EXHIBIT 99.3
VOTING AND EXCHANGE TRUST SUPPLEMENT
THIS VOTING AND EXCHANGE TRUST SUPPLEMENT is made as of the 12th day of May,
1999,
B E T W E E N :
MATTEL, INC.
a corporation governed by the laws of
the State of Delaware,
(hereinafter referred to as "Mattel"),
OF THE FIRST PART,
- and -
THE LEARNING COMPANY, INC.
a corporation governed by the laws of
the State of Delaware,
(hereinafter referred to as "TLC"),
OF THE SECOND PART,
- and -
SOFTKEY SOFTWARE PRODUCTS INC.,
a corporation governed by the laws of
the Province of Ontario,
(hereinafter referred to as "Softkey"),
OF THE THIRD PART,
- and -
CIBC MELLON TRUST COMPANY,
a trust company incorporated under
the laws of Canada,
(hereinafter referred to as the "Trustee"),
OF THE FOURTH PART.
WHEREAS TLC (under its predecessor name, "Softkey International Inc."),
Softkey and the Trustee (under its predecessor name, "The R-M Trust Company")
entered into a voting and exchange trust agreement made as of the 4th day of
February, 1994 (the "Original Trust Agreement") relating to the granting of (i)
voting rights in TLC to holders of Exchangeable Shares and (ii) certain rights
in favour of such holders to require TLC to purchase all or part of the
Exchangeable Shares held by such holders;
AND WHEREAS, pursuant to, among other things, the Exchangeable Share
Provisions, the Exchangeable Shares are currently exchangeable, on a one-for-
one basis, for shares of common stock in the capital of TLC;
AND WHEREAS pursuant to an agreement and plan of merger dated as of December
13, 1998 between Mattel and TLC (the "Merger Agreement"), it is proposed that
TLC merge with and into Mattel (the "Merger") with the result that, pursuant to
the Merger Agreement and in accordance with the Delaware General Corporation
Law, (i) the outstanding shares of common stock in the capital of TLC will be
changed and converted into and represent the right to receive shares of common
stock in the capital of Mattel and (ii) the separate corporate existence of TLC
will cease and Mattel will continue as the surviving corporation and will
succeed to and assume all of the rights and obligations of TLC, including
without limitation the rights and obligations of TLC under the Original Trust
Agreement;
AND WHEREAS, following the Merger and pursuant to, among other things, the
Exchangeable Share Provisions, the Exchangeable Shares will be exchangeable for
shares of common stock in the capital of Mattel, on the basis of 1.2 shares of
Mattel common stock per Exchangeable Share (being the Exchange Ratio as that
term is defined herein);
AND WHEREAS, pursuant to Articles 11 and 12 of the Original Trust Agreement,
as a result of the Merger the Original Trust Agreement must be amended,
modified and supplemented as necessary in order that it applies with full force
and effect, mutatis mutandis, to the shares of common stock in the capital of
Mattel following the Merger and the parties to the Original Trust Agreement are
required to execute and deliver this voting and exchange trust supplement
giving effect to and evidencing such necessary amendments and modifications;
AND WHEREAS Mattel and TLC propose to complete the Merger pursuant to the
Merger Agreement and in accordance with the Delaware General Corporation Law
immediately following the execution and delivery of this voting and exchange
trust supplement by the parties hereto;
AND WHEREAS the board of directors of each of TLC and Softkey is of the
opinion that the amendments and modifications to be effected hereby are not
inconsistent with the Original Trust Agreement, are necessary and desirable in
light of the Merger and will not be prejudicial to the interests of the holders
of the Exchangeable Shares;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledge by each of the parties hereto, the
parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 "Hereto", "herein", "hereunder", "hereof" and similar expressions refer
to this voting and exchange trust supplement and not to any particular article,
section or other portion hereof and include any and every instrument
supplemental or ancillary hereto.
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1.2 The division of this voting and exchange trust supplement into articles
and sections is for convenience of reference only and shall not affect the
construction or interpretation of this voting and exchange trust supplement.
1.3 All terms contained in this voting and exchange trust supplement,
including the recitals hereto, which are defined in the Original Trust
Agreement shall, for the purposes hereof, have the meanings given to such terms
in the Original Trust Agreement unless otherwise defined herein or unless the
context otherwise specifies or requires.
ARTICLE 2
ISSUE OF MATTEL SPECIAL VOTING SHARE
2.1 Immediately upon the Merger becoming effective under the Delaware General
Corporation Law, (a) Mattel shall issue to and deposit with the Trustee one
share of special voting preferred stock, U.S.$1.00 par value per share, of
Mattel (the "Mattel Special Voting Stock") to be thereafter held of record by
the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Beneficiaries and in accordance with the provisions of the Original Trust
Agreement as amended, modified and supplemented by this voting and exchange
trust supplement, and (b) the Trustee shall surrender to Mattel the certificate
formerly representing the one outstanding share of special voting stock, par
value U.S.$1.00 per share, of TLC.
ARTICLE 3
AMENDMENTS TO ORIGINAL TRUST AGREEMENT
The Original Trust Agreement is hereby amended, modified and supplemented,
immediately upon the Merger becoming effective under the Delaware General
Corporation Law, as follows:
3.1 Section 1.1 of the Original Trust Agreement is hereby amended, modified
and supplemented as follows:
(a) by deleting the words "Boston, Massachusetts" in the definition of
"Business Day" and replacing them with the words "Los Angeles,
California";
(b) by deleting the definition of "Current Market Price" and replacing it
with the following:
" "Current Market Price" means, in respect of a Mattel Common Share on
any date, the Canadian Dollar Equivalent of the average of the closing
bid and asked prices of Mattel Common Shares during a period of 20
consecutive trading days ending not more than five trading days before
such date on the New York Stock Exchange or, if the Mattel Common
Shares are not then listed on the New York Stock Exchange, on such
other stock exchange or automated quotation system on which the Mattel
Common Shares are listed or quoted, as the case may be, as may be
selected by the Board of Directors for such purpose; provided, however,
that if in the opinion of the Board of Directors the public
distribution or trading activity of Mattel Common Shares during such
period does not create a market which reflects the fair market value of
a Mattel Common Share, then the Current Market Price of a Mattel Common
Share shall be determined by the Board of Directors based upon the
advice of such qualified independent financial advisers as the Board of
Directors of Mattel may deem to be appropriate, and provided further
that any such selection, opinion or determination by the Board of
Directors shall be conclusive and binding."
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(c) by adding the following definition after the definition of "Current
Market Price":
" "Exchange Ratio" means 1.2."
(d) by adding the following definitions after the definition of "List":
" "Mattel" means Mattel, Inc., a corporation governed by the laws of
the State of Delaware, and any successor thereto.
"Mattel Common Shares" means the shares of common stock in the capital
of Mattel (together with the accompanying rights, if any, to purchase
shares of Series E Junior Participating Preference Stock, par value
U.S. $0.01 per share, in the capital of Mattel, subject to adjustment
as contemplated by such rights) and any other securities into which
such shares may be changed or converted."
(e) by deleting the word "Parent" in each of the definitions of "Parent
Consent", "Parent Meeting" and "Parent Successor" and replacing it with
the word "Mattel" in each such definition;
(f) by deleting the definition of "Support Agreement" and replacing it with
the following definition:
" "Support Agreement" means that certain support agreement made as of
the 4th day of February 1994 between Softkey International Inc. (a
predecessor corporate name of The Learning Company, Inc.) and the
Corporation, as amended by that certain amending agreement made as of
the 12th day of May 1999 between Mattel, The Learning Company, Inc. and
the Corporation."
(g) by deleting the words "The R-M Trust Company" in the definition of
"Trustee" and replacing them with the words "CIBC Mellon Trust Company";
(h) by deleting the definition of "Voting Share" and replacing it with the
following:
" "Voting Share" means the one share of special voting preferred stock,
U.S. $1.00 par value, of Mattel, issued by Mattel to and deposited with
the Trustee, which entitles the holder of record to a number of votes
at meetings of holders of Mattel Common Shares equal to the product of
(i) the number of Exchangeable Shares outstanding from time to time
other than Exchangeable Shares held by Mattel, its subsidiaries or any
person directly or indirectly controlled by or under common control of
Mattel, multiplied by (ii) the Exchange Ratio."
3.2 Each reference in Articles 1 to 14, inclusive, of the Original Trust
Agreement to "the Parent" is hereby deleted and replaced with "Mattel".
3.3 Each reference in Articles 1 to 14, inclusive, of the Original Trust
Agreement to "Parent Common Shares" is hereby deleted and replaced with "Mattel
Common Shares".
3.4 Each reference in Articles 11 and 12 of the Original Trust Agreement to
"Parent Successor" is hereby deleted and replaced with "Mattel Successor".
3.5 Section 3.1 of the Original Trust Agreement is hereby amended, modified
and supplemented by deleting the first two sentences thereof.
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3.6 Section 4.2 of the Original Trust Agreement is hereby deleted and
replaced with the following:
"4.2 Number of Votes. With respect to all meetings of shareholders of
Mattel at which holders of Mattel Common Shares are entitled to vote
(a "Mattel Meeting") and with respect to all written consents sought
by Mattel from its shareholders including the holders of Mattel Common
Shares (a "Mattel Consent"), each Beneficiary shall be entitled to
instruct the Trustee to cast and exercise such number of votes
comprised in the Voting Rights equal to the product (rounded down to
the nearest one-hundredth of a share) of (i) the aggregate number of
Exchangeable Shares owned of record by such Beneficiary on the record
date established by Mattel or by applicable law for such Mattel
Meeting or Mattel Consent, as the case may be, multiplied by (ii) the
Exchange Ratio (the "Beneficiary Votes"), in respect of each matter,
question or proposition to be voted on at such Mattel Meeting or to be
consented to in connection with such Mattel Consent."
3.7 Section 5.4 of the Original Trust Agreement is hereby deleted and
replaced with the following:
"5.4 Purchase Price. The purchase price payable by Mattel for the
Exchangeable Shares to be purchased by Mattel from each Beneficiary
under the Exchange Right shall be the sum of:
(a) (i) the Current Market Price of a Mattel Common Share on the
last Business Day prior to the day of closing of the purchase
and sale of such Exchangeable Shares under the Exchange
Right, multiplied by (ii) the number of Exchangeable Shares
to be purchased from such Beneficiary under the Exchange
Right, multiplied by (iii) the Exchange Ratio; and
(b) the full amount of all dividends declared and unpaid on such
Exchangeable Shares to be so purchased (provided that if the
record date for any such declared and unpaid dividends occurs
on or after the day of closing of such purchase and sale the
purchase price shall not include any amounts in respect of
such declared and unpaid dividends).
The purchase price for such Exchangeable Shares so purchased from each
Beneficiary under the Exchange Right shall be satisfied as follows:
(c) in respect of the portion of the purchase price described in
paragraph (a) above, by Mattel issuing and delivering or
causing to be delivered to the Trustee, on behalf of such
Beneficiary, (i) a number of Mattel Common Shares, rounded
down to the nearest whole number of Mattel Common Shares,
equal to (x) such portion of the purchase price divided by
(y) the Current Market Price of a Mattel Common Share on the
last Business Day prior to the day of closing of the purchase
and sale of such Exchangeable Shares under the Exchange Right
and (ii) a cheque in payment of the fractional Mattel Common
Share, if any, resulting from the calculation in (i) above
(before any such rounding) in an amount equal to the
corresponding fractional amount of the Current Market Price
of a Mattel Common Share on the last Business Day prior to
the day of closing of the purchase and sale of such
Exchangeable Shares under the Exchange Right; and
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(d) in respect of the portion of the purchase price described in
paragraph (b) above, by Mattel issuing and delivering or
causing to be delivered to the Trustee, on behalf of such
Beneficiary, a cheque in payment of such declared and unpaid
dividends.
In connection with each exercise of the Exchange Right, Mattel
will provide to the Trustee an Officer's Certificate setting
forth the calculation of the purchase price for the Exchangeable
Shares so purchased thereunder."
3.8 Section 5.11 of the Original Trust Agreement is hereby amended, modified
and supplemented by adding the words ", multiplied by the Exchange Ratio" after
the words "time to time" in the fifth and seventh lines of such section.
3.9 Paragraph (c) of section 5.12 of the Original Trust Agreement is hereby
amended, modified and supplemented by deleting the second and third sentences
thereof and replacing them with the following:
"To effect such automatic exchange, Mattel shall purchase all
Exchangeable Shares outstanding on the fifth Business Day prior to the
Liquidation Event Effective Date held by each Beneficiary, and each
such Beneficiary shall sell all Exchangeable Shares held by it at such
time, for a purchase price equal to the sum of:
(a) (i) the Current Market Price of a Mattel Common Share on the
fifth Business Day prior to the Liquidation Event Effective
Date, multiplied by (ii) the number of Exchangeable Shares to
be purchased from such Beneficiary pursuant to such automatic
exchange, multiplied by (iii) the Exchange Ratio; and
(b) the full amount of all dividends declared and unpaid on such
Exchangeable Shares to be so purchased.
The purchase price for such Exchangeable Shares so purchased from each
Beneficiary pursuant to such automatic exchange shall be satisfied as
follows:
(c) in respect of the portion of the purchase price described in
paragraph (a) above, by Mattel issuing and delivering or
causing to be delivered to such Beneficiary (i) a number of
Mattel Common Shares, rounded down to the nearest whole
number of Mattel Common Shares, equal to (x) such portion of
the purchase price divided by (y) the Current Market Price of
a Mattel Common Share on the fifth Business Day prior to the
Liquidation Event Effective Date and (ii) a cheque in payment
of the fractional Mattel Common Share, if any, resulting from
the calculation in (i) above (before any such rounding) in an
amount equal to the corresponding fractional amount of the
Current Market Price of a Mattel Common Share on the fifth
Business Day prior to the Liquidation Event Effective Date;
and
(d) in respect of the portion of the purchase price described in
paragraph (b) above, by Mattel issuing and delivering or
causing to be delivered to such Beneficiary a cheque in
payment of such declared and unpaid dividends.
In connection with such automatic exchange, Mattel will provide
to the Trustee an Officer's Certificate setting forth the
calculation of the purchase price for the Exchangeable Shares so
purchased pursuant thereto."
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3.10 Section 6.1 of the Original Trust Agreement is hereby amended, modified
and supplemented by deleting the words "Parent Special Voting Stock" in the
second line of such section and replacing them with the words "special voting
preferred stock, U.S. $1.00 par value, of Mattel".
3.11 Section 12.4 of the Original Trust Agreement is hereby amended, modified
and supplemented by adding the words ", notwithstanding the provisions of
section 12.1 hereof," after the words "changed and" in the third last line of
section 12.4.
3.12 Paragraphs (a), (b) and (c) of section 14.3 of the Original Trust
Agreement are hereby deleted and replaced with the following:
(a) if to Mattel or the Corporation, c/o Mattel at:
333 Continental Boulevard
El Segundo, CA 90245-5012
U.S.A.
Attention: General Counsel
Telecopy: (310) 252-3671
(b) if to the Trustee at:
320 Bay Street
P.O. Box 1
Toronto, Ontario
M5H 4A6
Attention: Assistant Vice President, Client Services
Telecopy: (416) 643-5570
ARTICLE 4
ASSUMPTION OF OBLIGATIONS
4.1 Mattel hereby confirms, covenants and agrees that, immediately upon the
Merger becoming effective under the Delaware General Corporation Law, Mattel
has succeeded to the position of TLC under the Original Trust Agreement as
amended, modified and supplemented hereby and, without limitation of the
foregoing, that it has assumed liability for all moneys payable and property
deliverable under the Original Trust Agreement as amended, modified and
supplemented hereby, and that it will pay and deliver or cause to be delivered
all such moneys and property and will observe and perform all the covenants and
obligations of TLC under the Original Trust Agreement as amended, modified and
supplemented hereby.
ARTICLE 5
GENERAL
5.1 This voting and exchange trust supplement is supplementary to and amends
and modifies the Original Trust Agreement as herein set forth. Immediately upon
the Merger becoming effective under the Delaware General Corporation Law, the
Original Trust Agreement shall thereafter be read in conjunction with this
voting and exchange trust supplement and the Original Trust Agreement and this
voting and exchange trust supplement shall be deemed for all purposes to be a
part of the Original Trust Agreement and shall have effect so far as is
practicable as if all the provisions of the Original Trust Agreement and this
voting and exchange trust supplement were contained in one instrument.
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5.2 This voting and exchange trust supplement and the Original Trust
Agreement constitute the entire agreement between the parties relating to the
subject matter hereof and thereof. This voting and exchange trust supplement
supersedes all prior agreements and understandings of the parties, whether oral
or written, including the Original Trust Agreement, with respect to the
portions of the Original Trust Agreement hereby amended, modified and
supplemented. There are no general or specific representations, warranties or
other agreements by or among the parties in connection with the entering into
of this voting and exchange trust supplement or the subject matter hereof
except as specifically set forth herein.
5.3 This voting and exchange trust supplement 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.
5.4 This voting and exchange trust supplement shall be construed and enforced
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
5.5 Mattel agrees that any action or proceeding arising out of or relating to
this voting and exchange trust supplement may be instituted in the courts of
Ontario, waives any objection which it may now or hereafter have to the venue
of any such action or proceeding, irrevocably submits to the jurisdiction of
the said courts in any such action or proceeding, agrees to be bound by any
judgment of the said courts and not to seek, and hereby waives, any review of
the merits of any such judgment by the courts of any other jurisdiction and
hereby appoints Softkey at its registered office in the Province of Ontario as
Mattel's attorney for service of process.
5.6 This voting and exchange trust supplement shall be binding upon and enure
to the benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF the parties hereto have executed this voting and exchange
trust supplement as of the date first referred to above.
MATTEL, INC.
By: /s/ Robert Normile
_________________________________
Robert Normile
__________________________________
THE LEARNING COMPANY, INC.
By: /s/ R. Scott Murray
_________________________________
R. Scott Murray
__________________________________
SOFTKEY SOFTWARE PRODUCTS INC.
By: /s/ R. Scott Murray
_________________________________
R. Scott Murray
__________________________________
CIBC MELLON TRUST COMPANY
By: /s/ Warren Jansen
__________________________________
Warren Jansen
__________________________________
By: /s/ Susan Clough
__________________________________
Susan Clough
__________________________________
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