WARRANTHOLDER INFORMATION
I.
AMENDMENT TO WARRANT INDENTURE
On March 26, 2013 MEGA Brands Inc. (the “Corporation”) announced that
effective April 5, 2013, it will amend certain terms of the warrant indenture dated
January 28, 2010 (as supplemented, the “Warrant Indenture”) between the
Corporation and CIBC Mellon Trust Company, as warrant agent (the “Warrant
Agent”) by a supplemental warrant indenture (the “Supplemental Indenture”) to
permit the Corporation to offer to holders of common share purchase warrants
outstanding pursuant to the Warrant Indenture (such warrants, the “Warrants”;
such holders, the “Warrantholders”) the right to exercise their Warrants on a
cashless basis from time to time.
To make such a cashless exercise offer the Corporation will mail a Cashless
Exercise Offer letter (the “Cashless Exercise Offer”) and a cashless exercise
election form (the “Cashless Exercise Election Form”) to Warrantholders.
Under the Warrant Indenture, exercising 20 Warrants together with the payment
of $9.94 entitles Warrantholders to receive one common share of the Corporation
(a “Common Share”). In accordance with the Supplemental Indenture, the
Corporation will now be permitted to provide Warrantholders with the choice to
elect to exercise their Warrants on a cashless basis, and receive Common
Shares based on the in-the-money amount of their Warrants during certain offer
periods to be determined by the Corporation. During any such offer period,
Warrantholders may continue to exercise their Warrants and pay the $9.94
exercise price, or alternatively, they may exercise their Warrants cashlessly and
receive
the
number
of
Common
Shares
determined
using
a
new
formula (Cashless Method section below).
The effective date of the amendments to the Warrant Indenture and the start of
the first cashless exercise offer period (the “Offer Period”) will be April 5, 2013.
The Offer Period will expire on May 10, 2013.The Warrants trade on the Toronto
Stock Exchange (“TSX”) under the symbol MB.WT and expire March 30, 2015.
Warrantholder Documents
Material Change Report Warrant Indenture (January 28, 2010)
First Supplemental Indenture to Warrant Indenture (June 10, 2011)
Second Supplemental Indenture to Warrant Indenture
Cashless Exercise Offer
Cashless Exercise Election Form
II.
EXERCISING WARRANTS
Warrantholders may exercise their Warrants by a cash method at all times and,
during the Offer Period, may exercise their Warrants by a cashless method.
a) Cash Method
In order to exercise Warrants using cash, a Warrantholder will need to comply
with the relevant procedures set out in the Warrant Indenture, including the
payment by way of certified cheque, bank draft or money order payable to the
order of the Warrant Agent in an amount equal to the exercise price for such
Warrants.
Cash Formula
The formula, after adjusting for the twenty for one consolidation of the
Corporation’s outstanding common shares effective on June 15, 2011 is:
20 warrants + $9.94 = 1 Common Share of MEGA Brands Inc.
Click here for further information on share consolidation
b) Cashless Method
In order to exercise Warrants on a cashless basis during the Offer Period, a
Warrantholder will need to send the certificates evidencing such Warrants, a duly
completed and executed subscription form and the Cashless Exercise Election
Form to the Warrant Agent.
In either case, if the Warrants are held through CDS Clearing and Depository
Services Inc., it will be necessary for the Warrantholder to obtain a Warrant
certificate. The Warrantholders’ broker should be contacted for assistance with
this.
Cashless Formula
Number of Common
Shares to be issued =
(rounded down to
Number of Warrants Exercised / 20 x (Market
Price of Common Shares on the Exercise Date –
Exercise Price)
nearest whole Number,
must be a positive
number)
Market Price of the Common Shares on the
Exercise Date
For the purposes of the above formula, “Market Price” means the volume
weighted average trading price (“VWAP”) on the TSX for the five trading days
immediately preceding the Exercise Date.
Click here for Market Price (five-day VWAP) information
III.
PROCEDURES FOR CASHLESS EXERCISE
At any time during the Offer Period, Warrantholders may exercise their warrants
on a cashless basis by sending a completed Cashless Exercise Election
Form together with the certificates evidencing such Warrants and a duly
completed and executed subscription form to CIBC Mellon Trust Company as
follows:
Warrant Agent
By Courier to:
CIBC Mellon Trust Company
C/O Canadian Stock Transfer Company
320 Bay St.
Basement Level (B1 Level)
Toronto, ON M5H 4A6
Attn. Corporate Actions; Re: MEGA Brands Inc.
By Mail to:
CIBC Mellon Trust Company
P.O. Box 1036
Adelaide Street Postal Station
Toronto, ON M5C 2K4
Attn. Corporate Actions; Re: MEGA Brands Inc.
For questions, please contact the Information Agent:
North American Toll Free Phone:
1-800-398-1272
Banks, Brokers and collect calls: 201-806-2222
Toll Free Facsimile: 1-888-509-5907
Email: [email protected]