHORTFALL
To the extent that the Escrowed Funds are insufficient to permit the
Trustee to pay the aggregate Redemption Amount as aforesaid, the Corporation
shall provide to the Trustee within two Business Days of the Notice Date, by
certified cheque or bank draft, sufficient funds in sufficient time to permit
the Trustee to pay and satisfy the aggregate Redemption Amount as aforesaid.
ARTICLE FOUR
TRIGGERING EVENT
SECTION 4.01 - TRIGGERING EVENT
If for any reason, other than by reason of an Event of Force Majeure
(in which case the Clearance Date shall be extended by a period of time equal to
the period during which such Event of Force Majeure exists), the Mindscape
Acquisition has closed and Transaction Approval has been obtained but (i) the
Clearance Date does not occur by 5:00 p.m. (local time) on the Qualification
Deadline or (ii) the Corporation is unable to file the Final Prospectus with the
Securities Commission of any Designated Province by 5:00 p.m. (local time) on
the Qualification
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Deadline (each, a "Triggering Event"), the Corporation shall forthwith give
notice of that fact to the Trustee and to each of the Warrantholders resident in
the relevant Designated Province(s) (non-Canadian resident holders of Warrants
being deemed to be resident in the Province of Ontario for this purpose), which
notice shall also describe the change in the exercise rights attaching to the
Warrants held by such Warrantholders as a result of such Triggering Event.
SECTION 4.02 - CHANGE IN EXERCISE RIGHTS
Upon the occurrence during the Exercise Period of a Triggering Event
with respect to a Designated Province, each Warrant held by a holder resident or
deemed resident in such province shall thereafter entitle the holder, without
further action being required to be taken hereunder, to acquire (subject to
subsection 5.01(2)), at no additional cost, 1.07 Exchangeable Shares or such
other kind and amount of Underlying Shares as is herein provided in accordance
with the provisions of this Indenture. In such case, but without derogating from
the Corporation's obligation to use its reasonable efforts to obtain from each
of the Securities Commissions in the Designated Provinces, as soon as
practicable, a receipt or similar document for the Final Prospectus, the
Exchangeable Shares issued upon the exercise or deemed exercise of the Warrants
will be subject to restrictions on the resale thereof in accordance with
applicable Securities Laws and U.S. Securities Laws and may bear a legend to
such effect.
ARTICLE FIVE
EXERCISE OF WARRANTS
SECTION 5.01 - METHOD OF EXERCISE OF WARRANTS
(1) The holder of any Warrant may exercise during the Exercise Period the
right thereby conferred on such holder to acquire without further payment
(except as provided in subsection 5.01(2)) the Underlying Shares to which such
Warrant entitles the holder by surrendering such Warrant to the Trustee at any
time during the Exercise Period at its principal stock and bond transfer office
in the City of Toronto (or at such additional place or places as may be decided
by the Corporation from time to time with the approval of the Trustee) with a
duly completed and executed exercise form substantially in the form set out in
the Warrant certificate. A Warrant with the duly completed and executed exercise
form shall be deemed to be surrendered only upon personal delivery thereof to,
or if sent by mail or other means of transmission upon actual receipt thereof
by, the Trustee.
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(2) Any exercise form referred to in subsection 5.01(1) shall be signed by
the Warrantholder. If any of the Underlying Shares issuable upon the exercise of
Warrants by a holder are to be issued to a person or persons other than the
Warrantholder, the signatures set out in the exercise form referred to in
subsection 5.01(1) shall be guaranteed by a Canadian chartered bank, a Canadian
trust company or a member firm of The Toronto Stock Exchange and the
Warrantholder shall pay to the Corporation or the Trustee all applicable
transfer or similar taxes and the Corporation shall not be required to issue or
deliver certificates evidencing Underlying Shares unless or until such
Warrantholder shall have paid to the Corporation or the Trustee on behalf of the
Corporation the amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid or that no such tax is due. The
exercise form attached to the Warrant certificate shall be completed to specify
the person or persons in whose name or names the Underlying Shares to be issued
upon exercise are to be registered, such person's or persons' address or
addresses and the number of Underlying Shares to be issued to each person if
more than one is so specified.
SECTION 5.02 - AUTOMATIC EXERCISE
(1) If at the Time of Expiry the holder of a Warrant certificate has not
exercised his right to acquire Underlying Shares during the Exercise Period in
accordance with the provisions of Section 5.01, the Warrants held by such
Warrantholder shall be deemed to have been exercised by such Warrantholder,
without any further action on the part of such Warrantholder, immediately prior
to the expiry of the Exercise Period.
(2) If a Clearance Date occurs during the Exercise Period, the Corporation
shall forthwith give notice of such occurrence, together with copies of the
receipts for the Final Prospectus, to the Trustee.
(3) As soon as practicable following the automatic exercise of the
Warrants pursuant to this Section 5.02, the Trustee shall notify each of the
holders of such Warrants as have been automatically exercised to the effect that
such Warrants have been automatically exercised and that the holders thereof
have acquired the Underlying Shares and shall be entered in the relevant
register(s) of holders of Underlying Shares, in each case, effective as at the
Expiry Time, and shall receive certificates for the Underlying Shares to which
they have become entitled.
SECTION 5.03 - EFFECT OF EXERCISE OF WARRANTS
(1) Upon compliance by the Warrantholder with the provisions of Section
5.01 or the automatic exercise of the Warrants pursuant to Section 5.02, the
Underlying Shares issuable upon the exercise of the Warrants shall be deemed to
have been issued and the person to whom such Underlying Shares are to be issued
shall be deemed to have become the holder of record of such Underlying Shares on
the Exercise Date unless the transfer registers of the Corporation for the
Exchangeable Shares shall be closed on such date, in which case the Underlying
Shares subscribed
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for shall be deemed to have been issued and such person shall be deemed to have
become the holder of record of such Underlying Shares on the date on which such
transfer registers are reopened.
(2) Forthwith following the due exercise by a Warrantholder of Warrants in
accordance with Section 5.01 or the automatic exercise of the Warrants pursuant
to Section 5.02, the Trustee shall deliver to the Corporation a notice setting
out the particulars of the Warrants exercised, the person in whose name the
Underlying Shares are to be issued and the address of such person.
(3) Within three Business Days of receipt of the notice referred to in
subsection 5.03(2), the Corporation shall cause to be mailed to the person in
whose name the Underlying Shares issuable upon the exercise of the Warrants are
to be issued, as specified in the exercise form completed on the Warrant, at the
address specified therein, or, if so specified in such exercise form, cause to
be delivered to such person at the office of the Trustee where such Warrant was
surrendered, or in the event of the automatic exercise of the Warrants pursuant
to Section 5.02, to the applicable Warrantholder at his address specified in the
register for the Warrants, a certificate or certificates for the Underlying
Shares to which the Warrantholder is entitled.
(4) If at the time of any exercise of the Warrants there remain trading
restrictions on the Underlying Shares pursuant to applicable Securities Laws or
U.S. Securities Laws, the Corporation may, upon the advice of counsel, endorse
any certificates representing the Underlying Shares to such effect.
SECTION 5.04 - CANCELLATION OF WARRANT CERTIFICATES
All Warrant certificates surrendered to the Trustee pursuant to
Section 2.06, 2.09, 2.11 or 5.01 shall be cancelled by the Trustee. All Warrant
certificates deemed to have been exercised pursuant to Section 5.02 shall be
deemed to have been cancelled by the Trustee. All Warrants represented by
Warrant certificates that have been cancelled or have been deemed to have been
cancelled pursuant to this Section 5.04 shall be without further force or effect
whatsoever.
SECTION 5.05 - NOTICE OF EXTENSION OF QUALIFICATION DEADLINE
If the Corporation and the Underwriters extend the Qualification
Deadline, the Corporation shall forthwith give notice in writing thereof to the
Trustee and the Warrantholders.
SECTION 5.06 - LEGEND ON EXCHANGEABLE SHARES
All certificates representing Exchangeable Shares shall have typed
thereon the following legend:
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"The Exchangeable Shares issuable upon exercise of the Special
Warrants and the shares of Common Stock, par value U.S.$0.01 per
share, of The Learning Company, Inc. (the "Common Stock") issuable
upon exchange of the Exchangeable Shares have not been registered
under the Securities Act of 1933, as amended, of the United States of
America (the "U.S. Securities Act"); the Exchangeable Shares and the
Common Stock may not be offered, sold or otherwise transferred within
the United States or to, or for the account or benefit of, any U.S.
person (as such terms are defined in Regulation S promulgated under
the U.S. Securities Act) unless such offer, sale or transfer is
covered by or made pursuant to an effective registration statement
under the U.S. Securities Act or pursuant to an exemption from
registration under the U.S. Securities Act, nor may any Exchangeable
Share be offered, sold or otherwise transferred within the United
States or to, or for the account or benefit of, any U.S. person unless
the issuance of the Common Stock is registered under an effective
registration statement under the U.S. Securities Act or an exemption
from registration under the U.S. Securities Act is available for the
exchange of the Exchangeable Shares. Any holder that surrenders this
certificate in exchange for Common Stock prior to effectiveness of a
registration statement filed under the U.S. Securities Act covering
such exchange or availability of an exemption from registration, must
certify that the holder is not a U.S. person."
ARTICLE SIX
COVENANTS
SECTION 6.01 - GENERAL COVENANTS
The Corporation covenants with the Trustee that so long as any
Warrants remain outstanding:
(1) It will at all times maintain its corporate existence and will carry
on and conduct its business in accordance with good business practice.
(2) It will send to each Warrantholder copies of all financial statements
and other material furnished to the holders of Exchangeable Shares after the
date of this Indenture.
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(3) It will reserve and there will remain unissued out of its authorized
capital a sufficient number of Underlying Shares to satisfy the rights of
acquisition provided for herein.
(4) It will cause the Underlying Shares from time to time subscribed for
pursuant to the Warrants in the manner herein provided and the certificates
representing such Underlying Shares to be duly issued and delivered in
accordance with the Warrants and the terms hereof.
(5) All Exchangeable Shares that shall be issued upon exercise of the
right to acquire provided for herein shall be issued as fully paid and
non-assessable and the holders thereof shall not be liable to the Corporation or
its creditors in respect thereof.
(6) It shall use its reasonable efforts to obtain, as soon as practicable,
Transaction Approval and, as soon as practicable thereafter, it shall use its
reasonable efforts to obtain from each of the Securities Commissions in the
Designated Provinces a receipt or similar document for the Final Prospectus.
(7) It will use its reasonable efforts to maintain the listing of the
Exchangeable Shares on The Toronto Stock Exchange and to ensure that the
Exchangeable Shares issuable upon the exercise of the Warrants will be listed
and posted for trading on such exchange simultaneously with or as soon as
practicable following their issue.
(8) It will use its reasonable best efforts to maintain its status as a
reporting issuer (or analogous entity) as set out in paragraph 4(i) of Schedule
"A" of the Subscription Agreements and to continue to be in compliance with its
obligations under the Securities Laws of such Provinces, without default, from
the date hereof up to and including the first anniversary of the Closing Date.
(9) The issue and sale of the Warrants do not and will not result in a
breach by the Corporation of, and do not and will not create a state of facts
which, after notice or lapse of time or both, will result in a breach by the
Corporation of any applicable laws and do not and will not conflict with any of
the terms, conditions or provisions of the articles of the Corporation or
by-laws or resolutions of the Corporation or any trust indenture, loan agreement
or any other agreement or instrument to which the Corporation is a party or by
which it is contractually bound on the date hereof.
SECTION 6.02 - NOTICE TO SECURITIES COMMISSIONS
The Corporation will give written notice of the issue of Underlying
Shares pursuant to the exercise of Warrants in such detail as may be required to
The Toronto Stock Exchange and to each Securities Commission in each Designated
Province in which there is legislation requiring the giving of any such notice.
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SECTION 6.03 - TRUSTEE'S REMUNERATION AND EXPENSES
The Corporation covenants that it will pay to the Trustee the fees
agreed to by the Corporation and the Trustee from time to time for the Trustee's
services hereunder and will pay or reimburse the Trustee upon its request for
all its reasonable expenses and disbursements arising from the administration or
execution of the trusts hereby created (including the reasonable compensation
and the disbursements of its counsel and all other advisers, experts,
accountants and assistants not regularly in its employ) both before any default
hereunder and thereafter until all duties of the Trustee hereunder shall be
finally and fully performed, except any such expense or disbursement in
connection with or related to or required to be made as a result of the gross
negligence, wilful misconduct or bad faith of the Trustee.
SECTION 6.04 - PERFORMANCE OF COVENANTS BY TRUSTEE
If the Corporation shall fail to perform any of its covenants
contained in this Indenture and the Corporation has not rectified such failure
within 15 Business Days after receiving written notice from the Trustee of such
failure, the Trustee may notify the Warrantholders of such failure on the part
of the Corporation or may itself perform any of the said covenants capable of
being performed by it but shall be under no obligation to perform said covenants
or to notify the Warrantholders of such performance by it. All reasonable sums
expended or disbursed by the Trustee in so doing shall be repayable as provided
in Section 6.03. No such performance, expenditure or disbursement by the Trustee
shall be deemed to relieve the Corporation of any default hereunder or of its
continuing obligations under the covenants herein contained.
SECTION 6.05 - RIGHT TO DIVIDENDS OR DISTRIBUTIONS
If, during the Exercise Period, the Corporation shall pay any dividend
or make any distribution to all or substantially all of the holders of
Exchangeable Shares or if the Corporation declares any dividend or provides for
any distribution payable to all or substantially all of the holders of
Exchangeable Shares of record during that period, Warrantholders who hold any
unexercised Warrants on the date of payment or date of record as the case may be
shall be entitled to a payment in compensation for the making of such dividend
or distribution mutatis mutandis, as if they had exercised their Warrants and
acquired Exchangeable Shares thereunder immediately prior to the effective date
or record date of the dividend or distribution. For cash dividends, this
entitlement shall be satisfied by the payment of such amounts by the Corporation
to the holders of the Warrants. For stock dividends or distributions in respect
of which an adjustment can be made in the number of Exchangeable Shares to be
delivered to the Warrantholder upon exercise of Warrants pursuant to paragraph
sections 2.13 and 2.14, this entitlement shall be satisfied by such an
adjustment.
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ARTICLE SEVEN
ENFORCEMENT
SECTION 7.01 - SUITS BY WARRANTHOLDERS
All or any of the rights conferred upon a Warrantholder by the terms
of the Warrants held by such Warrantholder and/or this Indenture may be enforced
by such Warrantholder by appropriate legal proceedings, but subject to the
rights that are hereby conferred upon the Trustee and subject to the provisions
of Section 8.10.
SECTION 7.02 - IMMUNITY OF SHAREHOLDERS, ETC.
The Trustee and, by the acceptance of the Warrant certificates and as
part of the consideration for the issue of the Warrants, the Warrantholders
hereby waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any person in his capacity as an
incorporator or any past, present or future shareholder or other securityholder,
director, officer, employee or agent of the Corporation for the creation and
issue of the Underlying Shares pursuant to any Warrant or on any covenant,
agreement, representation or warranty by the Corporation herein or in the
Warrant certificates contained. The foregoing, with respect to the officers and
directors of the Corporation, shall be subject to rights of action for
rescission or damages which Warrantholders may have pursuant to applicable
Securities Laws.
SECTION 7.03 - LIMITATION OF LIABILITY
The obligations hereunder are not personally binding upon, nor shall
resort hereunder be had to, the directors or shareholders of the Corporation or
any of the past, present or future directors or shareholders of the Corporation
or any of the past, present or future officers, employees or agents of the
Corporation. Only the property of the Corporation shall be bound in respect
hereof.
ARTICLE EIGHT
MEETINGS OF WARRANTHOLDERS
SECTION 8.01 - RIGHT TO CONVENE MEETINGS
The Trustee may at any time and from time to time, and shall on
receipt of a written request of the Corporation or of a Warrantholders' Request,
convene a meeting of the Warrantholders provided that the Trustee is indemnified
and funded to its reasonable satisfaction by the Corporation or by the
Warrantholders signing such Warrantholders' Request against the costs, charges,
expenses
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and liabilities that may be incurred in connection with the calling and holding
of such meeting. If within five Business Days after the receipt of a written
request of the Corporation or a Warrantholders' Request and funding and
indemnity given as aforesaid the Trustee fails to give the requisite notice
specified in Section 8.02 to convene a meeting, the Corporation or such
Warrantholders, as the case may be, may convene such meeting. Every such meeting
shall be held in the City of Toronto or at such other place as may be approved
by the Trustee.
SECTION 8.02 - NOTICE
At least 15 days' prior notice of any meeting of Warrantholders shall
be given to the Warrantholders in the manner provided for in Section 11.01 and a
copy of such notice shall be delivered to the Trustee unless the meeting has
been called by it and to the Corporation unless the meeting has been called by
it. Such notice shall state the time and place of the meeting, the general
nature of the business to be transacted and shall contain such information as is
reasonably necessary to enable the Warrantholders to make a reasoned decision on
the matter. It shall not be necessary for any such notice to set out the terms
of any resolution to be proposed or any of the provisions of this Article Eight.
The notice convening any such meeting may be signed by an appropriate officer of
the Trustee or of the Corporation or the person designated by such
Warrantholders, as the case may be.
SECTION 8.03 - CHAIR
The Trustee may nominate in writing an individual to be Chair of the
meeting and if no individual is so nominated, or if the individual so nominated
is not present within 15 minutes after the time fixed for the holding of the
meeting, the Warrantholders present in person or by proxy shall appoint an
individual present to be Chair.
SECTION 8.04 - QUORUM
Subject to the provisions of Section 8.11, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or
represented by proxy and holding at least 10% of the aggregate number of
Warrants then unexercised and outstanding, provided that at least two persons
entitled to vote thereat are personally present. If a quorum of the
Warrantholders shall not be present within one half-hour from the time fixed for
holding any meeting, the meeting, if summoned by the Warrantholders or on a
Warrantholders' Request, shall be dissolved; but in any other case the meeting
shall be adjourned to the same day in the next week at the same time and place
to the extent possible and, subject to the provisions of Section 8.11, no notice
of the adjournment need be given. Any business may be brought before or dealt
with at an adjourned meeting which might have been dealt with at the original
meeting in accordance with the notice calling the same. At the adjourned meeting
the Warrantholders present in person or represented by proxy shall form a quorum
and may transact the business for which the meeting was originally
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convened notwithstanding that they may not hold at least 10% of the aggregate
number of Warrants then unexercised and outstanding. No business shall be
transacted at any meeting unless a quorum is present at the commencement of
business.
SECTION 8.05 - POWER TO ADJOURN
The Chair of any meeting at which a quorum of the Warrantholders is
present, with the consent of the meeting, may adjourn any such meeting and no
notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.
SECTION 8.06 - SHOW OF HANDS
Every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on
an extraordinary resolution shall be given in the manner hereinafter provided.
At any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the Chair that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
SECTION 8.07 - POLL AND VOTING
On every extraordinary resolution, and when demanded by the Chair or
by one or more of the Warrantholders acting in person or by proxy on any other
question submitted to a meeting and after a vote by show of hands, a poll shall
be taken in such manner as the Chair shall direct. Questions other than those
required to be determined by extraordinary resolution shall be decided by a
majority of the votes cast on a poll. On a show of hands, every person who is
present and entitled to vote, whether as a Warrantholder or as proxy for one or
more absent Warrantholders, or both, shall have one vote. On a poll, each
Warrantholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each Warrant
that he (or the Warrantholder appointing him as proxy) holds. A proxyholder need
not be a Warrantholder. The Chair of any meeting shall be entitled to vote, both
on a show of hands and on a poll, in respect of any Warrants held or represented
by him.
SECTION 8.08 - REGULATIONS
Subject to the provisions of this Indenture, the Trustee or the
Corporation with the approval of the Trustee from time to time may make and vary
such regulations as it shall consider necessary or appropriate:
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(a) for the deposit of instruments appointing proxies at such place and
time as the Trustee, the Corporation or the Warrantholders convening
the meeting, as the case may be, may direct in the notice convening
the meeting;
(b) for the deposit of instruments appointing proxies at some approved
place other than the place at which the meeting is to be held and
enabling particulars of such instruments appointing proxies to be
mailed or telecopied before the meeting to the Corporation or to the
Trustee at the place where the meeting is to be held and for the
voting of proxies so deposited as though the instruments themselves
were produced at the meeting;
(c) for the form of the instrument of proxy; and
(d) generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Warrantholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 8.09), shall be Warrantholders or persons
holding proxies of Warrantholders.
SECTION 8.09 - CORPORATION, TRUSTEE AND COUNSEL MAY BE REPRESENTED
The Corporation and the Trustee, by their respective employees,
directors and officers, and the counsel for each of the Corporation, the
Warrantholders and the Trustee may attend any meeting of the Warrantholders and
speak thereto but shall have no vote as such.
SECTION 8.10 - POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to all other powers conferred upon them by any other
provisions of this Indenture or by law, the Warrantholders at a meeting shall
have the power, exercisable from time to time by extraordinary resolution:
(a) to agree with the Corporation to any modification, abrogation,
alteration, compromise or arrangement of the rights of Warrantholders
and/or the Trustee in its capacity as Trustee hereunder (subject to
the consent of the Trustee) or on behalf of the Warrantholders against
the Corporation whether such rights arise under this Indenture or the
Warrants or otherwise, except that a change in the Purchase Price of
the Warrants shall not be binding upon a Warrantholder who does not
consent thereto;
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(b) to amend or repeal any extraordinary resolution previously passed or
sanctioned by the Warrantholders;
(c) to direct or authorize the Trustee, subject to receipt of funding and
indemnity, to enforce any of the covenants on the part of the
Corporation contained in this Indenture or the Warrants or to enforce
any of the rights of the Warrantholders in any manner specified in
such extraordinary resolution or to refrain from enforcing any such
covenant or right;
(d) to waive and direct the Trustee to waive any default on the part of
the Corporation in complying with any provisions of this Indenture or
the Warrants, either unconditionally or upon any conditions specified
in such extraordinary resolution;
(e) to restrain any Warrantholder from taking or instituting any suit,
action or proceeding against the Corporation for the enforcement of
any of the covenants on the part of the Corporation contained in this
Indenture or the Warrants or to enforce any of the rights of the
Warrantholders, except for a suit or action against the Corporation to
compel payment to a Warrantholder in respect of monies owing to him in
accordance with the provisions of Section 6.05;
(f) to direct any Warrantholder who, as such, has brought any suit, action
or proceeding to stay or discontinue or otherwise deal with any such
suit, action or proceeding, upon payment of the costs, charges and
expenses reasonably and properly incurred by such Warrantholder in
connection therewith, except for a suit or action against the
Corporation to compel payment to a Warrantholder in respect of monies
owing to him in accordance with the provisions of Section 6.05; and
(g) to remove the Trustee and appoint a successor trustee.
SECTION 8.11 - MEANING OF EXTRAORDINARY RESOLUTION
(1) The expression "extraordinary resolution" when used in this Indenture
means, subject to this Section 8.11 and Section 8.14, a resolution proposed at a
meeting of Warrantholders duly convened for that purpose and held in accordance
with the provisions of this Article Seven at which there are present in person
or represented by proxy Warrantholders holding at least 25% of the aggregate
number of then outstanding unexercised Warrants and passed by the affirmative
votes of Warrantholders holding not less than 66 2/3% of the aggregate number of
the then outstanding unexercised Warrants represented at the meeting and voted
on the poll upon such resolution.
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(2) If, at any meeting called for the purpose of passing an extraordinary
resolution, Warrantholders holding at least 25% of the aggregate number of then
outstanding unexercised Warrants are not present in person or by proxy within
one half-hour after the time appointed for the meeting, then the meeting, if
convened by Warrantholders or on a Warrantholders' Request, shall be dissolved;
but in any other case it shall stand adjourned to such day, being not less than
four or more than 10 Business Days later, and to such place and time as may be
appointed by the Chair. Not less than three Business Days' prior notice shall be
given of the time and place of such adjourned meeting in the manner provided in
Article Eleven. Such notice shall state that at the adjourned meeting the
Warrantholders present in person or represented by proxy shall form a quorum but
it shall not be necessary to set forth the purposes for which the meeting was
originally called or any other particulars. At the adjourned meeting the
Warrantholders present in person or represented by proxy shall form a quorum and
may transact the business for which the meeting was originally convened and a
resolution proposed at such adjourned meeting and passed by the requisite vote
as provided in subsection 8.11(1) shall be an extraordinary resolution within
the meaning of this Indenture notwithstanding that Warrantholders holding at
least 25% of the aggregate number of then outstanding unexercised Warrants are
not present in person or represented by proxy at such adjourned meeting.
(3) Votes on an extraordinary resolution shall always be given on a poll
and no demand for a poll on an extraordinary resolution shall be necessary.
SECTION 8.12 - POWERS CUMULATIVE
It is hereby declared and agreed that any one or more of the powers or
any combination of the powers in this Indenture stated to be exercisable by the
Warrantholders by extraordinary resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Warrantholders to exercise such powers or combination of powers then or
thereafter from time to time.
SECTION 8.13 - MINUTES
Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be from time to time
provided for that purpose by the Trustee at the reasonable expense of the
Corporation and any such minutes, if signed by the Chair of the meeting at which
such resolutions were passed or proceedings held or by the Chair of the next
succeeding meeting of the Warrantholders, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes shall have been made shall be deemed
to have been duly convened and held and all resolutions passed thereat or
proceedings taken shall be deemed to have been duly passed and taken.
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SECTION 8.14 - INSTRUMENTS IN WRITING
All actions that may be taken and all powers that may be
exercised by the Warrantholders at a meeting held as provided in this Article
Eight also may be taken and exercised by Warrantholders holding at least 66 2/3%
of the aggregate number of then outstanding unexercised Warrants by an
instrument in writing signed in one or more counterparts by such Warrantholders
in person or by attorney duly appointed in writing and the expression
"extraordinary resolution" when used in this Indenture shall include an
instrument so signed.
SECTION 8.15 - BINDING EFFECT OF RESOLUTIONS
Every resolution and every extraordinary resolution, subject to
subsection 8.10(a), passed in accordance with the provisions of this Article
Eight at a meeting of Warrantholders shall be binding upon all the
Warrantholders, whether present at or absent from such meeting, and every
instrument in writing signed by Warrantholders in accordance with Section 8.14
shall be binding upon all the Warrantholders, whether signatories thereto or
not, and each and every Warrantholder and the Trustee (subject to the provisions
for indemnity herein contained) shall be bound to give effect accordingly to
every such resolution and instrument in writing. In the case of an instrument in
writing, the Trustee shall give notice in the manner contemplated in Section
11.01 of the effect of the instrument in writing to all Warrantholders and the
Corporation as soon as is reasonably practicable.
SECTION 8.16 - HOLDINGS BY THE CORPORATION OR SUBSIDIARIES
OF THE CORPORATION DISREGARDED
In determining whether Warrantholders holding the required number of
outstanding Warrants are present at a meeting of Warrantholders for the purpose
of determining a quorum or the number of holders who have concurred in any
consent, waiver, extraordinary resolution, Warrantholders' Request or other
action under this Indenture, Warrants owned legally or beneficially by the
Corporation or any associate or affiliate (as those terms are defined in the
Securities Act (Ontario)) of the Corporation shall be disregarded. The Trustee
shall be protected in acting and relying upon a certificate of the Corporation,
to be provided on request of the Trustee, detailing the exact registration of
any Warrants owned legally or beneficially by the Corporation or any associate
or affiliate thereof.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01 - SUPPLEMENTAL INDENTURES
Subject to the provisions of this Indenture, from time to time the
Corporation and the Trustee may execute and deliver and, when so directed by
this Indenture, they shall execute and deliver by their proper officers,
indentures or instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more or all of the following purposes:
(a) setting forth adjustments in the application of Article Two;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as in the opinion of counsel are necessary or
advisable, provided that the same, in the opinion of the Trustee
relying on the opinion of counsel, are not prejudicial to the
interests of the Warrantholders as a group;
(c) giving effect to any extraordinary resolution passed as provided in
Article Eight;
(d) making such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder, provided that such provisions are not, in the opinion of
the Trustee relying on the opinion of counsel, prejudicial to the
interests of the Warrantholders as a group;
(e) adding to or amending the provisions hereof in respect of the transfer
of Warrants, making provision for the exchange of Warrants and making
any modification in the forms of the Warrant certificates that does
not affect the substance thereof;
(f) making any additions to, deletions from or alterations to the
provisions of this Indenture which, in the opinion of the Trustee
relying on the advice of counsel, do not materially and adversely
affect the interests of the Warrantholders and are necessary or
advisable in order to incorporate, reflect or comply with any
Applicable Legislation; and
(g) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors or omissions
herein, provided that, in the opinion of the Trustee relying on the
opinion of counsel, the rights of the Trustee and of the
Warrantholders as a group are not prejudiced thereby.
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SECTION 9.02 - SUCCESSOR CORPORATIONS
In the case of the consolidation, amalgamation, arrangement, merger or
transfer of the undertaking or assets of the Corporation as an entirety or
substantially as an entirety to another person (a "successor"), forthwith
following the occurrence of such event the successor resulting from such
consolidation, amalgamation, arrangement, merger or transfer (if not the
Corporation) shall expressly assume, by supplemental indenture satisfactory in
form to the Trustee relying on the advice of counsel and executed and delivered
to the Trustee, the due and punctual performance and observance of each and
every covenant and condition of this Indenture to be performed and observed by
the Corporation and, in any event, shall be bound by the provisions hereof and
all obligations for the due and punctual performance and observance of each and
every covenant and obligation contained in this Indenture to be performed by the
Corporation.
ARTICLE TEN
CONCERNING THE TRUSTEE
SECTION 10.01 - TRUST INDENTURE LEGISLATION
(1) In this Article, the term "Applicable Legislation" means the
provisions, if any, of the Business Corporations Act (Ontario) and any other
statute of Ontario or Canada and of regulations under any such named or other
statute relating to trust indentures and/or to the rights, duties and
obligations of trustees and of corporations under trust indentures to the extent
that such provisions are at the time in force and applicable to this Indenture.
(2) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable Legislation,
such mandatory requirement shall prevail.
(3) The Corporation and the Trustee agree that at all times in relation to
this Indenture and any action to be taken hereunder each will observe and comply
with and be entitled to the benefit of Applicable Legislation.
SECTION 10.02 - RIGHTS AND DUTIES OF TRUSTEE
(1) In the exercise of the rights and duties prescribed or conferred by
the terms of this Indenture, the Trustee shall act honestly and in good faith
with a view to the best interests of the Warrantholders and shall exercise the
degree of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this Indenture shall be
construed to relieve the Trustee from, or require any other person to indemnify
the Trustee against, liability for its own gross negligence, wilful misconduct
or bad faith.
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(2) Subject only to subsection 10.02(1), the Trustee shall not be bound to
do or take any act, action or proceeding for the enforcement of any of the
obligations of the Corporation under this Indenture unless and until it shall
have received a Warrantholders' Request specifying the act, action or proceeding
that the Trustee is requested to take. The obligation of the Trustee to commence
or continue any act, action or proceeding for the purpose of enforcing any
rights of the Trustee or the Warrantholders hereunder shall be conditional upon
the Warrantholders furnishing, when required by notice in writing by the
Trustee, sufficient funds to commence or continue such act, action or proceeding
and an indemnity reasonably satisfactory to the Trustee to protect and hold
harmless the Trustee against the costs, charges, expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof. None
of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers unless indemnified as aforesaid.
(3) The Trustee, before commencing or at any time during the continuance
of any such act, action or proceeding, may require the Warrantholders at whose
instance it is acting to deposit with the Trustee the Warrants held by them, for
which Warrants the Trustee shall issue receipts.
(4) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence submitted to it is
subject to the provisions of Applicable Legislation, of this Section 10.02 and
of Section 10.03.
SECTION 10.03 - EVIDENCE, EXPERTS AND ADVISERS
(1) In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Corporation shall furnish to the Trustee such
additional evidence of compliance with any provision hereof in such form as may
be prescribed by Applicable Legislation or as the Trustee may reasonably require
by written notice to the Corporation.
(2) In the exercise of its rights and duties hereunder, the Trustee, if it
is acting in good faith, may rely as to the truth of the statements and the
accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, written requests, consents or orders of the Corporation,
certificates of the Corporation or other evidence furnished to the Trustee
provided that such evidence complies with Applicable Legislation and the Trustee
examines the same and determines that such evidence complies with the applicable
requirements of this Indenture.
(3) Whenever Applicable Legislation requires that evidence referred to in
subsection 10.03(1) be in the form of a statutory declaration, the Trustee may
accept such statutory declaration in lieu of a certificate of the Corporation
required by any provision hereof. Any such statutory
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declaration may be made by one or more of the chairman, chief executive officer,
president or any vice-president of the Corporation.
(4) Proof of the execution of an instrument in writing, including a
Warrantholders' Request, by any Warrantholder may be made by the certificate of
a notary public, or other officer with similar powers, that the person signing
such instrument acknowledged to him the execution thereof or by an affidavit of
a witness to such execution or in any other manner that the Trustee may consider
adequate.
(5) The Trustee may employ or retain such counsel, accountants or other
experts or advisers as it may reasonably require for the purpose of determining
and discharging its duties hereunder, may act on and rely upon, and shall be
protected in acting and relying in good faith upon, the advice or opinions so
obtained and may pay reasonable remuneration for all services so performed by
any of them (any such remuneration paid by the Trustee to be repaid by the
Corporation to the Trustee in accordance with Section 6.03), without taxation of
costs of any counsel, and shall not be responsible for any misconduct on the
part of any of them.
(6) The Trustee may act and rely and shall be protected in acting and
relying upon any resolution, certificate, statement, instrument, opinion,
report, notice, receipt, request, consent, order, letter, telegram, cablegram or
other paper document reasonably believed by it to be genuine and to have been
signed, presented by or on behalf of the proper party or parties.
SECTION 10.04 - DOCUMENTS, MONEY, ETC. HELD BY TRUSTEE
(1) Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be placed in
the deposit vaults of the Trustee or of any Canadian chartered bank or trust
company or deposited for safekeeping with any such bank or trust company.
(2) Unless otherwise expressly provided herein, any monies so held pending
the application or withdrawal thereof under any provision of this Indenture
shall be held in the name of the Trustee in a segregated trust account with any
Canadian chartered bank or financial institution (which may be the Trustee or
any affiliate or related party), at the rate of interest then current on similar
deposits or, on the direction of the Corporation, may be invested in Permitted
Investments. Any such direction by the Corporation to the Trustee as to the
investment of the funds shall be in writing and shall be provided to the Trustee
no later than 9:00 a.m. on the day on which the investment is to be made. Any
such direction received by the Trustee after 9:00 a.m. or received on a
non-Business Day, shall be deemed to have been given prior to 9:00 a.m. the next
Business Day.
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SECTION 10.05 - ACTIONS BY TRUSTEE TO PROTECT INTERESTS
The Trustee shall have the power to institute and to maintain such
actions and proceedings as it may consider necessary or expedient to preserve,
protect or enforce its interests and the interests of the Warrantholders.
SECTION 10.06 - TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts and powers of this Indenture or
otherwise.
SECTION 10.07 - PROTECTION OF TRUSTEE
By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows:
(1) The Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Warrants (except the representation
contained in Section 10.09 or in the certificate of the Trustee on the Warrants)
or be required to verify the same.
(2) Nothing herein contained shall impose any obligation on the Trustee to
see to or to require evidence of the registration or filing (or renewal thereof)
of this Indenture or any instrument ancillary or supplemental hereto.
(3) The Trustee shall not be bound to give notice to any person of the
execution hereof.
(4) The Trustee shall not incur any liability or responsibility whatsoever
or be in any way responsible for the consequence of any breach on the part of
the Corporation of any of the covenants herein contained or of any acts of any
directors, officers, employees, agents or servants of the Corporation.
SECTION 10.08 - REPLACEMENT OF TRUSTEE
(1) The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder by giving to the Corporation not less than 45
days' prior notice in writing or such shorter prior notice as the Corporation
may accept as sufficient. The Warrantholders by extraordinary resolution shall
have the power at any time to remove the existing Trustee and to appoint a new
trustee. In the event of the Trustee resigning or being removed as aforesaid or
being dissolved, becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Corporation shall forthwith appoint a new
trustee unless a new trustee has already been appointed by the Warrantholders.
Failing such appointment by the Corporation, within 10 days
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the retiring Trustee or any Warrantholder may apply to a justice of the Ontario
Court (General Division) at the Corporation's expense, on such notice as such
justice may direct, for the appointment of a new trustee. Any new trustee so
appointed by the Corporation or by the Court shall be subject to removal as
aforesaid by the Warrantholders. Any new trustee appointed under any provision
of this Section 10.08 shall be a corporation authorized to carry on the business
of a trust company in the Province of Ontario and, if required by Applicable
Legislation of any other province, in such other province. On any such
appointment, the new trustee shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as Trustee
without any further assurance, conveyance, act or deed. In addition, there shall
be immediately executed, at the expense of the Corporation, all such conveyances
or other instruments as may be necessary or advisable, in the opinion of
counsel, for the purpose of assuring the same to the new trustee, provided that
any resignation or removal of the Trustee and appointment of a successor trustee
shall not become effective until the successor trustee shall have executed an
appropriate instrument accepting such appointment and, at the request of the
Corporation, the predecessor Trustee, upon payment of its outstanding
remuneration and expenses, shall execute and deliver to the successor trustee an
appropriate instrument transferring to such successor trustee all rights and
powers of the Trustee hereunder.
(2) Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Warrantholders thereof.
(3) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated or any corporation succeeding to the trust business
of the Trustee shall be the successor to the Trustee hereunder without any
further act on its part or of any of the parties hereto, provided that such
corporation would be eligible for appointment as a new trustee under subsection
10.08(1).
(4) Any Warrants certified but not delivered by a predecessor trustee may
be certified by the successor trustee in the name of the predecessor or
successor trustee.
SECTION 10.09 - CONFLICT OF INTEREST
(1) The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest exists in the
Trustee's role as a fiduciary hereunder and agrees that in the event of a
material conflict of interest arising hereafter it will, within 90 days after
ascertaining that it has such a material conflict of interest, either eliminate
the same or resign its trust hereunder to a successor trustee approved by the
Corporation. If any such material conflict of interest exists or hereafter shall
exist, the validity and enforceability of this Indenture and the Warrants shall
not be affected in any manner whatsoever by reason thereof.
(2) Subject to subsection 10.09(1), the Trustee in its personal or any
other capacity may buy, lend upon and deal in securities of the Corporation and
generally may contract and enter into
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financial transactions with the Corporation or any subsidiary of the Corporation
without being liable to account for any profit made thereby.
SECTION 10.10 - ACCEPTANCE OF TRUSTS
The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth, and to hold all rights, interests and benefits contained herein for
and on behalf of those persons who become Warrantholders from time to time.
SECTION 10.11 - TRUSTEE NOT TO BE APPOINTED RECEIVER
The Trustee and any person related to the Trustee shall not be
appointed a receiver or receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.
SECTION 10.12 - INDEMNITY OF TRUSTEE
The Corporation hereby indemnifies and holds harmless the Trustee and
its officers, directors, employees and agents from and against all reasonable
costs, liabilities, expenses and disbursements (including reasonable legal fees
and disbursements) that it might incur or to which it might have become subject
in any action, suit or other similar legal proceeding that might be instituted
against the Trustee arising from or out of any act, omission or error of the
Trustee arising pursuant to this Indenture, provided that the Trustee acted in
accordance with the standards set forth in Section 10.02 and that any such act,
omission or error did not constitute gross negligence, wilful misconduct or bad
faith on the part of the Trustee. This Section 10.12 shall survive the
resignation or removal of the Trustee or the termination of this Indenture.
ARTICLE ELEVEN
GENERAL
SECTION 11.01 - NOTICE
(1) Unless herein otherwise expressly provided, any notice, document or
thing required or permitted to be given or delivered hereunder shall be deemed
to be properly given or delivered if:
(a) delivered in person to the address set out below and acknowledged by
written receipt signed by the person receiving such notice;
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(b) telecopied and confirmed by prepaid registered letter addressed to the
party receiving such notice at its respective addresses set out below;
or
(c) sent by letter (provided that any notice to be so given is not
unlikely to reach its destination as a result of any actual or
threatened interruption of mail services) or courier delivery
addressed to the party receiving such notice at its respective address
set out below:
the Corporation: SoftKey Software Products Inc.
c/o The Learning Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx
X.X.X. 00000
Attention: General Counsel
Telecopy: (000) 000-0000
the Trustee: CIBC Mellon Trust Company
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice President, Client Services
Telecopy: 416) 813-4555
a Warrantholder: the address appearing in the register of holders.
(2) Any notice or delivery given in accordance with the provisions of this
Section 11.01 shall be deemed to have been given and received:
(a) if delivered in person in accordance with the provisions of clause
11.01(1)(a), on the day of delivery in person (provided that such day
is a Business Day at the place of receipt and delivery occurs prior to
4:00 p.m. (local time of the recipient) and, if it is not, on the next
following Business Day);
(b) if telecopied in accordance with the provisions of clause 11.01(1)(b)
during the business hours of the recipient, on the date of receipt of
the telecopy (provided that such day is a Business Day at the place of
receipt and, if it is not, on the next following Business Day) and if
telecopied other than during business hours, on the next following
Business Day; and
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(c) if sent by letter or courier delivery in accordance with the
provisions of clause 11.01(1)(c), on the date the letter is actually
received by the addressee.
(3) For greater certainty, a letter delivered by courier where such
courier obtains a written acknowledgement of receipt from the party receiving
the letter shall be considered a delivery in person in accordance with clause
11.01(1)(a) rather than the sending of a letter in accordance with clause
11.01(1)(c).
(4) Any party may from time to time by notice in writing delivered in
accordance with the provisions of this Article Eleven change its address for
purposes hereof.
SECTION 11.02 - ACCIDENTAL FAILURE TO GIVE NOTICE TO WARRANTHOLDERS
Accidental error or omission in giving notice or accidental failure to
give notice to any Warrantholder shall not invalidate any action or proceeding
founded thereon.
SECTION 11.03 - COUNTERPARTS AND FORMAL DATE
This Indenture may be executed in several counterparts each of which
when so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument and notwithstanding their
date of execution shall be deemed to be dated as of the Closing Date.
SECTION 11.04 - SATISFACTION AND DISCHARGE OF INDENTURE
Upon the date by which all Warrants theretofore certified hereunder
have been cancelled or deemed to be cancelled in accordance with Section 5.04,
this Indenture, except to the extent that Exchangeable Shares and certificates
therefor have not been issued and delivered hereunder or the Corporation has not
performed any of its obligations hereunder, shall cease to be of further effect
in respect of the Corporation and the Trustee, on written demand of and at the
cost and expense of the Corporation and upon delivery to the Trustee of a
certificate of the Corporation stating that all conditions precedent to the
satisfaction and discharge of this Indenture have been complied with and upon
payment to the Trustee of the expenses, fees and other remuneration payable to
the Trustee, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture provided that, if the Trustee has not then performed
any of its obligations hereunder, any such satisfaction and discharge of the
Corporation's obligations hereunder shall not affect or diminish the rights of
any Warrantholder or the Corporation against the Trustee.
SECTION 11.05 - PROVISIONS OF INDENTURE AND WARRANTS FOR THE
SOLE BENEFIT OF PARTIES AND WARRANTHOLDERS
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Except as provided in Sections 7.02 and 7.03, nothing in this
Indenture or the Warrants, expressed or implied, shall give or be construed to
give to any person other than the parties hereto and the holders from time to
time of the Warrants any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision therein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
the Warrantholders.
SECTION 11.06 - LANGUAGE
The parties hereto confirm their express wish that this Indenture and
all documents and agreements directly or indirectly relating thereto be drawn up
in the English language. Notwithstanding such express wish, the parties agree
that any such document or agreement or any part thereof or of this Indenture may
be drawn up in the French language.
Les parties aux presentes confirment leur volonte expresse que la
presente convention ainsi que tous les documents et conventions s'y rattachant
directement ou indirectement soient rediges en anglais. Nonobstant cette volonte
expresse, les parties aux presentes conviennent que la presente convention ainsi
que tous les documents et conventions s'y rattachant directement ou
indirectement, ou toute partie de ceux-ci, puissent etre rediges en francais.
IN WITNESS WHEREOF the parties hereto have executed this Indenture
under the hands of their proper officers in that behalf.
SOFTKEY SOFTWARE PRODUCTS INC.
By "(signed) Xxxx X. Xxxxxx"
-----------------------------------
Authorized Signing Officer
CIBC MELLON TRUST COMPANY
By "(signed) X. Xxxxxxxx"
-----------------------------------
Authorized Signing Officer
By "(signed) Xxxxx Xxxxxx"
-----------------------------------
Authorized Signing Officer
48
SCHEDULE A
FORM OF WARRANT CERTIFICATE
The following is the form of Warrant certificate referred to in
Section 2.02 of the Warrant Indenture:
EXERCISABLE ONLY DURING THE PERIOD COMMENCING ON THE BUSINESS DAY FOLLOWING THE
DATE ON WHICH TRANSACTION APPROVAL (AS DEFINED HEREIN) IS OBTAINED AND ENDING AT
5:00 P.M. (LOCAL TIME) ON THE DATE THAT IS THE EARLIER OF (I) THE FIRST
ANNIVERSARY OF THE DATE HEREOF AND (II) THE SIXTH BUSINESS DAY FOLLOWING THE
DATE OF ISSUANCE OF A RECEIPT BY THE SECURITIES REGULATORY AUTHORITY IN THE
PROVINCE OF RESIDENCE OF THE HOLDER HEREOF (WHICH MAY ONLY BE XXX XX XXX
XXXXXXXXX XX XXXXXXXX, XXXXXXX AND QUEBEC, AND WILL, IN THE CASE OF PERSONS
RESIDENT OUTSIDE CANADA, BE DEEMED TO BE THE PROVINCE OF ONTARIO) FOR A (FINAL)
PROSPECTUS RELATING TO THE DISTRIBUTION OF THE EXCHANGEABLE NON-VOTING SHARES OF
SOFTKEY SOFTWARE PRODUCTS INC. TO BE ISSUED UPON THE EXERCISE OF THE SPECIAL
WARRANTS, IMMEDIATELY AT WHICH TIME THESE SPECIAL WARRANTS SHALL BE DEEMED
CONCLUSIVELY TO HAVE BEEN EXERCISED.
NO. _____________________ Representing _______________________Special
Warrants, each such warrant entitling the
holder to acquire one Exchangeable Share (or
in the circumstances described below 1.07
Exchangeable Shares), subject to adjustment,
of SoftKey Software Products Inc. for no
additional consideration.
NOTE: THESE SPECIAL WARRANTS ARE NON-TRANSFERABLE EXCEPT AS SET FORTH HEREIN.
SPECIAL WARRANT
OF
SOFTKEY SOFTWARE PRODUCTS INC.
THIS CERTIFIES that, for value received, the holder hereof,
__________________________________, (the "holder") of the Special Warrants (the
"Warrants") of SoftKey Software Products Inc. (the "Corporation") represented
hereby is entitled at any time during the period (the "Exercise Period")
commencing on the Business Day following the date on which Transaction Approval
(as defined herein) is obtained and ending at 5:00 p.m. (local time) (the
"Expiry Time") on the date (the "Expiry Date") that is the earlier of (i) March
12, 1999 and (ii) the date that is the sixth Business Day following the date
(the "Clearance Date") upon which a receipt for the Final Prospectus (as herein
defined) is issued by the securities regulatory authority in the province of
residence of the holder hereof (which may only be one of the Provinces of
Manitoba, Ontario and Quebec, and will, in the case of persons resident outside
Canada, be deemed
49
- 2 -
to be the Province of Ontario) for the (final) prospectus (the "Final
Prospectus") of the Corporation qualifying the exchangeable non-voting shares
(the "Exchangeable Shares") of the Corporation to be issued upon the exercise of
the Warrants, to acquire in accordance with the provisions of the Warrant
Indenture (as defined below) one Exchangeable Share (or 1.07 Exchangeable Shares
to be issued by the Corporation in the circumstances described below), subject
to adjustment, for each Warrant represented hereby without payment of any
consideration in addition to the issue price of such Warrant by surrendering to
CIBC Mellon Trust Company (the "Trustee") at its principal office in the City of
Toronto this Warrant certificate together with an executed exercise form in the
form of the attached Exercise Form or any other written notice in a form
satisfactory to the Trustee, in either case duly completed and executed PROVIDED
THAT UNLESS THE HOLDER HAS SURRENDERED THE WARRANTS REPRESENTED HEREBY FOR
EXERCISE PURSUANT TO THE PROVISIONS HEREOF AND OF THE WARRANT INDENTURE DURING
THE EXERCISE PERIOD, THE WARRANTS REPRESENTED HEREBY SHALL BE DEEMED TO HAVE
BEEN EXERCISED BY THE HOLDER AT THE EXPIRY TIME WITHOUT FURTHER NOTICE TO OR
ACTION ON THE PART OF THE HOLDER. For the purposes of this Warrant certificate,
"Underwriters" means, collectively, Xxxxxxxxx XxXxxxxx & Partners and First
Marathon Securities Limited.
Upon the exercise or deemed exercise of the Warrants evidenced hereby,
the Corporation shall cause to be issued to the person(s) in whose name(s) the
Exchangeable Shares so subscribed for are to be issued (provided that, if the
Exchangeable Shares are to be issued to a person other than a holder of this
Warrant certificate, the holder's signature on the Exercise Form herein shall be
guaranteed by a Canadian chartered bank, by a Canadian trust company or by a
member firm of The Toronto Stock Exchange) the number of Exchangeable Shares to
be issued to such person(s) and such person(s) shall become a holder in respect
of Exchangeable Shares with effect from the date of such exercise and upon due
surrender of this Warrant certificate. The Corporation will cause a
certificate(s) representing such Exchangeable Shares to be made available for
pick-up by such person(s) at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxx
X0X 0X0, or mailed to such person(s) at the address(es) specified in such
Exercise Form, within two Business Days after receipt of notice from the Trustee
of the exercise of this Warrant.
The net proceeds of sale of the Warrants will be deposited on the date
hereof in escrow with the Trustee to be held and invested by the Trustee in
accordance with the provisions of the Warrant Indenture. If the acquisition of
Mindscape, Inc. and certain of its affiliates (the "Acquisition") is not
completed in accordance with the Stock Purchase Agreement dated as of March 5,
1998 between The Learning Company, Inc., Mindscape Holding Company, Pearson
Overseas Holding, Ltd. and Pearson Netherlands, B.V., within five Business Days
following the release of the Escrowed Funds, the Corporation shall redeposit
such funds with the Trustee in escrow. The Trustee shall thereafter release the
Escrowed Funds to the Corporation at any time upon receipt of a further written
notice in prescribed form. In the event that the Corporation fails to complete
the Acquisition on or prior to July 10, 1998 or such later date as may be agreed
upon in writing by the Corporation and the Underwriters and notified to the
Trustee (the "Qualification Deadline") the Corporation shall redeem each Warrant
for an amount equal to the purchase price paid by the
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Warrantholder for the Warrant, together with interest thereon as provided in the
Warrant Indenture. For the purposes of this Warrant certificate, "Transaction
Approval" means such consents and approvals necessary to ensure that the rights
and benefits of the holders of Underlying Shares are substantially equivalent to
the rights and benefits of the holders of the existing Exchangeable Shares
(subject to the securities laws of the United States); provided that, for
greater certainty Transaction Approval shall not include the filing of, or the
obtaining of a receipt for, the Final Prospectus.
The Trustee shall, upon receipt of written notice and supporting
documents, in prescribed form, release the Escrowed Funds to the Corporation for
the purpose of completing the Acquisition. For the purpose of this Warrant
certificate, "Escrowed Funds" means the net proceeds of sale of the Warrants
deposited in escrow with the Trustee, and all proceeds of investment and
reinvestment thereof from time to time.
If, notwithstanding Transaction Approval having been obtained, the
Clearance Date does not occur by 5:00 p.m. (local time) on the Qualification
Deadline, or for any reason the Corporation is unable to file the Final
Prospectus with the securities regulatory authority of the holder's province
(which may only be one of the Provinces of Manitoba, Ontario and Quebec, and
will, in the case of non-Canadian resident holders of Warrants, be deemed to be
the Province of Ontario) by 5:00 p.m. (local time) on the Qualification
Deadline, each Warrant represented hereby shall thereafter entitle the holder
upon the exercise or deemed exercise thereof, without further action being
required to be taken hereunder or under the Warrant Indenture, to acquire 1.07
Exchangeable Shares (subject to adjustment) at no additional cost provided that
no fractional Exchangeable Shares will be issued but a cash payment will be made
in lieu thereof. IN SUCH CASE, BUT WITHOUT DEROGATING FROM THE CORPORATION'S
OBLIGATION TO USE ITS REASONABLE EFFORTS TO OBTAIN FROM EACH OF THE SECURITIES
REGULATORY AUTHORITIES OF THE PROVINCES OF MANITOBA, ONTARIO AND QUEBEC, AS SOON
AS PRACTICABLE, A RECEIPT OR SIMILAR DOCUMENT FOR THE FINAL PROSPECTUS, THE
EXCHANGEABLE SHARES ISSUED UPON THE EXERCISE OR DEEMED EXERCISE OF THE WARRANTS
WILL BE SUBJECT TO RESTRICTIONS ON THE RESALE THEREOF IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS OF CANADA AND THE UNITED STATES OF AMERICA AND MAY
BEAR A LEGEND TO SUCH EFFECT.
This Warrant certificate represents Warrants of the Corporation issued
or issuable under the provisions of a warrant indenture (which indenture
together with all other instruments supplemental or ancillary thereto is herein
referred to as the "Warrant Indenture") made as of March 12, 1998 between the
Corporation and the Trustee, as trustee, TO WHICH WARRANT INDENTURE REFERENCE IS
HEREBY MADE FOR SPECIFIC PARTICULARS OF THE RIGHTS OF THE HOLDERS OF THE
WARRANTS AND THE CORPORATION AND OF THE TRUSTEE IN RESPECT THEREOF AND THE TERMS
AND CONDITIONS UPON WHICH THE WARRANTS ARE ISSUED AND HELD (WHICH RIGHTS, TERMS
AND CONDITIONS ARE SUMMARIZED ONLY IN THIS WARRANT CERTIFICATE), ALL TO THE SAME
EFFECT AS IF THE PROVISIONS OF THE WARRANT
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INDENTURE WERE HEREIN SET FORTH, TO ALL OF WHICH THE HOLDER OF THIS WARRANT
CERTIFICATE BY ACCEPTANCE HEREOF ASSENTS. A copy of the Warrant Indenture will
be available for inspection at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxxxx X0X 0X0. If any conflict exists between the provisions contained herein
and the provisions of the Warrant Indenture, the provisions of the Warrant
Indenture shall govern.
The Warrant Indenture provides for adjustments to the right of
exercise, including the amount of and class and kind of Exchangeable Shares and
other shares, securities or property issuable upon exercise, upon the happening
of certain stated events including the subdivision or consolidation of the
Exchangeable Shares, certain distributions of Exchangeable Shares or securities
convertible into Exchangeable Shares or of other securities or assets of the
Corporation, certain offerings of rights, warrants or options and certain
capital reorganizations and for payment of an amount to compensate for dividends
paid on Exchangeable Shares.
If, immediately prior to the expiry of the Exercise Period, the
Warrants represented by this Warrant certificate have not been exercised, the
Warrants represented hereby shall be deemed to have been exercised and
surrendered by the holder immediately after that time without any further action
on the part of the holder.
THIS SPECIAL WARRANT, THE EXCHANGEABLE SHARES ISSUABLE UPON EXERCISE
HEREOF AND THE SHARES OF COMMON STOCK, PAR VALUE U.S.$0.01 PER SHARE, OF THE
LEARNING COMPANY, INC. (THE "COMMON STOCK") ISSUABLE UPON EXCHANGE OF THE
EXCHANGEABLE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OF THE UNITED STATES OF AMERICA (THE "U.S. SECURITIES ACT"); THE
SPECIAL WARRANT, THE EXCHANGEABLE SHARES AND THE COMMON STOCK MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT) UNLESS SUCH OFFER, SALE
OR TRANSFER IS COVERED BY OR MADE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT, NOR MAY ANY SPECIAL WARRANT OR ANY
EXCHANGEABLE SHARE BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON UNLESS THE
ISSUANCE OF THE COMMON STOCK IS REGISTERED UNDER AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION UNDER
THE U.S. SECURITIES ACT IS AVAILABLE FOR THE EXCHANGE OF THE EXCHANGEABLE
SHARES. ANY HOLDER THAT SURRENDERS THE SPECIAL WARRANT FOR EXCHANGEABLE SHARES
OR THE EXCHANGEABLE SHARES IN EXCHANGE FOR COMMON STOCK PRIOR TO EFFECTIVENESS
OF A REGISTRATION
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STATEMENT FILED UNDER THE U.S. SECURITIES ACT COVERING SUCH EXERCISE OR
EXCHANGE, OR AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT, MUST CERTIFY THAT THE HOLDER IS NOT A U.S. PERSON AND THAT THE
SPECIAL WARRANTS ARE NOT BEING EXERCISED AND THE EXCHANGEABLE SHARES ARE NOT
BEING EXCHANGED ON BEHALF OF A U.S. PERSON.
Upon presentation at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxxxx X0X 0X0, subject to the provisions of the Warrant Indenture and upon
compliance with the reasonable requirements of the Trustee, Warrants may be
exchanged for Warrants entitling the holder thereof to acquire an equal
aggregate number of Exchangeable Shares (subject to adjustment) or, in the
circumstances described above, Warrants entitling the holder thereof to acquire
an aggregate number of Exchangeable Shares equal to the product of 1.07 and the
aggregate number of Warrants (subject to adjustment) rounded down to the nearest
whole number. The Corporation and the Trustee may treat the registered holder of
this Warrant certificate for all purposes as the absolute owner hereof. The
holding of this Warrant certificate shall not constitute the holder hereof a
holder of Exchangeable Shares nor entitle him to any right or interest in
respect thereof except as herein and in the Warrant Indenture expressly
provided.
The transfer of the Warrants evidenced hereby is restricted by
applicable securities laws of Canada and the United States of America. In
addition, no Warrant may be transferred to a person resident in any Province of
Canada other than Manitoba, Ontario and Quebec. Warrants may only be
transferred, upon compliance with the conditions prescribed in the Warrant
Indenture, on the register to be kept at the principal offices of the Trustee in
the City of Toronto by the registered holder thereof or his executors or
administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and execution satisfactory to the
Trustee with the signature guaranteed by a Canadian chartered bank, a Canadian
trust company or a member firm of The Toronto Stock Exchange and upon compliance
with such reasonable requirements as the Trustee may prescribe (including,
without limitation, the requirement to provide evidence of satisfactory
compliance with applicable securities laws of Canada and the United States of
America).
PRIOR TO THE EARLIER OF THE CLEARANCE DATE AND THE FIRST ANNIVERSARY
OF THE DATE HEREOF, THE TRANSFER OF EXCHANGEABLE SHARES ISSUABLE UPON EXERCISE
OF THE WARRANTS EVIDENCED HEREBY IS RESTRICTED BY APPLICABLE SECURITIES
LEGISLATION.
The Warrant Indenture contains provisions making binding upon all
holders of Warrants outstanding thereunder resolutions passed at meetings of
such holders held in accordance with such provisions and instruments in writing
signed by the Warrantholders holding a specified percentage of outstanding and
unexercised Warrants.
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The Warrant Indenture identifies and provides for certain restrictive
legends that will appear on the certificates for the Exchangeable Shares.
The Warrants and the Warrant Indenture shall be governed by and
performed, construed and enforced in accordance with the laws of the Province of
Ontario and shall be treated in all respects as Ontario contracts. Time shall be
of the essence hereof and of the Warrant Indenture.
This Warrant certificate shall not be valid for any purpose until it
has been certified by or on behalf of the Trustee for the time being under the
Warrant Indenture.
IN WITNESS WHEREOF the Corporation has caused this Warrant certificate
to be signed by its duly authorized officers as of the 12th day of March, 1998.
SOFTKEY SOFTWARE PRODUCTS INC.
By
----------------------------------
Authorized Signing Officer
This Warrant certificate represents Warrants referred
to in the Warrant Indenture within mentioned.
CIBC MELLON TRUST COMPANY
Trustee
By date of signing
--------------------------------------- ---------------------
Authorized Signing Officer
54
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TRANSFER FORM
FOR VALUE RECEIVED, __________________________________________
hereby sells, assigns and transfers unto
_______________________________________________________________________
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______________________Warrants represented by the within Warrant certificate and
does hereby irrevocably constitute and appoint__________________________________
________________________________________________________________________________
attorney to transfer the said Warrants on the books of the Trustee with full
power of substitution in the premises.
The undersigned hereby certifies that the undersigned is not a U.S.
person and that the Special Warrants are not being transferred on behalf of a
U.S. person.
DATED _______________ 199__.
In the presence of )
)
) --------------------------
----------------------------------- Signature of Warrantholder
guaranteed by:
----------------------------------- --------------------------
Name: (Authorized Signature Number)
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Upon any due transfer of Warrants, the transferee of a Warrant shall
be a permitted assignee of the transferring holder and shall be entitled to the
benefits of the covenants of the Corporation referred to in section 5 of
Schedule "A" of the Subscription Agreements (as defined in the Warrant
Indenture) and granted by the Corporation, subject to the restrictions and
limitations described therein.
NOTICE: The signature on this assignment must correspond exactly with the name
as written upon the face of this Warrant certificate. If Exchangeable Shares are
to be issued to a person other than the registered holder, the registered holder
must pay to the Trustee all exigible taxes and the signature of the registered
holder must be guaranteed by a Canadian chartered bank, a Canadian trust company
or a member firm of The Toronto Stock Exchange.
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EXERCISE FORM
TO: SoftKey Software Products Inc.
c/o CIBC Mellon Trust Company
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Stock and Bond Transfer Department
The undersigned holder of the within Warrants hereby irrevocably
exercises the Warrants represented hereby and subscribes for the maximum number
of Exchangeable Shares (or other shares, securities or property issuable in
accordance with the Warrant Indenture) issuable pursuant to the exercise of such
Warrants on the terms specified in the said Warrants and the Warrant Indenture.
The undersigned hereby directs that the said Exchangeable Shares be
issued in the name of the undersigned and delivered as follows:
------------------------------- -------------------------- -------------------
NAME(S) IN FULL ADDRESS(ES) NUMBER OF
(include Postal Code) EXCHANGEABLE
SHARES
------------------------------- -------------------------- -------------------
------------------------------- -------------------------- -------------------
------------------------------- -------------------------- -------------------
(Please Print)
57
- 10 -
The undersigned hereby certifies that the undersigned is not a U.S.
person and that the Special Warrants are not being transferred on behalf of a
U.S. person.
DATED____________________ , 199__.
In the presence of )
)
) --------------------------
----------------------------------- Signature of Warrantholder
guaranteed by:
----------------------------------- --------------------------
Name: (Authorized Signature Number)
58
- 11 -
Please note that if Exchangeable Shares are to be issued to a person
other than the registered holder, the registered holder must pay to the Trustee
all exigible taxes and the signature of the registered holder must be
guaranteed.
DATED this ______ day of _____________________, 199_.
____________________________ ) ______________________________
Witness ) Signature
)
)
______________________________
Print full name
______________________________
Address in full
|_| Please check box if these certificates are to be delivered to the
office where this Warrant certificate is surrendered, failing which the
certificates will be mailed to the address shown on the register.
(The Trustee may require that the signature above be guaranteed, in which event
the following must be completed.)
Signature of Warrantholder
guaranteed by:
____________________________________
(Signature of Warrantholder)
___________________________________ ____________________________________
Name: (Authorized Signature Number)
Note: If the signature of the person executing this form is to be guaranteed,
it must be guaranteed by a Canadian chartered bank, a Canadian trust
company or a member firm of The Toronto Stock Exchange.
59
SCHEDULE B
FORM OF RELEASE CERTIFICATE
TO: CIBC MELLON TRUST COMPANY
================================================================================
Reference is made to the special warrant indenture (the "Indenture")
dated March 12, 1998 between SoftKey Software Products Inc. (the "Corporation")
and CIBC Mellon Trust Company (the "Trustee"). Capitalized terms used herein and
not otherwise defined shall have the respective meanings ascribed thereto in the
Indenture.
I, [INSERT NAME], being the [INSERT TITLE] of SoftKey Software
Products Inc., on behalf of the Corporation hereby certify that the Escrowed
Funds are required for the purpose of completing the Mindscape Acquisition.
Based on the foregoing, the Corporation hereby requests that the
Escrowed Funds be released from escrow and paid to the Corporation.
DATED this ______ day of _______________ , 1998.
SOFTKEY SOFTWARE PRODUCTS INC.
By _________________________________
[NAME]
[TITLE]
_______________________
The undersigned, on behalf of the Underwriters, hereby agrees
with and confirms the foregoing and hereby requests that the Escrowed Funds be
released from escrow and paid to the Corporation.
DATED this ______ day of _______________ , 1998.
XXXXXXXXX XxXXXXXX & PARTNERS, on
behalf of itself and on behalf of FIRST
MARATHON SECURITIES LIMITED
By _________________________________
[NAME]
[TITLE]
