<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 21, 1995
MATTEL, INC.
------------
(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
----------------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
99.1 First Amendment dated as of May 17, 1994 to Credit
Agreement (Multi-Year Facility) dated as of March
18, 1994 among the Company, the Banks named therein
and Bank of America National Trust and Savings
Association, as Agent
99.2 First Amendment dated as of May 17, 1994 to Credit
Agreement (364-Day Facility) dated as of March 18,
1994 among the Company, the Banks named therein and
Bank of America National Trust and Savings Association,
as Agent
99.3 Second Amendment dated as of September 30, 1994 to
Credit Agreement (Multi-Year Facility) dated as of
March 18, 1994 among the Company, the Banks named
therein and Bank of America National Trust and Savings
Association, as Agent
99.4 Second Amendment dated as of September 30, 1994 to
Credit Agreement (364-Day Facility) dated as of
March 18, 1994 among the Company, the Banks named
therein and Bank of America National Trust and Savings
Association, as Agent
99.5 Credit Agreement dated as of March 10, 1995 among
the Company, the Banks named therein and Bank of
America National Trust and Savings Association,
as Agent
99.6 Second Amended and Restated Transfer and Administration
Agreement dated as of March 10, 1995 among the
Company, Mattel Sales Corp., Fisher-Price, Inc.,
the Banks named therein and NationsBank of Texas,
N.A., as Agent
99.7 Mattel, Inc. Supplemental Executive Retirement Plan
effective as of April 1, 1994
99.8 Fisher-Price, Inc. Matching Savings Plan, 1994
Restatement
99.9 Mattel, Inc. Personal Investment Plan, 1993 Restatement
99.10 First Amendment to the Mattel, Inc. Personal Investment
Plan, 1993 Restatement
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTEL, INC.
Registrant
By: /s/ Leland P. Smith
-----------------------------
Leland P. Smith
Date: March 21, 1995 Assistant General Counsel
--------------
<PAGE>
EXHIBIT 99.1
FIRST AMENDMENT TO
------------------
CREDIT AGREEMENT (MULTI-YEAR FACILITY)
--------------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (MULTI-YEAR
FACILITY) (this "First Amendment") is dated as of May 17, 1994
and is entered into by and among MATTEL, INC., a Delaware
corporation (the "Company"), THE FINANCIAL INSTITUTIONS LISTED ON
THE SIGNATURE PAGES HEREOF (the "Banks"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the Banks
(the "Agent") and amends the Credit Agreement (Multi-Year
Facility) dated as of March 18, 1994 among the Company, the Banks
and the Agent (the "Agreement").
RECITAL
-------
The Company has requested that the Banks and the Agent
amend the Agreement, and the Banks and Agent are willing to amend
the Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All capitalized terms used herein have the
same meanings as in the Agreement unless otherwise defined
herein. All references to the Agreement shall mean the Agreement
as hereby amended.
2. Amendments. The parties hereto agree that the
Agreement is amended as follows:
2.1 The definition of "Certificate of Deposit Rate"
within the definition of "CD Rate" in Section 1.1 of the
Agreement is amended by deleting "Reference Banks" on the next-to-
last line thereof and inserting "Agent" in lieu thereof.
2.2 Section 1.1 of the Agreement is amended by
inserting the following definition in proper alphabetical order:
"'Commitment' means the Aggregate Loan
Commitment, the Aggregate 364-Day Commitment or the
Aggregate Receivables Commitment (collectively, the
"Commitments").
2.3 Section 2.5 of the Agreement is amended and
restated in its entirety as follows:
"2.5 Adjustments of Aggregate Loan
Commitment and Aggregate Receivables Commitment.
-1-
<PAGE>
"(a) Reduction and Termination of
Commitments. The Company may from time to time, in
accordance with Section 2.5(c), reduce or terminate the
Aggregate Loan Commitment or the Aggregate Receivables
Commitment. The Company may effect changes in the
Aggregate 364-Day Commitment pursuant to the 364-Day
Facility. Any reduction or termination of any
Commitment pursuant to this Section 2.5(a) shall be
permanent.
"(b) Reallocation of Commitments. In
addition, the Company may from time to time, in
accordance with Section 2.5(c), (i) reallocate the
Aggregate Receivables Commitment to the Aggregate Loan
Commitment and/or (ii) reallocate the Aggregate Loan
Commitment to the Aggregate Receivables Commitment;
provided, however, that (x) the Company may not deliver
a Change in Commitment Notice (as hereafter defined) to
the Agent to reallocate Commitments pursuant to this
Section 2.5(b) more than four times in any consecutive
12-month period, (y) the Aggregate Receivables
Commitment may not exceed $250,000,000 at any time, and
(z) the Aggregate Loan Commitment may not be reduced to
less than $125,000,000 pursuant to this Section 2.5(b)
at any time.
"(c) Procedures. (i) The Company may effect
the termination, reduction or reallocation of the
Aggregate Loan Commitment or the Aggregate Receivables
Commitment by delivering a fully completed notice (a
"Change in Commitment Notice") to the Agent
substantially in the form of Exhibit H not less than
three Business Days' prior to the date of the requested
termination, reduction or reallocation.
"(ii) Promptly after receipt of any Change
in Commitment Notice (and in no event later than the
end of the following Business Day), the Agent shall
notify each Bank and the Transfer and Administration
Agent thereof. In the case of any reduction,
termination or reallocation of the Aggregate
Receivables Commitment, the Agent shall directly
contact the Transfer and Administration Agent for any
relevant information.
"(iii) Any partial reduction or reallocation
of a Commitment shall be in an aggregate minimum amount
of $10,000,000 for each such Commitment, and integral
multiples of $1,000,000 in excess of that amount for
each such Commitment. Any reduction or reallocation of
any Commitment shall be applied to each Bank in
accordance with such Bank's Pro Rata Share thereof.
-2-
<PAGE>
All accrued commitment fees to, but not including the
effective date of any termination of any Commitment,
shall be paid on the effective date of such
termination.
"(iv) No reduction, termination or
reallocation of any Commitments shall be permitted if,
after giving effect thereto and to any prepayments made
on the effective date thereof, (A) the outstanding
principal amount of the Loans hereunder would exceed
the Aggregate Loan Commitment; or (B) the Total
Outstanding Investment would exceed the Aggregate
Receivables Commitment.
"(v) Concurrently with any termination,
reduction or reallocation of the Aggregate Loan
Commitment, the Company shall sign such amended Notes
as requested by the Banks through the Agent to reflect
such change."
2.4 A new Section 2.9(c) is inserted into the
Agreement immediately following Section 2.9(b) as follows:
"(c) The Company shall pay to the Agent such
fees as may from time to time be agreed upon between
the Company and the Agent."
2.5 Section 4.2(b) of the Agreement is amended and
restated in its entirety as follows:
"(b) The representations and warranties of
the Company contained in any Loan Document (except the
representation and warranty contained in Section 5.9
and, in the case of a borrowing of Loans where the
aggregate principal amount of the Loans being made on
that Funding Date equals or is less than the aggregate
principal amount of Loans maturing on that Funding
Date, the representation and warranty contained in
Section 5.11), shall be true, correct and complete in
all material respects on and as of that Funding Date,
to the same extent as though made on and as of that
Funding Date; and"
2.6 Section 7.6 of the Agreement is amended by
deleting "$736,000,000" and inserting "$655,000,000" in lieu
thereof.
2.7 A new Exhibit H is added to the Agreement in the
form of Exhibit H hereto.
-3-
<PAGE>
3. Representations and Warranties. The Company
represents and warrants to the Banks and the Agent:
3.1 Authorization. The execution, delivery and
performance of this First Amendment by the Company has been duly
authorized by all necessary corporate action by the Company and
has been duly executed and delivered by the Company.
3.2 Binding Obligation. This First Amendment and the
Agreement are legal, valid and binding agreements of the Company,
enforceable in accordance with their respective terms, except to
the extent enforceability thereof may be limited by applicable
law relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting
creditors' rights generally or by the application of general
principles of equity.
3.3 No Legal Obstacle to Agreements. Neither the
execution of this First Amendment, the making by the Company of
any borrowings under the Agreement, as amended hereby, nor the
performance of the Agreement by the Company has constituted or
resulted in or will constitute or result in a breach of the
provisions of any material agreement, or the violation of any
law, judgment, decree or governmental order, rule or regulation
applicable to the Company, or result in the creation under any
material agreement of any security interest, lien, charge, or
encumbrance upon any of the assets of the Company. No approval
or authorization of any Governmental Person is required to be
obtained by the Company to permit the execution, delivery or
performance by the Company of this First Amendment, the Agreement
as amended hereby, or the transactions contemplated hereby or
thereby, or the making of any borrowing by the Company under the
Agreement, as amended hereby.
3.4 Incorporation of Certain Representations. The
representations and warranties set forth in Section 5 of the
Agreement are true and correct in all material respects on and as
of the date hereof as though made on and as of the date hereof
except to the extent such representations and warranties
expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all
material respects on and as of such earlier date.
3.5 Default. No Default or Event of Default under the
Agreement has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of
this First Amendment shall be subject to the compliance by the
Company with its agreements herein contained, and to the delivery
-4-
<PAGE>
of the following to Agent in form and substance satisfactory to
Agent:
4.1 Corporate Resolution. A copy of a resolution
or resolutions passed by the Board of Directors of the Company,
certified by the Secretary or an Assistant Secretary of the
Company as being in full force and effect on the effective date
of this First Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and
performance of this First Amendment and any note or other
instrument or agreement required hereunder.
4.2 Authorized Signatories. A certificate, signed by
the Secretary or an Assistant Secretary of the Company and dated
the date of this First Amendment, as to the incumbency of the
person or persons authorized to execute and deliver this First
Amendment and any instrument or agreement required hereunder on
behalf of the Company.
4.3 Other Evidence. Such other evidence with respect
to the Company or any other person as the Agent or any Bank may
reasonably request to establish the consummation of the
transactions contemplated hereby, the taking of all corporate
action in connection with this First Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as hereby
amended, the Agreement shall remain in full force and effect.
5.2 Waivers. This First Amendment is specific in time
and in intent and does not constitute, nor should it be construed
as, a waiver of any other right, power or privilege under the
Agreement, or under any agreement, contract, indenture, document
or instrument mentioned in the Agreement; nor does it preclude
any exercise thereof or the exercise of any other right, power or
privilege, nor shall any future waiver of any right, power,
privilege or default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement,
constitute a waiver of any other default of the same or of any
other term or provision.
5.3 Counterparts. This First Amendment may be
executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and
the same instrument. This First Amendment shall not become
effective until the Company, the Banks, the Agent, and Mattel
Sales shall have signed a copy hereof, whether the same or
-5-
<PAGE>
counterparts, and the same shall have been delivered to the
Agent.
5.4 Jurisdiction. This First Amendment, and any
instrument or agreement required hereunder, shall be governed by
and construed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first above
written.
MATTEL, INC.
By /s/ William Stavro
---------------------------
Vice President and
Treasurer
AGENT BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
---------------------------
KAY WARREN
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
---------------------------
ROBERT W. TROUTMAN
Vice President
ABN AMRO BANK N.V.
By /s/ Ellen M. Coleman
---------------------------
Title Assistant Vice President
By /s/ J. Alexander Pruijs
---------------------------
Title Vice President
(Signatures continue)
-6-
<PAGE>
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
---------------------------
Title Vice President
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
---------------------------
Title Vice President
By /s/ Rafael C. Lumanlan
---------------------------
Title Vice President
CHEMICAL BANK
By /s/ John J. Huber III
---------------------------
Title: Managing Director
CONTINENTAL BANK N.A.
By /s/ Donald Hartmann
---------------------------
Title Vice President
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Barbara J. Readick
---------------------------
Title Vice President
By /s/ Dennis G. Blank
---------------------------
Title Assistant Vice President
(Signatures continue)
-7-
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. Peter Mitchell
---------------------------
Title Director
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffery R. Fenn
---------------------------
Title Vice President
MARINE MIDLAND BANK
By /s/ Mary Ann Tappero
---------------------------
Title Vice President
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Transfer
and Administration Agent.
By /s/ J. Blake Seaton
---------------------------
Title Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ John R. Heskett
---------------------------
Title Commercial Banking Officer
(Signatures continue)
-8-
<PAGE>
ISTITUTO BANCARIO SAN
PAOLO di TORINO SpA
By /s/ Roberto Gorlier
---------------------------
Title Branch Manager
By /s/ Glen Binder
---------------------------
Title Assistant Vice President
TORONTO-DOMINION (TEXAS), INC.
By /s/ Warren Finlay
---------------------------
Title Vice President
-9-
<PAGE>
EXHIBIT H TO FIRST AMENDMENT
----------------------------
EXHIBIT H
---------
CHANGE IN COMMITMENTS NOTICE
----------------------------
For Multi-Year Facility
and
Transfer and Administration Agreement
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Global Agency
NationsBank of Texas, N.A., as Agent
444 South Flower Street, Suite 1500
Los Angeles, Ca 90071-2901
Attn: J. Blake Seaton
Gentlemen:
Pursuant to (a) Section 2.5 of that certain Credit Agreement
(Multi-Year Facility) dated as of March 18, 1994, as amended (the
"Credit Agreement") among Mattel, Inc., a Delaware corporation (the
"Company"), the Banks named therein (the "Banks") and Bank of
America National Trust and Savings Association, as Agent (the
"Agent") and/or (b) Section 2.11 of that certain Amended and
Restated Transfer and Administration Agreement dated as of March
19, 1994, as amended, among Mattel Sales Corp., as transferor, the
Company, as guarantor and servicer, the banks named therein, and
NationsBank of Texas, N.A., as Transfer and Administration Agent,
please effect the following changes in the Aggregate Receivables
Commitment/Facility Limit and/or the Aggregate Loan Commitment:
1. Effective Date of Change:
------------------------
__________ __, 19__
2. Requested Change:
----------------
a. Please permanently reduce the [Aggregate Receivables
Commitment/Facility Limit] [Aggregate Loan Commitment] by
$___________.
H - 1
<PAGE>
b. Please permanently terminate the [Aggregate
Receivables Commitment] [Aggregate Loan Commitment].
c. Please reallocate $___________ from the [Aggregate
Receivables Commitment/Facility Limit] [Aggregate Loan
Commitment] to the [Aggregate Loan Commitment] [Aggregate
Receivables Commitment/Facility Limit].
3. Summary of Changes:
------------------
Before Change After Change
in Commitment/ in Commitment/
Facility Limit: Facility Limit:
-------------- --------------
Aggregate Loan Commitment/Facility Limit:
- ----------------------------------------
Aggregate Loan Commitment $_____________ $_____________
Aggregate Outstandings $_____________ $_____________
Aggregate Receivables Commitment/Facility Limit:
- -----------------------------------------------
Aggregate Receivables
Commitment/Facility Limit $_____________ $_____________
Total Outstanding Investment $_____________ $_____________
Unless otherwise defined herein, capitalized terms used herein
have the meanings assigned to them in the Agreement. "Facility
Limit" is used herein as defined in the above-referenced Amended
and Restated Transfer and Administration Agreement.
DATED: __________________
MATTEL, INC.
By _______________________
Name _____________________
Title ____________________
*Signature required only MATTEL SALES CORP.*
when Aggregate Receivables
Commitment changed
By _______________________
Name _____________________
Title ____________________
H - 2
<PAGE>
CONSENT OF MATTEL SALES CORP.
-----------------------------
The undersigned Mattel Sales Corp. hereby consents to the
foregoing First Amendment to Credit Agreement (Multi-Year Facility)
dated as of May 17, 1994, and reaffirms the Continuing Guaranty
(Multi-Year Facility) dated as of March 18, 1994.
Dated: May 17, 1994
MATTEL SALES CORP.
By: /s/ William Stavro
---------------------------
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 99.2
FIRST AMENDMENT TO
------------------
CREDIT AGREEMENT (364-DAY FACILITY)
-----------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (364-DAY
FACILITY) (this "First Amendment") is dated as of May 17, 1994
and is entered into by and among MATTEL, INC., a Delaware
corporation (the "Company"), THE FINANCIAL INSTITUTIONS LISTED ON
THE SIGNATURE PAGES HEREOF (the "Banks"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the Banks
(the "Agent") and amends the Credit Agreement (364-Day Facility)
dated as of March 18, 1994 among the Company, the Banks and the
Agent (the "Agreement").
RECITAL
-------
The Company has requested that the Banks and the Agent
amend the Agreement, and the Banks and Agent are willing to amend
the Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All capitalized terms used herein have the
same meanings as in the Agreement unless otherwise defined
herein. All references to the Agreement shall mean the Agreement
as hereby amended.
2. Amendments. The parties hereto agree that the
Agreement is amended as follows:
2.1 The definition of "Certificate of Deposit Rate"
within the definition of "CD Rate" in Section 1.1 of the
Agreement is amended by deleting "Reference Banks" on the next-to-
last line thereof and inserting "Agent" in lieu thereof.
2.2 The proviso to Section 2.1 of the Agreement is
amended by amending and restating clause (ii) thereof in its
entirety as follows:
"(ii) if at any time between November 1 of
each year and the Termination Date (the "Rating
Period") the rating on the Company's long-term
unsecured Indebtedness by any one of S&P, Moody's or
Duff & Phelps is below investment grade, there shall be
no Loans outstanding for 30 consecutive days during
such Rating Period; provided, that if any of such
ratings is first downgraded below investment grade
within 30 consecutive days of the end of such Rating
Period, there shall be no Loans outstanding from and
after the
-1-
<PAGE>
date of such downgrade through and including
the Termination Date, and in each case the Company
shall prepay any outstanding Loans pursuant to Section
2.6(b) to the extent required to not have any Loans
outstanding during such period; and"
2.3 Section 2.5 of the Agreement is amended and
restated in its entirety as follows:
"2.5 Termination or Reduction of Aggregate
Loan Commitment.
"(a) Termination or Reduction. The Company
may from time to time, in accordance with Section
2.5(b), reduce or terminate the Aggregate Loan
Commitment. Any change in the Aggregate Multi-Year
Commitment or the Aggregate Receivables Commitment
shall be effected pursuant to the Multi-Year Facility.
"(b) Procedures. (i) The Company may effect
the termination or reduction of the Aggregate Loan
Commitment by delivering a written notice to the Agent,
specifying the date and amount of such termination or
reduction, not less than three Business Days' prior to
the date of the requested termination or reduction.
"(ii) Promptly after receipt of such notice
(and in no event later than the end of the following
Business Day), the Agent shall notify each Bank
thereof.
"(iii) Any partial reduction of the
Aggregate Loan Commitment shall be in an aggregate
minimum amount of $10,000,000, and integral multiples
of $1,000,000 in excess of that amount. Any reduction
of the Aggregate Loan Commitment shall be applied to
each Bank in accordance with such Bank's Pro Rata Share
thereof. Any reduction or termination of the Aggregate
Loan Commitment shall be permanent. All accrued
commitment fees to, but not including the effective
date of any termination of the Aggregate Loan
Commitment, shall be paid on the effective date of such
termination.
"(iv) No reduction or termination of the
Aggregate Loan Commitment shall be permitted if, after
giving effect thereto and to any prepayments made on
the effective date thereof, the outstanding principal
amount of the Loans hereunder would exceed the
Aggregate Loan Commitment.
-2-
<PAGE>
"(v) Concurrently with any termination or
reduction of the Aggregate Loan Commitment, the Company
shall sign such amended Notes as requested by the Banks
through the Agent."
2.4 Section 4.2(b) of the Agreement is amended and
restated in its entirety as follows:
"(b) The representations and warranties of
the Company contained in any Loan Document (except the
representation and warranty contained in Section 5.9
and, in the case of a borrowing of Loans where the
aggregate principal amount of the Loans being made on
that Funding Date equals or is less than the aggregate
principal amount of Loans maturing on that Funding
Date, the representation and warranty contained in
Section 5.11), shall be true, correct and complete in
all material respects on and as of that Funding Date,
to the same extent as though made on and as of that
Funding Date; and"
2.5 Section 7.6 of the Agreement is amended by
deleting "$736,000,000" and inserting "$655,000,000" in lieu
thereof.
3. Representations and Warranties. The Company
represents and warrants to the Banks and the Agent:
3.1 Authorization. The execution, delivery and
performance of this First Amendment by the Company has been duly
authorized by all necessary corporate action by the Company and
has been duly executed and delivered by the Company.
3.2 Binding Obligation. This First Amendment and the
Agreement are legal, valid and binding agreements of the Company,
enforceable in accordance with their respective terms, except to
the extent enforceability thereof may be limited by applicable
law relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting
creditors' rights generally or by the application of general
principles of equity.
3.3 No Legal Obstacle to Agreements. Neither the
execution of this First Amendment, the making by the Company of
any borrowings under the Agreement, as amended hereby, nor the
performance of the Agreement by the Company has constituted or
resulted in or will constitute or result in a breach of the
provisions of any material agreement, or the violation of any
law, judgment, decree or governmental order, rule or regulation
-3-
<PAGE>
applicable to the Company, or result in the creation under any
material agreement of any security interest, lien, charge, or
encumbrance upon any of the assets of the Company. No approval
or authorization of any Governmental Person is required to be
obtained by the Company to permit the execution, delivery or
performance by the Company of this First Amendment, the Agreement
as amended hereby, or the transactions contemplated hereby or
thereby, or the making of any borrowing by the Company under the
Agreement, as amended hereby.
3.4 Incorporation of Certain Representations. The
representations and warranties set forth in Section 5 of the
Agreement are true and correct in all material respects on and as
of the date hereof as though made on and as of the date hereof
except to the extent such representations and warranties
expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all
material respects on and as of such earlier date.
3.5 Default. No Default or Event of Default under the
Agreement has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of
this First Amendment shall be subject to the compliance by the
Company with its agreements herein contained, and to the delivery
of the following to Agent in form and substance satisfactory to
Agent:
4.1 Corporate Resolution. A copy of a resolution
or resolutions passed by the Board of Directors of the Company,
certified by the Secretary or an Assistant Secretary of the
Company as being in full force and effect on the effective date
of this First Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and
performance of this First Amendment and any note or other
instrument or agreement required hereunder.
4.2 Authorized Signatories. A certificate, signed by
the Secretary or an Assistant Secretary of the Company and dated
the date of this First Amendment, as to the incumbency of the
person or persons authorized to execute and deliver this First
Amendment and any instrument or agreement required hereunder on
behalf of the Company.
4.3 Other Evidence. Such other evidence with respect
to the Company or any other person as the Agent or any Bank may
reasonably request to establish the consummation of the
transactions contemplated hereby, the taking of all corporate
-4-
<PAGE>
action in connection with this First Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as hereby
amended, the Agreement shall remain in full force and effect.
5.2 Waivers. This First Amendment is specific in time
and in intent and does not constitute, nor should it be construed
as, a waiver of any other right, power or privilege under the
Agreement, or under any agreement, contract, indenture, document
or instrument mentioned in the Agreement; nor does it preclude
any exercise thereof or the exercise of any other right, power or
privilege, nor shall any future waiver of any right, power,
privilege or default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement,
constitute a waiver of any other default of the same or of any
other term or provision.
5.3 Counterparts. This First Amendment may be
executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and
the same instrument. This First Amendment shall not become
effective until the Company, the Banks, the Agent, and Mattel
Sales shall have signed a copy hereof, whether the same or
counterparts, and the same shall have been delivered to the
Agent.
5.4 Jurisdiction. This First Amendment, and any
instrument or agreement required hereunder, shall be governed by
and construed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first above
written.
MATTEL, INC.
By /s/ William Stavro
---------------------------
WILLIAM STAVRO
Vice President and
Treasurer
(Signatures continue)
-5-
<PAGE>
AGENT BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
---------------------------
KAY WARREN
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
---------------------------
ROBERT W. TROUTMAN
Vice President
ABN AMRO BANK N.V.
By /s/ J. Alexander Pruijs
---------------------------
Title Vice President
By /s/ Ellen M. Coleman
---------------------------
Title Assistant Vice President
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
---------------------------
Title Vice President
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
---------------------------
Title Vice President
By /s/ Rafael Lumanlan
---------------------------
Title Vice President
(Signatures continue)
-6-
<PAGE>
CHEMICAL BANK
By /s/ John J. Huber III
---------------------------
Title: Managing Director
CONTINENTAL BANK N.A.
By /s/ Donald Hartmann
---------------------------
Title Vice President
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Barbara J. Readick
---------------------------
Title Vice President
By /s/ Dennis G. Blank
---------------------------
Title Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. Peter Mitchell
---------------------------
Title Director
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffery R. Fenn
---------------------------
Title Vice President
MARINE MIDLAND BANK
By /s/ Mary Ann Tappero
---------------------------
Title Vice President
(Signatures continue)
-7-
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Transfer and
Administration Agent.
By /s/ J. Blake Seaton
---------------------------
Title Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ John R. Heskett
---------------------------
Title Commercial Banking
Officer
ISTITUTO BANCARIO SAN
PAOLO di TORINO SpA
By /s/ Roberto Gorlier
---------------------------
Title Branch Manager
By /s/ Glen Binder
---------------------------
Title Assistant Vice President
TORONTO-DOMINION (TEXAS), INC.
By /s/ Warren Finlay
---------------------------
Title Vice President
-8-
<PAGE>
CONSENT OF MATTEL SALES CORP.
The undersigned Mattel Sales Corp. hereby consents to the
foregoing First Amendment to Credit Agreement (364-Day Facility)
dated as of May 17, 1994, and reaffirms the Continuing Guaranty
(364-Day Facility) dated as of March 18, 1994.
Dated: May 17, 1994
MATTEL SALES CORP.
By: /s/ William Stavro
---------------------------
Title: Vice President and
Treasurer
-9-
<PAGE>
EXHIBIT 99.3
SECOND AMENDMENT TO
CREDIT AGREEMENT
(MULTI-YEAR FACILITY)
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (MULTI-
YEAR FACILITY (this "Second Amendment") is dated as of
September 30, 1994 and is entered into by and among MATTEL,
INC., a Delaware corporation (the "Company"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and
collectively as the "Banks") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION as the agent for the Banks
(the "Agent") and amends the Credit Agreement (Multi-Year
Facility) dated as of March 18, 1994 among the Company, the
Banks and the Agent, as amended by the First Amendment to
Credit Agreement dated as of May 17, 1994 (the "Credit
Agreement").
PRELIMINARY STATEMENT.
The parties to the Credit Agreement desire to
amend the Credit Agreement.
In consideration of the premises and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Terms. All capitalized terms used herein
shall have the same meanings as in the Credit Agreement
unless otherwise defined herein. All references to the Loan
Documents shall mean the Loan Documents as hereby amended.
2. Amendments. The parties hereto agree that
the Credit Agreement is amended as follows:
2.1 The definition of "Future Indebtedness" in
Section 1.1 of the Agreement is amended and restated in its
entirety as follows and realphabetized in Section 1.1 as
appropriate:
"Debt" means unsecured Indebtedness for borrowed
money by the Company or its Domestic Material
Subsidiaries having maturities in excess of one year,
excluding (i) intercompany Indebtedness, (ii)
Indebtedness permitted to be secured under Section 7.2,
(iii) Indebtedness incurred under the Transfer and
-1-
<PAGE>
Administration Agreement and (iv) Indebtedness
hereunder and under the 364-Day Facility."
2.2 Section 7.1(b) of the Credit Agreement is
amended and restated in its entirety as follows:
"(b) Additional Debt incurred since
January 1, 1994 not exceeding, on a cumulative
basis, the following amounts for the calendar
years indicated:
Cumulative Additional
Year Debt Permitted
1994 $150,000,000
1995 $300,000,000
1996 $450,000,000
1997 $600,000,000
provided, that any such Debt (x) will not
contain any terms and conditions that in the
aggregate are more restrictive than the terms and
conditions contained in this Agreement (y) will
not cause the Company to be in violation of
Sections 7.5, 7.6, or 7.7 of this Agreement, and
(z) will not exceed an additional $150,000,000 in
the aggregate in any one calendar year at any
time."
2.3 Section 7.6 of the Credit Agreement is
amended and restated in its entirety as follows:
"7.6 Consolidated Tangible Net Worth.
The Company shall not permit its Consolidated
Tangible Net Worth at the end of any fiscal
quarter to be less than $655,000,000 plus 50% of
each fiscal quarter's Consolidated Net Income
subsequent to December 31, 1993 (but without
reduction for any losses) plus 100% of any Net
Issuance Proceeds less an amount equal to the
Company's cost of any repurchases of the Company's
capital stock or any goodwill due to acquisitions
subsequent to December 31, 1993 in an aggregate
amount not exceeding $125,000,000."
3. Representations and Warranties. The Company
represents and warrants to the Banks, the Agent:
3.1 Authorization. The execution, delivery and
performance of this Second Amendment by the Company has been
duly authorized by all necessary corporate action by the
Company and has been duly executed and delivered by the
Company.
3.2 Binding Obligation. This Second Amendment
and the Loan Documents are legal, valid and binding
agreements of the Company, enforceable in accordance with
their respective terms, except to the extent enforceability
thereof may be limited by applicable law relating to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or limiting creditors' rights
-2-
<PAGE>
generally or by the application of general principles of
equity.
3.3 No Legal Obstacle to Agreements. Neither the
execution of this Second Amendment, the making by the
Company of any borrowings under the Credit Agreement, as
amended hereby, nor the performance of the Loan Documents by
the Company has constituted or resulted in or will
constitute or result in a breach of the provisions of any
material agreement, or the violation of any law, judgment,
decree or governmental order, rule or regulation applicable
to the Company, or result in the creation under any material
agreement of any security interest, lien, charge, or
encumbrance upon any of the assets of the Company. No
approval or authorization of any governmental authority is
required to be obtained by the Company to permit the
execution, delivery or performance by the Company of this
Second Amendment, the Loan Documents, as amended hereby, or
the transactions contemplated hereby or thereby, or the
making of any borrowing by the Company under the Credit
Agreement, as amended hereby.
3.4 Incorporation of Certain Representations.
The representations and warranties set forth in Section 5 of
the Credit Agreement are true and correct in all material
respects on and as of the date hereof as though made on and
as of the date hereof except to the extent such
representations and warranties expressly relate to an
earlier date, in which case such representations and
warranties were true and correct in all material respects on
and as of such earlier date.
3.5 Default. No Default or Event of Default
under the Credit Agreement has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness
of this Second Amendment shall be subject to the compliance
by the Company with its agreements herein contained, and to
the delivery of the following to Agent in form and substance
satisfactory to Agent:
4.1 Corporate Resolution. A copy of a resolution
or resolutions passed by the Board of Directors of the
Company, certified by the Secretary or an Assistant
Secretary of the Company as being in full force and effect
on the effective date of this Second Amendment, authorizing
the amendments to the Loan Documents herein provided for and
the execution, delivery and performance of this Second
Amendment and any other instrument or agreement required
hereunder.
-3-
<PAGE>
4.2 Authorized Signatories. A certificate,
signed by the Secretary or an Assistant Secretary of the
Company and dated the date of this Second Amendment, as to
the incumbency of the person or persons authorized to
execute and deliver this Second Amendment and any instrument
or agreement required hereunder on behalf of the Company.
4.3 Other Evidence. Such other evidence with
respect to the Company or any other person as the Agent or
any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the
taking of all corporate action in connection with this
Second Amendment and the Loan Documents and the compliance
with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as
hereby amended, the Loan Documents shall remain in full
force and effect. This Second Amendment shall be effective
September 30, 1994.
5.2 Waivers. This Second Amendment is specific
in time and in intent and does not constitute, nor should it
be construed as, a waiver of any other right, power or
privilege under the Loan Documents, or under any agreement,
contract, indenture, document or instrument mentioned in the
Loan Documents; nor does it preclude any exercise thereof or
the exercise of any other right, power or privilege, nor
shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Loan
Documents, constitute a waiver of any other default of the
same or of any other term or provision.
5.3 Consent of Transfer and Administration
Agent. NationsBank of Texas, N.A. consents and agrees to
the terms hereof in its capacity as Transfer and
Administration Agent.
5.4 Counterparts. This Second Amendment may be
executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute
one and the same instrument. This Second Amendment shall
not become effective until the Company, the Banks, the Agent
and Mattel Sales shall have signed a copy hereof, whether
the same or counterparts, and the same shall have been
delivered to the Agent.
-4-
<PAGE>
5.5 Jurisdiction. This Second Amendment, and any
instrument or agreement required hereunder, shall be
governed by and construed under the laws of the State of
California.
IN WITNESS WHEREOF, the parties hereto have
executed this Second Amendment by their duly authorized
officers as of the day and year first above written.
MATTEL, INC.
By /s/ William Stavro
---------------------------
Vice President and
Treasurer
AGENT BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
---------------------------
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
---------------------------
ROBERT W. TROUTMAN
Vice President
ABN AMRO BANK N.V.
By /s/ J. Alexander Pruijs
---------------------------
Title Vice President
By /s/ John A. Miller
---------------------------
Title Vice President
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
---------------------------
Title Vice President
(Signatures continue)
-5-
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
---------------------------
Title Vice President
By /s/ Deborah Gohh
---------------------------
Title Vice President
CHEMICAL BANK
By /s/ Susie Kjorlien
---------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
(FORMERLY NAMED CONTINENTAL BANK
N.A.)
By /s/ Robert W. Troutman
---------------------------
Title Vice President
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Jon M. Bland
---------------------------
Title Senior Vice President
By /s/ Dennis G. Blank
---------------------------
Title Vice President
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Debra Zurka
---------------------------
Title Vice President
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffery R. Fenn
---------------------------
Title Vice President
(Signatures continue)
-6-
<PAGE>
MARINE MIDLAND BANK
By /s/ Mary Ann Tappero
---------------------------
Title Vice President
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Transfer and
Administration Agent
By /s/ J. Blake Seaton
---------------------------
Title Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Ted A. Dunn
---------------------------
Title Assistant Vice President
ISTITUTO BANCARIO SAN
PAOLO di TORINO SpA
By /s/ Donald W. Brown
---------------------------
Title Branch Manager
By /s/ Glen Binder
---------------------------
Title Vice President
TORONTO-DOMINION (TEXAS), INC.
By /s/ Diane Bailey
---------------------------
Title Vice President
-7-
<PAGE>
CONSENT OF MATTEL SALES CORP.
The undersigned Mattel Sales Corp. hereby consents to the
foregoing Second Amendment to Credit Agreement (Multi-Year
Facility) dated as of September 30, 1994, and reaffirms the
Continuing Guaranty (Multi-Year Facility) dated as of March 18,
1994 and the Mattel Sales Security Agreement dated as of March 18,
1994 executed and delivered by Mattel Sales Corp.
Date: September 30, 1994
MATTEL SALES CORP.
By: /s/ William Stavro
---------------------------
Title: Vice President and
Treasurer
-8-
<PAGE>
EXHIBIT 99.4
SECOND AMENDMENT TO
CREDIT AGREEMENT
(364-DAY FACILITY)
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (364-DAY
FACILITY (this "Second Amendment") is dated as of September
30, 1994 and is entered into by and among MATTEL, INC., a
Delaware corporation (the "Company"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and
collectively as the "Banks") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION as the agent for the Banks
(the "Agent") and amends the Credit Agreement (364-Day
Facility) dated as of March 18, 1994 among the Company, the
Banks and the Agent, as amended by the First Amendment to
Credit Agreement dated as of May 17, 1994 (the "Credit
Agreement").
PRELIMINARY STATEMENT.
---------------------
The parties to the Credit Agreement desire to
amend the Credit Agreement.
In consideration of the premises and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Terms. All capitalized terms used herein
shall have the same meanings as in the Credit Agreement
unless otherwise defined herein. All references to the Loan
Documents shall mean the Loan Documents as hereby amended.
2. Amendments. The parties hereto agree that
the Credit Agreement is amended as follows:
2.1 The definition of "Future Indebtedness" in
Section 1.1 of the Agreement is amended and restated in its
entirety as follows and realphabetized in Section 1.1 as
appropriate:
"Debt" means unsecured Indebtedness for borrowed
money by the Company or its Domestic Material
Subsidiaries having maturities in excess of one year,
excluding (i) intercompany Indebtedness, (ii)
Indebtedness permitted to be secured under Section 7.2,
(iii) Indebtedness incurred under the Transfer and
-1-
<PAGE>
Administration Agreement and (iv) Indebtedness
hereunder and under the Multi-Year Facility."
2.2 Section 7.1(b) of the Credit Agreement is
amended and restated in its entirety as follows:
"(b) Debt in excess of $150,000,000 in
the aggregate incurred in any one calendar year,
net of paydowns of Debt in such year commencing
January 1, 1994; provided that any such Debt so
incurred (x) will not contain any terms and
conditions that in the aggregate are more
restrictive than the terms and conditions
contained in this Agreement and (y) will not cause
the Company to be in violation of Sections 7.5,
7.6, or 7.7 of this Agreement."
2.3 Section 7.6 of the Credit Agreement is
amended and restated in its entirety as follows:
"7.6 Consolidated Tangible Net Worth.
The Company shall not permit its Consolidated
Tangible Net Worth at the end of any fiscal
quarter to be less than $655,000,000 plus 50% of
each fiscal quarter's Consolidated Net Income
subsequent to December 31, 1993 (but without
reduction for any losses) plus 100% of any Net
Issuance Proceeds less an amount equal to the
Company's cost of any repurchases of the Company's
capital stock or any goodwill due to acquisitions
subsequent to December 31, 1993 in an aggregate
amount not exceeding $125,000,000."
3. Representations and Warranties. The Company
represents and warrants to the Banks, the Agent:
3.1 Authorization. The execution, delivery and
performance of this Second Amendment by the Company has been
duly authorized by all necessary corporate action by the
Company and has been duly executed and delivered by the
Company.
3.2 Binding Obligation. This Second Amendment
and the Loan Documents are legal, valid and binding
agreements of the Company, enforceable in accordance with
their respective terms, except to the extent enforceability
thereof may be limited by applicable law relating to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or limiting creditors' rights
-2-
<PAGE>
generally or by the application of general principles of
equity.
3.3 No Legal Obstacle to Agreements. Neither the
execution of this Second Amendment, the making by the
Company of any borrowings under the Credit Agreement, as
amended hereby, nor the performance of the Loan Documents by
the Company has constituted or resulted in or will
constitute or result in a breach of the provisions of any
material agreement, or the violation of any law, judgment,
decree or governmental order, rule or regulation applicable
to the Company, or result in the creation under any material
agreement of any security interest, lien, charge, or
encumbrance upon any of the assets of the Company. No
approval or authorization of any governmental authority is
required to be obtained by the Company to permit the
execution, delivery or performance by the Company of this
Second Amendment, the Loan Documents, as amended hereby, or
the transactions contemplated hereby or thereby, or the
making of any borrowing by the Company under the Credit
Agreement, as amended hereby.
3.4 Incorporation of Certain Representations.
The representations and warranties set forth in Section 5 of
the Credit Agreement are true and correct in all material
respects on and as of the date hereof as though made on and
as of the date hereof except to the extent such
representations and warranties expressly relate to an
earlier date, in which case such representations and
warranties were true and correct in all material respects on
and as of such earlier date.
3.5 Default. No Default or Event of Default
under the Credit Agreement has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness
of this Second Amendment shall be subject to the compliance
by the Company with its agreements herein contained, and to
the delivery of the following to Agent in form and substance
satisfactory to Agent:
4.1 Corporate Resolution. A copy of a resolution
or resolutions passed by the Board of Directors of the
Company, certified by the Secretary or an Assistant
Secretary of the Company as being in full force and effect
on the effective date of this Second Amendment, authorizing
the amendments to the Loan Documents herein provided for and
the execution, delivery and performance of this Second
Amendment and any other instrument or agreement required
hereunder.
-3-
<PAGE>
4.2 Authorized Signatories. A certificate,
signed by the Secretary or an Assistant Secretary of the
Company and dated the date of this Second Amendment, as to
the incumbency of the person or persons authorized to
execute and deliver this Second Amendment and any instrument
or agreement required hereunder on behalf of the Company.
4.3 Other Evidence. Such other evidence with
respect to the Company or any other person as the Agent or
any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the
taking of all corporate action in connection with this
Second Amendment and the Loan Documents and the compliance
with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as
hereby amended, the Loan Documents shall remain in full
force and effect. This Second Amendment shall be effective
September 30, 1994.
5.2 Waivers. This Second Amendment is specific
in time and in intent and does not constitute, nor should it
be construed as, a waiver of any other right, power or
privilege under the Loan Documents, or under any agreement,
contract, indenture, document or instrument mentioned in the
Loan Documents; nor does it preclude any exercise thereof or
the exercise of any other right, power or privilege, nor
shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Loan
Documents, constitute a waiver of any other default of the
same or of any other term or provision.
5.3 Consent of Transfer and Administration
Agent. NationsBank of Texas, N.A. consents and agrees to
the terms hereof in its capacity as Transfer and
Administration Agent.
5.4 Counterparts. This Second Amendment may be
executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute
one and the same instrument. This Second Amendment shall
not become effective until the Company, the Banks, the Agent
and Mattel Sales shall have signed a copy hereof, whether
the same or counterparts, and the same shall have been
delivered to the Agent.
-4-
<PAGE>
5.5 Jurisdiction. This Second Amendment, and any
instrument or agreement required hereunder, shall be
governed by and construed under the laws of the State of
California.
IN WITNESS WHEREOF, the parties hereto have
executed this Second Amendment by their duly authorized
officers as of the day and year first above written.
MATTEL, INC.
By /s/ William Stavro
----------------------------
WILLIAM STAVRO
Vice President and
Treasurer
AGENT BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
----------------------------
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
----------------------------
ROBERT W. TROUTMAN
Vice President
ABN AMRO BANK N.V.
By /s/ J. Alexander Pruijs
----------------------------
Title Vice President
By /s/ Ellen M. Coleman
----------------------------
Title Assistant Vice President
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
----------------------------
Title Vice President
(Signatures continue)
-5-
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
----------------------------
Title Vice President
By /s/ Deborah Gohh
----------------------------
Title Vice President
CHEMICAL BANK
By /s/ Susie Kjorlien
----------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
(FORMERLY NAMED CONTINENTAL BANK
N.A.)
By /s/ Robert W. Troutman
----------------------------
Title Vice President
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Jon M. Bland
----------------------------
Title Senior Vice President
By /s/ Dennis G. Blank
----------------------------
Title Vice President
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Debra Zurka
----------------------------
Title Vice President
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffery R. Fenn
----------------------------
(Signatures continue) Title Vice President
-6-
<PAGE>
MARINE MIDLAND BANK
By /s/ Mary Ann Tappero
----------------------------
Title Vice President
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Transfer and
Administration Agent
By /s/ J. Blake Seaton
----------------------------
Title Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Ted A. Dunn
----------------------------
Title Assistant Vice President
ISTITUTO BANCARIO SAN
PAOLO di TORINO SpA
By /s/ Donald W. Brown
----------------------------
Title Branch Manager
By /s/ Glen Binder
----------------------------
Title Vice President
TORONTO-DOMINION (TEXAS), INC.
By /s/ Frederic B. Hawley
----------------------------
Title Vice President
-7-
<PAGE>
CONSENT OF MATTEL SALES CORP.
The undersigned Mattel Sales Corp. hereby consents to the
foregoing Second Amendment to Credit Agreement (364-Day Facility)
dated as of September 30, 1994, and reaffirms the Continuing
Guaranty (364-Day Facility) dated as of March 18, 1994 and the
Mattel Sales Security Agreement dated as of March 18, 1994 executed
and delivered by Mattel Sales Corp.
Date: September 30, 1994
MATTEL SALES CORP.
By: /s/ William Stavro
----------------------------
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT 99.5
================================================================================
CREDIT AGREEMENT
Dated as of March 10, 1995
among
MATTEL, INC.,
THE BANKS NAMED HEREIN,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
Arranged By
[LOGO OF B of A] BA SECURITIES, INC.
================================================================================
<PAGE>
MATTEL INC. CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
SECTION 1.
DEFINITIONS.. 1
1.1 Certain Defined Terms.............................. 1
1.2 Other Definitional Provisions...................... 15
SECTION 2.
THE COMMITMENT 15
2.1 The Aggregate Facilities Commitment................ 15
2.2 Loan Accounts and Notes............................ 16
2.3 Borrowing Procedure................................ 16
2.4 Conversion and Continuation Elections.............. 17
2.5 Adjustments of Aggregate Loan Commitment and
Aggregate Receivables Commitment................... 19
2.6 Prepayments........................................ 20
2.7 Repayment of Loans................................. 20
2.8 Interest on the Loans.............................. 20
2.9 Fees............................................... 21
2.10 Calculation of Interest and Fees................... 22
2.11 Payments by the Company............................ 22
2.12 Payments by the Banks to the Agent................. 23
2.13 Sharing of Payments, Etc........................... 24
SECTION 3.
PAYMENTS IN GENERAL. 24
3.1 Taxes.............................................. 24
3.2 Capital Adequacy................................... 27
3.3 Illegality......................................... 28
3.4 Increased Costs and Reduction of Return............ 29
3.5 Funding Losses..................................... 29
3.6 Inability to Determine Rates....................... 30
3.7 Survival........................................... 30
SECTION 4.
CONDITIONS PRECEDENT 30
4.1 Conditions to Effectiveness........................ 30
4.2 Conditions to All Loans............................ 33
SECTION 5.
REPRESENTATIONS AND WARRANTIES. 34
5.1 Organization and Powers............................ 34
5.2 Good Standing...................................... 34
5.3 Subsidiaries....................................... 34
5.4 Authorization of Borrowing......................... 34
5.5 No Conflict........................................ 35
5.6 Governmental Consents.............................. 35
5.7 Binding Obligation................................. 35
5.8 Financial Condition................................ 35
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
5.9 Changes, Etc....................................... 36
5.10 Title to Properties................................ 36
5.11 Litigation; Adverse Facts.......................... 36
5.12 Payment of Taxes................................... 36
5.13 Agreements......................................... 37
5.14 Performance........................................ 37
5.15 Governmental Regulation............................ 37
5.16 Employee Benefit Plans............................. 37
5.17 Environmental Matters.............................. 37
5.18 Disclosure......................................... 37
5.19 Subordination Agreements........................... 38
SECTION 6.
AFFIRMATIVE COVENANTS. 38
6.1 Reporting and Information Requirements............. 38
6.2 Corporate Existence, etc........................... 41
6.3 Payment of Taxes and Claims; Tax Consolidation..... 41
6.4 Maintenance of Properties; Insurance............... 42
6.5 Inspection of Property and Books and Records....... 42
6.6 Use of Proceeds of Loans........................... 43
6.7 Environmental Laws................................. 43
6.8 Subordination Agreements........................... 43
SECTION 7.
NEGATIVE COVENANTS. 43
7.1 Indebtedness....................................... 44
7.2 Liens.............................................. 44
7.3 Restriction on Fundamental Changes................. 44
7.4 Sale or Discount of Receivables.................... 45
7.5 Consolidated Funded Indebtedness to Total
Capitalization..................................... 45
7.6 Consolidated Tangible Net Worth.................... 45
7.7 Interest Coverage Ratio............................ 45
7.8 ERISA.............................................. 46
7.9 Amendments or Waivers Under Transfer and
Administration Agreement........................... 46
7.10 Margin Regulations................................. 46
7.11 Independence of Covenants.......................... 46
SECTION 8.
EVENTS OF DEFAULT. 46
8.1 Events of Default.................................. 46
8.2 Remedies........................................... 49
8.3 Rights Not Exclusive............................... 50
SECTION 9.
THE AGENT 50
9.1 Appointment and Authorization...................... 50
9.2 Delegation of Duties............................... 50
9.3 Liability of Agent................................. 50
9.4 Reliance by Agent.................................. 51
</TABLE>
-ii-
<PAGE>
<TABLE>
<C> <S> <C>
9.5 Notice of Default.................................. 52
9.6 Credit Decision.................................... 52
9.7 Indemnification.................................... 52
9.8 Agent in Individual Capacity....................... 53
9.9 Successor Agent.................................... 54
SECTION 10.
MISCELLANEOUS 54
10.1 Assignments, Participations, etc................... 54
10.2 Survival of Warranties and of Certain Agreements... 57
10.3 Failure or Indulgence Not Waiver;
Remedies Cumulative................................ 57
10.4 Fees and Expenses.................................. 58
10.5 Set Off............................................ 58
10.6 Notices............................................ 58
10.7 Severability....................................... 59
10.8 Amendments and Waivers............................. 59
10.9 Obligations Several................................ 60
10.10 Certain Changes.................................... 60
10.11 Headings........................................... 60
10.12 Applicable Law..................................... 60
10.13 Successors and Assigns............................. 61
10.14 Counterparts....................................... 61
10.15 Indemnity.......................................... 61
SIGNATURE PAGES.................................... S-1
</TABLE>
EXHIBITS
- --------
A Form of Note
B Form of Notice of Borrowing
C Form of Notice of Conversion/Continuation
D Form of Officer's Certificate
E Form of Opinion of Assistant General Counsel of
Company
F-1 Form of Fisher-Price Continuing Guaranty
F-2 Form of Mattel Sales Continuing Guaranty
G-1 Form of Fisher-Price Subordination Agreements
G-2 Form of Mattel Sales Subordination Agreements
H Form of Change in Commitments
I Form of Notice of Assignment and Acceptance
SCHEDULES
- ---------
1.1 Loan Commitments and Pro Rata Share
5.3 Material Subsidiaries of Company
7.2 Certain Liens
10.6 Addresses for Notices and Lending Offices
-iii-
<PAGE>
MATTEL, INC.
------------
CREDIT AGREEMENT
----------------
This Credit Agreement (this "Agreement") is dated as of March 10, 1995
and is entered into by and among MATTEL, INC., a Delaware corporation (the
"Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and collectively as the "Banks"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the agent for the
Banks (the "Agent").
SECTION 1.
DEFINITIONS.
-----------
1.1 Certain Defined Terms. The following terms used in this Agreement
---------------------
shall have the following meanings:
"Affiliate", as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" has the meaning assigned to that term in the introduction to
-----
this Agreement.
"Agent-Related Persons" means Bank of America and any successor agent
---------------------
arising under Section 9.9, together with their respective Affiliates (including,
in the case of Bank of America, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Facilities Commitment" means the maximum amount which may
-------------------------------
be outstanding at any one time under this Agreement and the Transfer and
Administration Agreement.
"Aggregate Loan Commitment" means the aggregate commitments of the
-------------------------
Banks to make Loans under this Agreement.
"Aggregate Receivables Commitment" means the aggregate commitments of
--------------------------------
the Banks party to the Transfer and Administration Agreement to purchase
receivables under such Agreement.
"Agreement" means this Credit Agreement, as it may hereafter be
---------
amended, supplemented, restated or otherwise modified from time to time.
"Applicable Amount" means, for each type of Loan, the commitment fee
-----------------
and the utilization fee, the amount (expressed in
-1-
<PAGE>
basis points per annum) set forth in the chart below opposite the Applicable
Level then in effect:
(Basis Points Per Annum)
<TABLE>
<CAPTION>
Applicable Commitment Eurodollar CD Utiliza-
Level Fee Rate Rate tion Fee
Loans Loans
============================================================
<S> <C> <C> <C> <C>
1 9.50 25.00 37.50 5.00
2 11.00 30.00 42.50 5.00
3 13.75 37.50 50.00 5.00
4 17.50 45.00 57.50 5.00
5 35.00 75.00 87.50 0
============================================================
</TABLE>
"Applicable Level" means Level 1, Level 2, Level 3, Level 4 or Level
----------------
5, whichever is then applicable, as determined from the Company's unsecured
long-term debt ratings then in effect as announced by each rating agency. Any
change in the Applicable Level shall become effective upon any public
announcement of any change in any rating that requires a change in the Level in
accordance with the definitions of Level 1, Level 2, Level 3, Level 4 or Level
5.
"Arranger" means BA Securities, Inc., a Delaware corporation.
--------
"Availability Period" means the period from the Effective Date to
-------------------
but excluding the Termination Date.
"Bank" has the meaning assigned to that term in the introduction to
----
this Agreement.
"Bank Affiliate" means a Person engaged primarily in the business of
--------------
commercial banking and that is a Subsidiary of a Bank or of a Person of which a
Bank is a Subsidiary.
"Bank of America" means Bank of America National Trust and Savings
---------------
Association.
"Base Rate" means a fluctuating rate per annum which is the higher of
---------
(a) the Federal Funds Rate plus one-half of one percent (1/2%) per annum and (b)
the Reference Rate.
"Base Rate Loans" means Loans made by the Banks bearing interest at
---------------
rates determined by reference to the Base Rate.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and, if the applicable
Business Day relates to
-2-
<PAGE>
any Eurodollar Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Capital Assets" means, as at any date of determination, those assets
--------------
of a Person that would, in conformity with GAAP, be classified as property,
plant or equipment on the balance sheet of that Person.
"Capital Lease" as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee which would,
in conformity with GAAP, be required to be accounted for as a capital lease on
the balance sheet of that Person other than, in the case of the Company or any
of its Subsidiaries, any such lease under which the Company or any of its
Subsidiaries is the lessor.
"CD Rate" means, for each Interest Period in respect of CD Rate Loans
-------
comprising a part of the same borrowing, the rate of interest (rounded upward to
the nearest 1/100th of 1%) determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.0 - Reserve Percentage Rate
Where:
"Assessment Rate" means, for any day of such Interest Period, the
---------------
rate determined by the Agent as equal to the annual assessment rate in
effect on such day payable to the FDIC by a member of the Bank Insurance
Fund that is classified as adequately capitalized and within supervisory
subgroup "A" (or a comparable successor assessment risk classification
within the meaning of 12 C.F.R. (S)327.3(d)) for insuring time deposits at
offices of such member in the United States; or, in the event that the FDIC
shall at any time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the maximum annual
assessment rate in effect on such day that is payable to the FDIC by
commercial banks (whether or not applicable to any particular Bank) for
insuring time deposits at offices of such banks in the United States.
"Certificate of Deposit Rate" means for any Interest Period for CD
---------------------------
Rate Loans the rate of interest per annum determined by the Agent to be the
arithmetic mean (rounded upward to the nearest 1/100th of 1%) of the rates
notified to the Agent by the Reference Banks as the rates of interest bid
by two or more certificate of deposit dealers of recognized standing
selected by the Reference Banks for the purchase at face value of dollar
certificates of deposit issued by major United States banks, for a maturity
comparable to such Interest Period and in the approximate amount of the CD
Rate Loans to be made, at the time selected by the Agent on the first day
of such Interest Period.
-3-
<PAGE>
"Reserve Percentage" means for any Interest Period for CD Rate Loans
------------------
the maximum reserve percentage (expressed as a decimal, rounded upward to
the nearest 1/100th of 1%), as determined by the Agent, in effect on the
first day of such Interest Period (including any ordinary, marginal,
emergency, supplemental, special and other reserve percentages) prescribed
by the Federal Reserve Board for determining the maximum reserves to be
maintained by member banks of the Federal Reserve System with deposits
exceeding $1,000,000,000 for new non-personal time deposits for a period
comparable to such Interest Period and in an amount of $100,000 or more.
"CD Rate Loan" means a Loan that bears interest based on the CD Rate.
------------
"Change in Commitment Notice" means a notice substantially in the form
---------------------------
of Exhibit H hereto with respect to a reallocation of Commitments.
"Commitment" means the Aggregate Loan Commitment or the Aggregate
----------
Receivables Commitment (collectively, the "Commitments").
-----------
"Consolidated Funded Indebtedness" means, at any date of
--------------------------------
determination, for the Company and its Subsidiaries on a consolidated basis, the
sum of (a) all obligations and liabilities, whether current or long-term, for
borrowed money, (b) that portion of obligations with respect to Capital Leases
which is capitalized on the consolidated balance sheet of the Company and its
Subsidiaries, and (c) all guaranties of unconsolidated funded obligations for
borrowed money, all determined in conformity with GAAP.
"Consolidated Net Income" for any period, means the net income (or
-----------------------
loss) of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, as at any date of
-------------------------------
determination, the net worth of the Company and its Subsidiaries on a
consolidated basis minus foreign exchange currency translation adjustments and
-----
intangible assets, all determined in conformity with GAAP.
"Contingent Obligation", as applied to any Person, means, without
---------------------
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will
-4-
<PAGE>
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof or (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another and (b) any liability of such Person for the obligations
of another through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another, if in the case of any agreement described under
subclauses (x) or (y) of this sentence the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported. The amount of any Contingent Obligation denominated in a currency
other than Dollars shall be equal to the Dollar Equivalent of such Contingent
Obligation.
"Contractual Obligation", as applied to any Person, means any
----------------------
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Debt" means unsecured Indebtedness for borrowed money by the Company
----
or its Material Subsidiaries that are Domestic Subsidiaries having maturities in
excess of one year, excluding (i) intercompany Indebtedness, (ii) Indebtedness
permitted to be secured under Section 7.2, (iii) Indebtedness incurred under the
Transfer and Administration Agreement and (iv) Indebtedness hereunder.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Dollars" means lawful money of the United States of America.
-------
-5-
<PAGE>
"Domestic Subsidiary" means a Subsidiary of the Company that is
-------------------
incorporated in a jurisdiction of the United States of America.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
-------------
"Effective Date" means the date on or after March 10, 1995 on which
--------------
the Existing Credit Agreements terminate and all the conditions in Section 4.1
are satisfied or waived.
"Eligible Assignee" means (i) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; and (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Person or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Person, in each case relating
to environmental, health, safety and land use matters.
"ERISA" means, at any time, the Employee Retirement Income Security
-----
Act of 1974, as amended from time to time and any successor statute, and the
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Person, means any trade or
---------------
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
Section 414(b) and 414(c) of the Internal Revenue Code.
"Eurodollar Rate Loans" means Loans bearing interest at rates
---------------------
determined by reference to the Eurodollar Rate as provided in Section 2.8(a).
-6-
<PAGE>
"Eurodollar Rate" means, for each Interest Period for any Eurodollar
---------------
Rate Loan, an interest rate per annum (rounded upward to the nearest 1/16 of one
percent) determined pursuant to the following formula:
Eurodollar Rate = LIBOR
-----------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means the maximum reserve
-----------------------------
percentage (expressed as a decimal rounded upward to the next 1/100 of one
percent) in effect on the date LIBOR for such Interest Period is determined
(whether or not applicable to any Bank) under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency Liabilities") having a term equal to such
Interest Period; and
"LIBOR" means the rate of interest per annum determined by the
-----
Agent to be the arithmetic mean (rounded upward to the nearest 1/16th of
1%) of the rates of interest per annum notified to the Agent by each
Reference Bank as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued as, or
converted into, a Eurodollar Rate Loan by such Reference Bank and having a
maturity comparable to such Interest Period would be offered to major banks
in the London interbank market at their request at or about 11:00 a.m.
(London time) on the second Business Day prior to the commencement of such
Interest Period.
"Event of Default" means any of the events set forth in Section 8.1.
----------------
"Exchange Act" means, at any time, the Securities Exchange Act of
------------
1934, as amended from time to time, and any successor statute, and the rules and
regulations promulgated thereunder.
"Existing Credit Agreements" means (i) that certain Credit Agreement
--------------------------
(Multi-Year Facility) dated as of March 18, 1994 among the Company, the banks
party thereto and the Agent, as amended, and (ii) that certain Credit Agreement
(364-Day Facility) dated as of March 18, 1994 among the Company, the banks party
thereto and the Agent, as amended.
"Federal Funds Rate" means the weighted average of the rates on
------------------
overnight Federal funds transactions with members of the
-7-
<PAGE>
Federal Reserve System arranged by Federal funds brokers, as published for such
day of determination (or if such day of determination is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transaction received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System or any successor thereof.
"Fisher-Price" means Fisher-Price, Inc., a Delaware corporation,
------------
formerly known as FPI, Inc.
"Fisher-Price Guaranty" means the Continuing Guaranty signed by
---------------------
Fisher-Price substantially in the form of Exhibit F-1 hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Fisher-Price Subordination Agreement" means a Fisher-Price
------------------------------------
Subordination Agreement substantially in the form of Exhibit G-1 attached hereto
signed by the Company and certain Affiliates of the Company with respect to
which Fisher-Price has material outstanding obligations, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time.
"Fitch" means Fitch Investors Service, Inc.
-----
"Funding Date" means the Business Day of the funding of a Loan.
------------
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Person" means the government of the United States or the
-------------------
government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority, body or entity
of the United States or any state or locality therein, including the Federal
Deposit Insurance Company, the Comptroller of the Currency or the Federal
Reserve Board.
-8-
<PAGE>
"Governmental Rule" means any law, statute, rule, regulation,
-----------------
ordinance, order, judgment, guidelines or decision of any Governmental Person.
"Indebtedness", as applied to any Person, means (i) all indebtedness
------------
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases which is required to be capitalized on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (y) due more than twelve months from the date of
incurrence of the obligation in respect thereof, or (z) evidenced by a
promissory note and (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person. The amount of any Indebtedness shall be the principal
amount of and all interest, premium, if any, and other fees and expenses accrued
on any of the foregoing.
"Ineligible Securities" means securities which may not be underwritten
---------------------
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Interest Payment Date" means, with respect to any CD Rate Loan or
---------------------
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan and, with respect to any Base Rate Loan, the last day of each calendar
quarter, and with respect to all Loans, the Termination Date; provided, however,
-------- -------
that if any Interest Period for a CD Rate Loan or Eurodollar Rate Loan exceeds
90 days or three months, respectively, interest shall also be paid on the date
which falls 90 days or three months after the beginning of such Interest Period.
"Interest Period" means, (a) with respect to any Eurodollar Rate Loan,
---------------
the period commencing on the Business Day the Eurodollar Rate Loan is disbursed
or continued or on the date on which a Loan is converted into a Eurodollar Rate
Loan and ending on the date one, two, three or six months thereafter, as
selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; and (b) with respect to any CD Rate Loan, the period
commencing on the date the CD Rate Loan is disbursed or continued or on the date
on which a Loan is converted into a CD Rate Loan and ending 30, 60, 90 or 180
days thereafter, as selected by the Company in its Notice of Borrowing or Notice
of Conversion/Continuation; provided that:
--------
-9-
<PAGE>
(i) if any Interest Period pertaining to a Eurodollar Rate Loan or CD
Rate Loan would otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Rate Loan, the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period pertaining to a Eurodollar Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Termination
Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter, and the rules and
regulations promulgated thereunder.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office," as the case may be, opposite its name on
Schedule 10.6 hereto, or such other office or offices of the Bank as it may from
time to time specify to the Company and the Agent in writing.
"Level 1" means the Company's senior unsecured long-term debt carries
-------
two or more of the following ratings (provided at least one of such ratings is
from S&P or Moody's):
A- or higher by S&P
A3 or higher by Moody's
A- or higher by Duff & Phelps
A- or higher by Fitch
"Level 2" means that the criteria of Level 1 are not satisfied and
-------
the Company's senior unsecured long-term debt carries two or more of the
following ratings (provided at least one of such ratings is from S&P or
Moody's):
BBB+ or higher by S&P
Baa1 or higher by Moody's
BBB+ or higher by Duff & Phelps
BBB+ or higher by Fitch
"Level 3" means that neither of the criteria of Level 1 nor Level 2
-------
are satisfied and the Company's senior unsecured
-10-
<PAGE>
long-term debt carries two or more of the following ratings (provided at least
one of such ratings is from S&P or Moody's):
BBB or higher by S&P
Baa2 or higher by Moody's
BBB or higher by Duff & Phelps
BBB or higher by Fitch
"Level 4" means that none of the criteria of Level 1, Level 2 or
-------
Level 3 are satisfied and the Company's senior unsecured long-term debt carries
two or more of the following ratings (provided at least one of such ratings is
from S&P or Moody's):
BBB- or higher by S&P
Baa3 or higher by Moody's
BBB- or higher by Duff & Phelps
BBB- or higher by Fitch
"Level 5" means that none of the criteria of Level 1, Level 2, Level
-------
3 or Level 4 are satisfied.
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any kind
of security interest).
"Loan Commitment" means the amount set forth under "Loan Commitment"
---------------
on Schedule 1.1, as such amount may be adjusted pursuant to Section 2.5.
"Loan Documents" means this Agreement, any Notes, the Mattel Sales
--------------
Guaranty, the Fisher-Price Guaranty, the Mattel Sales Subordination Agreement,
the Fisher-Price Subordination Agreement and all documents and instruments
delivered in connection therewith (other than the Transfer and Administration
Agreement and the documents delivered pursuant thereto).
"Loans" has the meaning set forth in Section 2.1.
-----
"Margin Stock" has the meaning assigned to the term "Margin Stock" in
------------
Regulation U of the Federal Reserve Board as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
-----------------------
business, operations, properties, assets, business prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or (ii) a material impairment of the ability of the Company to perform the
Obligations or of the Banks to enforce the Obligations.
-11-
<PAGE>
"Material Subsidiaries" means those Subsidiaries of the Company
---------------------
designated as such on Schedule 5.3 hereto and any Subsidiary of the Company
formed or acquired after the Effective Date designated by the Board of Directors
of the Company as a "Material Subsidiary".
"Mattel Sales" means Mattel Sales Corp., a California corporation.
------------
"Mattel Sales Guaranty" means the Continuing Guaranty signed by
---------------------
Mattel Sales substantially in the form of Exhibit F-2 hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Mattel Sales Subordination Agreement" means a Mattel Sales
------------------------------------
Subordination Agreement substantially in the form of Exhibit G-2 attached hereto
signed by the Company and certain Affiliates of the Company with respect to
which Mattel Sales has material outstanding obligations, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the Company or
any ERISA Affiliate of the Company.
"Net Issuance Proceeds" means, in respect of any issuance of equity
---------------------
(excluding shares of common stock issued in connection with conversions of the
8% Convertible Subordinated Debentures), the cash proceeds and non-cash proceeds
received or receivable in connection therewith, net of reasonable costs and
expenses paid or incurred in connection therewith in favor of any Person not an
Affiliate of the Company, excluding the exercise of stock options under the
Company's stock option plans. In the case of the issuance of debt securities
after the date hereof that are convertible into equity, "Net Issuance Proceeds"
shall be deemed to be received if and when such debt securities are converted
into equity, and the amount of such Net Issuance Proceeds shall be an amount
equal to the principal amount of the debt being converted.
"Note" means a promissory note of the Company payable to the order of
----
a Bank substantially in the form of Exhibit A hereto, evidencing the Loans made
by such Bank to the Company.
"Notice of Borrowing" means a notice substantially in the form of
-------------------
Exhibit B hereto with respect to a proposed borrowing pursuant to Section
2.3(a).
-12-
<PAGE>
"Notice of Conversion/Continuation" means a notice given by the
---------------------------------
Company to the Agent pursuant to Section 2.4, in substantially the form of
Exhibit C hereto.
"Obligations" means all obligations of every nature of the Company,
-----------
Fisher-Price and Mattel Sales from time to time owed to the Agent, the Banks or
any other Person required to be indemnified hereunder, or any of them, under any
Loan Document.
"Officers' Certificate" means a certificate substantially in the form
---------------------
of Exhibit D hereto executed on behalf of the Company by two different officers
of the Company, one of which shall be (a) its Chairman of the Board (if an
officer), its President, one of its Executive Vice Presidents, or one of its
Senior Vice Presidents, and the other one of which shall be (b) its Chief
Financial Officer, its Executive Vice President-Finance, its Treasurer, one of
its Assistant Treasurers, or its Controller, delivered to the Banks by the
Company pursuant to Section 6.1(c).
"Participant" has the meaning set forth in Section 10.1.
-----------
"Pension Plan" means any employee plan which is subject to Section 412
------------
of the Internal Revenue Code and which is maintained for employees of the
Company or any ERISA Affiliate of the Company other than a Multiemployer Plan.
"Person" means any individual, partnership, corporation (including a
------
business trust), joint stock company, joint venture, trust, bank, trust company,
unincorporated association or other entity or a government or any agency or
political subdivision thereof.
"Pro Rata Share" means with respect to each Bank the percentage set
--------------
forth opposite such Bank's name on Schedule 1.1 hereto.
"Receivables Commitment" means the amount set forth for each Bank
----------------------
under "Receivables Commitment" on Schedule 1.1, as such amount may be adjusted
under Section 2.5 and the Transfer and Administration Agreement.
"Reference Banks" means Bank of America, NationsBank of Texas, N.A.
---------------
and PNC Bank, National Association. Subject to Section 3.6, in the event that
at any time of determination only two Banks designated as "Reference Banks" are
providing rates for deposits referred to in the definition of "Eurodollar Rate"
or "Certificate of Deposit Rate," those two Banks shall be the "Reference Banks"
or, if only one such Bank is providing such rates, that Bank shall be the
"Reference Banks" for purposes of this Agreement.
-13-
<PAGE>
"Reference Rate" means the rate of interest publicly announced from
--------------
time to time by Bank of America in San Francisco as its reference rate, as in
effect on such date of determination. The reference rate is set by Bank of
America based on various factors including Bank of America's costs and desired
return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. Bank of America may make loans at,
above or below the rate announced by it as its reference rate.
"Regulation D" means Regulation D of the Federal Reserve Board as in
------------
effect from time to time.
"Requisite Banks" means, as at any date of determination, Banks having
---------------
at least 66-2/3% of the then aggregate unpaid principal amount of the Loans (or
if no Loans are then outstanding, Banks having at least 66-2/3% of the Aggregate
Loan Commitment), and Banks having at least 66-2/3% of the then Total
Outstanding Investment (or if no Investment is then outstanding, Banks having at
least 66-2/3% of the Aggregate Receivables Commitment) as at such date of
determination.
"Securities Act" means, at any time, the Securities Act of 1933, as
--------------
amended from time to time, and any successor statute, and the rules and
regulations promulgated thereunder.
"Section 20 Subsidiary" means the Subsidiary of the bank holding
---------------------
company controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"S&P" means Standard & Poor's Ratings Group.
---
"Subsidiary" means any corporation, association or other business
----------
entity of which more than 50% of the total voting power of shares of stock
entitled to vote in the election of directors, managers or trustees thereof is
at the time owned or controlled, directly or indirectly, by any Person or one or
more of the other Subsidiaries of that Person or a combination thereof; provided
--------
that, for purposes of this Agreement (other than financial reporting purposes),
Subsidiaries of the Company shall include only the entities identified in
Schedule 5.3 hereto and any Subsidiary formed or acquired after the Effective
Date designated by the Board of Directors of the Company as a "Material
Subsidiary".
"Termination Date" means March 31, 1998.
----------------
"Total Outstanding Investment" has the meaning set forth in the
----------------------------
Transfer and Administration Agreement.
-14-
<PAGE>
"Transfer and Administration Agent" means NationsBank of Texas, N.A.
---------------------------------
in its capacity as agent under the Transfer and Administration Agreement.
"Transfer and Administration Agreement" means the Second Amended and
-------------------------------------
Restated Transfer and Administration Agreement dated as of even date herewith,
among Mattel Sales and Fisher-Price, as transferors, the Company, as guarantor
and servicer, the banks named therein, and NationsBank of Texas, N.A., as
Transfer and Administration Agent for such banks, as it may be amended,
supplemented, restated or otherwise modified from time to time.
1.2 Other Definitional Provisions. References to "Sections" shall be
-----------------------------
to Sections of this Agreement unless otherwise specifically provided. Any of
the terms defined in Section 1.1 may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference.
SECTION 2.
THE COMMITMENTS.
----------------
2.1 The Aggregate Facilities Commitment. Each Bank hereby severally
-----------------------------------
agrees (a) to make advances to the Company ("Loans") on the terms and conditions
set forth in this Agreement in an aggregate principal amount not exceeding such
Bank's Pro Rata Share of the Aggregate Loan Commitment during the Availability
Period and (b) to purchase receivables on the terms and conditions set forth in
the Transfer and Administration Agreement in an amount not exceeding such Bank's
Receivables Commitment during the period from the Closing Date (as defined in
the Transfer and Administration Agreement) to but excluding the Termination Date
(as defined in the Transfer and Administration Agreement); provided, however,
-------- -------
that:
(i) the outstanding principal amount of all Loans hereunder shall
not exceed the Aggregate Loan Commitment; and the amount of the Total
Outstanding Investment shall not exceed the Aggregate Receivables
Commitment;
(ii) if at any time between November 1 of each year and March 1 of
the following year the rating on the Company's long-term unsecured
Indebtedness by any one of S&P, Moody's, Duff & Phelps or Fitch is below
investment grade, there shall be no Loans outstanding for 30 consecutive
days commencing not earlier than such November 1 and ending not later than
March 31, and the Company shall prepay any outstanding Loans pursuant to
Section 2.6(b) to the extent required to not have any Loans outstanding
during such period; and
-15-
<PAGE>
(iii) the Aggregate Facilities Commitment shall not exceed
$650,000,000 in the aggregate at any one time.
Within the limits of each Bank's Loan Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.1, prepay
pursuant to Section 2.6 and reborrow pursuant to this Section 2.1.
2.2 Loan Accounts and Notes. (a) Subject to Section 2.2(b), the
-----------------------
Loans made by each Bank shall be evidenced by one or more loan accounts
maintained by such Bank in the ordinary course of business. The loan accounts
or records maintained by the Agent and each Bank shall be conclusive absent
manifest error of the amount of the Loans made by the Banks to the Company and
the interest and payments thereon. Any failure to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans.
(b) Upon the written request of any Bank made through the Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note(s),
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Company with respect thereto. Each such Bank is
irrevocably authorized by the Company to endorse its Note(s) and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
-------- -------
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.3 Borrowing Procedure.
-------------------
(a) Whenever the Company desires to borrow hereunder, it shall
deliver irrevocable telephonic notice to the Agent followed immediately by
written notice in the form of a Notice of Borrowing, which telephonic notice
must be received by the Agent no later than (i) 8:00 a.m. (San Francisco time)
on the proposed Funding Date in the case of Base Rate Loans, (ii) 9:00 a.m. (San
Francisco time) three Business Days in advance of the proposed Funding Date in
the case of Eurodollar Rate Loans, and (iii) 12:00 Noon (San Francisco time) two
Business Days prior to the proposed Funding date in the case of CD Rate Loans,
specifying (A) the proposed Funding Date which shall be a Business Day, (B) the
amount of the proposed borrowing, (C) whether the proposed borrowing shall
consist of Base Rate Loans, Eurodollar Rate Loans or CD Rate Loans, and (D) in
the case of Eurodollar Rate Loans and CD Rate Loans, the requested Interest
Period. Base Rate Loans made on any Funding Date shall be in an aggregate
minimum amount of $1,000,000 and integral
-16-
<PAGE>
multiples of $500,000 in excess of that amount. Eurodollar Rate Loans and CD
Rate Loans made on any Funding Date shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $500,000 in excess of that amount.
(b) Promptly (and normally within two hours) after receipt of a
Notice of Borrowing (or telephone notice in lieu thereof), the Agent shall
notify each Bank of the proposed borrowing. Each Bank shall make available to
the Agent its Pro Rata Share of the amount (if any) by which the principal
amount of the proposed borrowing exceeds the principal amount of the Loans (if
any) maturing on the Funding Date, in same day funds, by remitting such funds
to: Bank of America National Trust and Savings Association, ABA No. 121-000-
358, Attn: Agency Management Services No. 5596 For credit to: BANCONTROL
Account No. 12358-88449, Reference: Mattel, Inc. at the office of Bank of
America located at 1850 Gateway Boulevard, Concord, California 94520, no later
than 11:00 a.m. (San Francisco time) on the Funding Date. Upon satisfaction of
the conditions set forth in Section 4.2, the Agent shall make available to the
Company on such Funding Date the aggregate of the amounts (if any) so made
available by the Banks by causing an amount of same day funds equal to such
aggregate amount (if any) received by the Agent to be credited to the account of
the Company at such office of Bank of America. To the extent that Eurodollar
Rate Loans or CD Rate Loans made by the Banks mature on any Funding Date, the
Banks shall apply the proceeds of the Loans made on such Funding Date, to the
extent thereof, to the repayment of such maturing Loans, such Loans and
repayments intended to be a contemporaneous exchange.
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) The Company may upon irrevocable written notice to the Agent: (i)
elect to convert any Base Rate Loans (or any part thereof in an amount not less
than $5,000,000 or an integral multiple of $500,000 in excess thereof) on any
Business Day into Eurodollar Rate Loans or CD Rate Loans; (ii) elect to convert
any Eurodollar Rate Loans or CD Rate Loans (or any part thereof) on the last day
of any Interest Period therefor into Base Rate Loans in an amount not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof, or into CD
Rate Loans or Eurodollar Rate Loans in an amount not less than $5,000,000 or an
integral multiple of $500,000 in excess thereof; or (iii) elect to continue any
Eurodollar Rate Loans or CD Rate Loans (or any part thereof in an amount not
less than $5,000,000 or an integral multiple of $500,000 in excess thereof) on
the last day of any Interest Period therefor; provided, that if the aggregate
--------
amount of Eurodollar Rate Loans or CD Rate Loans shall have been reduced, by
payment, prepayment, or conversion of part thereof to be less than $5,000,000,
the Eurodollar Rate Loans and CD Rate Loans shall automatically convert into
Base Rate Loans, and on
-17-
<PAGE>
and after such date the right of the Company to continue such Loans as
Eurodollar Rate Loans or CD Rate Loans shall terminate.
(b) Each conversion or continuation shall be made upon irrevocable
telephonic notice to the Agent followed immediately by written notice in the
form of a Notice of Conversion/ Continuation, which telephonic notice must be
received by the Agent prior to (i) 9:00 a.m. (San Francisco time) at least three
Business Days in advance of the conversion or continuation date, if the Loans
are to be converted into or continued as Eurodollar Rate Loans; (ii) 12:00 Noon
(San Francisco time) at least two Business Days in advance of the conversion or
continuation date, if the Loans are to be converted into or continued as CD Rate
Loans; and (ii) 9:00 a.m. (San Francisco time) on the conversion or continuation
date, if the Loans are to be converted into Base Rate Loans, specifying: (A)
the proposed conversion or continuation date; (B) the aggregate amount of Loans
to be converted or continued; (C) the nature of the proposed conversion or
continuation; and (D) the duration of the requested Interest Period, if
applicable.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans or CD Rate Loans, the Company has failed to select a new
Interest Period to be applicable to such Eurodollar Rate Loans or CD Rate Loans
or type of Loan or if any Default or Event of Default shall then exist, the
Company shall be deemed to have elected to convert such Eurodollar Rate Loans
and CD Rate Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Bank thereof, or, if no timely notice is provided, the
Agent will promptly notify each Bank of the details of any automatic conversion.
All conversions and continuations shall be made pro rata according to the
respective outstanding principal amounts of the Loans with respect to which the
notice was given held by each Bank.
(e) Unless the Requisite Banks shall otherwise agree, after the
occurrence of and during the continuance of a Default or Event of Default, the
Company may not elect to have a Loan be made as, or converted into or continued
as, a Eurodollar Rate Loan or CD Rate Loan.
(f) Notwithstanding any other provision contained in this Agreement,
after giving effect to any conversion or continuation of any Loans, there shall
not be more than five different Interest Periods in effect.
-18-
<PAGE>
2.5 Adjustments of Aggregate Loan Commitment and Aggregate
------------------------------------------------------
Receivables Commitment.
- ----------------------
(a) Reduction and Termination of Commitments. The Company may from
----------------------------------------
time to time, in accordance with Section 2.5(c), reduce or terminate the
Aggregate Loan Commitment or the Aggregate Receivables Commitment. Any
reduction or termination of any Commitment pursuant to this Section 2.5(a) shall
be permanent.
(b) Reallocation of Commitments. In addition, the Company may from
---------------------------
time to time, in accordance with Section 2.5(c), (i) reallocate the Aggregate
Receivables Commitment to the Aggregate Loan Commitment and/or (ii) reallocate
the Aggregate Loan Commitment to the Aggregate Receivables Commitment; provided,
--------
however, that (x) the Company may not deliver a Change in Commitment Notice to
- -------
the Agent to reallocate Commitments pursuant to this Section 2.5(b) more than
four times in any consecutive 12-month period, and, as a result of any
reallocation, (y) the Aggregate Receivables Commitment may not exceed
$250,000,000 at any time, and (z) the Aggregate Loan Commitment may not be
reduced to less than $400,000,000 pursuant to this Section 2.5(b) at any time.
(c) Procedures. (i) The Company may effect the termination,
----------
reduction or reallocation of the Aggregate Loan Commitment or the Aggregate
Receivables Commitment by delivering a fully completed Change in Commitment
Notice to the Agent not less than three Business Days' prior to the date of
the requested termination, reduction or reallocation.
(ii) Promptly after receipt of any Change in Commitment Notice
(and in no event later than the end of the following Business Day), the
Agent shall notify each Bank and the Transfer and Administration Agent
thereof. In the case of any reduction, termination or reallocation of the
Aggregate Receivables Commitment, the Agent shall directly contact the
Transfer and Administration Agent for any relevant information.
(iii) Any partial reduction or reallocation of a Commitment
shall be in an aggregate minimum amount of $10,000,000 for each such
Commitment, and integral multiples of $1,000,000 in excess of that amount
for each such Commitment. Any reduction or reallocation of any Commitment
shall be applied to each Bank in accordance with such Bank's Pro Rata Share
thereof. All accrued commitment fees to, but not including the effective
date of any termination of any Commitment, shall be paid on the effective
date of such termination.
-19-
<PAGE>
(iv) No reduction, termination or reallocation of any
Commitments shall be permitted if, after giving effect thereto and to any
prepayments made on the effective date thereof, (A) the outstanding
principal amount of the Loans hereunder would exceed the Aggregate Loan
Commitment; or (B) the Total Outstanding Investment would exceed the
Aggregate Receivables Commitment.
(v) Concurrently with any termination, reduction or reallocation
of the Aggregate Loan Commitment, the Company shall sign such amended Notes
as requested by the Banks through the Agent to reflect such change.
2.6 Prepayments. (a) Voluntary. The Company may, upon not less
----------- ---------
than one Business Days' prior written or telephonic notice confirmed in writing
to the Agent (in the case of a prepayment of a Base Rate Loan) or three Business
Days' prior written or telephonic notice confirmed in writing to the Agent (in
the case of a prepayment of a Eurodollar Rate Loan or CD Rate Loan) (which
notice the Agent will promptly transmit by telecopy, telex or telephone to each
Bank), at any time and from time to time prepay (i) any Eurodollar Rate Loans or
CD Rate Loans in whole or in part in an aggregate minimum amount of $3,000,000
and integral multiples of $500,000 in excess of that amount so long as the
unpaid balance is not less than $5,000,000; or (ii) any Base Rate Loans in whole
or in part in an aggregate minimum amount of $1,000,000 and integral multiples
of $100,000 in excess of that amount; provided that in the event of any such
--------
prepayment of any Eurodollar Rate Loans or CD Rate Loans, the Company shall be
obligated to reimburse the Banks in respect thereof pursuant to Section 3.5. If
such notice of prepayment does not specify how such prepayment shall be applied,
it shall be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans or CD Rate Loans, as determined by the
Agent. All prepayments of Eurodollar Rate Loans and CD Rate Loans shall be
applied to the payment of any interest that has accrued to the date of such
prepayment before application to principal. Prepayments of Base Rate Loans
shall be applied to principal only.
(b) Mandatory. Any mandatory prepayments required under Section
---------
2.1(ii) shall be accompanied by any payment required under Section 2.6(a) or
3.5, if applicable.
2.7 Repayment of Loans. Each Loan shall mature and the Company shall
------------------
repay the unpaid principal amount of each Loan on the Termination Date.
2.8 Interest on the Loans.
---------------------
(a) Subject to Section 2.8(c), the Loans shall bear interest on the
unpaid principal amount thereof from the Funding
-20-
<PAGE>
Date through maturity (whether by acceleration or otherwise) at a rate per annum
equal to the (i) Eurodollar Rate plus the Applicable Amount or (ii) CD Rate plus
---- ----
the Applicable Amount or (iii) the Base Rate; provided, however, during any
period when the aggregate principal amount of Loans outstanding exceeds 50% of
the Aggregate Loan Commitment, an additional .125% will be added to the
Eurodollar Rate, CD Rate or Base Rate as the case may be.
(b) Subject to Section 2.8(c), from and after the Effective Date,
interest shall be payable in arrears on the Loans on each Interest Payment Date
applicable to that Loan. Interest paid on the date of any partial prepayment of
Loans hereunder shall be paid in respect of the portion of the Loans so prepaid.
(c) Any principal payments on the Loans not paid when due and, to
the extent permitted by applicable law, any interest payments on the Loans not
paid when due, in each case whether at stated maturity, by notice of prepayment,
by acceleration or otherwise, shall thereafter bear interest payable upon demand
at a rate which is 2% per annum in excess of the rate of interest otherwise
payable under this Agreement.
2.9 Fees. (a) The Company agrees to pay a commitment fee equal to
----
the Applicable Amount on the daily average unused portion of the Loan Commitment
during the Availability Period. The Company shall pay the commitment fee to the
Agent for distribution to each Bank in accordance with its Pro Rata Share. The
commitment fee shall be calculated on the basis of a 360-day year and the actual
number of days elapsed and shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, for all amounts accrued to such date, and
on the Termination Date; provided that, in connection with any reduction or
--------
termination of the Loan Commitment pursuant to Section 2.5, the accrued fee
calculated on the portion so terminated or reduced for the period ending on such
date shall also be paid on the date of such reduction or termination.
(b) The Company agrees to pay a utilization fee equal to the
Applicable Amount on the daily average used portion of the Loan Commitment when
utilization of the Loan Commitment exceeds 50% of the Loan Commitment during the
Availability Period. The Company shall pay the utilization fee to the Agent for
distribution to each Bank in accordance with its Pro Rata Share. The
utilization fee shall be calculated on the basis of a 360-day year and the
actual number of days elapsed and shall be payable quarterly in arrears on the
last Business Day of each calendar quarter, for all amounts accrued to such
date, and on the Termination Date; provided that, in connection with any
--------
reduction or termination of the Loan Commitment pursuant to Section 2.5, the
accrued fee calculated on the portion so
-21-
<PAGE>
terminated or reduced for the period ending on such date shall also be paid on
the date of such reduction or termination.
(c) The Company shall pay to the Agent and the Arranger other fees in
accordance with a term sheet dated as of February 1, 1995 from the Arranger and
Bank of America to the Company.
(d) The Company shall pay to the Agent such fees as may from time to
time be agreed upon between the Company and the Agent.
2.10 Calculation of Interest and Fees. (a) Interest on all
--------------------------------
Loans and fees payable under this Agreement shall be computed on the basis of a
360-day year and the actual number of days elapsed in the period during which it
accrues. In computing interest on any Loan, the date of the making of the Loan
or the first day of an Interest Period, as the case may be, shall be included
and the date of payment shall be excluded; provided that, if a Loan is repaid on
--------
the same day on which it is made, one day's interest shall be paid on that Loan.
(b) Any change in the interest rate on a Loan resulting from a change
in the Applicable Amount, Reserve Percentage or Eurodollar Reserve Percentage
shall become effective as of the opening of business on the day on which such
change in the Applicable Amount or Eurodollar Reserve Percentage becomes
effective. Each determination of an interest rate by the Agent pursuant hereto
shall be conclusive and binding on the Company and the Banks in the absence of
manifest error.
2.11 Payments by the Company. (a) All payments of principal,
-----------------------
interest and fees hereunder and under any Notes shall be in same day funds and
delivered to the Agent for credit to:
Bancontrol Account No. 12358-88449
Reference: Mattel, Inc.
1850 Gateway Boulevard
Concord, California 94520
for the account of the Banks or the Agent not later than 11:00 a.m. (San
Francisco time) on the date due. The Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided herein)
of such principal, interest, fees or other amounts in like funds received. Any
payment which is received by the Agent after that time shall be deemed to have
been paid by the Company on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions in the definition of "Interest Period",
whenever any payment hereunder shall be stated
-22-
<PAGE>
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) Unless the Agent shall have received notice from the Company prior
to the date on which any payment is due to the Banks hereunder that the Company
will not make such payment in full as and when required hereunder, the Agent may
assume that the Company has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the extent
the Company shall not have made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate as in effect for each such day.
2.12 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent shall have received notice from a Bank on the
Effective Date or, with respect to each borrowing after the Effective Date, by
12:00 noon (San Francisco time) one Business Day prior to the date of any
proposed borrowing of Eurodollar Rate Loans or CD Rate Loans, or by 10:00 a.m.
(San Francisco time) on the date of any proposed borrowing of Base Rate Loans,
that such Bank will not make available to the Agent as and when required
hereunder for the account of the Company the amount of that Bank's Pro Rata
Share of the borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the Funding Date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to
the extent any Bank shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the next Business Day
following the date of such borrowing make such amount available to the Agent,
together with interest at the Federal Funds Rate for and determined as of each
day during such period. A notice of the Agent submitted to any Bank with
respect to amounts owing under this Section 2.12(a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Bank's Loan on the date of borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the next
Business Day following the date of such borrowing, the Agent shall notify the
Company of such failure to fund and, upon demand by the Agent, the Company shall
pay such amount to the Agent for the
-23-
<PAGE>
Agent's account, together with interest thereon for each day elapsed since the
date of such borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such borrowing.
(b) The failure of any Bank to make any Loan on any date of borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of any
borrowing.
2.13 Sharing of Payments, Etc. If, other than as expressly
-------------------------
provided elsewhere herein, any Bank shall obtain on account of the Loans made by
it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share of payments on
account of the Loans obtained by all the Banks, such Bank shall forthwith (a)
notify the Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of them; provided,
--------
however, that if all or any portion of such excess payment is thereafter
- -------
recovered from the purchasing Bank, such purchase shall to that extent be
rescinded and each other Bank shall repay to the purchasing Bank the purchase
price paid therefor, together with an amount equal to such paying Bank's Pro
Rata Share (according to the proportion of (i) the amount of such paying Bank's
required repayment to (ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. The Company agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section 2.13 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank were the direct creditor of the Company in the amount of such
participation. The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased pursuant
to this Section 2.13 and will in each case notify the Banks following any such
purchases or repayments.
SECTION 3.
PAYMENTS IN GENERAL.
--------------------
3.1 Taxes.
-----
(a) Subject to Section 3.1(d) and Section 3.1(g), any and all payments
by the Company to each Bank or the Agent under this Agreement shall be made free
and clear of, and without deduction or withholding for, any and all present or
future
-24-
<PAGE>
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Bank and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or measured
by each Bank's or the Agent's net income by the jurisdiction under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to Section 3.1(g), the Company shall indemnify and hold
harmless each Bank and the Agent for the full amount of Taxes or Other Taxes
(including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.1) paid by such Bank or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date such Bank or the
Agent makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then, subject to Section 3.1(g): (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.1) such
Bank or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made; (ii) the Company shall
make such deductions, and (iii) the Company shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that:
(i) it shall, no later
-25-
<PAGE>
than the Effective Date (or, in the case of a Bank which becomes a party hereto
after the Effective Date, the date upon which the Bank becomes a party hereto)
deliver to the Company and the Agent: (A) if any Lending Office is located in
the United States, two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"), and (B) if any
Lending Office is located outside the United States, two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), in each case indicating that the Bank is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for the
account of such Lending Office or Offices under this Agreement free from
withholding of United States Federal income tax; (ii) if at any time the Bank
changes its Lending Office or Offices or selects an additional Lending Office as
herein provided, it shall with reasonable promptness deliver to the Company and
the Agent in replacement for, or in addition to, the forms previously delivered
by it hereunder: (A) if such changed or additional Lending Office is located in
the United States, two accurate and complete signed originals of Form 4224; or
(B) otherwise, two accurate and complete signed originals of Form 1001, in each
case indicating that the Bank is on the date of delivery thereof entitled to
receive payments of principal, interest and fees for the account of such changed
or additional Lending Office under this Agreement free from withholding of
United States Federal income tax; (iii) it shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in the most recent Form 4224 or Form
1001 previously delivered by such Bank and if the delivery of the same be
lawful, deliver to the Company and the Agent two accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms previously
delivered by the Bank; and (iv) it shall, promptly upon the Company's reasonable
request to that effect, deliver to the Company and the Agent such other forms or
similar documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Bank's tax status for
withholding purposes.
(g) The Company will not be required to pay any additional amounts in
respect of United States Federal income tax pursuant to Section 3.1(d) to any
Bank for the account of any Lending Office of such Bank: (i) if the obligation
to pay such additional amounts would not have arisen but for a failure by such
Bank to comply with its obligations under Section 3.1(f) in respect of such
Lending Office; (ii) if such Bank shall have delivered to the Company a Form
4224 in respect of such Lending Office pursuant to Section 3.1(f)(i)(A), and
such Bank shall not be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by the Company hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or in the
-26-
<PAGE>
official interpretation of such law or regulations by any Governmental Person
charged with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 4224; or (iii) if the
Bank shall have delivered to the Company a Form 1001 in respect of such Lending
Office pursuant to Section 3.1(f)(i)(B), and such Bank shall not at any time be
entitled to exemption from deduction or withholding of United States Federal
income tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States law or
regulations or any applicable tax treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any Governmental Person
charged with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 1001.
(h) If, at any time, the Company requests any Bank to deliver any
forms or other documentation pursuant to Section 3.1(f)(iv), then the Company
shall, on demand of such Bank through the Agent, reimburse such Bank for any
costs and expenses (including expenses of outside legal counsel and the
allocated costs of in-house counsel) reasonably incurred by such Bank in the
preparation or delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any Bank
or the Agent pursuant to Section 3.1(d), then such Bank shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise disadvantageous to such Bank.
(j) The agreements and obligations of the Company contained in this
Section 3.1 shall survive the payment in full of all other Obligations.
3.2 Capital Adequacy. If (a) any adoption of or any change in or in
----------------
the interpretation of any law, rule or regulation, or (b) compliance with any
guideline, request or directive of any central bank or other Governmental Person
or quasi-governmental authority exercising control over banks or financial
institutions generally or any court (whether or not having the force of law), or
(c) any change in the force or effectiveness of the regulations set forth at 12
C.F.R. Part 3 (Appendix A), 12 C.F.R. Part 225 (Appendix A), 12 C.F.R. Part 208
(Appendix A) or 12 C.F.R. Part 325 (Appendix A) requires that the commitments of
any Bank hereunder (including, without limitation, commitments and obligations
in respect of Loans) be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Bank or any corporation controlling such Bank (a "Change in Law"), the
-27-
<PAGE>
result of which is to reduce the rate of return on such Bank's capital as a
consequence of such commitments to a level below that which such Bank could have
achieved but for such Change in Law, taking into consideration such Bank's
policies with respect to capital adequacy, by an amount which such Bank deems to
be material, the Bank shall deliver to the Company a statement of the amount
necessary to compensate such Bank for the reduction in the rate of return on its
capital attributable to such commitments (the "Capital Compensation Amount").
The Bank shall determine the Capital Compensation Amount in good faith, using
reasonable attribution and averaging methods. The Bank shall from time to time
notify the Company of the amount so determined. Such amount shall be due and
payable by the Company to such Bank ten Business Days after such notice is
given. As soon as practicable after any Change in Law, each Bank shall submit
to the Company estimates of the Capital Compensation Amounts that would be
payable as a function of such Bank's commitments hereunder.
3.3 Illegality.
----------
(a) If any Bank shall determine that any Governmental Rule or any
change therein or in the interpretation or administration thereof has made it
unlawful, or that any Governmental Person has asserted that it is unlawful, for
any Bank or its Lending Office to make Eurodollar Rate Loans, then, on notice
thereof by the Bank to the Company through the Agent, the obligation of the Bank
to make Eurodollar Rate Loans shall be suspended until the Bank shall have
notified the Agent and the Company that the circumstances giving rise to such
determination no longer exists.
(b) If a Bank shall determine that any Governmental Rule or any change
therein or in the interpretation or administration thereof has made it unlawful,
or that any Governmental Person has asserted that it is unlawful, for any Bank
or its Lending Office to maintain any Eurodollar Rate Loan, the Company shall
prepay all Eurodollar Rate Loans of the Bank then outstanding, together with
interest accrued thereon, or convert all Eurodollar Rate Loans of the Bank then
outstanding to CD Rate Loans or Base Rate Loans pursuant to Section 2.4, either
on the last day of the Interest Period thereof if the Bank may lawfully continue
to maintain such Eurodollar Rate Loans to such day, or promptly, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 3.5.
(c) If the obligation of any Bank to make or maintain Eurodollar Rate
Loans has been terminated, the Company may elect, by giving notice to the Bank
through the Agent that all Loans
-28-
<PAGE>
which would otherwise be made by the Bank as Eurodollar Rate Loans shall be
instead CD Rate Loans or Base Rate Loans.
(d) Before giving any notice to the Agent pursuant to this Section
3.3, the affected Bank shall designate a different Lending Office with respect
to its Eurodollar Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
3.4 Increased Costs and Reduction of Return. If any Bank shall
---------------------------------------
determine that, due to either (a) the introduction of or any change (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the CD Rate or the Eurodollar Rate) in or in the
interpretation of any law or regulation or (b) the compliance with any guideline
or request from any Governmental Person (whether or not having the force of
law), there shall be any increase in the cost to such Bank of agreeing to make
or making, funding or maintaining any Eurodollar Rate Loans or CD Rate Loans,
then the Company shall be liable for, and shall from time to time, upon demand
therefor by such Bank (with a copy of such demand to the Agent), pay to such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs. Each Bank agrees to notify the Company of the occurrence of
such an increased cost event promptly after obtaining knowledge thereof.
3.5 Funding Losses. The Company agrees to reimburse each Bank and to
--------------
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Company to make any payment
or prepayment of principal of any Eurodollar Rate Loan or CD Rate Loan
(including payments made after any acceleration thereof); (b) the failure of the
Company to borrow, continue or convert a Loan after the Company has given (or is
deemed to have given) a Notice of Borrowing or a Notice of Conversion/
Continuation; (c) the failure of the Company to make any prepayment after the
Company has given a notice in accordance with Section 2.6; or (d) the prepayment
of a Eurodollar Rate Loan or CD Rate Loan on a day which is not the last day of
the Interest Period with respect thereto; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
its Eurodollar Rate Loans or CD Rate Loans hereunder or from fees payable to
terminate the deposits from which such funds were obtained. Solely for purposes
of calculating amounts payable by the Company to the Banks under this Section
3.3(b) and Sections 3.4 and 3.5, (i) each Eurodollar Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Eurodollar Rate used in
determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a
-29-
<PAGE>
comparable period, whether or not such Eurodollar Rate Loan is in fact so funded
and (ii) each CD Rate Loan made by a Bank (and each related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been funded
at the Certificate of Deposit Rate used in determining the CD Rate for such CD
Rate Loan by the issuance of its certificate of deposit in a comparable amount
and for a comparable period, whether or not such CD Rate Loan is in fact so
funded. This covenant shall survive the payment in full of all other
Obligations.
3.6 Inability to Determine Rates. If any two Reference Banks shall
----------------------------
have determined that for any reason adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan or CD Rate Loan, or if the Requisite
Banks advise the Agent in writing that the Eurodollar Rate or the CD Rate
applicable for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan or CD Rate Loan does not adequately and fairly reflect the
cost to such Banks of funding such Loan, the Agent will forthwith give notice of
such determination to the Company and each Bank. Thereafter, the obligation of
the Banks to make or maintain Eurodollar Rate Loans or CD Rate Loans, as the
case may be, hereunder shall be suspended until the Agent upon the instruction
of the Requisite Banks revokes such notice in writing. Upon receipt of such
notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/
Continuation then submitted by it. If the Company does not revoke such notice
with respect to Loans, the Banks shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Eurodollar Rate Loans or CD Rate Loans, as
applicable.
3.7 Survival. The agreements and obligations of the Company in this
--------
Section 3 shall survive the payment of all other Obligations.
SECTION 4.
CONDITIONS PRECEDENT.
--------------------
4.1 Conditions to Effectiveness. This Agreement shall become
---------------------------
effective only upon the Company delivering to the Agent and Banks (or to the
Agent for the Banks with sufficient originally executed copies for each Bank,
except for any Notes):
(a) A copy of the Restated Certificate of Incorporation of the
Company, together with evidence acceptable to Agent that the same has been filed
with the Secretary of State of the State of Delaware and a good standing
certificate from the
-30-
<PAGE>
Secretaries of State of the States of Delaware and California, each to be dated
a recent date prior to the Effective Date;
(b) Copies of the Bylaws of the Company, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(c) Resolutions of the Board of Directors of the Company approving
and authorizing the execution, delivery and performance of each Loan Document to
which it is a party or which it is acknowledging and approving and authorizing
the execution, delivery and payment of any Notes, certified as of the Effective
Date by its corporate secretary or an assistant secretary;
(d) A signature and incumbency certificate of the officers of the
Company executing or acknowledging any Loan Document;
(e) A copy of the Certificate of Incorporation of Fisher-Price,
together with evidence acceptable to the Agent that the same has been filed with
the Secretary of State of the State of California and a good standing
certificate from the Secretary of State of the State of California to be dated a
recent date prior to the Effective Date;
(f) Copies of the Bylaws of Fisher-Price, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(g) Resolutions of the Board of Directors of Fisher-Price approving
and authorizing the execution, delivery and performance of each Loan Document to
which it is a party or which it is acknowledging, certified as of the Effective
Date by its corporate secretary or an assistant secretary;
(h) A signature and incumbency certificate of the officers of
Fisher-Price executing or acknowledging any Loan Document;
(i) A copy of the Articles of Incorporation of Mattel Sales,
together with evidence acceptable to the Agent that the same has been filed with
the Secretary of State of the State of California and a good standing
certificate from the Secretary of State of the State of California to be dated a
recent date prior to the Effective Date;
(j) Copies of the Bylaws of Mattel Sales, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(k) Resolutions of the Board of Directors of Mattel Sales approving
and authorizing the execution, delivery and
-31-
<PAGE>
performance of each Loan Document to which it is a party or which it is
acknowledging, certified as of the Effective Date by its corporate secretary or
an assistant secretary;
(l) A signature and incumbency certificate of the officers of Mattel
Sales executing or acknowledging any Loan Document;
(m) A good standing certificate with respect to any Affiliate of the
Company executing a Fisher-Price Subordination Agreement or Mattel Sales
Subordination Agreement from the Secretary of State of the state of its
incorporation, each to be dated a recent date prior to the Effective Date;
(n) Resolutions of the Board of Directors of any Affiliate of the
Company executing a Fisher-Price Subordination Agreement or Mattel Sales
Subordination Agreement approving and authorizing the execution, delivery and
performance of such Fisher-Price Subordination Agreement and such Mattel Sales
Subordination Agreement, certified as of the Effective Date by its corporate
secretary or an assistant secretary;
(o) A signature and incumbency certificate of the officers of any
Affiliate of the Company executing a Fisher-Price Subordination Agreement or
Mattel Sales Subordination Agreement;
(p) Executed copies of this Agreement and, as requested by any Bank,
executed Notes drawn to the order of such Bank and with appropriate insertions;
(q) A certificate or other evidence from the Transfer and
Administration Agent that the Transfer and Administration Agreement shall have
been, or concurrently herewith is being, duly executed and delivered and all
conditions precedent thereunder shall have been, or concurrently herewith are
being, satisfied or waived by the Banks;
(r) Executed copies of one or more favorable written opinions of
Robert Normile, Esq., Assistant General Counsel of the Company dated as of the
Effective Date, substantially in the form of Exhibit E hereto relating to the
Company, Fisher-Price and Mattel Sales and as to such other matters as the Agent
and the Banks may reasonably request;
(s) A certificate signed by one of the officers authorized to deliver
an Officer's Certificate, or other evidence satisfactory to the Agent, of the
ratings on the Company's long-term unsecured Indebtedness by S&P, Moody's, Duff
& Phelps and Fitch;
(t) Evidence of termination of the Existing Credit Agreements dated
the date hereof, together with payment, for
-32-
<PAGE>
distribution to the agent and banks parties to the Existing Credit Agreements,
of all fees payable by the Company pursuant to Sections 2.4 and 2.6 of the
Existing Credit Agreements that have accrued through the Effective Date;
(u) Payment of all fees payable pursuant to Section 2.9(b);
(v) The Fisher-Price Guaranty duly executed by Fisher-Price;
(w) The Mattel Sales Guaranty duly executed by Mattel Sales;
(x) The Company shall have performed in all material respects all
agreements which this Agreement provides shall be performed by it on or before
the Effective Date; and
(y) A Mattel Sales Subordination Agreement and a Fisher-Price
Subordination Agreement duly executed by the Company.
4.2 Conditions to All Loans. The obligation of each Bank to make any
-----------------------
Loan is subject to the following further conditions precedent that, as of the
applicable Funding Date:
(a) The Agent shall have received on or before that Funding Date a
Notice of Borrowing signed by the Chief Executive Officer, the Chief Financial
Officer, the Treasurer or an Assistant Treasurer of the Company or any officer
of the Company designated by any of the above described officers on behalf of
the Company in writing delivered to the Agent;
(b) The representations and warranties of the Company contained in
any Loan Document (except the representation and warranty contained in Section
5.9 and, in the case of a borrowing of Loans where the aggregate principal
amount of the Loans being made on that Funding Date equals or is less than the
aggregate principal amount of Loans maturing on that Funding Date, the
representation and warranty contained in Section 5.11), shall be true, correct
and complete in all material respects on and as of that Funding Date, to the
same extent as though made on and as of that Funding Date; and
(c) No Default or Event of Default shall exist or shall result from
such borrowing or continuation or conversion.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the Funding Date,
that the conditions in Section 4.2 are satisfied.
-33-
<PAGE>
SECTION 5.
REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Banks and the Agent to enter into this
Agreement and to make any extension of credit hereunder, the Company represents
and warrants to each Bank and the Agent that the following statements are true,
correct and complete:
5.1 Organization and Powers. The Company is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware; and, except for changes in the ordinary course of business or as
permitted or contemplated by this Agreement, each of the Material Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; and each has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted and, in the case of the
Company, to enter into this Agreement, a Fisher-Price Subordination Agreement
and a Mattel Sales Subordination Agreement, to issue the Notes and to carry out
the transactions contemplated hereby and thereby.
5.2 Good Standing. The Company and, except for changes in the
-------------
ordinary course of business or as permitted or contemplated by this Agreement,
each Material Subsidiary is in good standing wherever necessary to carry on its
present business and operations, except in jurisdictions in which the failure to
be in good standing has or will have no Material Adverse Effect.
5.3 Subsidiaries. Except as set forth in the immediately succeeding
------------
sentence and except for changes in the ordinary course of business or as
permitted or contemplated by this Agreement, Schedule 5.3 hereto correctly sets
forth the name, jurisdiction of incorporation and ownership interest of the
Company in each of its Material Subsidiaries as of the date hereof. Except as
identified on Schedule 5.3 hereto and except for changes in the ordinary course
of business or as permitted or contemplated by this Agreement, the Company has
no subsidiaries the book value of whose assets as at December 31, 1993, exceed
$1,000,000 or, when considered in the aggregate with all other subsidiaries not
listed on Schedule 5.3 hereto constitute an amount in excess of $4,000,000.
5.4 Authorization of Borrowing. The execution, delivery and
--------------------------
performance of each Loan Document to which it is a party, and acknowledgement of
the Fisher-Price Subordination Agreement and the Mattel Sales Subordination
Agreement and the issuance, delivery and payment of the Notes have been duly
authorized by all necessary corporate action by the Company.
-34-
<PAGE>
5.5 No Conflict. The execution, delivery and performance by the
-----------
Company of this Agreement and the acknowledgement of the Fisher-Price
Subordination Agreement, the Mattel Sales Subordination Agreement and the
issuance, delivery and payment of the Notes do not and will not (a) violate the
Restated Certificate of Incorporation or Bylaws of the Company, (b) violate any
provision of law applicable to the Company, or any material order, judgment or
decree of any court or other agency of government binding on the Company, the
violation of which would result in a Material Adverse Effect, (c) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company, (d) result in or
require the creation or imposition of any material lien, security interest,
charge or encumbrance of any nature whatsoever upon any of its material
properties or assets, or (e) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of the
Company.
5.6 Governmental Consents. The execution, delivery and performance
---------------------
by the Company of each Loan Document to which it is a party and each agreement,
document, or instrument required hereunder, the acknowledgment of the Fisher-
Price Subordination Agreement, Mattel Sales Subordination Agreement, and the
issuance, delivery and payment of the Notes do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any Federal, state or other governmental authority or regulatory
body or other such person.
5.7 Binding Obligation. This Agreement is, and each other Loan
------------------
Document to which it is a party, when executed and delivered hereunder will be,
the legally valid and binding obligations of the Company, enforceable against it
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally.
5.8 Financial Condition. The Company has heretofore delivered to the
-------------------
Banks a consolidated balance sheet of the Company and its Subsidiaries for the
fiscal year ended December 31, 1993 and related consolidated statements of
income, shareholders' equity and changes in financial position of the Company
and its Subsidiaries for such fiscal year, audited by Price Waterhouse. All
such statements were prepared in accordance with GAAP and fairly present the
consolidated financial position of the Company and its Subsidiaries as at the
date thereof and the consolidated results of operations and statement of cash
flow of the Company and its Subsidiaries for the period then ended. Neither the
Company nor any of its Subsidiaries has any material Contingent Obligation,
liability for taxes or long-term lease which as of the date of this
-35-
<PAGE>
Agreement, individually or in the aggregate, would, if it became absolute,
result in a Material Adverse Effect which is not reflected in the foregoing
statements or in the notes thereto.
5.9 Changes, Etc. Since December 31, 1993, there has been no event or
------------
events that have, either individually or in the aggregate, resulted in a
Material Adverse Effect.
5.10 Title to Properties. The Company and its Subsidiaries
-------------------
have good, sufficient and legal title to all the properties and assets reflected
in the consolidated balance sheet referred to in Section 5.8 except as set forth
in said balance sheet or in the notes thereto, except for assets acquired or
disposed of in the ordinary course of business or as otherwise permitted by this
Agreement since December 31, 1993 and except for immaterial defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect.
5.11 Litigation; Adverse Facts. There is no action, suit,
-------------------------
proceeding or arbitration (whether or not purportedly on behalf of the Company
or any of its Subsidiaries) at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of the Company's or such Subsidiaries' properties which, in
the reasonable judgment of the Company and its executive officers (assuming
adverse determination of facts which the Company in good faith believes it would
not successfully prove, and considering damages which in their best judgment is
the maximum that would be awarded upon, and the likelihood of, an adverse
determination of the claim or the amount which reflects their best judgment as
to that required to be paid to settle the claims) would result in a Material
Adverse Effect and there is no basis known to such executive officers for any
such action, suit or proceeding. Neither the Company nor any of its
Subsidiaries is (i) in violation of any applicable law which could result in a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, injunction, decree, rule or regulation of any court or
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could result in a
Material Adverse Effect. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries which provides a reasonable basis for
questioning the validity or the enforceability of any Loan Document.
5.12 Payment of Taxes. All tax returns and reports of the
----------------
Company and its Material Subsidiaries required to be filed by any of them have
been timely filed, and all taxes,
-36-
<PAGE>
assessments, fees and other governmental charges upon the Company and its
Subsidiaries and upon their respective properties, assets, income and franchises
which are due and payable have been paid when due and payable or bonded against,
except to the extent permitted by Section 6.3. The Company knows of no proposed
tax assessment against it or any of its Subsidiaries that would result in a
Material Adverse Effect.
5.13 Agreements. Neither the Company nor any of its
----------
Subsidiaries is a party to or is subject to any material agreement or
instrument or charter or other internal restriction which results in a Material
Adverse Effect.
5.14 Performance. Neither the Company nor any of its
-----------
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any Contractual
Obligation of the Company, and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute such a default, except, in
any such case, where the consequences, direct or indirect, of such default or
defaults, if any, would not result in a Material Adverse Effect.
5.15 Governmental Regulation. Neither the Company nor any of
-----------------------
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or to any Federal or state statute or regulation
limiting its ability in any material way to incur Indebtedness for money
borrowed.
5.16 Employee Benefit Plans. The Company and each of its ERISA
----------------------
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Pension Plans. Neither the Company nor any of its ERISA
Affiliates has participated in or participates in any Multiemployer Plan the
withdrawal from which may result in any liability to any party in an amount in
excess of $1,000,000.
5.17 Environmental Matters. The Company conducts in the
---------------------
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
properties, and as a result thereof the Company has reasonably concluded that
such Environmental Laws and Environmental Claims could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
5.18 Disclosure. No representation or warranty of the Company
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by the
-37-
<PAGE>
Company since January 1, 1994 for use in connection with the transactions
contemplated by this Agreement as of the date of this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
the officers of the Company in the case of any document or fact not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading except to the extent that any such statement or omission that was
untrue or misleading at the time made or that subsequently became untrue or
misleading has been superseded or corrected by information provided to the Banks
prior to the date of this Agreement. The projections and pro forma financial
information contained in such written materials are based upon good faith
estimates and assumptions believed by the Company to be reasonable at the time
made, it being recognized by the Banks that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There is no fact known to the officers of the Company as of the date of this
Agreement (other than matters of a general economic nature) which materially
adversely affects the business, operations, property, assets or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
which has not been disclosed herein or in the written materials referred to in
Section 5.8 other than as disclosed in writing to the Banks on or before the
date hereof.
5.19 Subordination Agreements. Neither Fisher-Price nor Mattel
------------------------
Sales has any material outstanding obligations to any Affiliate of the Company
which has not signed a Fisher-Price Subordination Agreement or a Mattel Sales
Subordination Agreement, respectively.
SECTION 6.
AFFIRMATIVE COVENANTS.
---------------------
The Company agrees from the Effective Date until payment in full of
all Obligations and termination of the Aggregate Facilities Commitment and the
Transfer and Administration Agreement, unless Requisite Banks shall otherwise
give prior written consent, the Company will perform all covenants in this
Section 6.
6.1 Reporting and Information Requirements. The Company will
--------------------------------------
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. The Company
will deliver to the Agent and to each Bank:
(a) as soon as practicable and in any event not later than 55 days
after the end of each of the first three fiscal
-38-
<PAGE>
quarters of the Company, consolidated balance sheets of the Company and its
Subsidiaries as at the end of such period and for the fiscal year to date and
the related consolidated statements of income, consolidated statements of
stockholders' equity and consolidated statements of cash flow all in reasonable
detail and certified by the Chief Financial Officer, Executive Vice President
Finance or the Treasurer of the Company that the consolidated statements (and to
the best of his or her belief, the consolidating statements) and other materials
required by this clause (a) fairly present the financial condition of the
Company and its Subsidiaries as at the dates indicated and the results of their
operations for the periods indicated, subject to changes resulting from year-end
audit and normal year-end adjustments;
(b) as soon as practicable and in any event not later than 100 days
after the end of each fiscal year of the Company, consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the end of such year
and the related consolidated (and, as to statements of income only, consolidated
and consolidating) statements of income, stockholders' equity and cash flow of
the Company and its Subsidiaries for such fiscal year, setting forth in each
case, in comparative form the consolidated figures for the previous year, all in
reasonable detail and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of Price Waterhouse or other independent
accountants of recognized national standing selected by the Company which report
shall state that such consolidated financial statements present fairly the
financial position of the Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flow for the periods
indicated in conformity with GAAP and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (ii) in the case of
such consolidating financial statements, certified by the chief financial or
accounting officer of the Company;
(c) together with each delivery of financial statements of the
Company and its Subsidiaries pursuant to clauses (a) and (b) above, an Officers'
Certificate (i) stating that the signers have reviewed the terms of this
Agreement and the Notes and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
the Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Default, or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof,
-39-
<PAGE>
and (ii) demonstrating in reasonable detail compliance during (to the extent
required) and at the end of such accounting periods with the restrictions
contained in Sections 7.5, 7.6 and 7.7;
(d) together with each delivery of consolidated financial statements
of the Company and its Subsidiaries pursuant to clause (b) above, a written
statement by the independent accountants giving the report thereon (i) stating
that their audit examination has included a review of the terms of this
Agreement and the Notes as they relate to accounting matters, and (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes an Event of Default or Default has come to their attention,
and if such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided that such accountants shall not
--------
be liable by reason of any failure to obtain knowledge of any such Event of
Default or Default that would not be disclosed in the course of their audit
examination. The Agent shall have the right, from time to time, to discuss the
affairs of the Company directly with such independent certified public
accountants;
(e) promptly upon receipt thereof, copies of all reports submitted to
the Company (including, without limitation, the Company's Board of Directors) by
the Company's independent accountants in connection with each annual, interim or
special audit of the consolidated financial statements of the Company made by
such accountants, including, without limitation, any comment letter submitted by
such accountants to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its security holders or by any Subsidiary of the
Company to its security holders other than the Company or another Subsidiary,
and, promptly upon their becoming effective, and in any event within 15 days of
filing, all regular and periodic reports and all registration statements and
prospectuses that have been filed by the Company or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
Governmental Person succeeding to any of its functions, and all press releases
and other statements made available generally by the Company or any Subsidiary
to the public concerning material developments in the business of the Company
and its Subsidiaries;
(g) promptly upon any executive officer of the Company obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that the Agent or any Bank has given any notice or
taken any other action with respect to a claimed Event of Default or Default
under this Agreement, (ii) of any condition or event which would be required to
be disclosed in a current report filed
-40-
<PAGE>
by the Company with the Securities and Exchange Commission on Form 8-K (Items 1,
2, 4 and 6 of such Form as in effect on the date hereof) if the Company were
required to file such reports under the Exchange Act, (iii) that any Person has
given any notice to the Company or any Subsidiary of the Company or taken any
other action with respect to a claimed default or event or condition of the type
referred to in Section 8.1, (iv) of the institution of any litigation involving
an alleged liability of the Company or any of its Subsidiaries equal to or
greater than $20,000,000 or any adverse determination in any litigation
involving a potential liability of the Company or any of its Subsidiaries equal
to or greater than $20,000,000, or (v) of a Material Adverse Effect, in each
case an Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed default, Event of Default,
Default, event or condition, and what action the Company has taken, is taking
and proposes to take with respect thereto;
(h) as soon as available but no later than March 31 of each year,
copies of the Company's consolidated financial plan for the then current fiscal
year as customarily prepared for internal use;
(i) promptly after the acquisition of any Material Subsidiary,
notice of such acquisition;
(j) promptly upon any executive officer of the Company obtaining
knowledge, notice of any change in the ratings on the Company's long-term
unsecured Indebtedness by S&P, Moody's, Duff & Phelps or Fitch; and
(k) with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as from time to time may be
reasonably requested by any Bank or the Agent, including any financial reports
regularly prepared by the Company for internal use.
6.2 Corporate Existence, etc. Except as permitted or not prohibited
------------------------
in Section 7.3, the Company will at all times preserve and keep in full force
and effect its corporate existence and rights and franchises material to its
business and those of each of its Material Subsidiaries; provided that the
--------
corporate existence and the rights and franchises of any Material Subsidiary may
be terminated or permitted to lapse if such termination or lapse is in the best
interest of the Company, is approved by the Board of Directors of the Company
and is not materially disadvantageous to the holder of any Note.
6.3 Payment of Taxes and Claims; Tax Consolidation. The Company
----------------------------------------------
will, and will cause each of its Material
-41-
<PAGE>
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if being contested
--------
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor. The Company
will not, nor will it permit any Material Subsidiary to, file or consent to the
filing of any consolidated income tax return with any Person (other than the
Company or a Subsidiary of the Company).
6.4 Maintenance of Properties; Insurance. Except as permitted or
------------------------------------
not prohibited in Section 7.3, the Company will maintain or cause to be
maintained in good repair, working order and condition all material properties
(other than obsolete properties) used or useful in the business of the Company
and its Material Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals, substitutions and replacements thereof.
The Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Material Subsidiaries against loss or damage
of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated, of
such types and in such amounts as are customarily carried under similar
circumstances by such other corporations; provided that the Company may maintain
a program of self insurance for the Company and its Material Subsidiaries in
accordance with sound business practices.
6.5 Inspection of Property and Books and Records. The Company shall
--------------------------------------------
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiaries.
The Company will permit any authorized representatives designated by any Bank at
the expense of that Bank, to visit and inspect any of the properties of the
Company or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom (but not
records relating to intellectual property), and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all
-42-
<PAGE>
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested.
6.6 Use of Proceeds of Loans. (a) The Company shall use the
------------------------
proceeds of Loans for general corporate purposes, including, without limitation,
lending to its Subsidiaries and acquiring other Persons or businesses so long as
the acquisition is approved by the board of directors of the Person being
acquired.
(b) The Company shall not, directly or indirectly, use any portion of
the Loan proceeds (i) knowingly to purchase Ineligible Securities from a Section
20 Subsidiary during any period in which such Section 20 Subsidiary makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by a Section 20 Subsidiary, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or privately placed
by a Section 20 Subsidiary and issued by or for the benefit of the Company or
any Affiliate of the Company.
6.7 Environmental Laws. The Company shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.8 Subordination Agreements. If from time to time Fisher-Price or
------------------------
Mattel Sales has any material outstanding obligations owing to any Affiliate of
the Company which has not signed a Fisher-Price Subordination Agreement or a
Mattel Sales Subordination Agreement, respectively, the Company shall cause such
Affiliate to execute deliver a Fisher-Price Subordination Agreement or a Mattel
Sales Subordination Agreement, as the case may be, and deliver to the Agent a
signature and incumbency certificate of the officers of each such Affiliate and
cause Fisher-Price or Mattel Sales, as the case may be, to acknowledge each such
agreement.
SECTION 7.
NEGATIVE COVENANTS.
------------------
The Company agrees from the Effective Date until payment in full of
all Obligations and termination of the Aggregate Facilities Commitment and the
Transfer and Administration Agreement, unless Requisite Banks shall otherwise
give prior written consent, the Company will perform all covenants in this
Section 7.
-43-
<PAGE>
7.1 Indebtedness. The Company will not, and will not permit any of
------------
its Material Subsidiaries to, directly or indirectly incur, assume, guaranty or
otherwise become directly or indirectly liable with respect to:
(a) Indebtedness for borrowed money senior or having priority of
payment over the Obligations hereunder or secured by Liens on any of the
Company's or any Subsidiary's assets other than as permitted under Section
7.2 other than Indebtedness existing on the Effective Date; and
(b) Debt in excess of $150,000,000 in the aggregate incurred in any
one calendar year, net of paydowns of Debt in such year, commencing January
1, 1995; provided that any such Debt so incurred (i) will not contain any
--------
terms and conditions that in the aggregate are more restrictive than the
terms and conditions contained in this Agreement and (ii) will not cause
the Company to be in violation of Sections 7.5, 7.6, or 7.7 of this
Agreement.
7.2 Liens. The Company will not, and will not permit any of its
-----
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of the Company or any
Subsidiary to secure Indebtedness for borrowed money in excess of $100,000,000
(excluding Liens existing on the date hereof, Liens securing Indebtedness under
the Transfer and Administration Agreement, Liens listed on Schedule 7.2 and
Liens on newly-acquired Capital Assets); provided that such Liens on assets
--------
located in the United States shall not secure Indebtedness for borrowed money in
excess of $15,000,000.
7.3 Restriction on Fundamental Changes. (a) The Company shall not,
----------------------------------
and shall not permit any of its Material Subsidiaries to, engage in any material
line of business substantially different from those lines of business carried on
by it on the date hereof; provided, however, that the Company may engage in the
-------- -------
production and sale of CD-ROM products and coin-operated arcade games related to
the Company's existing lines of business.
(b) The Company shall not, and shall not suffer or permit any of its
Material Subsidiaries to, merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of whether in one transaction or in a series of
transactions, all or substantially all, of its assets to or in favor of any
Person, except:
(i) any Material Subsidiary of the Company may merge with the
Company, provided that the Company shall be the continuing or surviving
corporation, or with any one or more Material Subsidiaries of the Company,
provided that if any
-44-
<PAGE>
transaction shall be between a Subsidiary and a wholly-owned subsidiary,
the wholly-owned subsidiary shall be the continuing or surviving
corporation; and
(ii) any Subsidiary of the Company may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the Company or
another Wholly-Owned Subsidiary of the Company.
7.4 Sale or Discount of Receivables. The Company will not, and will
-------------------------------
not permit any of its Domestic Subsidiaries to, directly or indirectly, sell
with recourse, or discount or otherwise sell for less than the face value
thereof (other than in the ordinary course of receivables financing without
recourse), any of its notes or accounts receivable, except:
(a) The Company and its Domestic Subsidiaries may offer discounts in
the ordinary course of business for early payment of accounts receivable and may
negotiate settlements of bad debts and disputed accounts receivable in the
ordinary course of business; and
(b) The Company, Mattel Sales and Fisher-Price may enter into and
perform under the Transfer and Administration Agreement.
7.5 Consolidated Funded Indebtedness to Total Capitalization. The
--------------------------------------------------------
Company shall not permit the ratio of the sum of (a) Consolidated Funded
Indebtedness plus (b) Total Outstanding Investment to the sum of (x)
----
Consolidated Funded Indebtedness plus (y) Total Outstanding Investment plus (z)
---- ----
Consolidated Tangible Net Worth to exceed 65% at the end of each of the first
three fiscal quarters in each fiscal year and 55% at the end of each fiscal
year.
7.6 Consolidated Tangible Net Worth. The Company shall not permit
-------------------------------
its Consolidated Tangible Net Worth at the end of any fiscal quarter to be less
than $530,000,000 plus 50% of each fiscal quarter's Consolidated Net Income
----
subsequent to December 31, 1993 (but without reduction for any losses) plus 100%
----
of any Net Issuance Proceeds subsequent to December 31, 1993.
7.7 Interest Coverage Ratio. The Company shall not permit, as of the
-----------------------
last day of each fiscal quarter, the ratio of (a) the sum of (i) its net income
from continuing operations, for the four consecutive fiscal quarters ending on
such date, before (A) special items, (B) minority interest, (C) gains on
reacquisition of debt, plus (ii) income taxes accrued for the four consecutive
----
fiscal quarters ending on such date, plus (iii) interest accrued for the four
----
consecutive fiscal quarters ending on such date, excluding capitalized interest
and without regard
-45-
<PAGE>
to interest income plus (iv) depreciation and amortization for the four
----
consecutive fiscal quarters ending on such date to (b) interest incurred for the
four consecutive fiscal quarters ending on such date, including capitalized
interest and without regard to interest income, to be less than 3.5 to 1.
7.8 ERISA. The Company will not, and will not permit any of its
-----
ERISA Affiliates to, permit the actuarial present value of all benefit
liabilities under all Pension Plans to exceed the fair market value of the
assets of such Pension Plans (excluding Pension Plans with assets greater than
vested benefits) allocable to such benefit liabilities by more than $10,000,000.
As used in this Section 7.8, the terms "actuarial present value" and "benefit
liabilities" have the meanings specified in Section 4001 of ERISA.
7.9 Amendments or Waivers Under Transfer and Administration
-------------------------------------------------------
Agreement. The Company shall not agree to any amendment or waiver under the
Transfer and Administration Agreement without the consent of the Requisite
Banks.
7.10 Margin Regulations. No portion of the proceeds of any
------------------
borrowing under this Agreement shall be used by the Company for the purpose of
"purchasing" or "carrying" any Margin Stock or used in any manner which might
cause such borrowing or the application of such proceeds to violate Regulation
G, Regulation U, Regulation T, or Regulation X of the Federal Reserve Board or
any other regulation of the Federal Reserve Board or to violate the Exchange
Act, in each case as in effect on the date or dates of such borrowing and the
use of such proceeds.
7.11 Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Default if such action is
taken or condition exists.
SECTION 8.
EVENTS OF DEFAULT.
-----------------
8.1 Events of Default. Any of the following conditions or events
-----------------
shall constitute an "Event of Default:"
(a) Failure to Make Payments When Due. (i) Failure to pay any
---------------------------------
required payment of principal under this Agreement or the Transfer and
Administration Agreement or of any Loan or any Notes, when due, whether at
stated maturity, by acceleration, by
-46-
<PAGE>
notice of prepayment or otherwise, (ii) failure to pay any required payment of
interest under this Agreement or the Transfer and Administration Agreement or on
any Loan or any Note or any fees payable pursuant to Section 2 for a period of
five days or more after the date such payment is due, or (iii) failure to pay
any other amount due under this Agreement or the Transfer and Administration
Agreement within 90 days after written notice thereof; or
(b) Default in Other Agreements. (i) Failure of the Company, Fisher-
---------------------------
Price, Mattel Sales or any of its Material Subsidiaries to pay or any default in
the payment of any principal or interest on any Indebtedness in an amount
exceeding $15,000,000 or any default in any other obligation for the payment of
money in an amount in excess of $15,000,000 beyond any period of grace allowed;
or
(ii) any breach or default (unless cured or waived) with respect to
any other term of any evidence of such other Indebtedness for borrowed money in
an amount exceeding $15,000,000 or of any loan agreement, mortgage, indenture or
other agreement relating thereto, if the effect of such failure, default or
breach is to cause such Indebtedness for borrowed money to become or be declared
due prior to its stated maturity; or
(c) Breach of Certain Covenants. Failure of the Company to perform or
---------------------------
comply with any term or condition contained in Sections 6.1(g), 6.2 or Section 7
of this Agreement; or
(d) Breach of Warranty. Any of the Company's, Fisher-Price's or
------------------
Mattel Sales' representations or warranties made in any Loan Document in writing
pursuant hereto or in connection herewith shall be false in any material respect
on the date as of which made; or
(e) Other Defaults Under Agreement. Failure of the Company, Fisher-
------------------------------
Price or Mattel Sales to perform or comply with any other term or condition
contained in this Agreement or the Transfer and Administration Agreement or any
Loan Document other than the conditions referred to in Subsections (a), (b), (c)
and (d) above and such default shall not have been remedied or waived within 30
days after receipt of notice from the Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court
----------------------------------------------------
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Company or any of its Material Subsidiaries in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed, or (ii) any other
similar relief shall be granted under any applicable
-47-
<PAGE>
federal or state or applicable foreign law; a petition for an involuntary case
shall be filed against the Company or any of its Material Subsidiaries under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Company or any of its Material
Subsidiaries, or over all or substantially all of its property, shall have been
entered; or an interim receiver, trustee or other custodian of the Company or
any of its Material Subsidiaries for all or substantially all of the property of
the Company or any of its Material Subsidiaries shall be appointed
involuntarily; and the continuance of any such events in clause (ii) for 45 days
unless dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. The Company
--------------------------------------------------
or any of its Material Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in any involuntary case, or to the conversion
from an involuntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, sequestrator,
trustee or other custodian for all or substantially all of its property; the
making by the Company or any of its Material Subsidiaries of any assignment for
the benefit of creditors; or the inability or failure of the Company or any of
its Material Subsidiaries, or the admission by the Company or any of its
Material Subsidiaries in writing of its inability, to generally pay its debts as
such debts become due; or the Board of Directors of the Company or any of its
Material Subsidiaries adopts any resolution or otherwise takes action to approve
any of the foregoing; or
(h) Judgments. Any final money judgment involving in any case an
---------
amount in excess of $20,000,000 or in excess of $40,000,000 in the aggregate at
any one time for all final judgments shall be entered or filed against the
Company or any Material Subsidiary or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 45 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
(i) Dissolution. Any order, judgment or decree shall be entered
-----------
against the Company or any Material Subsidiary decreeing the dissolution or
split up of the Company and such order shall remain undischarged or unstayed for
a period in excess of 30 days; or
(j) ERISA. (i) any Pension Plan maintained by the Company or any of
-----
its ERISA Affiliates shall be terminated within
-48-
<PAGE>
the meaning of Title IV of ERISA, or (ii) a trustee shall be appointed by an
appropriate United States district court to administer any Pension Plan, or
(iii) the Pension Benefit Guaranty Corporation (or any successor thereto) shall
institute proceedings to terminate any Pension Plan or to appoint a trustee to
administer any Pension Plan, or (iv) the Company or any of its ERISA Affiliates
shall withdraw (under Section 4063 of ERISA) from a Pension Plan, if, as of the
date of the event listed in clauses (i)-(iv) above or any subsequent date, any
of the Company or its ERISA Affiliates has any liability (such liability to
include, without limitation, any liability to the Pension Benefit Guaranty
Corporation, or any successor thereto, or to any other party under Sections
4062, 4063 or 4064 of ERISA or any other provision of law) resulting from or
otherwise associated with the events listed in clauses (i)-(iv) above for
unfunded guarantied vested benefits under the Pension Plans which exceeds the
current value of assets accumulated in such Pension Plan by more than
$10,000,000; or
(k) Loss of Property. All, or a substantial part of, the property,
----------------
assets or business of the Company or any Material Subsidiary shall be condemned
or seized and such condemnation or seizure shall have (after taking into account
any insurance or condemnation award) a Material Adverse Effect; or
(l) Cessation of Business. The Company or any Material Subsidiary
---------------------
shall at any time voluntarily or involuntarily suspend its business or a
substantial part thereof which would constitute a substantial part of, and would
have a Material Adverse Effect; or
(m) Servicer Default or Termination Event. A Servicer Default or a
-------------------------------------
Termination Event (as each is defined in the Transfer and Administration
Agreement) (other than as set forth in Section 7.3(i) of the Transfer and
Administration Agreement) shall occur and be continuing;
8.2 Remedies. If any Event of Default occurs, the Agent shall, at
--------
the request of, or may, with the consent of, the Requisite Banks, (a) declare
the Loan Commitment of each Bank to make Loans to be terminated, whereupon such
Loan Commitments shall forthwith be terminated; (b) declare the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other Loan Document to
be immediately due and payable; without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and remedies available
to it and the Banks under the Loan Documents or applicable law; provided,
--------
however, that upon the occurrence of any event specified in paragraph (f) or (g)
- -------
of Section 8.1 above (in the case of clause (ii) of paragraph (f) upon the
expiration
-49-
<PAGE>
of the 45-day period mentioned therein), the obligation of each Bank to make
Loans shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
8.3 Rights Not Exclusive. The rights provided for in this Agreement
--------------------
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
SECTION 9.
THE AGENT.
---------
9.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall (i)
------------------
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner to
any of the Banks for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement
-50-
<PAGE>
or any other Loan Document, or for the value of any Collateral or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the Properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Requisite Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Requisite
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.1 and 4.2, each Bank that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank, unless an
officer of the Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from the Bank prior to any borrowing
specifying its objection thereto and either such objection shall not have been
withdrawn by notice to the Agent to that effect or the Bank shall not have made
available to the Agent the Bank's ratable portion of such borrowing.
-51-
<PAGE>
9.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Banks, unless the Agent shall
have received written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Banks and the Transfer
and Administration Agent. The Agent shall take such action with respect to such
Default or Event of Default as shall be requested by the Requisite Banks in
accordance with Section 8; provided, however, that unless and until the Agent
-------- -------
shall have received any such request, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.6 Credit Decision. Each Bank expressly acknowledges that none of
---------------
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also represents
that it will, independently and without reliance upon the Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Company which
may come into the possession of any of the Agent-Related Persons.
9.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby shall be consummated, the Banks shall
-52-
<PAGE>
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of the Company and without limiting the obligation of the Company
to do so), ratably from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans and the termination or resignation of
the related Agent) be imposed on, incurred by or asserted against any such
Person any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; provided, however, that no
-------- -------
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable share
of any costs or out-of-pocket expenses (including fees and expenses of counsel
and the allocated cost of in-house counsel) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Company. Without limiting the generality of the
foregoing, if the Internal Revenue Service or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs and
expenses (including fees and expenses of counsel and the allocated cost of in-
house counsel). The obligation of the Banks in this Section shall survive the
payment of all Obligations hereunder.
9.8 Agent in Individual Capacity. Bank of America and its Affiliates
----------------------------
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with the Company and its
Subsidiaries
-53-
<PAGE>
and Affiliates as though Bank of America were not the Agent hereunder and
without notice to or consent of the Banks. With respect to its Loans, Bank of
America shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent, and the terms
"Bank" and "Banks" shall include Bank of America in its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the
---------------
Requisite Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent shall resign as Agent under this Agreement, the Requisite Banks shall
appoint from among the Banks a successor agent for the Banks which successor
agent shall be approved by the Company. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 9 and Sections 10.4 and 10.15 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Requisite Banks appoint a successor agent as provided for
above.
SECTION 10.
MISCELLANEOUS.
-------------
10.1 Assignments, Participations, etc. (a) Any Bank may, with
---------------------------------
the advance written consent of the Company at all times other than during the
existence of an Event of Default and the Agent, which consent of the Company
shall not be unreasonably withheld, at any time assign and delegate to one or
more Eligible Assignees (provided that no consent of the Company or the Agent
shall be required in connection with any assignment and delegation by a Bank to
an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee")
--------
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000 and such Bank shall concurrently therewith assign a ratable portion
in the Transfer and Administration Agreement; provided, however, that the
-------- -------
Company and the Agent may continue to
-54-
<PAGE>
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Agent by such Bank and
the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent a Notice of Assignment and Acceptance in the form of
Exhibit I ("Notice of Assignment and Acceptance") together with any Note or
- --------- -----------------------------------
Notes subject to such assignment and (iii) the assignor Bank or Assignee has
paid to the Agent a processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Notice of Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Notice of Assignment and Acceptance, shall have the rights and
obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Notice of Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Notice of Assignment and Acceptance and payment
of the processing fee, (and provided that the consents to such assignment have
been obtained in accordance with Section 10.01(a)), the Company shall execute
and deliver to the Agent, any new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Bank has retained a portion of its
Loans and its Commitments, any replacement Notes in the principal amount of the
Loans retained by the assignor Bank (such Notes to be in exchange for, but not
in payment of, the Notes held by such Bank). Immediately upon each Assignee's
making its processing fee payment under the Notice of Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Bank pro tanto.
--- -----
(d) Upon advance written notice to the Company, any Bank may at any
time sell to one or more commercial banks or other Persons not Affiliates of the
Company (a "Participant") participating interests in any Loans, the Commitment
-----------
of that Bank and the other interests of that Bank (the "originating Bank")
hereunder and under the other Loan Documents; provided, however, that (i) such
-------- -------
Bank shall concurrently with any sale of a
-55-
<PAGE>
participation herein sell a ratable participation in the Transfer and
Administration Agreement and thereafter cause any such participation herein to
remain ratable with such participation in the Transfer and Administration
Agreement, (ii) the originating Bank's obligations under this Agreement shall
remain unchanged, (iii) the originating Bank shall remain solely responsible for
the performance of such obligations, (iv) the Company and the Agent shall
continue to deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (v) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to this Agreement except to the extent
such amendment, consent or waiver would require unanimous consent as described
in the first proviso to Section 10.8. The Company hereby acknowledges and
agrees that any such disposition will give rise to a direct obligation of the
Company to the Participant and the Participant shall be entitled to the benefit
of Sections 3.1, 3.4 and 10.15 as if it were a "Bank." In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation,
except that if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note(s) held by it in
favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(f) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to
it by the Company or any Subsidiary of the Company, or by the Agent on such
Company's or Subsidiary's behalf, in connection with this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information for any purpose or in any manner other than pursuant to the terms
contemplated by this Agreement and the Transfer and Administration Agreement;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of a disclosure by the Bank, or
-56-
<PAGE>
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Bank; provided, however, that any Bank
-------- -------
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Person to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process and when required to do so in accordance with the provisions
of any applicable Governmental Rule; provided, that a Bank shall disclose only
--------
the information required by such request and shall notify the Company in advance
of such disclosure so that the Company may seek an appropriate protective order,
and (C) to such Bank's independent auditors and other professional advisors
provided such Persons are obligated to keep such information confidential.
Notwithstanding the foregoing, the Company authorizes each Bank to disclose to
any Assignee or Participant and to any prospective Assignee or Participant, such
financial and other information in such Bank's possession concerning the Company
or its Subsidiaries which has been delivered to Agent or the Banks pursuant to
this Agreement or which has been delivered to the Agent or the Banks by the
Company in connection with the Banks' credit evaluation of the Company prior to
entering into this Agreement; provided that, unless otherwise agreed by the
--------
Company, such Assignee or Participant agrees in writing to such Bank to keep
such information confidential to the same extent required of the Banks
hereunder.
10.2 Survival of Warranties and of Certain Agreements. (a)
------------------------------------------------
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement, the making of the Loans hereunder and
the execution and delivery of any Notes.
(b) Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Company set forth in Sections 2.9, 3, 10.4
and 10.15 and the agreements of the Banks set forth in Sections 2.13, 9, 10.1(b)
and 10.5 shall survive the payment of the Obligations by the Company and the
termination of this Agreement.
10.3 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any Bank or any holder of any Note in the
exercise of any power, right or privilege hereunder or under any Note shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under
this Agreement or any Notes are cumulative to and not exclusive of, any rights
or remedies otherwise available.
-57-
<PAGE>
10.4 Fees and Expenses. Whether or not the transactions contemplated
-----------------
hereby shall be consummated, the Company agrees to pay within 30 days after
submission of an invoice therefor (a) all the actual and reasonable out-of-
pocket costs and expenses of preparation of the Loan Documents and all the costs
of furnishing all opinions by counsel for the Company (including without
limitation any opinions requested by the Banks as to any legal matters arising
hereunder), and of the Company's performance of and compliance with all
agreements and conditions contained therein on its part to be performed or
complied with; (b) the cost of delivering to the Banks any Notes pursuant to the
provisions of this Agreement; (c) the reasonable fees, expenses and
disbursements of the Agent and the Agent's counsel (including the allocated cost
of Agent's inhouse counsel and staff) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and the Loans
and any amendments and waivers hereto; and (d) after the occurrence of an Event
of Default, all actual and reasonable out-of-pocket costs and expenses
(including reasonable fees of law firms engaged by the Banks and the reasonable
estimate of the allocable costs of counsel in the staff of legal departments of
the Banks and costs of settlement) incurred by the Agent and each Bank in
enforcing any Obligations or in collecting any payments due from the Company
hereunder or under any Notes by reason of such Event of Default or in connection
with any refinancing or restructuring of any Loan Document in the nature of a
"work-out" or of any insolvency or bankruptcy proceeding.
10.5 Set Off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of and during the continuance of any Event of Default (after
the giving of any notice and the expiration of any grace period contained in the
definition thereof), each Bank and each subsequent holder of any Note is hereby
authorized by the Company at any time or from time to time, without notice to
the Company, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate any and all deposits (including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured but not including trust accounts) and any other indebtedness at any
time held or owing by that Bank or that subsequent holder or any Bank Affiliate
thereof to or for the credit or the account of the Company and to apply any such
amounts in accordance with the provisions of Section 2.13 irrespective of
whether or not that Bank or that subsequent holder shall have made any demand
hereunder and each such Bank Affiliate is hereby irrevocably authorized to
permit such setoff and appropriation.
10.6 Notices. Unless otherwise specifically provided herein,
-------
any notice or other communication herein required or permitted to be given shall
be in writing and may be
-58-
<PAGE>
personally served, telecopied, telexed or sent by United States mail and shall
be deemed to have been given upon delivery in person, receipt of telecopy or
telex or four Business Days after deposit in the United States mail, registered
or certified, with postage prepaid and properly addressed. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 10.6) shall be as set forth under each
party's name on Schedule 10.6 hereto.
10.7 Severability. In case any provision in or obligation
------------
under this Agreement or any Notes shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.8 Amendments and Waivers. No amendment or waiver of any
----------------------
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless the
same shall be in writing and signed by the Requisite Banks and the Company, and
acknowledged by the Agent, and then such waiver shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no such waiver, amendment, or consent shall, unless in writing and
- -------
signed by all the Banks and the Company, and acknowledged by the Agent, do any
of the following:
(a) increase or extend any Bank's Pro Rata Share of the Aggregate Loan
Commitment or the Receivables Commitment or subject any Bank to any additional
obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or of any fees or other amounts payable hereunder or under any Loan
Document;
(d) change the Pro Rata Share of the Aggregate Loan Commitment or the
Aggregate Receivables Commitment or of the aggregate unpaid principal amount of
any extension of credit which shall be required for the Banks or any of them to
take any action hereunder;
(e) amend this Section 10.8 or Section 2.13;
(f) amend Section 2.1, the definitions of "Pro Rata Share" or
"Requisite Banks;" or
-59-
<PAGE>
(g) discharge any Guarantor;
provided further, that no amendment, waiver or consent shall (i) unless in
- -------- -------
writing and signed by the Agent in addition to the Requisite Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under any
Loan Document; or (ii) have the effect of making any Bank's Loan Commitment or
Receivables Commitment be nonratable with its Receivables Commitment and its Pro
Rata Share of the Aggregate Unpaids (as defined in the Transfer and
Administration Agreement). No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.8 shall be binding upon each
holder of any Notes at the time outstanding, each future holder of the Notes
and, if signed by the Company, on the Company.
10.9 Obligations Several. The obligation of each Bank
-------------------
hereunder is several, and no Bank shall be responsible for any obligation or
commitment of any other Bank hereunder. Nothing contained in this Agreement and
no action taken by Banks pursuant hereto shall be deemed to constitute Banks to
be a partnership, an association, a joint venture or another entity.
10.10 Certain Changes. If (a) any changes in accounting
---------------
principles from those used in the preparation of the financial statements
referred to in Section 5.8 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or requested by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accounts (or successors thereto or agencies with similar functions) result in a
change in the method of calculation of financial covenants, standards or terms
found in Sections 1, 6 and 7, or (b) the Company changes the manner in which its
fiscal year, fiscal quarters and fiscal months are determined, the parties
hereto agree to enter into negotiations in order to amend the appropriate
provisions of this Agreement so as to equitably reflect such changes with the
desired result that the criteria for evaluating the Company's financial
condition and operations or establishing limitations hereunder shall be the same
after such changes as if such changes had not been made.
10.11 Headings. Section headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.12 Applicable Law. (a) This Agreement, any Notes and the
--------------
other Loan Documents shall be governed by, and shall be construed and enforced
in accordance with, the internal
-60-
<PAGE>
laws of the State of California, without regard to conflicts of laws principles.
(b) Any legal action or proceeding with respect to this Agreement and
any other Loan Documents may be brought in the courts of the State of California
or of the United States for the Central District of California, and by execution
and delivery of this Agreement, each of the Company, the Agent and the Banks
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each of the Company, the Agent and the Banks
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any document related hereto. The Company, the Agent and
the Banks each waive personal service of any summons, complaint or other
process, which may be made by any other means permitted by California law.
10.13 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank. No assignment or transfer of any
Bank will be permitted if such assignment or transfer would result in any Bank's
Pro Rata Share hereunder being a different percentage than its pro rata share of
the Total Outstanding Investment.
10.14 Counterparts. This Agreement and any amendments,
------------
waivers, consents, or supplements may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
10.15 Indemnity. Whether or not the transactions contemplated
---------
hereby are consummated, the Company shall indemnify and hold the Agent-Related
Persons, and each Bank and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
------------------
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable fees and out-of-pocket expenses of counsel and the
allocated cost of internal counsel) of any kind or nature whatsoever which may
at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any Bank)
be imposed on, incurred by or asserted against any such Person arising out of
this Agreement or any document contemplated by or referred to herein, or the
-61-
<PAGE>
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any proceeding of the
type referred to in Section 8.1(f) or (g) or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Company shall
----------------------- --------
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting from the gross negligence or willful
misconduct of such Indemnified Person.
The agreements in this Section shall survive payment of all other Obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MATTEL, INC.
By /s/ William Stavro
______________________________
Vice President and
Treasurer
AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
____________________________
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
___________________________
Robert W. Troutman
Managing Director
NATIONSBANK OF TEXAS, N.A.
By /s/ J. Blake Seaton
____________________________
Title Vice President
_________________________
(Signatures continue)
-62-
<PAGE>
CHEMICAL BANK
By /s/ David J. Corcoran
____________________________
Title: Vice President
_________________________
THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. Peter Mitchell
_____________________________
Title Director
_________________________
PNC BANK, NATIONAL ASSOCIATION
By /s/ Ted A. Dunn
____________________________
Title Assistant Vice President
_________________________
TORONTO-DOMINION (TEXAS), INC.
By /s/ Diane Bailey
____________________________
Title Vice President
_________________________
ABN AMRO BANK N.V.
By /s/ Matthew S. Thomson
____________________________
Title Group Vice President
_________________________
By /s/ Patrick A. Russo
____________________________
Title Assistant Vice President
_________________________
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
____________________________
Title Vice President
_________________________
(Signatures continue)
-63-
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
____________________________
Title Vice President
_________________________
By /s/ Deborah Gohh
____________________________
Title Vice President
_________________________
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Barbara J. Readick
____________________________
Title Vice President
_________________________
By /s/ Dennis G. Blank
____________________________
Title Vice President
-------------------------
ISTITUTO BANCARIO SAN PAOLO di TORINO SpA
By /s/ Donald W. Brown
____________________________
Title Branch Manager
_________________________
By /s/ Glen Binder
____________________________
Title Vice President
_________________________
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffrey R. Fenn
____________________________
Title Vice President
_________________________
MARINE MIDLAND BANK
By /s/ William M. Holland
____________________________
Title Vice President
_________________________
CITICORP USA, INC.
By /s/ Barbara A. Cohen
____________________________
Title Vice President
_________________________
-64-
<PAGE>
EXHIBIT A
---------
FORM OF NOTE
MATTEL, INC.
PROMISSORY NOTE
DUE MARCH 31, 1998
$___________ Los Angeles, California
March 10, 1995
FOR VALUE RECEIVED, MATTEL, INC., a Delaware corporation (the
"Company"), promises to pay to the order of _______________________ (the
"Payee"), the principal amount of $______________ or, if different, the
aggregate principal amount of Loans made by the Payee to the Company under the
Credit Agreement referred to below outstanding on the Termination Date.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement dated as of March 10, 1995, among the Company, the Banks named therein
and Bank of America National Trust and Savings Association, as Agent (as amended
from time to time, the "Credit Agreement").
This Note (this "Note") is one of the Company's Notes issued pursuant
to and entitled to the benefits of the Credit Agreement to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loans evidenced hereby are made and are to be repaid. Capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of Bank of America for credit to: BANCONTROL Account No. 12358-88449,
reference: Mattel, Inc., at 1850 Gateway Boulevard, Concord, California 94520
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Payee and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid; provided
--------
that the failure to make a notation of any payment made on this Note shall not
limit or otherwise affect the obligation of the Company hereunder with respect
to payments of principal or interest on this Note.
A-1
<PAGE>
This Note is subject to prepayment as provided in the Credit
Agreement. Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The Company promises to pay all actual and reasonable costs and
expenses, including reasonable attorneys' fees and the reasonably allocated cost
of inhouse counsel and staff, incurred in the collection and enforcement of this
Note. The Company and endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and the
place first above written.
MATTEL, INC.
By
--------------------------------
Title
-----------------------------
A-2
<PAGE>
TRANSACTIONS ON NOTE
--------------------
Type Amount Amount of Outstanding Nota-
of of End of Prin. or Principal tion
Loan Loan Interest Int. Paid Balance Made
Date Made Made Period This Date This Date By
- ---- ---- ---- -------- --------- ---------- -----
A-3
<PAGE>
EXHIBIT B
---------
NOTICE OF BORROWING
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Gentlemen:
Pursuant to Section 2.3 of that certain Credit Agreement dated as of
March 10, 1995 (the "Credit Agreement"; capitalized terms used herein shall have
the meanings assigned to them in the Credit Agreement), among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent"),
this represents the Company's request to borrow on __________, 19__ from the
Banks on a pro rata basis the aggregate principal amount of $__________ as [Base
Rate] [Eurodollar Rate] [CD Rate] Loans.
[The initial Interest period for such [Eurodollar Rate] [CD Rate] Loan
is requested to be a ________ month/day period].
The proceeds of such Loans are to be deposited in the Company's
account at Bank of America.
The undersigned officer, to the best of his knowledge, and the
Company certifies that (i) the representations and warranties of the Company
contained in the Credit Agreement are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof; (ii) no Default or Event of Default has occurred and is
continuing under the Credit Agreement or will result from the proposed
borrowing; and (iii) the Company has performed in all material respects all
agreements and satisfied all conditions under the Credit Agreement required to
be performed by it on or before the date hereof.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
B-1
<PAGE>
EXHIBIT C
---------
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Gentlemen:
1. Conversion Selection. Pursuant to Section 2.4 of that certain
--------------------
Credit Agreement dated as of March 10, 1995 (the "Credit Agreement") among
Mattel, Inc., a Delaware corporation (the "Company"), the Banks named therein
(the "Banks") and Bank of America National Trust and Savings Association, as
Agent (the "Agent"), please convert an aggregate of $________of existing [Base
Rate, Eurodollar Rate, CD Rate] Loans, the final day of the current Interest
Period (if applicable) of which is __________, 19__, to [Base Rate, Eurodollar
Rate, CD Rate] Loans, as follows:
Interest Period
(Eurodollar Rate and
Dollar Amount CD Rate Loans)
------------- ----------------------
$____________ ________months/days
Maturing on ____, 19__
2. Continuation Selection. Pursuant to Section 2.4 of the
----------------------
Agreement, please continue an aggregate of $_______of existing [Eurodollar Rate,
CD Rate] Loans, the final day of the current Interest Period of which is
__________, 19____, as follows:
Requested
Dollar Amount Interest Period
------------- ---------------
$___________ ______ months/days
Maturing on ______, 19___
C-1
<PAGE>
Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to them in the Agreement.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
C-2
<PAGE>
EXHIBIT D
---------
OFFICERS' CERTIFICATE
---------------------
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Chairman of the Board, President,
Executive Vice President or Senior Vice President] and [Chief Financial
Officer, Treasurer, Controller Assistant Treasurer or other] of Mattel,
Inc., a Delaware corporation (the "Company");
(2) We have reviewed the terms of the Credit Agreement dated as of
March 10, 1995, among the Company, the Banks named therein and Bank of
America National Trust and Savings Association, as Agent (the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned them in the Credit Agreement), and we have made, or have
caused to be made under our supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements; and
(3) The examinations described in paragraph (2) did not disclose, and
we have no knowledge of, the existence of any condition or event which
constitutes a Default or Event of Default (as defined in the Credit
Agreement) during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Officers'
Certificate, except as set forth below.
Describe below (or in a separate attachment to this Officers'
Certificate) the exceptions, if any, to paragraph (3) by listing, in detail, the
nature of the condition or event and the period during which it has existed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-1
<PAGE>
The foregoing certifications, together with the computations set forth
in Attachment No. 1 hereto and the financial statements delivered with this
Officers' Certificate in support hereof, are made and delivered this _____ day
of ______________, 19__ pursuant to subsection 6.1(c) of the Credit Agreement.
MATTEL, INC.
By: __________________________
Title: _______________________
By: _________________________
Title: ______________________
D-2
<PAGE>
ATTACHMENT NO. I TO
OFFICERS' CERTIFICATE
As of (Date)
-------------
($000's Omitted Except Ratio Amounts)
I. CONSOLIDATED FUNDED INDEBTEDNESS TO TOTAL CAPITALIZATION AS OF ABOVE DATE.
(Section 7.5)
<TABLE>
<S> <C>
A. Consolidated Funded Indebtedness:
1. Total liabilities for borrowed money:
-- Notes Payable: $
---------------
-- Current Portion of Long-Term Debt: $
---------------
-- Term Loans: $
---------------
-- Subordinated Debt: $
---------------
-- Senior Long-Term Debt: $
---------------
-- Mortgages: $
---------------
Total liabilities for borrowed money: $
---------------
2. Capital Leases: $
---------------
3. Guaranties of unconsolidated funded obligations for borrowed money: $
---------------
4. Total Consolidated Funded Indebtedness (Lines A1+A2+A3): $
===============
B. Consolidated Tangible Net Worth:
1. Net Worth: $
---------------
2. Foreign exchange currency translation adjustments: $
---------------
3. Intangible assets: $
---------------
4. Consolidated Tangible Net Worth (Line B1 - (B2+B3)): $
===============
C. Total Outstanding Investment: $
---------------
D. Consolidated Funded Indebtedness plus Total Outstanding Investment (Lines A4+C): $
---- ===============
</TABLE>
D-3
<PAGE>
<TABLE>
<S> <C>
E. Consolidated Funded Indebtedness plus Total Outstanding Investment plus Consolidated
---- ----
Tangible Net Worth (Lines D+B4): $
===============
F. Actual percentage of Consolidated Adjusted Debt plus Total Outstanding Investment
----
of Consolidated Funded Indebtedness plus Total Outstanding Investment plus
---- ----
Consolidated Tangible Net Worth (Line D/E): %
---------------
G. Permitted maximum percentage of Consolidated Funded Indebtedness plus Total
----
Outstanding Investment to Consolidated Funded Indebtedness plus Total Outstanding
----
Investment plus Consolidated Tangible Net Worth: (55%) (65%)
----
</TABLE>
II. CONSOLIDATED TANGIBLE NET WORTH AS OF ABOVE DATE. (Section 7.6)
<TABLE>
<S> <C>
A. Minimum required Consolidated Tangible Net Worth
1. 50% of Consolidated Net Income for all fiscal quarters subsequent to
December 31, 1993: $
---------------
2. Any Net Issuance Proceeds subsequent to December 31, 1993: $
---------------
3. Minimum Consolidated Tangible Net Worth required by covenant
($530,000,000 + Line A1+A2): $
===============
B. Actual Consolidated Tangible Net Worth (Line I.B4): $
---------------
C. Excess (Deficit) Consolidated Tangible Net Worth (Line B-A3): $
===============
</TABLE>
III. INTEREST COVERAGE RATIO AS OF ABOVE DATE. (Section 7.7)
<TABLE>
<S> <C>
A. Company's net income
1. Company's net income from continuing operations, for the four consecutive
fiscal quarters ending on such date: $
---------------
2. Special items: $
---------------
3. Minority interest: $
---------------
4. Gains on reacquisition of debt: $
---------------
</TABLE>
D-4
<PAGE>
<TABLE>
<S> <C>
5. Total (Line A1 - Line A1+A2+A3): $
===============
B. Income taxes accrued for the four consecutive fiscal quarters ending on such date: $
---------------
C. Interest accrued for the four consecutive fiscal quarters ending on such date,
excluding capitalized interest and without regard to interest income: $
---------------
D. Depreciation and amortization for the four consecutive fiscal quarters
ending on such date: $
---------------
E. Total (Lines A5+B+C+D): $
================
F. Interest incurred for the four consecutive fiscal quarters ending on such date,
including capitalized interest and without regard to interest income: $
---------------
G. Actual Ratio (Line E/Line F): ______ to 1
H. Required Minimum Ratio 3.5 to 1
</TABLE>
D-5
<PAGE>
EXHIBIT E
---------
[FORM OF OPINION OF ASSISTANT
GENERAL COUNSEL OF COMPANY]
[EFFECTIVE DATE]
To: The Banks Listed on Schedule A Hereto and Bank of America National Trust
and Savings Association, as Agent
Re: Credit Agreement dated as of March 10, 1995, among Mattel, Inc., the
Banks named therein and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
I am the Assistant General Counsel of Mattel, Inc., a Delaware corporation
(the "Company"), and in that capacity have acted as counsel to the Company, and
Mattel Sales Corp., a California corporation ("Mattel Sales"), and Fisher-Price,
Inc., a Delaware corporation ("Fisher-Price") in connection with the Credit
Agreement dated as of March 10, 1995 (the "Credit Agreement"). This opinion is
rendered to you in compliance with Section 4.1(r) of the Credit Agreement.
Capitalized terms used herein without definition have the same meanings as in
the Credit Agreement.
In my capacity as such counsel, I have examined originals, or copies
identified to my satisfaction as being true copies, of such records, documents
or other instruments as in my judgment, are necessary or appropriate to enable
me to render the opinions expressed below. These records, documents and
instruments included the following:
(a) The Restated Certificate of Incorporation of the Company, the Articles
of Incorporation of Mattel Sales and the Certificate of Incorporation of
Fisher-Price, each as amended to date;
(b) The respective bylaws of the Company, Mattel Sales and Fisher-Price,
each as amended to date;
(c) All records of proceedings and actions of the respective Boards of
Directors of the Company, Mattel Sales and Fisher-Price with respect to the
Credit Agreement and the transactions contemplated thereby;
(d) The Credit Agreement;
E-1
<PAGE>
(e) The Mattel Sales Guaranty and the Fisher-Price Guaranty;
(f) The Mattel Sales Subordination Agreement and the Fisher-Price
Subordination Agreement;
(g) The agreements to which the Company, Mattel Sales and Fisher-Price are
subject and by which any material portion of their assets are bound,
identified to me by responsible officers of the Company and its Subsidiaries
(the "Material Agreements");
(h) The contracts, agreements and instruments involving the borrowing of
money in amounts of $15,000,000 or more currently extended or available for
borrowing to which the Company, Mattel Sales and Fisher-Price are subject or
by which any of their assets are bound, identified to me by responsible
officers of the Company as being all such contracts, agreements and
instruments (the "Other Loan Agreements"); and
(i) The orders, judgments and decrees to which the Company, Mattel Sales
and Fisher-Price are subject or by which any material portion of its assets is
bound, identified to me by responsible officers of the Company as being all
such orders, judgments and decrees (the "Judicial Orders").
I have been furnished with, and with the Banks' consent have relied upon,
certificates of officers of the Company, Mattel Sales and Fisher-Price with
respect to certain factual matters, copies of which have been delivered to the
Banks. In addition, I have obtained and relied upon such certificates and
assurances from public officials as I have deemed necessary, copies of which
have been delivered to the Banks.
I have investigated such questions of law for the purpose of rendering
this opinion as I have deemed necessary. I am opining herein as to the effect
on the subject transactions of only United States federal law, the General
Corporation Law of the State of Delaware and the laws of the State of
California.
Certain of the opinions rendered herein are qualified by the discussion
following the numbered paragraphs of my opinion.
On the basis of the foregoing, and in reliance thereon, I am of the
opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Credit Agreement, the Mattel Sales Subordination
Agreement and the Fisher-Price Subordination
E-2
<PAGE>
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement, the Mattel Sales Subordination
Agreement and the Fisher-Price Subordination Agreement.
2. Mattel Sales is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Mattel Sales Guaranty and the Mattel Sales Subordination
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Mattel Sales Guaranty. Mattel Sales is a wholly-owned
subsidiary of the Company.
3. Fisher-Price is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Fisher-Price Guaranty and the Fisher-Price Subordination
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Fisher-Price Guaranty. Fisher-Price is a wholly-owned
subsidiary of the Company.
4. The execution and delivery of the Credit Agreement, the Mattel Sales
Subordination Agreement and the Fisher-Price Subordination Agreement have been
duly authorized by all necessary corporate action on the part of the Company.
The Credit Agreement, the Mattel Sales Subordination Agreement and the Fisher-
Price Subordination Agreement have been duly executed and delivered by the
Company. The Credit Agreement, the Mattel Sales Subordination Agreement and the
Fisher-Price Subordination Agreement constitute the legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
5. The execution and delivery of the Mattel Sales Guaranty and the
acknowledgement of the Mattel Sales Subordination Agreement have been duly
authorized by all necessary corporate action on the part of Mattel Sales. The
Mattel Sales Guaranty has been duly executed and delivered by Mattel Sales, and
the Mattel Sales Subordination Agreement has been duly acknowledged by Mattel
Sales. The Mattel Sales Guaranty constitutes the legally valid and binding
obligations of Mattel Sales, enforceable against Mattel Sales in accordance with
its terms.
6. The execution and delivery of the Fisher-Price Guaranty and the
acknowledgement of the Fisher-Price Subordination Agreement have been duly
authorized by all necessary corporate action on the part of Fisher-Price. The
Fisher-Price Guaranty
E-3
<PAGE>
has been duly executed and delivered by Fisher-Price, and the Fisher-Price
Subordination Agreement has been duly acknowledged by Fisher-Price. The Fisher-
Price Guaranty constitutes the legally valid and binding obligations of Fisher-
Price, enforceable against Fisher-Price in accordance with its terms.
7. Neither the execution and delivery of the Credit Agreement, the Mattel
Sales Subordination Agreement, the Mattel Sales Guaranty, the Fisher-Price
Subordination Agreement or the Fisher-Price Guaranty by the Company, Mattel
Sales or Fisher-Price, as the case may be, the acknowledgement of the Mattel
Sales Subordination Agreement by Mattel Sales, the acknowledgement of the
Fisher-Price Subordination Agreement by Fisher-Price nor the consummation of the
transactions contemplated thereby, nor compliance on or prior to the date hereof
with the terms and conditions thereof applicable to the Company, Mattel Sales or
Fisher-Price, as the case may be, (A) conflicts with, results in a breach of, or
constitutes a default under, any of the terms, conditions or provisions of (v)
the Restated Certificate of Incorporation or Bylaws of the Company, (w) the
Articles of Incorporation or Bylaws of Mattel Sales, (x) the Certificate of
Incorporation or Bylaws of Fisher-Price, (y) any Material Agreement, any Other
Loan Agreement or any Judicial Order, or (z) any present federal, California or
Delaware statute binding on the Company, Mattel Sales or Fisher-Price or (B)
results in the creation of any lien upon any of the properties or assets of the
Company, Mattel Sales or Fisher-Price under any Material Agreement, any Other
Loan Agreement or any Judicial Order other than Liens created by or pursuant to
the Transfer and Administration Agreement in favor of the Transfer and
Administration Agent.
8. To the best of my knowledge and without having made any independent
investigation there is no action, suit, proceeding or arbitration at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to my knowledge, threatened against or affecting the
Company, Mattel Sales or Fisher-Price or any of their properties which would
result in any material adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or would materially adversely affect the
Company's, Mattel Sales' or Fisher-Price's ability to perform its Obligations.
9. The making of the Loans and the application of the proceeds thereof by
the Company as provided in the Credit Agreement do not violate Regulations G, T,
U or X of the Board of Governors of the Federal Reserve System.
10. No governmental consents, approvals, authorizations, registrations,
declarations or filings are required by the Company, Mattel Sales or Fisher-
Price under federal or California
E-4
<PAGE>
law or under the Delaware General Corporation Law in connection with the
extensions of credit under the Credit Agreement.
11. The Company is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
The opinions expressed in paragraphs 4, 5 and 6 hereof with respect to the
validity, binding effect and enforceability of the Credit Agreement, the Mattel
Sales Guaranty, the Mattel Sales Subordination Agreement, the Fisher-Price
Guaranty and the Fisher-Price Subordination Agreement (the "Documents") are
subject to the following limitations, qualifications and exceptions:
(i) Limitations imposed by law or equitable principles upon the specific
enforceability of any of the remedies, covenants and other provisions of the
Documents and upon the availability of injunctive relief or other equitable
remedies;
(ii) The effect upon the Documents of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
enforceability of creditors' rights generally, including without limitation,
the effect of Bankruptcy Code Section 547 on preferential transfers and
Section 548 on fraudulent transfers and comparable provisions of state law;
(iii) The effect of judicial decisions, invoking statutes or principles
of equity, which have held that certain covenants and provisions of agreements
are unenforceable where (y) the breach of such covenants or provisions imposes
restrictions or burdens upon the debtor, including the acceleration of
indebtedness due under debt instruments, and it cannot be demonstrated that
the enforcement of such restrictions or burdens is reasonably necessary for
the protection of the creditor, or (z) the creditor's enforcement of such
covenants or provisions under the circumstances would violate the creditor's
implied covenant of good faith and fair dealing; however, in my opinion,
acceleration of the maturity date of the Loans would be available as provided
in the Credit Agreement if an Event of Default occurs as a result of a
material breach by the Company of a material covenant contained in the
Documents;
(iv) The unenforceability under certain circumstances of provisions
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(v) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not
E-5
<PAGE>
exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, that election of a particular
remedy or remedies does not preclude recourse to one or more other remedies or
that failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any right or remedy;
(vi) The unenforceability under certain circumstances, under state or
federal law or court decisions, of provisions indemnifying a party against
liability for its own wrongful or negligent acts or where such indemnification
is contrary to public policy or prohibited by law;
(vii) The unenforceability under certain circumstances of provisions
imposing penalties, forfeitures, late payment charges or any increase in
interest rate upon delinquency in payment or upon occurrence of a default;
(viii) The effect of California law which provides that, where a contract
permits one party to the contract to recover attorneys' fees, the prevailing
party in any action to enforce any provisions of the contract shall be
entitled to recover its reasonable attorneys' fees; and
(ix) the requirements of the California Commercial Code that party
exercise its rights under the Documents in good faith and in a commercially
reasonable manner.
I also advise you of California statutory provisions and case law to the
effect that, in certain circumstances, a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
consent of the guarantor, elects remedies for default that impair the
subrogation rights of the guarantor against the principal, or otherwise takes
any action without notifying the guarantor that materially prejudices the
guarantor. However, there is also authority to the effect that a guarantor may
validly waive such rights if the waivers are expressly set forth in the
guaranty. While I believe that a California court should hold that the explicit
language contained in the Mattel Sales Guaranty and the Fisher-Price Guaranty
waiving such rights is enforceable, I express no opinion with respect to the
effect of: (i) any modification to or amendment of the obligations of Mattel
Sales or Fisher-price that materially increases such obligations; (ii) any
election of remedies by the Banks following the occurrence of an event of
default under the Documents; or (iii) any other action by the Banks that
materially prejudices the grantor.
The opinions set forth in paragraphs 7 and 10 are based upon consideration
of only those laws and statues which, in my experience, are normally applicable
to unsecured loans and guaranties.
E-6
<PAGE>
To the extent that the obligations of the Company and Mattel Sales may be
dependant upon such matters, I assume for purposes of this opinion that the
parties to the Documents (other than the Company, Mattel Sales and Fisher-Price)
are duly incorporated, validly existing and in good standing under the laws of
their respective jurisdiction of incorporation; that the Documents have been
duly authorized, executed and delivered by the parties thereto (other than the
Company, Mattel Sales and Fisher-Price), and constitute their legally valid and
binding obligations, enforceable against them in accordance with their
respective terms; that the parties to the Documents (other than the Company,
Mattel Sales and Fisher-Price) have the requisite corporate or other
organizational power and authority to perform their respective obligations under
the Documents; and that all parties to the Documents (other than the Company,
Mattel Sales and Fisher-Price) have filed any applicable returns and paid any
applicable taxes under the California Franchise Tax Law. I am not expressing
any opinion as to the effect of the compliance by the parties to the Documents
(other than the Company, Mattel Sales and Fisher-Price) with any state or
federal laws or regulations applicable to the transactions. In rendering my
opinions in paragraphs 4, 5 and 6 hereof, I have assumed that each Bank is
exempt from the California usury laws.
This opinion is rendered only to the Agent, the Banks and their permitted
Assignees and Participants and is solely for their benefit in connection with
the above transactions. This opinion may not be relied upon by the Banks for an
other purpose, or relied upon by any other person, firm or corporation for any
purpose without my prior written consent; except that this opinion may be
furnished or quoted to your legal counsel and independent auditors in connection
with the above transactions, to regulatory authorities having jurisdiction over
you, to your holding company and as otherwise compelled by legal process.
Very truly yours,
Robert Normile
Vice President,
Assistant General Counsel
and Assistant Secretary
E-7
<PAGE>
SCHEDULE A
Bank of America National Trust
and Savings Association
ABN AMRO Bank N.V.
Banque Nationale de Paris
The Bank of California, N.A.
Chemical Bank
Citicorp USA, Inc.
Dresdner Bank AG, Los Angeles Agency
The First National Bank of Boston
Marine Midland Bank
Istituto Bancario San Paolo di Torino SpA
Manufacturers & Traders Trust Co.
NationsBank of Texas, N.A.
PNC Bank, National Association
Toronto-Dominion (Texas), Inc.
E-8
<PAGE>
EXHIBIT F-1
-----------
FISHER-PRICE, INC.
------------------
CONTINUING GUARANTY
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent ("Agent")
PRELIMINARY STATEMENTS:
A. Concurrently herewith, Mattel, Inc., a Delaware corporation (the
"Company"), the Banks named therein (the "Domestic Banks") and Bank of America
National Trust and Savings Association, as agent (the "Agent"), are entering
into a Credit Agreement dated as of even date herewith (said agreement, as it
may hereafter be amended, supplemented, restated or otherwise modified from time
to time, is referred to herein as the "Credit Agreement"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement).
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered into credit facilities with one or more Banks or
foreign affiliates of the Banks (the "Foreign Banks"), and the Company has
guarantied the obligations of such Foreign Subsidiaries under such credit
facilities pursuant to one or more guaranties (the "Foreign Subsidiary
Guaranties"), and it is contemplated that one or more Foreign Subsidiaries may
hereafter enter into such credit facilities with one or more Foreign Banks, and
that the Company may guaranty the obligations of such Foreign Subsidiaries
thereunder pursuant to one or more Foreign Subsidiary Guaranties.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that the Guarantor enter into this Continuing Guaranty guarantying all
obligations of every nature of the Company and Mattel Sales from time to time
owed under or in respect of (i) the Credit Agreement, the Loans, and the other
Loan Documents (all such obligations are referred to herein as the "Domestic
Bank Obligations"), (ii) the Foreign Subsidiary Guaranties (such obligations are
referred to herein as the "Foreign Subsidiary Guaranty Obligations") and (iii)
any letters of credit issued by a Bank in its individual capacity for the
account of the Company outside the Credit Agreement (such obligations are
referred to herein as the "Company Letter of Credit Obligations").
F-1-1
<PAGE>
NOW, THEREFORE, the Guarantor agrees as follows:
1. For valuable consideration, the undersigned Guarantor unconditionally,
absolutely and irrevocably guarantees and promises to pay to the Agent, or
order, on demand, in lawful money of the United States and in immediately
available funds, any and all present or future Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
owing to the Agent, the Domestic Banks, the Foreign Banks and the Agent
(collectively, the "Guarantied Parties"). The terms Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
(hereinafter collectively referred to as the "Obligations") are used herein in
their most comprehensive sense and include any and all advances, debts,
obligations, and liabilities of the Company, now, or hereafter made, incurred,
or created, whether voluntary or involuntarily, and however arising, including,
without limitation, any and all attorneys' fees (including the allocated cost of
inhouse counsel), costs, premiums, charges, or interest owed by the Company to
the Guarantied Parties, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether the Company may
be liable individually or jointly with others, whether recovery upon such
indebtedness may be or hereafter becomes barred by any statute of limitations or
whether such indebtedness may be or hereafter become otherwise unenforceable.
2. This Guaranty is a continuing guaranty which relates to any
Obligations, including those which arise under successive transactions which
shall either cause the Company to incur new Obligations, continue the
Obligations from time to time, or renew them after they have been satisfied.
The Guarantor agrees that nothing shall discharge or satisfy its obligations
created hereunder except for the full payment of the Obligations. Any payment
by the Guarantor shall not reduce its maximum obligation hereunder.
3. The Guarantor agrees that it is directly and primarily liable to the
Agent for the benefit of the Guarantied Parties, that its obligations hereunder
are independent of the Obligations of the Company, or of any other guarantor,
and that a separate action or actions may be brought and prosecuted against the
Guarantor, whether action is brought against the Company or whether the Company
is joined in any such action or actions. The Guarantor agrees that any releases
which may be given by the Agent and the Guarantied Parties to the Company or any
other guarantor shall not release it from this Guaranty.
4. The obligations of the Guarantor under this Guaranty shall not be
affected, modified or impaired upon the occurrence from time to time of any of
the following, whether or not with notice to or the consent of the Guarantor:
F-1-2
<PAGE>
(a) the compromise, settlement, change, modification, amendment (whether
material or otherwise) or partial termination of any or all of the Obligations;
(b) the failure to give notice to the Guarantor of the occurrence of any
Event of Default under the terms and provisions of the Agreement;
(c) the waiver of the payment, performance or observance of any of the
Obligations;
(d) the taking or omitting to take any actions referred to in any Loan
Document or of any action under this Guaranty;
(e) any failure, omission or delay on the part of the Agent and/or the
Guarantied Parties to enforce, assert or exercise any right, power or remedy
conferred in this Guaranty, the Credit Agreement, any other Loan Document or any
other indulgence or similar act on the part of the Agent and/or the Guarantied
Parties in good faith and in compliance with applicable law;
(f) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshalling of assets,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors or
readjustment of, or other similar proceedings which affect the Guarantor, any
other guarantor of any of the Obligations of the Company or any of the assets of
any of them, or any allegation of invalidity or contest of the validity of this
Guaranty in any such proceeding;
(g) to the extent permitted by law, the release or discharge of any other
guarantors of the Obligations from the performance or observance of any
obligation, covenant or agreement contained in any guaranties of the Obligations
by operation of law; or
(h) the default or failure of any other guarantors of the Obligations
fully to perform any of their respective obligations set forth in any such
guaranties of the Obligations.
To the extent any of the foregoing refers to any actions which the Agent or
the Guarantied Parties may take, the Guarantor hereby agrees that the Agent
and/or the Guarantied Parties may take such actions in such manner, upon such
terms, and at such times as the Agent or the Guarantied Parties, in their
discretion, deem advisable, without, in any way or respect, impairing,
affecting, reducing or releasing the Guarantor from its undertakings hereunder
and the Guarantor hereby consents to each and all of the foregoing actions,
events and occurrences.
F-1-3
<PAGE>
5. The Guarantor hereby waives:
(a) any and all rights to require the Agent or the Guarantied Parties to
prosecute or seek to enforce any remedies against the Company or any other party
liable to the Agent or the Guarantied Parties on account of the Obligations;
(b) any right to assert against the Agent or the Guarantied Parties any
defense (legal or equitable), set-off, counterclaim, or claim which the
Guarantor may now or at any time hereafter have against the Company or any other
party liable to the Agent or the Guarantied Parties in any way or manner under
the Credit Agreement;
(c) all defenses, counterclaims and off-sets of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of any Loan Document and the security
interest granted pursuant thereto;
(d) any defense arising by reason of any claim or defense based upon an
election of remedies by the Agent or the Guarantied Parties including, without
limitation, any direction to proceed by judicial or nonjudicial foreclosure or
by deed in lieu thereof, which, in any manner impairs, affects, reduces,
releases, destroys or extinguishes the Guarantor's subrogation rights, rights to
proceed against the Company for reimbursement, or any other rights of the
Guarantor to proceed against the Company, against any other guarantor, or
against any other security, with the Guarantor understanding that the exercise
by the Agent and/or the Guarantied Parties of certain rights and remedies may
offset or eliminate the Guarantor's right of subrogation against the Company,
and that the Guarantor may therefore incur partially or totally non-reimbursable
liability hereunder;
(e) all presentments, demands for performance, notices of non-performance,
protests, notices of protest, notices of dishonor, notices of default, notice of
acceptance of this Guaranty, and notices of the existence, creation, or
incurring of new or additional indebtedness, and all other notices or
formalities to which the Guarantor may be entitled; and
(f) without limiting the generality of the foregoing, the Guarantor hereby
expressly waives any and all benefits of California Civil Code Sections 2809,
2810, 2819, 2825, 2839 and 2845 through 2850.
6. The Guarantor hereby agrees that unless and until all Obligations have
been paid to the Agent and the Guarantied Parties in full, it shall not have any
rights of subrogation, reimbursement or contribution as against the Company or
any other guarantor, if any, and shall not seek to assert or enforce the
F-1-4
<PAGE>
same. Guarantor understands that the exercise by Agent of certain rights and
remedies contained in the Loan Documents may affect or eliminate Guarantor's
right of subrogation if any, against the Company and that Guarantor may
therefore incur a partially or totally non-reimbursable liability hereunder;
nevertheless, Guarantor hereby authorizes and empowers the Agent and the
Guarantied Parties to exercise, in their sole discretion, any right and remedy,
or any combination thereof, which may then be available, since it is the intent
and purpose of Guarantor that the obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.
7. The Guarantor is presently informed of the financial condition of the
Company and of all other circumstances which a diligent inquiry would reveal and
which bear upon the risk of nonpayment of the Obligations. The Guarantor hereby
covenants that it will continue to keep itself informed of the financial
condition of the Company, the status of other guarantors, if any, and of all
other circumstances which bear upon the risk of nonpayment. The Guarantor
hereby waives its right, if any, to require the Agent or the Guarantied Parties
to disclose to it any information which the Agent or any Bank may now or
hereafter acquire concerning such condition or circumstances including, but not
limited to, the release of any other guarantor.
8. The Agent and each Bank's books and records evidencing the Obligations
shall be admissible in any action or proceeding and shall be binding upon the
Guarantor for the purpose of establishing the terms set forth therein and shall
constitute prima facie proof thereof.
9. Notwithstanding anything to the contrary contained herein, the
Guarantor's liability pursuant to this Guaranty shall be limited to the greater
of: (a) the 'reasonably equivalent value,' received by the Guarantor or any of
its subsidiaries arising out of the Loan Documents (including, without
limitation, repayment of intercompany or third party debt of, investments made
in, and capital contributions, advances and loans made to, the Guarantor or any
of its subsidiaries, directly or indirectly, by Company or any other subsidiary
with, or as a direct or indirect result of obtaining, the proceeds of any credit
extended under the Loan Documents) in exchange for or in connection with the
Guarantor's guaranty of the Obligations, and (b) 95% of the excess of (i) a
'fair valuation' of the amount of the assets and other property of the Guarantor
and its subsidiaries taken as a whole as of the applicable date of determination
of the incurrence of the Guarantor's obligations hereunder over (ii) a 'fair
----
valuation' of the Guarantor's and its subsidiaries' debts taken as a whole as of
such date, but excluding liabilities arising under this Guaranty and excluding
all liabilities owing by Guarantor and its subsidiaries taken as a whole to the
Company or any other Subsidiary or otherwise subordinated to the Guarantor's
obligations hereunder, it being understood that a
F-1-5
<PAGE>
portion of such indebtedness owing to Company shall be discharged on a dollar-
for-dollar basis in an amount equal to the amount paid by Guarantor hereunder.
The meaning of the terms 'reasonably equivalent value' and 'fair valuation,' and
the calculations of assets and other property and debts, shall be determined in
accordance with the applicable federal and California state laws in effect on
the date hereof governing the determination of the insolvency of a debtor and to
further the intent of all parties hereto to maximize the amount payable by the
Guarantor without rendering it insolvent or leaving it with an unreasonably
small amount of capital in relation to its business, in either case, at the
applicable date for the determination of the incurrence of its obligations
hereunder; provided, however, the Guarantor agrees, to the maximum extent
-------- -------
permitted by law, that 'fair valuation' of the Guarantor's and its subsidiaries'
assets and other properties means the fair market sales price as would be
obtained in an arms-length transaction between competent, informed and willing
parties under no compulsion to sell or buy or collections thereof obtained in
the ordinary course of business and 'fair valuation' of its debts means the
amount, in light of the applicable circumstances, at the time, for which the
Guarantor or its subsidiaries is liable for matured known liquidated liabilities
or would reasonably be expected to become liable on contingent or unliquidated
liabilities as they mature and taking into consideration the nature of any such
contingency and the probability that liability would be imposed.
10. The Guarantor represents and warrants for and with respect to itself
that:
(a) The Guarantor is a corporation duly organized and existing under the
laws of the state of California, and is properly licensed and in good standing
in, and where necessary to maintain its rights and privileges have complied with
the fictitious name statute of, every jurisdiction in which it is doing
business, except where the failure to be licensed or be in good standing or
comply with any such statute will not have a material adverse effect on the
ability of the Guarantor to perform its obligations hereunder or under any
instrument or agreement required hereunder;
(b) The execution, delivery and performance of this Guaranty and any
instrument or agreement required hereunder are within the power of the
Guarantor, have been duly authorized by, and are not in conflict with the terms
of any charter, by-law or other organization papers of, the Guarantor;
(c) No approval, consent, exemption or other action by, or notice to or
filing with, any governmental authority is necessary in connection with the
execution, delivery, performance or enforcement of this Guaranty or any
instrument or agreement required hereunder, except as may have been obtained and
F-1-6
<PAGE>
certified copies of which have been delivered to Agent and the Guarantied
Parties;
(d) There is no law, rule or regulation, nor is there any judgment,
decree or order of any court or governmental authority binding on the Guarantor,
which would be contravened by the execution, delivery, performance or
enforcement of this Guaranty or any instrument or agreement required hereunder;
(e) This Guaranty is a legal, valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly legal, valid, binding and enforceable, except where
enforceability thereof may be limited by applicable law relating to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the application of general principles of equity;
(f) There is no action, suit or proceeding pending against, or to the
knowledge of the Guarantor, threatened against or affecting the Guarantor,
before any court or arbitrator or any governmental body, agency or official
which in any manner draws into question the validity or enforceability of this
Guaranty; and
(g) The execution, delivery and performance by the Guarantor of this
Guaranty does not constitute, to the best knowledge of Guarantor, a "fraudulent
conveyance," "fraudulent obligation" or "fraudulent transfer" within the
meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent
Transfer Act, as enacted in any jurisdiction.
11. Any one of the following events shall constitute an "Event of
Bankruptcy:"
(a) The Guarantor or the Company is generally not paying or admits in
writing its inability to pay its debts as such debts become due, or files any
petition or action for relief under any bankruptcy, reorganization, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
now or hereafter in effect, or makes any assignment for the benefit of
creditors, or takes any corporate action in furtherance of any of the foregoing;
(b) An involuntary petition is filed against the Guarantor or the Company
under any bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property of
the Guarantor or the Company, unless such petition or appointment is set aside
or withdrawn or ceases to be in effect
F-1-7
<PAGE>
within sixty (60) days from the date of said filing or appointment.
Upon the occurrence of an Event of Bankruptcy, without notice or demand, any and
all of the Guarantor's obligations under this Guaranty shall become due, payable
and enforceable against the Guarantor whether or not the Obligations are then
due and payable.
12. All notices and other communications hereunder shall be delivered, in
the manner and with the effect provided in the Credit Agreement and, in the case
of the Guarantor, in care of the Company.
13. This Guaranty shall be binding upon the successors and assigns of the
Guarantor and shall inure to the benefit of the Agent's and the Guarantied
Parties' successors and assigns. This Guaranty cannot be assigned by the
Guarantor without the prior written consent of the Agent and the Guarantied
Parties which shall be in the Agent's and the Guarantied Parties' sole and
absolute discretion.
14. No failure or delay by the Agent or the Guarantied Parties in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
15. The Guarantor shall pay (a) all reasonable out-of-pocket expenses of
the Agent and the Guarantied Parties, including reasonable fees and
disbursements of counsel (including the allocated cost of inhouse counsel and
staff) for the Agent, in connection with any waiver or consent hereunder or any
amendment hereof and (b) all out-of-pocket expenses incurred by the Agent and
the Guarantied Parties, including fees and disbursements of counsel (including
the allocated cost of inhouse counsel and staff), in connection with the
enforcement of this Guaranty (whether or not suit is brought).
16. No modification of this Guaranty shall be effective for any purpose
unless it is in writing and executed by an officer of the Agent authorized to do
so. This Guaranty merges all negotiations, stipulations and provisions relating
to the subject matter of this Guaranty which preceded or may accompany the
execution of this Guaranty.
17. This Guaranty and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of California without reference to the principles of conflicts of laws thereof.
F-1-8
<PAGE>
18. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
19. Terms not defined herein shall have the meanings assigned to them in
the Credit Agreement.
20. Any indebtedness of the Company now or hereafter held by Guarantor is
hereby subordinated to the indebtedness of the Company to the Agent and the
Guarantied Parties; and such indebtedness of the Company to the Guarantor if the
Agent so requests shall be collected, enforced and received by Guarantor as
trustee for the Agent and the Guarantied Parties and be paid over to the Agent
on account of the indebtedness of the Company to the Agent and the Guarantied
Parties but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this guaranty.
21. It is not necessary for the Guarantied Parties to inquire into the
powers of any Guaranteed Party or of the officers, directors or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
Executed as of the 10th day of March 1995.
FISHER-PRICE, INC.
By: ____________________________
Title:__________________________
BANK OF AMERICA NATIONAL TRUST
SAVINGS ASSOCIATION, as
Agent
By: ____________________________
Title:_________________________
F-1-9
<PAGE>
EXHIBIT F-2
-----------
MATTEL SALES CORP.
------------------
CONTINUING GUARANTY
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent ("Agent")
PRELIMINARY STATEMENTS:
A. Concurrently herewith, Mattel, Inc., a Delaware corporation (the
"Company"), the Banks named therein (the "Domestic Banks") and Bank of America
National Trust and Savings Association, as agent (the "Agent"), are entering
into a Credit Agreement dated as of even date herewith (said agreement, as it
may hereafter be amended, supplemented, restated or otherwise modified from time
to time, is referred to herein as the "Credit Agreement"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement).
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered into credit facilities with one or more Banks or
foreign affiliates of the Banks (the "Foreign Banks"), and the Company has
guarantied the obligations of such Foreign Subsidiaries under such credit
facilities pursuant to one or more guaranties (the "Foreign Subsidiary
Guaranties"), and it is contemplated that one or more Foreign Subsidiaries may
hereafter enter into such credit facilities with one or more Foreign Banks, and
that the Company may guaranty the obligations of such Foreign Subsidiaries
thereunder pursuant to one or more Foreign Subsidiary Guaranties.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that the Guarantor enter into this Continuing Guaranty guarantying all
obligations of every nature of the Company and Fisher-Price from time to time
owed under or in respect of (i) the Credit Agreement, the Loans, and the other
Loan Documents (all such obligations are referred to herein as the "Domestic
Bank Obligations"), (ii) the Foreign Subsidiary Guaranties (such obligations are
referred to herein as the "Foreign Subsidiary Guaranty Obligations") and (iii)
any letters of credit issued by a Bank in its individual capacity for the
account of the Company outside the Credit Agreement (such obligations are
referred to herein as the "Company Letter of Credit Obligations").
F-2-1
<PAGE>
NOW, THEREFORE, the Guarantor agrees as follows:
1. For valuable consideration, the undersigned Guarantor unconditionally,
absolutely and irrevocably guarantees and promises to pay to the Agent, or
order, on demand, in lawful money of the United States and in immediately
available funds, any and all present or future Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
owing to the Agent, the Domestic Banks, the Foreign Banks and the Agent
(collectively, the "Guarantied Parties"). The terms Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
(hereinafter collectively referred to as the "Obligations") are used herein in
their most comprehensive sense and include any and all advances, debts,
obligations, and liabilities of the Company, now, or hereafter made, incurred,
or created, whether voluntary or involuntarily, and however arising, including,
without limitation, any and all attorneys' fees (including the allocated cost of
inhouse counsel), costs, premiums, charges, or interest owed by the Company to
the Guarantied Parties, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether the Company may
be liable individually or jointly with others, whether recovery upon such
indebtedness may be or hereafter becomes barred by any statute of limitations or
whether such indebtedness may be or hereafter become otherwise unenforceable.
2. This Guaranty is a continuing guaranty which relates to any
Obligations, including those which arise under successive transactions which
shall either cause the Company to incur new Obligations, continue the
Obligations from time to time, or renew them after they have been satisfied.
The Guarantor agrees that nothing shall discharge or satisfy its obligations
created hereunder except for the full payment of the Obligations. Any payment
by the Guarantor shall not reduce its maximum obligation hereunder.
3. The Guarantor agrees that it is directly and primarily liable to the
Agent for the benefit of the Guarantied Parties, that its obligations hereunder
are independent of the Obligations of the Company, or of any other guarantor,
and that a separate action or actions may be brought and prosecuted against the
Guarantor, whether action is brought against the Company or whether the Company
is joined in any such action or actions. The Guarantor agrees that any releases
which may be given by the Agent and the Guarantied Parties to the Company or any
other guarantor shall not release it from this Guaranty.
4. The obligations of the Guarantor under this Guaranty shall not be
affected, modified or impaired upon the occurrence from time to time of any of
the following, whether or not with notice to or the consent of the Guarantor:
F-2-2
<PAGE>
(a) the compromise, settlement, change, modification, amendment (whether
material or otherwise) or partial termination of any or all of the Obligations;
(b) the failure to give notice to the Guarantor of the occurrence of any
Event of Default under the terms and provisions of the Agreement;
(c) the waiver of the payment, performance or observance of any of the
Obligations;
(d) the taking or omitting to take any actions referred to in any Loan
Document or of any action under this Guaranty;
(e) any failure, omission or delay on the part of the Agent and/or the
Guarantied Parties to enforce, assert or exercise any right, power or remedy
conferred in this Guaranty, the Credit Agreement, any other Loan Document or any
other indulgence or similar act on the part of the Agent and/or the Guarantied
Parties in good faith and in compliance with applicable law;
(f) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshalling of assets,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors or
readjustment of, or other similar proceedings which affect the Guarantor, any
other guarantor of any of the Obligations of the Company or any of the assets of
any of them, or any allegation of invalidity or contest of the validity of this
Guaranty in any such proceeding;
(g) to the extent permitted by law, the release or discharge of any other
guarantors of the Obligations from the performance or observance of any
obligation, covenant or agreement contained in any guaranties of the Obligations
by operation of law; or
(h) the default or failure of any other guarantors of the Obligations
fully to perform any of their respective obligations set forth in any such
guaranties of the Obligations.
To the extent any of the foregoing refers to any actions which the Agent or
the Guarantied Parties may take, the Guarantor hereby agrees that the Agent
and/or the Guarantied Parties may take such actions in such manner, upon such
terms, and at such times as the Agent or the Guarantied Parties, in their
discretion, deem advisable, without, in any way or respect, impairing,
affecting, reducing or releasing the Guarantor from its undertakings hereunder
and the Guarantor hereby consents to each and all of the foregoing actions,
events and occurrences.
F-2-3
<PAGE>
5. The Guarantor hereby waives:
(a) any and all rights to require the Agent or the Guarantied Parties to
prosecute or seek to enforce any remedies against the Company or any other party
liable to the Agent or the Guarantied Parties on account of the Obligations;
(b) any right to assert against the Agent or the Guarantied Parties any
defense (legal or equitable), set-off, counterclaim, or claim which the
Guarantor may now or at any time hereafter have against the Company or any other
party liable to the Agent or the Guarantied Parties in any way or manner under
the Credit Agreement;
(c) all defenses, counterclaims and off-sets of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of any Loan Document and the security
interest granted pursuant thereto;
(d) any defense arising by reason of any claim or defense based upon an
election of remedies by the Agent or the Guarantied Parties including, without
limitation, any direction to proceed by judicial or nonjudicial foreclosure or
by deed in lieu thereof, which, in any manner impairs, affects, reduces,
releases, destroys or extinguishes the Guarantor's subrogation rights, rights to
proceed against the Company for reimbursement, or any other rights of the
Guarantor to proceed against the Company, against any other guarantor, or
against any other security, with the Guarantor understanding that the exercise
by the Agent and/or the Guarantied Parties of certain rights and remedies may
offset or eliminate the Guarantor's right of subrogation against the Company,
and that the Guarantor may therefore incur partially or totally non-reimbursable
liability hereunder;
(e) all presentments, demands for performance, notices of non-performance,
protests, notices of protest, notices of dishonor, notices of default, notice of
acceptance of this Guaranty, and notices of the existence, creation, or
incurring of new or additional indebtedness, and all other notices or
formalities to which the Guarantor may be entitled; and
(f) without limiting the generality of the foregoing, the Guarantor hereby
expressly waives any and all benefits of California Civil Code Sections 2809,
2810, 2819, 2825, 2839 and 2845 through 2850.
6. The Guarantor hereby agrees that unless and until all Obligations have
been paid to the Agent and the Guarantied Parties in full, it shall not have any
rights of subrogation, reimbursement or contribution as against the Company or
any other guarantor, if any, and shall not seek to assert or enforce the
F-2-4
<PAGE>
same. Guarantor understands that the exercise by Agent of certain rights and
remedies contained in the Loan Documents may affect or eliminate Guarantor's
right of subrogation if any, against the Company and that Guarantor may
therefore incur a partially or totally non-reimbursable liability hereunder;
nevertheless, Guarantor hereby authorizes and empowers the Agent and the
Guarantied Parties to exercise, in their sole discretion, any right and remedy,
or any combination thereof, which may then be available, since it is the intent
and purpose of Guarantor that the obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.
7. The Guarantor is presently informed of the financial condition of the
Company and of all other circumstances which a diligent inquiry would reveal and
which bear upon the risk of nonpayment of the Obligations. The Guarantor hereby
covenants that it will continue to keep itself informed of the financial
condition of the Company, the status of other guarantors, if any, and of all
other circumstances which bear upon the risk of nonpayment. The Guarantor
hereby waives its right, if any, to require the Agent or the Guarantied Parties
to disclose to it any information which the Agent or any Bank may now or
hereafter acquire concerning such condition or circumstances including, but not
limited to, the release of any other guarantor.
8. The Agent and each Bank's books and records evidencing the Obligations
shall be admissible in any action or proceeding and shall be binding upon the
Guarantor for the purpose of establishing the terms set forth therein and shall
constitute prima facie proof thereof.
9. Notwithstanding anything to the contrary contained herein, the
Guarantor's liability pursuant to this Guaranty shall be limited to the greater
of: (a) the 'reasonably equivalent value,' received by the Guarantor or any of
its subsidiaries arising out of the Loan Documents (including, without
limitation, repayment of intercompany or third party debt of, investments made
in, and capital contributions, advances and loans made to, the Guarantor or any
of its subsidiaries, directly or indirectly, by Company or any other subsidiary
with, or as a direct or indirect result of obtaining, the proceeds of any credit
extended under the Loan Documents) in exchange for or in connection with the
Guarantor's guaranty of the Obligations, and (b) 95% of the excess of (i) a
'fair valuation' of the amount of the assets and other property of the Guarantor
and its subsidiaries taken as a whole as of the applicable date of determination
of the incurrence of the Guarantor's obligations hereunder over (ii) a 'fair
----
valuation' of the Guarantor's and its subsidiaries' debts taken as a whole as of
such date, but excluding liabilities arising under this Guaranty and excluding
all liabilities owing by Guarantor and its subsidiaries taken as a whole to the
Company or any other Subsidiary or otherwise subordinated to the Guarantor's
obligations hereunder, it being understood that a
F-2-5
<PAGE>
portion of such indebtedness owing to Company shall be discharged on a dollar-
for-dollar basis in an amount equal to the amount paid by Guarantor hereunder.
The meaning of the terms 'reasonably equivalent value' and 'fair valuation,' and
the calculations of assets and other property and debts, shall be determined in
accordance with the applicable federal and California state laws in effect on
the date hereof governing the determination of the insolvency of a debtor and to
further the intent of all parties hereto to maximize the amount payable by the
Guarantor without rendering it insolvent or leaving it with an unreasonably
small amount of capital in relation to its business, in either case, at the
applicable date for the determination of the incurrence of its obligations
hereunder; provided, however, the Guarantor agrees, to the maximum extent
-------- -------
permitted by law, that 'fair valuation' of the Guarantor's and its subsidiaries'
assets and other properties means the fair market sales price as would be
obtained in an arms-length transaction between competent, informed and willing
parties under no compulsion to sell or buy or collections thereof obtained in
the ordinary course of business and 'fair valuation' of its debts means the
amount, in light of the applicable circumstances, at the time, for which the
Guarantor or its subsidiaries is liable for matured known liquidated liabilities
or would reasonably be expected to become liable on contingent or unliquidated
liabilities as they mature and taking into consideration the nature of any such
contingency and the probability that liability would be imposed.
10. The Guarantor represents and warrants for and with respect to itself
that:
(a) The Guarantor is a corporation duly organized and existing under the
laws of the state of California, and is properly licensed and in good standing
in, and where necessary to maintain its rights and privileges have complied with
the fictitious name statute of, every jurisdiction in which it is doing
business, except where the failure to be licensed or be in good standing or
comply with any such statute will not have a material adverse effect on the
ability of the Guarantor to perform its obligations hereunder or under any
instrument or agreement required hereunder;
(b) The execution, delivery and performance of this Guaranty and any
instrument or agreement required hereunder are within the power of the
Guarantor, have been duly authorized by, and are not in conflict with the terms
of any charter, by-law or other organization papers of, the Guarantor;
(c) No approval, consent, exemption or other action by, or notice to or
filing with, any governmental authority is necessary in connection with the
execution, delivery, performance or enforcement of this Guaranty or any
instrument or agreement required hereunder, except as may have been obtained and
F-2-6
<PAGE>
certified copies of which have been delivered to Agent and the Guarantied
Parties;
(d) There is no law, rule or regulation, nor is there any judgment,
decree or order of any court or governmental authority binding on the Guarantor,
which would be contravened by the execution, delivery, performance or
enforcement of this Guaranty or any instrument or agreement required hereunder;
(e) This Guaranty is a legal, valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly legal, valid, binding and enforceable, except where
enforceability thereof may be limited by applicable law relating to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the application of general principles of equity;
(f) There is no action, suit or proceeding pending against, or to the
knowledge of the Guarantor, threatened against or affecting the Guarantor,
before any court or arbitrator or any governmental body, agency or official
which in any manner draws into question the validity or enforceability of this
Guaranty; and
(g) The execution, delivery and performance by the Guarantor of this
Guaranty does not constitute, to the best knowledge of Guarantor, a "fraudulent
conveyance," "fraudulent obligation" or "fraudulent transfer" within the
meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent
Transfer Act, as enacted in any jurisdiction.
11. Any one of the following events shall constitute an "Event of
Bankruptcy:"
(a) The Guarantor or the Company is generally not paying or admits in
writing its inability to pay its debts as such debts become due, or files any
petition or action for relief under any bankruptcy, reorganization, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
now or hereafter in effect, or makes any assignment for the benefit of
creditors, or takes any corporate action in furtherance of any of the foregoing;
(b) An involuntary petition is filed against the Guarantor or the Company
under any bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property of
the Guarantor or the Company, unless such petition or appointment is set aside
or withdrawn or ceases to be in effect
F-2-7
<PAGE>
within sixty (60) days from the date of said filing or appointment.
Upon the occurrence of an Event of Bankruptcy, without notice or demand, any and
all of the Guarantor's obligations under this Guaranty shall become due, payable
and enforceable against the Guarantor whether or not the Obligations are then
due and payable.
12. All notices and other communications hereunder shall be delivered, in
the manner and with the effect provided in the Credit Agreement and, in the case
of the Guarantor, in care of the Company.
13. This Guaranty shall be binding upon the successors and assigns of the
Guarantor and shall inure to the benefit of the Agent's and the Guarantied
Parties' successors and assigns. This Guaranty cannot be assigned by the
Guarantor without the prior written consent of the Agent and the Guarantied
Parties which shall be in the Agent's and the Guarantied Parties' sole and
absolute discretion.
14. No failure or delay by the Agent or the Guarantied Parties in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
15. The Guarantor shall pay (a) all reasonable out-of-pocket expenses of
the Agent and the Guarantied Parties, including reasonable fees and
disbursements of counsel (including the allocated cost of inhouse counsel and
staff) for the Agent, in connection with any waiver or consent hereunder or any
amendment hereof and (b) all out-of-pocket expenses incurred by the Agent and
the Guarantied Parties, including fees and disbursements of counsel (including
the allocated cost of inhouse counsel and staff), in connection with the
enforcement of this Guaranty (whether or not suit is brought).
16. No modification of this Guaranty shall be effective for any purpose
unless it is in writing and executed by an officer of the Agent authorized to do
so. This Guaranty merges all negotiations, stipulations and provisions relating
to the subject matter of this Guaranty which preceded or may accompany the
execution of this Guaranty.
17. This Guaranty and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of California without reference to the principles of conflicts of laws thereof.
F-2-8
<PAGE>
18. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
19. Terms not defined herein shall have the meanings assigned to them in
the Credit Agreement.
20. Any indebtedness of the Company now or hereafter held by Guarantor is
hereby subordinated to the indebtedness of the Company to the Agent and the
Guarantied Parties; and such indebtedness of the Company to the Guarantor if the
Agent so requests shall be collected, enforced and received by Guarantor as
trustee for the Agent and the Guarantied Parties and be paid over to the Agent
on account of the indebtedness of the Company to the Agent and the Guarantied
Parties but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this guaranty.
21. It is not necessary for the Guarantied Parties to inquire into the
powers of any Guaranteed Party or of the officers, directors or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
Executed as of the 10th day of March 1995.
MATTEL SALES CORP.
By: ____________________________
Title:__________________________
BANK OF AMERICA NATIONAL TRUST
SAVINGS ASSOCIATION, as
Agent
By: ____________________________
Title:_________________________
F-2-9
<PAGE>
EXHIBIT G-1
-----------
SUBORDINATION AGREEMENT
-----------------------
(FISHER-PRICE, INC.)
--------------------
Bank of America National
Trust and Savings Association, as Agent
("Agent")
Gentlemen:
The undersigned, ___________________________, a _________________
corporation (hereinafter referred to as "Creditor") is a creditor of Fisher-
price, Inc., a Delaware corporation (hereinafter referred to as "Fisher-
Price").
A. Concurrently herewith, Mattel, Inc. (the "Company"), the Banks named
therein (the "Domestic Banks") and Bank of America, as agent (the "Agent"), are
entering into a Credit Agreement dated as of even date herewith (said credit
agreement, as it may hereafter be amended, continued, renewed, supplemented,
restated or otherwise modified from time to time, is referred to herein as the
"Credit Agreement"). Terms not defined herein have the meanings assigned to
them in the Credit Agreement.
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered, or may from time to time enter, into credit
facilities with one or more Banks or foreign affiliates of the Banks (the
"Foreign Banks"), and the Company has guarantied, or may from time to time
guaranty, the obligations of such Foreign Subsidiaries thereunder pursuant to
one or more guaranties (the Foreign Subsidiary Guaranties"). From time to time
Banks in their individual capacity may issue letters of credit for the account
of the Company outside the Credit Agreement (the "Company Letters of Credit").
The Domestic Banks and the Foreign Banks are collectively referred to herein as
the "Banks."
C. Concurrently herewith Fisher-Price is entering into a Continuing
Guaranty dated as of even date herewith guarantying all obligations of every
nature of the Company and Mattel Sales from time to time owed under or in
respect of the Credit Agreement, the loans thereunder, the other Loan Documents
(as defined therein) and the Foreign Subsidiary Guaranties and the Company
Letters of Credit.
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Creditor enter into this Fisher-Price
G-1-1
<PAGE>
Subordination Agreement. For the purpose of inducing the Banks to grant,
continue or renew such financial accommodations to the Company, and in
consideration thereof, Creditor agrees as follows:
1. Any and all claims of Creditor against Fisher-Price, now or hereafter
existing, are, and shall be at all times, subject and subordinate to any and all
claims, now or hereafter existing which Banks or Agent may have against Fisher-
Price (including any claim by Banks or Agent for interest accruing after any
assignment for the benefit of creditors by Fisher-Price or the institution by or
against Fisher-Price of any proceedings under the Bankruptcy Act, or any claim
by Bank for any such interest which would have accrued in the absence of such
assignment or the institution of such proceedings).
2. Creditor agrees not to sue upon, or to collect, or to receive payment
of the principal or interest of any claim or claims now or hereafter existing
which Creditor may hold against Fisher-Price, and not to sell, assign, transfer,
pledge, hypothecate, or encumber such claim or claims except subject expressly
to this Agreement, and not to file or join in any petition to commence any
proceeding under the Bankruptcy Act, nor to take any lien or security on any of
Fisher-Price' property, real or personal, so long as any claim of Banks or Agent
against Fisher-Price shall exist.
3. In case of any assignment for the benefit of creditors by Fisher-Price
or in case any proceedings under the Bankruptcy Act are instituted by or against
Fisher-Price, or in case of the appointment of any receiver for Fisher-Price's
business or assets, or in case of any dissolution or winding up of the affairs
of Fisher-Price: (a) Creditor and any assignee, trustee in bankruptcy,
receiver, debtor in possession or other person or persons in charge are hereby
directed to pay to Agent on behalf of itself and the Banks the full amount of
Banks' and Agent's claims against Fisher-Price (including interest to the date
of payment) before making any payment of principal or interest to Creditor under
any indebtedness, and insofar as may be necessary for that purpose, Creditor
hereby assigns and transfers to Agent on behalf of itself and the Banks all
security or the proceeds thereof and all rights to any payments, dividends or
other distributions, and (b) Creditor hereby irrevocably constitutes and
appoints Agent its true and lawful attorney to act in its name and stead: (i)
to file the appropriate claim or claims on behalf of Creditor if Creditor does
not do so prior to 30 days before the expiration of the time to file claims in
such proceeding and if Agent elects at its sole discretion to file such claim or
claims and (ii) to accept or reject any plan of reorganization or arrangement on
behalf of Creditor, and to
G-1-2
<PAGE>
otherwise vote Creditor's claim in respect of any indebtedness now or hereafter
owing from Fisher-Price to Creditor in any manner Agent deems appropriate for
its and the Banks' benefit and protection.
4. Agent on behalf of itself and the Banks is hereby authorized by
Creditor to from time to time: (a) renew, compromise, extend, accelerate or
otherwise change the time of payment, or any other terms, of any existing or
future claim of Banks against Fisher-Price or the Company or any part thereof,
(b) increase or decrease any rate of interest payable thereon, (c) exchange,
enforce, waive, release, or fail to perfect any security therefor, (d) apply
such security and direct the order or manner of sale thereof in such manner as
Agent acting on its behalf and on behalf of the Banks may at its discretion
determine, (e) release Fisher-Price, the Company or any other guarantor of any
indebtedness of the Company from liability, and (f) make optional future
advances to the Company, all without notice to Creditor and without affecting
the subordination provided by this Agreement.
5. Creditor acknowledges and agrees that Creditor shall have the sole
responsibility for obtaining from Fisher-Price or the Company such information
concerning Fisher-Price's or the Company's financial condition or business
operations as Creditor may require, and that neither the Agent nor the Banks has
any duty at any time to disclose to Creditor any information relating to the
business operations or financial condition of Fisher-Price or the Company.
6. On request of Agent, Creditor shall deliver to the Agent the original
of any promissory note or other evidence of any existing or future indebtedness
of Fisher-Price to Creditor, and mark same with a conspicuous legend which reads
substantially as follows:
"THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE
INDEBTEDNESS OWING FROM THE MAKER TO BANK OF AMERICA NT&SA, AS
AGENT, AND ITS ASSIGNS, AND MAY BE ENFORCED ONLY IN ACCORDANCE
WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED MARCH 10, 1995
BETWEEN [CREDITOR] AND BANK OF AMERICA NT&SA, AS AGENT."
7. In the event that any payment or any cash or noncash distribution
is made to Creditor in violation of the terms of this Agreement, Creditor shall
receive same in trust for the benefit of Banks and Agent, and shall forthwith
remit it to Agent in the form in which it was received, together with
G-1-3
<PAGE>
such endorsements or documents as may be necessary to effectively negotiate or
transfer same to Agent and/or Banks.
8. For violation of this Agreement, Creditor shall be liable for all
loss and damage sustained by reason of such breach, and upon any such violation
Agent, acting on behalf of the Banks, may accelerate the maturity of any of its
existing or future claims against Fisher-Price.
9. This Agreement shall be binding upon the heirs, successors and
assigns of Fisher-Price, Creditor and Bank. This Agreement and any existing or
future claim of Agent or the Banks against Fisher-Price may be assigned by
Agent, the Banks, in whole or in part, without notice to Fisher-Price or
Creditor.
10. Notwithstanding the provisions of Section 2, so long as there has
been no occurrence of any default under any agreement between Fisher-Price or
the Company and the Agent and the Banks, now existing or hereafter entered
into, Creditor may receive regularly scheduled principal and interest payments
on any indebtedness.
Mattel, Inc.
-------------------------------
Creditor
By:
----------------------------
William Stavro
Vice President and Treasurer
G-1-4
<PAGE>
ACCEPTANCE OF SUBORDINATION AGREEMENT BY FISHER-PRICE
The undersigned being the company named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all
the provisions thereof and to recognize all priorities and other rights granted
thereby to Bank of America National Trust and Savings Association, as Agent,
and the Banks (as defined therein) and their respective successors and assigns,
and to perform in accordance therewith.
Dated: March 10, 1995 FISHER-PRICE, INC.
-----------------------
By:
----------------------------
William Stavro
Treasurer
G-1-5
<PAGE>
EXHIBIT G-2
-----------
SUBORDINATION AGREEMENT
-----------------------
(MATTEL SALES CORP.)
--------------------
Bank of America National
Trust and Savings Association, as Agent
("Agent")
Gentlemen:
The undersigned, ___________________________, a _________________
corporation (hereinafter referred to as "Creditor") is a creditor of Mattel
Sales Corp., a California corporation (hereinafter referred to as "Mattel
Sales").
A. Concurrently herewith, Mattel, Inc. (the "Company"), the Banks
named therein (the "Domestic Banks") and Bank of America, as agent (the
"Agent"), are entering into a Credit Agreement dated as of even date herewith
(said credit agreement, as it may hereafter be amended, continued, renewed,
supplemented, restated or otherwise modified from time to time, is referred to
herein as the "Credit Agreement"). Terms not defined herein have the meanings
assigned to them in the Credit Agreement.
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered, or may from time to time enter, into credit
facilities with one or more Banks or foreign affiliates of the Banks (the
"Foreign Banks"), and the Company has guarantied, or may from time to time
guaranty, the obligations of such Foreign Subsidiaries thereunder pursuant to
one or more guaranties (the Foreign Subsidiary Guaranties"). From time to time
Banks in their individual capacity may issue letters of credit for the account
of the Company outside the Credit Agreement (the "Company Letters of Credit").
The Domestic Banks and the Foreign Banks are collectively referred to herein as
the "Banks."
C. Concurrently herewith Mattel Sales is entering into a Continuing
Guaranty dated as of even date herewith guarantying all obligations of every
nature of the Company and Fisher-Price from time to time owed under or in
respect of the Credit Agreement, the loans thereunder, the other Loan Documents
(as defined therein) and the Foreign Subsidiary Guaranties and the Company
Letters of Credit.
G-2-1
<PAGE>
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Creditor enter into this Mattel Sales Subordination Agreement.
For the purpose of inducing the Banks to grant, continue or renew such financial
accommodations to the Company, and in consideration thereof, Creditor agrees as
follows:
1. Any and all claims of Creditor against Mattel Sales, now or
hereafter existing, are, and shall be at all times, subject and subordinate to
any and all claims, now or hereafter existing which Banks or Agent may have
against Mattel Sales (including any claim by Banks or Agent for interest
accruing after any assignment for the benefit of creditors by Mattel Sales or
the institution by or against Mattel Sales of any proceedings under the
Bankruptcy Act, or any claim by Bank for any such interest which would have
accrued in the absence of such assignment or the institution of such
proceedings).
2. Creditor agrees not to sue upon, or to collect, or to receive
payment of the principal or interest of any claim or claims now or hereafter
existing which Creditor may hold against Mattel Sales, and not to sell, assign,
transfer, pledge, hypothecate, or encumber such claim or claims except subject
expressly to this Agreement, and not to file or join in any petition to commence
any proceeding under the Bankruptcy Act, nor to take any lien or security on any
of Mattel Sales' property, real or personal, so long as any claim of Banks or
Agent against Mattel Sales shall exist.
3. In case of any assignment for the benefit of creditors by Mattel
Sales or in case any proceedings under the Bankruptcy Act are instituted by or
against Mattel Sales, or in case of the appointment of any receiver for Mattel
Sales's business or assets, or in case of any dissolution or winding up of the
affairs of Mattel Sales: (a) Creditor and any assignee, trustee in bankruptcy,
receiver, debtor in possession or other person or persons in charge are hereby
directed to pay to Agent on behalf of itself and the Banks the full amount of
Banks' and Agent's claims against Mattel Sales (including interest to the date
of payment) before making any payment of principal or interest to Creditor under
any indebtedness, and insofar as may be necessary for that purpose, Creditor
hereby assigns and transfers to Agent on behalf of itself and the Banks all
security or the proceeds thereof and all rights to any payments, dividends or
other distributions, and (b) Creditor hereby irrevocably constitutes and
appoints Agent its true and lawful attorney to act in its name and stead: (i)
to file the appropriate claim or claims on behalf of Creditor if Creditor does
not do so prior to 30 days before the expiration of the time to file claims in
such proceeding and if Agent elects at its sole discretion to file
G-2-2
<PAGE>
such claim or claims and (ii) to accept or reject any plan of reorganization or
arrangement on behalf of Creditor, and to otherwise vote Creditor's claim in
respect of any indebtedness now or hereafter owing from Mattel Sales to Creditor
in any manner Agent deems appropriate for its and the Banks' benefit and
protection.
4. Agent on behalf of itself and the Banks is hereby authorized by
Creditor to from time to time: (a) renew, compromise, extend, accelerate or
otherwise change the time of payment, or any other terms, of any existing or
future claim of Banks against Mattel Sales or the Company or any part thereof,
(b) increase or decrease any rate of interest payable thereon, (c) exchange,
enforce, waive, release, or fail to perfect any security therefor, (d) apply
such security and direct the order or manner of sale thereof in such manner as
Agent acting on its behalf and on behalf of the Banks may at its discretion
determine, (e) release Mattel Sales, the Company or any other guarantor of any
indebtedness of the Company from liability, and (f) make optional future
advances to the Company, all without notice to Creditor and without affecting
the subordination provided by this Agreement.
5. Creditor acknowledges and agrees that Creditor shall have the
sole responsibility for obtaining from Mattel Sales or the Company such
information concerning Mattel Sales's or the Company's financial condition or
business operations as Creditor may require, and that neither the Agent nor the
Banks has any duty at any time to disclose to Creditor any information relating
to the business operations or financial condition of Mattel Sales or the
Company.
6. On request of Agent, Creditor shall deliver to the Agent the
original of any promissory note or other evidence of any existing or future
indebtedness of Mattel Sales to Creditor, and mark same with a conspicuous
legend which reads substantially as follows:
"THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE
INDEBTEDNESS OWING FROM THE MAKER TO BANK OF AMERICA NT&SA, AS
AGENT, AND ITS ASSIGNS, AND MAY BE ENFORCED ONLY IN ACCORDANCE
WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED MARCH 10, 1995
BETWEEN [CREDITOR] AND BANK OF AMERICA NT&SA, AS AGENT."
7. In the event that any payment or any cash or noncash distribution
is made to Creditor in violation of the terms of this Agreement, Creditor shall
receive same in trust for the benefit of Banks and Agent, and shall forthwith
remit it
G-2-3
<PAGE>
to Agent in the form in which it was received, together with such endorsements
or documents as may be necessary to effectively negotiate or transfer same to
Agent and/or Banks.
8. For violation of this Agreement, Creditor shall be liable for all
loss and damage sustained by reason of such breach, and upon any such violation
Agent, acting on behalf of the Banks, may accelerate the maturity of any of its
existing or future claims against Mattel Sales.
9. This Agreement shall be binding upon the heirs, successors and
assigns of Mattel Sales, Creditor and Bank. This Agreement and any existing or
future claim of Agent or the Banks against Mattel Sales may be assigned by
Agent, the Banks, in whole or in part, without notice to Mattel Sales or
Creditor.
10. Notwithstanding the provisions of Section 2, so long as there has
been no occurrence of any default under any agreement between Mattel Sales or
the Company and the Agent and the Banks, now existing or hereafter entered
into, Creditor may receive regularly scheduled principal and interest payments
on any indebtedness.
Mattel, Inc.
----------------------------------
Creditor
By:
-------------------------------
William Stavro
Vice President and Treasurer
G-2-4
<PAGE>
ACCEPTANCE OF SUBORDINATION AGREEMENT BY MATTEL SALES
The undersigned being the company named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all
the provisions thereof and to recognize all priorities and other rights granted
thereby to Bank of America National Trust and Savings Association, as Agent,
and the Banks (as defined therein) and their respective successors and assigns,
and to perform in accordance therewith.
Dated: March 10, 1995 MATTEL SALES CORP.
-----------------------
By:
-------------------------------
William Stavro
Vice President and Treasurer
G-2-5
<PAGE>
EXHIBIT H
---------
CHANGE IN COMMITMENTS NOTICE
----------------------------
For Credit Agreement
and
Transfer and Administration Agreement
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
NationsBank of Texas, N.A., as Agent
444 South Flower Street, Suite 1500
Los Angeles, Ca 90071-2901
Attn: J. Blake Seaton
Gentlemen:
Pursuant to (a) Section 2.5 of that certain Credit Agreement dated as of
March 10, 1995, as amended (the "Credit Agreement") among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent")
and/or (b) Section 2.11 of that certain Second Amended and Restated Transfer
and Administration Agreement dated as of March 10, 1995, as amended, among
Mattel Sales Corp. and Fisher-Price, Inc., as transferors, the Company, as
guarantor and servicer, the banks named therein, and NationsBank of Texas,
N.A., as Transfer and Administration Agent, please effect the following changes
in the Aggregate Receivables Commitment/Facility Limit and/or the Aggregate
Loan Commitment:
1. Effective Date of Change:
------------------------
______________ ___, 19__
H-1
<PAGE>
2. Requested Change:
----------------
a. Please permanently reduce the [Aggregate Receivables
------
Commitment/Facility Limit] [Aggregate Loan Commitment] by
$___________.
b. Please permanently terminate the [Aggregate Receivables Commitment]
---------
[Aggregate Loan Commitment].
c. Please reallocate $___________ from the [Aggregate Receivables
----------
Commitment/Facility Limit] [Aggregate Loan Commitment] to the
--
[Aggregate Loan Commitment] [Aggregate Receivables Commitment/Facility
Limit].
3. Summary of Changes:
------------------
Before Change After Change
in Commitment/ in Commitment/
Facility Limit: Facility Limit:
-------------- --------------
Aggregate Loan Commitment/Facility Limit:
----------------------------------------
Aggregate Loan Commitment $___________ $____________
Aggregate Outstandings $___________ $____________
Aggregate Receivables Commitment/Facility Limit:
-----------------------------------------------
Aggregate Receivables
Commitment/Facility Limit $___________ $____________
Total Outstanding Investment $___________ $____________
Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to them in the Agreement.
H-2
<PAGE>
"Facility Limit" is used herein as defined in the above-referenced Amended and
Restated Transfer and Administration Agreement.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
*Signature required only MATTEL SALES CORP.*
when Aggregate Receivables
Commitment changed
By ___________________________
Name _________________________
Title ________________________
*Signature required only FISHER-PRICE, INC.
when Aggregate Receivables
Commitment changed
By ___________________________
Name _________________________
Title ________________________
H-3
<PAGE>
EXHIBIT I
---------
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
-------------------------------------------
____________, 19__
TO: Bank of America National Trust
and Savings Association, as Agent
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Kay Warren
Vice President
Reference is made to that certain Credit Agreement dated as of March
10, 1995 (the "Credit Agreement"; capitalized terms used herein shall have the
meanings assigned to them in the Credit Agreement), among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent").
1. We hereby give you notice of, and request your consent to, the
assignment by _______________ (the "Assignor") to ________________ (the
"Assignee") of ____% of the right, title and interest of the Assignor in and to
the Loan Documents, including without limitation the right, title and interest
of the Assignor in and to the Loan Commitment of the Assignor, and all
outstanding Loans made by the Assignor. Before giving effect to such
assignment:
(a) the aggregate amount of the Assignor's Loan Commitment is
$_________; and
(b) as of the above date, the aggregate principal amount of its
outstanding Loans is $__________.
2. The Assignor hereby represents and warrants that it has complied
with the requirements of Section 10.1 of the Credit Agreement in connection
with this assignment, including paying, or causing the payment of, the
assignment fee thereunder to the Agent and concurrently assigning a ratable
portion in the Transfer and Administration Agreement.
3. The Assignee agrees that, upon receiving your consent to such
assignment and from and after ______________, the Assignee will be bound by the
terms of the Loan Documents, with respect to the interest in the Loan Documents
assigned to it as specified above, as fully and to the same extent as if the
I-1
<PAGE>
Assignee were the Bank originally holding such interest in the Loan Documents.
4. The following administrative details apply to the Assignee:
(a) Designated Offshore Market Office:
Assignee name: ____________________
Address: __________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(b) Domestic Lending Office:
Assignee name: ____________________
Address: __________________________
__________________________
__________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(c) Notice Address:
Assignee name: ____________________
Address: __________________________
__________________________
__________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(d) Payment Instructions:
Account No.: ______________________
At: ______________________
______________________
______________________
Ref.: ______________________
Attention: ______________________
IN WITNESS WHEREOF, the Assignor and the Assignee have
I-2
<PAGE>
caused this Notice of Assignment and Acceptance to be executed by their
respective duly authorized officials, officers or agents as of the date first
above mentioned.
Very truly yours,
[Name of Assignor]
By:______________________
Title:
[Name of Assignee]
By:______________________
Title:
We hereby consent to the
foregoing assignment:
MATTEL, INC.
By: __________________________
Title: _______________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: __________________________
Title: _______________________
I-3
<PAGE>
SCHEDULE 1.1
------------
BANK COMMITMENTS
----------------
<TABLE>
<CAPTION>
Aggregate
Loan Receivables Facilities
Bank % Commitment Commitment Commitment
- ----------------------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Bank of America 15.384615387 $ 61,538,461.56 $ 38,461,538.44 $100,000,000.00
NationsBank of Texas, N.A. 11.538461538 46,153,846.15 28,846,153.85 75,000,000.00
Chemical Bank 11.538461538 46,153,846.15 28,846,153.85 75,000,000.00
The First National Bank of 9.230769231 36,923,076.92 23,076,923.08 60,000,000.00
Boston
PNC Bank, National 9.230769231 36,923,076.92 23,076,023.08 60,000,000.00
Association
Toronto-Dominion (Texas), 9.230769231 36,923,076.92 23,076,023.08 60,000,000.00
Inc.
ABN AMRO Bank N.V. 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
The Bank of California, 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
N.A.
Banque Nationale de Paris 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Dresdner Bank AG, Los 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Angeles Agency
Istituto Bancario San 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Paolo di Torino SpA
Manufacturers & Traders 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Trust Co.
Marine Midland Bank 3.076923077 12,307,692.31 7,692,307.69 20,000,000.00
Citicorp USA, Inc. 3.076923077 12,307,692.31 7,692,307.69 20,000,000.00
============= =============== =============== ===============
AGGREGATE COMMITMENTS 100.000000000 $400,000,000.00 $250,000,000.00 $650,000,000.00
</TABLE>
<PAGE>
SCHEDULE 5.3
------------
(Page 1 of 2)
SUBSIDIARIES OF MATTEL, INC.
----------------------------
Parent: Mattel, Inc. (Delaware)
- ------
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Jurisdiction Owned Directly
in Which or Indirectly
Subsidiaries Organized By Parent
- ------------------------------------ --------------- -----------------
<S> <C> <C>
ARCO Toys, Limited Hong Kong 100%
Arcotoys, Inc. Delaware 100%
Croner Toys Limited New Zealand 60%
Far West Insurance Company,
Limited Bermuda 100%
Fisher-Price, Inc. Delaware 100%
Fisher-Price, N.V. Belgium 100%
Fisher-Price Inc. Canada 100%
Fisher-Price Beteiligungs-G.m.b.H Germany 100%
Mattel G.m.b.H. Germany 100%
Mattel Toys K.F.T. Hungary 100%
Mattel Spol. S.R.O. Czech Republic 100%
Fisher-Price, S.r.l. Italy 100%
Fisher-Price de Mexico, S.A. de C.V. Mexico 100%
Fisher-Price, S.A. Spain 100%
International Games, Inc. Delaware 100%
Juegos California, S.A. de C.V. Mexico 100%
Mabamex, S.A. de C.V. Mexico 100%
Mattel Argentina S.A. Argentina 100%
Mattel Asia Limited Hong Kong 100%
Mattel B.V. The Netherlands 100%
Mattel Chile S.A. Chile 100%
Mattel Colombia S.A. Columbia 100%
Mattel Espana, S.A. Spain 100%
Mattel Europa B.V. The Netherlands 100%
Mattel France S.A. France 100%
Corolle S.A. France 100%
Mattel Portugal Limitada Portugal 100%
Mattel Gesellschaft m.b.H. Austria 100%
Mattel Holding, Inc. Delaware 100%
Mattel U.K. Limited U.K. 100%
Mattel Group PLC U.K. 100%
J.W. Spear & Sons PLC U.K. 100%
J.W. Spear & Sons Pty. Limited Austria 100%
J.W. Spear S.A. France 100%
J.W. Spear N.V. Belgium 100%
J.W. Spear B.V. The Netherlands 100%
Mattel Holdings Limited Canada 100%
Mattel Canada,Inc. Canada 100%
</TABLE>
123
<PAGE>
(Page 2 of 2)
SUBSIDIARIES OF MATTEL, INC.
----------------------------
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Jurisdiction Owned Directly
in Which or Indirectly
Subsidiaries Organized By Parent
- ----------------------------------- --------------- ------------------
<S> <C> <C>
Mattel I., Inc. Delaware 100%
Mattel Toys, S.r.l. Italy 100%
Mattel A.E.B.E. Greece 100%
Mattel A.G. Switzerland 100%
Mattel Manufacturing Europe,
S.r.l. Italy 100%
Mattel K.K. Japan 100%
Mattel (K.L.) Sdn. Bhd. Malaysia 100%
Mattel (Malaysia) Sdn. Bhd. Malaysia 100%
Mattel Media, Inc. Delaware 100%
Mattel Operations, Inc. Delaware 100%
Mattel Overseas, Inc. California 100%
Mattel Toys Vendor Operations
Limited Hong Kong 100%
Mattel China Vendor Operations
Limited Hong Kong 100%
Mattel Vendor Operations China
Limited Hong Kong 100%
Mattel (Proprietary) Limited South Africa 100%
Mattel Pty. Limited Australia 100%
Mattel Realty Corporation Delaware 100%
Mattel, S.A. de C.V. Mexico 100%
Aurimat, S.A. de C.V. Mexico 100%
Mattel de Mexico, S.A. de C.V. Mexico 100%
Mattel Serivcios, S.A. de C.V. Mexico 100%
Mattel Sales Corp. California 100%
Mattel Scandinavia A/S Denmark 100%
Mattel South Africa South Africa 100%
Mattel T Company Limited Hong Kong 100%
Mattel Tools Sdn.Bhd. Malaysia 100%
Mattel Toys (HK) Limited Hong Kong 100%
Mattel Toys Polska Sp. Z.O.O. Poland 100%
Mattel Toys (Singapore) Pte. Ltd. Singapore 100%
Mattel Toys (Taiwan) Corporation Ltd. Taiwan 100%
Mattel de Venezuela, C.A. Venezuela 100%
Montoi S.A. de C.V. Mexico 100%
P.T. Mattel Indonesia Indonesia 95%
Precision Moulds Limited Hong Kong 100%
</TABLE>
124
<PAGE>
SCHEDULE 7.2
------------
CERTAIN LIENS
-------------
1. Liens for taxes, assessments or governmental charges or claims the payment
of which is not at the time required by Section 6.3;
2. Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
3. Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
4. Any attachment or judgment Lien, if the judgment or order it secures is
less than $20,000,000, or $40,000,000 in the aggregate for all such
judgments or orders in any calendar year; or any other attachment or
judgment Lien, if the judgment or order it secures shall, within 45 days
after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 45 days after the
expiration of any such stay;
5. Leases or subleases granted to others not interfering with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
6. Easements, rights-of-way, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
and
7. Any interest or title of a lessor under any lease.
<PAGE>
SCHEDULE 10.6
-------------
ADDRESSES FOR NOTICES AND LENDING OFFICES
-----------------------------------------
COMPANY
- -------
Mattel, Inc.
333 Continental Blvd.
El Segundo, California 90010
Attention: William Stavro
Treasurer
Telephone: (310) 252-3202
Facsimile: (310) 252-3861/2179
with a copy to the Corporate Counsel
BANK OF AMERICA NATIONAL TRUST
- -------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
AS AGENT
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Kay Warren
Vice President
Telephone: (415) 622-6918
Facsimile: (415) 622-4894
BANK OF AMERICA NATIONAL TRUST
- -------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
AS A BANK
Domestic and Eurodollar Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
555 Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Robert W. Troutman
Managing Director
Credit Products #5618
Telephone: (213) 228-3866
Facsimile: (213) 228-2756
-1-
<PAGE>
NATIONSBANK OF TEXAS, N.A.
- --------------------------
Domestic and Eurodollar Lending Office and Notices:
NationsBank of Texas, N.A.
444 S. Flower Street, Suite 1500
Los Angeles, California 90071
Attention: J. Blake Seaton
Telephone: (213) 236-4904
Facsimile: (213) 624-5815
CHEMICAL BANK
- -------------
Domestic and Eurodollar Lending Office and Notices:
Chemical Bank
Corporate Banking Group
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Sheila Hamilton
Telephone: (212) 270-2322
Facsimile: (212) 270-2625
THE FIRST NATIONAL BANK OF BOSTON
- ---------------------------------
Domestic and Eurodollar Lending Office and Notices:
The First National Bank of Boston
100 Federal Street, 6th Floor
Boston, Massachusetts 02110
Attention: J. Peter Mitchell
Telephone: (617) 434-8307
Facsimile: (617) 434-6685
PNC BANK, N.A.
- --------------
Domestic and Eurodollar Lending Office and Notices:
PNC Bank, N.A.
55 S. Lake Avenue, Suite 650
Pasadena, California 91101
Attention: Ted A. Dunn
Telephone: (818) 568-0325
Facsimile: (818) 568-0653
-2-
<PAGE>
TORONTO-DOMINION (TEXAS), INC.
- ------------------------------
Domestic and Eurodollar Lending Office and Notices:
Toronto-Dominion (Texas), Inc.
909 Fannin
Houston, Texas 77010
Attention: Lisa Allison
Telephone: (713) 653-8247
Facsimile: (713) 951-9921
ABN AMRO BANK N.V.
- ------------------
Domestic and Eurodollar Lending Office and Notices:
ABN AMRO Bank N.V.
Los Angeles International Branch
300 South Grand Avenue, Suite 1115
Los Angeles, California 90071
Attention: Matthew S. Thompson
Group Vice President
Telephone: (213) 687-2053
Facsimile: (213) 687-2061
THE BANK OF CALIFORNIA, N.A.
- ----------------------------
Domestic and Eurodollar Lending Office and Notices:
The Bank of California, N.A.
550 S. Hope Street, 5th Floor
Los Angeles, California 90071
Attention: Thomas Tegart
Telephone: (213) 243-3510
Facsimile: (213) 243-3552
BANQUE NATIONALE DE PARIS
- -------------------------
Domestic and Eurodollar Lending Office and Notices:
Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, CA 90017
Attention: Clive Bettles
Vice President
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
-3-
<PAGE>
DRESDNER BANK AG
- ----------------
Domestic and Eurodollar Lending Office and Notices:
Dresdner Bank
Los Angeles Agency
725 South Figueroa Street, Suite 3950
Los Angeles, CA 90017
Attention: Dennis Blank
Vice President
Telephone: (213) 489-5720
Facsimile: (213) 627-3819
ISTITUTO BANCARIO SAN PAOLO DI TORINO SPA
- -----------------------------------------
Domestic and Eurodollar Lending Office and Notices:
Istituto Bancario San Paolo di Torino SpA
444 S. Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Glen Binder
Telephone: (213) 489-3100
Facsimile: (213) 622-2514
MANUFACTURERS & TRADERS TRUST CO.
- ---------------------------------
Domestic and Eurodollar Lending Office and Notices:
Manufacturers & Traders Trust Co.
1 Fountain Plaza
Buffalo, New York
Attention: Geoffrey R. Fenn
Telephone: (716) 848-7335
Facsimile: (716) 848-7318
MARINE MIDLAND BANK
- -------------------
Domestic and Eurodollar Lending Office:
Marine Midland Bank
140 Broadway, 4th Floor
New York, NY 10005-1196
Attention: William M. Holland
Telephone: (212) 658-5257
Facsimile: (212) 658-5109
-4-
<PAGE>
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Marine Midland Bank
HSBC Corporate Banking
140 Broadway, 4th Floor
New York, NY 10005-1196
Attention: William M. Holland
Telephone: (212) 658-5257
Facsimile: (212) 658-5109
CITICORP USA, INC.
- ------------------
Domestic and Eurodollar Lending Office:
Citibank, N.A.
One Court Square, 7th Floor
Long Island City, NY 11120
Attention: Mark Wrigley
Telephone: (718) 248-5732
Facsimile: (718) 248-4845
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Citicorp USA, Inc.
c/o Citicorp North America, Inc.
725 South Figueroa Street, 5th Floor
Los Angeles, CA 90017
Attention: Deborah Ironson
Telephone: (213) 239-1424
Facsimile: (213) 623-3592
-5-
<PAGE>
EXHIBIT 99.6
================================================================================
SECOND AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
by and among
MATTEL SALES CORP.,
as a Transferor,
and
FISHER-PRICE, INC.,
as a Transferor
and
MATTEL, INC.,
as Guarantor and Servicer,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent,
and
THE BANKS NAMED HEREIN
Dated as of March 10, 1995
Arranged By
NationsBanc Capital Markets, Inc.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I DEFINITIONS
1.1 Certain Defined Terms....................................................... 2
1.2 Other Terms................................................................. 16
1.3 Computation of Time Periods................................................. 16
ARTICLE II PURCHASES AND SETTLEMENTS
2.1 Facility.................................................................... 17
2.2 Transfers................................................................... 17
2.3 Discount, Fees and Other Costs and Expenses................................. 19
2.4 Settlement Procedures....................................................... 20
2.5 Protection of Ownership Interest of the Banks............................... 20
2.6 Deemed Collections; Application of Payments................................. 22
2.7 Payments and Computations, Etc.............................................. 23
2.8 Reports..................................................................... 23
2.9 Collection Account.......................................................... 24
2.10 Deficiency Advances......................................................... 25
2.11 Adjustment of Facility Limit............................................... 25
2.12 Inability to Determine LIBOR............................................... 26
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Transferors........................... 27
3.2 Representations and Warranties of Mattel, Inc............................... 32
3.3 Reaffirmation of Representations and Warranties............................. 36
ARTICLE IV CONDITIONS PRECEDENT
4.1 Conditions to Closing....................................................... 37
ARTICLE V COVENANTS
5.1 Affirmative Covenants of the Transferors.................................... 39
5.2 Negative Covenants of the Transferors....................................... 41
5.3 Affirmative Covenants of Mattel, Inc........................................ 42
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI ADMINISTRATION AND COLLECTIONS
6.1 Appointment of Servicer..................................................... 45
6.2 Duties of Servicer and Agent................................................ 45
6.3 Rights After Designation of New Servicer.................................... 48
6.4 Responsibilities of the Transferors......................................... 48
ARTICLE VII SERVICER DEFAULT AND TERMINATION EVENTS
7.1 Servicer Default............................................................ 50
7.2 Servicer Default Remedies................................................... 50
7.3 Termination Events.......................................................... 51
7.4 Termination Event Remedies.................................................. 52
7.5 Potential Termination Event Remedies........................................ 52
ARTICLE VIII INDEMNIFICATION; EXPENSES; RELATED MATTERS
8.1 Indemnities by the Transferors.............................................. 54
8.2 Indemnity for Taxes, Reserves and Expenses.................................. 55
8.3 Other Costs, Expenses and Related Matters................................... 57
8.4 Reconveyance Under Certain Circumstances.................................... 58
ARTICLE IX THE AGENT
9.1 Appointment................................................................. 59
9.2 Attorneys-in-fact........................................................... 59
9.3 Limitation on Liability..................................................... 59
9.4 Reliance.................................................................... 60
9.5 Notice of Termination Event................................................. 60
9.6 No Representations.......................................................... 61
9.7 Indemnification............................................................. 61
9.8 Bank........................................................................ 62
9.9 Resignation................................................................. 62
9.10 Sharing of Payments, etc.................................................... 63
9.11 Independent Agreements...................................................... 64
ARTICLE X GUARANTY
10.1 Guaranty of Obligations..................................................... 65
10.2 Guaranty Continuing......................................................... 65
10.3 Guarantor Directly Liable................................................... 65
10.4 No Impairment............................................................... 66
10.5 Waiver...................................................................... 67
10.6 Subrogation................................................................. 68
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
10.7 Information................................................................ 68
10.8 Evidence of Obligations.................................................... 69
ARTICLE XI MISCELLANEOUS
11.1 Term of Agreement.......................................................... 70
11.2 Waivers; Amendments........................................................ 70
11.3 Notices.................................................................... 71
11.4 Governing Law; Integration................................................. 72
11.5 Severability; Counterparts................................................. 72
11.6 Successors and Assigns..................................................... 73
11.7 Confidentiality............................................................ 73
11.8 Characterization of the Transactions Contemplated by the Agreement......... 74
11.9 Assignments; Participations................................................ 74
</TABLE>
iii
<PAGE>
EXHIBITS
--------
EXHIBIT A Form of Written Agreement
EXHIBIT B Form of Weekly Servicer's Certificate
EXHIBIT C Form of Transfer Notice
EXHIBIT D [Reserved]
EXHIBIT E [List of Actions, Suits and Proceedings
against the Transferors]
EXHIBIT F Location of Records
EXHIBIT G List of Tradenames
EXHIBIT H [List of Actions, Suits and Proceedings
against the Guarantor]
EXHIBIT I Form of Opinion of Counsel to the
Transferors
EXHIBIT J Form of Opinion of Counsel for the
Guarantor/Servicer
iv
<PAGE>
SECOND AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
SECOND AMENDED AND RESTATED TRANSFER AND ADMINISTRATION AGREEMENT
(this "Agreement"), dated as of March 10, 1995, by and among MATTEL SALES CORP.,
---------
a California corporation, and FISHER-PRICE, INC., a Delaware corporation, as
transferors (each, a "Transferor"), MATTEL, INC., a Delaware corporation, as
----------
guarantor and servicer (the "Guarantor" and the "Servicer"), THE BANKS LISTED ON
--------- --------
THE SIGNATURE PAGES HEREOF (collectively, the "Banks") and NATIONSBANK OF TEXAS,
-----
N.A., a national banking association, as agent on behalf of the Banks (the
"Agent").
- ------
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto intend to amend and restate that certain
Amended and Restated Transfer and Administration Agreement, dated as of March
18, 1994, by and among Mattel Sales Corp., as transferor thereunder, the
Guarantor and Servicer, the Banks and the Agent, on the terms and conditions set
forth herein;
WHEREAS, the Transferors may desire to convey, transfer and assign,
from time to time, undivided percentage interests in certain accounts receivable
with respect to which Toys "R" Us, Inc. ("Toys "R" Us") is the named obligor,
-----------
and the Agent, on behalf of and for the benefit of the Banks, shall accept such
conveyance, transfer and assignment of such undivided percentage interests,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings:
"Adjusted Certificate of Deposit Rate" means, with respect to a
------------------------------------
Tranche and the related Tranche Period, the sum (rounded upward to the next
highest 1/100 of 1%) of (i) the rate obtained by dividing (x) the Certificate of
Deposit Rate by (y) a percentage equal to 100% minus the full reserve
requirement percentage as specified by the Board of Governors of the Federal
Reserve System that the Agent determines would be applicable on the date of
determination to a certificate of deposit of the Agent in excess of $100,000
with a maturity comparable to the related Tranche Period (including, without
limitation, any marginal, emergency, supplemental, special or other reserves if
the Agent, in its sole discretion, determines that it is required to maintain
any such reserves on such day), plus (ii) the then daily net annual assessment
rate as estimated by the Agent for determining the current annual assessment
payable by the Agent to the Federal Deposit Insurance Corporation for insuring
certificates of deposit with a maturity comparable to the related Tranche
Period.
"Adverse Claim" means a lien, security interest, charge or
-------------
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affiliate", as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
2
<PAGE>
"Agent" means NationsBank of Texas, N.A., a national banking
-----
association, in its capacity as agent on behalf of the Banks.
"Aggregate Unpaids" means at any time, an amount equal to the sum of
-----------------
(i) the aggregate accrued and unpaid Discount (including any additional Discount
due pursuant to Section 7.4) with respect to all Tranche Periods at such time,
(ii) the Total Outstanding Investment at such time, and (iii) all amounts owed
(whether due or accrued) hereunder by the Transferors to the Agent or the Banks
at such time.
"Alternate Rate" means a rate per annum equal to 2% in excess of the
--------------
prime rate of interest announced by the Agent from time to time, changing when
and as said prime rate changes (such rate not necessarily being the lowest or
best rate charged by the Agent).
"Arranger" means NationsBanc Capital Markets, Inc.
--------
"Bank" means each of the financial institutions listed on the
----
signature pages hereto, and any successors in accordance with Section 11.6.
"Bank Commitment" for each Bank means such Bank's Percentage of the
---------------
Facility Limit.
"Base Rate" means a fluctuating rate per annum which is the higher of
---------
(a) the Federal Funds Rate plus one-half of one percent (1/2%) per annum and (b)
the Reference Rate.
"Business Day" means any day excluding Saturday, Sunday and any day on
------------
which banks in Dallas, Texas, New York, New York, Pittsburgh, Pennsylvania, or
San Francisco, California are authorized or required by Governmental Rule to
close; provided, however, when used with respect to LIBOR, "Business Day" means
-------- -------
any day on which dealings in deposits of United States dollars are transacted in
the applicable offshore United States dollar interbank market.
"Certificate of Deposit Rate" means, with respect to a Tranche and the
---------------------------
related Tranche Period, the average of the consensus bid rates determined by the
3
<PAGE>
Agent on the date of determination of two or more New York certificate of
deposit dealers of recognized standing selected by the Agent for the purchase in
New York at face value from the Reference Banks of certificates of deposit of
the Reference Banks in an amount comparable to the amount of the related
Transfer Price to be funded by the Agent, and with a maturity comparable to the
related Tranche Period.
"Close-Out Collections" means Collections received with respect to any
---------------------
Close-Out Receivable.
"Close-Out Receivable" means any Receivable which is due and payable
--------------------
prior to the Remittance Date following the date of creation of such Receivable.
"Closing Date" means March 10, 1995.
------------
"Collection Account" means the account established and maintained by
------------------
the Agent for the benefit of the Banks pursuant to Section 2.9.
"Collections" means, with respect to any Receivable, all cash
-----------
collections and other cash proceeds of such Receivable including, without
limitation, any Deemed Collections and Close-Out Collections.
"Commitment Commission Rate" means the per annum rate payable by the
--------------------------
Transferors to the Banks (calculated on the basis of actual number of days
elapsed divided by 360), determined in accordance with the following table, and
based upon the second highest of Toys "R" Us, Inc.'s long-term senior unsecured
debt ratings:
<TABLE>
<CAPTION>
Toys "R" Us, Inc.'s
long-term senior
unsecured debt ratings Commitment
S&P/Moody's/Duff Commission
- --------------------------------------
<S> <C>
AA-/Aa3/AA-or higher 10.0 bps
A/A2/A or higher 15.0 bps
A-/A3/A- 18.75 bps
======================================
</TABLE>
4
<PAGE>
The Commitment Commission Rate as of the Closing Date is 10.0 basis
points. Upon a rating change, the Agent shall determine the applicable
Commitment Commission Rate and shall promptly notify the Banks and the
Transferors of the Commitment Commission Rate so determined. Such determination
by the Agent shall be conclusive absent manifest error. The new applicable
Commitment Commission Rate will be effective as of the date of notification to
the Banks.
"Commitment Fee" means a fee equal to the applicable Commitment
--------------
Commission Rate payable by the Transferors on each Remittance Date on the
difference between the average Facility Limit as set forth on each Weekly Report
and the average Total Outstanding Investment as set forth on each Weekly Report
for the one year period preceding such date.
"Contingent Obligation", as applied to any Person, means, without
---------------------
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof or (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings. Contingent Obligations shall include, without limitation, (a) the
direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another and
(b) any liability of such Person for the obligations of another through any
agreement (contingent or otherwise) (x) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (y) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another, if in the case of any agreement
5
<PAGE>
described under subclauses (x) or (y) of this sentence the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported. The amount of any Contingent Obligation
denominated in a currency other than United States dollars shall be equal to the
United States dollar equivalent of such Contingent Obligation.
"Contract" means, with respect to any Receivable, both the Written
--------
Agreement and the invoice related thereto, pursuant to or under which the
Obligor shall be obligated to pay for merchandise sold by the related Transferor
to the Obligor.
"Contractual Obligation", as applied to any Person, means any
----------------------
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Credit Agreement" means the Credit Agreement, dated as of March 10,
----------------
1995, by and among Mattel, Inc., the banks named therein and Bank of America
National Trust and Savings Association, as Agent, as such agreement may be
amended and supplemented from time to time.
"Credit and Collection Policy" means each Transferor's credit and
----------------------------
collection policies and practices relating to Contracts and Receivables with
respect to such Transferor existing on the date hereof, as modified from time to
time in compliance with Section 5.2(c).
"Deemed Collections" means any Collections on any Receivable deemed to
------------------
have been received pursuant to Section 2.6(a) or (b).
"Defaulted Receivable" means a Receivable: (i) as to which any
--------------------
payment, or part thereof, remains unpaid as of the close of business on the
Remittance Date next succeeding the date such Receivable is created; (ii) as to
which an Event of Bankruptcy has occurred with respect to the Obligor; (iii)
which has been identified by the applicable Transferor or the Servicer as
uncollectible; or (iv) which, consistent with the Credit and Collection
6
<PAGE>
Policy, should be written off the related Transferor's books as uncollectible.
"Deficiency Advance" has the meaning specified in Section 2.10.
------------------
"Discount" means, for each Tranche, an amount equal to the product of
--------
(a) the related Transfer Price (minus any amounts released from the Collection
Account by the Agent pursuant to Section 2.9(b) to fund all or a portion of such
Transfer Price) and (b) the applicable Participation Rate and (c) a fraction,
the numerator of which is the number of days in such Tranche Period and the
denominator of which is 360; provided, however, that no provision of this
-------- -------
Agreement shall require the payment or permit the collection of Discount in
excess of the maximum permitted by applicable Governmental Rule; and provided,
--------
further, that Discount shall not be considered paid by any distribution of
- -------
Collections if at any time such distribution is rescinded or must be returned
for any reason.
"Discount Reserve" means, at any time, the aggregate amount of
----------------
Discount for all outstanding Tranches.
"Duff" means Duff & Phelps Credit Ratings Co.
----
"Eligible Receivable" means, at any time, any Receivable:
-------------------
(i) the Obligor of which is Toys "R" Us, Inc.;
(ii) which is not a Defaulted Receivable at the time of the
initial creation of an interest of the Agent, on behalf of the Banks,
therein;
(iii) which is an "account" within the meaning of Section 9-106
of the UCC of all applicable jurisdictions;
(iv) which is denominated and payable only in United States
dollars in the United States;
7
<PAGE>
(v) which, together with the Contract related thereto, is in
full force and effect and constitutes the legal, valid and binding
obligation of the Obligor enforceable against the Obligor in accordance
with its terms and subject to no offset, counterclaim or other defense;
(vi) which, together with the Contract related thereto, does not
contravene in any material respect any Governmental Rules applicable
thereto and with respect to which no part of the Contract related thereto
is in violation of any such Governmental Rule in any material respect;
(vii) for which the Obligor has been directed and has agreed to
remit all payments to the Collection Account;
(viii) which satisfies all applicable requirements of the Credit
and Collection Policy;
(ix) the term of which does not extend beyond the Remittance
Date next succeeding the date such Receivable is created; and
(x) which was generated in the ordinary course of the related
Transferor's business.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Person or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Person, in each case relating
to environmental, health, safety and land use matters.
"ERISA" means, at any time, the Employee Retirement Income Security
-----
Act of 1974, as amended from time to time, and any successor statute.
8
<PAGE>
"ERISA Affiliate", as applied to any Person, means any trade or
---------------
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
Section 414(b) and 414(c) of the Internal Revenue Code of 1986, as amended.
"Event of Bankruptcy", with respect to any Person, means (i) that such
-------------------
Person shall generally not pay its debts as such debts become due or shall admit
in writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against such Person seeking to adjudicate it as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any Governmental Rule
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a corporation, such Person shall take any corporate
action to authorize any of the actions set forth in the preceding clause (i).
"Facility Limit" means $250,000,000, as such amount may be adjusted as
--------------
provided herein.
"Federal Funds Rate" means the weighted average of the rates on
------------------
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day of determination
(or if such day of determination is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transaction received by the Agent from three Federal funds
brokers of recognized standing selected by it.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
9
<PAGE>
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Person" means the government of the United States or the
-------------------
government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority, body or entity
of the United States or any state or locality therein, including the Federal
Deposit Insurance Company, the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System, any central bank or any comparable
authority.
"Governmental Rule" means any law, statute, rule, regulation,
-----------------
ordinance, order, judgment, guidelines or decision of any Governmental Person.
"Guarantor" means Mattel, Inc.
---------
"Indemnified Amounts" has the meaning specified in Section 8.1.
-------------------
"Indemnified Parties" has the meaning specified in Section 8.1.
-------------------
"LIBOR" means, with respect to a Tranche and the related Tranche
-----
Period, the average of the quotations (rounded upwards to the nearest 1/100 of
1%) as of 10:00 a.m. New York time on the second Business Day prior to the
commencement of such Tranche Period, if any, offered to first class banks in the
offshore dollar market by the Reference Banks for U.S. Dollar deposits of
amounts in same day funds comparable to the Transfer Price of such Tranche (net
of amounts payable in accordance with Section 2.9(b)), with a maturity
comparable to such Tranche Period to which LIBOR will apply.
"Material Adverse Effect" means (i) a material adverse effect upon the
-----------------------
business, operations, properties, assets, business prospects or condition
(financial or otherwise) of Mattel, Inc. (together with its Subsidiaries), taken
as a whole, or (ii) a material impairment of the ability of Mattel, Inc. to
perform its obligations under this Agreement.
10
<PAGE>
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is maintained for employees of a Person or any
ERISA Affiliate of such Person.
"Notice of Termination" means a notice delivered by the Agent to the
---------------------
Transferors, the Guarantor and the Banks pursuant to Section 7.4.
"Obligations" has the meaning set forth in Section 10.1.
-----------
"Obligor" means Toys "R" Us, Inc., a Delaware corporation, which is
-------
obligated to the Transferors to make payments for the provision of goods
pursuant to Contracts.
"Participant" has the meaning set forth in Section 11.9.
-----------
"Participation Rate" means, for any Tranche and related Tranche
------------------
Period, LIBOR (or the Adjusted Certificate of Deposit Rate pursuant to Section
2.12) plus the applicable spread. Such spread shall mean the per annum rate
(calculated on the basis of the actual number of days elapsed divided by 360),
determined in accordance with the following table, and based upon the second
highest of Toys "R" Us, Inc.'s long-term unsecured senior debt ratings:
<TABLE>
<CAPTION>
Toys "R" Us, Inc.'s long-
term senior unsecured
debt ratings
S&P/Moody's/Duff Spread
- ---------------------------------------
<S> <C>
AA-/Aa3/AA-or higher 20.0 bps
A/A2/A or higher 22.5 bps
A-/A3/A- 35.0 bps
=======================================
</TABLE>
Such spread as of the Closing Date is 20 basis points. Upon a rating
change, the Agent shall determine the applicable spread and shall promptly
notify the Banks
11
<PAGE>
and the Transferors of the spread so determined. Such determination by the Agent
shall be conclusive absent manifest error. The new applicable spread will be
effective as of the date of notification to the Banks and will be applicable to
all Tranches.
"Pension Plan" means any employee plan which is subject to Section 412
------------
of the Internal Revenue Code of 1986, as amended, and which is maintained for
employees of a Person or any ERISA Affiliate of such Person other than a
Multiemployer Plan.
"Percentage" means, with respect to any Bank at any time, the
----------
percentage set forth next to its name on the signature page hereof, which is the
equivalent of a fraction the numerator of which is equal to such Bank's Bank
Commitment, and the denominator of which is equal to the Facility Limit.
"Percentage Factor" means the percentage computed at any time of
-----------------
determination as follows:
TOI + DR
------------
ERB
Where:
TOI = the Total Outstanding Investment at the time of such computation.
DR = the Discount Reserve at the time of such computation.
ERB = the aggregate outstanding balance of the Eligible Receivables at the
time of such computation.
In no event shall the Percentage Factor exceed one hundred percent.
The Percentage Factor shall be calculated by the Agent on the day of the initial
Transfer hereunder. Thereafter, the Percentage Factor shall remain constant
from the time as of which any such computation is made until the time as of
which a subsequent Transfer shall be made pursuant to Section 2.2. The
Percentage Factor, as calculated at the close of business on the date as of
which any such Transfer is made shall remain constant at all times thereafter
until such time
12
<PAGE>
as an additional Transfer is made or until such time as the Banks shall have
received the full amount of the Aggregate Unpaids, at which time the Percentage
Factor shall be recomputed.
"Person" means any corporation, natural person, firm, joint venture,
------
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Potential Termination Event" means any condition or event which, with
---------------------------
the giving of notice or the lapse of time or both, would constitute a
Termination Event.
"Proceeds" means "proceeds" as defined in Section 9.306(1) of the UCC.
--------
"Receivable" means the indebtedness denominated in United States
----------
dollars to a Transferor by the Obligor (without giving effect to any purchase
hereunder by the Agent, on behalf of the Banks, at any time) under a Contract
whether constituting an account, chattel paper, instrument or general
intangible, including all other obligations of the Obligor with respect thereto.
Notwithstanding the foregoing, once a Receivable has been deemed collected
pursuant to Section 2.6 hereof, it shall no longer constitute a Receivable
hereunder.
"Records" means all Contracts and other documents, books, records and
-------
other information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the Obligor.
"Reference Banks" means Bank of America National Trust and Savings
---------------
Association, NationsBank of Texas, N.A. and PNC Bank, National Association. In
the event that at any time of determination only two Banks designated as
"Reference Banks" are providing rates for deposits referred to in the definition
of "LIBOR", those two Banks shall be the "Reference Banks" or, if only one such
Bank is providing such rates, that Bank shall be the "Reference Banks" for
purposes of this Agreement.
13
<PAGE>
"Reference Rate" means the rate of interest publicly announced from
--------------
time to time by NationsBank of Texas, N.A. in Dallas as its reference rate, as
in effect on such date of determination. The reference rate is set by
NationsBank of Texas, N.A. based on various factors including NationsBank of
Texas, N.A.'s costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans. NationsBank of
Texas, N.A. may make loans at, above or below the rate announced as its
reference rate.
"Remittance Date" means December 18, 1995, December 17, 1996, and
---------------
December 17, 1997, as applicable, or, if such day is not a Business Day, the
next succeeding Business Day.
"Requisite Banks" means, at any date of determination, Banks having at
---------------
least 66-2/3% of the aggregate Bank Commitments at such time.
"S&P" means Standard & Poor's Ratings Group.
---
"Servicer" means Mattel, Inc. or, after a Servicer Default, a servicer
--------
appointed by the Agent.
"Servicer Default" has the meaning specified in Section 7.1.
----------------
"Subsidiary" means any corporation, association or other business
----------
entity of which more than 50% of the total voting power of shares of stock
entitled to vote in the election of directors, managers or trustees thereof is
at the time owned or controlled, directly or indirectly, by any Person or one or
more of the other Subsidiaries of that Person or a combination thereof.
"Termination Date" means the earlier of (i) December 17, 1997, unless
----------------
such date is otherwise extended, or (ii) the date on which the Agent delivers a
Notice of Termination to the Transferors.
"Termination Event" means an event described in Section 7.3.
-----------------
"Total Outstanding Investment" means the sum of the Transfer Prices
----------------------------
paid to the Transferors for all Transfers less any amounts released from the
----
Collection
14
<PAGE>
Account by the Agent pursuant to Section 2.9(b) to fund all or a
portion of any such amounts paid to the Transferors and less the aggregate
----
amount of Collections received and applied by the Agent to reduce such Total
Outstanding Investment pursuant to Section 2.4 or 2.9(b); provided that the
--------
Total Outstanding Investment shall be restored in the amount of any Collections
so received and applied if at any time the distribution of such Collections is
rescinded or must otherwise be returned for any reason; and provided further
-------- -------
that the Total Outstanding Investment shall at no time exceed the Facility
Limit.
"Tranche" means a portion of the Total Outstanding Investment
-------
allocated to a Tranche Period.
"Tranche Period" means, with respect to a Tranche, the period from the
--------------
date of the Transfer related thereto to the following Remittance Date.
"Transaction Costs" has the meaning specified in Section 8.3.
-----------------
"Transfer" means a conveyance, transfer and assignment by a Transferor
--------
to the Agent, on behalf of the Banks, of an undivided percentage ownership
interest in Receivables hereunder.
"Transfer Date" means, with respect to each Transfer, the Business Day
-------------
on which such Transfer is made.
"Transfer Price" means, with respect to any Transfer, the amount paid
--------------
to the related Transferor by the Banks as described in the Transfer Notice
related to such Transfer.
"Transfer Notice" has the meaning given to it in Section 2.2.
---------------
"Transferred Interest" means, at any time of determination, an
--------------------
undivided percentage ownership interest in (i) each and every then outstanding
Receivable, (ii) all Collections with respect thereto, and (iii) other Proceeds
of the foregoing, equal to the Percentage Factor at such time. The Transferred
Interest in each Receivable and the Collections and Proceeds with respect
thereto, shall at all times be in proportion to the Transferred
15
<PAGE>
Interest in each other Receivable, and Collections and Proceeds with respect
thereto.
"UCC" means, with respect to any state, the Uniform Commercial Code as
---
from time to time in effect in such state.
"Weekly Report" means a report prepared on a Weekly basis by the
-------------
Servicer in the form attached hereto as Exhibit B and delivered to the Agent in
accordance with Section 2.8.
"Written Agreement" means the agreement between the Obligor and the
-----------------
Transferors in the form of Exhibit A.
SECTION 1.2. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of California, and not specifically defined
herein, are used herein as defined in such Article 9. All other terms not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
SECTION 1.3. Computation of Time Periods. Unless otherwise stated in
---------------------------
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
16
<PAGE>
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility. Upon the terms and subject to the conditions
--------
herein set forth, each Transferor may, at its option, convey, transfer and
assign to the Agent, on behalf of the Banks, and the Banks shall, subject to the
terms and conditions hereof, accept such conveyance, transfer and assignment
from such Transferor, without recourse except as provided herein, undivided
percentage ownership interests in the Receivables, together with Collections
with respect thereto, from time to time.
SECTION 2.2. Transfers. Upon the terms and subject to the conditions
---------
herein set forth, each Transferor may, prior to the Termination Date, convey,
transfer and assign to the Agent, on behalf of the Banks, and the Banks shall,
subject to the terms and conditions hereof, accept such conveyance, transfer and
assignment from such Transferor, without recourse except as otherwise provided
herein, undivided percentage ownership interests in Receivables, together with
Collections with respect thereto (each, a "Transfer") from time to time for an
--------
aggregate Transfer Price (less any amounts released from the Collection Account
pursuant to Section 2.9(b) to fund all or a portion of any Transfer) not to
exceed the Facility Limit; provided that in no event may there be more than one
--------
Transfer per Transferor per week, and no Transfer shall be made by a Transferor
between two Business Days prior to any Remittance Date and the next succeeding
March 17. Each Transferor shall convey, transfer and assign to the Agent, on
behalf of the Banks, undivided percentage ownership interests in its Receivables
by delivering to the Agent, not later than 1:00 p.m., Dallas, Texas time, on the
third Business Day prior to the proposed date of transfer, notice of each
Transfer in substantially the form of Exhibit C hereto (a "Transfer Notice").
---------------
Each Transfer Notice shall specify (i) the Transfer Price based on an estimated
Participation Rate, (ii) an initial estimate of the Discount relating to such
Transfer based on an estimated Participation Rate, (iii) the date of such
Transfer, (iv) the Tranche Period related thereto, (v) the aggregate outstanding
balance of the Eligible Receivables as of the day of such notice and (vi) the
estimated Percentage Factor after giving effect
17
<PAGE>
to such Transfer. After giving effect to such Transfer, the Total Outstanding
Investment plus the Discount Reserve shall not be greater than 80% of the
aggregate outstanding balance of the Eligible Receivables. Promptly after 10:00
a.m., Dallas, Texas time, on the second Business Day prior to the date of a
proposed Transfer, the Agent will notify the related Transferor of the LIBOR (or
the Adjusted Certificate of Deposit Rate, if applicable pursuant to Section
2.12) and the Participation Rate applicable to such Transfer, and such
Transferor will notify the Agent in writing of the finalized Transfer Price and
the finalized Percentage Factor. The finalized Transfer Price shall be an
amount not in excess of the amount which, when added to the Total Outstanding
Investment immediately prior to such Transfer, would cause the Total Outstanding
Investment plus the Discount Reserve to be greater than 80% of the aggregate
outstanding balance of the Eligible Receivables. The Transfer Price (net of any
amounts released from the Collection Account pursuant to Section 2.9(b) to fund
all or a portion of any Transfer) with respect to each Transfer shall not be
less than $5,000,000 and shall be in increments of $500,000 in excess thereof.
Each Transfer Notice shall be executed by duly authorized officers of the
Transferors. The Agent, on behalf of the Banks, shall accept such offer to
convey, transfer and assign undivided percentage ownership interests in writing.
The terms of each Transfer shall be as set forth herein and in the related
Transfer Notice.
Promptly after receipt of a Transfer Notice, the Agent shall notify
each Bank of the proposed Transfer (such notice to normally be given within two
hours of receipt by the Agent). Each Bank shall make available to the Agent its
pro rata share of the Transfer Price by remitting such funds to the Agent for
credit to NationsBank of Texas, N.A., ABA No. 111000025, Attention: Commercial
Loan Operations, Account No. 0180019828, Ref. Mattel Sales Inc., no later than
2:00 p.m., Dallas, Texas time on the date of such Transfer. The Agent shall
make available to the related Transferor on the date of such Transfer the
aggregate of the amounts so made available by the Banks by causing an amount of
same-day funds equal to such aggregate amount received by the Agent to be
credited to the account of the Transferors at Bank of America National Trust and
Savings Association (ABA No. 121000358, Account No. 1233112850, reference:
Mattel
18
<PAGE>
Sales Receivables); provided that, upon prior written notice to the Agent, each
--------
Transferor may at any time direct the Agent to credit such amounts to another
account of such Transferor.
Each Transfer Notice shall be irrevocable and binding on the
Transferors, and the Transferors shall indemnify the Agent and the Banks against
any loss or expense incurred by the Agent or the Banks arising from or relating
to any failure by the Transferor to complete such Transfer including, without
limitation, any loss or expense incurred by the Agent or the Banks by reason of
the liquidation or reemployment of funds acquired by the Banks in anticipation
of funding such Transfer.
Each Transfer shall constitute a purchase of undivided percentage
ownership interests in each and every Receivable, together with all Collections
and Proceeds with respect thereto. The aggregate undivided percentage ownership
interest of the Agent, on behalf of the Banks, in the Receivables, together with
all Collections and Proceeds with respect thereto, shall equal the Percentage
Factor in effect from time to time.
SECTION 2.3. Discount, Fees and Other Costs and Expenses. (a)
-------------------------------------------
Notwithstanding any limitation on recourse contained herein, the Transferors
shall pay to the Agent (i) on each Remittance Date and on each day thereafter
until the Total Outstanding Investment has been reduced to zero, the amounts
required pursuant to Section 7.4 hereof, and (ii) as and when due in accordance
with this Agreement, all amounts payable pursuant to Article VIII hereof, if
any.
(b) Notwithstanding any limitation on recourse contained in this
Agreement, Mattel, Inc. and the Transferors, as appropriate, shall pay the
following non-refundable fees calculated on the basis of the actual number of
days elapsed divided by 360:
(i) on each Remittance Date occurring from the date of execution
hereof, the Transferors shall pay the Commitment Fee; and
19
<PAGE>
(ii) the Transferors shall pay to the Agent the fee referenced
in that certain letter agreement, dated January 25, 1995, between the
Transferors and the Agent.
(c) Nothing in this Agreement shall limit in any way the obligations
of the Transferors to pay the amounts set forth in this Section 2.3.
SECTION 2.4. Settlement Procedures. On each Remittance Date and each
---------------------
day thereafter until the Aggregate Unpaids have been paid in full, the Agent
shall apply (i) amounts on deposit in the Collection Account pursuant to Section
2.6 or 7.3(h) and (ii) the Percentage Factor of all remaining amounts on deposit
in the Collection Account in the following order of priority: first, in payment
-----
of the accrued Discount for each Tranche Period, second, in payment of the
------
Commitment Fee, third, in payment of any additional Discount due pursuant to
-----
Section 7.4, fourth, in payment of the aggregate of all other amounts then owed
------
(whether due or accrued) hereby by Transferors to the Banks or the Agent (other
than the Total Outstanding Investment), and fifth, in reduction of the Total
-----
Outstanding Investment. In the event that on any Remittance Date and any day
thereafter, the Aggregate Unpaids have not been paid in full after giving effect
to the preceding sentence, the Agent shall apply any other amounts on deposit in
the Collection Account to the payment in full of the Aggregate Unpaids in
accordance with the foregoing priority. Following the date on which the Total
Outstanding Investment has been reduced to zero, all accrued Discount and
applicable fees have been paid in full, all other Aggregate Unpaids have been
paid in full and this Agreement shall have terminated pursuant to Section 11.1,
(i) the Agent shall recompute the Percentage Factor, (ii) the Agent, on behalf
of the Banks, shall be considered to have reconveyed to the applicable
Transferor any interest in the Receivables (including the Transferred Interest),
(iii) the Agent shall release to such Transferor any remaining Collections held
in the Collection Account pursuant to this Section 2.4 and (iv) the Agent, on
behalf of the Banks, shall execute and deliver to such Transferor, such
documents or instruments as are necessary to terminate the Agent's interest in
the Receivables. Any such documents shall be prepared by or on behalf of the
related Transferor.
20
<PAGE>
SECTION 2.5. Protection of Ownership Interest of the Banks. Each
---------------------------------------------
Transferor agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all action necessary,
and such other actions as may be reasonably requested by the Agent, in order to
perfect or protect the Transferred Interest or to enable the Agent to exercise
or enforce any of its or any Bank's rights hereunder. Without limiting the
foregoing, each Transferor will, in order to accurately reflect this purchase
and sale transaction, execute and file such financing or continuation statements
or amendments thereto or assignments thereof as are necessary or as may be
requested by the Agent in order to protect, perfect and preserve the Transferred
Interest of the Agent, and agrees to mark its master data processing records and
other documents with a legend describing the purchase by the Agent, on behalf of
the Banks, of the Transferred Interest. Each Transferor shall, upon request of
the Agent, obtain such additional search reports as the Agent shall reasonably
request. To the fullest extent permitted by applicable Governmental Rule, the
Agent shall be permitted to sign and file continuation statements and amendments
thereto and assignments thereof without the applicable Transferor's signature.
Carbon, photographic or other reproduction of this Agreement or any financing
statement shall be sufficient as a financing statement. No Transferor shall
change its name, identity or corporate structure (within the meaning of Section
9-402(7) of the UCC as in effect in the State of California), nor relocate its
chief executive office or any office where Records are kept, unless it shall
have: (i) given the Agent at least thirty (30) days' prior written notice
thereof and (ii) prepared at such Transferor's expense and delivered to the
Agent all financing statements, instruments and other documents necessary to
preserve, perfect and protect the Transferred Interest of the Agent or
reasonably requested by the Agent in connection with such change or relocation.
Any filings under the UCC or otherwise that are occasioned by such change in
name or location shall be made at the expense of the related Transferor. As of
the date hereof, each Transferor has instructed the Obligor to cause all
Collections to be deposited directly into the Collection Account, and such
Transferor shall not change such arrangement unless the Agent shall have given
its prior written consent thereto. If either Transferor receives any Collections
or is deemed to receive any
21
<PAGE>
Collections pursuant to Section 2.6, such Transferor shall immediately remit
such Collections to the Collection Account administered by the Agent for the
benefit of the Banks.
SECTION 2.6. Deemed Collections; Application of Payments. (a) In
-------------------------------------------
the event that on any day the outstanding balance of a Receivable is either (x)
reduced as a result of any defective or returned merchandise, any cash discount
or any adjustment by the related Transferor, or (y) reduced or canceled as a
result of a setoff in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction),
then within ten (10) days, either (i) the Servicer shall deliver a Weekly Report
evidencing that the aggregate outstanding balance of Eligible Receivables is at
least 125% of the Total Outstanding Investment and the Discount Reserve or (ii)
such Transferor shall deposit to the credit of the Collection Account the amount
of such reduction or cancellation and the Agent shall be considered to have
reconveyed to such Transferor any interest in such Receivables (including the
Transferred Interest therein). The Agent agrees that it shall execute and
return to the related Transferor such documents or instruments as are reasonably
requested by such Transferor and necessary to terminate the Agent's interest on
behalf of the Banks in such Receivables. Any such documents shall be prepared
by or on behalf of such Transferor.
(b) In the event that on any day any of the representations or
warranties in Article III is no longer true with respect to a Receivable, then
within ten (10) days of such occurrence, either (i) the related Transferor shall
cure the breach of the applicable representation or warranty or (ii) the
Servicer shall deliver a Weekly Report evidencing that the aggregate outstanding
balance of Eligible Receivables (not including the aggregate outstanding balance
of the Receivables subject to any such breach of a representation or warranty)
is at least 125% of the Total Outstanding Investment and the Discount Reserve or
(iii) such Transferor shall deposit to the credit of the Collection Account the
outstanding balance of such Receivable in full and the Agent, on behalf of the
Banks, shall be considered to have reconveyed to such Transferor any interest in
such Receivables (including the Transferred Interest therein). The Agent
22
<PAGE>
agrees that it shall execute and return to the related Transferor such documents
or instruments as are reasonably requested by such Transferor and necessary to
terminate the Agent's interest on behalf of the Banks in such Receivables. Any
such documents shall be prepared by or on behalf of such Transferor.
SECTION 2.7. Payments and Computations, Etc. All amounts to be paid
------------------------------
or deposited by the Transferors hereunder shall be paid or deposited in
accordance with the terms hereof no later than 1:00 p.m. (New York City time) on
the day when due in immediately available funds; if such amounts are payable to
the Agent, on behalf of the Banks, they shall be paid or deposited in the
Collection Account, until otherwise notified by the Agent. The Transferors
shall, to the extent permitted by Governmental Rule, pay to the Agent, for the
benefit of the Banks, upon demand, interest on all amounts not paid or deposited
when due to the Banks hereunder at a rate equal to the highest Participation
Rate applicable to any Tranche then outstanding plus 2% or, if no Tranche is
then outstanding, the Alternate Rate. All computations of discount, interest
and all per annum fees hereunder shall be made on the basis of a year of 360
days for the actual number of days (including the first but excluding the last
day) elapsed. Any computations by the Agent of amounts payable by the
Transferors hereunder to the Banks or the Agent shall be binding absent manifest
error. All payments made to the Agent in respect of the Total Outstanding
Investment and Discount shall be made to the Agent for the account of the Banks
pro rata based on their respective Percentages. The Agent shall promptly remit
- --- ----
to each Bank such Bank's pro rata share of such payments (such payments to
--- ----
normally be remitted within two hours of receipt by the Agent).
SECTION 2.8. Reports. At any time the Total Outstanding Investment
-------
is greater than zero, commencing on the date hereof, and on each subsequent
Monday (or, if such day is not a Business Day, the next succeeding Business Day)
the Servicer shall prepare and forward to the Agent a Weekly Report for the
preceding calendar week, and (ii) such other information as the Agent may
reasonably request. On the second Business Day prior to each Remittance Date,
the Transferors shall provide the Agent and each Bank with a certificate
detailing the amount of Collections expected as of that Remittance
23
<PAGE>
Date, together with the Total Outstanding Investment and the Discount Reserve.
SECTION 2.9. Collection Account. (a) There shall be established on
------------------
the day of the initial Transfer hereunder and maintained, in the name of the
Agent for the benefit of the Banks, a segregated account (the "Collection
----------
Account"), at NationsBank of Texas, N.A., bearing a designation clearly
- -------
indicating that the funds deposited therein are held for the benefit of the
Banks. (The wiring instructions for deposits to such account are: ABA No.
111000025, Account No. 1290154724.) Any interest and earnings (net of losses
and investment expenses) on funds on deposit in the Collection Account shall be
retained in the Collection Account and be available to make any payments
required to be made hereunder (including Discount) to the Agent or the Banks.
On the date on which the Total Outstanding Investment is zero and the Aggregate
Unpaids have been paid in full to the Banks, any funds remaining on deposit in
the Collection Account shall be released to the Transferors in same-day funds.
(b) Close-Out Collections deposited to the credit of the Collection
Account shall be retained in the Collection Account by the Agent until the
earlier of (w) the next succeeding Remittance Date, at which time such amounts
shall be applied pursuant to Section 2.4, and (x) the next succeeding Transfer
Date, at which time the Agent shall release to the Transferors the amount of
such Collections minus the Percentage Factor (as calculated as of the latest
-----
Transfer Date) of such Collections. In the event that Collections of Close-Out
Receivables are to be applied pursuant to clause (x) above, the Transferors may
request that the Percentage Factor of such Collections be applied toward (i) all
or a portion of the Transfer Price of the Transfer occurring on such Transfer
Date (in which case such amounts shall be paid to the Transferors) or (ii) the
reduction of the Total Outstanding Investment (in which case such amounts shall
be paid to the Banks). In the case of any such reduction of the Total
Outstanding Investment, the Agent shall, in its sole discretion, determine the
Tranche(s) with respect to which such reduction shall be applied; provided
--------
further, however, that in the case of any such reduction of the Total
- ------- -------
Outstanding Investment, each Transferor agrees to reimburse each Bank and to
hold each Bank
24
<PAGE>
harmless from any loss or expense which such Bank may sustain or incur as a
consequence of such reduction of the Total Outstanding Investment, including any
such loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain its funding hereunder or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the payment in full of the Aggregate Unpaids.
SECTION 2.10. Deficiency Advances. No Bank shall be responsible for
-------------------
any default of any other Bank in respect of such other Bank's obligation to fund
any portion of a Transfer hereunder, nor shall the commitment of any Bank
hereunder be increased as a result of such default by any other Bank. Without
limiting the generality of the foregoing, in the event any Bank shall fail to
advance funds as provided herein, the Agent may, in its discretion but shall not
be obligated to, advance as a Bank all or any portion of such amount (the
"Deficiency Advance") and shall thereafter be entitled to payments on such
- -------------------
Deficiency Advance in the same manner and at the same rate(s) to which such
other Bank would have been entitled had it made such advance itself; provided
--------
that, upon payment to the Agent from such other Bank of the entire outstanding
amount of such Deficiency Advance, together with interest thereon, at the
Participation Rate applicable to the related Tranche, then such payment shall be
credited against the Agent's share of the Total Outstanding Investment in full
payment of such Deficiency Advance. Acceptance by a Transferor of a Deficiency
Advance from the Agent shall in no way limit the rights of such Transferor
against the Bank failing to fund its pro rata portion (based on its Percentage)
--- ----
of the Transfer Price of any Transfer hereunder.
SECTION 2.11. Adjustment of Facility Limit. (a) The Transferors
----------------------------
shall have the right, at any time and from time to time; to terminate in whole
or permanently reduce in part, without premium or penalty, the Facility Limit;
provided that the Facility Limit, as reduced, shall equal or exceed the Total
- --------
Outstanding Investment as of the date of such reduction.
(b) The Transferors shall give not less than three Business Days'
prior written notice to the Agent designating the date (which shall be a
Business Day) and the amount of such termination or reduction.
25
<PAGE>
Any partial reduction shall be in an aggregate minimum amount of $10,000,000 and
integral multiples of $1,000,000 in excess of that amount. Promptly after
receipt of a notice of such termination or partial reduction, the Agent shall
notify each Bank and Bank of America National Trust and Savings Association as
agent under the Credit Agreement of the proposed termination or reduction. Such
termination or reduction shall be effective on the date specified in the
Transferors' notice and shall terminate or reduce the dollar amount of each
Bank's Bank Commitment.
SECTION 2.12. Inability to Determine LIBOR. If for any reason the
----------------------------
Reference Banks shall have determined that for any reason adequate and
reasonable means do not exist for ascertaining LIBOR for any proposed Tranche
Period, or if the Requisite Banks advise the Agent in writing that LIBOR for any
proposed Tranche Period does not adequately and fairly reflect the cost to such
Banks of funding the Total Outstanding Investment during such Tranche Period,
the Agent will forthwith give notice of such determination to the Transferors
and each Bank. In such event, the Participation Rate with respect to such
proposed Tranche Period and related Tranche shall be determined by reference to
the Adjusted Certificate of Deposit Rate. If for any reason the Reference Banks
shall have determined that for any reason adequate and reasonable means do not
exist for ascertaining the Adjusted Certificate of Deposit Rate for any proposed
Tranche Period, or if the Requisite Banks advise the Agent in writing that the
Adjusted Certificate of Deposit Rate for any proposed Tranche Period does not
adequately and fairly reflect the cost to such Banks of funding the Total
Outstanding Investment during such Tranche Period, the Agent will forthwith give
notice of such determination to the Transferors and each Bank. In such event,
the Participation Rate with respect to such proposed Tranche Period and related
Tranche shall be determined by reference to the Base Rate.
26
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Transferors. Each
-------------------------------------------------
Transferor hereby represents and warrants to each of the Banks that:
(a) Perfection. Immediately preceding each Transfer hereunder, the
----------
related Transferor shall be the owner of all of the Receivables which are the
subject of each such Transfer, free and clear of all liens, encumbrances,
security interests, preferences or other security arrangements of any kind or
nature whatsoever. On or prior to each Transfer, all financing statements and
other documents required to be recorded or filed in order to perfect the
Transferred Interest against all creditors and purchasers from such Transferor
will have been duly filed in each filing office necessary for such purpose and
all filing fees and taxes, if any, payable in connection with such filings have
been paid in full.
(b) Accuracy of Information. All information heretofore furnished by
-----------------------
a Transferor to the Banks or the Agent for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by such Transferor to the Banks or the Agent
will be, true and accurate in every material respect, on the date such
information is stated or certified.
(c) Place of Business. The chief place of business and chief
-----------------
executive office of the Transferors are located at the addresses of the
Transferors indicated on Exhibit F hereto, and the offices where each Transferor
keeps its Records are located at the address of such Transferor indicated on
Exhibit F hereto or at such other locations notified to the Agent in accordance
with Section 2.5 in jurisdictions where all action required by Section 2.5 has
been taken and completed.
(d) Payments. The Obligor has, with respect to each Receivable, been
--------
directed by the related Transferor to remit all payments in respect of such
Receivable directly to the Collection Account administered by the Agent.
27
<PAGE>
(e) Good Title. Upon each Transfer and each recomputation of the
----------
Transferred Interest, the Agent, on behalf of the Banks, shall acquire a valid
and perfected first priority undivided percentage ownership interest to the
extent of the Transferred Interest or a first priority perfected security
interest in each Receivable which exists on the date of such Transfer and
recomputation and all Collections with respect thereto free and clear of any
Adverse Claim.
(f) Tradenames, etc.. As of the date hereof: (i) neither Transferor
----------------
has any subsidiaries or divisions; and (ii) neither Transferor has, within the
last five (5) years, operated under any tradenames except as set forth on
Exhibit G hereto and, within the last five (5) years, has not changed its name,
merged with or into or consolidated with any other corporation or been the
subject of any proceeding under Title 11 of the United States Code (Bankruptcy).
(g) No Termination Event. No event has occurred and is continuing,
--------------------
and no condition exists, which constitutes a Potential Termination Event or
Termination Event.
(h) Organization and Powers. Each Transferor is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted and to enter into this Agreement and to
carry out the transactions contemplated hereby.
(i) Good Standing. Each Transferor is in good standing wherever
-------------
necessary to carry on its present business and operations, except in
jurisdictions in which the failure to be in good standing has or will have no
Material Adverse Effect.
(j) Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action by each
Transferor.
28
<PAGE>
(k) No Conflict. The execution, delivery and performance by each
-----------
Transferor of this Agreement do not and will not (a) violate the Certificate of
Incorporation or Bylaws of such Transferor, (b) violate any provision of law
applicable to such Transferor, or any material order, judgment or decree of any
court or other agency of government binding on such Transferor, the violation of
which would result in a Material Adverse Effect, (c) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of such Transferor, (d) result in or require
the creation or imposition of any material lien, security interest, charge or
encumbrance of any nature whatsoever upon any of its material properties or
assets, other than Liens created in favor of the Agent, or (e) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of such Transferor.
(l) Governmental Consents. The execution, delivery and performance
---------------------
by the Transferors of this Agreement, and each agreement, document, or
instrument required hereunder do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
Federal, state or other governmental authority or regulatory body or other such
person.
(m) Binding Obligation. This Agreement when executed and delivered
------------------
will be the legally valid and binding obligation of the Transferors, enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(n) Changes, Etc. Since December 31, 1993 there has been no event or
------------
events that have, either individually or in the aggregate, resulted in a
Material Adverse Effect.
(o) Litigation; Adverse Facts. There is no action, suit, proceeding
-------------------------
or arbitration (whether or not purportedly on behalf of either Transferor) at
law or in equity or before or by any Federal, state, municipal or other
governmental department, commission, board,
29
<PAGE>
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of the related Transferor, threatened against or affecting such
Transferor or any of its properties which, in the reasonable judgment of such
Transferor and its executive officers (assuming adverse determination of facts
which such Transferor in good faith believes it would not successfully prove,
and considering damages which in their best judgment is the maximum that would
be awarded upon, and the likelihood of, an adverse determination of the claim or
the amount which reflects their best judgment as to that required to be paid to
settle the claims) would result in a Material Adverse Effect and there is no
basis known to such executive officers for any such action, suit or proceeding.
Neither Transferor is (i) in violation of any applicable law which could result
in a Material Adverse Effect, or (ii) subject to or in default with respect to
any final judgment, writ, injunction, decree, rule or regulation of any court or
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could result in a
Material Adverse Effect. There is no action, suit, proceeding or investigation
pending or, to the knowledge of such Transferor, threatened against or affecting
such Transferor which provides a reasonable basis for questioning the validity
or the enforceability of this Agreement.
(p) Payment of Taxes. All tax returns and reports of either
----------------
Transferor required to be filed by any of them have been timely filed, and all
taxes, assessments, fees and other governmental charges upon such Transferor and
upon its respective properties, assets, income and franchises which are due and
payable have been paid when due and payable or bonded against, except to the
extent permitted by Section 6.3 of the Credit Agreement. Neither Transferor
knows of any proposed tax assessment against it that would result in a Material
Adverse Effect.
(q) Agreements. Neither Transferor is a party to nor is it subject
----------
to any material agreement or instrument or charter or other internal restriction
which results in a Material Adverse Effect.
30
<PAGE>
(r) Performance. Neither Transferor is in default in the
-----------
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of such Transferor,
and no condition exists which, with the giving of notice or the lapse of time or
both, would constitute such a default, except, in any such case, where the
consequences, direct or indirect, of such default or defaults, if any, would not
result in a Material Adverse Effect.
(s) Governmental Regulation. Neither Transferor is subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940
limiting its ability to transfer interests in its Receivables hereunder.
(t) Employee Benefit Plans. Each Transferor and each of its
----------------------
respective ERISA Affiliates is in compliance in all material respects with any
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Pension Plans. Neither Transferor nor any of its
respective ERISA Affiliates has participated in or participates in any
Multiemployer Plan the withdrawal from which may result in any liability to any
party in an amount in excess of $1,000,000.
(u) Disclosure. No representation or warranty of a Transferor
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by such Transferor since January 1, 1995 for
use in connection with the transactions contemplated by this Agreement as of the
date of this Agreement contains any untrue statement of a material fact or omits
to state a material fact (known to the Transferor in the case of any document or
fact not furnished by it) necessary in order to make the statements contained
herein or therein not misleading except that any such statement or omission that
was untrue or misleading at the time made or that subsequently became untrue or
misleading has been superseded or corrected by information provided to the Banks
prior to the date of this Agreement.
(v) Environmental Matters. Each Transferor conducts in the ordinary
---------------------
course of business a review of the effect of existing Environmental Laws and
31
<PAGE>
existing Environmental Claims on its business, operations and properties, and as
a result thereof each Transferor has reasonably concluded that such
Environmental Laws and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.2. Representations and Warranties of Mattel, Inc. Mattel,
----------------------------------------------
Inc. represents and warrants to the Banks that:
(a) Servicing. Since January 1, 1995, there has been no material
---------
change in the ability of Mattel, Inc. to service the Receivables.
(b) Organization and Powers. Mattel, Inc. is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into this Agreement and to carry out the transactions
contemplated hereby and thereby.
(c) Good Standing. Mattel, Inc. is in good standing wherever
-------------
necessary to carry on its present business and operations, except in
jurisdictions in which the failure to be in good standing has or will have no
Material Adverse Effect.
(d) Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action by Mattel,
Inc.
(e) No Conflict. The execution, delivery and performance by Mattel,
-----------
Inc. of this Agreement do not and will not (a) violate the Restated Certificate
of Incorporation or Bylaws of Mattel, Inc., (b) violate any provision of law
applicable to Mattel, Inc., or any material order, judgment or decree of any
court or other agency of government binding on Mattel, Inc., the violation of
which would result in a Material Adverse Effect, (c) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Mattel, Inc., (d) result in or require the
creation or imposition of any
32
<PAGE>
material lien, security interest, charge or encumbrance of any nature whatsoever
upon any of its material properties or assets, other than Liens created in favor
of the Agent, or (e) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Mattel, Inc.
(f) Governmental Consents. The execution, delivery and performance
---------------------
by Mattel, Inc. of this Agreement, and each agreement, document, or instrument
required hereunder do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Federal, state or
other governmental authority or regulatory body or other such person.
(g) Binding Obligation. This Agreement when executed and delivered
------------------
will be the legally valid and binding obligation of Mattel, Inc., enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(h) Financial Condition. Mattel, Inc. has heretofore delivered to
-------------------
the Banks a consolidated balance sheet of Mattel, Inc. and its Subsidiaries for
the fiscal year ended December 31, 1993 and related consolidated statements of
income, shareholders' equity and changes in financial position of Mattel, Inc.
and its Subsidiaries for such fiscal year, audited by Price Waterhouse. All
such statements were prepared in accordance with GAAP and fairly present the
consolidated financial position of Mattel, Inc. and its Subsidiaries as at the
date thereof and the consolidated results of operations and statement of cash
flow of Mattel, Inc. and its Subsidiaries for the period then ended. Neither
Mattel, Inc. nor any of its Subsidiaries has any material Contingent Obligation,
liability for taxes or long-term lease which as of the date of this Agreement,
individually or in the aggregate, would, if it became absolute, result in a
Material Adverse Effect which is not reflected in the foregoing statements or in
the notes thereto.
33
<PAGE>
(i) Changes, Etc. Since December 31, 1992 there has been no event or
------------
events that have, either individually or in the aggregate, resulted in a
Material Adverse Effect.
(j) Title to Properties. Mattel, Inc. and its Subsidiaries have
-------------------
good, sufficient and legal title to all the properties and assets reflected in
the consolidated balance sheet referred to in Section 5.8 of the Credit
Agreement except as set forth in said balance sheet or in the notes thereto,
except for assets acquired or disposed of in the ordinary course of business or
as otherwise permitted by this Agreement or the Credit Agreement since December
31, 1993 and, except for immaterial defects in title as could not, individually
or in the aggregate, have a Material Adverse Effect.
(k) Litigation; Adverse Facts. There is no action, suit, proceeding
-------------------------
or arbitration (whether or not purportedly on behalf of Mattel, Inc.) at law or
in equity or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to the knowledge of Mattel, Inc., threatened against or
affecting Mattel, Inc. or any of its Subsidiaries or any of Mattel, Inc.'s or
such Subsidiaries' properties which, in the reasonable judgment of Mattel, Inc.
and its executive officers (assuming adverse determination of facts which
Mattel, Inc. in good faith believes it would not successfully prove, and
considering damages which in their best judgment is the maximum that would be
awarded upon, and the likelihood of, an adverse determination of the claim or
the amount which reflects their best judgment as to that required to be paid to
settle the claims) would result in a Material Adverse Effect and there is no
basis known to such executive officers for any such action, suit or proceeding.
Neither Mattel, Inc. nor any of its Subsidiaries is (i) in violation of any
applicable law which could result in a Material Adverse Effect, or (ii) subject
to or in default with respect to any final judgment, writ, injunction, decree,
rule or regulation of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could result in a Material Adverse Effect. There is
no action, suit, proceeding or investigation pending or, to the knowledge of
Mattel, Inc., threatened against or affecting Mattel,
34
<PAGE>
Inc. or any of its Subsidiaries which provides a reasonable basis for
questioning the validity or the enforceability of this Agreement.
(l) Payment of Taxes. All tax returns and reports of Mattel, Inc.
----------------
and its Subsidiaries required to be filed by any of them have been timely filed,
and all taxes, assessments, fees and other governmental charges upon Mattel,
Inc. and its Subsidiaries and upon their respective properties, assets, income
and franchises which are due and payable have been paid when due and payable or
bonded against, except to the extent permitted by Section 6.3 of the Credit
Agreement. Mattel, Inc. knows of no proposed tax assessment against it or any of
its Subsidiaries that would result in a Material Adverse Effect.
(m) Agreements. Neither Mattel, Inc. nor any of its Subsidiaries is
----------
a party to or is subject to any material agreement or instrument or charter or
other internal restriction which results in a Material Adverse Effect.
(n) Performance. Neither Mattel, Inc. nor any of its Subsidiaries is
-----------
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation of
Mattel, Inc., and no condition exists which, with the giving of notice or the
lapse of time or both, would constitute such a default, except, in any such
case, where the consequences, direct or indirect, of such default or defaults,
if any, would not result in a Material Adverse Effect.
(o) Governmental Regulation. Neither Mattel, Inc. nor any of its
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or to any Federal or state statute or regulation
limiting its ability in any material way to transfer interests in the
Receivables hereunder.
(p) Employee Benefit Plans. Mattel, Inc. and each of its ERISA
----------------------
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations there-
35
<PAGE>
under with respect to all Pension Plans. Neither Mattel, Inc. nor any of its
ERISA Affiliates has participated in or participates in any Multiemployer Plan
the withdrawal from which may result in any liability to any party in an amount
in excess of $1,000,000.
(q) Disclosure. No representation or warranty of Mattel, Inc.
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by Mattel, Inc. since January 1, 1995 for use
in connection with the transactions contemplated by this Agreement as of the
date of this Agreement contains any untrue statement of a material fact or omits
to state a material fact (known to the officers of Mattel, Inc. in the case of
any document or fact not furnished by it) necessary in order to make the
statements contained herein or therein not misleading except that any such
statement or omission that was untrue or misleading at the time made or that
subsequently became untrue or misleading has been superseded or corrected by
information provided to the Banks prior to the date of this Agreement.
SECTION 3.3. Reaffirmation of Representations and Warranties. On
-----------------------------------------------
each day that a Transfer is made hereunder (a) the related Transferor, by
accepting the proceeds of such Transfer, shall be deemed to have certified that
(i) all representations and warranties described in Section 3.1 are correct on
and as of such day as though made on and as of such day, and (ii) no event has
occurred or is continuing or would result from any such Transfer, which
constitutes a Termination Event or a Potential Termination Event and (b) Mattel,
Inc. as Guarantor and as Servicer shall be deemed to have certified that (i) all
representations and warranties described in Section 3.2 are correct on and as of
such day as though made on and as of such day and (ii) if Mattel, Inc. is then
the Servicer, that no event has occurred or is continuing or would result from
any such Transfer, which constitutes, or with the passage of time or the giving
of notice or both, would constitute a Servicer Default.
36
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. On or prior to the date of
---------------------
execution hereof and prior to the effectiveness of this Agreement, the
Transferors and the Guarantor shall have delivered to the Agent and the Banks
originally executed copies of this Agreement, together with originals to the
Agent and copies to the Banks of the following documents and instruments, all in
form and substance acceptable to the Agent:
(a) a Certificate of the Secretary of Mattel, Inc. (i) certifying
that, since March 18, 1994, there have been no changes in the Restated
Certificate of Incorporation, by-laws and incumbency signatures of Mattel, Inc.
(or, if changes have been made with respect thereto, specifying the nature of
such changes and attaching copies thereof to such Certificate) and (ii)
attaching copies of resolutions of the Board of Directors authorizing the
execution, delivery and performance of this Agreement and related documents to
which it is a party;
(b) good standing certificates of Mattel, Inc. from each of the
Secretaries of State of Delaware and California, each to be dated a recent date
prior to the Closing Date;
(c) (i) a Certificate of the Secretary of Fisher-Price, Inc.
attaching copies of the Certificate of Incorporation, by-laws and incumbency
signatures of such Transferor, together with copies of resolutions of the Board
of Directors authorizing the execution, delivery and performance of this
Agreement and related documents to which it is a party and (ii) a Certificate of
the Secretary of Mattel Sales Corp. (1) certifying that, since March 18, 1994,
there have been no changes in the Certificate of Incorporation, by-laws and
incumbency signatures of such Transferor (or, if changed have been made with
respect thereto, specifying the nature of such changes and attaching copies
thereof to such Certificate) and (2) attaching copies of resolutions of the
Board of Directors authorizing the execution, delivery and perfor-
37
<PAGE>
mance of this Agreement and related documents to which it is a party;
(d) good standing certificate of Mattel Sales Corp. from the
Secretary of State of California and a good standing certificate of Fisher-
Price, Inc. from the Secretary of State of the State of Delaware to be dated a
recent date prior to the Closing Date;
(e) proper financing statements (Form UCC-1) naming each Transferor
as the debtor/transferor and the Agent, as agent on behalf of the Banks, as
purchaser or other similar instruments or documents as may be necessary or in
the opinion of the Agent desirable under the UCC of all appropriate
jurisdictions or any comparable Governmental Rule to perfect the ownership
interest of the Agent, on behalf of the Banks, in all Receivables related to
both Transferors;
(f) certified copies of request for information or copies (Form UCC-
11) (or a similar search report certified by parties acceptable to the Banks)
dated a date reasonably near the date of the initial Transfer listing all
effective financing statements which name the Transferors (under their present
names and any previous names) as Debtor and which are filed in jurisdictions in
which the filings were made pursuant to item (i) above together with copies of
such financing statements (none of which shall cover any Receivables or
Contracts);
(g) a favorable opinion of Robert J. Normile, counsel for the
Transferors, in substantially the form of Exhibit I hereto and as to such other
matters as the Agent may reasonably request;
(h) a favorable opinion of Robert J. Normile, counsel for the
Guarantor, in substantially the form of Exhibit J hereto and as to such other
matters as the Agent may reasonably request;
(i) a favorable opinion of Latham & Watkins, special counsel for the
Transferors, as to such matters as the Agent may reasonably request; and
(j) an executed copy of the Written Agreement.
38
<PAGE>
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of the Transferors. At all times
----------------------------------------
for the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) Conduct of Business. Each Transferor will carry on and conduct
-------------------
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and will do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and will maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is presently conducted.
(b) Compliance with Governmental Rules. Each Transferor will comply
----------------------------------
with all Governmental Rules, writs, judgments, injunctions, decrees or awards to
which it may become subject.
(c) Furnishing of Information and Inspection of Records. Each
---------------------------------------------------
Transferor will furnish to the Agent and the Banks from time to time such
information with respect to the Receivables as the Agent or the Banks may
reasonably request, including, without limitation, listings identifying the
outstanding balance for each Receivable. Each Transferor will at any time and
from time to time during regular business hours permit the Agent or the Banks,
or their agents or representatives, (i) to examine and make copies of and
abstracts from all Records and (ii) to visit the offices and properties of such
Transferor for the purpose of examining such Records, and to discuss matters
relating to the Receivables or such Transferor's performance hereunder with any
of the officers, directors, employees, agents or independent public accountants
of such Transferor having knowledge of such matters.
(d) Keeping of Records and Books of Account. Each Transferor will
---------------------------------------
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evi-
39
<PAGE>
dencing Receivables in the event of the destruction of the originals thereof),
and keep and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
Receivable). Each Transferor will give the Agent notice of any material change
in the administrative and operating procedures referred to in the previous
sentence.
(e) Performance and Compliance with Receivables and Contracts. Each
---------------------------------------------------------
Transferor will at its expense timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables.
(f) Credit and Collection Policies. Each Transferor will comply in
------------------------------
all material respects with its Credit and Collection Policy in regard to each
Receivable and the related Contract.
(g) Accounting Treatment. Each Transferor shall report the
--------------------
transactions contemplated by the Agreement on its financial statements as a sale
of the Transferred Interest to the Agent on behalf of the Banks.
(h) Knowledge. Promptly upon any executive officer of a Transferor
---------
obtaining knowledge of any condition or event which constitutes a Termination
Event or Potential Termination Event or becoming aware that the Agent or any
Bank has given any notice or taken any other action with respect to a claimed
Termination Event or Potential Termination Event under this Agreement, such
Transferor shall provide to the Agent an officer's certificate specifying the
nature and period of existence of any such condition or event, or specifying the
notice given and the nature of such claimed Termination Event or Potential
Termination Event, together with what action the Transferor has taken, is taking
and proposes to take with respect thereto.
(i) Written Agreement. For so long as this Agreement is in effect,
-----------------
and prior to the delivery by the Transferors of the initial Transfer Notice of
each calendar year, the Transferors shall provide the Agent
40
<PAGE>
and the Banks with a copy of a Written Agreement in the form of Exhibit A
hereto, duly executed by the Transferors and the Obligor and appropriately
revised to reflect the Remittance Date of such calendar year.
(j) Environmental Laws. Each Transferor shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, expect where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 5.2. Negative Covenants of the Transferors. At all times
-------------------------------------
during the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) No Sales, Liens, etc. Except as otherwise provided herein,
--------------------
neither Transferor will sell, assign (by operation of Governmental Rule or
otherwise) or otherwise dispose of, or create or knowingly suffer to exist any
Adverse Claim upon (or the filing of any financing statement) or with respect
to, any Receivable, or upon or with respect to any account to which any
Collections of any Receivable are sent.
(b) Extension or Amendment of Receivables. Neither Transferor will
-------------------------------------
extend the term of any Receivable beyond the Remittance Date next succeeding the
date such Receivable was created. Neither Transferor will amend or modify any
Receivable or amend, modify or waive any term or condition of any Contract
related thereto except in accordance with its normal business practices as
reflected in the Credit and Collection Policy.
(c) No Change in Business or Credit and Collection Policy. Neither
-----------------------------------------------------
Transferor will make any change in the character of its business or in the
Credit and Collection Policy without the prior written consent of the Agent at
the written direction of the Requisite Banks.
(d) No Modification of Written Agreement. Neither Transferor will
------------------------------------
amend, supplement, alter or otherwise modify the Written Agreement.
41
<PAGE>
SECTION 5.3. Affirmative Covenants of Mattel, Inc. At all times
-------------------------------------
during the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) Financial Information. Mattel, Inc. will maintain a system of
---------------------
accounting established and administered in accordance with generally accepted
accounting principles, and will furnish to the Agent and the Banks:
(i) as soon as practicable and in any event not later than
fifty-five (55) days after the end of each of the first three (3) fiscal
quarters of Mattel, Inc., consolidated balance sheets of Mattel, Inc. and
its Subsidiaries as at the end of such period and for the fiscal year to
date and the related consolidated and consolidating statements of income,
consolidated statements of stockholders' equity and consolidated statements
of cash flow all in reasonable detail and certified by the Chief Financial
Officer, Executive Vice President -- Finance or the Treasurer of Mattel,
Inc. that the consolidated statements (and to the best of his belief, the
consolidating statements) and other materials required by this clause
(a)(i) fairly present the financial condition of Mattel, Inc. and its
Subsidiaries as at the dates indicated and the results of their operations
for the periods indicated, subject to changes resulting from year-end audit
and normal year-end adjustments;
(ii) as soon as practicable and in any event not later than one
hundred (100) days after the end of each fiscal year of Mattel, Inc.,
consolidated and consolidating balance sheets of Mattel, Inc. and its
Subsidiaries as at the end of such year (such consolidating statements
shall specifically detail the Transferors) and the related consolidated
(and, as to statements of income only, consolidated and consolidating)
statements of income, stockholders' equity and cash flow of Mattel, Inc.
and its Subsidiaries for such fiscal year, setting forth in each case, in
comparative form, the consolidated figures for the previous year, all in
reasonable detail and (x) in the case of such consolidated financial
statements, accompanied by a report there-
42
<PAGE>
on of Price Waterhouse or other independent accountants of recognized
national standing selected by Mattel, Inc., which report shall state that
such consolidated financial statements present fairly the financial
position of Mattel, Inc. and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flow for the periods
indicated in conformity with generally accepted accounting principles and
that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards and (y) in the case of such
consolidating financial statements, certified by the chief financial or
accounting officer of Mattel, Inc.; and
(iii) together with each delivery of financial statements of
Mattel, Inc. and its Subsidiaries as provided above in clauses (i) and
(ii), an officer's certificate stating that the signers thereof have
reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions
and condition of Mattel, Inc. and its Subsidiaries during the accounting
period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period, and
the signers do not have knowledge of the existence as of the date of such
officer's certificate, of any condition or event which constitutes a
Termination Event or Potential Termination Event or, if any such condition
or event existed or exists, specifying the nature and period of existence
thereof.
(b) Conduct of Business. Mattel, Inc. will carry on and conduct its
-------------------
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted (provided, however, that Mattel, Inc.
may engage in the production and sale of CD-ROM products and coin-operated
arcade games related to its existing lines of business) and will do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and will maintain
all requisite authority to conduct its business in each
43
<PAGE>
jurisdiction in which its business is presently conducted.
(c) Compliance with Governmental Rule. Mattel, Inc. will comply with
---------------------------------
all Governmental Rules, writs, judgments, injunctions, decrees or awards to
which it may become subject.
(d) Furnishing of Information and Inspection of Records. Mattel,
---------------------------------------------------
Inc. will furnish to the Agent from time to time such information with respect
to its obligations as Guarantor and Servicer hereunder as may be reasonably
requested by the Agent. Mattel, Inc. will at any time and from time to time
during regular business hours permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of Mattel, Inc. for the
purpose of examining such Records, and to discuss matters relating to the
Receivables or Mattel, Inc.'s performance hereunder as Guarantor and as
Servicer, as the case may be, with any of the officers, directors, employees,
agents or independent public accounts of Mattel, Inc. having knowledge of such
matters.
(e) Keeping of Records and Books of Account. Mattel, Inc. will
---------------------------------------
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable). Mattel, Inc. will give the
Agent notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(f) Knowledge. Promptly upon any executive officer of Mattel, Inc.
---------
obtaining knowledge of any condition or event which constitutes a Termination
Event or Potential Termination Event or becoming aware that the Agent or any
Bank has given any notice or taken any other action with respect to a claimed
Termination Event or Potential Termination Event under this Agreement, Mattel,
Inc. shall provide to the Agent an officer's certificate
44
<PAGE>
specifying the nature and period of existence of any such condition or event, or
specifying the notice given and the nature of such claimed Termination Event or
Potential Termination Event, together with what action Mattel, Inc. has taken,
is taking and proposes to take with respect thereto.
45
<PAGE>
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Servicer. The servicing and
-----------------------
administering of the Receivables shall be conducted by the Servicer. Until the
Agent gives notice to the Transferors of the designation of a new Servicer,
Mattel, Inc. is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Servicer pursuant to the terms hereof; provided that,
--------
with respect to any group of Receivables, Mattel, Inc. may, at any time, upon
prior notice to the Agent, designate any Affiliate of Mattel, Inc. as
subservicer hereunder, provided that such Affiliate shall not become the
--------
Servicer hereunder and Mattel, Inc. shall remain liable for the performance of
the duties and obligations of the Servicer in accordance with the terms hereof;
provided further that Mattel, Inc. hereby designates Fisher-Price, Inc. as
- -------- -------
subservicer with respect to Receivables transferred by it hereunder. On and
after the occurrence of a Servicer Default, the Agent, on behalf of the Banks,
may designate as Servicer any Person (including the Agent) to succeed Mattel,
Inc. or any successor Servicer, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
SECTION 6.2. Duties of Servicer and Agent. (a) The Servicer shall
----------------------------
take or cause to be taken all such action as may be necessary or advisable to
facilitate the collection of each Receivable from time to time, all in
accordance with applicable Governmental Rules, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. Each of the
Transferors, the Agent and the Banks hereby appoints as its agent the Servicer,
from time to time designated pursuant to Section 6.1, to enforce its respective
rights and interests in and under the Receivables and the Contracts. Neither
the Transferors nor the Servicer may extend the maturity of any Receivable
beyond the Remittance Date next succeeding the date of creation of such
Receivable. Each Transferor shall deliver to the Servicer, and the Servicer
shall hold in trust for such Transferor and the Agent in accordance with their
respective interests, all Records which evidence or relate to any Receivables
relating to such Transferor. Notwithstanding
46
<PAGE>
anything to the contrary contained herein, the Agent shall have the
absolute and unlimited right to direct the Servicer to commence or settle any
legal action to enforce collection of any Receivable. In the event that the
Obligor defaults in the performance of the Written Agreement and the Servicer
fails to take action with respect to the Obligor as directed by the Agent
pursuant to the preceding sentence, notwithstanding anything to the contrary
contained herein, the Agent shall have the absolute and unlimited right to take
any and all steps in the related Transferor's name and on behalf of such
Transferor necessary or desirable, in the determination of the Requisite Banks,
to collect all amounts due under any and all Receivables including, without
limitation, endorsing such Transferor's name on checks and other instruments
representing Collections and enforcing such Receivables and the Written
Agreement.
(b) The Agent shall, as soon as practicable following receipt
thereof, turn over to the applicable Transferor any collections of any
indebtedness of the Obligor which is not a Receivable.
(c) On and after the occurrence of a Servicer Default, the Agent
shall have the right to require the Servicer to cause a firm of independent
public accountants (who may also render other services to the Servicer or the
Transferors) to furnish a report to the Agent to the effect that they have (i)
compared the information contained in the Transfer Notices and the Weekly
Reports with the information contained in the Records and the Servicer's records
and computer systems for such period, and that, on the basis of such examination
and comparison, such firm is of the opinion that the information contained in
such Transfer Notices and Weekly Reports reconciles with the information
contained in the Receivables and the Servicer's records and computer system and
that the servicing of the Receivables has been conducted in compliance with this
Agreement, (ii) confirmed the Eligible Receivables balance as set forth on such
Transfer Notices and Weekly Reports, and (iii) confirmed that the Receivables
treated by the Agent as Eligible Receivables in fact satisfied the requirements
of the definition thereof contained herein, except, in each case for (a) such
exceptions as such firm shall believe to be immaterial (which exceptions need
not be
47
<PAGE>
enumerated) and (b) such other exceptions as shall be set forth in such
statement.
SECTION 6.3. Rights After Designation of New Servicer. At any time
----------------------------------------
following the designation of a Servicer pursuant to Section 6.1:
(i) Each Transferor shall, at the Agent's request and at such
Transferor's expense, give notice of the Banks' ownership of Receivables to
the Obligor and direct that payments be made directly to the Agent or its
designee or designate a new Collection Account.
(ii) Each Transferor shall, at the Agent's request, (A) assemble
all of the Records, and shall make the same available to the Agent at a
place selected by the Agent or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Receivables in a manner reasonably acceptable to the Agent
and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
(iii) Each Transferor hereby authorizes the Agent to take any
and all reasonable steps in such Transferor's name and on behalf of such
Transferor necessary or desirable, in the determination of the Agent, to
collect all amounts due under any and all Receivables including, without
limitation, endorsing such Transferor's name on checks and other
instruments representing Collections and enforcing such Receivables and the
Written Agreement.
SECTION 6.4. Responsibilities of the Transferors. Anything herein to
-----------------------------------
the contrary notwithstanding, each Transferor shall (i) perform all of its
obligations under the Contracts related to its Receivables to the same extent as
if interests in such Receivables had not been sold hereunder and the exercise by
the Agent of its rights hereunder shall not relieve such Transferor from such
obligations and (ii) pay when due any taxes, including without limitation, any
sales taxes payable in connection with its Receivables and their creation and
satisfaction. Neither the Agent nor the Banks shall have
48
<PAGE>
any obligation or liability with respect to any Receivable or related Contracts,
nor shall they be obligated to perform any of the obligations of the related
Transferor thereunder.
49
<PAGE>
ARTICLE VII
SERVICER DEFAULT AND TERMINATION EVENTS
SECTION 7.1. Servicer Default. The occurrence of any one or more of
----------------
the following events shall constitute a default by the Servicer hereunder (each,
a "Servicer Default"):
----------------
(a) (i) the Servicer shall fail to perform or observe any term,
covenant or agreement hereunder (other than as referred to in this Section 7.1)
and such failure shall remain unremedied for ten (10) Business Days or (ii) the
Servicer shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) any representation, warranty, certification or statement made by
the Servicer in this Agreement or in any other document delivered pursuant
hereto shall prove to have been incorrect in any material respect when made or
deemed made; or
(c) the Agent, on behalf of the Banks, shall fail to have a valid and
perfected first priority ownership or security interest in and to the
Receivables; or
(d) any Event of Bankruptcy shall occur with respect to the
Servicer; or
(e) the Servicer shall merge with or into any entity whereby it
is not the surviving entity; or
(f) [reserved]
(g) an event of acceleration with respect to any indebtedness in
excess of $20,000,000 under any agreement to which the Servicer or any one of
its domestic subsidiaries is a party occurs.
SECTION 7.2. Servicer Default Remedies. If a Servicer Default
-------------------------
occurs, the Agent shall, upon written request of the Requisite Banks, by notice
to the Transferors, terminate the Servicer's rights as Servicer hereunder and
appoint a successor Servicer (which successor Servicer may be itself).
50
<PAGE>
SECTION 7.3. Termination Events. The occurrence of any one or more
------------------
of the following events shall constitute a Termination Event hereunder:
(a) the occurrence of a Servicer Default; or
(b) either Transferor or the Guarantor shall fail to make any payment
or deposit required to be made by it hereunder when due; or
(c) any Event of Bankruptcy shall occur with respect to a
Transferor or the Guarantor; or
(d) the material breach of any representation or warranty contained
herein, or the failure to comply with any material covenant contained herein, by
either Transferor or the Guarantor; or
(e) the Agent, on behalf of the Banks, shall fail to have a valid and
perfected first priority ownership or security interest in and to the
Receivables; or
(f) either Transferor or the Guarantor shall merge with or into any
entity whereby it is not the surviving entity; provided that the merger of any
--------
Transferor or the Guarantor with or into the other shall not constitute a
Termination Event under this Section 7.3(f); or
(g) any material adverse change in the operations of either
Transferor or the Guarantor, or any other event which materially affects the
ability of such Transferor or the Guarantor to perform its obligations
hereunder; or
(h) at any time the Percentage Factor exceeds 80% unless the
Transferors, within ten (10) days of such occurrence, either (i) deposit into
the Collection Account an amount equal to the amount by which the Total
Outstanding Investment plus the Discount Reserve exceeds 80% of the aggregate
----
outstanding balance of Eligible Receivables or (ii) otherwise reduce the
Percentage Factor to less than or equal to 80%; or
51
<PAGE>
(i) the second highest short-term unsecured debt rating assigned to
the Obligor by S&P, Moody's or Duff falls below "A-1", "P-1" or "D-1",
respectively, or the second highest long-term senior unsecured debt rating
assigned to the Obligor by S&P, Moody's or Duff falls below "A-", "A3" or "A-",
respectively; or
(j) the Obligor fails to remit full payment in respect of the
Receivables on any Remittance Date to the Collection Account; or
(k) the occurrence of an event of acceleration with respect to any
indebtedness in excess of $20,000,000 under any agreement to which the Guarantor
or any one of its domestic subsidiaries is a party; or
(l) the occurrence of an Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
SECTION 7.4. Termination Event Remedies. Upon the occurrence of a
--------------------------
Termination Event described in clause (c) or (e) of Section 7.3 above, all
outstanding Tranches shall thereafter accrue additional Discount at a rate equal
to the difference, for each respective Tranche, between (x) the highest
Participation Rate applicable to any Tranche plus 2% and (y) the Participation
Rate applicable to such Tranche at the time of such Termination Event, and the
commitment of the Banks to purchase undivided interests in the Receivables from
the Transferors shall automatically terminate. Upon the occurrence of a
Termination Event other than an event described in clause (c) or (e) of Section
7.3, the Agent, upon the written request of the Requisite Banks, shall, by
written notice to the Transferors, the Guarantor and the Banks, (a "Notice of
---------
Termination") (i) specify that additional Discount with respect for each
- -----------
outstanding Tranche shall thereafter accrue as described in this Section 7.4
and/or (ii) terminate the commitment of the Banks to purchase undivided
interests in the Receivables from the Transferors. In the event that any Total
Outstanding Investment remains unpaid on and after any Remittance Date, such
Total Outstanding Investment will thereafter accrue Discount at the Alternate
Rate until paid in full.
52
<PAGE>
SECTION 7.5. Potential Termination Event Remedies. Upon the
------------------------------------
occurrence of a Potential Termination Event, the Agent, upon the written request
of the Requisite Banks shall, by notice to the Transferors, terminate the
commitment of the Banks to purchase undivided interests in the Receivables from
the Transferors.
53
<PAGE>
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferors. Without limiting any
------------------------------
other rights which the Agent or the Banks may have hereunder or under applicable
Governmental Rule, each Transferor hereby agrees to indemnify the Agent and the
Banks and any permitted assigns and their respective officers, directors and
employees (collectively, "Indemnified Parties") from and against any and all
-------------------
damages, losses, claims, liabilities, costs and expenses, including reasonable
attorneys' fees (which such attorneys may be employees of the Agent or any one
of the Banks) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
-------------------
arising out of or as a result of this Agreement or the ownership, either
directly or indirectly, by the Agent or the Banks of a Transferred Interest
related to such Transferor, excluding, however, (i) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of an
Indemnified Party or (ii) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables related to such Transferor.
Without limiting the generality of the foregoing, the applicable Transferor
shall indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) reliance on any material representation or warranty made by
such Transferor or Mattel, Inc. (or any officers of such Transferor or
Mattel, Inc.) under or in connection with this Agreement, any Transfer
Notice, Weekly Report or any other information or report delivered by such
Transferor or Mattel, Inc. pursuant hereto, which shall have been false or
incorrect in any material respect when made or deemed made; or
(ii) the failure by such Transferor to comply with any
applicable Governmental Rule with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract
with any such applicable Governmental Rule; or
54
<PAGE>
(iii) the failure to vest and maintain vested in the Agent, on
behalf of the Banks, an undivided percentage ownership interest, to the
extent of a Transferred Interest related to Receivables originated by such
Transferor, in the Receivables included in such Transferred Interest, free
and clear of any Adverse Claim; or
(iv) the failure to file by such Transferor, or any delay in
filing by such Transferor, any required financing statements, continuation
statements, or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable Governmental Rules with respect
to any Receivable included in a Transferred Interest related to Receivables
originated by such Transferor; or
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable included in a Transferred Interest related to Receivables
originated by such Transferor (including, without limitation, a defense
based on such Receivable or the related Contract not being legal, valid and
binding obligation of the Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of merchandise
related to such Receivable or the furnishing or failure to furnish such
merchandise; or
(vi) any failure of Mattel, Inc., as Servicer or otherwise, to
perform its duties or obligations in accordance with the provisions of
Article VI; or
(vii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or services
which are the subject of any Receivable.
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses. (a) If
------------------------------------------
after the date hereof, the adoption of any Governmental Rule or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future Governmental Rule or bank regulatory guideline
55
<PAGE>
by any Governmental Person charged with the administration, interpretation or
application thereof, or the compliance with any directive of any Governmental
Person (in the case of any bank regulatory guideline, whether or not having the
force of Governmental Rule):
(i) shall subject any Indemnified Party to any tax, duty or
other charge with respect to this Agreement, any Transferred Interest, the
Receivables or payments of amounts due hereunder, or shall change the basis
of taxation of payments to any Indemnified Party of amounts payable in
respect of this Agreement, any Transferred Interest, the Receivables or
payments of amounts due hereunder or otherwise in respect of this
Agreement, any Transferred Interest or the Receivables (except for changes
in the rate of general corporate, franchise, net income or other income tax
imposed on such Indemnified Party by the jurisdiction in which such
Indemnified Party's principal executive office or any funding office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party or shall impose on any Indemnified Party
or on the United States market for certificates of deposit or the
Eurodollar interbank market any other condition affecting this Agreement,
any Transferred Interest, the Receivables or payments of amounts due
hereunder or otherwise in respect of this Agreement, any Transferred
Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and expenses,
and expenses of litigation or preparation therefor in contesting any of the
foregoing) with respect to this Agreement, any Transferred Interest, the
Receivables or payments of amounts due hereunder or otherwise in respect of
this Agreement, the Transferred Interests or the Receivables, and the
result of any of the foregoing is to increase the cost to such Indemni-
56
<PAGE>
fied Party with respect to this Agreement, any Transferred Interest, the
Receivables, the obligations hereunder, or the funding of any purchases
hereunder, by an amount deemed by such Indemnified Party to be material,
then, within ten (10) days after demand by the Agent, the applicable
Transferor shall pay to such Indemnified Party such additional amount or
amounts as will compensate such Indemnified Party for such increased cost.
(b) If any Indemnified Party shall have determined that after the
date hereof, the adoption of any applicable Governmental Rule or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation thereof by any Governmental Person, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of Governmental Rule) of any such Governmental
Person, has or would have the effect of reducing the rate of return on capital
of such Indemnified Party (or its parent) as a consequence of such Indemnified
Party's obligations hereunder or with respect hereto to a level below that which
such Indemnified Party (or its parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Indemnified Party
to be material, then from time to time, within ten (10) days after demand by
such Indemnified Party, the applicable Transferor shall pay to such Indemnified
Party such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.
(c) Each Bank will promptly notify the Agent, and the Agent will
promptly notify the applicable Transferor of any event of which such Bank has
knowledge, occurring after the date hereof, which will entitle an Indemnified
Party to compensation pursuant to this Section. Any notice by the Agent, acting
on behalf of a Bank, claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attributing methods.
57
<PAGE>
SECTION 8.3. Other Costs, Expenses and Related Matters. Each
-----------------------------------------
Transferor agrees, upon receipt of a written invoice, to pay or cause to be
paid, and to save the Agent harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountant's and other third parties' fees and expenses, any filing fees and
expenses incurred by officers or employees of the Agent) incurred by or on
behalf of the Agent (i) in connection with the negotiation, execution, delivery
and preparation of this Agreement and any documents or instruments delivered
pursuant hereto and the transactions contemplated hereby (including, without
limitation, the perfection or protection of the Transferred Interest related to
such Transferor) and (ii) from time to time (a) relating to any amendments,
waivers or consents under this Agreement, (b) arising in connection with the
Agent's or their agents' enforcement or preservation of rights (including,
without limitation, the perfection and protection of the Transferred Interest
related to Receivables originated by such Transferor under this Agreement), or
(c) arising in connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving this Agreement (all of such amounts,
collectively, "Transaction Costs").
-----------------
SECTION 8.4. Reconveyance Under Certain Circumstances. Each
----------------------------------------
Transferor agrees to accept the reconveyance from the Agent, on behalf of the
Banks, of the Transferred Interest related to Receivables originated by such
Transferor if the Agent notifies such Transferor of a material breach of any
representation or warranty made or deemed made pursuant to Article III of this
Agreement, and such Transferor shall fail to cure such breach within ten (10)
days (or, in the case of the representations and warranties in Sections 3.1(a)
and 3.1(e), five (5) days) of such notice. The reconveyance price (which shall
be an amount equal to the Aggregate Unpaids) shall be paid by such Transferor
directly to the Agent for the account of the Banks (and not to the Collection
Account) in immediately available funds on such tenth day (or fifth day, if
applicable).
58
<PAGE>
ARTICLE IX
THE AGENT
SECTION 9.1. Appointment. Each Bank hereby irrevocably designates
-----------
and appoints NationsBank of Texas, N.A., as the Agent of the Banks under this
Agreement, and each of the Banks hereby irrevocably authorizes NationsBank of
Texas, N.A., as the Agent for such Bank, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers as are expressly
delegated to the Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any of the Banks, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Agent.
SECTION 9.2. Attorneys-in-fact. The Agent may execute any of its
-----------------
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the gross negligence or willful
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 9.3. Limitation on Liability. Neither the Agent nor any of
-----------------------
its officers, directors, employees, agents or attorneys-in-fact shall be liable
to the Banks for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Banks for any recitals,
statements, representations or warranties made by the Transferors, the Servicer
or the Guarantor, or any officer or partner thereof contained in this Agreement,
or in any certificate, report, statement or other document referred to or
provided for in or received by the Agent under or in connection with this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, or for any failure of the Transferors, the
Servicer or the Guarantor to perform their obligations thereunder. The Agent
shall not be under any obligation to any of the Banks to
59
<PAGE>
ascertain or to inquire as to the observance or performance of any of the terms,
covenants or conditions of this Agreement on the part of the Transferors, the
Servicer or the Guarantor or to inspect the properties, books or records of the
Transferors, the Servicer or the Guarantor.
SECTION 9.4. Reliance. The Agent shall be entitled to rely, and
--------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy or telex
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Transferors, the Servicer or the Guarantor),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first receive advice or concurrence of the Requisite
Banks as provided in this Agreement (or from all of the Banks if so specified
herein) or it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
in accordance with a request of the Requisite Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks.
SECTION 9.5. Notice of Termination Event. The Agent shall not be
---------------------------
deemed to have knowledge or notice of the occurrence of any Termination Event or
Servicer Default hereunder unless the Agent has received written notice from a
Bank, either Transferor, the Servicer or the Guarantor, describing such
Termination Event or Servicer Default. In the event that the Agent receives
such a notice, the Agent shall promptly give notice thereof to the Banks and
Bank of America National Trust and Savings Association as agent under the Credit
Agreement. Except as otherwise provided herein, the Agent shall take such action
to enforce this Agreement as shall be directed by the Requisite Banks. In the
event that any remedy is exercised pursuant to Section 7.4 of this
60
<PAGE>
Agreement, each Bank and the Agent shall pursue remedies designated by the
Requisite Banks to the same extent as though such demand was caused by the
action of all Banks, and each Bank agrees to act as expeditiously as possible so
as to maximize recovery. Each Bank agrees that no Bank shall have any right
individually to take action with respect to the Transferred Interest, it being
understood and agreed that such rights and remedies with respect to any portion
of the Transferred Interest may be exercised by the Agent as directed by the
Requisite Banks for the ratable benefit of the Banks.
SECTION 9.6. No Representations. Each Bank expressly acknowledges
------------------
that neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Transferor or the Guarantor, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
financial condition, creditworthiness, affairs, status and nature of the
Transferors and the Guarantor and made its own decision to enter into this
Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and to make such investigation as its deems necessary to inform
itself as to the status and affairs, financial or otherwise, of the Transferors
and the Guarantor. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Transferors and the Guarantor which may come into the possession of the Agent or
any of its affiliates.
SECTION 9.7. Indemnification. The Banks agree to indemnify the Agent
---------------
in its capacity as such (to the extent not reimbursed by the Transferors or the
Guarantor and without limiting any obligations of the Transferors
61
<PAGE>
or the Guarantor so to do, ratably according to their respective Percentages as
then in effect) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time (including without
limitation at any time following the payment of the Aggregate Unpaids) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other document contemplated by or referred
to herein or the transactions contemplated hereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
--------
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the termination of
this Agreement.
SECTION 9.8. Bank. The Agent and its affiliates may make loans to,
----
accept deposits from and generally engage in any kind of business with the
Obligor, the Transferors and the Guarantor as though it were not the Agent
hereunder. With respect to its loans made or renewed by it and any note issued
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" shall, unless the context otherwise indicates, include
the Agent in its individual capacity.
SECTION 9.9. Resignation. If the Agent shall resign as Agent under
-----------
this Agreement, then the Requisite Banks may appoint a successor Agent for the
Banks, which shall be a commercial bank organized under the Governmental Rules
of the United States or any state thereof, having a combined surplus and capital
of not less than $500,000,000, whereupon such successor Agent shall succeed to
the rights, powers and duties of the former Agent and the obligations of the
former Agent shall be terminated and cancelled, without any other or further act
or deed on the part of such former Agent or any of the parties to this
Agreement; provided, however, that the former Agent's resignation shall not
-------- -------
become effective until such successor Agent has been appointed and has
succeeded of record to all right, title and interest of
62
<PAGE>
the former Agent in the Receivables; provided, further however, if the Requisite
-------- ------- -------
Banks cannot agree as to a successor Agent within ninety (90) days after such
resignation, the Agent shall appoint a successor Agent and the parties hereto
agree to execute whatever documents are necessary to effect such action under
this Agreement or any other document executed pursuant to this Agreement;
provided, however, in such event all provisions of this Agreement shall remain
- -------- -------
in full force and effect. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 9.10. Sharing of Payments, etc. The Banks agree that (i)
-------------------------
with respect to all amounts received by each of them with respect to the
Aggregate Unpaids, whether in the nature of a return of any investment or
discount, or amounts due to a particular Bank in respect of any commitment fees
or facility fees hereunder, equitable adjustment will be made so that, in
effect, all such amounts will be shared among the Banks in proportion to the
portion of the Aggregate Unpaids due each Bank, whether received by voluntary
payment, or by the exercise of the right of set-off or banker's lien or secured
claims under the Bankruptcy Code as now or hereafter amended, altered, modified
or replaced, by counterclaim or cross-action or by the enforcement of this
Agreement; (ii) if any of them shall exercise any right of counterclaim, set-
off, banker's lien or otherwise or as adequate protection of a deposit treated
as cash collateral under the Bankruptcy Code, receives payment or reduction of
any amounts due to such Bank hereunder, which is greater than the proportion
received by any other Bank in respect of the amounts due hereunder to such other
Bank, then the Bank receiving such proportionately greater payment shall (x)
notify each other Bank and the Agent of such receipt and (y) purchase
participations (which it shall be deemed to have done simultaneously upon the
receipt of such payment) in the amounts due hereunder to the other Banks so that
all such recoveries of amounts due hereunder shall be shared by the Banks in
proportion to the amounts due them hereunder; provided that the foregoing
--------
provisions shall not apply to any such amount received by a foreign branch,
subsidiary or affiliate of any Bank which is applied by that Bank to the payment
of any indebtedness of a foreign subsidiary. If all or any portion of
63
<PAGE>
such payment is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
SECTION 9.11. Independent Agreements. The provisions contained in
----------------------
Sections 9.1 through 9.8 and 9.10 of this Article IX constitute independent
obligations and agreements of the Agent and the Banks, and the Transferors and
the Guarantor shall not be deemed parties thereto nor bound thereby. The
Transferors and the Guarantor do acknowledge the rights of the Banks and the
Agent under Section 9.8.
64
<PAGE>
ARTICLE X
GUARANTY
SECTION 10.1. Guaranty of Obligations. For valuable consideration,
-----------------------
the Guarantor unconditionally, absolutely and irrevocably guarantees and
promises to pay to the Agent, or order, on demand, in lawful money of the United
States and in immediately available funds, any and all present or future payment
and performance obligations of the Transferors hereunder owing to the Agent and
the Banks. The phrase "payment and performance obligations of the Transferors"
(hereinafter collectively referred to as the "Obligations") is used herein in
its most comprehensive sense and includes any and all advances, debts,
obligations, and liabilities of the Transferors, now, or hereafter made,
incurred, or created, whether voluntarily or involuntarily, and however arising,
including, without limitation, any and all attorneys' fees, costs, premiums,
charges, or interest owed by the Transferors to the Agent and/or the Banks,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, whether the Transferors may be liable individually
or jointly with others, whether recovery upon such indebtedness may be or
hereafter becomes barred by any statute of limitations or whether such
indebtedness may be or hereafter become otherwise unenforceable.
SECTION 10.2. Guaranty Continuing. This guaranty is a continuing
-------------------
guaranty which relates to any Obligations, including those which arise under
successive transactions which shall either cause the Transferors to incur new
Obligations, continue the Obligations from time to time, or renew them after
they have been satisfied. The Guarantor agrees that nothing shall discharge or
satisfy its obligations created hereunder except for the full payment of the
Obligations with interest as applicable. Any payment by the Guarantor shall not
reduce its maximum obligation hereunder.
SECTION 10.3. Guarantor Directly Liable. The Guarantor agrees that
-------------------------
it is directly and primarily liable to the Agent for the benefit of the Banks,
that its obligations hereunder are independent of the Obligations of the
Transferors, or of any other guarantor, and that a separate action or actions
may be brought and prosecuted against the Guarantor, whether action is brought
against
65
<PAGE>
a Transferor or whether a Transferor is joined in any such action or actions.
The Guarantor agrees that any releases which may be given by the Agent and the
Banks to a Transferor or any other guarantor shall not release it from this
Guaranty.
SECTION 10.4. No Impairment. The obligations of the Guarantor under
-------------
this Guaranty shall not be affected, modified or impaired upon the occurrence
from time to time of any of the following, whether or not with notice to or the
consent of the Guarantor:
(a) the compromise, settlement, change, modification, amendment
(whether material or otherwise) or partial termination of any or all of the
Obligations;
(b) the failure to give notice to the Guarantor of the occurrence of
any Termination Event or Servicer Default under the terms and provisions of this
Agreement;
(c) the waiver of the payment, performance or observance of any
of the Obligations;
(d) the taking or omitting to take any actions referred to in
this Agreement or of any action under this guaranty;
(e) any failure, omission or delay on the part of the Agent and/or
the Banks to enforce, assert or exercise any right, power or remedy conferred in
this Agreement or any other indulgence or similar act on the part of the Agent
and/or the Banks in good faith and in compliance with applicable law;
(f) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all of the assets, marshalling of
assets, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors or readjustment of, or other similar proceedings which affect the
Guarantor, any other guarantor of any of the Obligations of either Transferor or
any of the assets of any of them, or any allegation of invalidity or contest of
the validity of this Guaranty in any such proceeding; or
66
<PAGE>
(g) to the extent permitted by law, the release or discharge of any
other guarantors of the Obligations from the performance or observance of any
obligation, covenant or agreement contained in any guaranties of the Obligations
by operation of law.
To the extent any of the foregoing refers to any actions which the
Agent or the Banks may take, the Guarantor hereby agrees that the Agent and/or
the Banks may take such actions in such manner, upon such terms, and at such
times as the Agent or the Banks, in their discretion, deem advisable, without,
in any way or respect, impairing, affecting, reducing or releasing the Guarantor
from its undertakings hereunder and the Guarantor hereby consents to each and
all of the foregoing actions, events and occurrences.
SECTION 10.5. Waiver. The Guarantor hereby waives:
------
(a) any and all rights to require the Agent or the Banks to prosecute
or seek to enforce any remedies against the Transferors or any other party
liable to the Agent or the Banks on account of the Obligations;
(b) any right to assert against the Agent or the Banks any defense
(legal or equitable), set-off, counterclaim, or claim which the Guarantor may
now or at any time hereafter have against the Transferors or any other party
liable to the Agent or the Banks in any way or manner under this Agreement;
(c) all defenses, counterclaims and off-sets of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of this Agreement and the security
interest granted pursuant thereto;
(d) any defense arising by reason of any claim or defense based upon
an election of remedies by the Agent or the Banks including, without limitation,
any direction to proceed by judicial or nonjudicial foreclosure or by deed in
lieu thereof, which, in any manner impairs, affects, reduces, releases, destroys
or extinguishes the Guarantor's subrogation rights, rights to proceed against
the Transferors for reimbursement, or any
67
<PAGE>
other rights of the Guarantor to proceed against the Transferors, against any
other guarantor, or against any other security, with the Guarantor understanding
that the exercise by the Agent and/or the Banks of certain rights and remedies
may offset or eliminate the Guarantor's right of subrogation against the
Transferors, and that the Guarantor may therefore incur partially or totally
non-reimbursable liability hereunder;
(e) all presentments, demands for performance, notices of non-
performance, protests, notices of protest, notices of dishonor, notices of
default, notice of acceptance of this Guaranty, and notices of the existence,
creation, or incurring of new or additional indebtedness, and all other notices
or formalities to which the Guarantor may be entitled; and
(f) without limiting the generality of the foregoing, the Guarantor
hereby expressly waives any and all benefits of (i) California Civil Code
Sections 2809, 2810, 2819, 2825, 2839, 2845 through 2850, 2899 and 3433 and (ii)
California Code of Civil Procedure Sections 580(a), 580(b), 580(d) and 726.
SECTION 10.6. Subrogation. The Guarantor hereby agrees that unless
-----------
and until this Agreement has terminated and all Obligations have been paid to
the Agent and the Banks in full, it shall not have any rights of subrogation,
reimbursement or contribution as against the Transferors or any other guarantor,
if any, and shall not seek to assert or enforce the same. Guarantor understands
that the exercise by Agent of certain rights and remedies contained in this
Agreement may affect or eliminate Guarantor's right of subrogation if any,
against the Transferors and that Guarantor may therefore incur a partially or
totally non-reimbursable liability hereunder; nevertheless, Guarantor hereby
authorizes and empowers the Agent and the Banks to exercise, in their sole
discretion, any right and remedy, or any combination thereof, which may then be
available, since it is the intent and purpose of Guarantor that the obligations
hereunder shall be absolute, independent and unconditional under any and all
circumstances.
SECTION 10.7. Information. The Guarantor is presently informed of
-----------
the financial condition of the Transferors and of all other circumstances which
a dili-
68
<PAGE>
gent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. The Guarantor hereby covenants that it will continue to keep
itself informed of the financial condition of the Transferors and of all other
circumstances which bear upon the risk of nonpayment. The Guarantor hereby
waives its right, if any, to require the Agent or the Banks to disclose to it
any information which the Agent or any Bank may now or hereafter acquire
concerning such condition or circumstances including, but not limited to, the
release of any other guarantor.
SECTION 10.8. Evidence of Obligations. The Agent and each Bank's
-----------------------
books and records evidencing the Obligations shall be admissible in any action
or proceeding and shall be binding upon the Guarantor for the purpose of
establishing the terms set forth therein and shall constitute prima facie proof
thereof.
69
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Term of Agreement. This Agreement shall terminate
-----------------
following the later of (i) the Termination Date or (ii) the date on which the
Total Outstanding Investment has been reduced to zero, all accrued Discount has
been paid in full and all other Aggregate Unpaids have been paid in full;
provided, however, that (i) the rights and remedies of the Banks with respect to
- -------- -------
any representation and warranty made or deemed to be made by either Transferor
pursuant to this Agreement, (ii) the indemnification and payment provisions of
Article VIII and (iii) the agreement set forth in Section 9.10, shall be
continuing and shall survive any termination of this Agreement.
SECTION 11.2. Waivers; Amendments. No failure or delay on the part
-------------------
of the Agent or the Banks in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. No notice to or
demand on the Transferors, the Servicer or the Guarantor in any case shall
entitle the Transferors, the Servicer or the Guarantor, as the case may be, to
any other or further notice or demand in similar or other circumstances. The
rights and remedies herein provided shall be cumulative and nonexclusive of any
rights or remedies provided by Governmental Rule. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by the Transferors, the Servicer, the Guarantor, the Agent and the
Requisite Banks; provided, however, that no such waiver, amendment or consent
-------- -------
shall, unless in writing and signed by all of the Banks, the Transferors, the
Servicer, the Guarantor and acknowledged by the Agent, (a) increase or extend
any Bank's Bank Commitment or subject any Bank to additional obligations; (b)
postpone or delay any date fixed for any payment of fees or any other amounts
due to the Banks (or any of them) hereunder; (c) reduce any fees or other
amounts payable to the Banks (or any Bank) hereunder; (d) change any Bank's
Percentage; (e) amend this Section 11.2 or Section 9.10; or (f) release the
Guarantor from any obligation undertaken by it pursuant to this Agreement.
70
<PAGE>
SECTION 11.3. Notices. Except as provided below, all communications
-------
and notices provided for hereunder shall be in writing and shall be sent by
telecopy and shall be given to the other party at its telecopy number set forth
on the signature page hereof or at such other telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice or
other communication shall be effective when such telecopy is transmitted to the
telecopy number specified below and when confirmation of delivery is received:
If to the Transferors:
Mattel Sales Corp.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
Fisher-Price, Inc.
c/o Mattel Sales Corp.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
If to the Guarantor or Servicer:
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
If to the Agent:
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Ms. Tammy Grier
Telephone: (214) 508-0987
Telecopy: (214) 508-2515
71
<PAGE>
If to the Banks, to their addresses set forth on the signature pages
hereto.
SECTION 11.4. Governing Law; Integration. (a) This Agreement shall
--------------------------
be governed by and construed in accordance with the laws of the State of
California, without regard to the conflicts of Governmental Rules provisions
thereof. This Agreement contains the final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire Agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings.
(b) Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of California or of the United States for
the Central District of California, and by execution and delivery of this
Agreement, each of the Guarantor, the Transferors and the Banks consents, for
itself and in respect of its property, to the non-exclusive jurisdiction of
those courts. Each of the Guarantor, the Transferors and the Banks irrevocably
waives any objection, including any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this
Agreement or any document related hereto. The Guarantor, the Transferors and
the Banks each waive personal service of any summons, complaint or other
process, which may be made by any other means permitted by California law.
SECTION 11.5. Severability; Counterparts. This Agreement may be
--------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
72
<PAGE>
SECTION 11.6. Successors and Assigns. This Agreement shall be
----------------------
binding on the parties hereto and their respective successors; provided,
--------
however, that subject to Section 11.9, no party to this Agreement may assign any
- -------
of its rights or delegate any of its duties hereunder.
SECTION 11.7. Confidentiality. Each Bank agrees to take normal and
---------------
reasonable precautions and exercise due care to maintain the confidentiality of
all information provided to it by the Guarantor or any Subsidiary of the
Guarantor, or by the Agent on such Guarantor's or Subsidiary's behalf, in
connection with this Agreement or any documents related hereto, and neither it
nor any of its Affiliates shall use any such information for any purpose or in
any manner other than pursuant to the terms contemplated by this Agreement;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of a disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Guarantor, provided that such source is not bound by a confidentiality agreement
with the Guarantor known to the Bank; provided, however, that any Bank may
-------- -------
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Person to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process and when required to do so in accordance with the provisions
of any applicable Governmental Rule; provided, that a Bank shall disclose only
the information required by such request and shall notify the Guarantor in
advance of providing such information so that the Guarantor may seek an
appropriate protective order, and (C) to such Bank's independent auditors and
other professional advisors provided such Persons are obligated to keep such
information confidential.
Notwithstanding the foregoing, the Guarantor authorizes each Bank to disclose to
any Participant or Assignee and to any prospective Participant or Assignee, such
financial and other information in such Bank's possession concerning the
Guarantor or its Subsidiaries which has been delivered to the Agent or the Banks
pursuant to this Agreement or which has been delivered to the Agent or the Banks
by the Guarantor in connection with the Banks' credit evaluation of the
Guarantor prior to entering into this Agreement; provided that, unless otherwise
--------
agreed by
73
<PAGE>
the Guarantor, such Participant or Assignee agrees in writing to such
Bank to keep such information confidential to the same extent required of the
Banks hereunder.
SECTION 11.8. Characterization of the Transactions Contemplated by
----------------------------------------------------
the Agreement. It is the intention of the parties that the transactions
- -------------
contemplated hereby constitute the sale of the Transferred Interest, conveying
good title thereto free and clear of any Adverse Claims to the Agent, on behalf
of the Banks, and that the Transferred Interest not be part of either
Transferor's estate in the event of an insolvency. If, notwithstanding the
foregoing, the transactions contemplated hereby should be deemed a financing,
the parties intend that each Transferor shall be deemed to have granted to the
Agent on behalf of the Banks, and each Transferor hereby grants to the Agent, on
behalf of the Banks, a first priority perfected security interest in all of such
Transferor's right, title and interest in, to and under the Receivables, and
that this Agreement shall constitute a security agreement under applicable law.
SECTION 11.9. Assignments; Participations. (a) Any Bank may, with
---------------------------
the advance written consent of the Transferors at all times other than during
the existence of a Termination Event and the Agent, which consent of the
Transferors shall not be unreasonably withheld, at any time assign and delegate
to one or more Eligible Assignees (provided that no consent of the Transferors
or the Agent shall be required in connection with any assignment and delegation
by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Transferred Interest and the
other rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000 and such Bank shall concurrently therewith assign a ratable portion
in the Credit Agreement; provided, however, that the Transferors and the Agent
may continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Transferors and the Agent
by such Bank and the Assignee; (ii) such Bank and its Assignee shall have
delivered to the Transferors and the Agent an executed assignment together with
any note or notes subject to such assignment and (iii) the
74
<PAGE>
assignor Bank or Assignee has paid to the Agent a processing fee in the amount
of $2,500.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
assignment and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
shall have the rights and obligations of a Bank under this Agreement, and (ii)
the assignor Bank shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such assignment, relinquish its rights and
be released from its obligations hereunder.
(c) Upon advance written notice to the Transferors, each Bank shall
have the right at any time to sell or otherwise transfer participations in all
or any part of their pro rata portion of the Transferred Interest, to one or
--- ----
more Affiliates of such Bank or to one or more commercial banks, merchant banks,
savings and loan associations or any other institution (a "Participant");
provided that such Bank shall concurrently with any sale of a participation
- --------
herein sell a ratable participation under the Credit Agreement and thereafter
cause any such participation herein to remain ratable with such participation
under the Credit Agreement. The Transferor hereby acknowledges and agrees that
any such disposition will give rise to a direct obligation of the Transferor to
the Participant and the Participant shall be entitled to the benefit of Section
9.10 as if it were a "Bank"; provided further, that in the case of a
-------- -------
participation, (i) the Bank's obligations under this Agreement shall remain
unchanged, (ii) the Bank shall remain solely responsible for the performance of
such obligations, (iii) the Transferors and the Agent shall continue to deal
solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant shall have rights to approve
any amendment to, or any consent or waiver with respect to this Agreement except
to the extent such amendment, consent or waiver would require unanimous consent.
In the case of any such participa-tion, the Participant shall not have any
rights under this Agreement, or any
75
<PAGE>
documents related hereto, and all amounts payable by the Transferors hereunder
shall be determined as if such Bank had not sold such participation, except that
if amounts outstanding under this Agreement are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of a
Termination Event, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
76
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
MATTEL SALES CORP.,
as Transferor
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
FISHER-PRICE, INC.,
as Transferor
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
MATTEL, INC., as Guarantor
and Servicer
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ J. Blake Seaton
_______________________
Name: J. Blake Seaton
Title: Vice President
77
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
11.538461538 28,846,153.85 NATIONSBANK OF TEXAS,
N.A.
By: /s/ J. Blake Seaton
________________________
Name: J. Blake Seaton
Title: Vice President
Notice Address: 444 S. Flower Street, Suite 1500
Los Angeles, California 90071
Attn: J. Blake Seaton
78
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
15.384615387 38,461,538.44 BANK OF AMERICA
NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Robert W. Troutman
__________________________
Name: Robert W. Troutman
Title: Managing Director
Notice Address: 555 Flower Street, 11th Floor
Los Angeles, California 90071
Attn: Robert W. Troutman
79
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,023.08 PNC BANK, NATIONAL
ASSOCIATION
By: /s/ Ted A. Dunn
__________________________
Name: Ted A. Dunn
Title: Assistant Vice President
Notice Address: 55 South Lake Avenue, Suite 650
Pasadena, California 91101
Attn: David Corcoran
80
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
11.538461538 28,846,153.85 CHEMICAL BANK
By: /s/ David J. Corcoran
___________________________
Name: David J. Corcoran
Title: Vice President
Notice Address: Corporate Banking Group
270 Park Avenue, 10th Floor
New York, New York 10017
Attn: David Corcoran
81
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,923.08 THE FIRST NATIONAL
BANK OF BOSTON
By: /s/ Patti A. Stoil
__________________________
Name: Patti A. Stoil
Title: Director
Notice Address: 100 Federal Street, 6th Floor
Boston, Massachusetts 02110
Attn: Debra Zurka
82
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,023.08 TORONTO-DOMINION
(TEXAS), INC.
By: /s/ Diane Bailey
__________________________
Name: Diane Bailey
Title: Vice President
Notice Address: 909 Fannin
Houston, Texas 77010
Attn: Lisa Allison
83
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
3.076923077 7,692,307.69 CITICORP USA, INC.
By: /s/ Barbara A. Cohen
________________________
Name: Barbara A. Cohen
Title: Vice President
Notice Addresses: c/o Citicorp North America, Inc.
725 South Figueroa Street
5th Floor
Los Angeles, California 90017
Attn: Deborah Ironson
c/o Citibank, N.A.
One Court Square, 7th Floor
Long Island City, New York 11120
Attn: Mark Wrigley
84
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 ABN AMRO BANK N.V.
By: /s/ Matthew S. Thomson
__________________________
Name: Matthew S. Thomson
Title: Group Vice President
By: /s/ Patrick A. Russo
__________________________
Name: Patrick A. Russo
Title: Assistant Vice President
Notice Address: Los Angeles International Branch
300 South Grand Avenue, Suite 1115
Los Angeles, California 90071
Attn: Matthew S. Thomson
85
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 DRESDNER BANK AG
Los Angeles Agency
By: /s/ Jon M. Bland
__________________________
Name: Jon M. Bland
Title: Senior Vice President
By: /s/ Dennis G. Blank
__________________________
Name: Dennis G. Blank
Title: Vice President
Notice Address: Los Angeles Agency
725 South Figueroa Street, Suite 3950
Los Angeles, California 90017
Attn: Dennis Blank
86
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 MANUFACTURERS &
TRADERS TRUST CO.
By: /s/ Geoffrey R. Fenn
__________________________
Name: Geoffrey R. Fenn
Title: Vice President
Notice Address: 1 Fountain Plaza
Buffalo, New York 14203
Attn: Geoffrey R. Fenn
87
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 ISTITUTO BANCARIO SAN
PAOLO DI TORINO SPA
By: /s/ Donald W. Brown
__________________________
Name: Donald W. Brown
Title: Branch Manager
By: /s/ Glen Binder
__________________________
Name: Glen Binder
Title: Vice President
Notice Address: 444 South Flower Street
Suite 4550
Los Angeles, California 90071
Attn: Glen Binder
88
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 THE BANK OF
CALIFORNIA, N.A.
By: /s/ Thomas H. Teagart
__________________________
Name: Thomas H. Teagart
Title: Vice President
Notice Address: 550 South Hope Street
Fifth Floor
Los Angeles, California 90071
Attn: Thomas Tegart
89
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,642.54 BANQUE NATIONALE
DE PARIS
By: /s/ Clive Bettles
__________________________
Name: Clive Bettles
Title: Vice President
By: /s/ Deborah Gohh
__________________________
Name: Deborah Gohh
Title: Vice President
Notice Address: 725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attn: Clive Bettles
90
<PAGE>
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
3.076923077 7,692,307.69 MARINE MIDLAND BANK
By: /s/ William M. Holland
_________________________
Name: William M. Holland
Title: Vice President
Notice Address: 140 Broadway, 4th Floor
New York, New York 10005
Attn: William M. Holland
91
<PAGE>
EXHIBIT A
[Toys "R" Us, Inc. Letterhead]
[Date]
Mr. William Stavro
Vice President and Treasurer
Mattel, Inc.
333 Continental Boulevard
El Segundo, CA 90245-5012
Dear Bill:
With reference to the Second Amended and Restated Transfer and Administration
Agreement, dated as of March 10, 1995, among Mattel Sales Corp., Fisher-Price,
Inc., NationsBank of Texas, N.A., and a syndicate of banks, it is our
understanding that Mattel and Fisher-Price would like to sell from time to time
undivided interests in their domestic accounts receivable from TOYS "R" US and
that to do so, it is necessary that TOYS "R" US commit for the benefit of the
banks to certain payment terms which will apply regardless of any contrary
language in any purchase order or other document.
TOYS "R" US hereby consents to such sales of accounts receivable and agrees,
unconditionally, to pay by wire transfer of immediately available funds on or
before [current Remittance Date] to the account designated by you an amount
equal to not less than eighty percent (80%) of the total amount of all invoices,
supported by bills of lading, issued by Mattel and Fisher-Price to TOYS "R" US
in the United States that are outstanding at such date. Modification or
revocation of the terms of this letter shall be effective only if in writing and
signed by you or the Chief Financial Officer of Mattel and by one of the
following duly authorized officers of TOYS "R" US: Louis Lipschitz, Jon
Friedman and Jon Kimmins.
[It is our intent that the remaining twenty percent (20%) of invoiced amounts
will be settled in accordance with normal settlement procedures between Mattel,
Fisher-Price and TOYS "R" US.] TOYS "R" US agrees that any invoiced amounts
remaining after settlement in accordance with
A-1
<PAGE>
normal settlement procedures will be paid by TOYS "R" US to the account
referenced in the prior paragraph.
Very truly yours,
Jon Kimmins
Vice President and Treasurer
Agreed to and accepted by:
Mattel, Inc.
By: ____________________________
William Stavro
Vice President and Treasurer
A-2
<PAGE>
EXHIBIT B
FORM OF WEEKLY SERVICER'S CERTIFICATE
For the calendar week ended __________, 19__
The undersigned, a duly authorized representative of Mattel, Inc. as
Servicer, pursuant to the Second Amended and Restated Transfer and
Administration Agreement, dated as of March 10, 1995 (as amended and modified
from time to time, the "TAA"), among Mattel Sales Corp. and Fisher-Price, Inc.,
as Transferors, Mattel, Inc., as Guarantor and Servicer, NationsBank of Texas,
N.A., as Agent, and the Banks, does hereby certify as follows:
1. Eligible Receivables as of the last day
of the previous week......................................... $______
2. plus Eligible Receivables generated during
----
the week..................................................... $______
3. less Close-Out Collections received during
----
the week..................................................... $______
4. less Deemed Collections during the week...................... $______
----
5. Eligible Receivables as of the last day
of the week.................................................. $______
6. Total Outstanding Investment as of the
last day of the week......................................... $______
7. Discount Reserve as of the last day of
the week..................................................... $______
8. Percentage Factor as of the last day of
the week ([line 6 + line 7] / line 5)........................ ______%
9. Average Facility Limit during the week....................... $______
10. [Eligible Receivables as of the last day of the week are equal to at least
125% of the sum of the Total Outstanding Investment and the Discount
Reserve] or [The Transferor is depositing to the credit of the Collection
Account the outstanding balance of certain Receivables as
B-1
<PAGE>
required by Section 2.6(b) of the TAA, and such amount is equal to $____].
11. As of the date hereof, no Termination Event or Potential Termination Event
has occurred under the TAA.
12. As of the date hereof, no default in the performance of the obligations of
the Servicer under the TAA has occurred or is continuing except as follows:
[if applicable, insert "none"]
13. As of the date hereof, no lien has been placed on the Receivables other than
pursuant to the TAA.
Capitalized terms used herein have their respective meanings as set forth in the
TAA.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this certificate this ___ day of _______, 19__.
MATTEL, INC.
as Servicer
By:
-----------------------
Name:
Title:
B-2
<PAGE>
EXHIBIT C
FORM OF TRANSFER NOTICE
MATTEL SALES CORP. and FISHER-PRICE, INC. (together, the
"Transferors") hereby conveys, transfers and assigns to the Agent, on behalf of
the Banks, pursuant to the terms and conditions of the Second Amended and
Restated Transfer and Administration Agreement, dated as of March 10, 1995 (the
"TAA"), among Mattel Sales Corp., Fisher-Price, Inc., Mattel, Inc., as Guarantor
and Servicer, NationsBank of Texas, N.A., as Agent, and the Banks, an undivided
percentage ownership interest in the Receivables, together with Collections with
respect thereto. The terms of such Transfer shall be as follows:
Transfer Date: __________
Transfer Price: $_________ (line 5 + line 6)
Receivables related to Mattel Sales Corp.......................... $______
Receivables related to Fisher-Price, Inc.......................... $______
THE TRANSFEROR DOES HEREBY CERTIFY AS FOLLOWS:
1. Eligible Receivables as of the last day of the prior week..... $______
2. Total Outstanding Investment as of the last day of the
prior week.................................................... $______
3. Discount Reserve as of the last day of the prior week......... $______
4. Funds on deposit in the Collection Account as of the date
hereof........................................................ $______
5. Close-Out Collections to be released from the Collection
Account on the Transfer Date to fund a portion of the
Transfer Price................................................ $______
6. Tranche amount (Transfer Price less line 5)................... $______
7. Tranche Period related to this Tranche........................ __ days
C-1
<PAGE>
8. Estimated LIBOR related to this Tranche....................... ______%
9. Estimated Participation Rate related to this Tranche
(line 8 + applicable spread).................................. ______%
10. Discount related to this Tranche
(line 6 x line 9 x line 7 / 360).............................. $_______
11. Total Outstanding Investment after giving effect to the
requested Tranche amount (line 2 + line 6).................... $_______
12. Discount Reserve after giving effect to the requested
Transfer (line 3 + line 10).................................. $_______
13. The Percentage Factor after giving effect to the requested
Tranche Amount and Discount will be (should not exceed 80%)
([line 11 + line 12] / line 1)............................... ______%
This Transfer Notice is irrevocable and may be accepted by the Agent, on behalf
of the Banks, at any time prior to 1:00 PM (Dallas, Texas time) on the third
Business Day immediately preceding the Transfer Date specified above. Upon such
acceptance of the terms of this Transfer Notice, the Transferors shall have
conveyed, transferred and assigned an undivided percentage ownership interest in
the Receivables, together with Collections with respect thereto to the Agent on
behalf of the Banks. The Transferors and the Banks intend that this transfer of
Receivables constitutes a sale of accounts under Section 9-102(1)(b) of the
Uniform Commercial Code as in effect in all applicable jurisdictions ("UCC").
In the event that the conveyance hereunder is characterized as a financing, this
notice shall be a security agreement under the UCC and the Transferors hereby
grant a security interest (as defined in the UCC) in the Receivables related to
each of them and the proceeds thereof to secure the payment to the Banks of the
Aggregate Unpaids. The Banks' rights with respect to such undivided ownership
interest shall be as set forth in the TAA. Capitalized terms used herein have
their respective meanings as set forth in the TAA.
C-2
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Transfer
Notice on this ___ day of __________, 199_.
MATTEL SALES CORP.,
as Transferor
By: ______________________
Name:
Title:
FISHER-PRICE, INC.,
as Transferor
By: ______________________
Name:
Title:
Agreed and accepted:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: ___________________________
Name:
Title:
C-3
<PAGE>
EXHIBIT D
[Reserved]
D-1
<PAGE>
EXHIBIT E
[List of Actions, Suits and Proceedings
against the Transferors]
Mattel Sales Corp.
- -----------------
NONE.
Fisher-Price, Inc.
- -----------------
NONE.
E-1
<PAGE>
EXHIBIT F
Location of Records
-------------------
Mattel Sales Corp.
- -----------------
Corporate Headquarters
333 Continental Boulevard
El Segundo, CA 90245
Mattel Computer Center
2424 West Desert Cove
Phoenix, AZ 85029
Fisher-Price, Inc.
- -----------------
636 Girard Avenue
East Aurora, New York 14052
F-1
<PAGE>
EXHIBIT G
List of Tradenames
------------------
Mattel Sales Corp.
- -----------------
Mattel Sales Corp.
Mattel Sales
Mattel
Fisher-Price, Inc.
- -----------------
Fisher-Price
FPI, Inc.
G-1
<PAGE>
EXHIBIT H
[List of Actions, Suits and Proceedings
against the Guarantor]
None.
H-1
<PAGE>
EXHIBIT I
[Letterhead of Counsel to the Transferors]
March 10, 1995
NationsBank of Texas, N.A.,
as Agent
[Address)
[Bank]
[Bank]
Re: Second Amended and Restated Transfer and
Administration Agreement, dated as of
March 10, 1995, among Mattel Sales Corp.,
Fisher-Price, Inc., Mattel, Inc., NationsBank
of Texas, N.A. and the banks named therein
---------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1(g) of the Second
Amended and Restated Transfer and Administration Agreement dated as of March 10,
1995 (the "Agreement") among Mattel Sales Corp., a California corporation, and
Fisher-Price, Inc., a Delaware corporation (together, the "Transferors"),
Mattel, Inc., a Delaware corporation, as guarantor (the "Guarantor") and
NationsBank of Texas, N.A., as agent (the "Agent") on behalf of the banks named
therein (collectively, the "Banks"). Terms defined in this Agreement and not
otherwise defined herein are used in this opinion with the meanings so defined.
I am Senior Vice President -- General Counsel for Mattel, Inc. and have
acted as counsel to the Transferors in connection with the preparation of the
Agreement and the transactions and other documents contemplated thereby.
I have examined, on the date hereof, the Agreement and all exhibits thereto
(including the form of Transfer Notice
I-1
<PAGE>
attached thereto as Exhibit C), the form of initial Transfer Notice, [to be]
dated ___________ 1995, relating to the initial transfers of Receivables (each,
an "Initial Transfer Notice"), certificates of public officials and of officers
of the Transferors and certified copies of the Transferors' certificate of
incorporation, by-laws, the Boards of Directors' resolutions authorizing the
Transferors' participation in the transactions contemplated by the Agreement,
copies of each of the above having been delivered to you, copies of the
financing statements on Form UCC-l filed in the filing offices of the Secretary
of State of the State of California [and _________] [this is intended to refer
to the local filing office, if applicable] (together, the "Filing Offices")
executed by each Transferor, as debtor, in favor of the Agent on behalf of the
Banks, substantially in the form attached hereto as Exhibit A (the "Financing
Statements") [and copies of the financing statements on Form UCC-3 filed in the
Filing Offices executed by ______ and ______, substantially in the form attached
hereto as Exhibit B (the "Releases")]. I have also examined the closing
documents delivered pursuant to the Agreement and copies of all such documents
and records, and have made such investigations of law, as I have deemed
necessary and relevant as a basis for our opinion. With respect to the accuracy
of material factual matters which were not independently established, I have
relied on certificates and statements of officers of the Transferors.
Certain of the opinions rendered herein are qualified by the discussion
following the numbered paragraphs of this opinion.
On the basis of the foregoing, and in reliance thereon, I am of the opinion
that:
1. Each Transferor is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, has the
power and authority to own its properties and to carry on its business as now
being conducted, and had at all relevant times, and now has, all necessary
power, authority, and legal right to acquire and own the Receivables, and is
duly qualified, in good standing and is authorized to do business in each
foreign jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the aggregate,
has not had and will not have a materially adverse effect upon the business
properties of either Transferor or its ability to perform its obligations under
the Agreement.
I-2
<PAGE>
2. Each Transferor has the corporate power and has taken all necessary
corporate action to execute, deliver and perform the Agreement, the Initial
Transfer Notice and each other Transfer Notice delivered pursuant to the
Agreement, each in accordance with its respective terms, and to consummate the
transactions contemplated thereby. The Agreement and the Initial Transfer
Notice have been duly executed and delivered by the Transferors and constitute,
and each Transfer Notice subsequently delivered by either Transferor pursuant to
the Agreement, when executed and delivered by the related Transferor, will
constitute the legal, valid and binding obligations of such Transferor,
enforceable against such Transferor in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
3. The execution, delivery and performance in accordance with their terms
by the Transferors of the Agreement, the Initial Transfer Notice and each other
Transfer Notice delivered pursuant to the Agreement, and the consummation of the
transactions contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any stockholder of the
Transferors that has not been obtained, (ii) violate or conflict with, result in
a breach of, or constitute a default under (a) the certificates of incorporation
or the by-laws of the Transferors, (b) any other agreement to which either
Transferor is a party or by which such Transferor or any of its properties may
be bound, or (c) any applicable law, or any order, rule, or regulation
applicable to the Transferors of any court or of any federal or state regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferors or any of their respective properties, or
(iii) result or require in the creation or imposition of any lien upon any of
the assets, property or revenue of the Transferors other than as contemplated by
the Agreement.
4. [Except as set forth on Exhibit E to the Agreement,] [and] [T][t]o the
best of my knowledge, there are not, in any court or before any arbitrator of
any kind or before or by any governmental or non-governmental body, any actions,
suits, proceedings or investigations, pending or threatened, (i) against the
Transferors or the business or any property of the Transferors except actions,
suits or proceedings that, if adversely determined, would not, singly or in the
aggregate, have a materially adverse effect on the Transferors, or on the
ability of either Transferor to perform its respective obligations under the
I-3
<PAGE>
Agreement, the Initial Transfer Notice and each other Transfer Notice
delivered pursuant to the Agreement or (ii) relating to the Agreement, the
Initial Transfer Notice or each other Transfer Notice delivered pursuant to the
Agreement.
5. The Agreement and each Initial Transfer Notice create a valid "security
interest" (as such term is defined in Section 1-201(37) of the Uniform
Commercial Code as in effect in the State of California (the "California UCC"),
under Article 9 of the California UCC in favor of the Agent, on behalf of the
Banks, in the Receivables in existence and thereafter created and the proceeds
thereof, subject to the provisions of Section 9-306 of the California UCC. The
Financing Statements have been filed in the filing office located in the State
of California and _____, which are the only offices in which filings are
required under the California UCC to perfect the Agent's security interest in
such Receivables and the proceeds thereof, and accordingly the Agent's security
interest in the Receivables in existence and thereafter created and the proceeds
thereof will, on the date[s] of the Initial Transfer Notice, be perfected under
Article 9 of the California UCC. All filing fees and all taxes required to be
paid as a condition to or upon the filing of the Financing Statements in the
State of California and ______ have been paid in full. As of the date hereof,
there were no (i) UCC financing statements naming either Transferor as debtor,
seller or assignor and covering any Receivables or any interest therein or (ii)
notices of the filing of any federal tax lien (filed pursuant to Section 6323 of
the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation
(filed pursuant to Section 4068 of the Employment Retirement Insurance Act)
covering any Receivable or any interest therein. The filing of the Financing
Statements in the Filing Offices will create a first priority security interest
in each Receivable and the proceeds thereof. Such perfection and priority will
continue, provided that appropriate continuation statements are timely filed
where and when required under the California UCC.
6. Neither Transferor is an "investment company" or a company "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended.
With respect to my opinion in paragraph 5 (i) I call your attention to the
necessity of filing continuation statements from time to time under the
applicable provisions of the California UCC and to the fact that additional
filings under the California UCC may be required, among other things, upon the
change of location of the debtor as provided in Section 9-l03(3)(e) of
I-4
<PAGE>
the California UCC or the change of the name of the debtor as provided in
Section 9-402(7) thereof; and (ii) I call your attention to the fact that under
certain circumstances described in Section 9-306(4) of the California UCC, the
right of a secured party to enforce a perfected security interest in the cash
proceeds of collateral may be limited.
To the extent that the obligations of the Transferors may be dependent upon
such matters, I assume for purposes of this opinion that the parties to the
Agreement (other than the Transferors and the Guarantor) are duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation; that the Agreement has been duly authorized,
executed and delivered by the parties to the Agreement (other than the
Transferors and the Guarantor), and constitutes their legally valid and binding
obligations, enforceable against them in accordance with their respective terms;
and that the parties to the Agreement (other than the Transferors and the
Guarantor) have the requisite corporate or other organizational power and
authority to perform their respective obligations under the Agreement. I am not
expressing any opinion as to the effect of compliance of the parties to the
Agreement (other than the Transferor and the Guarantor) with any state or
federal laws or regulations applicable to the transactions.
I am admitted to the bar of the State of California, and I express no
opinion herein other than with respect to the laws of the State of California
and the Federal laws of the United States of America. This opinion is rendered
only to you and is solely for your benefit in connection with the above
transactions. This opinion may not be relied upon by you for any other purpose,
or relied upon by any other person, firm or corporation for any purpose without
my prior written consent; except that this opinion may be furnished or quoted to
your legal counsel and independent auditors in connection with the above
transactions, to regulatory authorities having jurisdiction over you, and as
otherwise compelled by legal process.
Very truly yours,
Robert J. Normile
I-5
<PAGE>
EXHIBIT J
[Letterhead of Counsel to the Guarantor/Servicer]
March 10, 1995
NationsBank of Texas, N.A.,
as Agent
[Address]
[Bank]
[Bank]
Re: Second Amended and Restated Transfer and Administration
Agreement, dated as of March 10, 1995, among Mattel Sales Corp.,
Fisher-Price, Inc., Mattel, Inc., NationsBank of Texas, N.A. and
------------------
the banks named therein
--------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1(m) of the
Second Amended and Restated Transfer and Administration Agreement dated as of
March 10, 1995 (the "Agreement") among Mattel Sales Corp., a California
corporation, and Fisher-Price, Inc., a Delaware corporation (together, the
"Transferors"), Mattel, Inc., a Delaware corporation, as guarantor (the
"Guarantor") and NationsBank of Texas, N.A., as agent (the "Agent") on behalf of
the banks named therein (collectively, the "Banks"). Terms defined in this
Agreement and not otherwise defined herein are used in this opinion with the
meanings so defined.
I am Senior Vice President -- General Counsel for the Guarantor and
have acted as counsel to the Guarantor in connection with the preparation of the
Agreement and the transactions and other documents contemplated thereby.
J-1
<PAGE>
I have examined, on the date hereof, the Agreement and all exhibits
thereto, certificates of public officials and of officers of the Guarantor and
certified copies of the Guarantor's certificate of incorporation, by-laws, the
Board of Directors' resolutions authorizing the Guarantor's participation in the
transactions contemplated by the Agreement, copies of each of the above having
been delivered to you. I have also examined the closing documents delivered
pursuant to the Agreement and copies of all such documents and records, and have
made such investigations of law, as we have deemed necessary and relevant as a
basis for our opinion. With respect to the accuracy of material factual matters
which were not independently established, I have relied on certificates and
statements of officers of the Guarantor.
Certain of the opinions rendered herein are qualified by the
discussion following the numbered paragraphs of this opinion.
On the basis of the foregoing, and in reliance thereon, I am of the
opinion that:
1. The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the power and
authority to own its properties and to carry on its business as now being
conducted, and had at all relevant times, and now has, all necessary power,
authority, and legal right to perform its obligations under the Agreement, and
is duly qualified, in good standing and is authorized to do business in each
foreign jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the aggregate,
has not had and will not have a materially adverse effect upon the business
properties of the Guarantor or its ability to perform its obligations under the
Agreement.
2. The Guarantor has the corporate power and has taken all necessary
corporate action to execute, deliver and perform the Agreement in accordance
with its terms, and to consummate the transactions contemplated thereby. The
Agreement has been duly executed and delivered by the Guarantor and constitutes
the legal, valid and binding obligation of the Guarantor, enforceable against
the Guarantor in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
J-2
<PAGE>
3. The execution, delivery and performance in accordance with its
terms by the Guarantor of the Agreement, and the consummation of the
transactions contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any stockholder of the
Guarantor that has not been obtained, (ii) violate or conflict with, result in a
breach of, or constitute a default under (a) the certificate of incorporation or
the by-laws of the Guarantor, (b) any other agreement to which the Guarantor is
a party or by which the Guarantor or any of its properties may be bound, or (c)
any applicable law, or any order, rule, or regulation applicable to the
Guarantor of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Guarantor or any of its properties, or (iii) result or require in the
creation or imposition of any lien upon any of the assets, property or revenue
of the Guarantor other than as contemplated by the Agreement.
4. [Except as set forth on Exhibit H to the Agreement,] [and][T][t]o
the best of my knowledge, there are not, in any court or before any arbitrator
of any kind or before or by any governmental or non-governmental body, any
actions, suits, proceedings or investigations, pending or threatened, (i)
against the Guarantor or the business or any property of the Guarantor except
actions, suits or proceedings that, if adversely determined, would not, singly
or in the aggregate, have a materially adverse effect on the Guarantor, or on
the ability of the Guarantor to perform its obligations under the Agreement or
(ii) relating to the Agreement.
5. The Guarantor is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
To the extent that the obligations of the Guarantor may be dependent
upon such matters, I assume for purposes of this opinion that the parties to the
Agreement (other than the Guarantor and the Transferors) are duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation; that the Agreement has been duly authorized,
executed and delivered by the parties to the Agreement (other than the Guarantor
and the Transferors), and constitutes their legally valid and binding
obligations, enforceable against them in accordance with their respective terms;
and that the parties to the Agreement (other than the Guarantor and the
Transferors) have the requisite corporate or other organizational power and
authority to perform their respective obligations under
J-3
<PAGE>
the Agreement. I am not expressing any opinion as to the effect of compliance
of the parties to the Agreement (other than the Guarantor and the Transferors)
with any state or federal laws or regulations applicable to the transactions.
I am admitted to the bar of the State of California, and I express no
opinion herein other than with respect to the corporate laws of the State of
Delaware and the Federal laws of the United States of America.
This opinion is rendered only to you and is solely for your benefit in
connection with the above transactions. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm or
corporation for any purpose without my prior written consent; except that this
opinion may be furnished or quoted to your legal counsel and independent
auditors in connection with the above transactions, to regulatory authorities
having jurisdiction over you, and as otherwise compelled by legal process.
Very truly yours,
Robert J. Normile
J-4
<PAGE>
EXHIBIT 99.7
MATTEL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
April 1, 1994
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I - NAME AND PLAN PURPOSES . . . . . . . . . . . . . 1
1.1 Name and Plan Purposes. . . . . . . . . . . 1
ARTICLE II - DEFINITIONS. . . . . . . . . . . . . . . . . . . 2
2.1 Actuarial Equivalent or Actuarial
Equivalence . . . . . . . . . . . . . . . . 2
2.2 Administrative Committee. . . . . . . . . . 2
2.3 Beneficiary . . . . . . . . . . . . . . . . 2
2.4 Board of Directors. . . . . . . . . . . . . 2
2.5 Cause . . . . . . . . . . . . . . . . . . . 2
2.6 Change of Control . . . . . . . . . . . . . 2
2.7 Code. . . . . . . . . . . . . . . . . . . . 3
2.8 Company . . . . . . . . . . . . . . . . . . 3
2.9 Compensation. . . . . . . . . . . . . . . . 3
2.10 Disability. . . . . . . . . . . . . . . . . 4
2.11 Effective Date. . . . . . . . . . . . . . . 4
2.12 Employee. . . . . . . . . . . . . . . . . . 4
2.13 Employer. . . . . . . . . . . . . . . . . . 4
2.14 ERISA . . . . . . . . . . . . . . . . . . . 4
2.15 Final Average Compensation. . . . . . . . . 5
2.16 Month of Service. . . . . . . . . . . . . . 5
2.17 Participant . . . . . . . . . . . . . . . . 5
2.18 Plan. . . . . . . . . . . . . . . . . . . . 5
2.19 Plan Year . . . . . . . . . . . . . . . . . 5
2.20 Related Company . . . . . . . . . . . . . . 5
2.21 Service . . . . . . . . . . . . . . . . . . 5
2.22 Termination . . . . . . . . . . . . . . . . 6
ARTICLE III - ELIGIBILITY AND PARTICIPATION. . . . . . . . . . 7
3.1 Eligibility to Participate. . . . . . . . . 7
3.2 Effect of Participating in Plan . . . . . . 7
ARTICLE IV - FUNDING OF BENEFITS. . . . . . . . . . . . . . . 8
4.1 Funded Status of Benefits . . . . . . . . . 8
4.2 Rights of Participants. . . . . . . . . . . 8
4.3 No Participant Contributions. . . . . . . . 8
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . . . . 9
5.1 Benefit Accrual . . . . . . . . . . . . . . 9
5.2 Form of Distributions . . . . . . . . . . . 9
5.3 Vesting . . . . . . . . . . . . . . . . . . 9
5.4 Change of Control . . . . . . . . . . . . 10
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE VI - PAYMENT OF BENEFITS. . . . . . . . . . . . . . 12
6.1 In-Service Withdrawals Prohibited . . . . 12
6.2 Loans . . . . . . . . . . . . . . . . . . 12
6.3 Distributions Following Termination . . . 12
6.4 Death Benefits. . . . . . . . . . . . . . 12
6.5 Disability. . . . . . . . . . . . . . . . 13
6.6 Designation of Beneficiary. . . . . . . . 13
6.7 Mailing of Payments . . . . . . . . . . . 13
6.8 Payees under Legal Disability . . . . . . 14
6.9 Withholding For Taxes . . . . . . . . . . 14
ARTICLE VII - OPERATION AND ADMINISTRATION OF THE PLAN . . . 15
7.1 Administrative Committee Powers . . . . . 15
7.2 Composition of Administrative Committee . 15
7.3 Administrative Committee Procedure. . . . 16
7.4 Reporting and Disclosure. . . . . . . . . 16
7.5 Notices and Communications. . . . . . . . 16
7.6 Indemnification . . . . . . . . . . . . . 17
ARTICLE VIII - APPLICATION FOR BENEFITS . . . . . . . . . . . 18
8.1 Application for Benefits. . . . . . . . . 18
8.2 Content of Denial . . . . . . . . . . . . 18
8.3 Appeals . . . . . . . . . . . . . . . . . 19
8.4 Exhaustion of Remedies. . . . . . . . . . 19
ARTICLE IX MISCELLANEOUS MATTERS. . . . . . . . . . . . . 20
9.1 Amendment or Termination. . . . . . . . . 20
9.2 Effect of Merger of Company . . . . . . . 20
9.3 No Enlargement of Employee Rights . . . . 20
9.4 Restrictions Against Alienation . . . . . 21
9.5 Employment Agreements . . . . . . . . . . 21
9.6 Interpretation. . . . . . . . . . . . . . 21
<PAGE>
ARTICLE I
NAME AND PLAN PURPOSES
----------------------
1.1 Name and Plan Purposes.
(a) The plan established and adopted hereunder shall be
known as the Mattel, Inc. Supplemental Executive Retirement
Plan, dated as of April 1, 1994 (the "Plan"). This Plan does
not amend or supersede the Supplemental Executive Retirement
Plan dated October 31, 1991 (the "1991 SERP"). However, as set
forth in Section 3.2 hereof, the participants of the 1991 SERP
who retire after April 1, 1994 shall have the option of
receiving benefits under this Plan or the 1991 SERP.
(b) The Plan was established for the purpose of providing
pension benefits to a select group of executives or highly
compensated employees. The benefits under the Plan shall be
funded solely out of the general assets of the Company.
Accordingly, it is intended that the Plan be exempt from the
requirements of Parts II, III, and IV of Title I of ERISA
pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.
It is expressly intended that ERISA preempt the application of
state laws to this Plan, to the maximum extent permitted by
Section 514 of ERISA.
1
<PAGE>
ARTICLE II
DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall
have the meaning set forth in this Article II.
2.1 Actuarial Equivalent or Actuarial Equivalence. For
purposes of determining the actuarial equivalence of two different
forms of benefit payments, or for purposes of calculating the amount
of a lump sum, interest equal to the yield on the thirty (30) year
treasury bond with a maturity date closest to the calendar date on
which the calculation is made shall be used.
2.2 Administrative Committee. "Administrative Committee" shall
mean the Mattel, Inc. Supplemental Executive Retirement Plan
Administrative Committee described in Article VII.
2.3 Beneficiary. "Beneficiary" shall mean the person or
persons designated under Section 6.6 to receive the benefit payable
in the event of the death of a Participant.
2.4 Board of Directors. "Board of Directors" shall mean the
Board of Directors of the Company or any committee of the Board of
Directors empowered to act on behalf of the Board of Directors.
2.5 Cause. "Cause" shall mean (a) an act or acts of dishonesty
on the Participant's part that are intended to result in his
substantial personal enrichment at the expense of the Employer (b)
repeated violations by the Participant of his duties which are
demonstrably willful and deliberate on the Participant's part and
which resulted in material injury to the Employer, (c) conduct of a
criminal nature which may or which is likely to have an adverse
impact on the Employer's reputation or standing in the community or
on its relationship with its customers or those who purchase or use
its products, or (d) fraudulent conduct in connection with the
business or affairs of the Employer, regardless of whether said
conduct is designed to defraud the Employer or others.
2.6 Change of Control. A "Change of Control" shall be deemed
to have occurred on:
(a) the "Distribution Date" as that term is defined in Section
1(h) of the Company's Rights Agreement dated February 7,
1992, as it may be amended from time to time. The
definition of "Distribution Date" contained in the
Company's Rights Agreement shall continue to apply,
notwithstanding the expiration or termination of that
agreement; or
(b) the date (during any period of two (2) consecutive calendar
years) that individuals who at the beginning of such period
constituted the Company's Board of Directors, cease for any
reason (other than natural causes, including death,
2
<PAGE>
disability or retirement) to constitute a majority thereof;
or
(c) The date the stockholders of the Company approve:
(i) a plan of complete liquidation of the Company;
(ii) an agreement for the sale or disposition of all or
substantially all the assets of the Company; or
(iii) a merger, consolidation, or reorganization of the
Company with or involving any other corporation,
other than a merger, consolidation, or
reorganization that would result in the voting
stock of the Company outstanding immediately prior
thereto continuing to represent (either by
remaining outstanding or by being converted into
voting stock of the surviving entity) at least
eighty percent (80%) of the combined voting power
of the stock which is outstanding immediately after
such merger, consolidation or reorganization,
unless the Board of Directors of the Company
determines by a majority vote prior to the merger,
consolidation or reorganization that no Change in
Control will occur as a result of such transaction.
2.7 Code. "Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time. Where the context requires,
a reference to a particular Code section shall refer to a successor
Code provision.
2.8 Company. "Company" shall mean Mattel, Inc., and its
successors and assigns.
2.9 Compensation. "Compensation" means a Participant's Base
Salary and Short Term Bonus, as determined on the basis of the
calendar year in accordance with the following rules.
(a) "Base Salary" shall mean the full salary and wages
(including overtime, shift differential and holiday, vacation
and sick pay) paid by an Employer by reason of services
performed by an Employee, subject however to the following
special rules:
(i) Except as specified in (ii) below, fringe
benefits and contributions by the Employer to and benefits
under any employee benefit shall not be taken into account
in determining Compensation;
(ii) Amounts deducted pursuant to authorization
by an Employee or pursuant to requirements of law shall be
included in "Compensation";
(iii) Amounts deferred by the Employee pursuant to
non-qualified deferred compensation plans, regardless of
3
<PAGE>
whether such amounts are includable in the Employee's gross
income for his current taxable year, shall be taken into
account in determining Compensation; provided, however,
that amounts deferred more than three (3) years prior to
Termination shall not be taken into account in determining
Compensation; and
(iv) Amounts included in any Employee's gross
income with respect to fringe benefits, including but not
limited to car allowances, life insurance and financial
planning, shall not be taken into account in determining
Compensation.
(b) "Short Term Bonus" means the amount paid during the
year under the Mattel, Inc. Management Incentive Plan.
2.10 Disability.
(a) A Participant will be deemed to be "Disabled" if
there is a determination to that effect under the group long-
term disability plan of the Company or a Related Company and the
Participant is also approved for permanent disability benefits
by the Social Security Administration.
(b) However, in no event will a participant be
considered to be disabled for purposes of this Plan if the
participant's incapacity is a result of--
(i) Intentionally self-inflicted injuries (while
sane or insane),
(ii) Alcohol or drug abuse, or
(iii) A criminal act for which he is convicted or
to which he pleads guilty or nolo contendere.
2.11 Effective Date. The effective date of the Plan is
April 1, 1994.
2.12 Employee. "Employee" shall mean each person qualifying as
a common law employee of the Company or of a Related Company and
scheduled to work full-time (at least forty (40) hours per week).
2.13 Employer. "Employer" means the Company and any Related
Company which, with the approval of the Board of Directors, elects to
become a party to the Plan by adopting, by a resolution of its board
of directors, the Plan for the benefit of its employees, or any one
or more of them, as the context indicates.
2.14 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
4
<PAGE>
2.15 Final Average Compensation. "Final Average Compensation"
means the average of the Participant's Compensation during the final
three (3) years of employment with the Employer, or the entire period
during which he was a Participant in the Plan, if less.
2.16 Month of Service. "Month of Service" shall mean a one (1)
month period of Service (stated in terms of calendar months with
credit given for the actual time served during partial months and not
counted as full months).
2.17 Participant. "Participant" shall mean any Employee who has
been enrolled in this Plan in accordance with the provisions of
Article III below.
2.18 Plan. "Plan" shall mean the Mattel, Inc. Supplemental
Executive Retirement Plan.
2.19 Plan Year. The "Plan Year" shall mean the calendar year.
2.20 Related Company. An entity shall be a "Related Company"
if--
(a) Fifty percent (50%) or more of the interests in the
entity are owned by the Company; and
(b) The entity is so designated by the Board of
Directors of the Company.
2.21 Service. "Service" means the period of time (stated in
terms of Months of Service) during which the employment relation
between the Participant and an Employer has been maintained, and
shall include periods of paid absence (not to exceed six (6) months)
and unpaid leave of absence (not to exceed six (6) months) granted by
the Employer (including leaves approved for military service or for
birth or adoption of a child). Participants shall receive Service
credit for prior Service for any period between a Termination and
rehire of less than twelve (12) months and shall receive Service
credit for prior Service for any period prior to a Termination so
long as the rehire occurs within sixty (60) months of the date of
Termination, provided such period does not exceed the original period
of employment. However, periods of service as a consultant,
independent contractor or part-time employee (scheduled to work less
than forty (40) hours per week) shall not count as Service. An
Employee shall, if approved by the Board of Directors, receive credit
for service with a Related Company upon becoming a Participant
hereunder, with credit measured from the date such Related Company
was acquired, and may receive credit for periods of employment with
prior employers, but only at the discretion of the Board of Directors
and only if the Employee is made a Participant within ninety (90)
days of the later of his date of hire or the date of acquisition of
the Related Company.
5
<PAGE>
2.22 Termination.
(a) "Termination" shall mean the termination of an
Employee's employment with the Company or a Related Company by
reason of the Employee's retirement, death, Disability, resigna-
tion, dismissal, or otherwise.
(b) Subject to the provisions of Section 2.21, an
Employee shall not be considered to have incurred a Termination
by means of a leave of absence that is approved by the Company
or a Related Company (whichever is applicable) and is for a
period of less than two (2) years.
6
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligibility to Participate.
(a) The only Employees who are eligible to participate
in the Plan are those executives or highly compensated employees
of the Company or a Related Company that are designated by the
Chief Executive Officer of the Company (or officer serving in a
substantially similar capacity if there is no Chief Executive
Officer).
(b) An employee who becomes a Participant shall remain
a Participant hereunder until all benefits under Article 5 have
been paid.
(c) In the event that it is determined that allowing any
individual to continue participating in the Plan could cause the
Plan to violate ERISA, the Committee may elect to pay the entire
present value of the Participant's vested benefit to him in a
lump sum distribution as soon as administratively possible. The
amount of the lump sum distribution shall be the Actuarial
Equivalent of the Participant's vested benefit.
3.2 Effect of Participating in Plan. A Participant may receive
a benefit under this Plan only if he does not also receive a benefit
under the Mattel Financial Security Plan or the 1991 SERP.
Participants who have earned a benefit under either of such plans
shall have the right to make an irrevocable election, at any time
prior to Termination, to forfeit any benefit to which they may have
become entitled under either or both such plans, and if such an
election is made, shall thereupon become entitled instead to the
benefit provided by this Plan.
7
<PAGE>
ARTICLE IV
FUNDING OF BENEFITS
-------------------
4.1 Funded Status of Benefits. The benefits under the Plan
shall not be funded, but shall be payable out of the general assets
of the Company (or a Related Company) when due.
4.2 Rights of Participants.
(a) No Participant shall have a preferred claim on, or
a beneficial ownership interest in, any assets of the Company
(or a Related Company) prior to the time such assets are paid to
him in the form of benefits.
(b) All rights created under the Plan shall be unsecured
contractual rights of Participants against the Company or a
Related Company. However, nothing in this document shall in any
way diminish any rights of a Participant to pursue his rights as
a general creditor of Company or a Related Company with respect
to his benefits under the Plan.
4.3 No Participant Contributions. No Participant contributions
to the Plan are permitted.
8
<PAGE>
ARTICLE V
BENEFITS
---------
5.1 Benefit Accrual. Each employee who becomes a Participant
under Section 3.1 and who remains in the employ of the Employer until
age 60 and until he becomes vested under Section 5.3 shall be
entitled to a monthly benefit beginning at age sixty (60) (or when
there is a Termination, if later) and continuing for fifteen (15)
years. Such monthly amount, determined as of any Determination Date
(as defined below), shall equal one-twelfth (1/12th) of (a) times (b)
below, rounded to the nearest dollar, where
(a) is twenty-five percent (25%) of the Participant's
Final Average Compensation, determined as of the Determination
Date, and
(b) is the fraction, not in excess of one (1), equal to
the number of Months of Service credited to the Participant as
of the Determination Date divided by one hundred eighty (180).
"Determination Date" shall mean the date of Termination or the
date the Participant is no longer a full-time employee (scheduled to
work a forty (40) hour work week).
5.2 Form of Distributions.
(a) Benefits will be paid in the form of monthly
installments over a period of fifteen (15) years; provided,
however, that the Administrative Committee may in its sole
discretion elect to pay benefits other than monthly so long as
they are paid at least annually.
(b) A Participant may irrevocably elect, at any time
prior to Termination, to receive his benefits in installments
over ten (10) years. If the Participant elects that his
benefits be paid over ten (10) years, the amount of the monthly
installments will be adjusted so that they are the Actuarial
Equivalent of monthly installments for fifteen (15) years.
(c) Except as may be provided in Sections 3.1(c) and
5.4, Participants shall not be entitled to be paid their
benefits in the form of lump sum distributions. Notwithstanding
the preceding sentence, if the Actuarial Equivalent of the
amount payable to a Participant or Beneficiary is fifty thousand
dollars ($50,000) or less, it will automatically be paid in the
form of a lump sum distribution.
5.3 Vesting. Each Participant shall fully vest in his benefits
under Section 5.1 upon:
(a) completing sixty (60) or more Months of Service with
the Employer, and
(b) attaining age fifty-five (55).
A person whose employment with the Employer is terminated for
any reason prior to fulfilling both requirements for vesting
9
<PAGE>
hereunder shall not receive a benefit. Any Participant who has his
employment terminated for Cause shall forfeit any right to a benefit
notwithstanding the fact that he may have attained a vested interest
in that benefit. Any Participant who, in the opinion of the
Administrative Committee and within five (5) years of Termination,
competes in any way with the Company or a Related Company, either as
an employee of a competitor, or as a consultant or advisor to a
competitor, shall not receive any unpaid benefits.
A Participant who is reclassified to a management level that is
not eligible for participation under this Plan shall forfeit any
entitlement to a benefit under this Plan, except that a vested
Participant who is so reclassified may be entitled to the benefit
described under Section 5.1, based on Months of Service and
Compensation to the date of such reclassification, but only upon
review and approval by the Administrative Committee.
5.4 Change of Control.
(a) All benefits under the Plan shall become vested upon
a Change of Control of the Company. The provisions of this
Section 5.4(a) shall only apply to those Participants who are
employed by the Company or a Related Company on the date of the
Change of Control.
(b) Except as otherwise provided by resolutions adopted
by the Board of Directors prior to the date of a Change of
Control, all benefits payable to all Participants, (determined
after the application of Section 5.4(a) above), shall become
payable no later than thirty (30) days following a Change of
Control, in the form of a lump sum distribution.
(i) The provisions of this Section 5.4(b) shall
apply to all Participants, regardless of whether they--
(A) Are currently receiving benefits under the
Plan,
(B) Have terminated employment, but not yet
commenced receiving benefits, or
(C) Are still employed by the Company or a
Related Company.
(ii) The amount of the lump sum distribution
payable to a Participant under this Section 5.4(b) shall be
the Actuarial Equivalent of the Participant's vested
benefit. This amount shall be reduced by the amount (if
any) of the benefit that has already been paid to the
Participant.
10
<PAGE>
(c) If the Board of Directors elects to delay or suspend
payment of benefits following a Change in Control pursuant to
Section 5.4(b), and a Participant whose benefits were fully
vested upon such Change of Control pursuant to Section 5.4(a) is
terminated without Cause within five (5) years following such
Change of Control, then all benefits payable to such Participant
shall become immediately payable in the form of a lump sum
distribution. In calculating such benefit, the Participant
shall receive credit for all Months of Service following such
Change in Control. A Participant's employment will be
considered to have been terminated for Cause within five (5)
years following a Change of Control only if there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board of Directors.
(i) This resolution must be adopted at a
meeting of the Board of Directors called and held for such
purpose after reasonable notice to the Participant.
(ii) There must be an opportunity for the
Participant, together with counsel, to be heard before the
Board.
(iii) The resolution must find that, in the good
faith opinion of the Board of Directors, the Participant
was terminated for Cause and specifying the particulars
thereof in detail.
(d) The provisions of Section 5.4(c) above shall not
apply in determining whether a Participant has been terminated
for Cause in a situation that is not subject to the provisions
of this Section 5.4.
11
<PAGE>
ARTICLE VI
PAYMENT OF BENEFITS
-------------------
6.1 In-Service Withdrawals Prohibited. Participants are not
entitled to receive their benefits prior to Termination.
6.2 Loans. Participants may not borrow funds from the Plan.
6.3 Distributions Following Termination. A vested Participant
may terminate employment and begin to receive a benefit in the
unreduced amount specified in Section 5.1 upon or after attaining age
sixty (60).
A vested Participant who terminates employment prior to age
sixty (60) but after age fifty-five (55) shall receive a benefit
commencing the first day of the month following Termination, provided
that the amount specified under Section 5.1 shall be reduced by
0.4167% for each month by which the Participant's age at commencement
is less than age sixty (60). (See Example A attached hereto and
incorporated herein by this reference.)
(a) Payments may not commence until the first day of the
month following the later of the Participant's--
(i) Termination, or
(ii) Attainment of age fifty-five (55).
(b) With the consent of the Administrative Committee,
Participants may elect to defer the commencement of their
benefits for up to one (1) year; provided, however, that the
benefit paid shall be fixed at the time of deferral.
6.4 Death Benefits. If a Participant dies while employed by
the Company or a Related Company at a time when he is at least age
forty-five (45) with sixty (60) or more Months of Service, the
Participant's designated Beneficiary shall be entitled to a monthly
benefit for fifteen (15) years, commencing on the date as soon as
practicable after the Participant's death, in an amount equal to
fifty-five percent (55%) of the amount accrued to the Participant
under Section 5.1; provided, however, that for every month of age
over age forty-five (45), the benefit paid shall be increased by
.1667% per Month of Service. (See Example B attached hereto and
incorporated herein by this reference.)
If a Participant dies while employed by the Company or a Related
Company at a time when he has become vested under Section 5.3 above,
the Participant's Beneficiary shall be entitled to a monthly benefit
for fifteen (15) years, commencing on the date of death in an amount
equal to one hundred percent (100%) of the amount accrued by the
Participant under Section 5.1, reduced as provided in Section 6.3 for
each month by which the first payment precedes the date upon which
the Participant would have reached age sixty (60).
12
<PAGE>
If a Participant dies after Termination, then his surviving
Beneficiary shall be entitled to the payments hereunder, if any, that
remain to be made during that portion of the original payout period
(selected by the Participant prior to Termination) following the date
of death.
A designated Beneficiary entitled to any retirement death
benefit under this Section 6.4 may elect, prior to commencement of
payment, to receive Actuarial Equivalent installments for ten (10)
years.
6.5 Disability. If a Participant becomes Disabled at any time
following attainment of age forty-five (45) and completion of sixty
(60) Months of Service, then such Participant shall, in lieu of any
other benefit described under this Plan, be entitled to a benefit
commencing on the final day of the twenty-fourth month of disability
without regard to the age of the Participant at the time of the
disability calculated under Section 5.1 using Compensation at the
time the Participant became disabled, in an amount equal to fifty-
five percent (55%) of the amount accrued to the Participant under
Section 5.1; provided, however, that for every month of age over age
forty-five (45), the benefit paid shall be increased by .1667% per
Month of Service. (See Example B attached hereto and incorporated
herein by this reference.)
6.6 Designation of Beneficiary.
(a) In the event benefits are payable under the Plan on
behalf of a deceased Participant who has a surviving spouse, the
remaining benefits will be paid to another Beneficiary only if
the spouse consents in writing to such designation.
(b) If there is no designated Beneficiary or surviving
spouse, the benefits will be paid to the Participant's estate.
6.7 Mailing of Payments.
(a) All payments under the Plan shall be delivered in
person or mailed to the last address of the Participant (or, in
the case of the death of the Participant, to the last address of
his Beneficiary).
(b) Each Participant shall be responsible for furnishing
the Administrative Committee with--
(i) His current address, and
(ii) The name and current address of his
Beneficiary.
13
<PAGE>
6.8 Payees under Legal Disability. Every person receiving or
claiming benefits under the Plan shall be conclusively presumed to be
mentally competent and of age until the Administrative Committee
receives written notice, in a form and manner acceptable to it, that
such person is incompetent or a minor, and that a guardian,
conservator, statutory committee, or other person legally vested with
the care of his estate has been appointed. In the event that
the Administrative Committee finds that any person to whom a benefit
is payable under the Plan is unable to properly care for his affairs,
or is a minor, then any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) may be
paid to the spouse, a child, a parent, or a brother or sister, or to
any person deemed by the Administrative Committee to have incurred
expense for such person otherwise entitled to payment.
In the event a guardian or conservator or statutory committee of
the estate of any person receiving or claiming benefits under the
Plan shall be appointed by a court of competent jurisdiction, payment
shall be made to such guardian or conservator or statutory committee
provided that proper proof of appointment is furnished in a form and
manner suitable to the Administrative Committee.
Any payment made under the provisions of this section shall be
a complete discharge of liability therefor under the Plan.
6.9 Withholding For Taxes. Any payments out of the Plan shall
be reported to the applicable taxing authorities and may be subject
to withholding for taxes as may be required by any applicable
federal, state or other law.
14
<PAGE>
ARTICLE VII
OPERATION AND ADMINISTRATION OF THE PLAN
----------------------------------------
7.1 Administrative Committee Powers. The Administrative
Committee shall have all powers necessary to supervise the
administration of the Plan and control its operations. In addition
to any powers and authority conferred on the Administrative Committee
elsewhere in the Plan or by law, the Administrative Committee shall
have the following powers and authority:
(a) To designate agents to carry out responsibilities
relating to the Plan;
(b) To employ such legal, actuarial, accounting,
clerical, and other assistance as it may deem appropriate in
carrying out the provisions of this Plan;
(c) To establish rules and procedures from time to time
for the conduct of the Administrative Committee's business and
the administration of this Plan;
(d) To administer, interpret, and apply this Plan and to
decide all questions which may arise under this Plan. All
determinations by the Administrative Committee shall be binding
upon all parties, to the maximum extent permitted by law; and
(e) To perform or cause to be performed such further
acts as it may deem to be necessary, appropriate, or convenient
in the administration of the Plan.
7.2 Composition of Administrative Committee.
(a) The members of the Administrative Committee (who
may, but need not be Participants or even Employees) shall be
appointed by the Board of Directors and shall hold office until
termination of such status in accordance with the provisions of
this Article VII.
(b) The term of the office of each member of the
Administrative Committee shall be determined in accordance with
the following rules:
(i) Any member of the Administrative Committee
may resign at any time by giving written notice to the
other members and to the Board of Directors, effective as
of the date indicated therein.
(ii) Any member of the Administrative Committee
may be removed by the Board of Directors at any time.
(iii) In the case of an Administrative Committee
member who is also an Employee of the Company or a Related
Company, his status as a Administrative Committee member
shall terminate as of the date of his Termination, except
as otherwise provided in resolutions of the Board of
Directors.
15
<PAGE>
(c) Upon the death, resignation, or removal of any
member of the Administrative Committee, the Board of Directors
may appoint a successor. Notice of appointment of a successor
member shall be given by the Company in writing to the other
members of the Administrative Committee.
7.3 Administrative Committee Procedure.
(a) A majority of the members of the Administrative
Committee as constituted at any time shall constitute a quorum.
(b) Any action authorized by a majority of the members--
(i) Present at any meeting, or
(ii) In writing without a meeting,
shall constitute the actions of the Administrative Committee.
(c) Any member of the Administrative Committee is
authorized to execute any document or documents on behalf of the
Administrative Committee.
7.4 Reporting and Disclosure. The Company (and not the
Administrative Committee) shall be responsible for the reporting and
disclosure of information required to be reported or disclosed
pursuant to ERISA or any other applicable law.
7.5 Notices and Communications.
(a) All applications, notices, designations, elections,
and other communications from Participants shall be in writing,
on forms prescribed by the Administrative Committee. These
documents shall be mailed or delivered to the office designated
by the Administrative Committee, and shall be deemed to have
been given when received by such office.
(b) Each notice, report, remittance, statement, or other
communication directed to a Participant or Beneficiary shall be
in writing and may be delivered in person or by mail. An item
shall be deemed to have been delivered and received by the
Participant three (3) days after the date when it is deposited
in the United States Mail with postage prepaid, addressed to the
Participant or Beneficiary at his last address of record with
the Administrative Committee.
16
<PAGE>
7.6 Indemnification.
(a) To the maximum extent permitted by law, the Company
shall indemnify each member of the Board of Directors and of the
Administrative Committee, and every other Employee with duties
under the Plan, against expenses (including any amount paid in
settlement) reasonably incurred by him in connection with any
claims against him by reason of the performance of his duties
under the Plan.
(b) The right of indemnification specified in Section
7.6 (a) above shall not apply with respect to matters as to
which the individual acted fraudulently or in bad faith.
(c) Notwithstanding the above, the Company shall have
the right to select counsel and to control the prosecution or
defense of the suit.
(d) Furthermore, the Company shall not be obligated to
indemnify any person for any amount incurred through any
settlement or compromise of any action unless the Company
consents in writing to the settlement or compromise.
17
<PAGE>
ARTICLE VIII
APPLICATION FOR BENEFITS
------------------------
8.1 Application for Benefits.
(a) The Administrative Committee may require any person
claiming benefits under the Plan (a "Claimant") to submit an
application therefor, together with such other documents and
information as the Administrative Committee may require.
(b) Within ninety (90) days following receipt of the
application and all necessary documents and information, the
Administrative Committee's authorized delegate reviewing the
claim shall furnish the Claimant with written notice of the
decision rendered with respect to the application.
(c) Should special circumstances require an extension of
time for processing the claim, written notice of the extension
shall be furnished to the Claimant prior to the expiration of
the initial ninety (90) day period.
(i) The notice shall indicate the--
(A) Special circumstances requiring an
extension of time, and
(B) The date by which a final decision is
expected to be rendered.
(ii) In no event shall the period of the
extension exceed ninety (90) days from the end of the
initial ninety (90) day period.
8.2 Content of Denial. In the case of a denial of the
Claimant's claim for benefits, the written notice shall set forth:
(a) The specific reasons for the denial;
(b) References to the Plan provisions upon which the
denial is based;
(c) A description of any additional information or
material necessary for perfection of the application (together
with an explanation of why the material or information is
necessary); and
(d) An explanation of the Plan's claims review
procedure.
18
<PAGE>
8.3 Appeals.
(a) In order to appeal the decision rendered with
respect to his application for benefits or with respect to the
amount of his benefits, the Claimant must follow the appeal
procedures set forth in this Section 8.3.
(b) The appeal must be made, in writing--
(i) In the case where the claim is expressly
rejected, within sixty-five (65) days after the date of
notice of the decision with respect to the application, or
(ii) In the case where the claim has neither been
approved nor denied within the applicable period provided
in Section 8.1 above, within sixty-five (65) days after the
expiration of the period.
(c) The Claimant may request that his application be
given full and fair review by the Administrative Committee. The
Claimant may review all pertinent documents and submit issues
and comments in writing in connection with the appeal.
(d) The decision of the Administrative Committee shall
be made promptly, and not later than sixty (60) days after the
Administrative Committee's receipt of a request for review,
unless special circumstances require an extension of time for
processing. In such a case, a decision shall be rendered as
soon as possible, but not later than one hundred twenty (120)
days after receipt of the request for review.
(e) The decision on review shall--
(i) Be in writing,
(ii) Include specific reasons for the decision,
(iii) Be written in a manner designed to be
understood by the Claimant, and
(iv) Contain specific references to the pertinent
Plan provisions upon which the decision is based.
8.4 Exhaustion of Remedies. No legal action for benefits under
the Plan may be brought unless and until the Claimant has exhausted
his remedies under this Article VIII.
19
<PAGE>
ARTICLE IX
MISCELLANEOUS MATTERS
---------------------
9.1 Amendment or Termination.
(a) The Board of Directors may amend or terminate the
Plan at any time by an instrument in writing executed in the
name of the Company. However, no amendment may be adopted that
would (i) reduce the dollar value of a Participant's vested
benefit (ii) eliminate a form of benefit payment, or (iii) delay
the date on which a Participant's vested benefit becomes
payable. A reduction in a Participant's benefit resulting from
a change in the interest rate used in determining Actuarial
Equivalence shall not be precluded by reason of the prior
sentence.
(b) After the occurrence of a Change in Control, no
amendment may be adopted that would affect (i) Section 2.6, (ii)
Section 5.4, or (iii) this Section 9.1(b).
(c) In the event of the termination of the Plan, all
Participants who are employed by the Company or a Related
Company on that date become fully vested. However, termination
of the Plan will not accelerate the date on which benefits
become payable under the Plan, except as otherwise provided in--
(i) Section 5.4, or
(ii) Resolutions of the Board of Directors.
9.2 Effect of Merger of Company.
(a) In the event of a consolidation, merger, sale,
liquidation, or other transfer of substantially all of the
operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company
shall automatically be deemed to have elected to continue this
Plan in full force and effect, in the same manner as if the Plan
had been adopted by resolution of its board of directors.
(b) The presumption set forth in Section 9.2(a) above
shall not apply if the successor, by resolution of its board of
directors, elects not to so continue this Plan in effect. In
such a case, the Plan shall terminate as of the effective date
set forth in the board resolution.
9.3 No Enlargement of Employee Rights.
(a) This Plan is strictly a voluntary undertaking on the
part of the Company and shall not be deemed to constitute a
contract between the Company (or a Related Company) and any
Employee, or to be consideration for, or an inducement to, or a
condition of, the employment of any Employee.
(b) Nothing contained in the Plan shall be deemed to
give any Employee the right to be retained in the employ of the
Company (or a Related Company) or to interfere with the right of
20
<PAGE>
the Company (or a Related Company) to discharge any Employee at
any time.
9.4 Restrictions Against Alienation. A Participant's benefit
under the Plan may not be assigned or alienated, either voluntarily
or involuntarily. However, the preceding sentence will not preclude
the Plan from reducing a Participant's benefit by the amount he owes
to the Company or a Related Company. Such a reduction will apply
whether the benefit is payable to the Participant or to his
Beneficiary.
9.5 Employment Agreements. In the case of a Participant whose
terms of employment with the Company or a Related Company are subject
to the provisions of an employment agreement, to the extent that the
terms of the employment contract provide the Participant with greater
benefits than would otherwise be determined under the provisions of
the Plan, the terms of the employment contract shall prevail.
9.6 Interpretation.
(a) Article and Section headings are for reference only
and shall not be deemed to be part of the substance of this
instrument or to enlarge or limit the contents of any Article or
Section.
(b) Unless the context clearly indicates otherwise,
masculine gender shall include the feminine, the singular shall
include the plural, and the plural shall include the singular.
(c) In the case of any ambiguity, the Plan shall be
construed in such a manner so as to comply with the provisions
of ERISA, including the fact that it is intended that the Plan
be exempt from the requirements of Parts II, III, and IV of
Title I of ERISA pursuant to Sections 201(2), 301(a)(3), and
401(a)(1) of ERISA.
IN WITNESS WHEREOF, Mattel, Inc. has caused this instrument to
be executed by its duly authorized officer.
MATTEL, INC.
By: /s/ E. Joseph McKay
-------------------
E. JOSEPH MCKAY
Its: Senior Vice President
---------------------
Date: January 31, 1995
----------------
21
<PAGE>
EXHIBIT 99.8
1994 RESTATEMENT
FISHER-PRICE, INC.
MATCHING SAVINGS PLAN
Effective: July 1, 1994
<PAGE>
-i-
TABLE OF CONTENTS
-----------------
Page
ARTICLE 1
NAME, EFFECTIVE DATE AND BASIC PLAN DEFINITIONS . . . 3
Section 1.1. Name of Plan . . . . . . . . . . . . . . . . . . 3
Section 1.2. Effective Date . . . . . . . . . . . . . . . . . 3
Section 1.3. Basic Definitions. . . . . . . . . . . . . . . . 3
(a) Affiliated Corporation . . . . . . . . . . 3
(b) Affiliated Service Organization. . . . . . 3
(c) Business Day . . . . . . . . . . . . . . . 3
(d) Code . . . . . . . . . . . . . . . . . . . 3
(e) Company. . . . . . . . . . . . . . . . . . 3
(f) Date of Hire . . . . . . . . . . . . . . . 3
(g) ERISA. . . . . . . . . . . . . . . . . . . 3
(h) Organization Under Common Control. . . . . 3
(i) Plan . . . . . . . . . . . . . . . . . . . 4
(j) Plan Administrator . . . . . . . . . . . . 4
(k) Plan Year. . . . . . . . . . . . . . . . . 4
(l) Related Business . . . . . . . . . . . . . 4
(m) Trust. . . . . . . . . . . . . . . . . . . 4
(n) Trustee. . . . . . . . . . . . . . . . . . 4
Section 1.4. Other Definitions. . . . . . . . . . . . . . . . 4
(a) Annual Addition. . . . . . . . . . . . . . 4
(b) Annuity Starting Date. . . . . . . . . . . 4
(c) Company Contribution . . . . . . . . . . . 4
(d) Company Contribution Account . . . . . . . 4
(e) Compensation . . . . . . . . . . . . . . . 4
(f) Disability Retirement Date . . . . . . . . 4
(g) Discretionary Matching Contribution. . . . 4
(h) Early Retirement Date. . . . . . . . . . . 4
(i) Eligible Employee. . . . . . . . . . . . . 4
(j) Entry Date . . . . . . . . . . . . . . . . 4
(k) Highly Compensated Employee. . . . . . . . 5
(l) Hour of Service. . . . . . . . . . . . . . 5
(m) Key Employee . . . . . . . . . . . . . . . 5
(n) Limitation Year. . . . . . . . . . . . . . 5
(o) Matching Contribution. . . . . . . . . . . 5
(p) Maximum Annual Addition. . . . . . . . . . 5
(q) Maximum Company Contribution . . . . . . . 5
(r) Normal Retirement. . . . . . . . . . . . . 5
(s) Participant. . . . . . . . . . . . . . . . 5
(t) Required Beginning Date. . . . . . . . . . 5
(u) Rollover Account . . . . . . . . . . . . . 5
(v) Salary Reduction Contribution. . . . . . . 5
(w) Savings Account. . . . . . . . . . . . . . 5
(x) Six Months of Participation Service. . . . 5
(y) Top Heavy Plan . . . . . . . . . . . . . . 5
<PAGE>
-ii-
(z) Total and Permanent Disability . . . . . . 5
(aa) Transfer Account . . . . . . . . . . . . . 5
(bb) Valuation Date . . . . . . . . . . . . . . 5
ARTICLE 2
ELIGIBILITY FOR PARTICIPATION. . . . . . . . 6
Section 2.1. Definitions. . . . . . . . . . . . . . . . . . . 6
(a) Six Months of Participation Service. . . . 6
(b) Entry Date . . . . . . . . . . . . . . . . 6
(c) Eligible Employee. . . . . . . . . . . . . 6
(i) Employees Covered by Collective
Bargaining Agreement. . . . . . . . . 6
(ii) Nonresident Aliens. . . . . . . . . . 6
(iii) Irregular Employees. . . . . . . . . 6
Section 2.2. Age and Service Requirements . . . . . . . . . . 6
Section 2.3. Change in Employment Status. . . . . . . . . . . 7
(a) Employee Becomes Eligible Employee . . . . 7
(b) Participant Becomes a Non-Eligible
Employee . . . . . . . . . . . . . . . . . 7
Section 2.4. Termination and Resumption of Participation. . . 7
(a) Termination of Participation . . . . . . . 7
(b) Inactive Participant . . . . . . . . . . . 7
(c) Resumption of Participation. . . . . . . . 8
Section 2.5. Service with and Transfers Involving
Affiliated Corporations.. . . . . . . . . . . . 8
(a) Service with Organizations Under Common
Control. . . . . . . . . . . . . . . . . . 8
(b) Transfer of Employment.. . . . . . . . . . 8
(c) Change to Eligible Status. . . . . . . . . 9
(d) Change from Eligible Status. . . . . . . . 9
(e) Subsidiary . . . . . . . . . . . . . . . . 9
ARTICLE 3
CONTRIBUTIONS. . . . . . . . . . . . 10
Section 3.1. Salary Reduction Contributions . . . . . . . . . 10
(a) In General . . . . . . . . . . . . . . . . 10
(b) Salary Reduction Contribution Elections. . 10
(c) $7,000 Limit . . . . . . . . . . . . . . . 10
Section 3.2. Matching Contributions by the Company. . . . . . 11
Section 3.3. Discretionary Matching Contributions . . . . . . 11
Section 3.4. Forfeitures. . . . . . . . . . . . . . . . . . . 11
Section 3.5. Limitations on Contributions . . . . . . . . . . 11
Section 3.6. Rollover Contributions . . . . . . . . . . . . . 12
Section 3.7. Transfers From Another Plan. . . . . . . . . . . 13
Section 3.8. Allocations of Contributions and Forfeitures . . 14
(a) Maintenance of Accounts. . . . . . . . . . 14
(b) Allocation of Salary Reduction
<PAGE>
-iii-
Contributions. . . . . . . . . . . . . . . 14
(c) Allocation of Matching Contributions . . . 14
(d) Allocation of Discretionary Matching
Contributions. . . . . . . . . . . . . . . 15
(e) Qualified Participant. . . . . . . . . . . 15
Section 3.9. Compensation . . . . . . . . . . . . . . . . . . 15
Section 3.10. Limitations on Allocations . . . . . . . . . . . 16
(a) Definitions . . . . . . . . . . . . . . . 16
(i) Annual Addition . . . . . . . . . . . 16
(ii) Compensation. . . . . . . . . . . . . 16
(iii) Maximum Permissible Amount . . . . . 17
(iv) Defined Benefit Fraction. . . . . . . 17
(v) Defined Contribution Fraction . . . . 17
(vi) Limitation Year . . . . . . . . . . . 17
(b) Maximum Company Contribution . . . . . . . 17
(c) Maximum Annual Addition. . . . . . . . . . 17
(d) Excess Annual Additions. . . . . . . . . . 18
Section 3.11. ADP Test . . . . . . . . . . . . . . . . . . . . 19
(a) In General . . . . . . . . . . . . . . . . 19
(i) The 125% Test . . . . . . . . . . . . 19
(ii) The Alternative Limitation Test . . . 20
(b) Definitions. . . . . . . . . . . . . . . . 20
(i) ADP . . . . . . . . . . . . . . . . . 20
(ii) Average ADP . . . . . . . . . . . . . 20
(iii) ADP Compensation . . . . . . . . . . 20
(iv) Highly Compensated Employee . . . . . 21
(v) Nonhighly Compensated Employee. . . . 23
(vi) Nonelective Contributions . . . . . . 23
(vii) Qualified Matching Contributions. . 23
(c) Special Rules. . . . . . . . . . . . . . . 23
(i) Plan Aggregation - 410(b) . . . . . . 23
(ii) Plan Aggregation - Highly
Compensated Employee. . . . . . . . . 23
(iii) Family Aggregation . . . . . . . . . 24
Section 3.12. Distribution of Excess Contributions . . . . . . 24
(a) In General . . . . . . . . . . . . . . . . 24
(b) Excess Contributions . . . . . . . . . . . 25
(c) Family Aggregation . . . . . . . . . . . . 25
(d) Allocable Income/Loss. . . . . . . . . . . 25
Section 3.13. ACP Test . . . . . . . . . . . . . . . . . . . . 26
(a) In General . . . . . . . . . . . . . . . . 26
(i) The 125% Test . . . . . . . . . . . . 26
(ii) The Alternative Limitation Test . . . 26
(b) Definitions. . . . . . . . . . . . . . . . 26
(i) ACP . . . . . . . . . . . . . . . . . 26
(ii) Average ACP . . . . . . . . . . . . . 27
(iii) ACP Compensation . . . . . . . . . . 27
(c) Special Rules. . . . . . . . . . . . . . . 27
(i) Multiple Use. . . . . . . . . . . . . 27
(ii) Plan Aggregation - 410(b) . . . . . . 28
<PAGE>
-iv-
(iii) Plan Aggregation - Highly
Compensated Employee . . . . . . . . 28
(iv) Family Aggregation. . . . . . . . . . 28
Section 3.14. Distribution of Excess Aggregate
Contributions . . . . . . . . . . . . . . . . . 28
(a) In General . . . . . . . . . . . . . . . . 28
(b) Excess Aggregate Contributions . . . . . . 29
(c) Family Aggregation . . . . . . . . . . . . 29
(d) Allocable Income/Loss. . . . . . . . . . . 29
Section 3.15. Distributions of Excess Deferrals. . . . . . . . 30
(a) In General . . . . . . . . . . . . . . . . 30
(b) Excess Deferrals . . . . . . . . . . . . . 30
(c) Allocable Income/Loss. . . . . . . . . . . 30
Section 3.16. Coordinating Corrective Distributions. . . . . . 31
(a) Correcting Excess Deferrals After
Distributing Excess Contributions. . . . . 31
(b) Correcting Excess Contributions After
Distributing Excess Deferrals. . . . . . . 31
ARTICLE 4
NONFORFEITABLE RIGHT TO BENEFITS . . . . . . . 32
Section 4.1. Definitions. . . . . . . . . . . . . . . . . . . 32
(a) Normal Retirement Date . . . . . . . . . . 32
(b) Early Retirement Date. . . . . . . . . . . 32
(c) Disability Retirement Date . . . . . . . . 32
(d) Total and Permanent Disability . . . . . . 32
(e) Annuity Starting Date. . . . . . . . . . . 32
(f) Deferred Retirement. . . . . . . . . . . . 32
(g) Participant's Required Beginning Date. . . 32
(h) 70-1/2 Year. . . . . . . . . . . . . . . . 32
Section 4.2. Determination of Nonforfeitable Rights . . . . . 33
ARTICLE 5
DISTRIBUTION OF BENEFITS . . . . . . . . . 34
Section 5.1. Forms and Time of Benefit Distributions. . . . . 34
(a) In General . . . . . . . . . . . . . . . . 34
(b) Commencement of Distributions. . . . . . . 34
(c) Form of Distributions. . . . . . . . . . . 34
Section 5.2. Normal Form of Benefit . . . . . . . . . . . . . 34
Section 5.3. Alternative Form of Benefit. . . . . . . . . . . 35
Section 5.4. Designation of Death Beneficiary . . . . . . . . 35
Section 5.5. Death of Participant . . . . . . . . . . . . . . 36
Section 5.6. Early Distribution Consent . . . . . . . . . . . 36
(a) In General . . . . . . . . . . . . . . . . 36
(b) Valid Consent. . . . . . . . . . . . . . . 36
Section 5.7. Minimum Distribution Required. . . . . . . . . . 37
Section 5.8. Cash-Outs. . . . . . . . . . . . . . . . . . . . 37
(a) Definitions. . . . . . . . . . . . . . . . 37
<PAGE>
-v-
(i) Cash-Out. . . . . . . . . . . . . . . 37
(ii) Involuntary Cash-Out. . . . . . . . . 37
(iii) Voluntary Cash-Out . . . . . . . . . 37
(b) Involuntary Cash-Outs of Small Benefits. . 37
(c) Cash-Outs of Benefits in Excess of
$3,500 . . . . . . . . . . . . . . . . . . 38
Section 5.9. Hardship Withdrawals . . . . . . . . . . . . . . 38
Section 5.10. Loans to Participants. . . . . . . . . . . . . . 39
(a) Trustees May Make Loans. . . . . . . . . . 39
(b) Written Applications.. . . . . . . . . . . 39
(c) Limit on Amount of Loan. . . . . . . . . . 39
(d) Term and Interest Rate . . . . . . . . . . 40
(e) Promissory Note Required . . . . . . . . . 40
(f) Security . . . . . . . . . . . . . . . . . 40
(g) Directed Investment. . . . . . . . . . . . 41
ARTICLE 6
ACCOUNT VALUATIONS AND ALLOCATION OF NET EARNINGS. . . 42
Section 6.1. Valuation Dates. . . . . . . . . . . . . . . . . 42
Section 6.2. Method of Valuation of Trust Assets. . . . . . . 42
Section 6.3. Allocation of Net Earnings . . . . . . . . . . . 42
Section 6.4. Notification to Participants . . . . . . . . . . 42
Section 6.5. Directed Investment Accounts . . . . . . . . . . 43
ARTICLE 7
THE TRUST. . . . . . . . . . . . . 45
Section 7.1. Continuation of the Trust. . . . . . . . . . . . 45
Section 7.2. Disbursements Limited to Trust Assets. . . . . . 45
Section 7.3. Expenses of Administration and Litigation. . . . 45
Section 7.4. Pooled Investment Fund or Group Trust. . . . . . 45
Section 7.5. Mattel Stock Fund. . . . . . . . . . . . . . . . 46
(a) Voting of Shares in Mattel Stock Fund. . . 46
(b) Tender Offers. . . . . . . . . . . . . . . 46
ARTICLE 8
TOP-HEAVY PROVISIONS . . . . . . . . . . 47
Section 8.1. Definitions. . . . . . . . . . . . . . . . . . . 47
(a) Top-Heavy Plan . . . . . . . . . . . . . . 47
(b) Determination Date . . . . . . . . . . . . 47
(c) Key Employee . . . . . . . . . . . . . . . 47
(d) Cumulative Account Balances. . . . . . . . 47
(e) Aggregation Group. . . . . . . . . . . . . 47
(f) Top-Heavy Valuation Date . . . . . . . . . 48
(g) Top-Heavy Compensation . . . . . . . . . . 48
(h) Qualified Top-Heavy Participant. . . . . . 48
(i) Super Top-Heavy Plan . . . . . . . . . . . 48
Section 8.2. Top-Heavy Rules. . . . . . . . . . . . . . . . . 48
<PAGE>
-vi-
(a) Application of Top-Heavy Rules . . . . . . 48
(b) Minimum Company Contribution . . . . . . . 48
(c) Limitation on Contributions and Benefit. . 49
(d) Special Rule for Non-Key Employees in
Two Plans. . . . . . . . . . . . . . . . . 49
ARTICLE 9
ADMINISTRATION OF PLAN. . . . . . . . . . 50
Section 9.1. Company as Plan Administrator. . . . . . . . . . 50
Section 9.2. Responsibility for Administration of the Plan. . 50
Section 9.3. Expenses . . . . . . . . . . . . . . . . . . . . 50
Section 9.4. Liability and Indemnification. . . . . . . . . . 50
Section 9.5. Agents . . . . . . . . . . . . . . . . . . . . . 50
Section 9.6. Delegation of Authority. . . . . . . . . . . . . 51
(a) In General . . . . . . . . . . . . . . . . 51
(b) Liability. . . . . . . . . . . . . . . . . 51
Section 9.7. Defect or Omission . . . . . . . . . . . . . . . 51
Section 9.8. Funding Policy . . . . . . . . . . . . . . . . . 51
Section 9.9. Records. . . . . . . . . . . . . . . . . . . . . 51
Section 9.10. Claims Procedure . . . . . . . . . . . . . . . . 51
(a) Filing a Claim for Benefits. . . . . . . . 51
(b) Notification of Decision of Plan
Administrator. . . . . . . . . . . . . . . 52
(c) Claim Review Procedure . . . . . . . . . . 52
ARTICLE 10
RIGHT TO ALTER, AMEND OR TERMINATE. . . . . . . 53
Section 10.1. Plan Amendments. . . . . . . . . . . . . . . . . 53
(a) Right to Alter or Amend. . . . . . . . . . 53
(b) Limitations on Power of Amendment. . . . . 53
(c) Form of Amendment. . . . . . . . . . . . . 53
Section 10.2. Plan Termination . . . . . . . . . . . . . . . . 54
(a) Right to Terminate . . . . . . . . . . . . 54
(b) Vesting on Termination or Partial
Termination. . . . . . . . . . . . . . . . 54
(c) Disposition of Assets on Termination . . . 54
Section 10.3. Merger or Consolidation . . . . . . . . . . . . 54
ARTICLE 11
MISCELLANEOUS PROVISIONS . . . . . . . . . 55
Section 11.1. New York and Applicable Federal Law Govern. . . 55
Section 11.2. Headings for Convenience. . . . . . . . . . . . 55
Section 11.3. Rights of All Interested Parties Determined
by the Terms of the Plan. . . . . . . . . . . . 55
Section 11.4. Spendthrift Clause. . . . . . . . . . . . . . . 55
Section 11.5. Qualified Domestic Relations Order. . . . . . . 55
Section 11.6. Notice to Employees . . . . . . . . . . . . . . 56
-vii-
<PAGE>
-vii-
Section 11.7. No Employment Rights Created. . . . . . . . . . 56
Section 11.8. Diversion from Employees Prohibited . . . . . . 56
Section 11.9. Right to Judicial Accounting. . . . . . . . . . 57
Section 11.10. Transfer of Funds to Another Plan . . . . . . . 57
Section 11.11. Forfeiture on Account of Inability to Locate
Participant or Beneficiary. . . . . . . . . . . 57
Section 11.12. Incapacity of Person Entitled to Payment. . . . 57
Section 11.13. Adoption of Plan by Organization Under
Common Control. . . . . . . . . . . . . . . . . 58
ARTICLE 12
DIRECT ROLLOVERS . . . . . . . . . . . 59
Section 12.1. Direct Rollovers. . . . . . . . . . . . . . . . 59
Section 12.2. Definitions . . . . . . . . . . . . . . . . . . 59
(a) Eligible Rollover Distribution . . . . . . 59
(b) Eligible Retirement Plan . . . . . . . . . 59
(c) Distributee. . . . . . . . . . . . . . . . 59
(d) Direct Rollover. . . . . . . . . . . . . . 60
<PAGE>
INTRODUCTION
The Board of Directors of Fisher-Price, Inc. authorized
the adoption of the Fisher-Price, Inc. Matching Savings Plan,
having an effective date of January 1, 1992, for the benefit of
eligible employees of the Company. Fisher-Price previously
established the Fisher-Price Profit Sharing and Retirement
Savings Plan, having an effective date of January 15, 1953, for
the benefit of eligible employees of the Company.
The Company wishes to merge the Fisher-Price Profit
Sharing and Retirement Savings Plan into the Fisher-Price, Inc.
Matching Savings Plan effective July 1, 1994. Effective July 1,
1994 the Fisher-Price Profit Sharing and Retirement Savings Plan
shall be merged into the Fisher-Price, Inc. Matching Savings Plan
and all assets previously held by the Fisher-Price Profit Sharing
and Retirement Savings Plan shall be allocated to accounts under
the Fisher-Price, Inc. Matching Savings Plan.
The funds to provide benefits under this Plan shall be
held, managed, invested and disbursed in accordance with the
terms of this Plan and the separate Trust Agreement established
as the funding vehicle under the Plan. This Plan document,
together with such separate Trust Agreement, are designed to
constitute a qualified plan under Section 401 of the Internal
Revenue Code of 1986, as amended.
Thus Fisher-Price, Inc. hereby adopts the Plan as
follows:
<PAGE>
-3-
ARTICLE 1
NAME, EFFECTIVE DATE AND BASIC PLAN DEFINITIONS
-----------------------------------------------
Section 1.1. Name of Plan. The Plan as continued by
this instrument shall be called the "Fisher-Price, Inc. Matching
Savings Plan".
Section 1.2. Effective Date. The effective date of
this restated Plan is July 1, 1994. The original effective date
of the Plan was January 1, 1992. The original effective date of
the Fisher-Price Profit Sharing and Retirement Savings Plan was
January 15, 1953.
Section 1.3. Basic Definitions.
(a) Affiliated Corporation means any corporation that
is a member of a controlled group of corporations, as defined in
Section 414(b) of the Code, which includes the Company.
(b) Affiliated Service Organization means any service
organization which is a member of an affiliated service group, as
defined in Section 414(m) of the Code, which includes the
Company.
(c) Business Day means a day on which the New York
Stock Exchange is open for trading.
(d) Code means the Internal Revenue Code of 1986, as
amended from time to time.
(e) Company means Fisher-Price, Inc. and any
Organization Under Common Control that has adopted the Plan in
accordance with Section 11.13.
(f) Date of Hire means the employment commencement
date of the date on which an employee of the Company is first
entitled to be credited with an Hour of Service with the Company
as defined in Title 29, Code of Federal Regulations, Section
2530.200b-2.
(g) ERISA means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(h) Organization Under Common Control means (i) an
Affiliated Corporation, (ii) a Related Business, (iii) an
Affiliated Service Organization or (iv) any other entity required
to be aggregated with the Company pursuant to Section 414(o) of
the Code and the regulations thereunder.
<PAGE>
-4-
(i) Plan means the Fisher-Price, Inc. Matching Savings
Plan set forth herein and as it may hereafter be amended from
time to time.
(j) Plan Administrator means Fisher-Price, Inc.
(k) Plan Year means the twelve-month period beginning
each January 1 and ending on the following December 31.
(l) Related Business means any trade or business
included in a group of trades or businesses with the Company
which are under common control, as defined in Section 414(c) of
the Code.
(m) Trust means the assets held in trust pursuant to a
separate Trust Agreement between the Company and the Trustee, the
purpose of which is to provide benefits to Participants under the
Plan.
(n) Trustee means the person or persons appointed by
the Board of Directors of the Company to act as Trustee of the
Trust under the Plan, and with whom the Company has entered into
a separate Trust Agreement.
Section 1.4. Other Definitions.
(a) Annual Addition is defined in Section 3.10.
(b) Annuity Starting Date is defined in
Section 4.1(e).
(c) Company Contribution is defined in Section 3.5.
(d) Company Contribution Account is defined in
Section 3.8.
(e) Compensation is defined in Section 3.9.
(f) Disability Retirement Date is defined in
Section 4.1(c).
(g) Discretionary Matching Contribution is defined in
Section 3.3.
(h) Early Retirement Date is defined in
Section 4.1(b).
(i) Eligible Employee is defined in Section 2.1.
(j) Entry Date is defined in Section 2.1.
<PAGE>
-5-
(k) Highly Compensated Employee is defined in
Section 3.11.
(l) Hour of Service is defined in Section 1.3(f).
(m) Key Employee is defined in Section 8.1.
(n) Limitation Year is defined in Section 3.10.
(o) Matching Contribution is defined in Section 3.2.
(p) Maximum Annual Addition is defined in
Section 3.10.
(q) Maximum Company Contribution is defined in
Section 3.10.
(r) Normal Retirement Date is defined in Section 4.1.
(s) Participant is defined in Section 2.2.
(t) Required Beginning Date is defined in Section 4.1.
(u) Rollover Account is defined in Section 3.6.
(v) Salary Reduction Contribution is defined in
Section 3.1.
(w) Savings Account is defined in Section 3.8.
(x) Six Months of Participation Service is defined in
Section 2.1.
(y) Top Heavy Plan is defined in Section 8.1.
(z) Total and Permanent Disability is defined in
Section 4.1.
(aa) Transfer Account is defined in Section 3.7.
(bb) Valuation Date is defined in Section 6.1.
<PAGE>
-6-
ARTICLE 2
ELIGIBILITY FOR PARTICIPATION
-----------------------------
Section 2.1. Definitions. The following definitions
apply for purposes of this Article:
(a) Six Months of Participation Service. An employee
shall be considered to have completed Six Months of Participation
Service with the Company at the end of six full months following
the employee's Date of Hire.
(b) Entry Date. The term "Entry Date" means the first
day of each calendar month.
(c) Eligible Employee. Except as otherwise provided,
the term "Eligible Employee" shall mean any common-law employee
of the Company. For purposes of this Article, the term "Eligible
Employee" shall not include:
(i) Employees Covered by Collective Bargaining
Agreement. Employees included in a unit of
employees covered by an agreement which the
Secretary of Labor finds to be a collective
bargaining agreement between the Company and
employee representatives (within the meaning of
Section 7701(a)(46) of the Code) if (i) there is
evidence that retirement benefits were the subject
of good faith bargaining and (ii) the terms of
such collective bargaining agreement do not
specifically provide for participation in the
Plan.
(ii) Nonresident Aliens. Employees who are
nonresident aliens (within the meaning of Section
7701(b)(1)(B) of the Code) and who received no
earned income (within the meaning of Section
911(d)(2) of the Code) from the Company which
constitutes income from sources within the United
States (within the meaning of Section 861(a)(3) of
the Code).
(iii) Irregular Employees. Employees who are
hired on a seasonal basis or who otherwise have an
irregular work schedule.
Section 2.2. Age and Service Requirements. Each
Eligible Employee of the Company shall become a Participant in
the Plan on the first Entry Date coincident with or following the
<PAGE>
-7-
latest of:
(a) his or her completion of Six Months of
Participation Service with the Company;
(b) his or her attainment of age 20 1/2; or
(c) the Effective Date.
Each Eligible Employee who has completed the service
requirement in (a) above, but who is separated from the service
of the Company prior to the Entry Date shall become a Participant
immediately upon his or her return to the service of the Company
unless (i) Section 2.4(c) applies, or (ii) such Eligible
Employee, upon the date of his or her return to the service of
the Company, has not yet satisfied the age requirement in (b)
above. Notwithstanding the preceding sentence, an Eligible
Employee shall not in any event commence participation in the
Plan prior to the Entry Date which otherwise would have applied
had the Participant not separated from the service of the
Company.
Section 2.3. Change in Employment Status.
(a) Employee Becomes Eligible Employee. If an
employee's status is changed so that he or she becomes an
Eligible Employee, he or she shall become a Participant in the
Plan on the first Entry Date coincident with or following the
satisfaction of the age and service requirements set forth in
Section 2.2.
(b) Participant Becomes a Non-Eligible Employee. If a
Participant's employment status is changed so that he or she is
no longer an Eligible Employee, such Participant shall not be
entitled to share in any Matching Contributions or Discretionary
Matching Contributions with respect to any Compensation earned
while he or she is not an Eligible Employee.
Section 2.4. Termination and Resumption of
Participation.
(a) Termination of Participation. Except as otherwise
provided by this Section, an Eligible Employee who is a
Participant shall remain a Participant until (1) the date on
which his or her entire nonforfeitable interest is paid to him or
her or to his or her beneficiary, or (2) the date on which his or
her death occurs, if earlier.
(b) Inactive Participant. If a Participant separates
from the service of the Company, he or she will be an Inactive
<PAGE>
-8-
Participant (1) for the remainder of the Plan Year of such
separation from service, and (2) for each Plan Year beginning
after such separation from service and during which he or she
continues to be separated from the service of the Company.
(c) Resumption of Participation. An Inactive
Participant shall not be entitled to share in allocations of
Matching Contributions and Discretionary Matching Contributions
under Article 3.00. However, an Inactive Participant shall
immediately resume active participation and be entitled to share
in allocations of Matching Contributions and Discretionary
Matching Contributions in accordance with the terms and
conditions of Article 3.00 immediately upon reemployment by the
Company.
Section 2.5. Service with and Transfers Involving
Affiliated Corporations.
(a) Service with Organizations Under Common Control.
Hours of Service completed by a Participant with an Organization
Under Common Control shall be credited for eligibility and
vesting purposes under this Plan under Articles 2 and 4, but not
for purposes of benefit accrual under Article 3, except as
specifically provided hereunder.
With respect to employees who transfer to the Company
after November 30, 1993 directly from Mattel, Inc. or any
Subsidiary, the service credited under this subsection shall
include all service with such Subsidiary or with Mattel, Inc.,
including service prior to the date the Subsidiary or Mattel,
Inc. became an Affiliated Corporation unless at the time of the
event at which a Subsidiary became an Affiliated Corporation, the
Board of Directors of Fisher-Price, Inc. specifically provides
otherwise. The amount of service to be credited under the
preceding sentence shall be based on the terms of a qualified
plan maintained by Mattel, Inc. or the Subsidiary under which the
transferred employee was participating immediately prior to the
transfer or under the terms of this Plan for crediting service
for eligibility and vesting if the employee was not participating
in such a plan. Notwithstanding the foregoing, the Board of
Directors of Fisher-Price, Inc. may also specifically provide for
the crediting of service under this Section with a predecessor
employer or any entity other than a Subsidiary prior to the date
such predecessor employer or other entity was acquired by an
Affiliated Corporation or otherwise became an Affiliated
Corporation.
(b) Transfer of Employment. If a Participant
transfers employment from the Company or any business entity that
has adopted or is maintaining this Plan to any Organization Under
<PAGE>
-9-
Common Control that has not adopted or is not maintaining this
Plan, such transfer shall not be considered a separation from
service or termination of employment under this Plan. Such
Participant shall continue to be credited with Hours of Service
as provided in subsection (a). If a person transfers employment
from any Organization Under Common Control that has not adopted
the Plan to the Company or any business entity that has adopted
or is maintaining this Plan, he or she shall immediately commence
active participation in the Plan if such person is employed in an
eligible status, has satisfied the age and service requirements
under the Plan and if the Entry Date that would otherwise apply
to such person has already occurred.
(c) Change to Eligible Status. If the employment
status of an person changes so that he or she is eligible for
participation hereunder as a result of a transfer from ineligible
status, he or she shall immediately commence active participation
in the Plan following the date of his or her change in employment
status if such person has satisfied the age and service
requirements hereunder and if the Entry Date that would otherwise
apply to such person has already occurred.
(d) Change from Eligible Status. If the employment
status of a Participant changes so that he or she is no longer in
an eligible status under the Plan but he or she is still in the
service of the Company, he or she shall be credited with Hours of
Service for vesting purposes for Hours of Service with the
Company after the change in employment status.
(e) Subsidiary. The term "Subsidiary" means any
corporation included in a chain of corporations connected through
stock ownership with a common parent corporation as defined under
Section 1563(a)(1) of the Code where the common parent is Mattel,
Inc.
<PAGE>
-10-
ARTICLE 3
CONTRIBUTIONS
-------------
Section 3.1. Salary Reduction Contributions.
(a) In General. Each Participant, in accordance with
Subsection (b), may elect to contribute to the Plan a whole
percentage amount, not to exceed a percentage amount determined
by the Plan Administrator pursuant to a uniform nondiscriminatory
policy, of his or her Compensation ("Salary Reduction
Contribution"). Salary Reduction Contributions shall be made by
reducing a Participant's Compensation throughout the period
during which his or her election under this Section remains in
effect. The Company shall pay to the Trustees all Salary
Reduction Contributions made by Participants under this Section
no later than the end of a reasonable period after such Salary
Reduction Contributions were withheld from the Participants'
Compensation, or such longer period as may be permitted by
regulations issued under Section 401(k) of the Code, but in no
event later than 30 days after the close of the calendar month in
which such Salary Reduction Contributions were withheld. All
Salary Reduction Contributions are intended to qualify as
"employer contributions" under Section 401(k) of the Code.
(b) Salary Reduction Contribution Elections. The Plan
Administrator shall prescribe uniform rules of general
application concerning all elections under this Section. Such
rules may limit the amount of Salary Reduction Contributions or
the frequency of any changes in elections made by Participants.
Such rules also shall prescribe the effective date of any
elections, or changes in elections, made by Participants under
this Section. All elections under this Section shall remain in
effect until modified or discontinued by the Participant in
accordance with the rules established by the Plan Administrator.
Notwithstanding the foregoing, changes in Participant
elections under this Section shall be permitted no less
frequently than semi-annually. Furthermore, Participants, prior
to any payroll period or other payment of Compensation, may elect
to discontinue Salary Reduction Contributions. Such
discontinuance shall remain in effect until the date a new
election is made in accordance with the provisions of this
Subsection.
(c) $7,000 Limit. Salary Reduction Contributions of a
Participant, together with the other elective deferrals (as
defined in Section 402(g)(3) of the Code) of such Participant,
shall not exceed $7,000, as adjusted by Section 402(g)(5) of the
<PAGE>
-11-
Code, during any calendar year. In the event that the limit
under this Subsection is exceeded, the Plan Administrator shall
direct the Trustees to distribute such excess amount in
accordance with this Article.
Section 3.2. Matching Contributions by the Company.
For each Plan Year, the Company shall contribute to the Plan on
behalf of each Participant an amount equal to a percentage of
each such Participant's Salary Reduction Contributions for such
Plan Year (the "Matching Contribution") determined as follows:
Participant Salary Matching Contribution
Reduction Amount Percentage
------------------ ---------------------
$0 to $300 100%
$301 to $500 75%
$501 to 6% of 40%
Participant Compensation
Section 3.3. Discretionary Matching Contributions.
For each Plan Year, the Company shall contribute to the Plan on
behalf of each Qualified Participant (as defined in Section
3.8(e)) an amount determined in the sole discretion of the
Company (the "Discretionary Matching Contribution"). The amount
of the Discretionary Matching Contribution on behalf of any
Qualified Participant shall not exceed 3% of his or her
compensation for such Plan Year.
Section 3.4. Forfeitures. Forfeitures resulting from
the application of Section 11.11 shall not be applied to directly
increase the allocation that any Participant would otherwise
receive under the Plan. Forfeitures shall in the discretion of
the Plan Administrator be used to (1) pay Plan expenses or (2)
reduce (but not below zero) the Matching Contribution under
Section 3.2 for the Plan Year in which the forfeitures become
available. Notwithstanding the foregoing, if (1) all or a
portion of the forfeitures are used to reduce the Matching
Contribution and (2) such forfeitures exceed the Matching
Contribution for the Plan Year in which the forfeitures become
available, such excess shall be held in a suspense account and
shall be used to reduce Matching Contributions or pay expenses
for the next Plan Year (and succeeding Plan Years, as necessary)
all as determined in the discretion of the Plan Administrator.
If a suspense account is in existence at any time during a Plan
Year pursuant to this Section, such account will not participate
in the allocation of the trust's investment gains and losses.
Section 3.5. Limitations on Contributions. Salary
Reduction Contributions, Matching Contributions and Discretionary
Matching Contributions (collectively, the "Company
<PAGE>
-12-
Contributions") under this Article shall be subject to the
following limitations:
(a) the sum of the Company Contributions and other
amounts treated as Annual Additions for any Plan Year shall
not exceed the Maximum Company Contribution, as determined
under Section 3.10; and
(b) the amount of the Company Contributions shall not
exceed the maximum amount allowable as a deduction to the
Company under Section 404 of the Code.
Section 3.6. Rollover Contributions. If permitted
under a uniform, nondiscriminatory policy adopted by the Plan
Administrator, a rollover contribution may be made by an Eligible
Employee to the Plan if:
(a) the following conditions are satisfied:
(i) the Eligible Employee was a participant under
another plan that was qualified under Section 401(a) of
the Code or an annuity plan qualified under Section
403(a) of the Code;
(ii) in the case of a plan qualified under Section
401(a) of the Code, the trust under such other plan is
exempt from tax under Section 501(a) of the Code;
(iii) such Eligible Employee receives a
distribution from such other plan which qualifies as a
rollover amount, as described in Section 402(a)(5)(A)
of the Code;
(iv) the Eligible Employee furnishes evidence
satisfactory to the Plan Administrator that such
contribution meets conditions (1), (2) and (3); and
(v) the rollover contribution is transferred by
the Eligible Employee to the Plan within 60 days of his
or her receipt of the distribution; or
(b) the amounts transferred to the Plan are from a
conduit individual retirement account, provided that the
following conditions are satisfied:
(i) such account has no assets other than assets
that were previously distributed to the Eligible
Employee by another qualified plan;
(ii) such amounts met the applicable requirements
<PAGE>
-13-
of Section 408(d)(3) of the Code for rollover treatment
or transfer to the conduit individual retirement
account; and
(iii) such amounts are transferred by the
Eligible Employee to the Plan within 60 days of his or
her receipt of such amount from the conduit individual
retirement account.
Rollover contributions shall be held in a separate
"Rollover Account" established and maintained by the Plan
Administrator as a permanent accounting record under the Plan for
the benefit of the Eligible Employee who made such contributions.
An Eligible Employee who has made a rollover contribution shall
at all times have a 100% nonforfeitable right to the value of the
assets held in his or her Rollover Account. Amounts allocated to
a Rollover Account shall be held in trust and invested in
accordance with the terms and conditions of the Plan.
Distributions of amounts allocated to a Rollover Account shall be
made upon the Eligible Employee's retirement, death, disability
or other separation from service in accordance with the terms and
conditions of the Plan.
If an Eligible Employee makes a rollover contribution
to the Plan under this Section, such Eligible Employee
nevertheless shall not become a Participant under the Plan and
shall not participate in the allocations of Company Contributions
under Section 3.8 until such Eligible Employee has satisfied the
age and service requirements for participation set forth in
Section 2.2.
Section 3.7. Transfers From Another Plan. If
permitted under a uniform policy adopted by the Plan
Administrator, a Participant may elect to transfer amounts from
another plan to the Plan if the following conditions are
satisfied:
(a) such other plan is qualified under Section 401(a)
of the Code or is an annuity plan qualified under Section
403(a) of the Code;
(b) in the case of a plan qualified under Section
401(a) of the Code, the trust under such other plan is
exempt from tax under Section 501(a) of the Code;
(c) such other plan and the trust or annuity
thereunder provides that benefits may be transferred;
(d) the Participant furnishes evidence satisfactory to
the Plan Administrator that such transfer meets conditions
<PAGE>
-14-
(a), (b) and (c);
(e) the transfer will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences for
the Company; and
(f) such other plan does not have a history of
providing its participants with "section 411(d)(6) protected
benefits," as defined in Section 1.411(d)-4 of the Treasury
Regulations, that are different from the benefits being
offered under the Plan.
Transfers shall be held in a separate "Transfer
Account" established and maintained by the Plan Administrator as
a permanent accounting record under the Plan for the benefit of
the Participant whose benefits under another plan were
transferred to the Plan. A Participant shall at all times have a
100% nonforfeitable right to the value of assets held in his or
her Transfer Account. Amounts allocated to a Transfer Account
shall be held in trust and invested in accordance with the terms
and conditions of the Plan. Distributions of amounts allocated
to a Transfer Account shall be made upon the retirement, death,
disability or other separation from service of the Participant in
accordance with the terms and conditions of the Plan.
Section 3.8. Allocations of Contributions and
Forfeitures.
(a) Maintenance of Accounts. The Plan Administrator
shall establish and maintain, as a permanent accounting record
under the Plan, a "Company Contribution Account" and a "Savings
Account" in the name of each Participant in the Plan. For each
Participant for whom there was maintained an account or accounts
under the Fisher-Price Profit Sharing and Retirement Savings Plan
prior to the merger of such plan into this Plan, there shall be
maintained such Profit Sharing accounts as may be appropriate as
determined by the Plan Administrator.
(b) Allocation of Salary Reduction Contributions.
Upon the payment of Salary Reduction Contributions by the Company
to the Trustees in accordance with Section 3.1(a), the Plan
Administrator shall allocate the Salary Reduction Contributions
of each Participant to a separate Savings Account maintained for
such Participant under Subsection (a).
(c) Allocation of Matching Contributions. Upon the
payment of the Matching Contribution by the Company to the
Trustees, the Plan Administrator shall allocate so much of the
total Matching Contributions for such Plan Year and the
forfeitures resulting from the application of Section 11.11, if
<PAGE>
-15-
any, to the Company Contribution Account of each Participant as
determined by Section 3.2. The allocation determined under this
Subsection (c) shall be adjusted by an amount determined pursuant
to Section 3.10, if any.
(d) Allocation of Discretionary Matching
Contributions. Upon the payment of the Discretionary Matching
Contribution by the Company to the Trustees, the Plan
Administrator shall allocate the Discretionary Matching
Contribution for such Plan Year, if any, to the Company
Contribution Account of each Qualified Participant in the same
proportion that the Salary Reduction Contribution of such
Qualified Participant for the Plan Year bears to the total Salary
Reduction Contributions of all Qualified Participants for such
Plan Year. Notwithstanding the foregoing, the allocation under
this Subsection (d) with respect to any Qualified Participant
shall not exceed 3% of his or her Compensation for such Plan
Year. The allocation determined under this Subsection (d) shall
be adjusted by an amount determined pursuant to Section 3.10, if
any.
(e) Qualified Participant. The term "Qualified
Participant" for any Plan Year means a Participant who (1) is
employed by the Company on the last day of the Plan Year and (2)
is not a corporate vice-president or executive officer.
Section 3.9. Compensation. Unless otherwise provided,
the term "Compensation" for any Plan Year means the total amount
paid or made available by the Company to a Participant during
such Plan Year constituting wages as generally defined in Section
3401(a) of the Code determined without regard to any rules that
limit the amount included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2) of the
Code).
Compensation shall not include amounts representing
cash or merchandise prizes awarded for suggestions or ideas,
commissions, special allowances, expense reimbursements,
severance pay, pay for inactive status pending retirement, any
profits under stock option plans, any payments out of the short
term or long term disability plans or sickness and accident
plans, or any compensation the receipt of which is deferred
pursuant to a plan or contract.
Notwithstanding the foregoing, "Compensation" shall
include any amount which is contributed by the Company pursuant
to a salary reduction agreement and which is not includible in
the gross income of the Participant under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
<PAGE>
-16-
Any questions as to whether any other amounts paid to a
Participant constitutes Compensation shall be determined by the
Company.
The Compensation of each Participant taken into account
under the Plan for any Plan Year shall not exceed the applicable
limitation under Section 401(a)(17) of the Code for the Plan
Year. Such limitation shall be adjusted at the time and in the
manner permitted under Section 401(a)(17)(B) of the Code. If the
Compensation of a Participant is determined on a period of time
fewer than 12 months, then the limitation shall be prorated for
the number of full calendar months in such period. In
determining the Compensation of a Qualified Participant for
purposes of this limitation, the rules of Section 414(q)(6) of
the Code shall apply, except, in applying such rules, the term
"family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age
19 before the close of the Plan Year. If, as a result of the
application of such rules, the adjusted limitation is exceeded,
then the limitation shall be prorated among the affected
individuals in proportion to each individual's Compensation as
determined under this Section 3.9 prior to the application of
this limitation.
Notwithstanding any provision in this Section to the
contrary, Compensation of a Participant for a Plan Year shall be
limited to his or her Compensation earned while a Participant.
Section 3.10. Limitations on Allocations.
(a) Definitions. The following definitions apply for
purposes of this Section:
(i) Annual Addition shall have the same meaning
as defined under Section 415(c)(2) of the Code and the
regulations thereunder.
(ii) Compensation shall mean wages as defined in
Section 3121(a) of the Code, for purposes of
calculating Social Security taxes, but determined
without regard to the contribution base limitation in
Section 3121(a)(1) of the Code, the special rules in
Code Section 3121(v) (applicable to certain elective
contributions and non-qualified deferred compensation),
any rules that limit covered employment based on type
or location of an employee's employer, and any rules
that limit the remuneration included in wages based on
familial relationship or based on the nature or
location of the employment or the services performed
(such as the exceptions to the definition of employment
<PAGE>
-17-
in Section 3121(b)(1) through (20) of the Code).
(iii) Maximum Permissible Amount, for any
Limitation Year, means, with respect to a Participant,
the lesser of:
(1) $30,000 (or, if greater, 25% of the
dollar limitation in effect under Section
415(b)(1)(A) of the Code); or
(2) 25% of Compensation, as defined in (2)
above.
The limitation in (ii) shall not apply to any
contribution for medical benefits (within the meaning
of Section 401(h) of the Code or Section 419A(f)(2) of
the Code) which is otherwise treated as an annual
addition under Section 415(1)(1) or 419A(d)(2) of the
Code.
(iv) Defined Benefit Fraction shall have the same
meaning as defined in Section 415(e)(2) of the Code and
the regulations thereunder.
(v) Defined Contribution Fraction shall have the
same meaning as defined in Section 415(e)(3) of the
Code and the regulations thereunder.
(vi) Limitation Year means the Plan Year.
(b) Maximum Company Contribution. For purposes of the
Plan, the term "Maximum Company Contribution" shall mean the
aggregate of the Maximum Annual Additions of all Participants for
the Plan Year.
(c) Maximum Annual Addition. In no event shall an
amount exceeding the Maximum Annual Addition be allocated to the
accounts of a Participant during any Limitation Year. For
purposes of the Plan, the term "Maximum Annual Additions" shall
mean the following:
(i) if the Company (or an Organization Under
Common Control) does not maintain any other qualified
defined contribution plan and does not maintain and has
never maintained a qualified defined benefit plan, the
Maximum Permissible Amount;
(ii) if, in addition to the Plan, the Company (or
an Organization Under Common Control) maintains another
qualified defined contribution plan or plans, but does
<PAGE>
-18-
not maintain and has never maintained a qualified
defined benefit plan, the Maximum Permissible Amount
reduced (but not below zero) by the sum of any Annual
Additions allocated to the Participant during the
Limitation Year under such other defined contribution
plan or plans;
(iii) if, in addition to the Plan, the Company (or
an Organization Under Common Control) maintains, or at
any time maintained, a qualified defined benefit plan
covering any Participant in the Plan, the amount which,
when added to the Annual Additions under any other
qualified defined contribution plan maintained by the
Company (or an Organization Under Common Control), if
any, results in a Defined Contribution Fraction which,
when added to the Defined Benefit Fraction, does not
exceed 1.0 in the Limitation Year.
(d) Excess Annual Additions. If the Participant's
Annual Additions for the Limitation Year exceeds the maximum
Annual Addition for such Limitation Year (the "Excess Annual
Addition"), the Excess Annual Addition shall not be deemed Annual
Additions in that Limitation Year if they are treated in
accordance with any one or more of the following paragraphs as
determined in the Plan Administrator's discretion:
(i) The Excess Annual Additions of such
Participant may be allocated and reallocated to the
accounts of other Qualified Participants in the Plan.
However, if the allocation or reallocation of the
Excess Annual Addition causes the Maximum Annual
Addition of each Participant to be exceeded for the
Limitation Year, then these excess amounts must be held
unallocated in a suspense account. If a suspense
account is in existence at any time during a particular
Limitation Year, other than the Limitation Year
described in the preceding sentence, all amounts in the
suspense account must be allocated and reallocated to
Participants' accounts (subject to the limitations of
this Section) before any Company Contributions and any
employee contributions which would constitute Annual
Additions may be made to the Plan for that Limitation
year.
(ii) The Excess Annual Additions of such
Participant may be used to reduce Company Contributions
for the next Limitation Year (and succeeding Limitation
Years, as necessary) for that Participant if that
Participant is covered by the Plan as of the end of the
Limitation Year. However, if that Participant is not
<PAGE>
-19-
covered by the Plan as of the end of the Limitation
Year, then the Excess Annual Additions must be held
unallocated in a suspense account for the Limitation
Year and allocated and reallocated in the next
Limitation Year to all of the remaining Participants in
the Plan in accordance with the rules set forth in the
preceding paragraph. Furthermore, the Excess Annual
Additions must be used to reduce Company Contributions
for the next Limitation Year (and succeeding Limitation
Year, as necessary) for all of the remaining
Participants in the Plan. For purposes of this
paragraph, Excess Annual Additions may not be
distributed to Participants or former Participants.
(iii) The Excess Annual Additions of such
Participant may be held unallocated in a suspense
account for the Limitation Year and allocated and
reallocated in the next Limitation Year to all of the
Participants in the Plan in accordance with the rules
provided in paragraph (1). The Excess Annual Additions
must be used to reduce Company Contributions for the
next Limitation Year (and succeeding Limitation years,
as necessary) for all of the Participants in the Plan.
For purposes of this paragraph, Excess Annual Additions
may not be distributed to Participants or former
Participants.
(iv) Notwithstanding the provisions of paragraphs
(1), (2) or (3) above, the Plan may return employee
contributions, including Salary Reduction
Contributions, to the extent that the return would
reduce the Excess Annual Additions of such Participant.
If the Plan does not return gains attributable to the
returned employee contributions, such earnings will be
considered as an employee contribution for the
Limitation Year in which the returned contribution was
made.
If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section, such suspense
account will not participate in the allocation of the trust's
investment gains and losses.
Section 3.11. ADP Test.
(a) In General. Annual allocations derived from
Salary Reduction Contributions to the Participants' Savings
Accounts must satisfy one of the following tests:
(i) The 125% Test. The Average ADP for
<PAGE>
-20-
Participants who are Highly Compensated Employees shall
not exceed the Average ADP for Participants who are
Non-Highly Compensated Employees multiplied by 1.25; or
(ii) The Alternative Limitation Test. The Average
ADP for Participants who are Highly Compensated
Employees shall not exceed the lesser of (i) the
Average ADP for Participants who are Non-Highly
Compensated Employees multiplied by 2 and (ii) the
Average ADP for Participants who are Non-Highly
Compensated Employees plus 2 percentage points or such
lesser amount determined pursuant to the provisions of
Section 3.13(c)(1) to prevent the multiple use of the
alternative limitation under this subsection and
Section 3.13(a)(2).
The Plan Administrator may calculate the ADPs of
Participants and, thus, determine whether the Plan satisfies the
ADP Test under this Section by treating all or part of the
Qualified Matching Contributions made with respect to any or all
of the Participants as Salary Reduction Contributions. The Plan
Administrator may not treat Qualified Matching Contributions as
Salary Reduction Contributions unless the Qualified Matching
Contributions satisfy the conditions set forth in Section
1.401(k)-l(b)(5) of the Treasury Regulations.
The Plan Administrator shall maintain records that
demonstrate satisfaction of the ADP Test under this Section,
including the extent to which the Plan treated Qualified Matching
Contributions as Salary Reduction Contributions to satisfy the
ADP Test.
(b) Definitions. The following definitions apply for
purposes of the Plan:
(i) ADP, with respect to a Participant, shall
mean the ratio (expressed as a percentage) of the amount of
Salary Reduction Contributions and amounts treated as Salary
Reduction Contributions, if any, allocated to the
Participant's account for a Plan Year to the Participant's
ADP Compensation for the Plan Year.
(ii) Average ADP, with respect to a group of
Participants, shall mean the average of the ADPs for the
group of Participants.
(iii) ADP Compensation, with respect to any
Participant, shall be determined by the Plan Administrator
in a manner that satisfies the requirement of Section 414(s)
of the Code and the regulations thereunder. The period used
<PAGE>
-21-
to determine a Participant's ADP Compensation for a Plan
Year is either the Plan Year or the calendar year ending
within the Plan Year. Whichever period is selected must be
applied uniformly to determine the ADP Compensation of every
Participant for the Plan Year. If the Participant
participated in the Plan for less than the full Plan Year or
calendar year, the Plan may take into account ADP
Compensation for that portion of the Plan Year or calendar
year during which the Participant actually participated,
provided this limit is applied uniformly for all
Participants for the Plan Year.
(iv) Highly Compensated Employee.
(1) In General. The term "Highly
Compensated Employee" means an employee who is either a
Highly Compensated Active Employee or a Highly
Compensated Former Employee.
(2) Highly Compensated Active Employee. A
"Highly Compensated Active Employee" is any employee
who, with respect to the Company, (A) performs services
during the Look-Back Year and (B) is included in any
one or more of the groups described for purposes of the
Look-Back Year calculation in subparagraph (iii).
(3) Look-Back Year Calculation. For
purposes of subparagraph (ii), the following employees
shall be Highly Compensated Employees with respect to
the Look-Back Year:
(a) employees who are 5-percent owners
at any time during the Look-Back Year;
(b) employees who receive Compensation
in excess of $75,000 during the Look-Back Year;
(c) employees who receive Compensation
in excess of $50,000 during the Look-Back Year and
are members of the Top-Paid Group for the
Look-Back Year; and
(d) employees who are Includible
officers during the Look-Back Year.
(4) Determination Year Calculation. The
Company elects pursuant to Regulation Section 1.414(q)-
lT, Q & A-14(b) to make the calendar year calculation
election. Therefore, no Determination Year Calculation
is required.
<PAGE>
-22-
(5) Look-Back Year. The term "Look-Back
Year" means the Plan Year.
(6) Top-Paid Group. The term "Top-Paid
Group" means, with respect to a particular year, the
group consisting of the top 20 percent of the Company's
employees when ranked on the basis of Compensation
received from the Company during such year. The number
of employees in the Top-Paid Group for a particular
year is equal to 20 percent of the total number of
active employees of the Company for such year, reduced
by those active employees excluded under Sections
1.414(q)-lT, Q & A-9(b)(1)(i), (ii) and (iii) of the
Treasury Regulations.
(7) Includible Officers. The term
"Includible Officer" means an employee who is (A) an
officer of the Company (within the meaning of Section
416(i) of the Code and the regulations thereunder) at
any time during the Look-Back Year and (B) receives
compensation during such year that is greater than 50
percent of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code for the calendar year
in which the Look-Back Year begins. If no officer of
the Company satisfies the Compensation requirement of
(B) above, the highest paid officer of the Company for
such year is treated as a Highly Compensated Employee.
Notwithstanding the foregoing, the determination of
which employees are Includible Officers shall be
subject to the maximum inclusion limitations of Section
1.414(q)-lT, Q & A-10(b) of the Treasury Regulations.
(8) Highly Compensated Former Employee. A
"Highly Compensated Former Employee" for a Look-Back
Year is any former employee of the Company who, with
respect to the Company, (A) performs no services for
the Company in the Look-Back Year, (B) had a Separation
Year prior to the Look-Back Year and was (C) a Highly
Compensated Active Employee for either (I) such
employee's Separation Year, or (II) any Look-Back Year
ending on or after the employee's 55th birthday.
(9) Separation Year. The term "Separation
Year" means the Look-Back Year during which the
employee separates from the service of the Company.
(10) Family Aggregation. If an employee is,
during a Look-Back Year, a Family Member of either a
(A) 5-percent owner who is an active or former employee
or (B) a Highly Compensated Employee who is one of the
<PAGE>
-23-
ten most highly compensated employees ranked on the
basis of Compensation paid by the Company during such
year, then the Family Member and the 5-percent owner or
top-ten Highly Compensated Employee shall be aggregated
and shall be treated as a single employee receiving
Compensation and Plan contributions equal to the sum of
such Compensation and contributions of the Family
Member and 5-percent owner or top-ten Highly
Compensated Employee.
(11) Family Member. The term "Family Member"
means the spouse, lineal ascendants and descendants of
the employee or former employees, and the spouses of
such lineal ascendants and descendants.
(v) Nonhighly Compensated Employee shall mean an
Eligible Employee who is not a Highly Compensated Employee.
(vi) Nonelective Contributions are contributions
to the Plan made by the Company which are not made pursuant
to a Participant's salary reduction contribution election
under Section 3.1.
(vii) Qualified Matching Contributions are
Matching Contributions or Discretionary Matching
Contributions that are 100% nonforfeitable at all times and
satisfy the requirements set forth in Section 1.401(k)-
1(g)(13)(iii) of the Treasury Regulations.
(c) Special Rules.
(i) Plan Aggregation - 410(b). For purposes of
this Section, if the Plan and one or more other plans which
include cash or deferred arrangements actually are
aggregated for purposes of Section 410(b) (other than for
purposes of the average benefit percentage test) of the
Code, the cash or deferred arrangements included in the Plan
and such other plans shall be treated as a single cash or
deferred arrangement for purposes of Section 401(k) of the
Code and Section 1.401(k)-1(b) of the Treasury Regulations.
Plans are aggregated under this paragraph only if they have
the same plan year.
(ii) Plan Aggregation - Highly Compensated
Employee. For purposes of this Section, if a Highly
Compensated Employee is a participant in two or more cash or
deferred arrangements of the Company, all such cash or
deferred arrangements shall be treated as one cash or
deferred arrangement for purposes of determining the ADP of
the Highly Compensated Employee unless such aggregation is
<PAGE>
-24-
prohibited by Section 1.401(k)-1(g)(1)(ii)(B) of the
Treasury Regulations. If the cash or deferred arrangements
have different plan years, this paragraph shall be applied
by treating all cash or deferred arrangements ending with or
within the same calendar year as a single arrangement.
(iii) Family Aggregation. If a Highly Compensated
Employee is subject to the family aggregation rules of
Section 414(q)(6) of the Code because such employee is
either a five-percent owner or one of the ten most Highly
Compensated Employees, the combined ADP for the family group
(which is treated as one Highly Compensated Employee) must
be determined by combining the Salary Reduction
Contributions, Compensation, and amounts treated as Salary
Reduction Contributions, if any, of all the eligible family
members. The Salary Reduction Contributions, Compensation,
and amounts treated as Salary Reduction Contributions, if
any, are disregarded for purposes of determining the Average
ADP for the Non-Highly Compensated Employees. If a
Participant is required to be aggregated as a member of more
than one family group in the Plan, all Participants who are
members of those family groups that include that Participant
are aggregated as one family group.
Section 3.12. Distribution of Excess Contributions.
(a) In General. If for any Plan Year there are any
Excess Contributions, then on or before the 15th day of the third
month following the end of such Plan Year, each Highly
Compensated Employee having the highest ADP shall have his or her
portion of the Excess Contributions distributed to him or her
until one of the two tests set forth in Section 3.11(a) is
satisfied, or until his or her ADP equals the ADP of the Highly
Compensated Employee or Employees having the next highest ADP.
This process must be repeated until one of the two tests set
forth in Section 3.11(a) is satisfied. In no case may the amount
of Excess Contributions be distributed for a Plan Year with
respect to a Highly Compensated Employee exceed the Highly
Compensated Employee's Salary Reduction Contribution for the Plan
Year.
Distributions of Excess Contributions shall be made
first from unmatched Salary Reduction Contributions and,
thereafter, simultaneously from Salary Reduction Contributions
that are matched and Matching Contributions that relate to such
Salary Reduction Contributions. However, any such Matching
Contributions which are not vested shall be forfeited in lieu of
being distributed.
Notwithstanding the foregoing, if the Plan
<PAGE>
-25-
Administrator treats Qualified Matching Contributions as Salary
Reduction Contributions for purposes of the ADP Test,
distributions of Excess Contributions shall be made first from
unmatched Salary Reduction Contributions and, thereafter,
simultaneously from Salary Reduction Contributions and Qualified
Matching Contributions that relate to such Salary Reduction
Contributions.
(b) Excess Contributions. The term "Excess
Contributions" means, with respect to a Plan Year, the excess of
Salary Reduction Contributions, and Qualified Matching
Contributions, to the extent they are treated as Salary Reduction
Contributions for purposes of the ADP Test, over the maximum
amount of such contributions permitted under Section 3.11(a).
Excess Contributions also shall include the income allocable to
the excess described in the preceding sentence. The income
allocable to Excess Contributions shall be determined in
accordance with subsection (d).
(c) Family Aggregation. The determination and
correction of Excess Contributions of a Highly Compensated
Employee whose ADP is determined in accordance with the family
aggregation rules of Section 3.11(c)(3) is accomplished by
reducing the ADP as required by Subsection (a) and allocating the
Excess Contributions for the family group among the family
members in proportion to the Salary Reduction Contributions of
each family member that is combined to determine the ADP.
(d) Allocable Income/Loss. A Participant's Excess
Contributions with respect to a Plan Year shall be adjusted for
any income or loss up to the date of distribution. The income or
loss allocable to Excess Contributions is the sum of (1) income
or loss for the Plan Year allocable to Salary Reduction
Contributions and amounts treated as Salary Reduction
Contributions multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the Plan Year and the
denominator of which is the sum of (i) the total account balance
of the Participant attributable to Salary Reduction Contributions
and amounts treated as Salary Reduction Contributions, if any, as
of the beginning of the Plan Year, plus (ii) the Participant's
Salary Reduction Contributions and amounts treated as Salary
Reduction Contributions, if any, for the Plan Year and for the
Gap Period; and (2) ten percent of the amount determined under
(1) above multiplied by the number of whole calendar months that
have elapsed during the Gap Period. When calculating the number
of calendar months in (2) above, a distribution occurring on or
before the 15th day of the month will be treated as having been
made on the last day of the preceding month, and a distribution
occurring after such 15th day will be treated as having been made
on the first day of the next subsequent month. For purposes of
<PAGE>
-26-
this subsection, the Term "Gap Period" means the period between
the end of the Plan Year and the date of distribution.
Section 3.13. ACP Test.
(a) In General. Annual allocations derived from
Matching Contributions to the Company Contribution Accounts must
satisfy one of the following tests:
(i) The 125% Test. The Average ACP for
Participants who are Highly Compensated Employees shall not
exceed the Average ACP for Participants who are Nonhighly
Compensated Employees multiplied by 1.25.
(ii) The Alternative Limitation Test. The Average
ACP for Participants who are Highly Compensated Employees
shall not exceed the lesser of (i) the Average ACP for
Participants who are Nonhighly Compensated Employees
multiplied by two and (ii) the Average ACP for Participants
who are Nonhighly Compensated Employees plus two percentage
points or such lesser amount determined pursuant to the
provisions of Section 3.13(c)(1) to prevent the multiple use
of the alternative limitation under this Subsection and
Section 3.11(a)(2).
The Plan Administrator may calculate the ACPs of
Participants and, thus, determine whether the Plan satisfies the
ACP Test under this Section by taking into account Salary
Reduction Contributions that are treated as Matching
Contributions. The Plan Administrator may not treat Salary
Reduction Contributions as Matching Contributions unless the
Salary Reduction Contributions satisfy the conditions set forth
in Section 1.401(m)-l(b)(5) of the Treasury Regulations. The
Plan Administrator may not include Salary Reduction Contributions
in the ACP Test unless the Plan satisfies the ADP Test both with
and without the Salary Reduction Contributions included in this
ACP Test.
The Plan Administrator shall maintain records that
demonstrate satisfaction of the ACP Test under this Section,
including the extent to which the Plan treated Salary Reduction
Contributions as Matching Contributions to satisfy the ACP Test.
(b) Definitions. The following definitions apply for
purposes of the Plan:
(i) ACP, with respect to a Participant, shall
mean the ratio (expressed as a percentage) of the amount of
Matching Contributions and Discretionary Matching
Contributions and amounts treated as Matching Contributions
<PAGE>
-27-
allocated to the Participant's account for a Plan Year to
the Participant's ACP Compensation for the Plan Year.
(ii) Average ACP, with respect to a group of
Participants, shall mean the average of the ACPs for the
group of Participants.
(iii) ACP Compensation shall have the same meaning
as the term ADP Compensation, as defined in Section
3.11(b)(3).
(c) Special Rules.
(i) Multiple Use. If (i) the sum of the Average
ADP of the entire group of eligible Highly Compensated
Employees under the Plan and the Average ACP of the entire
group of eligible Highly Compensated Employees under the
Plan exceeds the Aggregate Limit, (ii) the Average ADP of
the entire group of eligible Highly Compensated Employees
exceeds the amount described in the 125% Test under Section
3.11(a)(1), and (iii) the Average ACP of the entire group of
eligible Highly Compensated Employees exceeds the amount
described in the 125% Test under Section 3.13(a)(1), then
the Average ADP or ACP of those Highly Compensated Employees
will be reduced so that the Aggregate Limit is not exceeded.
The amount of the reduction of the Average ADP or ACP of the
entire group of Highly Compensated Employees needed to
satisfy the Aggregate Limit is calculated in the manner
described in Section 3.12(a) or 3.14(a) and shall be treated
as Excess Contributions or Excess Aggregate Contributions.
For purposes of the Multiple Use Test, the ADP and the ACP
are determined after any corrections required to meet the
ADP Test and the ACP Test.
The "Aggregate Limit" shall mean the greater of:
(a) the sum of (i) 1.25 times the greater of (I)
the Average ADP of the Nonhighly Compensated Employees for the
Plan Year (the "Relevant ADP") or (II) the Average ACP of the
Nonhighly Compensated Employees for the Plan Year (the "Relevant
ACP"), and (ii) two percentage points plus the lesser of the
Relevant ADP or the Relevant ACP, provided that this amount does
not exceed two times the lesser of the Relevant ADP or the
Relevant ACP; or
(b) sum of (i) 1.25 times the lesser of the
Relevant ADP or the Relevant ACP, and (ii) two percentage points
plus the greater of the Relevant ADP or the Relevant ACP, above,
provided that this amount does not exceed two times the greater
of the Relevant ADP or the Relevant ACP.
<PAGE>
-28-
(ii) Plan Aggregation - 410(b). For purposes of
this Section, if the Plan and one or more other plans
actually are aggregated for purposes of Section 410(b)
(other than for purposes of the average percentage test) of
the Code, then the Plan and such other plans shall be
treated as a single plan for purposes of Section 401(m) of
the Code. Plans are aggregated under this paragraph only if
they have the same plan year.
(iii) Plan Aggregation - Highly Compensated
Employee. For purposes of this Section, if a Highly
Compensated Employee is a participant in two or more plans
of the Company to which employer contributions, matching
contributions or both are made, all such plans shall be
treated as one plan for purposes of determining the ACP of
the Highly Compensated Employee unless such aggregation is
prohibited by Section 1.401(m)-1(b)(3)(ii) of the Treasury
Regulation. If the plans have different plan years, this
paragraph shall be applied by treating all plans ending with
or within the same calendar year as a single arrangement.
(iv) Family Aggregation. If a Highly Compensated
Employee is subject to the family aggregation rules of
Section 414(q)(6) of the Code because such employee is
either a five-percent owner or one of the ten most Highly
Compensated Employees, the combined ACP for the family group
(which is treated as one Highly Compensated Employee) must
be determined by combining the Matching Contributions,
Discretionary Matching Contributions, Compensation, and
amounts treated as Matching Contributions, if any, of all
the eligible family members. The Matching Contributions,
Discretionary Matching Contributions, amounts treated as
Matching Contributions, if any, and Compensation of all
family members are disregarded for purposes of determining
the Average ACP for the Highly Compensated Employees and the
Non-Highly Compensated Employees. If a Participant is
required to be aggregated as a member of more than one
family group in the Plan, all Participants who are members
of those family groups that include that Participant are
aggregated as one group.
Section 3.14. Distribution of Excess Aggregate
Contributions.
(a) In General. If for any Plan Year there are Excess
Aggregate Contributions, then on or before the 15th day of the
third month following the end of such Plan Year, each Highly
Compensated Employee having the highest ACP shall have his or her
portion of the Excess Aggregate Contributions distributed to him
or her, or, if forfeitable, forfeit such nonvested Excess
<PAGE>
-29-
Aggregate contributions attributable to Matching Contributions
until one of the two tests set forth in Section 3.13(a) is
satisfied, or until his or her ACP equals the ACP of the Highly
Compensated Employee or Employees having the next highest ACP.
This process must be repeated until one of the two tests set
forth in Section 3.13(a) is satisfied.
The Plan Administrator will treat a Highly Compensated
Employee's allocable share of Excess Aggregate Contributions, on
a pro rata basis, as attributable to Matching Contributions,
Discretionary Matching Contributions, and to Salary Reduction
Contributions treated as Matching Contributions for purposes of
the ACP Test.
(b) Excess Aggregate Contributions. The term "Excess
Aggregate Contributions" means, with respect to a Plan Year, the
excess of Matching Contributions, Discretionary Matching
Contributions and Salary Reduction Contributions, to the extent
they are treated as Matching Contributions for purposes of the
ACP Test, over the maximum amount of such contributions permitted
under Section 3.13(a). Excess Aggregate Contributions shall also
include the income allocable to the excess described in the
preceding sentence. The income allocable to Excess Aggregate
Contributions shall be determined in accordance with
Subsection (d).
(c) Family Aggregation. The determination and
correction of Excess Aggregate Contributions of a Highly
Compensated Employee whose ACP is determined in accordance with
the family aggregation rules of Section 3.13(c)(4) is
accomplished by reducing the ACP as required by subsection (a)
and allocating the Excess Aggregate Contributions for the family
group among the family members in proportion to the Matching
Contributions, Discretionary Matching Contributions and amounts
treated as Matching Contributions for purposes of the ACP Test,
if any, of each family member that are combined to determine this
ACP.
(d) Allocable Income/Loss. A Participant's Excess
Aggregate Contributions with respect to a Plan Year shall be
adjusted for any income or loss up to the date of distribution.
The income or loss allocable to Excess Aggregate Contributions is
the sum of (1) income or loss for the Plan Year allocable to
Matching Contributions, Discretionary Matching Contributions and
amounts treated as Matching Contributions, if any, multiplied by
a fraction, the numerator of which is the Participant's Excess
Aggregate Contributions for the Plan Year and the denominator of
which is the sum of (i) the total account balance of the
Participant attributable to Matching Contributions, Discretionary
Matching Contributions and amounts treated as Matching
<PAGE>
-30-
Contributions, if any, as of the beginning of the Plan Year, plus
(ii) the Participant's Matching Contributions, Discretionary
Matching Contributions, and amounts treated as Matching
Contributions, if any, for the Plan Year and for the Gap Period,
and (2) ten percent of the amount determined under (1) above
multiplied by the number of whole calendar months that have
elapsed during the Gap Period. When calculating the number of
months in (2) above, a distribution occurring on or before the
15th day of the month will be treated as having been made on the
last day of the preceding month, and a distribution occurring
after such 15th day will be treated as having been made on the
first day of the next subsequent month. For purposes of this
subsection, the term "Gap Period" means the period between the
end of the Plan Year and the date of distribution.
Section 3.15. Distributions of Excess Deferrals.
(a) In General. Excess Deferrals by a Participant
shall be distributed to such Participant no later than the first
April 15 following the close of the Participant's taxable year,
unless the Participant notifies the Plan that such Excess
Deferrals or a portion thereof shall be distributed from a plan
other than the Plan. Notice under the preceding sentence must be
submitted to the Plan Administrator in writing no later than the
first March 1 following the close of the Participant's taxable
year. Notwithstanding the foregoing, a Participant is deemed to
have notified the Plan of Excess Deferrals for the taxable year
taking into account only Salary Reduction Contributions under the
Plan.
(b) Excess Deferrals. The term "Excess Deferrals"
means, with respect to a Participant, Salary Reduction
Contributions, together with other elective deferrals (as defined
in Section 402(g)(3) of the Code), in excess of the dollar
limitation under Section 3.1(c). Excess Deferrals also shall
include the income allocable to the excess described in the
preceding sentence. The income allocable to Excess Deferrals
shall be determined in accordance with Subsection (c).
(c) Allocable Income/Loss. A Participant's Excess
Deferrals with respect to a taxable year shall be adjusted for
any income or loss up to the date of distribution. The income or
loss allocable to Excess Deferrals is the sum of (1) income or
loss for the taxable year allocable to Salary Reduction
Contributions multiplied by a fraction, the numerator of which is
the Participant's Excess Deferrals for the taxable year and the
denominator of which is the sum of (i) the total account balance
of the Participant attributable to Salary Reduction Contributions
as of the beginning of the taxable year, plus (ii) the
Participant's Salary Reduction Contributions for the taxable year
<PAGE>
-31-
and for the Gap Period, and (2) ten percent of the amount
determined under (1) above, multiplied by the number of whole
calendar months that have elapsed during the Gap Period. When
calculating the number of months in (2), a distribution occurring
on or before the 15th day of the month will be treated as having
been made on the last day of the preceding month, and a
distribution occurring after such 15th day will be treated as
having been made on the first day of the next subsequent month.
For purposes of this subsection, the term "Gap Period" means the
period between the end of the taxable year and the date of
distribution.
Section 3.16. Coordinating Corrective Distributions.
(a) Correcting Excess Deferrals After Distributing
Excess Contributions. The amount of Excess Deferrals that may be
distributed under Section 3.15 with respect to a Participant for
a taxable year shall be reduced by any Excess Contributions
previously distributed with respect to such Participant for the
Plan Year beginning with or within such taxable year.
(b) Correcting Excess Contributions After Distributing
Excess Deferrals. The amount of Excess Contributions to be
distributed under Section 3.12(a) with respect to a Participant
for a Plan Year shall be reduced by any Excess Deferrals
previously distributed to such Participant for the Participant's
taxable year ending with or within such Plan Year.
<PAGE>
-32-
ARTICLE 4
NONFORFEITABLE RIGHT TO BENEFITS
--------------------------------
Section 4.1. Definitions. The following definitions
will apply for purposes of the Plan:
(a) Normal Retirement Date means the later of the
Participant's 65th birthday and the fifth anniversary of the date
the Participant commenced participation in the Plan.
(b) Early Retirement Date means the later of the
Participant's 55th birthday and the date on which the Participant
completes five Years of Service. A Year of Service means a Plan
Year during which an employee completes at least 1,000 Hours of
Service.
(c) Disability Retirement Date means the date on which
a determination is made by the Plan Administrator that a
Participant has a Total and Permanent Disability.
(d) Total and Permanent Disability means a mental or
physical condition, as determined by the Plan Administrator, or
by a licensed practicing physician selected by the Plan
Administrator, which is expected to be permanent or of long and
indefinite duration, and which renders the Participant incapable
of performing his or her customary duties for the Company.
(e) Annuity Starting Date means either (i) the first
day of the first period for which a benefit is paid as an annuity
to the Participant, or (ii) if the Participant's benefit is not
payable in the form of an annuity, the first day on which all
events have occurred which entitle the Participant to such
benefit.
(f) Deferred Retirement means the period beginning
with a Participant's Normal Retirement Date and ending with the
date that he or she actually retires from the Employer.
(g) Participant's Required Beginning Date means either
(i) with regard to any Participant whose date of birth is after
June 30, 1917, April 1 of the calendar year following the
Participant's 70-1/2 Year, or (ii) with regard to any Participant
whose date of birth is before July 1, 1917, April 1 of the
calendar year following the later of (A) the Participant's 70-1/2
Year or (B) the calendar year in which the Participant retires.
(h) 70-1/2 Year means, with respect to any
Participant, the calendar year which includes the date that is
<PAGE>
-33-
six months after the Participant's 70th birthday.
Section 4.2. Determination of Nonforfeitable Rights.
A Participant shall at all times be fully vested in, and have a
100% nonforfeitable right to his or her Savings Account and
Company Contribution Account.
<PAGE>
-34-
ARTICLE 5
DISTRIBUTION OF BENEFITS
------------------------
Section 5.1. Forms and Time of Benefit Distributions.
(a) In General. A Participant shall be entitled to
receive a distribution of his or her benefits under the Plan if
such Participant has separated from the service of the Company
(or Organization Under Common Control).
(b) Commencement of Distributions. Unless a
Participant elects otherwise, distributions of benefits to which
a Participant becomes entitled under Subsection (a) shall
commence as soon as practicable following the satisfaction of the
conditions set forth in such Subsection (a). Notwithstanding the
foregoing, distributions of a benefit to a Participant under the
Plan shall commence no later than the earlier of:
(i) the Participant's Required Beginning Date; or
(ii) the 60th day after the close of the Plan Year
in which occurs the latest of the following:
(1) the date on which the Participant
attains the earlier of age 65 or his or her Normal
Retirement Date,
(2) the 10th anniversary of the year in
which the Participant commenced participation in the
Plan,
(3) the date the Participant terminates his
service with the Company (or Organization Under Common
Control), or
(4) a date which is later than the dates
described in (i), (ii) and (iii) above and which is
specified in a written election made by the
Participant.
(c) Form of Distributions. At the time a Participant
becomes entitled to receive a distribution of a benefit in
accordance with this Section he or she shall receive such benefit
in the Normal Form of Benefit unless the alternative form of
benefit set forth in Section 5.3 is properly elected.
Section 5.2. Normal Form of Benefit. The Normal Form
of Benefit is a single lump sum payment in cash or property of
<PAGE>
-35-
the Participant's entire nonforfeitable interest in the Plan.
Section 5.3. Alternative Form of Benefit. A
Participant who separates from service with the Company on or
after his or her Normal Retirement Date, Early Retirement Date or
Disability Retirement Date and who properly waives the Normal
Form of Benefit may elect the following alternative form of
benefit. Such alternative form of benefit shall be actuarially
equivalent to the Participant's nonforfeitable interest in his or
her accounts under the Plan.
Under this alternative form, a Participant receives his
or her benefit in installments payable at least annually for a
period of years which shall not be greater than or equal to the
Participant's life expectancy determined as of his or her Annuity
Starting Date. The sum of the installments for each year shall
be a fixed dollar amount (as elected by the Participant with the
consent of the Plan Administrator) which shall not be less than
the annual installment determined under the requirements of
Section 401(a)(9) of the Code.
All such installments shall be in cash or other
property and the installment or installments for the
Participant's 70-1/2 Year and all subsequent years shall be paid
to the Participant on or before December 31 of such year. The
frequency of the installments shall be determined by the
Participant after consultation with the Plan Administrator, but
shall be made no less frequently than annually.
Section 5.4. Designation of Death Beneficiary. Each
Participant shall designate the beneficiary for the benefits
provided on his or her death under the Plan. Such designation
may be changed from time to time. All designations shall be made
on forms provided by and filed with the Plan Administrator.
A designation made by a Participant under the Fisher-
Price Profit Sharing and Retirement Savings Plan will continue to
remain in effect after the merger of such plan into this Plan
only for a Participant who had no account balance under this Plan
immediately prior to such merger. In all other cases, a death
beneficiary designation made under this Plan shall supersede a
designation made under the Fisher-Price Profit Sharing and
Retirement Savings Plan after the merger of the two plans on or
about July 1, 1994.
A married Participant may designate a beneficiary other
than his or her spouse if such spouse consents in writing to such
designation. Such consent shall acknowledge the effect of such
designation and must be witnessed by a representative of the Plan
Administrator or a notary public. No such designation shall be
<PAGE>
-36-
effective if the beneficiary may be changed without the consent
of the spouse, unless the spouse's consent expressly permits
changes in beneficiary designations by the Participant without
any requirement of further consent of the spouse. Any consent by
a spouse under this Section 5.4 shall be effective only with
respect to such spouse.
In the absence of an otherwise effective designation
under the Plan, death benefits shall be payable in the following
order of priority:
(a) to the Participant's spouse, or if there is none;
(b) to the Participant's estate.
Section 5.5. Death of Participant.
If a Participant dies prior to what would otherwise
have been his or her Annuity Starting Date, the Participant's
entire nonforfeitable interest in the Plan shall be distributed
to his or her beneficiary in a single lump sum payment in cash or
property by December 31 of the calendar year in which occurs the
fifth anniversary of the Participant's death.
Section 5.6. Early Distribution Consent.
(a) In General. If the Participant's nonforfeitable
interest in the Plan exceeds $3,500, or has ever exceeded $3,500
at the time of any prior distribution, no benefit shall be paid
to the Participant prior to the later of his Normal Retirement
Date or age 62 unless the Participant consents in writing to the
commencement of the distribution of the benefit. If the required
consent is not obtained, payment of the benefit shall commence as
otherwise provided under this Article.
(b) Valid Consent. A Participant's consent under this
Section shall not be valid unless the Participant has received a
notice containing a general description of the material features
of, and an explanation of, the relative values of the alternative
form of benefit available under the Plan. The notice must be
written in a manner that would satisfy the notice requirements of
section 417(a)(3) of the Code. Such notice shall be provided no
less than 30 days and no more than 90 days before the Annuity
Starting Date. In addition, the Participant must be informed of
his or her right to defer receipt of the distribution. A consent
also will not be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution. Finally, written consent of the Participant to the
distribution must not be made before the Participant receives the
aforementioned notice and must not be made more than 90 days
<PAGE>
-37-
before the Annuity Starting Date.
Notwithstanding the foregoing, if a distribution is one
to which Sections 401(a)(11) and 417 of the Code do not apply,
such distribution may commence less than 30 days after the
aforementioned notice is given, provided that:
(i) the Plan Administrator clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution and a particular distribution option, and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
Section 5.7. Minimum Distribution Required. If the
Deferred Retirement of any Participant extends to the
Participant's Required Beginning Date, the Participant must begin
to receive his or her benefit under the Plan pursuant to the
Normal Form of Benefit. Notwithstanding anything in the Plan to
the contrary, the sum of payments made under this Section during
a calendar year must be greater than or equal to the annual
installment required by Section 401(a)(9) of the Code and the
regulations thereunder.
Section 5.8. Cash-Outs.
(a) Definitions. The following definitions will apply
for purposes of this Article:
(i) Cash-Out means Involuntary Cash-Outs and
Voluntary Cash-Outs.
(ii) Involuntary Cash-Out means a distribution
made in accordance with Subsection (b).
(iii) Voluntary Cash-Out means a distribution made
in accordance with Subsection (c).
(b) Involuntary Cash-Outs of Small Benefits.
Notwithstanding any other provision of this Article, a
Participant who has separated from the service of the Company and
who is no longer employed by any Organization Under Common
Control shall receive a distribution of his or her entire
nonforfeitable interest in the Plan in a single lump sum payment
of cash or property, provided that the value of such
nonforfeitable interest is equal to or less than $3,500,
determined as of the Valuation Date coincident with or
immediately preceding his or her separation from service. A
<PAGE>
-38-
distribution under this Subsection shall be made as soon as
administratively feasible following the Participant's separation
from service.
(c) Cash-Outs of Benefits in Excess of $3,500.
Notwithstanding any other provision of this Article, a
Participant who has separated from the service of the Company,
and who is no longer employed by any Organization Under Common
Control and whose nonforfeitable interest in the Plan exceeds
$3,500 may elect to receive a distribution of his or her entire
nonforfeitable interest in the Plan prior to attaining his or her
Normal Retirement Date or Disability Retirement Date. If a
Participant elects to receive a distribution of his or her
nonforfeitable interest in the Plan in accordance with this
Subsection, he or she shall receive such benefit in the form of a
single lump sum payment in cash or property. A distribution
under this Subsection shall commence as soon as administratively
feasible following the Participant's separation from service.
Section 5.9. Hardship Withdrawals. Upon the
application of a Participant, the Plan Administrator, in
accordance with a uniform, nondiscriminatory policy, may permit
such Participant to withdraw all or a portion of his or her
interest in any account under the Plan needed for the purpose of
alleviating extraordinary financial hardship. Only those
Participants who are employed by the Company shall be permitted
to apply for such withdrawals. Participants who are retired,
terminated, on leave of absence or on layoff will not be
permitted distributions under this Section. For purposes of this
Section, a distribution is on account of extraordinary financial
hardship if the distribution is made on account of immediate and
heavy financial need of the Participant and is necessary to
satisfy such financial need. The determination of whether a
Participant has an immediate and heavy financial need is to be
made on the basis of all relevant facts and circumstances. A
financial need shall not fail to qualify as immediate and heavy
merely because such need was reasonably foreseeable or
voluntarily incurred by the Participant. A distribution will be
treated as necessary to satisfy the financial need to the extent
that it cannot be satisfied from other resources that are
reasonably available to the Participant. Unless otherwise
proscribed by applicable Treasury Regulations, a hardship may be
determined to exist as a result of:
(a) extraordinary expenses arising from the
sickness or disability of a Participant or a member of
his or her family;
(b) purchasing real property which is to serve as
the principal residence of the Participant;
<PAGE>
-39-
(c) financing the cost of education beyond the
secondary level for the Participant or a member of his
or her family; or
(d) the need to prevent the eviction of the
Participant from his or her principal residence or
foreclosure on the mortgage on the Participant's
principal residence.
A Participant making application under this Section
shall have the burden of presenting to the Plan Administrator
proof of such need and the amount required to meet the immediate
financial need created by the hardship and not reasonably
available from other resources of the Participant. The Plan
Administrator shall not permit withdrawal under this Section 5.9
without first receiving such proof.
The Plan Administrator shall adopt uniform rules of
general applicability regarding maximum amounts, timing and
frequency of withdrawals permitted under this Section and shall
also adopt rules regarding which accounts shall be charged with
any such withdrawal.
Section 5.10. Loans to Participants.
(a) Trustees May Make Loans. Upon written direction
of the Plan Administrator, the Trustees shall make loans to
Participants, who are employed by the Company, pursuant to the
terms and conditions set forth in this Section and any additional
rules that may be adopted. Such loans shall be made available to
Participants who are on the active payroll of the Company on a
reasonably equivalent basis and shall not be made available to
Highly Compensated Employees, officers or shareholders in an
amount greater than the amount made available to other
Participants. Loans shall not be made available to Participants
who are retired, terminated, on leave of absence or on layoff.
(b) Written Applications. Loan applications must be
in writing, signed by the applying Participant and submitted to
the Plan Administrator. The application of the Participant shall
be executed within 90 days prior to the making of the loan.
(c) Limit on Amount of Loan. The dollar amount of a
loan to any Participant, when added to any other loans granted
under this Section, shall not exceed the lesser of:
(i) $50,000, reduced by the excess (if any) of-
(a) the highest outstanding balance of loans
from the Plan during the one-year period
<PAGE>
-40-
ending on the day before the date on
which such loan was made, over
(b) the outstanding balance of loans from
the Plan on the date on which such loan
was made; or
(ii) one-half of the present value of the
nonforfeitable accrued benefit of the employee under
the Plan.
The Plan Administrator, pursuant to nondiscriminatory
uniform rules of general application, may impose a minimum loan
amount requirement and may limit the maximum number of loans
which may be outstanding under the Plan.
(d) Term and Interest Rate. The term of any loan
granted under this Section shall not exceed four years.
Notwithstanding the previous sentence, in the case of a loan used
to acquire a dwelling unit which within a reasonable time is to
be used as a principal residence of the Participant the term of
such loan shall not exceed fifteen years. The unpaid balance of
any loan shall bear a fixed rate of interest equal to one percent
plus the annual prime rate announced by the Trustee (or any other
financial institution selected by the Plan Administrator) for its
nonfiduciary business customers as in effect at the beginning of
the month in which the loan is granted or such other reasonable
rate of interest established by the Plan Administrator. The loan
must be repaid in substantially level payments (with payments not
less frequently than quarterly) over the term of the loan.
(e) Promissory Note Required. Each such loan shall be
evidenced by a promissory note or notes made, executed and
delivered by the applying Participant to the Plan Administrator,
and each such note or notes shall be in such form and contain
such terms and conditions as the Plan Administrator shall
require.
(f) Security. Each loan to a Participant under this
Section must be adequately secured by the Participant's
nonforfeitable interest in the Plan. No more than 50% of the
Participant's nonforfeitable interest in the Plan may be
considered by the Plan as security for the outstanding balance of
all Plan loans made to that Participant.
On default, the balance of the amount owed by a
Participant may be charged by the Plan Administrator or Trustee
against such Participant's interest in the Plan. However,
foreclosure on a note and attachment of security shall not occur
until a distribution under the Plan occurs. If any balance
<PAGE>
-41-
remains owing on the loan after the balance of the amount owed
has been charged against such interest in the Plan, such
Participant shall remain liable for such remaining balance and
the Plan Administrator or Trustee may take any action it deems
advisable to collect such remaining balance from such
Participant.
(g) Directed Investment. Any application for a loan
under this Section shall constitute a direction by the
Participant that his or her nonforfeitable interest in the Plan
be invested in such loan. If a loan is made under this Section,
the value of a Participant's account shall be adjusted as of each
valuation date to reflect any principal and interest credited to
such account as a result of the repayment of the loan by the
Participant hereunder.
<PAGE>
-42-
ARTICLE 6
ACCOUNT VALUATIONS AND ALLOCATION OF NET EARNINGS
-------------------------------------------------
Section 6.1. Valuation Dates. The Plan Administrator
shall direct the Trustee to determine the value of the Trust on
each Valuation Date. For purposes of the Plan, "Valuation Date"
means each of the following dates:
(a) the last Business Day of each Plan Year; and
(b) any other Business Day of the Plan Year as
determined by the Plan Administrator pursuant to a
nondiscriminatory policy.
Section 6.2. Method of Valuation of Trust Assets. As
of each Valuation Date, the Trustee shall value the assets held
in the Trust at their fair market value on such date. In
determining the fair market value of assets other than securities
for which trading or bid prices can be obtained or cash or cash
equivalents, the Trustee may appraise such assets themselves, or
in its discretion employ one or more appraisers for that purpose
and rely on the values established by such appraiser or
appraisers. All items of income and expenses shall be taken into
account either on a cash receipts and disbursements basis or on
an accrual basis, as determined by the Trustee in a consistent
manner.
Section 6.3. Allocation of Net Earnings. As of each
Valuation Date, the Plan Administrator shall (or direct the
Trustee to) allocate the net earnings or losses of the Trust for
the period ending with respect to such Valuation Date to each
Participant's account or accounts in the ratio that each such
account balance bears to all Participants' account balances as of
the immediately preceding Valuation Date adjusted for charges
against and credits to each such account for all payments,
distributions and contributions that occurred during such period.
Notwithstanding the foregoing, in making the adjustments required
by this Section the amount of any net earnings or losses with
respect to each Separate Fund, as hereafter defined, shall be
allocated solely with respect to such Separate Fund.
Section 6.4. Notification to Participants. The Plan
Administrator shall, upon request, make available to each
Participant a notice of the amount of his or her interest in the
Trust as of the close of each Plan Year. Such interest shall
consist of an amount equal to the total amounts credited to his
or her accounts as a result of the adjustments under Section 6.3.
<PAGE>
-43-
Section 6.5. Directed Investment Accounts.
Notwithstanding any other provisions of the Plan or the Trust, a
Participant or beneficiary may direct in writing that the funds
allocable to his or her accounts be invested by the Trustee in
one or more investment funds established by the Plan
Administrator (referred to collectively as the Separate Funds and
individually as a Separate Fund). By way of illustration but not
limitation, such Separate Funds may include mutual funds or the
following:
(i) One or more Separate Funds which may be
invested primarily in stocks, other securities or other
property including bonds, notes and debentures, the
income from which may be fixed or limited. Such
Separate Funds may be established to provide a variety
of investment objectives and varying degrees of risk
such as (a) capital preservation and generation of
income, (b) capital appreciation and (c) liquidity with
a high degree of assurance of repayment.
(ii) If it is permitted, in the sole discretion of
the Plan Administrator, a "Mattel Stock Fund" shall be
established, which shall be primarily invested by the
Trustee in the common stock of Mattel, Inc.,
hereinafter called "Mattel Stock". The Mattel Stock
Fund may be unitized for valuation purposes, and a
portion of its assets may be held in cash or other
short-term investments.
Notwithstanding the preceding, and without the
adoption of any Plan amendment, the Plan Administrator may
discontinue any of the funds established under this Section and
it may establish such substitute funds or additional funds as it
may determine in its sole discretion.
The Plan Administrator shall establish uniform
rules of general applicability designating the amounts of each
Participant's accounts with respect to any Plan Year which may be
invested in such Separate Funds. The Plan Administrator shall
make available to each Participant an election form or electronic
or telephonic procedures to designate the percentage or the
amount allocable to his or her accounts which shall be invested
in each Separate Fund. In the discretion of the Plan
Administrator, investment elections hereunder may be made at such
time or times during a Plan Year as determined by the Plan
Administrator.
Any written election forms or other written
designations shall be filed with the Plan Administrator not later
than a date fixed by the Plan Administrator in order for such
<PAGE>
-44-
form or designation to be effective by a specified date. An
election form or other designation filed by a Participant in
connection with the Plan shall be deemed to be filed when it is
actually received by the Plan Administrator at the address
specified on such form or any accompanying instructions.
Procedures for electronic or telephonic elections under this
Section may be established, changed or modified by the Plan
Administrator in its discretion and shall be communicated to
Participants. Electronic or telephonic elections shall be
effective as provided in the procedures governing such elections.
Any Participant who does not provide an election
hereunder may be deemed to have elected the same investment
directions as last previously specified. If no effective
election has been made by a Participant, his or her accounts
shall be invested by the Trustee in such fund or funds designated
by the Plan Administrator.
To the extent investment of assets are directed
herein by the Participants, the fiduciary responsibility of the
Trustee shall be limited to the extent provided in Section 404(c)
of ERISA.
<PAGE>
-45-
ARTICLE 7
THE TRUST
---------
Section 7.1. Continuation of the Trust. The Company
shall continue a Trust under the Plan. The Trust was established
pursuant to a separate Trust Agreement executed by the Company
and the Trustee. The Trust shall consist of such sums of money
and such other property acceptable to the Trustee as shall be
paid or delivered to the Trustee, together with the earnings and
profits thereon. All such money and other property, all
investments made therewith and the proceeds thereof, and all
earnings and profits thereon, less the payments and distributions
therefrom, are part of the Trust to be administered in accordance
with the Trust and the terms of the Plan.
Section 7.2. Disbursements Limited to Trust Assets.
Nothing contained in this Plan shall be construed as obligating
the Company or the Trustee to make any payment or disbursements
except from funds or property held under the Trust.
Section 7.3. Expenses of Administration and
Litigation. The reasonable costs, expenses, taxes and
liabilities incurred in connection with the administration of the
Plan (including, without limitation, Trustee compensation, legal
fees, and accounting and actuarial expenses) or in connection
with any litigation involving the Trust shall be paid from the
assets of the Trust, unless paid by the Company. No person who
is a disqualified person (as defined in Section 4975 of the Code)
and who receives full-time compensation from the Company, may
receive compensation from the Trust, although he or she may be
reimbursed for expenses properly and actually incurred in
connection with the administration of the Plan. The Plan
Administrator shall direct the Trustee in the payment of expenses
and liabilities pursuant to this Section.
Section 7.4. Pooled Investment Fund or Group Trust.
Part or all of the assets of the Trust, from time to time, may be
transferred to (a) any pooled investment fund of an insurance
company or (b) a common or collective trust fund or pooled
investment fund maintained by a bank or trust company which
contemplates the commingling for investment purposes of such
Trust assets with assets of other trusts. Such transfers shall
be made in a manner consistent with the provisions of Section
4975(d)(8) of the Code.
<PAGE>
-46-
Section 7.5. Mattel Stock Fund.
(a) Voting of Shares in Mattel Stock Fund.
Participants with amounts invested in the Mattel Stock Fund may
direct the Trustee with respect to the voting of shares held in
such Funds in accordance with this Section.
The Company or the Trustee shall provide each
Participant who has any portion of his or her accounts invested
in the Mattel Stock Fund with the regular proxy materials or
other information relating to the voting of Mattel Stock normally
given to shareholders. Under rules administered by the Company
and set forth under the terms of the Trust Agreement, such
Participants may direct the Trustee as to the manner in which
shares of Mattel Stock held by the Trustee are to be voted.
Pursuant to such rules and on forms provided by the Company, each
Participant may submit a direction as to the voting of the number
of shares of Mattel Stock equal in value to his or her
proportionate interest in the Mattel Stock Fund. The Trustee
shall then vote such shares in accordance with the directions
received from Participants. The Trustee shall not vote shares of
Mattel Stock for which it has receive no direction from the
Participants.
(b) Tender Offers. If a tender offer (for which a
filing has been made with the SEC which purports to comply with
the requirements of Section 14(b) of the Securities Exchange Act
of 1934 and the corresponding SEC Rules) is made for Mattel
Stock, each Participant who has any portion of his or her
accounts invested in the Mattel Stock Fund may direct the Trustee
to tender the number of shares equal in value to his or her
proportionate interest in the Mattel Stock Fund. Directions to
the Trustee with respect to tender offers under this Section
shall be made in accordance with the rules administered by the
Company and set forth under the terms of the Trust Agreement. If
any Participant fails to direct the Trustee to tender shares
hereunder, the Trustee shall not tender such shares. Any cash or
securities received by the Trustee as a result of a tender offer
for shares of Mattel Stock shall be transferred to such Separate
Fund as the Participant may elect.
<PAGE>
-47-
ARTICLE 8
TOP-HEAVY PROVISIONS
--------------------
Section 8.1. Definitions. The following definitions
will apply for purposes of this Article:
(a) Top-Heavy Plan. The Plan shall be considered a
Top-Heavy Plan for a Plan Year if, on the Determination Date, the
Cumulative Account Balances of Key Employees exceed 60% of the
Cumulative Account Balances of all employees under the Plan or
under all plans included in an Aggregation Group if the Plan is
included in an Aggregation Group. The computation in the
preceding sentence shall be made in accordance with Section 416
of the Code and the regulations thereunder.
(b) Determination Date means the last day of the
preceding Plan Year or, in the case of the first Plan Year, the
last day of such first Plan Year.
(c) Key Employee means any employee of the Company
(including a beneficiary of such employee) who at any time during
the Plan Year, or any of the four preceding Plan Years, is a key
employee as defined in Section 416 of the Code and the
regulations thereunder. Former Key Employees are not Key
Employees and are excluded entirely in determining whether the
Plan is a Top-Heavy Plan.
(d) Cumulative Account Balances, with respect to any
Participant means, the value, determined as of the Top-Heavy
Valuation Date, of the Participant's accounts under the Plan,
plus the sum of the present value of the cumulative accrued
benefits for such Participant under all defined benefit plans
included in an Aggregation Group and the aggregate of the
accounts of such Participant under all defined contribution plans
included in an Aggregation Group. For purposes of the preceding
sentence, Cumulative Account Balances shall not include the value
of the accounts or the present value of the cumulative accrued
benefits of any Participant who has not performed services for
the Company at any time during the 5-year period ending on the
Determination Date. Except to the extent provided in the
regulations, any rollover contribution (or similar transfer)
initiated by the Participant, and made after December 31, 1983,
to a plan shall not be taken into account with respect to the
Plan for purposes of determining whether the Plan is a Top-Heavy
Plan.
(e) Aggregation Group shall include (1) each plan
(including terminated plans) of the Company in which a Key
<PAGE>
-48-
Employee is a participant during the Plan Year, or any of the
four preceding Plan Years, and (2) each other plan (including
terminated plans) of the Company which enables any plan in which
a Key Employee participates to meet the requirements of Sections
401(a)(4) or 410 of the Code. Any other plan of the Company may
be included in an Aggregation Group if such Aggregation Group
would continue to meet the requirements of Sections 401(a)(4) and
410 of the Code with such plan being taken into account. In
computing the value of accounts and benefits under this
Subsection, any distribution made with respect to a Participant
from the Plan during the 5-year period ending on the
Determination Date and any distribution under a terminated plan
which, if it had not been terminated, would have been required to
be included in an Aggregation Group shall be added to the
Participant's Cumulative Account Balances.
(f) Top-Heavy Valuation Date means, with respect to
each Plan Year, the last Valuation Date of such Plan Year.
(g) Top-Heavy Compensation has the same meaning as
defined in Section 415(c)(3) of the Code, but including amounts
contributed by the Company pursuant to a salary reduction
agreement which are excludable from the Participant's gross
income under Sections 125, 402(a)(8), 402(h) or 403(b) of the
Code.
(h) Qualified Top-Heavy Participant, for any Plan Year
in which the Plan is a Top-Heavy Plan, means any Participant who
has not separated from service at the end of such Plan Year,
regardless of the Participant's Hours of Service or Compensation
for such year.
(i) Super Top-Heavy Plan. The Plan shall be
considered a Super Top-Heavy Plan if the Plan would meet the
definition of a Top-Heavy Plan if 90% were substituted for 60% in
each place it appears in Subsection (a).
Section 8.2. Top-Heavy Rules.
(a) Application of Top-Heavy Rules. If the Plan is a
Top-Heavy Plan with respect to a Plan Year, the provisions of
this Section shall become applicable for such Plan Year,
notwithstanding any other provision of the Plan to the contrary.
(b) Minimum Company Contribution. In any Plan Year in
which the Plan is a Top-Heavy Plan, there shall be allocated to
each Qualified Top-Heavy Participant, before any other
allocations are made under the Plan, the lesser of 3% of the
Participant's Top-Heavy Compensation or the percentage at which
contributions and forfeitures are allocated under the Plan for
<PAGE>
-49-
the Plan year for the Key Employee for whom such percentage is
the highest for the Plan Year. The latter percentage shall be
determined by dividing the contributions (including Salary
Reduction Contributions) and forfeitures allocated to such Key
Employee by his or her Top Heavy Compensation for the Plan Year.
For purposes of this Section, Salary Reduction Contributions,
matching contributions required to pass the actual deferral
percentage test of Section 401(k)(3) of the Code, and matching
contributions required to pass the actual contribution percentage
test of Section 401(m) of the Code, of a non-Key Employee may not
be considered in meeting this minimum contribution requirement.
If in any Plan Year the Plan is a Top-Heavy Plan, and a non-Key
Employee who is eligible to be a participant hereunder also
participates in a defined benefit plan of the Company, the
minimum contribution shall be provided under the defined benefit
plan. If in any Plan Year this Plan is a Top-Heavy Plan, and a
non-Key Employee who is eligible to be a participant hereunder
also participates in a defined benefit plan of the Company, the
minimum contribution shall be provided under the Plan.
(c) Limitation on Contributions and Benefit. If the
Plan is a Top-Heavy Plan in any Plan Year, 1.00 shall be
substituted for 1.25 in calculating the Defined Benefit Fraction
and the Defined Contribution Fraction under Section 3.10.
Notwithstanding the preceding sentence, in any Plan Year in which
the Plan is a Top-Heavy Plan but not a Super Top-Heavy Plan, 1.00
shall not be substituted for 1.25 if the Company makes an
additional minimum Company contribution under Subsection (b) by
substituting 4% for 3%.
(d) Special Rule for Non-Key Employees in Two Plans.
If (1) the Plan is a Top-Heavy Plan in any Plan Year, and (2) a
non-Key Employee participates both in the Plan and in a defined
benefit plan which is top-heavy and which is included in an
Aggregation Group, 5% shall be substituted for 3% in
Subsection (b) and 7-1/2% shall be substituted for 4% in
Subsection (c).
<PAGE>
-50-
ARTICLE 9
ADMINISTRATION OF PLAN
----------------------
Section 9.1. Company as Plan Administrator. The
Company is the Plan Administrator and shall be a "named
fiduciary" under Section 402(a)(1) of ERISA.
Section 9.2. Responsibility for Administration of the
Plan. The Plan Administrator shall have the authority to control
and manage the operation and administration of the Plan for the
exclusive benefit of the Participants and their beneficiaries as
required under ERISA and the Code, subject to the specific terms
of the Plan.
The Plan Administrator shall have the responsibility to
file and distribute reports and returns to government agencies
and Participants and beneficiaries as required of Plan
Administrators under ERISA and the Code.
The Plan Administrator shall have the authority to
determine, in accordance with the terms of the Plan, any
questions as to the eligibility of an employee to become a
Participant, the amount of contribution allocated to a
Participant or the determination of a Participant's interest in
the Trust at any time.
Section 9.3. Expenses. The Company or the Trust, as
determined in accordance with Section 7.3, may pay the expenses
of the Plan Administrator incurred in connection with the
administration of the Plan.
Section 9.4. Liability and Indemnification. Except
for their own negligence, willful misconduct, or breach of
fiduciary duty, the Plan Administrator and any individual to whom
responsibilities have been delegated under Section 9.6 shall not
be liable to anyone for any act or omission in the course of the
administration of the Plan or management of the Trust. In any
case, to the extent permitted by law, the Company shall indemnify
any employee of the Company to whom responsibilities have been
delegated under Section 9.6 against any liability (not reimbursed
by insurance) incurred in the course of the administration of the
Plan or the management of Trust assets, except liability arising
from their own negligence, willful misconduct or breach of
fiduciary duty.
Section 9.5. Agents. The Plan Administrator may
employ such agents, including counsel, as it may deem advisable
for the administration of the Plan. Such agents need not be
<PAGE>
-51-
Participants under the Plan.
Section 9.6. Delegation of Authority.
(a) In General. The Company, by a written resolution
approved by its Board of Directors, may delegate responsibilities
under the Plan among employees, officers, offices or committees
to carry out such responsibilities in accordance with the terms
of the Plan or the Trust Agreement.
(b) Liability. If the Plan Administrator delegates
responsibilities to certain persons under subsection (a), such
persons shall not be liable for any act or omission of other
persons to whom such responsibilities are delegated except as
provided in Section 405(c)(2) of ERISA.
Section 9.7. Defect or Omission. The Plan
Administrator shall refer any defect, omission or inconsistency
in the Plan to the Board of Directors of the Company for such
action as may be necessary to correct such defect, supply such
omission, or reconcile such inconsistency.
Section 9.8. Funding Policy. The Board of Directors
of the Company or a committee authorized by the Board shall
establish and review the funding policy of the Plan taking into
consideration the short-term need for liquidity in Trust assets
and the long-term goals for investment growth. The Board of
Directors or the authorized committee shall communicate the
funding policy and any changes of funding policy in writing to
the Plan Administrator and the Trustee.
Section 9.9. Records. The acts and decisions of the
Plan Administrator shall be duly recorded. The Plan
Administrator shall make available for examination by any
Participant during the business hours of the Company a copy of
the Plan and those records which demonstrate the determination of
amounts credited to the account of and held by the Plan
Administrator for the benefit of such Participant.
Section 9.10. Claims Procedure.
(a) Filing a Claim for Benefits. If an employee
disputes a decision of the Plan Administrator with respect to
such employee's eligibility to become a Participant, if a
Participant disputes the amount of contribution allocated to such
Participant or the determination of his or her interest in the
Trust, or if an employee, a Participant or his or her beneficiary
does not receive benefits to which he or she believes he or she
is entitled, such person (the "Claimant") may file a claim in
writing with the Plan Administrator.
<PAGE>
-52-
(b) Notification of Decision of Plan Administrator.
If the claim is totally or partially denied, the Plan
Administrator shall notify the Claimant in writing within 90 days
after the claim has been received (unless special circumstances
require an extension of up to 90 additional days). The written
notice shall state the specific reason for denial of the claim
and a specific reference to the Plan provisions on which the
denial is based. It shall describe any additional material the
Claimant may need to submit to the Plan Administrator to have the
claim approved, and shall give the reasons such material is
necessary. in addition, the notice shall explain the claim review
procedure.
(c) Claim Review Procedure. If the Claimant receives
a notice that the claim has been denied, the Claimant, or his or
her authorized representative, may appeal to the Plan
Administrator for a review of the claim. The Claimant must
submit a request for review in writing to the Plan Administrator
within 60 days after the date the written notice of denial of the
claim is received. The Claimant, or his or her representative,
may then review Plan documents which pertain to the claim and may
submit issues and comments in writing to the Plan Administrator.
The Plan Administrator shall then deliver to the Claimant a
written determination of the claim, including specific reasons
for the decision, no later than 60 days after the date the Plan
Administrator received the request for review (unless special
circumstances require an extension of up to 60 additional days).
The decision of the Plan Administrator shall be final and
conclusive.
<PAGE>
-53-
ARTICLE 10
RIGHT TO ALTER, AMEND OR TERMINATE
----------------------------------
Section 10.1. Plan Amendments.
(a) Right to Alter or Amend. Subject to Subsection
(b), the Board of Directors of the Company reserves the right to
amend, alter, modify or suspend, in whole or in part, any
provision or provisions of the Plan and the Trust at any time,
retroactively or otherwise. The authority under this Section may
be delegated to a committee or an officer pursuant to a
resolution adopted by the Board of Directors.
(b) Limitations on Power of Amendment. No such
amendment, alteration, modification or suspension shall be
effective if it:
(i) increases the duties or responsibilities of
the Trustee without its written consent;
(ii) vests in the Company any right, title or
interest in or to any property or funds held under the
Trust;
(iii) diverts any part of the Trust for purposes
other than for the exclusive benefit of Participants or
their beneficiaries;
(iv) reduces the accrued benefit of any
Participant or decreases a Participant's nonforfeitable
interest; or
(v) eliminates or reduces a "protected benefit"
(within the meaning of Section 411(d)(6) of the Code
and the regulations thereunder) with respect to
benefits attributable to service rendered before the
later of the adoption date or effective date of such
amendment, alteration, modification or suspension,
except as permitted by Section 411(d)(6) of the Code
and the regulations thereunder.
(c) Form of Amendment. Any such amendment,
alteration, modification or suspension shall be set forth in a
written instrument executed by an authorized officer of the
Company.
<PAGE>
-54-
Section 10.2. Plan Termination.
(a) Right to Terminate. The Board of Directors of the
Company reserves the right to revoke or terminate the Plan and
the Trust at any time with respect to its employees, in whole or
in part, or to reduce, suspend or discontinue its contributions
under the Plan. Such revocation, termination, reduction,
suspension or discontinuance shall be effective upon the date set
forth in the resolution of the Board of Directors of the Company
authorizing such action.
(b) Vesting on Termination or Partial Termination. In
the event of termination or partial termination of the Plan, the
account balance of each affected Participant shall be
nonforfeitable.
(c) Disposition of Assets on Termination. Upon
termination (but not partial termination) of the Plan, the
Trustees shall dispose of the assets of the Trust by (1) valuing
such assets, (2) allocating such assets to the accounts of each
Participant, and (3) distributing to such Participants their
nonforfeitable interest as soon as practicable following the
termination in accordance with Article 5.
Section 10.3. Merger or Consolidation. This Plan
shall not be merged or consolidated with, nor shall its assets or
liabilities be transferred to, any other plan unless each
Participant would receive a benefit immediately after the merger,
consolidation or transfer (if the Plan then terminated) which is
equal to or greater than the benefit he or she would have been
entitled to receive immediately before the merger, consolidation
or transfer (if the Plan then terminated).
<PAGE>
-55-
ARTICLE 11
MISCELLANEOUS PROVISIONS
------------------------
Section 11.1. New York and Applicable Federal Law
Govern. The Plan shall be construed and all Plan provisions
shall be administered according to the laws of the State of New
York and applicable federal law.
Section 11.2. Headings for Convenience. The headings
and subheadings of the Plan are inserted for convenience and
reference only, and are not to be used in construing the Plan or
any of its individual provisions.
Section 11.3. Rights of All Interested Parties
Determined by the Terms of the Plan. The Plan and Trust are
purely voluntary on the part of the Company. The Trust shall be
the sole source of benefits and in no event shall the Company be
liable or otherwise responsible for such benefits. The Plan
shall be binding upon the Company and all Participants under the
Plan, and upon their respective heirs, executors, administrators,
successors and assigns, and upon all persons having or claiming
to have any interest of any kind or nature in or under the Plan
or the Trust.
Section 11.4. Spendthrift Clause. Except as provided
in Sections 11.5 and 5.10, and otherwise required by law, none of
the rights, benefits, payments or proceeds arising out of or by
virtue of the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge.
Section 11.5. Qualified Domestic Relations Order.
Section 11.4 shall not apply to a Qualified Domestic Relations
Order. Qualified Domestic Relations Orders shall have the same
meaning as defined in Section 414(p) of the Code.
The Plan Administrator shall establish a written
procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified
orders. Upon receipt of a domestic relations order made pursuant
to state law the Plan Administrator shall:
(i) promptly notify the Participant and any other
Alternate Payee, as defined by Section 414(p)(8) of the
Code, of the receipt of such order and the Plan's
procedures for determining its qualified status;
(ii) determine within a reasonable period after
<PAGE>
-56-
its receipt whether such order is a Qualified Domestic
Relations Order, and notify the Participant and any
other Alternate Payee of such determination; and
(iii) segregate in a separate account in the Plan
the amounts which would have been payable to the
Alternate Payee designated in such order during such
period of determination specified in paragraph (2), if
the order had been determined to be a Qualified
Domestic Relations Order.
If the Plan Administrator determines that the order is
a Qualified Domestic Relations Order, then it shall direct the
Trustees to comply with the terms of the order and shall release
the amounts held in the segregated account to the Alternate Payee
designated in such order.
To the extent provided under a Qualified Domestic
Relations Order, a former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes under
the Plan.
Section 11.6. Notice to Employees. Notice of the
existence and the provisions of the Plan and amendments thereto
shall be communicated by the Plan Administrator to all
individuals who are or who become Participants.
Section 11.7. No Employment Rights Created. The
creation and maintenance of the Plan shall not confer on any
employee any right to continued employment, and all employees
shall remain subject to discharge to the same extent as if the
Plan had never been established.
Section 11.8. Diversion from Employees Prohibited.
Except as otherwise permitted by law, no part of the corpus or
income of any trust fund maintained pursuant to the Plan or of
any funds contributed to any such trust fund shall be used for,
or diverted to purposes other than the exclusive benefit of
Participants or their beneficiaries. In the event the Company
shall make an excessive contribution under a mistake of fact
pursuant to Section 403(c)(2)(A) of ERISA, the Company may demand
repayment of such excess contribution at any time within one year
following the time of payment and the Trustee shall return such
amount to the Company within the one year period. Earnings of
the Plan attributable to the excess contributions may not be
returned to the Company but any losses attributable thereto must
reduce the amount returned. All contributions made by the
Company are conditioned on the deductibility of such amount under
Section 404 of the Code, and shall be returned to the Company to
the extent of any disallowance of a deduction within one year
<PAGE>
-57-
after the disallowance.
Section 11.9. Right to Judicial Accounting. Nothing
contained in the Plan shall be construed as depriving the Trustee
of the right to have a judicial settlement of its accounts. Upon
any proceeding by the Trustee for such judicial settlement or for
instructions, the only necessary party thereto in addition to the
Trustee shall be the Company. None of the Participants or other
beneficiaries of the Plan shall have any right to compel an
accounting, judicial or otherwise, by the Trustee, and all such
parties shall be bound with respect to all accounts submitted by
the Trustee to the Company as provided by the Plan and Trust.
Section 11.10. Transfer of Funds to Another Plan. If
(1) a Participant under the Plan becomes a participant under any
other plan qualified under Section 401(a) of the Code, (2) the
trust under such other plan is exempt from tax under Section
501(a) of the Code, and (3) such other plan provides that amounts
may be transferred to it from other qualified plans in which the
employee has been eligible to participate, then such Participant
may elect, subject to approval by the Plan Administrator, to
transfer such amount from the Plan to such other plan to be held
in trust and invested in accordance with the terms and conditions
of that plan. In the case of a transfer to another plan made
under this Section, the entire amount available for transfer
shall be transferred as soon as administratively feasible.
Section 11.11. Forfeiture on Account of Inability to
Locate Participant or Beneficiary. Notwithstanding any other
provision of the Plan, if a benefit becomes payable to a
Participant or to his or her beneficiary and if the Company,
after all reasonable efforts, is unable to locate such
Participant or beneficiary within one year of the date such
benefit became payable, the benefit payable to the Participant or
beneficiary shall be forfeited.
If a benefit has been forfeited due to the Company's
inability to locate a Participant or beneficiary, and such
Participant or his or her beneficiary subsequently makes a claim
for such benefit, such benefit shall then be reinstated. Any
reinstatement of forfeited amounts under this Section shall first
be made from forfeitures, if any, occurring during the Plan Year
in which such reinstatement occurs, and then, if necessary, by an
additional contribution by the Company.
Section 11.12. Incapacity of Person Entitled to
Payment. If any person entitled to receive any benefits under
the Plan ("distributee") is, in the judgment of the Plan
Administrator, legally, physically, or mentally incapable of
personally caring for his or her affairs, unless prior claim has
<PAGE>
-58-
been made by a duly qualified guardian or other legal
representative, the Plan Administrator may instruct the Trustee
to make distribution to such other person, persons, or
institutions as, in the judgment of the Plan Administrator,
maintains, has custody of, or is otherwise responsible for such
distributee. Any such payment shall be a payment for such
distributee's account and shall be a complete discharge of any
liability of the Plan therefor.
Section 11.13. Adoption of Plan by Organization Under
Common Control. With the consent of the Board of Directors of
the Company the Plan may be adopted by any Organization Under
Common Control with the Company for the benefit of all or a
limited group of such organization's employees as specified in an
agreement to adopt the Plan executed by such organization and the
Board of Directors of the Company. If an Organization Under
Common Control adopts the Plan, the term "Company" shall also
refer to such organization.
<PAGE>
-59-
ARTICLE 12
DIRECT ROLLOVERS
----------------
Section 12.1. Direct Rollovers. This Article applies
to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this
Article, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
Section 12.2. Definitions.
(a) Eligible Rollover Distribution. An eligible
rollover distribution is an distribution of all or any portion of
the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution
that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life
expectancy) of the distributee on the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(b) Eligible Retirement Plan. An eligible retirement
plan is an individual retirement account described in section
408(a) of the Code, and individual retirement annuity described
in section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
(c) Distributee. A distributee includes a Participant
or former Participant. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former
Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest
of the spouse or former spouse.
<PAGE>
-60-
(d) Direct Rollover. A direct rollover is a payment
by the Plan to the eligible retirement plan specified by the
distributee.
IN WITNESS WHEREOF, the Company has caused the Plan to
be executed by its duly authorized officer this 27th day of
September, 1994.
FISHER PRICE, INC.
By: /s/ Karen L. Kemp
---------------------
<PAGE>
EXHIBIT 99.9
MATTEL, INC.
PERSONAL INVESTMENT PLAN
1993 Restatement
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Plan Name. . . . . . . . . . . . . . . . . . . . 1
1.2 Plan Purpose.. . . . . . . . . . . . . . . . . . 1
1.3 Effective Date.. . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Accounts.. . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliated Company.. . . . . . . . . . . . . . . 3
2.3 After-Tax Contributions. . . . . . . . . . . . . 3
2.4 Before-Tax Contributions.. . . . . . . . . . . . 3
2.5 Beneficiary. . . . . . . . . . . . . . . . . . . 3
2.6 Reserved for Plan Modifications. . . . . . . . . 3
2.7 Board of Directors.. . . . . . . . . . . . . . . 3
2.8 Reserved for Plan Modifications. . . . . . . . . 4
2.9 Reserved for Plan Modifications. . . . . . . . . 4
2.10 Code. . . . . . . . . . . . . . . . . . . . . . 4
2.11 Committee. . . . . . . . . . . . . . . . . . . . 4
2.12 Company. . . . . . . . . . . . . . . . . . . . . 4
2.13 Company Contributions. . . . . . . . . . . . . . 4
2.14 Company Matching Contributions.. . . . . . . . . 4
2.15 Company Stock. . . . . . . . . . . . . . . . . . 4
2.16 Compensation.. . . . . . . . . . . . . . . . . . 4
2.17 Deferral Limitation. . . . . . . . . . . . . . . 6
2.18 Reserved for Plan Modifications. . . . . . . . . 6
2.19 Distributable Benefit. . . . . . . . . . . . . . 6
2.20 Effective Date.. . . . . . . . . . . . . . . . . 7
2.21 Eligible Employee. . . . . . . . . . . . . . . . 7
2.22 Employee.. . . . . . . . . . . . . . . . . . . . 7
2.23 Employment Commencement Date.. . . . . . . . . . 8
2.24 ERISA. . . . . . . . . . . . . . . . . . . . . . 8
2.25 Hardship.. . . . . . . . . . . . . . . . . . . . 8
2.26 Highly Compensated Employee. . . . . . . . . . . 8
2.27 Hour of Service. . . . . . . . . . . . . . . . .12
2.28 Investment Manager.. . . . . . . . . . . . . . .12
2.29 Normal Retirement. . . . . . . . . . . . . . . .13
2.30 Normal Retirement Date.. . . . . . . . . . . . .13
2.31 Participant. . . . . . . . . . . . . . . . . . .13
2.32 Participation Commencement Date. . . . . . . . .13
2.33 Participating Company. . . . . . . . . . . . . .13
2.34 Period of Severance. . . . . . . . . . . . . . .13
2.35 Plan. . . . . . . . . . . . . . . . . . . . . .13
2.36 Plan Administrator.. . . . . . . . . . . . . . .13
2.37 Plan Year. . . . . . . . . . . . . . . . . . . .14
2.38 Reserved for Plan Modifications. . . . . . . . .14
2.39 Severance Date.. . . . . . . . . . . . . . . . .14
2.40 Reserved for Plan Modifications. . . . . . . . .14
i
<PAGE>
Page
----
2.41 Reserved for Plan Modifications. . . . . . . . .14
2.42 Reserved for Plan Modifications. . . . . . . . .14
2.43 Reserved for Plan Modifications. . . . . . . . .14
2.44 Total and Permanent Disability.. . . . . . . . .14
2.45 Trust and Trust Fund.. . . . . . . . . . . . . .15
2.46 Trustee. . . . . . . . . . . . . . . . . . . . .15
2.47 Valuation Date.. . . . . . . . . . . . . . . . .15
2.48 Year of Service. . . . . . . . . . . . . . . . .15
ARTICLE III
ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . .17
3.1 Eligibility to Participate.. . . . . . . . . . .17
3.2 Commencement of Participation. . . . . . . . . .17
ARTICLE IV
TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . .18
4.1 Trust Fund.. . . . . . . . . . . . . . . . . . .18
ARTICLE V
EMPLOYEE CONTRIBUTIONS . . . . . . . . . . . . . . . . . .19
5.1 Employee Contributions.. . . . . . . . . . . . .19
5.2 Amount Subject to Election.. . . . . . . . . . .19
5.3 Termination of, Change in Rate of, or
Resumption of Deferrals.. . . . . . . . . . .20
5.4 Limitation on Before-Tax Contributions by
Highly Compensated Employees. . . . . . . . .20
5.5 Provisions for Disposition of Excess Before-
Tax Contributions by Highly Compensated
Employees.. . . . . . . . . . . . . . . . . .23
5.6 Provisions for Return of Annual Before-Tax
Contributions in Excess of the Deferral
Limitation. . . . . . . . . . . . . . . . . .25
5.7 Character of Amounts Contributed as Before-
Tax Contributions.. . . . . . . . . . . . . .27
5.8 Participant Transfer/Rollover Contributions. . .28
ARTICLE VI
COMPANY CONTRIBUTIONS. . . . . . . . . . . . . . . . . . .29
6.1 General. . . . . . . . . . . . . . . . . . . . .29
6.2 Requirement for Net Profits. . . . . . . . . . .30
6.3 Special Limitations on After-Tax
Contributions and Company Matching
Contributions.. . . . . . . . . . . . . . . .30
6.4 Provision for Return of Excess After-Tax
Contributions and Company Matching
Contributions on Behalf of Highly
Compensated Employees.. . . . . . . . . . . .33
6.5 Forfeiture of Company Matching Contributions
Attributable to Excess Deferrals or
Contributions.. . . . . . . . . . . . . . . .35
6.6 Investment and Application of Plan
Contributions.. . . . . . . . . . . . . . . .35
6.7 Irrevocability.. . . . . . . . . . . . . . . . .38
ii
<PAGE>
Page
----
6.8 Company, Committee and Trustee Not
Responsible for Adequacy of Trust Fund. . . .38
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS . . . . . . . . . . .39
7.1 General. . . . . . . . . . . . . . . . . . . . .39
7.2 Participants' Accounts.. . . . . . . . . . . . .39
7.3 Revaluation of Participants' Accounts. . . . . .39
7.4 Treatment of Accounts Following Termination
of Employment.. . . . . . . . . . . . . . . .40
7.5 Accounting Procedures. . . . . . . . . . . . . .40
ARTICLE VIII
VESTING; PAYMENT OF PLAN BENEFITS. . . . . . . . . . . . .41
8.1 Vesting. . . . . . . . . . . . . . . . . . . . .41
8.2 Distribution Upon Retirement.. . . . . . . . . .41
8.3 Distribution Upon Death Prior to Termination
of Employment.. . . . . . . . . . . . . . . .42
8.4 Death After Termination of Employment. . . . . .42
8.5 Termination of Employment Prior to Normal
Retirement Date.. . . . . . . . . . . . . . .43
8.6 Withdrawals. . . . . . . . . . . . . . . . . . .44
8.7 Form of Distribution.. . . . . . . . . . . . . .47
8.8 Election for Direct Rollover of Distributable
Benefit to Eligible Retirement Plan.. . . . .48
8.9 Designation of Beneficiary.. . . . . . . . . . .49
8.10 Facility of Payment. . . . . . . . . . . . . . .50
8.11 Requirement of Spousal Consent.. . . . . . . . .51
8.12 Additional Documents.. . . . . . . . . . . . . .51
8.13 Company Stock Distribution.. . . . . . . . . . .51
8.14 Valuation of Accounts. . . . . . . . . . . . . .52
8.15 Forfeitures; Repayment.. . . . . . . . . . . . .53
8.16 Loans. . . . . . . . . . . . . . . . . . . . . .54
8.17 Special Rule for Disabled Employees. . . . . . .56
ARTICLE IX
OPERATION AND ADMINISTRATION OF THE PLAN . . . . . . . . .59
9.1 Plan Administration. . . . . . . . . . . . . . .59
9.2 Committee Powers.. . . . . . . . . . . . . . . .59
9.3 Investment Manager.. . . . . . . . . . . . . . .61
9.4 Periodic Review. . . . . . . . . . . . . . . . .61
9.5 Committee Procedure. . . . . . . . . . . . . . .61
9.6 Compensation of Committee. . . . . . . . . . . .62
9.7 Resignation and Removal of Members.. . . . . . .62
9.8 Appointment of Successors. . . . . . . . . . . .62
9.9 Records. . . . . . . . . . . . . . . . . . . . .63
9.10 Reliance Upon Documents and Opinions.. . . . . .63
9.11 Requirement of Proof.. . . . . . . . . . . . . .64
9.12 Reliance on Committee Memorandum.. . . . . . . .64
9.13 Multiple Fiduciary Capacity. . . . . . . . . . .64
9.14 Limitation on Liability. . . . . . . . . . . . .64
9.15 Indemnification. . . . . . . . . . . . . . . . .64
9.16 Reserved for Plan Modifications. . . . . . . . .65
9.17 Allocation of Fiduciary Responsibility.. . . . .65
iii
<PAGE>
Page
----
9.18 Bonding. . . . . . . . . . . . . . . . . . . . .65
9.19 Reserved for Plan Modifications. . . . . . . . .66
9.20 Reserved for Plan Modifications. . . . . . . . .66
9.21 Reserved for Plan Modifications. . . . . . . . .66
9.22 Prohibition Against Certain Actions. . . . . . .66
9.23 Plan Expenses. . . . . . . . . . . . . . . . . .66
ARTICLE X
SPECIAL PROVISIONS CONCERNING COMPANY STOCK
EFFECTIVE AS OF OCTOBER 1, 1992. . . . . . . . . . . . . .67
10.1 Securities Transactions. . . . . . . . . . . . .67
10.2 Valuation of Company Securities. . . . . . . . .67
10.3 Allocation of Stock Dividends and Splits.. . . .68
10.4 Reinvestment of Dividends. . . . . . . . . . . .68
10.5 Voting of Company Stock. . . . . . . . . . . . .68
10.6 Confidentiality Procedures.. . . . . . . . . . .69
10.7 Securities Law Limitation. . . . . . . . . . . .69
ARTICLE XI
MERGER OF COMPANY; MERGER OF PLAN. . . . . . . . . . . . .70
11.1 Effect of Reorganization or Transfer of
Assets. . . . . . . . . . . . . . . . . . . .70
11.2 Merger Restriction.. . . . . . . . . . . . . . .70
ARTICLE XII
PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS . . .71
12.1 Plan Termination.. . . . . . . . . . . . . . . .71
12.2 Discontinuance of Contributions. . . . . . . . .71
12.3 Rights of Participants.. . . . . . . . . . . . .72
12.4 Trustee's Duties on Termination. . . . . . . . .72
12.5 Partial Termination. . . . . . . . . . . . . . .73
12.6 Failure to Contribute. . . . . . . . . . . . . .73
ARTICLE XIII
APPLICATION FOR BENEFITS . . . . . . . . . . . . . . . . .74
13.1 Application for Benefits.. . . . . . . . . . . .74
13.2 Action on Application. . . . . . . . . . . . . .74
13.3 Appeals. . . . . . . . . . . . . . . . . . . . .74
ARTICLE XIV
LIMITATIONS ON CONTRIBUTIONS . . . . . . . . . . . . . . .76
14.1 General Rule.. . . . . . . . . . . . . . . . . .76
14.2 Annual Additions.. . . . . . . . . . . . . . . .76
14.3 Other Defined Contribution Plans.. . . . . . . .76
14.4 Combined Plan Limitation (Defined Benefit
Plan).. . . . . . . . . . . . . . . . . . . .77
14.5 Adjustments for Excess Annual Additions. . . . .77
14.6 Disposition of Excess Amounts. . . . . . . . . .79
14.7 Affiliated Company.. . . . . . . . . . . . . . .79
iv
<PAGE>
Page
----
ARTICLE XV
RESTRICTION ON ALIENATION. . . . . . . . . . . . . . . . .80
15.1 General Restrictions Against Alienation. . . . .80
15.2 Nonconforming Distributions Under Court
Order.. . . . . . . . . . . . . . . . . . . .80
ARTICLE XVI
PLAN AMENDMENTS. . . . . . . . . . . . . . . . . . . . . .83
16.1 Amendments.. . . . . . . . . . . . . . . . . . .83
16.2 Retroactive Amendments.. . . . . . . . . . . . .83
16.3 Amendment of Vesting Provisions. . . . . . . . .83
ARTICLE XVII
TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . .85
17.1 Minimum Company Contributions. . . . . . . . . .85
17.2 Compensation.. . . . . . . . . . . . . . . . . .85
17.3 Top-Heavy Determination. . . . . . . . . . . . .85
17.4 Maximum Annual Addition. . . . . . . . . . . . .88
17.5 Aggregation. . . . . . . . . . . . . . . . . . .88
ARTICLE XVIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .90
18.1 No Enlargement of Employee Rights. . . . . . . .90
18.2 Mailing of Payments; Lapsed Benefits.. . . . . .90
18.3 Addresses. . . . . . . . . . . . . . . . . . . .91
18.4 Notices and Communications.. . . . . . . . . . .92
18.5 Reporting and Disclosure.. . . . . . . . . . . .92
18.6 Governing Law. . . . . . . . . . . . . . . . . .92
18.7 Interpretation.. . . . . . . . . . . . . . . . .92
18.8 Certain Securities Laws Rules. . . . . . . . . .93
18.9 Withholding for Taxes. . . . . . . . . . . . . .93
18.10 Limitation on Company; Committee and
Trustee Liability.. . . . . . . . . . . . . .93
18.11 Successors and Assigns. . . . . . . . . . . .93
18.12 Counterparts. . . . . . . . . . . . . . . . .93
<PAGE>
MATTEL, INC.
PERSONAL INVESTMENT PLAN
ARTICLE I
GENERAL
1.1 Plan Name.
This instrument evidences the terms of a tax-
qualified retirement plan for the Eligible Employees of
Mattel, Inc. and its participating affiliates to be known as
the "Mattel, Inc. Personal Investment Plan" ("Plan").
1.2 Plan Purpose.
This Plan is intended to qualify under Code
Section 401(a) as a profit sharing plan, although
contributions may be made to the Plan without regard to
profits, and with respect to the portion hereof intended to
qualify as a Qualified Cash or Deferred Arrangement, to
satisfy the requirements of Code Section 401(k).
1.3 Effective Date.
The original effective date of this Plan is
November 1, 1983. This amendment and restatement of the
Plan reflects the provisions of the Plan as in effect as of
January 1, 1993, except as otherwise expressly provided
herein.
<PAGE>
ARTICLE II
DEFINITIONS
2.1 Accounts.
"Accounts" or "Participant's Accounts" means the
following Plan accounts maintained by the Committee for each
Participant as required by Article VII:
(a) "Before-Tax Contributions Account" shall
mean the account established and maintained for each
Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which
are attributable to Participant Before-Tax
Contributions, and any earnings thereon, in accordance
with Article V.
(b) "After-Tax Contributions Account" shall
mean the account established and maintained for each
Participant under Article VII to reflect amounts held
in the Trust Fund on behalf of such Participant which
are attributable to Participant After-Tax Contributions
and any earnings thereon, in accordance with Article V.
(c) "Company Matching Account" shall mean
the account established and maintained for each
Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which
are attributable to Company Matching Contributions, and
any earnings thereon, pursuant to Section 6.1(c).
(d) "Company Contributions Account" shall
mean the account established and maintained for each
Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which
are attributable to Company Contributions, and any
earnings thereon, pursuant to Section 6.1(a).
(e) "Transfer/Rollover Account" shall mean
the account established and maintained for each
Participant under Article VII for purposes of holding
and accounting for amounts held in the Trust Fund which
are attributable to amounts distributed to the
Participant from any other plan qualified under Code
Section 401(a), or from an Individual Retirement
Account attributable to employer contributions under
another plan qualified under Code Section 401(a), and
any earnings on such amounts, as provided in
Section 5.8.
2
<PAGE>
2.2 Affiliated Company.
"Affiliated Company" shall mean:
(a) Any corporation that is included in a
controlled group of corporations, within the meaning of
Section 414(b) of the Code, that includes the Company,
(b) Any trade or business that is under
common control with the Company within the meaning of
Section 414(c) of the Code,
(c) Any member of an affiliated service
group, within the meaning of Section 414(m) of the
Code, that includes the Company, and
(d) Any other entity required to be
aggregated with the Company pursuant to regulations
under Section 414(o) of the Code.
2.3 After-Tax Contributions.
"After-Tax Contributions" shall mean those
contributions by a Participant to the Trust Fund in
accordance with Article V which do not qualify as Before-Tax
Contributions.
2.4 Before-Tax Contributions.
"Before-Tax Contributions" shall mean those
amounts contributed to the Plan as a result of a salary or
wage reduction election made by the Participant in
accordance with Article V, to the extent such contributions
qualify for treatment as contributions made under a
"qualified cash or deferred arrangement" within the meaning
of Section 401(k) of the Code.
2.5 Beneficiary.
"Beneficiary" or "Beneficiaries" shall mean the
person or persons last designated by a Participant as set
forth in Section 8.9 or, if there is no designated
Beneficiary or surviving Beneficiary, the person or persons
designated in Section 8.9 to receive the interest of a
deceased Participant in such event.
2.6 Reserved for Plan Modifications.
2.7 Board of Directors.
"Board of Directors" shall mean the Board of
Directors (or its delegate) of Mattel, Inc. as it may from
time to time be constituted.
3
<PAGE>
2.8 Reserved for Plan Modifications.
2.9 Reserved for Plan Modifications.
2.10 Code.
"Code" shall mean the Internal Revenue Code of
1986, as in effect on the date of execution of this Plan
document and as thereafter amended from time to time.
2.11 Committee.
"Committee" shall mean the Committee described in
Article IX hereof.
2.12 Company.
"Company" shall mean Mattel, Inc., or any
successor thereof, if its successor shall adopt this Plan.
2.13 Company Contributions.
"Company Contributions" shall mean amounts paid by
a Participating Company into the Trust Fund in accordance
with Section 6.1(a).
2.14 Company Matching Contributions.
"Company Matching Contributions" shall mean
amounts paid by a Participating Company into the Trust Fund
in accordance with Section 6.1(c).
2.15 Company Stock.
"Company Stock" shall mean whichever of the
following is applicable:
(a) So long as the Company has only one
class of stock, that class of stock.
(b) In the event the Company at any time has
more than one class of stock, the class (or classes) of
the Company's stock constituting "employer securities"
as that term is defined in Section 409A(1) of the Code.
2.16 Compensation.
(a) "Compensation" shall mean the full
salary and wages (including overtime, shift
differential and holiday, vacation and sick pay) and
other compensation paid by a Participating Company
during a Plan Year by reason of services performed by
an Employee, subject, however, to the following special
4
<PAGE>
rules and to the provisions of Subsections 2.16(b)
through (e):
(i) Except as specified in (ii) below,
fringe benefits and contributions by the
Participating Company to and benefits under any
employee benefit shall not be taken into account
in determining compensation;
(ii) Amounts deducted pursuant to
authorization by an Employee or pursuant to
requirements of law (including amounts of salary
or wages deferred in accordance with the
provisions of Section 5.1 and which qualify for
treatment under Code Section 401(k) or amounts
deducted pursuant to Code Section 125 or 129)
shall be included in "Compensation" except as
specifically provided to the contrary elsewhere in
this Plan;
(iii) Amounts paid or payable by reason
of services performed during any period in which
an Employee is not a Participant under the Plan
shall not be taken into account in determining
Compensation;
(iv) Amounts deferred by the Employee
pursuant to non-qualified deferred compensation
plans, regardless of whether such amounts are
includable in the Employee's gross income for his
current taxable year, shall not be taken into
account in determining Compensation;
(v) Amounts included in any Employee's
gross income with respect to life insurance as
provided by Code Section 79 shall not be taken
into account in determining compensation; and
(vi) Amounts paid to Employees as
"bonuses" shall not be taken into account in
determining compensation.
(b) To the extent permitted by Code
Section 415(c)(3), in the case of a Participant who
ceases actively to perform services for a Participating
Company prior to January 1, 1989 because such person
has sustained a Total and Permanent Disability, such
Participant shall be deemed to have "Compensation" to
the extent provided in the provisions of
Section 8.17(d), for the limited purposes of
determining the amount of certain contributions to this
Plan.
5
<PAGE>
(c) The term "Compensation," for purposes of
Article XIV of this Plan, shall mean wages as defined
in Section 3401(a) and all other payments of
compensation to an Employee by the Company (in the
course of the Company's trade or business) for which
the Company is required to furnish the Employee a
written statement under Code Sections 6041(d) and
6051(a)(3). Compensation for purposes of this
Subsection (c) shall be determined without regard to
any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or
location of the employment or the services performed
(such as the exception for agricultural labor in Code
Section 3401(a)(2)).
(d) In the event that this Plan is deemed a
Top-Heavy Plan as set forth in Article XVII, the term
"Compensation" shall not include amounts excluded by
reason of and to the extent provided by Sections 17.1
and 17.2.
(e) Effective for Plan Years commencing on
and after January 1, 1989, the "Compensation" of any
Employee taken into account under the Plan for any Plan
Year shall not exceed $200,000, as that amount is
adjusted each year by the Secretary of the Treasury.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include
only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result
of the application of such rules the adjusted $200,000
limitation is exceeded, then, the limitation shall be
prorated among the affected individuals in proportion
to each such individual's Compensation as determined
under this Subsection (e) prior to the application of
this limitation.
2.17 Deferral Limitation.
"Deferral Limitation" shall mean the dollar
limitation on the exclusion of elective deferrals from a
Participant's gross income under Section 402(g) of the Code,
as in effect with respect to the taxable year of the
Participant.
2.18 Reserved for Plan Modifications.
2.19 Distributable Benefit.
"Distributable Benefit" shall mean the vested
interest of a Participant in this Plan which is determined
6
<PAGE>
and distributable in accordance with the provisions of
Article VIII following the termination of the Participant's
employment.
2.20 Effective Date.
"Effective Date" shall mean November 1, 1983,
which shall be the original effective date of this Plan.
2.21 Eligible Employee.
"Eligible Employee" shall include any individual
who is at least age twenty-one (21) and is employed by a
Participating Company, except
(a) any Employee who is covered by a
collective bargaining agreement to which a
Participating Company is a party if there is evidence
that retirement benefits were the subject of good faith
bargaining between the Participating Company and the
collective bargaining representative, unless the
collective bargaining agreement provides for coverage
under this Plan,
(b) any Employee who is a "leased employee,"
within the meaning of Code Section 414(n), or
(c) any Employee who is classified as a
temporary Employee, unless such temporary Employee has
been an Employee for a twelve (12) consecutive month
period.
2.22 Employee.
(a) "Employee" shall mean each person
currently employed in any capacity by the Company or
Affiliated Company any portion of whose income is
subject to withholding of income tax and/or for whom
Social Security contributions are made by the Company.
The term "Employee" also includes a "leased employee,"
to the extent required by Code Section 414(n).
(b) Although Eligible Employees are the only
class of Employees eligible to participate in this
Plan, the term "Employee" is used to refer to persons
employed in a non-Eligible Employee capacity as well as
Eligible Employee category. Thus, those provisions of
this Plan that are not limited to Eligible Employees,
such as those relating to Hours of Service, apply to
both Eligible and non-Eligible Employees.
7
<PAGE>
2.23 Employment Commencement Date.
"Employment Commencement Date" shall mean each of
the following:
(a) The date on which an Employee first
performs an Hour of Service in any capacity for the
Company or an Affiliated Company with respect to which
the Employee is compensated or is entitled to
compensation by the Company or the Affiliated Company.
(b) In the case of an Employee who has a
one-year Period of Severance and who is subsequently
reemployed by the Company or an Affiliated Company, the
term "Employment Commencement Date" shall also mean the
first day following such one-year Period of Severance
on which the Employee performs an Hour of Service for
the Company or an Affiliated Company with respect to
which he is compensated or entitled to compensation by
the Company or Affiliated Company.
2.24 ERISA.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.25 Hardship.
"Hardship" shall mean a need created by immediate
and heavy financial obligations of the Participant, which
obligations cannot be met by other sources reasonably
available to the Participant, and shall be limited to a
distribution for the purpose of meeting major medical
expenses of the Participant or his Spouse or dependents. A
distribution shall be deemed to be necessary for the purpose
of meeting major medical expenses if such expenses were
previously incurred, or if such distribution is necessary to
obtain major medical care. The amount required to meet a
Hardship need may include amounts necessary to pay federal,
state or local income taxes or penalties reasonably
anticipated to result from the distribution. Any
determination of Hardship shall be in accordance with
regulations promulgated under Code Section 401(k). The
existence of a Participant's financial Hardship and the
amount required to meet the need created by the Hardship
shall be determined by the Committee in accordance with
rules of uniform application which the Committee may from
time to time prescribe.
2.26 Highly Compensated Employee.
(a) "Highly Compensated Employee" shall mean
any Employee who
8
<PAGE>
(i) was a 5% owner during the
Determination Year or the Look Back Year;
(ii) received Compensation from the
Company in excess of $75,000 during the Look Back
Year;
(iii) received Compensation from the
Company in excess of $50,000 during the Look Back
Year and was in the "top-paid group" of Employees
for such Look Back Year;
(iv) was at any time an officer during
the Look Back Year and received Compensation
greater than fifty percent (50%) of the amount in
effect under Section 415(b)(1)(A) of the Code in
such Look Back Year; or
(v) was an Employee described in
Paragraph (ii), (iii), or (iv) above for the
Determination Year and was a member of the group
consisting of the 100 Employees paid the greatest
Compensation during the Determination Year.
(b) Determination of a Highly Compensated
Employee shall be in accordance with the following
definitions and special rules:
(i) "Determination Year" means the Plan
Year for which the determination of Highly
Compensated Employee is being made.
(ii) "Look Back Year" is the twelve
(12) month period preceding the Determination
Year.
(iii) An Employee shall be treated as a
5% owner for any Determination Year or Look Back
Year if at any time during such Year such Employee
was a 5% owner (as defined in Section 17.3).
(iv) An Employee is in the "top-paid
group" of Employees for any Determination Year or
Look Back Year if such Employee is in the group
consisting of the top twenty percent (20%) of the
Employees when ranked on the basis of Compensation
paid during such Year.
(v) For purposes of this Section, no
more than fifty (50) Employees (or, if lesser, the
greater of three (3) Employees or ten
percent (10%) of the Employees) shall be treated
as officers. To the extent required by Code
Section 414(q), if for any Determination Year or
9
<PAGE>
Look Back Year no officer of the Company is
described in this Section, the highest paid
officer of the Company for such year shall be
treated as described in this Section.
(vi) If any individual is a "family
member" with respect to a 5% owner or of a Highly
Compensated Employee in the group consisting of
the ten (10) Highly Compensated Employees paid the
greatest Compensation during the Determination
Year or Look Back Year, then
(A) such individual shall not be
considered a separate Employee, and
(B) any Compensation paid to such
individual (and any applicable contribution
or benefit on behalf of such individual)
shall be treated as if it were paid to (or on
behalf of) the 5% owner or Highly Compensated
Employee.
For purposes of this Paragraph (vi), the term
"family member" means, with respect to any
Employee, such Employee's spouse and lineal
ascendants or descendants and the spouses of such
lineal ascendants or descendants.
(vii) For purposes of this Section the
term "Compensation" means Compensation as defined
in Code Section 415(c)(3), as set forth in
Section 2.16(c), without regard to the limitations
of Section 2.16(e); provided, however, the
determination under this Paragraph (vi) shall be
made without regard to Code Sections 125,
402(a)(8), and 401(h)(1)(B), and in the case of
Participant contributions made pursuant to a
salary reduction agreement, without regard to Code
Section 403(b).
(viii) For purposes of determining the
number of Employees in the "top-paid" group under
this Section, the following Employees shall be
excluded:
(A) Employees who have not
completed six (6) months of service,
(B) Employees who normally work
less than 17-1/2 hours per week,
(C) Employees who normally work
not more than six (6) months during any Plan
Year, and
10
<PAGE>
(D) Employees who have not
attained age 21,
(E) Except to the extent provided
in Treasury Regulations, Employees who are
included in a unit of employees covered by an
agreement which the Secretary of Labor finds
to be a collective bargaining agreement
between Employee representatives and the
Company, and
(F) Employees who are nonresident
aliens and who receive no earned income
(within the meaning of Code Section 911(d)(2)
from the Company which constitutes income
from sources within the United States (within
the meaning of Code Section 861(a)(3)).
The Company may elect to apply Subparagraphs (A)
through (D) above by substituting a shorter period
of service, smaller number of hours or months, or
lower age for the period of service, number of
hours or months, or (as the case may be) than as
specified in such Subparagraphs.
(ix) A former Employee shall be treated
as a Highly Compensated Employee if
(A) such Employee was a Highly
Compensated Employee when such Employee
incurred a severance, or
(B) such Employee was a Highly
Compensated Employee at any time after
attaining age fifty-five (55).
(x) Code Sections 414(b), (c), (m), and
(o) shall be applied before the application of
this Section. Also, the term "Employee" shall
include "leased employees," within the meaning of
Code Section 414(n), unless such leased Employee
is covered under a "safe harbor" plan of the
leasing organization and not covered under a
qualified plan of the Affiliated Company.
(c) To the extent permissible under Code
Section 414(q), the Committee may determine which
Employees shall be categorized as Highly Compensated
Employees by applying a simplified method and calendar
year election prescribed by the Internal Revenue
Service.
11
<PAGE>
2.27 Hour of Service.
(a) "Hour of Service" of an Employee shall
mean the following:
(i) Each hour for which the Employee is
paid by the Company or an Affiliated Company or
entitled to payment for the performance of
services as an Employee.
(ii) Each hour in or attributable to a
period of time during which the Employee performs
no duties (irrespective of whether he has
terminated his Employment) due to a vacation,
holiday, illness, incapacity (including pregnancy
or disability), layoff, jury duty, military duty
or a Leave of Absence, for which he is so paid or
so entitled to payment, whether direct or
indirect. However, no such hours shall be
credited to an Employee if such Employee is
directly or indirectly paid or entitled to payment
for such hours and if such payment or entitlement
is made or due under a plan maintained solely for
the purpose of complying with applicable workmen's
compensation, unemployment compensation or
disability insurance laws or is a payment which
solely reimburses the Employee for medical or
medically related expenses incurred by him.
(iii) Each hour for which he is
entitled to back pay, irrespective of mitigation
of damages, whether awarded or agreed to by the
Company or an Affiliated Company, provided that
such Employee has not previously been credited
with an Hour of Service with respect to such hour
under paragraphs (i) or (ii) above.
(b) Hours of Service under Subsections
(a)(ii) and (a)(iii) shall be calculated in accordance
with Department of Labor Regulation 29 C.F.R.
[section] 2530.200b-2(b). Hours of Service shall be credited
to the appropriate computation period according to the
Department of Labor Regulation [section] 2530.200b-2(c).
However, an Employee will not be considered as being
entitled to payment until the date when the Company or
the Affiliated Company would normally make payment to
the Employee for such Hour of Service.
2.28 Investment Manager.
"Investment Manager" means the one or more
Investment Managers, if any, that are appointed pursuant to
Section 9.3.
12
<PAGE>
2.29 Normal Retirement.
"Normal Retirement" shall mean a Participant's
termination of employment on or after attaining the Plan's
Normal Retirement Date.
2.30 Normal Retirement Date.
"Normal Retirement Date" shall be the
Participant's sixty-fifth birthday.
2.31 Participant.
"Participant" shall mean any Eligible Employee who
has satisfied the participation eligibility requirements set
forth in Section 3.1 and has begun participation in this
Plan in accordance with the provisions of Section 3.2.
2.32 Participation Commencement Date.
"Participation Commencement Date" shall mean the
day on which an Employee's participation in this Plan may
commence in accordance with the provisions of Article III.
2.33 Participating Company.
"Participating Company" shall mean Mattel, Inc.
and each Affiliated Company (or similar entity) that has
been granted permission by the Board of Directors to
participate in this Plan, provided that contributions are
being made hereunder for the Employees of such Participating
Company. Permission to become a Participating Company shall
be granted under such conditions and upon such conditions as
the Board of Directors deems appropriate.
2.34 Period of Severance.
"Period of Severance" shall mean the period of
time commencing on the Participant's Severance Date and
continuing until the first day, if any, on which the
Participant completes one or more Hours of Service following
such Severance Date.
2.35 Plan.
"Plan" shall mean the Mattel, Inc. Personal
Investment Plan herein set forth, and as it may be amended
from time to time.
2.36 Plan Administrator.
"Plan Administrator" shall mean the administrator
of the Plan, within the meaning of Section 3(16)(A) of
ERISA. The Plan Administrator shall be Mattel, Inc.
13
<PAGE>
2.37 Plan Year.
"Plan Year" shall mean the fiscal year of the
Company. Effective as of January 1, 1992, the fiscal year
of the Company is the twelve consecutive month period ending
each December 31.
2.38 Reserved for Plan Modifications.
2.39 Severance Date.
"Severance Date" shall mean the earlier of (a) the
date on which an Employee quits, retires, is discharged, or
dies; or (b) the first anniversary of the first date of a
period in which an Employee remains absent from service
(with or without pay) with the Company or an Affiliated
Company for any reason other than quit, retirement,
discharge or death (such as vacation, holiday, sickness,
disability, leave of absence or layoff).
In the case of an Employee who has a maternity or
paternity absence described in Code Sections 410(a)(5)(E)
and 411(a)(6)(E), the Employee's Period of Severance will
begin on the second anniversary of the date the Employee is
first absent for a maternity or paternity leave, provided
the Employee does not perform an Hour of Service during such
period. The first one-year period of the absence will be
included in the Employee's period of service and the second
one-year period is neither part of the period of service nor
part of the Period of Severance. The Committee may require
that the Employee furnish such timely information as the
Committee may reasonably require to establish that the
absence from work is for such a maternity or paternity
absence, and the number of days for which there was such an
absence.
2.40 Reserved for Plan Modifications.
2.41 Reserved for Plan Modifications.
2.42 Reserved for Plan Modifications.
2.43 Reserved for Plan Modifications.
2.44 Total and Permanent Disability.
An individual shall be considered to be suffering
from a Total and Permanent Disability if he is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which
can be expected to last for a continuous period of not less
than 12 months. An individual's disabled status shall be
determined by the Committee, based on such evidence as the
Committee determines to be sufficient. The rules of this
14
<PAGE>
Section 2.44 shall be applied by the Committee in accordance
with Treasury Regulations, if any, promulgated under Code
Section 415 or Code Section 37(e)(3).
2.45 Trust and Trust Fund.
"Trust" or "Trust Fund" shall mean the one or more
trusts created for funding purposes under the Plan.
2.46 Trustee.
"Trustee" shall mean the corporation appointed by
the Company to act as Trustee of the Trust Fund, or any
successor or other corporation acting as a trustee of the
Trust Fund.
2.47 Valuation Date.
"Valuation Date" shall mean the date as of which
the Trustee shall determine the value of the assets in the
Trust Fund for purposes of determining the value of each
Account, which shall be the last business day of each
calendar month or such other dates as may be determined in
rules prescribed by the Committee.
2.48 Year of Service.
"Year of Service" means three hundred sixty five
(365) days included in a period of service recognized under
this Section 2.48.
(a) Subject to the succeeding provisions of
this Section 2.48, a Participant shall be credited with
a period of service equal to the elapsed time between
his Employment Commencement Date and his subsequent
Severance Date.
(b) A Participant additionally shall receive
credit for a Period of Severance in computing his
service hereunder if such Participant completes an Hour
of Service prior to the first anniversary of his
Severance Date. Except as provided in this
Section 2.48(b), a Period of Severance shall not be
included in a Participant's period of service
hereunder.
(c) If a Participant who does not have any
vested interest in his accounts under the Plan has five
(5) consecutive one-year Periods of Severance, any
prior period of service shall be disregarded for all
purposes of the Plan. Periods of service credited
under this Section 2.48 before such five (5)
consecutive one-year Periods of Severance shall not
include any period or periods of service that are not
15
<PAGE>
required to be taken into account under this
Section 2.48(c) by reason of any prior Periods of
Severance.
(d) The number of a Participant's Years of
Service for vesting shall be determined by reference to
each three hundred sixty five day period of service
recognized under this Section 2.48, whether or not
consecutive.
(e) Notwithstanding any other provision of
this Plan, service performed by Employees for employers
other than the Company or Affiliated Companies may be
taken into account in computing service for any purpose
of this Plan to the extent and in the manner determined
by resolution of the Administrative Committee in its
sole discretion.
(f) Notwithstanding any other provision of
this Plan, service performed for an Affiliated Company
prior to such entity becoming an Affiliated Company
shall be taken into account for purposes of computing
service under this Plan unless determined otherwise by
resolution of the Board of Directors of the Company.
16
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate.
(a) Every Eligible Employee shall become
eligible to participate in the Plan on the date he
becomes an Eligible Employee.
(b) If an Eligible Employee ceases to be an
Eligible Employee he shall again become eligible to
participate in the Plan on the date he again becomes an
Eligible Employee.
(c) Notwithstanding the preceding rules of
this Section 3.1, the actual date upon which an
Employee will commence participation will be determined
pursuant to the rules of Section 3.2.
3.2 Commencement of Participation.
(a) Each Eligible Employee shall be entitled
automatically to commence participation in this Plan
with respect to the Company Contributions described in
Section 6.1(a).
(b) From January 1, 1987 to June 30, 1988,
each Eligible Employee shall be entitled to commence
Employee contributions as set forth in Article V and
Company Matching Contributions as set forth in
Section 6.1(c) on the January 1 after their Employment
Commencement Date.
(c) Effective July 1, 1988, each Eligible
Employee shall be entitled to commence After-Tax
Contributions and Company Matching Contributions as set
forth in Section 6.1(c) as of the date he becomes an
Eligible Employee.
(d) Effective January 1, 1989, each Eligible
Employee shall be entitled to commence Before-Tax
Contributions and Company Matching Contributions as set
forth in Section 6.1(c) as of the date he becomes an
Eligible Employee.
(e) The Committee may prescribe such rules
as it deems necessary or appropriate regarding times
and procedures for Participants to make elections to
contribute a portion of Compensation as provided in
Section 5.1.
17
<PAGE>
ARTICLE IV
TRUST FUND
4.1 Trust Fund.
(a) The Company has entered into a Trust
Agreement for the establishment of a Trust to hold the
assets of the Plan. Simultaneously with the
establishment of this Plan the Company shall pay to the
Trustee a specified sum of money as its initial
contribution to the Trust Fund. The Trustee shall
acknowledge receipt of this contribution and shall
agree to hold and administer this contribution together
with such additional funds and assets that may be
subsequently deposited with the Trustee pursuant to the
terms of this Plan.
(b) The Trust Fund is authorized to invest
in either Company Stock or such other assets as the
Committee or the Investment Manager (if applicable) may
direct. Participants may direct the investment of the
assets in their Accounts in the Trust Fund from among
the acceptable investment alternatives which the
Committee may from time to time make available.
(c) The Committee shall not be required to
engage in any transaction, including without
limitation, directing the purchase or sale of Company
Stock, which it determines in its sole discretion,
might tend to subject itself, its members, the Plan,
the Company, or any Participant to liability under
federal or state securities law.
18
<PAGE>
ARTICLE V
EMPLOYEE CONTRIBUTIONS
5.1 Employee Contributions.
In accordance with rules which the Committee shall
prescribe from time to time, each Participant shall be given
an opportunity to elect to have a percentage of his or her
Compensation contributed to the Plan. A contribution
election by a Participant shall remain in effect from year
to year (notwithstanding salary or wage rate changes) until
changed by the Participant. Effective January 1, 1987, at
the election of the Participant, contributions shall be made
as Before-Tax Contributions, After-Tax Contributions or a
combination thereof.
5.2 Amount Subject to Election.
(a) Effective for Plan Years commencing on
and after January 1, 1989, subject to the limitations
of this Article V, the amount of an individual's
Compensation that may be contributed subject to the
election provided in Section 5.1 shall be a whole
percentage of the individual's Compensation, which
percentage is not less than one percent (1%) nor more
than the difference between (i) the Participant's
Company Contributions percentage determined under
Section 6.1(a) and (ii) seventeen percent (17%).
(b) No Participant shall be permitted to
make Before-Tax Contributions in excess of the Deferral
Limitation. Any election by a Participant to make
Before-Tax Contributions shall be deemed to include an
election to automatically substitute After-Tax
Contributions for such Before-Tax Contributions,
effective for the period starting on the date
immediately following the date the Participant's
Before-Tax Contributions for a calendar year equal the
Deferral Limitation and ending on the immediately
following December 31. In the event a Participant's
Before-Tax Contributions exceed the Deferral
Limitation, excess contributions shall be subject to
the provisions of Section 5.6.
(c) For purposes of satisfying one of the
tests described under Section 5.4 and Section 6.3, the
Committee may prescribe such rules as it deems
necessary or appropriate regarding the maximum amount
that a Participant may elect to contribute and the
timing of such an election. These rules may prescribe
a maximum percentage of Compensation that may be
contributed, or may provide that the maximum percentage
of Compensation that a Participant may contribute will
19
<PAGE>
be a lower percentage of his Compensation above a
certain dollar amount of Compensation than the maximum
deferral percentage below that dollar amount of
Compensation. These rules shall apply to all
individuals eligible to make the election described in
Section 5.1, except to the extent that the Committee
prescribes special or more stringent rules applicable
only to Highly Compensated Employees.
5.3 Termination of, Change in Rate of, or Resumption
of Deferrals.
(a) A Participant may at any time submit a
request to the Committee to terminate his contributions
made pursuant to this Article V.
(b) A Participant may at any time (but not
more frequently than once per calendar quarter) submit
a request to the Committee to alter the rate of, or
resume his contributions made pursuant to this
Article V.
(c) A request for termination, alteration,
or resumption or alteration of the rate of
contributions shall be in form satisfactory to the
Committee. The Committee may require at least thirty
(30) days notice prior to commencement of the payroll
period for which such change is to be effective.
5.4 Limitation on Before-Tax Contributions by Highly
Compensated Employees.
With respect to each Plan Year, Participant
Before-Tax Contributions under the Plan for the Plan Year
shall not exceed the limitations on contributions on behalf
of Highly Compensated Employees under Section 401(k) of the
Code, as provided in this Section. In the event that
Before-Tax Contributions under this Plan on behalf of Highly
Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess
contributions and any income allocable thereto shall be
returned to the Participant or recharacterized as
Participant After-Tax Contributions, as provided in
Section 5.5.
(a) The Before-Tax Contributions by a
Participant for a Plan Year shall satisfy the Average
Deferral Percentage test set forth in (i)(A) below, or
the alternative Average Deferral Percentage test set
forth in (i)(B) below, and to the extent required by
regulations under Code Section 401(m), also shall
satisfy the test identified in (ii) below:
20
<PAGE>
(i)(A) The "Actual Deferral
Percentage" for Eligible Employees who are
Highly Compensated Employees shall not be
more than the "Actual Deferral Percentage" of
all other Eligible Employees multiplied by
1.25, or
(i) (B) The excess of the "Actual
Deferral Percentage" for Eligible Employees
who are Highly Compensated Employees over the
"Actual Deferral Percentage" for all other
Eligible Employees shall not be more than two
percentage points, and the "Actual Deferral
Percentage" for Highly Compensated Employees
shall not be more than the "Actual Deferral
Percentage" of all other Eligible Employees
multiplied by 2.00.
(ii) Average Contribution Percentage
for Highly Compensated Employees eligible to
participate in this Plan and a plan of the Company
or an Affiliated Company that is subject to the
limitations of Section 401(m) of the Code
including, if applicable, this Plan, shall be
reduced in accordance with Section 6.4, to the
extent necessary to satisfy the requirements of
Treasury Regulations Section 1.401(m)-2.
(b) For the purposes of the limitations of
this Section 5.4, the following definitions shall
apply:
(i) "Actual Deferral Percentage" means,
with respect to Eligible Employees who are Highly
Compensated Employees and all other Eligible
Employees for a Plan Year, the average of the
ratios, calculated separately for each Eligible
Employee in such group, of the amount of Before-
Tax Contributions under the Plan allocated to each
Eligible Employee for such Plan Year to such
Employee's "Compensation" for such Plan Year. An
Eligible Employee's Before-Tax Contributions may
be taken into account for purposes of determining
his Actual Deferral Percentage for a particular
Plan Year only if such Before-Tax Contributions
are allocated to the Eligible Employee as of a
date within that Plan Year. For purposes of this
rule, an Eligible Employee's Before-Tax
Contributions shall be considered allocated as of
a date within a Plan Year only if (A) the
allocation is not contingent upon the Eligible
Employee's participation in the Plan or
performance of services on any date subsequent to
that date, and (B) the Before-Tax Contribution is
21
<PAGE>
actually paid to the Trust no later than the end
of the twelve month period immediately following
the Plan Year to which the contribution relates.
To the extent determined by the Committee and in
accordance with regulations issued by the
Secretary of the Treasury, contributions on behalf
of an Eligible Employee that satisfy the
requirements of Code Section 401(k)(3)(C)(ii) may
also be taken into account for the purpose of
determining the Actual Deferral Percentage of such
Eligible Employee.
(ii) "Compensation" means Compensation
determined by the Committee in accordance with the
requirements of Section 414(s) of the Code,
including, to the extent elected by the Committee,
amounts deducted from an Employee's wages or
salary that are excludable from income under
Sections 125, 129, or 402(a)(8) of the Code.
(c) In the event that as of the last day of
a Plan Year this Plan satisfies the requirements of
Section 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans which include
arrangements under Code Section 401(k), then this
Section 5.4 shall be applied by determining the Actual
Deferral Percentages of Eligible Employees as if all
such plans were a single plan, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code.
(d) For the purposes of this Section, the
Actual Deferral Percentage for any Highly Compensated
Employee who is a participant under two or more Code
Section 401(k) arrangements of the Company or an
Affiliated Company shall be determined by taking into
account the Highly Compensated Employee's Compensation
under each such arrangement and contributions under
each such arrangement which qualify for treatment under
Code Section 401(k), in accordance with regulations
prescribed by the Secretary of the Treasury under
Section 401(k) of the Code.
(e) If an Eligible Employee (who is also a
Highly Compensated Employee) is subject to the family
aggregation rules in Section 2.26(b)(vi), the combined
Actual Deferral Percentage for the family group (which
is treated as one Highly Compensated Employee) shall be
the Actual Deferral Percentage determined by combining
the Before-Tax Contributions, amounts treated as
Before-Tax Contributions under Code
Section 401(k)(3)(D)(ii), and Compensation of all
eligible family members.
22
<PAGE>
(f) For purposes of this Section, the amount
of Before-Tax Contributions by a Participant who is not
a Highly Compensated Employee for a Plan Year shall be
reduced by any Before-Tax Contributions in excess of
the Deferral Limitation which have been distributed to
the Participant under Section 5.6, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code.
(g) The determination of the Actual Deferral
Percentage of any Participant shall be made after
applying the provisions of Section 14.5 relating to
certain limits on Annual Additions under Section 415 of
the Code.
(h) The determination and treatment of
Before-Tax Contributions and the Actual Deferral
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of
the Treasury.
(i) The Committee shall keep or cause to
have kept such records as are necessary to demonstrate
that the Plan satisfies the requirements of Code
Section 401(k) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary
of the Treasury.
5.5 Provisions for Disposition of Excess Before-Tax
Contributions by Highly Compensated Employees.
(a) The Committee shall determine, as soon
as is reasonably possible following the close of each
Plan Year, the extent, if any, to which deferral
treatment under Code Section 401(k) may not be
available for Before-Tax Contributions by Highly
Compensated Employees. If, pursuant to the
determination by the Committee, any or all of a
Participant's Before-Tax Contributions are not eligible
for tax-deferral treatment, then any excess Before-Tax
Contributions and any income allocable thereto shall be
disposed of in accordance with (i) or (ii) below.
(i) To the extent permissible under
Section 6.3, excess Before-Tax Contributions by
the Highly Compensated Employee in a Plan Year may
be recharacterized as After-Tax Contributions for
the Plan Year not later than two and one-half
(2-1/2) months following the close of the Plan
Year. Any recharacterization shall be effective
retroactive to the date of the Highly Compensated
Employee's earliest Before-Tax Contributions
during the Plan Year in which the excess Before-
Tax Contributions were made. To the extent
23
<PAGE>
required by Treas. Reg. Section 1-401(k)-1(f)(3),
Before-Tax Contributions recharacterized as After-
Tax Contributions shall continue to be treated as
Before-Tax Contributions for purposes of
Article VIII.
(ii) To the extent a Participant's
Before-Tax Contributions cannot be recharacterized
in accordance with (i) above, any excess Before-
Tax Contributions in a Plan Year shall, if
administratively feasible, be distributed to the
Participant not later than two and one-half
(2-1/2) months following the close of the Plan
Year in which such excess Before-Tax Contributions
were made, but in any event no later than the
close of the first Plan Year following the Plan
Year in which such excess Before-Tax Contributions
were made (after withholding any applicable income
taxes due on such amounts).
(b) For purposes of this Section, the amount
of excess Before-Tax Contributions to be distributed to
a Participant for a Plan Year or recharacterized shall
be reduced by the amount of any Before-Tax
Contributions in excess of the Deferral Limitation (for
the Participant's taxable year that ends with or within
the Plan Year) which have been distributed to the
Participant under Section 5.6, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code.
(c) The Committee shall determine the amount
of any excess Before-Tax Contributions by Highly
Compensated Employees for a Plan Year by application of
the leveling method set forth in Treasury Regulation
Section 1.401(k)-1(f)(2) under which the Deferral
Percentage of the Highly Compensated Employee who has
the highest such percentage for such Plan Year is
reduced to the extent required (i) to enable the Plan
to satisfy the Actual Deferral Percentage test, or
(ii) to cause such Highly Compensated Employee's
Deferral Percentage to equal the Deferral Percentage of
the Highly Compensated Employee with the next highest
Deferral Percentage. This process shall be repeated
until the Plan satisfies the Actual Deferral Percentage
test. For each Highly Compensated Employee, the amount
of excess Before-Tax Contributions shall be equal to
the total Before-Tax Contributions (plus any amounts
treated as Before-Tax Contributions) made or deemed to
be made by such Highly Compensated Employee (determined
prior to the application of the foregoing provisions of
this Subsection (c)) minus the amount determined by
multiplying the Highly Compensated Employee's Deferral
Percentage (determined after application of the
24
<PAGE>
foregoing provisions of this Subsection (c)) by his
Compensation.
(d) The determination and correction of
excess Before-Tax Contributions of a Highly Compensated
Employee whose Actual Deferral Percentage is determined
under the family aggregation rules in Section 5.4(e)
shall be accomplished by reducing the Actual Deferral
Percentage as required under Subsections (a) and (b)
above and allocating the excess Before-Tax
Contributions for the family unit among family members
in proportion to the Before-Tax Contributions of each
family member that are combined to determine the Actual
Deferral Percentage.
(e) For purposes of satisfying the Actual
Deferral Percentage test, income allocable to a
Participant's excess Before-Tax Contributions, as
determined under (b) above, shall be determined in
accordance with any reasonable method used by the Plan
for allocating income to Participant Accounts, provided
such method does not discriminate in favor of Highly
Compensated Employees and is consistently applied to
all Participants for all corrective distributions or
recharacterizations under the Plan for a Plan Year.
The Committee shall not be liable to any Participant
(or his Beneficiary, if applicable) for any losses
caused by misestimating the amount of any Before-Tax
Contributions in excess of the limitations of this
Article V and any income allocable to such excess.
(f) To the extent required by regulations
under Section 401(k) or 415 of the Code, any excess
Before-Tax Contributions with respect to a Highly
Compensated Employee shall be treated as Annual
Additions under Article XIV for the Plan Year for which
the excess Before-Tax Contributions were made,
notwithstanding the distribution or recharacterization
of such excess in accordance with the provisions of
this Section.
5.6 Provisions for Return of Annual Before-Tax
Contributions in Excess of the Deferral
Limitation.
(a) In the event that due to error or
otherwise, a Participant's Before-Tax Contributions
under this Plan exceed the Deferral Limitation for any
calendar year (but without regard to amounts of
compensation deferred under any other plan), the excess
Before-Tax Contributions for the Plan Year, if any,
together with income allocable to such amount shall be
distributed to the Participant on or before the first
April 15 following the close of the calendar year in
25
<PAGE>
which such excess contribution is made. The amount of
excess Before-Tax Contributions that may be distributed
to a Participant under this Section for any taxable
year shall be reduced by any excess Before-Tax
Contributions previously distributed or recharacterized
in accordance with Section 5.5 for the Plan Year
beginning with or within such taxable year.
(i) Income on Before-Tax Contributions
in excess of the Deferral Limitation shall be
calculated in accordance with Section 5.5(e),
except calculations of allocable income shall be
made with reference to the calendar year (if the
Plan Year is not the calendar year).
(ii) For the 1987 calendar year only,
income shall be calculated on a reasonable and
consistent basis; provided, however, if there is a
loss allocable to the excess Before-Tax
Contributions, the amount distributed shall be the
excess amount adjusted to reflect such loss.
(iii) The Committee shall not be liable
to any Participant (or his Beneficiary, if
applicable) for any losses caused by misestimating
the amount of any Before-Tax Contributions in
excess of the limitations of this Article V and
any income allocable to such excess.
(b) If in any calendar year a Participant
makes Before-Tax Contributions under this Plan and
additional elective deferrals, within the meaning of
Code Section 402(g)(3), under any other plan maintained
by the Company or an Affiliated Company, and the total
amount of the Participant's elective deferrals under
this Plan and all such other plans exceed the Deferral
Limitation, the Company and each Affiliated Company
maintaining a plan under which the Participant made any
elective deferrals shall notify the affected plans in
writing, and corrective distributions of the excess
elective deferrals, and any income allocable thereto,
shall be made from one or more such plans, to the
extent determined by the Company and each Affiliated
Company. The determination of the amount of a
Participant's elective deferrals for any calendar year
shall be made after applying the provisions of
Section 14.5 relating to certain limits on Annual
Additions under Section 415 of the Code. All
corrective distributions of excess elective deferrals
shall be made on or before the first April 15 following
the close of the calendar year in which the excess
elective deferrals were made.
26
<PAGE>
(c) In accordance with rules and procedures
as may be established by the Committee, a Participant
may submit a claim to the Committee in which he
certifies in writing the specific amount of his Before-
Tax Contributions for the preceding calendar year
which, when added to amounts deferred for such calendar
year under any other plans or arrangements described in
Section 401(k), 408(k) or 403(b) of the Code (other
than a plan maintained by the Company or an Affiliated
Company), will cause the Participant to exceed the
Deferral Limitation for the calendar year in which the
deferral occurred. Any such claim must be submitted to
the Committee no later than the March 1 of the calendar
year following the calendar year of deferral. To the
extent the amount specified by the Participant does not
exceed the amount of the Participant's Before-Tax
Contributions under the Plan for the applicable
calendar year, the Committee shall treat the amount
specified by the Participant in his claim as a Before-
Tax Contribution in excess of the Deferral Limitation
for such calendar year and return such excess and any
income allocable thereto to the Participant, as
provided in (a) above. In the event that for any
reason such Participant's Before-Tax Contributions in
excess of the Deferral Limitation for any calendar year
are not distributed to the Participant by the time
prescribed in (a) above, such excess shall be held in
the Participant's Before-Tax Contribution Account until
distribution can be made in accordance with the
provisions of this Plan.
(d) To the extent required by regulations
under Section 402(g) or 415 of the Code, Before-Tax
Contributions with respect to a Participant in excess
of the Deferral Limitation shall be treated as Annual
Additions under Article XIV for the Plan Year for which
the excess contributions were made, notwithstanding the
distribution of such excess in accordance with the
provisions of this Section.
5.7 Character of Amounts Contributed as Before-Tax
Contributions.
Unless otherwise specifically provided to the
contrary in this Plan, amounts deferred pursuant to a
Participant's election to make Before-Tax Contributions in
accordance with Section 5.1 (and which qualify for treatment
under Code Section 401(k) and are contributed to the Trust
Fund pursuant to Article VI) shall be treated, for federal
and state income tax purposes, as Participating Employer
contributions.
27
<PAGE>
5.8 Participant Transfer/Rollover Contributions.
Effective as of an Eligible Employee's Employment
Commencement Date, or such later date as may be determined
by the Administrator, amounts, if any, distributed to such
Eligible Employee from another plan that satisfies the
requirements of Code Section 401(a), or held in an
individual retirement account which is attributable solely
to a rollover contribution within the meaning of Code
Section 408(d)(3), may be transferred to this Plan and
credited to the Participant's Transfer/Rollover Account in
accordance with Code Section 402(a) and rules which the
Committee shall prescribe from time to time; provided,
however, the Committee determines that the continued
qualification of this Plan under Code Section 401(a) or
401(k) would not be adversely affected by such transfer, or
would cause this Plan to become a "transferee plan," within
the meaning of Code Section 401(a)(ll). Any amounts
transferred in accordance with this Section 5.8, which shall
be in cash, shall not be subject to distribution to the
Participant except as expressly provided under the terms of
this Plan.
28
<PAGE>
ARTICLE VI
COMPANY CONTRIBUTIONS
6.1 General.
Subject to the requirements and restrictions of
this Article VI and Article XIV, and subject also to the
amendment or termination of the Plan or the suspension or
discontinuance of contributions as provided herein, a
Participating Company shall contribute for each Participant
who is an Employee of such Participating Company, as
follows:
(a) For each month of each Plan Year
commencing on and after January 1, 1989, an amount to
the Participant's Company Contributions Account equal
to a percentage of the Participant's Compensation
during such month according to the Participant's
attained age as of the last day of the preceding month,
as follows:
Age as of Last Day Percentage of
of Preceding Month Compensation
------------------ -------------
Under 40 2%
40 - 44 4%
45 - 49 5%
50 - 54 6%
55+ 7%
(b) An amount to the Participant's Before-
Tax Contributions Account which is equal to the amount
of the Participant's Before-Tax Contributions pursuant
to Section 5.1 and which qualify for tax treatment
under Code Section 401(k).
(c) An amount to the Participant's Company
Matching Account which is the sum of the amounts in (i)
and (ii) below:
(i) A dollar amount equal to the dollar
amount of the first two percent (2%) of the sum of a
Participant's Before-Tax and After-Tax Contributions
pursuant to Section 5.1.
(ii) A dollar amount equal to 50% of
the dollar amount of the next four percent (4%) of the
sum of a Participant's Before-Tax and After-Tax
Contributions pursuant to Section 5.1.
The maximum Company Matching Contribution pursuant to
this Section 6.1(c) shall be four percent (4%) of the
Participant's Compensation (such Compensation to be
29
<PAGE>
determined prior to reduction for Before-Tax
Contributions pursuant to Section 5.1).
6.2 Requirement for Net Profits.
Contributions by a Participating Employer shall be
made without regard to current or accumulated profits for
the year; provided, however, that the Plan is intended to be
designed to qualify as a profit sharing plan for purposes of
Sections 401(a) et seq. of the Code.
6.3 Special Limitations on After-Tax Contributions
and Company Matching Contributions.
With respect to each Plan Year, After-Tax
Contributions and Company Matching Contributions under the
Plan for the Plan Year shall not exceed the limitations on
contributions on behalf of Highly Compensated Employees
under Section 401(m) of the Code, as provided in this
Section. For purposes of this Section, excess Before-Tax
Contributions recharacterized as After-Tax Contributions
after the close of a Plan Year shall be treated as After-Tax
Contributions in a Plan Year as provided in
Section 5.5(a)(i). In the event that After-Tax
Contributions and Company Matching Contributions under this
Plan on behalf of Highly Compensated Employees for any Plan
Year exceed the limitations of this Section for any reason,
such excess contributions and any income allocable thereto
shall be disposed of in accordance with Section 6.4. For
purposes of this Section 6.3, the meaning of the term
"Compensation" shall be as defined in Section 5.4(b).
(a) After-Tax Contributions and Company
Matching Contributions on behalf of Participants under
Section 6.1(c) for a Plan Year shall satisfy the
Average Contribution Percentage test set forth in
(i)(A) below, or the Average Contribution Percentage
test set forth in (i)(B) below:
(i) (A) The "Average Contribution
Percentage" for Eligible Employees who are
Highly Compensated Employees shall not be
more than the "Average Contribution
Percentage" of all other Eligible Employees
multiplied by 1.25, or
(i) (B) The excess of the "Average
Contribution Percentage" for Eligible
Employees who are Highly Compensated
Employees over the "Average Contribution
Percentage" for the other Eligible Employees
shall not be more than two (2) percentage
points, and the "Average Contribution
Percentage" for Eligible Employees who are
30
<PAGE>
Highly Compensated Employees shall not be
more than the "Average Contribution
Percentage" of all other Eligible Employees
multiplied by 2.00.
(ii) The Average Contribution
Percentage for Highly Compensated Employees
eligible to participate in this Plan and a plan of
the Company or an Affiliated Company that
satisfies the requirements of Section 401(k) of
the Code, including, if applicable, this Plan,
shall be reduced to the extent necessary to
satisfy the requirements of Treasury Regulations
Section 1.401(m)-2 or similar such rule.
(b) For purposes of this Section, "Average
Contribution Percentage" means, with respect to a group
of Eligible Employees for a Plan Year, the average of
the "Contribution Percentage," calculated separately
for each Eligible Employee in such group. The
"Contribution Percentage" for any Eligible Employee is
determined by dividing the sum of After-Tax
Contributions during the Plan Year and Company Matching
Contributions under the Plan on behalf of each Eligible
Employee for such Plan Year, by such Eligible
Employee's Compensation for such Plan Year. "Company
Matching Contributions" for purposes of the Average
Contribution Percentage test shall include a Company
Matching Contribution only if it is allocated to the
Participant's Company Matching Contributions Account
during the Plan Year and is paid to the Trust Fund by
the end of the twelfth month following the close of the
Plan Year. To the extent determined by the Committee
and in accordance with regulations issued by the
Secretary of the Treasury under Code Section 401(m)(3),
the Before-Tax Contributions on behalf of an Eligible
Employee and any "qualified nonelective contributions,"
within the meaning of Code Section 401(m)(4)(c), on
behalf of an Eligible Employee may also be taken into
account for purposes of calculating the Contribution
Percentage of such Eligible Employee, but shall not
otherwise be taken into account. However, any Company
Matching Contributions taken into account for purposes
of determining the Actual Deferral Percentage of an
Eligible Employee under Section 5.4(a) shall not be
taken into account under this Section 6.3.
(c) In the event that as of the last day of
a Plan Year this Plan satisfies the requirements of
Section 410(b) of the Code only if aggregated with one
or more other plans, or if one or more other plans
satisfy the requirements of Section 410(b) of the Code
only if aggregated with this Plan, then this
Section 6.3 shall be applied by determining the
31
<PAGE>
Contribution Percentages of Eligible Employees as if
all such plans were a single plan, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(m) of the Code.
(d) For the purposes of this Section, the
Contribution Percentage for any Eligible Employee who
is a Highly Compensated Employee under two or more Code
Section 401(a) plans of the Company or an Affiliated
Company to the extent required by Code Section 401(m),
shall be determined in a manner taking into account the
participant contributions and matching contributions
for such Eligible Employee under each of such plans.
(e) If an Eligible Employee (who is also a
Highly Compensated Employee) is subject to the family
aggregation rules in Section 2.26(b)(vi), the combined
Average Contribution Percentage for the family group
(which is treated as one Highly Compensated Employee)
shall be the Average Contribution Percentage
determined by combining the After-Tax Contributions,
Company Matching Contributions, amounts treated as
Company Matching Contributions under Code
Section 401(m)(3), and Compensation of all the eligible
family members.
(f) The determination of the Contribution
Percentage of any Participant shall be made after first
applying the provisions of Section 14.5 relating to
certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 5.6
relating to the return of Before-Tax Contributions in
excess of the Deferral Limitation, then applying the
provisions of Section 5.5 relating to certain limits
under Section 401(k) of the Code imposed on Pre-Tax
Contributions of Highly Compensated Employees, and
last, applying the provisions of Section 6.5 relating
to the forfeiture of Company Matching Contributions
attributable to excess Before-Tax or After-Tax
Contributions.
(g) The determination and treatment of the
Contribution Percentage of any Participant shall
satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(h) The Committee shall keep or cause to
have kept such records as are necessary to demonstrate
that the Plan satisfies the requirements of Code
Section 401(m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary
of the Treasury.
32
<PAGE>
6.4 Provision for Return of Excess After-Tax
Contributions and Company Matching Contributions
on Behalf of Highly Compensated Employees.
(a) The Committee shall determine, as soon
as is reasonably possible following the close of the
Plan Year, the extent (if any) to which After-Tax and
Company Matching Contributions on behalf of Highly
Compensated Employees may cause the Plan to exceed the
limitations of Section 6.3 for such Plan Year. If,
pursuant to the determination by the Committee, After-
Tax and Company Matching Contributions on behalf of a
Highly Compensated Employee may cause the Plan to
exceed such limitations, then the Committee shall take
the following steps:
(i) First, any excess After-Tax
Contributions that were not matched by Company
Matching Contributions, and any income allocable
thereto, shall be distributed to the Highly
Compensated Employee (after withholding any
applicable income taxes on such amounts).
(ii) Second, if any excess remains
after the provisions of (i) above are applied, to
the extent necessary to eliminate the excess,
Company Matching Contributions on behalf of the
Highly Compensated Employee, and any income
allocable thereto, shall be forfeited, to the
extent forfeitable under the Plan, or distributed
to the Highly Compensated Employee, to the extent
non-forfeitable under the Plan (after withholding
any applicable income taxes on such amounts). Any
corresponding After-Tax Contributions, and any
income allocable thereto, shall be distributed to
the Highly Compensated Employee (after withholding
any applicable income taxes on such amounts).
(iii) If administratively feasible,
excess After-Tax Contributions and Company
Matching Contributions which are nonforfeitable
under the Plan, including any income allocable
thereto, shall be distributed to Highly
Compensated Employees, or, to the extent
forfeitable, forfeited, within two and one-half
(2-1/2) months following the close of the Plan
Year for which the excess Contributions were made,
but in any event no later than the end of the
first Plan Year following the Plan Year for which
the excess Contributions were made,
notwithstanding any other provision in this Plan.
Amounts of excess Company Matching Contributions
forfeited by Highly Compensated Employees under
this Section, including any income allocable
33
<PAGE>
thereto, shall be applied, to the maximum extent
practicable, to reduce Company Matching
Contributions for the Plan Year for which such
excess Contributions were made and thereafter
shall be applied as soon as possible to reduce
Company Matching Contributions for succeeding Plan
Years.
(b) The Committee shall determine the amount
of any excess After-Tax Contributions and Company
Matching Contributions made by or on behalf of Highly
Compensated Employees for a Plan Year by application of
the leveling method set forth in Proposed Treasury
Regulation Section 1.401(m)-1(e)(2) under which the
Contribution Percentage of the Highly Compensated
Employee who has the highest such percentage for such
Plan Year is reduced, to the extent required (i) to
enable the Plan to satisfy the Average Contribution
Percentage test, or (ii) to cause such Highly
Compensated Employee's Contribution Percentage to equal
the Contribution Percentage of the Highly Compensated
Employee with the next highest Contribution Percentage.
This process shall be repeated until the Plan satisfies
the Average Contribution Percentage test. For each
Highly Compensated Employee, the amount of excess
After-Tax and Company Matching Contributions shall be
equal to the total After-Tax and Company Matching
Contributions (plus any amounts treated as Company
Matching Contributions) made on behalf of such Highly
Compensated Employee (determined prior to the
application of the foregoing provisions of this
Subsection (b)) minus the amount determined by
multiplying the Highly Compensated Employee's
Contribution Percentage (determined after the
application of the foregoing provisions of this
Subsection (b)) by his Compensation.
(c) The determination and correction of
excess After-Tax and Company Matching Contributions
made by and on behalf of a Highly Compensated Employee
whose Average Contribution Percentage is determined
under the family aggregation rules in Section 6.3(e)
shall be accomplished by reducing the Average
Contribution Percentage of the Highly Compensated
Employee as required under Subsections (a) and (b)
above and allocating the excess After-Tax and Company
Matching Contributions for the family unit among the
family members in proportion to the After-Tax and
Company Matching Contributions of each family member
that are combined to determine the Average Contribution
Percentage.
34
<PAGE>
(d) For purposes of satisfying the Average
Contribution Percentage test, income allocable to a
Participant's excess After-Tax Contributions or Company
Matching Contributions, as determined under (b) above,
shall be determined by applying procedures comparable
to those provided under Section 5.5.
(e) To the extent required by regulations
under Section 414(m) or 415 of the Code, any excess
After-Tax Contributions or matching Company
Contribution forfeited by or distributed to a Highly
Compensated Employee in accordance with this Section
shall be treated as an Annual Addition under
Article XIV for the Plan Year for which the excess
contribution was made, notwithstanding such forfeiture
or distribution.
6.5 Forfeiture of Company Matching Contributions
Attributable to Excess Deferrals or
Contributions.
To the extent any Company Matching Contributions
allocated to a Participant's Company Matching Contributions
Account are attributable to excess Before-Tax Contributions
required to be distributed to the Participant in accordance
with Section 5.5 or 5.6, or excess After-Tax Contributions
required to be distributed to the Participant in accordance
with Section 6.10, such Company Matching Contributions,
including any income allocable thereto, shall be forfeited,
notwithstanding that such Company Matching Contributions may
otherwise be nonforfeitable under the terms of the Plan.
Any Company Matching Contributions forfeited by a
Participant in accordance with this Section 6.5 shall be
applied to reduce Company Matching Contributions.
6.6 Investment and Application of Plan
Contributions.
(a) Subject to the provisions of
Section 4.1(b), all contributions to the Trust Fund
under Section 6.1 (including Before-Tax Contributions)
and Participant After-Tax Contributions under
Section 5.1 shall be invested as provided in this
Section 6.6, subject to such rules as the Committee may
adopt, in its sole discretion, to implement the
provisions of this Section 6.6. The Committee may
establish a choice of investment alternatives for
Accounts from which each Participant may select in
determining the manner in which his Account will be
invested. In its sole discretion, the Committee may
establish an investment alternative consisting of
Company Stock. If investment alternatives are
established in accordance with this Section 6.6, the
following provisions of this Section 6.6 shall apply,
35
<PAGE>
including, in the event the Committee establishes a
Company Stock alternative, the limitations of
(iv) below and the provisions of Article X relating to
investments in Company Stock.
(i) A Participant may elect to change
an investment election with respect to the
allocation of future contributions made by him or
on his behalf (such election to apply to all such
contributions without regard to any distinction
between Company contributions or Participant
contributions) among the investment alternatives.
Subject to such rules as the Committee may
prescribe, any such election to change shall be
effective as of the next succeeding January 1,
April 1, July 1, or October 1. Any such election
shall be made in any whole percentage, subject to
the provisions of Subsection (iv) below.
(ii) Separate Trust Fund Subaccounts
shall be established for each investment
alternative selected by a Participant, and each
such Subaccount shall be valued separately.
(iii) A Participant may elect to change
the investment of his Accounts and reallocate such
Accounts among the investment alternatives in any
whole percentage, subject to the limitations of
(iv) below. Subject to such rules as the
Committee may prescribe, any such election to
change shall be effective as of the next
succeeding January 1, April 1, July 1, or
October 1. Any such change shall be implemented
by the Committee in accordance with practices and
procedures established by the Committee to provide
for the orderly liquidation and/or purchase of
investments.
(iv) If a Company Stock alternative is
established by the Committee, each Participant may
elect to invest up to a maximum of twenty-five
percent (25%) of contributions made by him or on
his behalf (such limitation to apply to all
contributions without regard to any distinction
between Company contributions and Participant
contributions) in the Company Stock alternative in
accordance with this Section 6.6. Such a
Participant may also elect to transfer amounts
from his Accounts held in other investment
alternatives to the Company Stock alternative in
accordance with this Section 6.6, provided,
however, that no such transfer shall be
implemented to the extent that such transfer would
result in the value of the Participant's interest
36
<PAGE>
in the Company Stock Fund exceeding twenty-five
percent (25%) of the value of his interest in all
investment alternatives held under the Plan.
Notwithstanding the preceding sentence, neither
the Company nor the Committee, nor any
representative of the Company, the Committee or of
the Plan shall have any obligation to monitor the
value of a Participant's interest in the Company
Stock Fund, or to manage said fund, and no person
shall or shall have any authority to dispose of
any Participant's interest in the Company Stock
Fund except in accordance with a Participant's
valid election or otherwise in accordance with
express provisions of this Plan.
(v) In the case of a Participant who
fails to make an effective election, for any
reason whatsoever, as to how all or any portion of
his interest therein shall be invested, the
Committee shall prescribe rules which shall
require that the Accounts of such Participant be
invested in the current guaranteed investment
contract.
(b) If a fund consisting of one or more
guaranteed investment contracts is made available as an
investment alternative, from time to time the Company
may advise Participants of the projected rate of return
to be credited on contributions held or deposited in a
Participant's guaranteed investment fund subaccount
during a future period, not to exceed twelve (12)
months (the "Guarantee Period"). To the extent the
actual rate of return on contributions deposited or
held in the guaranteed investment fund during a
Guarantee Period is less than the projected rate
communicated to Participants, the Company may, in its
sole discretion make one or more contributions on
behalf of each Participant for such Guarantee Period,
which shall not exceed the amount required, if any, to
increase the rate of return on such Participant's
guaranteed investment fund subaccount for such
Guarantee Period to the projected rate of return for
the Guarantee Period.
Notwithstanding the foregoing, no contribution and
allocation shall be made under this Subsection with
respect to a Highly Compensated Employee to the extent
such contribution would result in prohibited
discrimination, within the meaning of Section 401(a)(4)
of the Code. Further, notwithstanding the foregoing,
neither this Section 6.6 nor any other provision of
this Plan shall be construed or applied to cause the
Company to be an insurer or guarantor of any
investment, either as to income or principal.
37
<PAGE>
6.7 Irrevocability.
A Participating Company shall have no right or
title to, nor interest in, the contributions made to the
Trust Fund, and no part of the Trust Fund shall revert to
the Participating Company except that on and after the
Effective Date funds may be returned to a Participating
Company as follows:
(a) In the case of a Participating Company
contribution which is made by a mistake of fact, that
contribution may be returned to the Participating
Company within one (1) year after it is made.
(b) All contributions to the Trust Fund are
conditioned on deductibility under Code Section 404.
In the event deduction is disallowed for any such
contribution, such contribution may be returned to the
Participating Company.
6.8 Company, Committee and Trustee Not Responsible
for Adequacy of Trust Fund.
The Company, Committee and Trustee shall not be
liable or responsible for the adequacy of the Trust Fund to
meet and discharge any or all payments and liabilities
hereunder. All Plan benefits will be paid only from the
Trust assets, and neither the Company, the Committee nor the
Trustee shall have any duty or liability to furnish the
Trust with any funds, securities or other assets except as
expressly provided in the Plan. Except as required under
the Plan or Trust or under Part 4 of Title I of ERISA, the
Company shall not be responsible for any decision, act or
omission of the Trustee, the Committee, or the Investment
Manager (if applicable), and shall not be responsible for
the application of any moneys, securities, investments or
other property paid or delivered to the Trustee.
38
<PAGE>
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 General.
(a) All contributions under this Plan shall
be held in the Trust Fund.
(b) All gains, losses, dividends and other
property acquisitions and/or transfers that occur with
respect to the Trust Fund shall be held, charged,
credited, debited or otherwise accounted for under said
fund on an unallocated basis until allocated to
Participants' Accounts as of a Valuation Date as
provided under this Plan or otherwise used or applied
in accordance with the provisions of this Plan.
7.2 Participants' Accounts.
In order to account for the allocated interest of
each Participant in the Trust Fund, there shall be
established and maintained the Accounts described in
Section 2.1.
7.3 Revaluation of Participants' Accounts.
(a) As of each Valuation Date, and within
sixty days after the removal or resignation of the
Trustee, the Trustee shall value the assets of the
Trust on the basis of fair market values.
(b) As soon as is reasonably possible after
receipt of these valuations from the Trustee, the
Committee shall revalue the Accounts of each
Participant as of the applicable Valuation Date so as
to reflect a proportionate share in any increase or
decrease in the fair market value of the assets in the
Trust Fund, determined by the Trustee as of that date
as compared with the value of the assets in the Trust
Fund as of the immediately preceding Valuation Date.
The valuation and allocation provisions of this
Section 7.3 shall be applied and implemented in
accordance with the following rules:
(i) As of each Valuation Date the
Committee shall revalue the Accounts holding such
assets so as to reflect to each such Account a
proportionate share in the net income or loss of
the assets since the immediately preceding
Valuation Date.
39
<PAGE>
(ii) The Company, Committee and Trustee
do not in any manner or to any extent whatsoever
warrant, guarantee or represent that the value of
a Participant's Accounts shall at any time equal
or exceed the amount previously contributed
thereto.
7.4 Treatment of Accounts Following Termination of
Employment.
Following a Participant's termination of
employment, pending distribution of the Participant's
Distributable Benefit pursuant to the provisions of
Article VIII below, the Participant's Plan Accounts shall
continue to be maintained and accounted for in accordance
with all applicable provisions of this Plan.
7.5 Accounting Procedures.
The Committee and the Trustee shall establish
accounting procedures for the purpose of making the
allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VII. From time to
time the Committee and Trustee may modify such accounting
procedures for the purpose of achieving equitable,
nondiscriminatory, and administratively feasible allocations
among the Accounts of Participants in accordance with the
general concepts of the Plan and the provisions of this
Article VII.
40
<PAGE>
ARTICLE VIII
VESTING; PAYMENT OF PLAN BENEFITS
8.1 Vesting.
Each Participant's vested interest in his Accounts
shall be determined as follows:
(a) Each Participant shall at all times be
one hundred percent (100%) vested in his Before-Tax
Contributions Account, his After-Tax Contributions
Account and his Transfer/Rollover Account under the
Plan.
(b) Except as provided in (c) below, each
Participant shall become vested in his Company Matching
Account and his Company Contributions Account according
to the table set forth below:
Number of Vesting
Years of Service Percentage
---------------- ----------
Less than 1 0
At least 1 but less than 2 0
At least 2 but less than 3 25
At least 3 but less than 4 50
At least 4 but less than 5 75
5 or more 100
(c) Notwithstanding the foregoing, each
Participant who completed an Hour of Service prior to
July 1, 1989 shall at all times be one hundred percent
(100%) vested in his Company Contributions Account.
(d) Additionally a Participant shall become
one hundred percent (100%) vested in his Company
Matching Account and his Company Contributions Account
upon attainment of Normal Retirement Date while an
Employee, or in the event of death or Total and
Permanent Disability while an Employee.
8.2 Distribution Upon Retirement.
(a) A Participant may retire from the
employment of the Company on his Normal Retirement
Date. Subject to the required distribution rules under
(b) below, if the Participant continues in the service
of the Company beyond his Normal Retirement Date, he
shall continue to participate in the Plan in the same
manner as Participants who have not reached their
Normal Retirement Dates. At the subsequent termination
of the Participant's employment on his late retirement
date, his Distributable Benefit shall be based upon the
41
<PAGE>
value of his Accounts as of the applicable Valuation
Date determined with reference to the date of
distribution. After a Participant has reached his
Normal Retirement Date, any termination of the
Participant's employment (other than by reason of death
or disability) shall be deemed a Normal Retirement.
(b) Upon Normal Retirement a Participant
shall be entitled to a distribution of his
Distributable Benefit in the Trust Fund. Such
distribution shall be made or commence to be made as
soon as practicable but no later than the sixtieth day
after the close of the Plan Year in which occurs the
Participant's termination of employment with the
Company and all Affiliated Companies; provided,
however, in the case of a Participant who is a
"5-percent owner" (within the meaning of
Section 401(a)(9) of the Code) and, in the case of any
Participant who attains age 70-1/2 after December 31,
1987, distribution shall be made not later than April 1
following the calendar year in which such Participant
attains age 70-1/2, whether or not the Participant's
employment has terminated.
8.3 Distribution Upon Death Prior to Termination of
Employment.
(a) Upon the death of a Participant during
his employment the Committee shall direct the Trustee
to make a distribution of the Participant's
Distributable Benefit in the Trust Fund to the
Beneficiary designated by the deceased Participant, or
as otherwise determined under Section 8.9.
(b) Distribution as provided in
Section 8.3(a) shall be made or commence to be made not
later than sixty (60) days after the close of the Plan
Year in which all facts required by the Committee to be
established as a condition of payment shall have been
established to the satisfaction of the Committee
(provided that, to the extent required by
Section 401(a)(9) of the Code, his entire Distributable
Benefit shall be distributed within five (5) years of
such Participant's death).
8.4 Death After Termination of Employment.
Upon the death of a former Participant after his
retirement or other termination of employment, but prior to
the distribution of his Distributable Benefit in the Trust
Fund to which he is entitled, the Committee shall direct the
Trustee to make a distribution of the balance to which the
deceased Participant was entitled, to the Beneficiary
42
<PAGE>
designated by the deceased Participant or as otherwise
determined under Section 8.9.
8.5 Termination of Employment Prior to Normal
Retirement Date.
(a) Subject to the provisions of
Section 8.5(b) below, if a Participant's employment for
the Company and all Affiliated Companies terminates
prior to his Normal Retirement Date, his Distributable
Benefit in the Trust Fund shall be paid in a lump sum
distribution as soon as administratively feasible
following his Normal Retirement Date, or prior to his
Normal Retirement Date in accordance with
Subsection 8.5(b). Unless the Participant's
Distributable Benefit is payable prior to his Normal
Retirement in accordance with (b), the Participant
shall be deemed to have elected to defer distribution
until his Normal Retirement Date. In no event shall
such distribution be later than sixty (60) days after
the close of the Plan Year in which occurs the
Participant's Normal Retirement Date.
(b) If the Participant makes a valid written
election in accordance with (c) below (and without
regard to any such election if the distribution is not
more than $3,500), payment of his Distributable Benefit
pursuant to this Section 8.5 may be made on an earlier
date which is not later than sixty (60) days after the
close of the Plan Year in which occurs the
Participant's termination of employment with the
Company and all Affiliated Companies, to the extent
administratively feasible. For purposes of
Section 72(t) of the Code, any distribution to a
Participant in accordance with this Section 8.5 during
or following the year in which he attains age fifty-
five (55) shall be deemed to be on account of an event
enumerated in Code Section 72(t)(2).
(c) Effective as of January 1, 1989, any
written election by a Participant to receive payment of
his Distributable Benefit prior to Normal Retirement
Date shall not be valid unless such election is made
both (A) after the Participant receives a written
notice advising him of his right to defer payment to
Normal Retirement Date and (B) within the ninety (90)
day period ending on the Participant's "Benefit
Starting Date." The notice to the Participant advising
him of his right to defer payment shall be given no
less than thirty (30) nor more than ninety (90) days
prior to the Participant's Benefit Starting Date. For
purposes of this Subsection(c), "Benefit Starting Date"
shall mean the first day of the first period for which
the Participant's Distributable Benefit is paid.
43
<PAGE>
(d) In the event a Participant is not fully
vested in all of his Company Contributions Account or
Company Matching Account under the Plan, the portion of
such Accounts which is not vested shall be forfeited as
of the earlier of the date such Accounts are
distributed to him or the date he incurs five (5)
consecutive one-year Periods of Severance.
(e) Notwithstanding the foregoing, if a
Participant ceases to be an Employee by reason of the
disposition by the Company or an Affiliated Company of
either (i) substantially all of the assets used by the
Company or an Affiliated Company, as the case may be,
in a trade or business, or (ii) the interest of the
Company or an Affiliated Company, as the case may be,
in a subsidiary, such Participant shall be entitled to
distribution of his Distributable Benefit as if, for
purposes of this Plan only, such event constitutes a
termination of employment.
8.6 Withdrawals.
(a) Subject to the succeeding provisions of
this Section 8.6, while he is still an Eligible
Employee, a Participant may withdraw amounts from his
Accounts under the Plan; provided, however, that not
more than one withdrawal may be made by a Participant
from his Accounts within any single quarter of a Plan
Year. Payment of a withdrawal shall be made only in
cash and shall be allocated pro rata among the
Participant's investment fund subaccounts, including
any Company Stock subaccount. In no event may any
amount be withdrawn by a Participant after he ceases to
be an Eligible Employee.
(b) A withdrawal from a Participant's
Transfer/Rollover Account may be made in accordance
with rules of uniform application which the Committee
may from time to time prescribe; provided, however,
that, except in the case of a Participant who is
determined to have a Total and Permanent Disability and
who is ineligible to make further contributions under
Section 5.1, no amount representing Employee
contributions made within the preceding six months to
the Mattel Investment Plan which were matched by
Company matching contributions under said Plan may be
withdrawn from such Account; and provided further, that
unless the Participant has completed an aggregate of at
least sixty (60) months of participation in this Plan
and the Mattel Investment Plan as of the date of
withdrawal or has attained age 59-1/2 or is determined
by the Committee to have a Total and Permanent
Disability, the withdrawal shall not include amounts
attributable to Company contributions made under the
44
<PAGE>
Mattel Investment Plan within the two (2) year period
preceding withdrawal.
(c) A withdrawal from a Participant's After-
Tax Contribution Account may be made in accordance with
rules of uniform application which the Committee may
from time to time prescribe; provided, however, that
except in the case of a Participant who is determined
to have a Total and Permanent Disability and who is
ineligible to make further contributions under
Section 5.1, no amount representing After-Tax
Contributions made within the preceding six months to
the Plan which were matched by Company Matching
Contributions may be withdrawn from such Account.
(d) A withdrawal from a Participant's
Before-Tax Contributions Account may be made in
accordance with rules of uniform application which the
Committee may from time to time prescribe; provided,
however, no Participant may withdraw from his Before-
Tax Contributions Account prior to attaining age 59-1/2
or a determination by the Committee that such
Participant has a Total and Permanent Disability or
that the withdrawal is necessary to relieve a Hardship
of the Participant or his family. For purposes of this
Section 8.6(d), a withdrawal may be considered to be
necessary on account of a Hardship of the Participant
if the Committee determines that the amount required to
meet such Hardship is not readily available to the
Participant from other resources, in accordance with
regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code. The Committee may
determine that a withdrawal is necessary on account of
a Hardship on the basis of facts and circumstances, as
provided in (i) below, or on the basis of the criteria
specified in (ii) below:
(i) A distribution generally may be
treated as necessary on account of a Hardship of a
Participant if the Committee reasonably relies on
the Participant's representations to the
Committee, unless the Committee has actual
knowledge to the contrary, that the Hardship
cannot be relieved (A) through reimbursement or
compensation by insurance or otherwise, (B) by
reasonable liquidation of assets, if such
liquidation would not itself cause an immediate
and heavy financial need, (C) by the cessation of
Participant Before-Tax Contributions to the Plan,
or (D) by other distributions or non-taxable loans
from plans of the Company or any other employer,
or by borrowing from commercial sources on
reasonable commercial terms, unless the obligation
to repay the loan would be inconsistent with the
45
<PAGE>
purpose of the withdrawal. For purposes of this
Section, a Participant's resources shall be deemed
to include those assets of his spouse and minor
children that are reasonably available to the
Participant.
(ii) A distribution shall be deemed by
the Committee to be necessary on account of a
Hardship of a Participant if all of the following
requirements are satisfied: (A) the distribution
is not in excess of the amount of the Hardship,
(B) the Participant has obtained all distributions
(other than Hardship distributions) and all non-
taxable loans (at the time of the loan) currently
available under all plans maintained by the
Company, (C) the Participant's Before-Tax
Contributions and After-Tax Contributions and
employee contributions under all qualified and
nonqualified plans of deferred compensation
maintained by the Company, including a stock
option, stock purchase, or similar plan, or a cash
or deferred arrangement that is part of a
cafeteria plan within the meaning of Code
Section 125, will be suspended under the terms of
each such plan, or in accordance with the terms of
an otherwise legally enforceable agreement, for
twelve (12) months following the receipt of the
distribution, and (D) the Deferral Limitation for
the Participant for the Participant's taxable year
following the taxable year of distribution is
reduced by the amount of the Participant's Before-
Tax Contributions for the taxable year of
distribution.
No earnings credited to a Participant's Before-Tax
Contributions Account after December 31, 1988 shall be
available for a Hardship withdrawal.
(e) A withdrawal from a Participant's vested
interest in his Company Contributions Account may be
made in accordance with rules of uniform application
which the Committee may from time to time prescribe;
provided, however, that no Participant may withdraw
from his Company Contributions Account prior to
attaining age 59-1/2 or a determination by the
Committee that such Participant has a Total and
Permanent Disability or that the withdrawal is
necessary to relieve a Hardship of the Participant or
his family.
(f) A withdrawal from the vested portion of
a Participant's Company Matching Account may be made in
accordance with rules of uniform application which the
Committee may from time to time prescribe; provided,
46
<PAGE>
however, that unless the Participant has completed an
aggregate of at least sixty (60) months of
participation in this Plan and the Mattel Investment
Plan as of the date of withdrawal or has attained age
59-1/2 or is determined by the Committee to have Total
and Permanent Disability, any withdrawal from such
Company Matching Account shall not include amounts
attributable to Company contributions made within the
two (2) year period preceding withdrawal.
(g) If a Participant makes an in-service
withdrawal from his Company Contributions Account or
Company Matching Account at a time when the Participant
does not have a one hundred percent (100%) vested
interest in the value of such Account, and the
Participant may increase his vested interest in the
Account:
(i) such Account shall be established
as a separate Account as of the date of
distribution, and
(ii) at any relevant time the
Participant's vested interest in the value of such
separate Account shall be equal to an amount ("X")
determined by the formula:
X = P(AB + D) - D
For purposes of applying the formula above: P is the
nonforfeitable percentage at the relevant time, AB is
the Account balance at the relevant time, and D is the
amount of the withdrawal.
(h) Disbursement of withdrawals shall be as
soon as administratively practicable after the
Valuation Date which occurs at the end of the month in
which the Participant completes the filing of a request
for withdrawal in form satisfactory to the Committee.
8.7 Form of Distribution.
(a) Unless a Participant makes a written
election in accordance with Section 8.8 below, a
Participant's Distributable Benefit shall be payable in
the form of a single sum distribution. Except for any
portion of such Distributable Benefit that is payable
in the form of Company Stock in accordance with
Section 8.13, such distribution shall be in cash.
(b) In the case of any disbursement from a
Participant's Accounts, such disbursement shall be made
ratably from such investment funds or investment
47
<PAGE>
vehicles in which such Participant's Accounts affected
by such disbursement are invested.
8.8 Election for Direct Rollover of Distributable
Benefit to Eligible Retirement Plan.
(a) Effective as of January 1, 1993, to the
extent required by Section 401(a)(31) of the Code, a
Participant who is eligible to receive payment of his
Distributable Benefit shall be entitled to elect a
direct rollover of all or part of the taxable portion
of his Distributable Benefit to an "eligible retirement
plan." For purposes of this Section, an "eligible
retirement plan" shall mean any plan described in Code
Section 402(c)(8)(B), except that such plan must be a
defined contribution plan, the terms of which permit
the acceptance of a direct rollover from a qualified
plan. Any non-taxable portion of the Participant's
Distributable Benefit shall be payable to the
Participant in accordance with Section 8.7 above.
(b) A Participant's direct rollover election
under this Section shall be in writing and shall be
made in accordance with rules and procedures
established by the Committee. Such election shall
specify the dollar or percentage amount of the
Distributable Benefit to be rolled over, the name and
address of the eligible retirement plan selected by the
Participant, and such additional information as the
Committee deems necessary or appropriate in order to
implement the election. It shall be the Participant's
responsibility to confirm that the eligible retirement
plan designated in his direct rollover election will
accept the direct rollover of his Distributable
Benefit. The Committee shall be entitled to direct the
rollover based on its reasonable reliance on
information provided by the Participant, and shall be
not required to independently verify such information,
unless it is clearly unreasonable not to do so.
(c) At least thirty (30) days, but not more
than ninety (90) days, prior to the date a
Participant's Distributable Benefit becomes payable,
the Participant shall be given written notice of any
right he may have to elect a direct rollover of the
taxable portion of his Distributable Benefit to an
eligible retirement plan; provided, however, a
Participant who attained his Normal Retirement Date or
whose Distributable Benefit does not exceed $3,500 may
waive the thirty (30) day notice requirement by making
an affirmative election to make or not to make a direct
rollover of all or a portion of his Distributable
Benefit.
48
<PAGE>
(d) If a Participant who attained his Normal
Retirement Date or whose Distributable Benefit does not
exceed $3,500 fails to file a written election with the
Committee within ninety (90) days after notice is
given, or if the Committee cannot effect the direct
rollover within a reasonable time after the election is
filed due to the failure of the Participant to take
such actions as may be required by the eligible
retirement plan before it will accept the direct
rollover, the Participant's Distributable Benefit shall
be paid to him after withholding applicable income
taxes.
(e) If a Participant has made a direct
rollover election with respect to any portion of his
Distributable Benefit that is payable in Company Stock,
as provided in Section 8.13, unless the eligible
retirement plan specified by the Participant will
accept a direct rollover of such Stock, the Stock will
be distributed to the Participant, notwithstanding the
Participant's direct rollover election.
(f) To the extent required by
Section 401(a)(31) of the Code, if all or a portion of
a Participant's Distributable Benefit is payable to the
Participant's surviving Spouse, or to a former Spouse
in accordance with a "qualified domestic relations
order," such surviving Spouse or former Spouse shall be
entitled to elect a direct rollover of all or a portion
of such distribution in accordance with the provisions
of this Section.
8.9 Designation of Beneficiary.
(a) Subject to the provisions of
Section 8.11, each Participant shall have the right to
designate a Beneficiary or Beneficiaries to receive his
interest in the Trust Fund in the event of his death
before receipt of his entire interest in the Trust
Fund. This designation is to be made on the form
prescribed by and delivered to the Committee.
(b) Subject to the provisions of
Section 8.11, a Participant shall have the right to
change or revoke any such designation by filing a new
designation or notice of revocation with the Committee.
Subject to the provisions of Section 8.11, no notice to
any Beneficiary nor consent by any Beneficiary shall be
required to effect any such change or revocation.
(c) If a deceased Participant shall have
failed to designate a Beneficiary, or if the Company
shall be unable to locate a designated Beneficiary
after reasonable efforts have been made, or if for any
49
<PAGE>
reason the designation shall be legally ineffective, or
if the Beneficiary shall have predeceased the
Participant without effectively designating a successor
Beneficiary, any distribution required to be made under
the provisions of this Plan shall commence within three
(3) years after the Participant's death to the person
or persons included in the highest priority category
among the following, in order of priority:
(i) The Participant's surviving spouse;
(ii) The Participant's surviving
children, including adopted children;
(iii) The Participant's surviving
parents; or
(iv) The Participant's estate.
The determination by the Committee as to which persons,
if any, qualify within the foregoing categories shall
be final and conclusive upon all persons.
(d) In the event that the deceased
Participant was not a resident of California at the
date of his death, the Committee, in its discretion,
may require the establishment of ancillary
administration in California. In the event that a
Participant shall predecease his Beneficiary and on the
subsequent death of the Beneficiary a remaining
distribution is payable under the applicable provisions
of this Plan, the distribution shall be payable in the
same order of priority categories as set forth above
but determined with respect to the Beneficiary, subject
to the same provisions concerning non-California
residency, the unavailability of an estate
representative and/or the absence of administration of
the Beneficiary's estate as are applicable on the death
of the Participant.
8.10 Facility of Payment.
If any payee under the Plan is a minor or if the
Committee reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any
payment due him, the Committee may have the payment, or any
part thereof, made to the person (or persons or institution)
whom it reasonably believes is caring for or supporting the
payee, unless it has received due notice of claim therefor
from a duly appointed guardian or committee of the payee.
Any payment shall be a payment from the Accounts of the
payee and shall, to the extent thereof, be a complete
discharge of any liability under the Plan to the payee.
50
<PAGE>
8.11 Requirement of Spousal Consent.
Notwithstanding any Beneficiary designation
submitted by a Participant, any distribution required to be
made under the terms of the Plan by reason of the death of
the Participant shall be paid in full to the Participant's
surviving spouse, unless there is no surviving spouse or the
spouse consents in writing to the beneficiary designation,
acknowledging the effect of the election. Any such spousal
consent, to be valid, must be witnessed by a plan
representative or a notary public. The spousal consent
requirement of this Section 8.11 shall be waived and the
Participant's Beneficiary designation shall be made
effective if the Participant establishes to the satisfaction
of the Committee that the required consent cannot be
obtained because there is no spouse or the spouse cannot be
located.
8.12 Additional Documents.
(a) The Committee or Trustee, or both, may
require the execution and delivery of such documents,
papers and receipts as the Committee or Trustee may
determine necessary or appropriate in order to
establish the fact of death of the deceased Participant
and of the right and identity of any Beneficiary or
other person or persons claiming any benefits under
this Article VIII.
(b) The Committee or the Trustee, or both,
may, as a condition precedent to the payment of death
benefits hereunder, require an inheritance tax release
and/or such security as the Committee or Trustee, or
both, may deem appropriate as protection against
possible liability for state or federal death taxes
attributable to any death benefits.
8.13 Company Stock Distribution.
Except in the case of a withdrawal in accordance
with Section 8.6, payment of any portion of a Participant's
Distributable Benefit held in his Company Stock subaccount
shall be paid in Company Stock, unless the Participant
elects in writing in accordance with procedures established
by the Committee that payment shall be made in cash in lieu
of Company Stock (which election may apply to a payment to
the trustee of an "eligible retirement plan" in accordance
with Section 8.8). Within a reasonable period of time prior
to the date such Participant's Distributable Benefit is to
be paid, the Committee shall notify the Participant of his
right to elect to have payment of the value of his Company
Stock subaccount made in the form of a cash distribution in
lieu of a Company Stock distribution. Upon being so
notified, the Participant shall have a reasonable time (at
51
<PAGE>
least thirty (30) days) in which to file a written election
to have such payment made in cash. Any such election shall
be irrevocable and shall operate to require the Trustee to
value such Company Stock as of the immediately following
Valuation Date at the then prevailing purchase price.
Neither the Company, the Committee, nor the Trustee shall be
required to time the distribution or sale of Company Stock
to anticipate fluctuations in the purchase price. If a
Participant fails to file a written election to receive a
cash payment of the value of the portion of his
Distributable Benefit attributable to his Company Stock
subaccount within thirty (30) days of receiving
notification, payment shall be made in Company Stock.
8.14 Valuation of Accounts.
(a) For purposes of determining a
Participant's Distributable Benefit under this Plan,
the value of a Participant's Accounts shall be
determined in accordance with rules prescribed by the
Committee, subject, however, to the following
provisions:
(i) Unless the provisions of (ii) below
apply, if a Participant's employment terminates
for any reason other than death, the value of a
Participant's Accounts shall be determined as of
the Valuation Date coinciding with or next
following the date on which a properly completed
application for payment or transfer of the
Participant's Distributable Benefit, and such
other forms as may be required by the Committee in
order to process the distribution or transfer, are
received by the Committee.
(ii) If a Participant's employment
terminates for any reason other than death and the
Committee does not receive the Participant's
properly completed application for the payment or
transfer of the Participant's Distributable
Benefit, and such other forms as may be required
by the Committee to process the payment or
transfer, and the value of such Participant's
Accounts at the applicable Valuation Date does not
exceed $3500, the applicable Valuation Date shall
be the Valuation Date coinciding with or next
following the expiration of a reasonable period of
time after the Participant is furnished with such
application and forms, including any tax notice
required under Code Section 402(f).
(iii) In the case of a Participant's
death, the value of a Participant's Accounts for
purposes of determining the Participant's
52
<PAGE>
Distributable Benefit shall be determined as of
the Valuation Date coinciding with or next
following the date on which the Committee has been
furnished with all documents and information
(including but not limited to proof of death,
facts demonstrating the identity and entitlement
of any Beneficiary or other payee, and any and all
releases) necessary to distribute such
Participant's Accounts.
(iv) In the case of any withdrawal or
loan, the value of a Participant's Accounts under
the Plan shall be determined as of the Valuation
Date coinciding with or next following the date on
which the Participant submits a request for such
withdrawal or loan in a form satisfactory to the
Committee and the withdrawal or loan is approved.
(v) The value of a Participant's
Accounts shall be increased or decreased (as
appropriate) by any contributions, forfeitures, or
distributions properly allocable under the terms
of this Plan to his Accounts that occurred on or
after the most recent Valuation Date or for any
other reason were not otherwise reflected in the
valuation of his Accounts on such Valuation Date.
(b) Neither the Committee, the Company, nor
the Trustee shall have any responsibility for any
increase or decrease in the value of a Participant's
Accounts as a result of any valuation made under the
terms of this Plan after the date of his termination of
employment and before the date of the distribution of
his Accounts to him. Also, neither the Committee, the
Company, nor the Trustee shall have any responsibility
for failing to make any interim valuation of a
Participant's Accounts between the date of distribution
to the Participant of his Accounts and the applicable
Valuation Date, even though the Plan assets may have
been revalued in that interim for a purpose other than
to revalue the Accounts under this Plan.
8.15 Forfeitures; Repayment.
(a) Amounts forfeited in accordance with
Section 8.5(d) shall be applied as soon as practicable
to reduce future Company contributions.
(b) A Participant who elects to receive a
distribution pursuant to Subsection 8.5(b) may, in the
case of his reemployment as an Eligible Employee, repay
the total amount distributed and shall in such case be
fully restored in amounts forfeited in accordance with
Section 8.5(d); provided, however, that no such
53
<PAGE>
repayment shall be permitted unless such repayment is
made prior to the date the Participant incurs five (5)
consecutive one-year Periods of Severance and prior to
the fifth anniversary of his Employment Commencement
Date following the Period of Severance.
8.16 Loans.
(a) From time to time, the Committee may
adopt procedures whereby a Participant may borrow from
his Accounts under the Plan. In no event may any
amount be borrowed by a Participant after he ceases to
be an Eligible Employee. In addition to such other
requirements as may be imposed by applicable law, any
such loan shall bear a reasonable rate of interest,
shall be adequately secured by proper collateral, and
shall be repaid within a specified period of time
according to a written repayment schedule that calls
for substantially level amortization over the term of
the loan.
(b) In connection with the requirements set
forth in Subsection (a) above, the Committee shall
establish the applicable interest rate, which shall be
reasonably equivalent to interest rates available
commercially with respect to similar loans. Without
prejudice to the right of any Participant and the
Trustee to enter into other appropriate arrangements to
secure repayment of a loan pursuant to this
Section 8.16, a loan to a Participant hereunder may be
secured by an interest in the Participant's vested
interest in his Accounts under this Plan. Any loan
shall by its terms require repayment within five (5)
years in substantially level payments made no less
frequently than quarterly, except that the repayment
period may in the discretion of the Committee be up to
a maximum of fifteen (15) years in the case of a loan
certified by the Participant to be used to acquire any
dwelling unit which within a reasonable time is to be
used (determined at the time the loan is made) as a
principal residence of the Participant.
(c) In no event shall the principal amount
of a loan hereunder, at the time the loan is made,
together with the outstanding balance of all other
loans to the Participant under this Plan, exceed the
lesser of:
(i) fifty percent (50%) of the value of
the Participant's vested interest in his Accounts
under this Plan, determined as of the Valuation
Date occurring at the end of the month in which
the Participant's loan application is completed in
form satisfactory to the Committee (provided,
54
<PAGE>
however, for loans granted or renewed prior to
October 19, 1989, the amount determined under this
Subsection 8.16(c)(i) shall not be less than the
lesser of ten thousand dollars ($10,000) or the
full value of all such Accounts of the Participant
where such value is less than twenty thousand
dollars ($20,000)), or
(ii) fifty thousand dollars ($50,000),
reduced by the highest outstanding loan balance of
the Participant from the Plan during the 1-year
period ending on the day before the date on which
such loan was made.
No loan less than two thousand dollars ($2,000) will be
made. Unless otherwise determined by the Committee, no
Participant may have more than one loan outstanding
under this Plan on any date.
(d) Each Participant desiring to enter into
a loan arrangement pursuant to this Section 8.16 shall
apply for a loan by filing a properly completed
application with the Committee. The Committee shall
notify the Participant within a reasonable time whether
the application is approved or denied. Upon approval
of the application by the Committee, the Participant
shall enter into a loan agreement with the Trustee.
Such a Participant shall execute such further written
agreements as may be necessary or appropriate to
establish a bona fide debtor-creditor relationship
between such Participant and the Trustee and to protect
against the impairment of any security for said loan.
(e) Any loan made to a Participant shall be
secured by a pro rata portion of his vested investment
fund subaccounts, including any Company Stock
subaccount. Repayments of a loan by a Participant
shall be invested among the Participant's investment
fund subaccounts in accordance with the Participant's
investment election then in effect under
Section 6.6(a)(i).
(f) Loans shall be repaid in accordance with
the repayment schedule provided under the terms of the
loan agreement. Notwithstanding the repayment schedule
provided in a loan agreement, however, the amount of
any outstanding loan shall be due and payable on the
earlier to occur of (a) the date on which distribution
is made or commences to be made of the participant's
vested interest under the Plan or (b) the expiration of
one hundred eighty (180) days following the date the
Participant ceases to be an Employee. Following a
Participant's Severance Date, any outstanding loan
amount which has become due and payable under the
55
<PAGE>
foregoing rule or otherwise, and which is secured by
the Participant's vested interest in his Accounts,
shall be treated as distributed from the Plan to the
Participant.
(g) In the event a Participant fails to
repay a loan in accordance with the terms of a loan
agreement, such loan shall be treated as in default.
The date of the enforcement of the security interest
due to a loan in default shall be determined by the
Committee, provided no loss of principal or income
shall result due to any delay in the enforcement of the
security interest due to the default. As of the
Participant's Severance Date, the Participant's
Distributable Benefit shall be reduced by the
outstanding amount of a loan which is then in default,
including any accrued interest thereon, that is secured
by the Participant's vested interest in his Accounts.
Any reasonable costs related to collection of a loan
made hereunder shall be borne by the Participant.
(h) To the extent required to comply with
the requirements of Section 401(a)(4) of the Internal
Revenue Code, loans hereunder shall be made in a
uniform and non-discriminatory manner.
8.17 Special Rule for Disabled Employees.
(a) Subsection 8.17(b) shall apply to any
Participant whose active performance of services for a
Participating Company has ceased by reason of
disability, and who has not subsequently resumed the
active performance of such services.
Subsections 8.17(c) and (d) shall apply only to a
Participant whose active performance of services for a
Participating Company ceases prior to January 1, 1989
by reason of disability, and who has not subsequently
resumed the active performance of such services.
(b) In the case of a Participant to whom
this Section 8.17(b) applies, so long as such
Participant continues to receive Compensation from a
Participating Company, but in no event for longer than
a period of six (6) months commencing with the date of
such Participant's cessation of active service, such
Participant may continue to participate in this Plan in
the same manner as any other Participant.
(c) In the case of a Participant to whom
this Section 8.17 applied by reason of a disability
prior to January 1, 1989 and who, on or after
expiration of the period described in Section 8.17(b)
above, commences to receive payments under the long
term disability benefit coverage provided by a
56
<PAGE>
Participating Company and who also is determined to be
suffering from a Total and Permanent Disability,
contributions shall be made by the Participating
Company pursuant to Section 6.1(a) (relating to
contributions to Participants' Company Contributions
Accounts) with respect to the Participant's
"Compensation" as defined in Subsection 8.17(d) below,
but the Participant shall not be eligible to make any
contributions with respect to his own Compensation, and
shall not be entitled to share in any other
Participating Company contributions to the Plan
(including but not limited to contributions to the
Company Matching Account). Contributions by a
Participating Company pursuant to this Section 8.17(c)
shall be subject to amendment or termination of the
Plan or other suspension or discontinuance of
contributions, and in any event shall cease to be made
with respect to any Participant after the earlier to
occur of such Participant's death or termination of
employment for any other reason, cessation of Total and
Permanent Disability, or attainment of age sixty-five
(65).
(d) In the case of a Participant to whom
Section 8.17 applied by reason of a disability prior to
January 1, 1989 and who is eligible to share in
contributions of a Participating Company as provided in
Subsection 8.17(c) above, the Compensation of such
Participant for a Plan Year shall be deemed to equal
the amount of Compensation which the Participant was
paid (and which was taken into account for purposes of
Sections 5.1 and 6.1 hereof) immediately before
sustaining such Total and Permanent Disability,
provided, however, that such amounts shall be included
in Compensation only upon the following conditions:
(i) the Participant is not an officer,
owner, or highly compensated individual (within
the meaning of such terms under Code
Section 415(c)(3));
(ii) the payments to such Participant
under such long term disability benefit coverage
shall be treated as "Compensation" only to the
extent that such payments do not exceed the
Participant's wage or salary rate paid immediately
before becoming disabled to an extent constituting
a Total and Permanent Disability; and
(iii) the Participant's accounts under
the Plan, to the extent attributable to
contributions made during a period of Total and
Permanent Disability shall be nonforfeitable.
57
<PAGE>
(e) For purposes of this Plan, a Participant
shall not be deemed to have terminated employment prior
to his ceasing to be eligible for contributions under
this Section 8.17, and upon such cessation of
eligibility shall be deemed to have terminated
employment only if he did not then begin or recommence
employment for the Company or an Affiliated Company.
58
<PAGE>
ARTICLE IX
OPERATION AND ADMINISTRATION OF THE PLAN
9.1 Plan Administration.
(a) Authority to control and manage the
operation and administration of the Plan shall be
vested in a committee ("Committee") as provided in this
Article IX.
(b) The members of the Committee shall be
appointed by the Board of Directors and shall hold
office until resignation, death or removal by the Board
of Directors. Members of the Committee may, but need
not be, appointed by appropriate designation of a
Committee heretofore constituted pursuant to the
provisions of another employee benefit plan maintained
by the Company.
(c) For purposes of ERISA Section 402(a),
the members of the Committee shall be the Named
Fiduciaries of this Plan.
(d) The Secretary of the Committee shall
cause to be attached to the copy of the Plan maintained
in the office of the Committee for the purpose of
inspection an accurate schedule listing the names of
all persons from time to time serving as the Named
Fiduciaries of the Plan.
(e) Notwithstanding the foregoing, a Trustee
with whom Plan assets have been placed in trust or an
Investment Manager appointed pursuant to Section 9.3
may be granted exclusive authority and discretion to
manage and control all or any portion of the assets of
the Plan.
9.2 Committee Powers.
The Committee shall have all powers and discretion
necessary to supervise the administration of the Plan and
control its operations. In addition to any powers and
authority conferred on the Committee elsewhere in the Plan
or by law, the Committee shall have, by way of illustration
but not by way of limitation, the following powers and
authority:
(a) To allocate fiduciary responsibilities
(other than trustee responsibilities) among the Named
Fiduciaries and to designate one or more other persons
to carry out fiduciary responsibilities (other than
trustee responsibilities). However, no allocation or
delegation under this Section 9.2(a) shall be effective
59
<PAGE>
until the person or persons to whom the
responsibilities have been allocated or delegated agree
to assume the responsibilities. The term "trustee
responsibilities" as used herein shall have the meaning
set forth in Section 405(c) of ERISA. The preceding
provisions of this Section 9.2(a) shall not limit the
authority of the Committee to appoint one or more
Investment Managers in accordance with Section 9.3.
(b) To designate agents to carry out
responsibilities relating to the Plan, other than
fiduciary responsibilities.
(c) To employ such legal, actuarial,
medical, accounting, clerical and other assistance as
it may deem appropriate in carrying out the provisions
of this Plan, including one or more persons to render
advice with regard to any responsibility any Named
Fiduciary or any other fiduciary may have under the
Plan.
(d) To establish rules and regulations from
time to time for the conduct of the Committee's
business and the administration and effectuation of
this Plan.
(e) To administer, interpret, construe and
apply this Plan and to decide all questions which may
arise or which may be raised under this Plan by any
Employee, Participant, former Participant, Beneficiary
or other person whatsoever, including but not limited
to all questions relating to eligibility to participate
in the Plan, the amount of service of any Participant,
and the amount of benefits to which any Participant or
his Beneficiary may be entitled by reason of his
service prior to or after the Effective Date hereof.
(f) To determine the manner in which the
assets of this Plan, or any part thereof, shall be
disbursed.
(g) To direct the Trustee, in writing, from
time to time, to invest and reinvest the Trust Fund, or
any part thereof, or to purchase, exchange, or lease
any property, real or personal, which the Committee may
designate. This shall include the right to direct the
investment of all or any part of the Trust in any one
security or any one type of securities permitted
hereunder. Among the securities which the Committee
may direct the Trustee to purchase are "employer
securities" as defined in Code Section 409A(1) or any
successor statute thereto.
60
<PAGE>
(h) To perform or cause to be performed such
further acts as it may deem to be necessary,
appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Committee in the
exercise of authority conferred upon it by this Plan shall
be conclusive and binding upon the Participants and their
Beneficiaries. All discretionary powers conferred upon the
Committee shall be absolute.
9.3 Investment Manager.
(a) The Committee, by action reflected in
the minutes thereof, may appoint one or more Investment
Managers, as defined in Section 3(38) of ERISA, to
manage all or a portion of the assets of the Plan.
(b) An Investment Manager shall discharge
its duties in accordance with applicable law and in
particular in accordance with Section 404(a) (1) of
ERISA.
(c) An Investment Manager, when appointed,
shall have full power to manage the assets of the Plan
for which it has responsibility, and neither the
Company nor the Committee shall thereafter have any
responsibility for the management of those assets.
9.4 Periodic Review.
(a) At periodic intervals, not less
frequently than annually, the Committee shall review
the long-run and short-run financial needs of the Plan
and shall determine a funding policy for the Plan
consistent with the objectives of the Plan and the
minimum funding standards of ERISA, if applicable. In
determining the funding policy the Committee shall take
into account, at a minimum, not only the long-term
investment objectives of the Trust Fund consistent with
the prudent management of the assets thereof, but also
the short-run needs of the Plan to pay benefits.
(b) All actions taken by the Committee with
respect to the funding policy of the Plan, including
the reasons therefor, shall be fully reflected in the
minutes of the Committee.
9.5 Committee Procedure.
(a) A majority of the members of the
Committee as constituted at any time shall constitute a
quorum, and any action by a majority of the members
present at any meeting, or authorized by a majority of
61
<PAGE>
the members in writing without a meeting, shall
constitute the action of the Committee.
(b) The Committee may designate certain of
its members as authorized to execute any document or
documents on behalf of the Committee, in which event
the Committee shall notify the Trustee of this action
and the name or names of the designated members. The
Trustee, Company, Participants, Beneficiaries, and any
other party dealing with the Committee may accept and
rely upon any document executed by the designated
members as representing action by the Committee until
the Committee shall file with the Trustee a written
revocation of the authorization of the designated
members.
9.6 Compensation of Committee.
(a) Members of the Committee shall serve
without compensation unless the Board of Directors
shall otherwise determine. However, in no event shall
any member of the Committee who is an Employee receive
compensation from the Plan for his services as a member
of the Committee.
(b) All members shall be reimbursed for any
necessary or appropriate expenditures incurred in the
discharge of duties as members of the Committee.
(c) The compensation or fees, as the case
may be, of all officers, agents, counsel, the Trustee,
or other persons retained or employed by the Committee
shall be fixed by the Committee.
9.7 Resignation and Removal of Members.
Any member of the Committee may resign at any time
by giving written notice to the other members and to the
Board of Directors effective as therein stated. Any member
of the Committee may, at any time, be removed by the Board
of Directors.
9.8 Appointment of Successors.
(a) Upon the death, resignation, or removal
of any Committee member, the Board of Directors may
appoint a successor.
(b) Notice of appointment of a successor
member shall be given by the Secretary of the Company
in writing to the Trustee and to the members of the
Committee.
62
<PAGE>
(c) Upon termination, for any reason, of a
Committee member's status as a member of the Committee,
the member's status as a Named Fiduciary shall
concurrently be terminated, and upon the appointment of
a successor Committee member the successor shall assume
the status of a Named Fiduciary as provided in
Section 9.1.
9.9 Records.
(a) The Committee shall keep a record of all
its proceedings and shall keep, or cause to be kept,
all such books, accounts, records or other data as may
be necessary or advisable in its judgment for the
administration of the Plan and to properly reflect the
affairs thereof.
(b) However, nothing in this Section 9.9
shall require the Committee or any member thereof to
perform any act which, pursuant to law or the
provisions of this Plan, is the responsibility of the
Plan Administrator, nor shall this Section relieve the
Plan Administrator from such responsibility.
9.10 Reliance Upon Documents and Opinions.
(a) The members of the Committee, the Board
of Directors, the Company and any person delegated
under the provisions hereof to carry out any fiduciary
responsibilities under the Plan ("delegated
fiduciary"), shall be entitled to rely upon any tables,
valuations, computations, estimates, certificates and
reports furnished by any consultant, or firm or
corporation which employs one or more consultants, upon
any opinions furnished by legal counsel, and upon any
reports furnished by the Trustee. The members of the
Committee, the Board of Directors, the Company and any
delegated fiduciary shall be fully protected and shall
not be liable in any manner whatsoever for anything
done or action taken or suffered in reliance upon any
such consultant or firm or corporation which employs
one or more consultants, Trustee, or counsel.
(b) Any and all such things done or actions
taken or suffered by the Committee, the Board of
Directors, the Company and any delegated fiduciary
shall be conclusive and binding on all Employees,
Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law.
(c) The Committee and any delegated
fiduciary may, but are not required to, rely upon all
records of the Company with respect to any matter or
thing whatsoever, and may likewise treat those records
63
<PAGE>
as conclusive with respect to all Employees,
Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law.
9.11 Requirement of Proof.
The Committee or the Company may require
satisfactory proof of any matter under this Plan from or
with respect to any Employee, Participant, or Beneficiary,
and no person shall acquire any rights or be entitled to
receive any benefits under this Plan until the required
proof shall be furnished.
9.12 Reliance on Committee Memorandum.
Any person dealing with the Committee may rely on
and shall be fully protected in relying on a certificate or
memorandum in writing signed by any Committee member or
other person so authorized, or by the majority of the
members of the Committee, as constituted as of the date of
the certificate or memorandum, as evidence of any action
taken or resolution adopted by the Committee.
9.13 Multiple Fiduciary Capacity.
Any person or group of persons may serve in more
than one fiduciary capacity with respect to the Plan.
9.14 Limitation on Liability.
(a) Except as provided in Part 4 of Title I
of ERISA, no person shall be subject to any liability
with respect to his duties under the Plan unless he
acts fraudulently or in bad faith.
(b) No person shall be liable for any breach
of fiduciary responsibility resulting from the act or
omission of any other fiduciary or any person to whom
fiduciary responsibilities have been allocated or
delegated, except as provided in Part 4 of Title I of
ERISA.
(c) No action or responsibility shall be
deemed to be a fiduciary action or responsibility
except to the extent required by ERISA.
9.15 Indemnification.
(a) To the extent permitted by law, the
Company shall indemnify each member of the Board of
Directors and the Committee, and any other Employee of
the Company with duties under the Plan, against
expenses (including any amount paid in settlement)
reasonably incurred by him in connection with any
64
<PAGE>
claims against him by reason of his conduct in the
performance of his duties under the Plan, except in
relation to matters as to which he acted fraudulently
or in bad faith in the performance of such duties. The
preceding right of indemnification shall pass to the
estate of such a person.
(b) The preceding right of indemnification
shall be in addition to any other right to which the
Board member or Committee member or other person may be
entitled as a matter of law or otherwise.
9.16 Reserved for Plan Modifications.
9.17 Allocation of Fiduciary Responsibility.
(a) Part 4 of Title I of ERISA permits the
division, allocation and delegation between Plan
fiduciaries of the fiduciary responsibilities owed to
the Plan Participants. Under this concept, each
fiduciary, including a Named Fiduciary, is accountable
only for his own functions, except to the extent of his
co-fiduciary liability under Section 405 of ERISA.
(b) Under the preceding provisions of this
Article IX, the day-to-day operational, administrative
and investment aspects of the Plan have been delegated
to the Committee. Except to the extent expressly
provided to the contrary in the Plan document, the
responsibilities delegated to the Committee include, by
way of illustration but not by way of limitation, such
matters as:
(i) Satisfying accounting and auditing
requirements;
(ii) Satisfying insurance and bonding
requirements;
(iii) Administering the Plan's claims
procedure; and
(iv) Appointing Investment Managers.
9.18 Bonding.
(a) Except as is prescribed by the Board of
Directors, as provided in Section 412 of ERISA, or as
may be required under any other applicable law, no bond
or other security shall be required by any member of
the Committee, or any other fiduciary under this Plan.
65
<PAGE>
(b) Notwithstanding the foregoing, for
purposes of satisfying its indemnity obligations under
Section 9.15, the Company may (but need not) purchase
and pay premiums for one or more policies of insurance.
However, this insurance shall not release the Company
of its liability under the indemnification provisions.
9.19 Reserved for Plan Modifications.
9.20 Reserved for Plan Modifications.
9.21 Reserved for Plan Modifications.
9.22 Prohibition Against Certain Actions.
(a) To the extent prohibited by law, in
administering this Plan the Committee shall not
discriminate in favor of any class of Employees and
particularly it shall not discriminate in favor of
highly compensated Employees, or Employees who are
officers or shareholders of the Company.
(b) The Committee shall not cause the Plan
to engage in any transaction that constitutes a
nonexempt prohibited transaction under Section 4975(c)
of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with
respect to the Plan (as defined in Section 3(21) of
ERISA) shall discharge their fiduciary duties in
accordance with applicable law, and in particular, in
accordance with the standards of conduct contained in
Section 404 of ERISA.
9.23 Plan Expenses.
(a) All expenses incurred in the
establishment, administration and operation of the
Plan, including but not limited to the expenses
incurred by the members of the Committee in exercising
their duties, shall be charged to the Trust Fund and
allocated to Participants Accounts as determined by the
Committee, but shall be paid by the Company if not paid
by the Trust Fund.
(b) Notwithstanding the foregoing, the cost
of interest and normal brokerage charges which are
included in the cost of securities purchased by the
Trust Fund (or charged to proceeds in the case of
sales) or other charges relating to specific assets of
the Plan shall be charged and allocated in a fair and
equitable manner to the Accounts to which the
securities (or other assets) are allocated.
66
<PAGE>
ARTICLE X
SPECIAL PROVISIONS
CONCERNING COMPANY STOCK
EFFECTIVE AS OF OCTOBER 1, 1992
10.1 Securities Transactions.
Subject to the limitations of Section 6.6(a)iv,
the Trustee shall acquire Company Stock in the open market
or from the Company or any other person, including a party
in interest, pursuant to a Participant's election to invest
any Company contributions on his behalf (including Before-
Tax Contributions), or Participant After-Tax Contributions,
in the Company Stock alternative established by the
Committee in accordance with Section 6.6, or to transfer
amounts held in other investment alternatives to such
Company Stock alternative. No commission will be paid in
connection with the Trustee's acquisition of Company Stock
from a party in interest. Pending acquisition of Company
Stock and pursuant to a Participant's investment election,
elected amounts shall be allocated to the Participant's
Company Stock subaccount in cash and may be invested in any
short-term interest fund of the Trustee. Neither the
Company, nor the Committee, nor any Trustee have any
responsibility or duty to time any transaction involving
Company Stock in order to anticipate market conditions or
changes in Company Stock value. Neither the Company, nor
the Committee nor any Trustee have any responsibility or
duty to sell Company Stock held in the Trust Fund in order
to maximize return or minimize loss.
10.2 Valuation of Company Securities.
When it is necessary to value Company Stock held
by the Plan, the value will be the current fair market value
of the Company Stock, determined in accordance with
applicable legal requirements.
If the Company Stock is publicly traded, fair
market value will be based on the most recent closing price
in public trading, as reported in The Wall Street Journal or
any other publication of general circulation designated by
the Committee, unless another method of valuation is
required by the standards applicable to prudent fiduciaries.
If the Company Stock cannot be valued on the basis
of its closing price in recent public trading, fair market
value will be determined by the Company in good faith based
on all relevant factors for determining the fair market
value of securities. Relevant factors include an
independent appraisal by a person who customarily makes such
appraisals, if an appraisal of the fair market value of the
Company Stock as of the relevant date was obtained.
67
<PAGE>
In the case of a transaction between the Plan and
a party in interest, the fair market value of the Company
Stock must be determined as of the date of the transaction
rather than as of some other Valuation Date occurring before
or after the transaction. In other cases, the fair market
value of the Company Stock will be determined as of the most
recent Valuation Date.
10.3 Allocation of Stock Dividends and Splits.
Company Stock received by the Trust as a result of
a Company Stock split or Company Stock dividend on Company
Stock held in Participants' Accounts will be allocated as of
the Valuation Date coincident with or following the date of
such split or dividend, to each Participant who has such an
Account. The amount allocated will bear substantially the
same proportion to the total number of shares received as
the number of shares in the Participant's Account bears to
the total number of shares allocated to such Accounts of all
Participants immediately before the allocation. The shares
will be allocated to the nearest thousandth of a share.
10.4 Reinvestment of Dividends.
Upon direction of the Committee, cash dividends
may be reinvested as soon as practicable by the Trustee in
shares of Company Stock for Participants' Accounts. Cash
dividends may be reinvested in Company Stock purchased as
provided in Section 10.1 or purchased from the Accounts of
Participants who receive cash distributions of a fractional
share or a fractional interest therein.
10.5 Voting of Company Stock.
The Trustee shall have no discretion or authority
to vote Company Stock held in the Trust on any matter
presented for a vote by the stockholders of the Company
except in accordance with timely directions received by the
Trustee from Participants, unless otherwise required by
applicable law.
(a) Each Participant shall be entitled to
direct the Trustee as to the voting of all Company
Stock allocated and credited to his Account.
(b) All Participants entitled to direct such
voting shall be notified by the Company, pursuant to
its normal communications with shareholders, of each
occasion for the exercise of such voting rights within
a reasonable time before such rights are to be
exercised. Such notification shall include all
information distributed to shareholders either by the
Company or any other party regarding the exercise of
such rights. If a Participant shall fail to direct the
68
<PAGE>
Trustee as to the exercise of voting rights arising
under any Company Stock credited to his Accounts, or if
any Company Stock held in the Plan has not been
allocated to Participants' Accounts, the Trustee shall
not be required to vote such Company Stock except as
otherwise required by applicable law. The Trustee
shall maintain confidentiality with respect to the
voting directions of all Participants.
(c) Each Participant shall be a Named
Fiduciary (as that term is defined in ERISA
Section 402(a)(2)) with respect to Company Stock for
which he has the right to direct the voting under the
Plan but solely for the purpose of exercising voting
rights pursuant to this Section 10.5.
10.6 Confidentiality Procedures.
The Administration Committee shall establish
procedures intended to ensure the confidentiality of
information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and
similar rights. The Administration Committee shall also be
responsible for ensuring the adequacy of the confidentiality
procedures and monitoring compliance with such procedures.
The Administration Committee may, in its sole discretion,
appoint an independent fiduciary to carry out any activities
that it determines involve a potential for undue Company
influence on Participants with respect to the exercise of
their rights as shareholders.
10.7 Securities Law Limitation.
Neither the Committee nor the Trustee shall be
required to engage in any transaction, including, without
limitation, directing the purchase or sale of Company Stock,
which it determines in its sole discretion might tend to
subject itself, its members, the Plan, the Company, or any
Participant or Beneficiary to a liability under federal or
state securities laws.
69
<PAGE>
ARTICLE XI
MERGER OF COMPANY; MERGER OF PLAN
11.1 Effect of Reorganization or Transfer of Assets.
In the event of a consolidation, merger, sale,
liquidation, or other transfer of the operating assets of
the Company to any other company, the ultimate successor or
successors to the business of the Company shall
automatically be deemed to have elected to continue this
Plan in full force and effect, in the same manner as if the
Plan had been adopted by resolution of its Board of
Directors, unless the successor(s), by resolution of its
Board of Directors, shall elect not to so continue this Plan
in effect, in which case the Plan shall automatically be
deemed terminated as of the applicable effective date set
forth in the board resolution.
11.2 Merger Restriction.
Notwithstanding any other provision in this
Article, this Plan shall not in whole or in part merge or
consolidate with, or transfer its assets or liabilities to
any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger,
consolidation, or transfer (if the Plan then terminated)
which is equal to or greater than the benefit he would have
been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then
terminated).
70
<PAGE>
ARTICLE XII
PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS
12.1 Plan Termination.
(a) (i) Subject to the following provisions of
this Section 12.1, the Company may terminate the Plan
and the Trust Agreements at any time by an instrument
in writing executed in the name of the Company by an
officer or officers duly authorized to execute such an
instrument, and delivered to the Trustee.
(ii) The Plan and Trust Agreements may
terminate if the Company merges into any other
corporation, if as the result of the merger the entity
of the Company ceases, and the Plan is terminated
pursuant to the rules of Section 11.1.
(b) Upon and after the effective date of the
termination, the Company shall not make any further
contributions under the Plan and no contributions need
be made by the Company applicable to the Plan year in
which the termination occurs, except as may otherwise
be required by law.
(c) The rights of all affected Participants to
benefits accrued to the date of termination of the
Plan, to the extent funded as of the date of
termination, shall automatically become fully vested as
of that date.
12.2 Discontinuance of Contributions.
(a) In the event the Company decides it is
impossible or inadvisable for business reasons to
continue to make contributions under the Plan, the
Company by resolution of its Board of Directors may
discontinue contributions to the Plan. Upon and after
the effective date of this discontinuance, no
Participating Company or Participant shall make any
further contributions under the Plan and no
contributions need be made by a Participating Company
with respect to the Plan Year in which the
discontinuance occurs, except as may otherwise be
required by law. A Participant shall be released from
any salary reduction agreement under the Plan as of the
effective date of a discontinuance of contributions.
(b) The discontinuance of contributions on
the part of the Company shall not terminate the Plan as
to the funds and assets then held by the Trustee, or
71
<PAGE>
operate to accelerate any payments of distributions to
or for the benefit of Participants or Beneficiaries,
and the Trustee shall continue to administer the Trust
Fund in accordance with the provisions of the Plan
until all of the obligations under the Plan shall have
been discharged and satisfied.
(c) However, if this discontinuance of
contributions shall cause the Plan to lose its status
as a qualified plan under Code Section 401(a), the Plan
shall be terminated in accordance with the provisions
of this Article XII.
(d) On and after the effective date of a
discontinuance of contributions, the rights of all
affected Participants to benefits accrued to that date,
to the extent funded as of that date, shall
automatically become fully vested as of that date.
12.3 Rights of Participants.
In the event of the termination of the Plan, for
any cause whatsoever, all assets of the Plan, after payment
of expenses, shall be used for the exclusive benefit of
Participants and their Beneficiaries and no part thereof
shall be returned to the Company, except as provided in
Section 6.7 of this Plan.
12.4 Trustee's Duties on Termination.
(a) On or before the effective date of
termination of this Plan, the Trustee shall proceed as
soon as possible, but in any event within six months
from the effective date, to reduce all of the assets of
the Trust Fund to cash and other securities in such
proportions as the Committee shall determine (after
approval by the Internal Revenue Service, if necessary
or desirable, with respect to any portion of the assets
of the Trust Fund held in common stock or securities of
the Company).
(b) After first deducting the estimated
expenses for liquidation and distribution chargeable to
the Trust Fund, and after setting aside a reasonable
reserve for expenses and liabilities (absolute or
contingent) of the Trust, the Committee shall make
required allocations of items of income and expense to
the Accounts.
(c) Following these allocations, the Trustee
shall promptly, after receipt of appropriate
instructions from the Committee, distribute in
accordance with Section 8.7 to each former Participant
in Company stock or cash an amount equal to the amount
72
<PAGE>
credited to his Accounts as of the date of completion
of the liquidation.
(d) The Trustee and the Committee shall
continue to function as such for such period of time as
may be necessary for the winding up of this Plan and
for the making of distributions in accordance with the
provisions of this Plan.
(e) Notwithstanding the foregoing,
distributions to Participants upon Plan termination in
accordance with this Section 12.4 shall only be made if
a "successor plan," within the meaning of regulations
under Code Section 401(k)(10), is not established. In
the event a "successor plan" is established prior to or
subsequent to the termination of the Plan, the
Committee shall direct the Trustee to continue to hold
any assets of the Trust Fund not payable upon the
termination until such assets may, at the direction of
the Committee, be transferred to and held in the
successor plan until distributable under the terms of
that successor plan.
12.5 Partial Termination.
(a) In the event of a partial termination of
the Plan within the meaning of Code Section 411(d)(3),
the interests of affected Participants in the Trust
Fund, as of the date of the partial termination, shall
become nonforfeitable as of that date.
(b) That portion of the assets of the Plan
affected by the partial termination shall be used
exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part
thereof shall otherwise be applied.
(c) With respect to Plan assets and
Participants affected by a partial termination, the
Committee and the Trustee shall follow the same
procedures and take the same actions prescribed in this
Article XII in the case of a total termination of the
Plan.
12.6 Failure to Contribute.
The failure of a Participating Company to
contribute to the Trust in any year, if contributions are
not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the
Plan.
73
<PAGE>
ARTICLE XIII
APPLICATION FOR BENEFITS
13.1 Application for Benefits.
The Committee may require any person claiming
benefits under the Plan to submit an application therefor,
together with such documents and information as the
Committee may require. In the case of any person suffering
from a disability which prevents the claimant from making
personal application for benefits, the Committee may, in its
discretion, permit another person acting on his behalf to
submit the application.
13.2 Action on Application.
(a) Within ninety days following receipt of
an application and all necessary documents and
information, the Committee's authorized delegate
reviewing the claim shall furnish the claimant with
written notice of the decision rendered with respect to
the application.
(b) In the case of a denial of the
claimant's application, the written notice shall set
forth:
(i) The specific reasons for the
denial, with reference to the Plan provisions upon
which the denial is based;
(ii) A description of any additional
information or material necessary for perfection
of the application (together with an explanation
why the material or information is necessary); and
(iii) An explanation of the Plan's
claim review procedure.
(c) A claimant who wishes to contest the
denial of his application for benefits or to contest
the amount of benefits payable to him shall follow the
procedures for an appeal of benefits as set forth in
Section 13.3 below, and shall exhaust such
administrative procedures prior to seeking any other
form of relief.
13.3 Appeals.
(a) (i) A claimant who does not agree with the
decision rendered with respect to his application may
appeal the decision to the Committee.
74
<PAGE>
(ii) The appeal shall be made, in writing,
within sixty-five days after the date of notice of the
decision with respect to the application.
(iii) If the application has neither been
approved nor denied within the ninety day period
provided in Section 13.2 above, then the appeal shall
be made within sixty-five days after the expiration of
the ninety day period.
(b) The claimant may request that his application
be given full and fair review by the Committee. The
claimant may review all pertinent documents and submit
issues and comments in writing in connection with the
appeal.
(c) The decision of the Committee shall be made
promptly, and not later than sixty days after the
Committee's receipt of a request for review, unless
special circumstances require an extension of time for
processing, in which case a decision shall be rendered
as soon as possible, but not later than one hundred
twenty days after receipt of a request for review.
(d) The decision on review shall be in writing
and shall include specific reasons for the decision,
written in a manner calculated to be understood by the
claimant with specific reference to the pertinent Plan
provisions upon which the decision is based.
75
<PAGE>
ARTICLE XIV
LIMITATIONS ON CONTRIBUTIONS
14.1 General Rule.
(a) Notwithstanding anything to the contrary
contained in this Plan, the total Annual Additions
under this Plan to a Participant's Plan Accounts for
any Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000)
(or if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in
Section 415(b) of the Code as in effect for the
Limitation Year); or
(ii) Twenty-five percent of the
Participant's total Compensation from the Company
and any Affiliated Companies for the year,
excluding amounts otherwise treated as Annual
Additions under Section 14.2.
(b) For purposes of this Article XIV, the
Company has elected a "Limitation Year" corresponding
to the Plan Year.
14.2 Annual Additions.
For purposes of Section 14.1, the term "Annual
Additions" shall mean, for any Limitation Year, the sum of:
(a) the amount credited to the Participant's
Accounts from Company contributions for such Limitation
Year;
(b) any Employee contributions for the
Limitation Year; and
(c) any amounts described in
Section 415(l)(1) or 419(A)(d)(2) of the Code.
Annual Additions for Limitation Years commencing
prior to 1987 shall not be recalculated to take into account
all Employee contributions.
14.3 Other Defined Contribution Plans.
If the Company or an Affiliated Company is
contributing to any other defined contribution plan (as
defined in Section 415(i) of the Code) for its Employees,
some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with
76
<PAGE>
contributions under this Plan for the purposes of applying
the limitations of Section 14.1.
14.4 Combined Plan Limitation (Defined Benefit Plan).
In the event a Participant hereunder also is a
participant in any qualified defined benefit plan (within
the meaning of Section 415(k) of the Code) of the Company or
an Affiliated Company, then the benefit payable under such
other defined benefit plan, or any of them, shall be reduced
for so long and to the extent necessary to provide that the
sum of the "defined benefit fraction" and the "defined
contribution fraction," for any Limitation Year, as defined
in Section 415(e) of the Code, shall not exceed one (1).
14.5 Adjustments for Excess Annual Additions.
In general, the amount of excess for any
Limitation Year under this Plan and any other defined
contribution plan (as defined in Code Section 414(i)) or
defined benefit plan (as defined in Code Section 414(j))
maintained by the Company or an Affiliated Company will be
determined so as to avoid Annual Additions in excess of the
limitations set forth in Sections 14.1 through 14.4.
However, if as a result of an administrative error, the
Annual Additions to a Participant's Accounts under this Plan
(after giving effect to the maximum permissible adjustments
under the other plans) would exceed the applicable
limitations described in Sections 14.1 through 14.4, the
excess amount shall be subject to this Section 14.5.
(a) For Plan Years commencing prior to
January 1, 1993, the following rules shall apply:
(i) If the Participant made any after-
tax contributions to any defined contribution plan
that is maintained by the Company or an Affiliated
Company, which after-tax contributions were not
matched by matching contributions, these
contributions shall be returned to the Participant
to the extent of any excess Annual Additions
arising under Section 14.1(a)(ii).
(ii) If excess Annual Additions remain
after the application of the above rule, such
excess amounts (if any) allocated to the
Participant's Company Contributions Account shall
be reduced to the extent necessary to eliminate
(if possible) any remaining excess Annual
Additions.
(iii) If excess Annual Additions remain
after the application of (i) and (ii) above, such
excess amounts (if any) allocated to the
77
<PAGE>
Participant's Company Matching Contribution
Account shall be reduced to the extent necessary
to eliminate (if possible) any remaining excess
Annual additions.
(iv) If any excess Annual Additions
remain after the application of (i), (ii) and
(iii) above, such excess amounts (if any)
allocated to the Participant's Before-Tax
Contributions Account shall be reduced to the
extent necessary to eliminate (if possible) any
remaining excess Annual Additions.
(b) For Plan Years commencing on or after
January 1, 1993, the following rules shall apply:
(i) If the Participant made any after-
tax contributions to this or any other defined
contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax
contributions were not matched by matching
contributions, within the meaning of Code Section
401(m), such after-tax contributions and any
earnings thereon shall be returned to the
Participant to the extent of any excess Annual
Additions.
(ii) If excess Annual Additions remain
after the application of the above rule, if the
Participant made any Before-Tax Contributions for
the Plan Year to this or any other defined
contribution plan that is maintained by the
Company or an Affiliated Company, which Before-Tax
Contributions were not matched by matching
contributions, within the meaning of Code
Section 401(m), Before-Tax Contributions and any
earnings thereon shall be returned to the
Participant to the extent of any excess Annual
Additions.
(iii) If excess Annual Additions remain
after the application of the above rule, if the
Participant made any after-tax contributions for
the Plan Year to this or any other defined
contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax
contributions were matched by matching
contributions, within the meaning of Code
Section 401(m), any such after-tax contributions
and any earnings thereon shall be returned to the
Participant and any matching contributions
attributable thereto shall be reduced to the
extent necessary to eliminate any remaining excess
Annual Additions.
78
<PAGE>
(iv) If excess Annual Additions remain
after the application of the above rule, if the
Participant made any Before-Tax Contributions for
the Plan Year to this or any other defined
contribution plan that is maintained by the
Company or an Affiliated Company, which Before-Tax
Contributions were matched by matching
contributions, within the meaning of Code
Section 401(m), any such Before-Tax Contributions
and any earnings thereon shall be returned to the
Participant and any matching contributions
attributable thereto shall be reduced to the
extent necessary to eliminate any remaining excess
Annual Additions.
(v) If excess Annual Additions remain
after the application of the above rule, any other
Company contributions for the Plan Year shall be
reduced to the extent necessary to eliminate any
remaining excess Annual Additions.
14.6 Disposition of Excess Amounts.
Any excess amounts contributed by a Participating
Company on behalf of a Participant for any Plan Year (other
than Before-Tax Contributions) shall be held unallocated in
a suspense account for the Plan Year and applied, to the
extent possible, first to reduce the Participating Company
contributions for the Plan Year, and next, to reduce the
Participating Company contributions for the succeeding Plan
Year, or Years, if necessary. No investment gains or losses
shall be allocated to a suspense account.
14.7 Affiliated Company.
For purposes of this Article XIV, the status of an
entity as an Affiliated Company shall be determined by
reference to the percentage tests set forth in Code
Section 415(h).
79
<PAGE>
ARTICLE XV
RESTRICTION ON ALIENATION
15.1 General Restrictions Against Alienation.
(a) The interest of any Participant or
Beneficiary in the income, benefits, payments, claims
or rights hereunder, or in the Trust Fund shall not in
any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and
Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his
or her interest under the Trust Fund, and is without
power to do so, except as may otherwise be provided for
in the Trust Agreement. The interest of any
Participant or Beneficiary shall not be liable or
subject to his debts, liabilities, or obligations, now
contracted, or which may be subsequently contracted.
The interest of any Participant or Beneficiary shall be
free from all claims, liabilities, bankruptcy
proceedings, or other legal process now or hereafter
incurred or arising; and the interest or any part
thereof, shall not be subject to any judgment rendered
against the Participant or Beneficiary.
(b) In the event any person attempts to take
any action contrary to this Article XV, that action
shall not be effective, and all Participants and their
Beneficiaries, may disregard that action and shall not
suffer any liability for any disregard of that action,
and shall be reimbursed on demand out of the Trust Fund
for the amount of any loss, cost or expense incurred as
a result of disregarding or of acting in disregard of
that action.
(c) The preceding provisions of this
Section 15.1 shall be interpreted and applied by the
Committee in accordance with the requirements of Code
Section 401(a)(13) as construed and interpreted by
authoritative judicial and administrative rulings and
regulations.
(d) The provisions of Subsections 15.1(a)
and 15.1(b) are expressly subject to qualified domestic
relations orders, as provided in Code
Section 401(a)(13)(B).
15.2 Nonconforming Distributions Under Court Order.
(a) In the event that a court with
jurisdiction over the Plan and the Trust Fund shall
issue an order or render a judgment requiring that all
or part of a Participant's interest under the Plan and
80
<PAGE>
in the Trust Fund be paid to a spouse, former spouse
and/or children of the Participant by reason of or in
connection with the marital dissolution and/or marital
separation of the Participant and the spouse, and/or
some other similar proceeding involving marital rights
and property interests, then notwithstanding the
provisions of Section 15.1 the Committee may, in its
absolute discretion, direct the applicable Trustee to
comply with that court order or judgment and distribute
assets of the Trust Fund in accordance therewith.
Pending distribution to an alternate payee of any
portion of a Participant's vested interest in the Trust
Fund, pursuant to a court order or judgment, such
portion shall be segregated and invested in accordance
with rules prescribed by the Committee, and neither the
Participant nor the alternate payee shall be entitled
to make an election with respect to the investment of
such segregated portion.
(b) The Committee's decision with respect to
compliance with any such court order or judgment shall
be made in its absolute discretion and shall be binding
upon the Trustee and all Participants and their
Beneficiaries; provided, however, that the Committee in
the exercise of its discretion shall not make payments
in accordance with the terms of an order which is not a
qualified domestic relations order or which the
Committee determines would jeopardize the continued
qualification of the Plan and Trust under Section 401
of the Code. Notwithstanding the foregoing, the
Committee may make a distribution to an alternate payee
prior to the date the Participant attains age fifty
(50), if such distribution is required by a qualified
domestic relations order.
(c) Neither the Plan, the Company, the
Committee nor the Trustee shall be liable in any manner
to any person, including any Participant or
Beneficiary, for complying with any such court order or
judgment.
(d) Nothing in this Section 15.2 shall be
interpreted as placing upon the Company, the Committee
or any Trustee any duty or obligation to comply with
any such court order or judgment. The Committee may,
if in its absolute discretion it deems it to be in the
best interests of the Plan and the Participants,
determine that any such court order or judgment shall
be resisted by means of judicial appeal or other
available judicial remedy, and in that event the
Trustee shall act in accordance with the Committee's
directions.
81
<PAGE>
(e) The Committee shall adopt procedures and
provide notifications to a Participant and alternate
payees in connection with a qualified domestic
relations order, to the extent required under Code
Section 414(p).
82
<PAGE>
ARTICLE XVI
PLAN AMENDMENTS
16.1 Amendments.
The Board of Directors may at any time, and from
time to time, amend the Plan by an instrument in writing
executed in the name of the Company by an officer or
officers duly authorized to execute such instrument, and
delivered to the applicable Trustee. However, to the extent
required by law, no amendment shall be made at any time, the
effect of which would be:
(a) To cause any assets of the Trust Fund to
be used for or diverted to purposes other than
providing benefits to the Participants and their
Beneficiaries, and defraying reasonable expenses of
administering the Plan, except as provided in
Section 6.7;
(b) To have any retroactive effect so as to
deprive any Participant or Beneficiary of any accrued
benefit to which he would be entitled under this Plan,
in contravention of Code Section 411(d)(6), if his
employment were terminated immediately before the
amendment;
(c) To eliminate or reduce an optional form
of benefit to the extent so doing would contravene Code
Section 411(d)(6); or
(d) To increase the responsibilities or
liabilities of a Trustee or an Investment Manager
without his written consent.
16.2 Retroactive Amendments.
Notwithstanding any provisions of this Article XVI
to the contrary, the Plan may be amended prospectively or
retroactively (as provided in Section 401(b) of the Code) to
make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or
any regulation under either.
16.3 Amendment of Vesting Provisions.
Effective January 1, 1989, if the Plan is amended
in any way that directly or indirectly affects the
computation of a Participant's vested interest in his
Accounts, each Participant who has completed at least three
(3) Years of Service may elect, within a reasonable time
after the adoption of the amendment, to continue to have his
vested interest computed under the Plan without regard to
83
<PAGE>
such amendment. The period during which the election may be
made shall commence when the date of the amendment is
adopted and shall end on the latest of: (i) 60 days after
the amendment is adopted; (ii) 60 days after the amendment
is effective; or (iii) 60 days after the Participant is
issued written notice of the amendment.
84
<PAGE>
ARTICLE XVII
TOP-HEAVY PROVISIONS
17.1 Minimum Company Contributions.
In the event that this Plan is deemed a Top-Heavy
plan with respect to any Plan Year, each Non-Key Employee
who is a Participant shall receive Company contributions
that in the aggregate are at least equal to the lesser of
three percent (3%) of Compensation or the percentage at
which Company contributions are made for the Key Employee
(under any plan required to be included in an Aggregation
Group) for whom such percentage is the highest for the Plan
Year, regardless of whether the Non-Key Employee elected to
make Before-Tax Contributions to the Plan for the Plan Year,
completed less than 1,000 Hours of Service during such Plan
Year, or the Non-Key Employee's level of Compensation. For
purposes of this Section 17.1, Company contributions shall
include amounts considered contributed by Key Employees and
which qualify for treatment under Code Section 401(k), and
any Company contributions for Key Employees taken into
account under Section 401(k)(3) or 401(m) of the Code, but
shall not include such amounts considered as contributed by
or for Non-Key Employees. Further, in determining the
percentage at which Company contributions are made for the
Plan Year for the Key Employee for whom such percentage is
the highest, the contributions for a Key Employee shall be
divided by so much of a Key Employee's compensation for the
Plan Year as does not exceed $200,000, as that amount is
adjusted each year by the Secretary of the Treasury.
In the event a Participant is covered by both a
defined contribution and a defined benefit plan maintained
by the Company, both of which are determined to be Top-Heavy
Plans, the defined benefit minimum, offset by the benefits
provided under the defined contribution plan, shall be
provided under the defined benefit plan.
17.2 Compensation.
For the purpose of calculating Company
contributions to be made to a Participant for Plan Years
commencing prior to January 1, 1989, the annual Compensation
taken into account for any Employee shall not exceed
$200,000 (increased by any adjustments made pursuant to
Section 416(d)(2) of the Code or regulations thereunder) if
the Plan is deemed a Top-Heavy Plan with respect to any Plan
Year.
17.3 Top-Heavy Determination.
This Plan shall be deemed a Top-Heavy Plan with
respect to any Plan Year in which, as of the Determination
85
<PAGE>
Date: (a) the aggregate of the Accounts of Key Employees
under the Plan exceeds 60% of the aggregate of the Accounts
of all Employees; or (b) the aggregate of the Accounts of
Key Employees under all defined contribution plans and the
present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans includable in an
Aggregation Group exceed 60% of a similar sum for all
employees in such group. As used above, the term
"Aggregation Group" includes all plans of Participating
Companies having one or more Key Employees as Participants
and any other defined contribution plan of a Participating
Company that permits a plan of a Participating Company
having one or more Key Employees to meet the qualification
requirements of Sections 401(a)(4) or 410 of the Code.
The present value of account balances under a
defined contribution plan shall be determined as of the most
recent valuation date that falls within or ends on the
Determination Date. The present value of accrued benefits
under a defined benefit plan shall be determined as of the
same valuation date used for computing plan costs for
minimum funding. The present value of the cumulative
accrued benefits of a Non-Key Employee shall be determined
under either:
(i) the method, if any, that uniformly
applies for accrual purposes under all plans maintained
by affiliated companies, within the meaning of Code
Sections 414(b), (c), (m) or (o); or
(ii) if there is no such method, as if such
benefit accrued not more rapidly than the lowest
accrual rate permitted under the fractional accrual
rate of Section 411(b)(1)(C) of the Code.
For purposes of this Article XVII, "Determination
Date" shall mean, with respect to any Plan Year, the last
day of the preceding Plan Year, or, in the case of the first
Plan Year, the last day of such Plan Year.
The term, "Key Employee" shall mean, for purposes
of this Article XVII, any Employee or former Employee who,
at any time during such Plan Year (or any of the 4 preceding
Plan Years) is:
(1) an officer of a Participating Company
having an annual compensation in excess of 50 percent
of the amount in effect under Section 415(b)(1)(A) of
the Code for such Plan Year;
(2) one of the 10 Employees having an annual
compensation in excess of 150 percent of the amount in
effect under Section 415(c)(1)(A) of the Code owning
(or considered as owning within the meaning of
86
<PAGE>
Section 318 of the Code) the largest interests in a
Participating Company;
(3) a 5% owner of a Participating Company;
or
(4) 1% owner of a Participating Company
having an annual compensation from a Participating
Company of more than $150,000.
For purposes of (1) above, no more than 50
Employees (or, if lesser, the greater of 3 or 10% of the
Employees) shall be treated as officers.
A 5% (or 1%, if applicable) owner means any person
who owns (or is considered as owning within the meaning of
Section 318 of the Code) more than 5% (1%) of the
outstanding stock of the Participating Company or stock
possessing more than 5% (1%) of the total combined voting
power of all stock of the Participating Company.
For purposes of applying the constructive
ownership rules under Section 318(a)(2) of the Code,
subparagraph (C) of such Section shall be applied by
substituting "5 percent" for "50 percent."
For purposes of determining "5% owners" and/or "1%
owners," the aggregating rules of Sections 414(b), (c) and
(m) of the Code shall not apply. For purposes of
determining whether an Employee has compensation of more
than $150,000, however, compensation from each entity
required to be aggregated under Sections 414(b), (c) and/or
(m) of the Code shall be taken into account.
For purposes of determining the amount of a
Participant's Account for purposes of this Section 17.3, the
amount shall include the aggregate distributions under the
Plan made to the Participant during the five year period
ending on the Determination Date.
The following shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy
Plan: (1) any rollover to the Plan that is initiated by a
Participant; (2) the account value of any Participant who is
not a Key Employee with respect to any Plan Year but was a
Key Employee with respect to any prior Plan Year; and (3)
the account value of a Participant who has not received any
compensation from any Participating Company under the Plan
(other than benefits under the Plan) during the five year
period ending on the Determination Date.
87
<PAGE>
17.4 Maximum Annual Addition.
(a) Except as set forth below, in the case
of any Top-Heavy Plan the rules of Section 14.4 shall
be applied by substituting "1.0" for "1.25" in the
defined benefit plan fraction and the defined
contribution fraction.
(b) The rule set forth in Subsection (a)
above shall not apply if the requirements of both
Paragraphs (i) and (ii), below, are satisfied.
(i) The requirements of this
Paragraph (i) are satisfied if the rules of
Section 17.4(a) above would be satisfied after
substituting "four percent (4%)" for "three
percent (3%)" where it appears therein with
respect to Participants covered only under a
defined contribution plan.
(ii) The requirements of this
Paragraph (ii) are satisfied if the Plan would not
be a Top-Heavy Plan if "ninety percent (90%)" were
substituted for "sixty percent (60%)" each place
it appears in Section 17.3(a)(ii).
(c) The rules of Subsection (a) shall not
apply with respect to any Employee as long as there are
no --
(i) Company contributions, forfeitures,
or voluntary nondeductible contributions allocated
to the Employee under a defined contribution plan
maintained by the Company, or
(ii) Accruals by the Employee under a
defined benefit plan maintained by the Company.
17.5 Aggregation.
Each Plan of a Participating Company required to
be included in an "Aggregation Group" shall be treated as a
Top-Heavy Plan if such group is a "Top-Heavy Group."
For purposes of this Article XVII, an "Aggregation
Group" shall mean: (i) each plan of a Participating Company
in which a Key Employee is a Participant, and (ii) each
other plan of a Participating Company which enables any plan
described in (i) above to meet the requirements of
Section 401(a)(4) or 410 of the Code.
Any plan of a Participating Company that is not
required to be included in an Aggregation Group may be
treated as part of such group if such group would continue
88
<PAGE>
to meet the requirements of Section 401(a)(4) and 410 of the
Code with such plan taken into account.
For purposes of this Section 17.5, a "Top-Heavy
Group" means any Aggregation Group if the sum (as of the
Determination Date) of the present value of the cumulative
accrued benefits for Key Employees under all defined benefit
plans included in such group and the aggregate of the
accounts of Key Employees under all defined contribution
plans included in such group exceed 60% of a similar sum
determined for all Employees.
89
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
18.1 No Enlargement of Employee Rights.
(a) This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be
deemed to constitute a contract between the Company and
any Employee, or to be consideration for, or an
inducement to, or a condition of, the employment of any
Employee.
(b) Nothing contained in this Plan or the
Trust shall be deemed to give any Employee the right to
be retained in the employ of the Company or to
interfere with the right of the Company to discharge or
retire any Employee at any time.
(c) No Employee, nor any other person, shall
have any right to or interest in any portion of the
Trust Fund other than as specifically provided in this
Plan.
18.2 Mailing of Payments; Lapsed Benefits.
(a) All payments under the Plan shall be
delivered in person or mailed to the last address of
the Participant (or, in the case of the death of the
Participant, to the last address of any other person
entitled to such payments under the terms of the Plan)
furnished pursuant to Section 18.3 below.
(b) In the event that a benefit is payable
under this Plan to a Participant or any other person
and after reasonable efforts such person cannot be
located for the purpose of paying the benefit for a
period of three (3) consecutive years, the Committee,
in its sole discretion, may determine that such person
conclusively shall be presumed dead and upon the
termination of such three (3) year period the benefit
shall be forfeited and as soon thereafter as
practicable shall be applied to reduce future Company
Contributions; provided, however, should any person
entitled to such benefit thereafter claim such benefit,
such benefit shall be restored. Alternatively,
benefits that cannot be paid may escheat to the state
in accordance with applicable state law.
(c) For purposes of this Section 18.2, the
term "Beneficiary" shall include any person entitled
under Section 8.9 to receive the interest of a deceased
Participant or deceased designated Beneficiary. It is
the intention of this provision that the benefit will
90
<PAGE>
be distributed to an eligible Beneficiary in a lower
priority category under Section 8.9 if no eligible
Beneficiary in a higher priority category can be
located by the Committee after reasonable efforts have
been made.
(d) The Accounts of a Participant shall
continue to be maintained until the amounts in the
Accounts are paid to the Participant or his
Beneficiary. Notwithstanding the foregoing, in the
event that the Plan is terminated, the following rules
shall apply:
(i) All Participants (including
Participants who have not previously claimed their
benefits under the Plan) shall be notified of
their right to receive a distribution of their
interests in the Plan;
(ii) All Participants shall be given a
reasonable length of time, which shall be
specified in the notice, in which to claim their
benefits;
(iii) All Participants (and their
Beneficiaries) who do not claim their benefits
within the designated time period shall be
presumed to be dead. The Accounts of such
Participants shall be forfeited at such time.
These forfeitures shall be disposed of according
to rules prescribed by the Committee, which rules
shall be consistent with applicable law.
(iv) The Committee shall prescribe such
rules as it may deem necessary or appropriate with
respect to the notice and forfeiture rules stated
above.
(e) Should it be determined that the
preceding rules relating to forfeiture of benefits upon
Plan termination are inconsistent with any of the
provisions of the Code and/or ERISA, these provisions
shall become inoperative without the need for a Plan
amendment and the Committee shall prescribe rules that
are consistent with the applicable provisions of the
Code and/or ERISA.
18.3 Addresses.
Each Participant shall be responsible for
furnishing the Committee with his correct current address
and the correct current name and address of his Beneficiary
or Beneficiaries.
91
<PAGE>
18.4 Notices and Communications.
(a) All applications, notices, designations,
elections, and other communications from Participants
shall be in writing, on forms prescribed by the
Committee and shall be mailed or delivered to the
office designated by the Committee, and shall be deemed
to have been given when received by that office.
(b) Each notice, report, remittance,
statement and other communication directed to a
Participant or Beneficiary shall be in writing and may
be delivered in person or by mail. An item shall be
deemed to have been delivered and received by the
Participant when it is deposited in the United States
Mail with postage prepaid, addressed to the Participant
or Beneficiary at his last address of record with the
Committee.
18.5 Reporting and Disclosure.
The Plan Administrator shall be responsible for
the reporting and disclosure of information required to be
reported or disclosed by the Plan Administrator pursuant to
ERISA or any other applicable law.
18.6 Governing Law.
All legal questions pertaining to the Plan shall
be determined in accordance with the provisions of ERISA and
the laws of the State of California. All contributions made
hereunder shall be deemed to have been made in California.
18.7 Interpretation.
(a) Article and Section headings are for
convenient reference only and shall not be deemed to be
part of the substance of this instrument or in any way
to enlarge or limit the contents of any Article or
Section. Unless the context clearly indicates
otherwise, masculine gender shall include the feminine,
and the singular shall include the plural and the
plural the singular.
(b) The provisions of this Plan shall in all
cases be interpreted in a manner that is consistent
with this Plan satisfying:
(i) The requirements (of Code
Section 401(a) and related statutes) for
qualification as a Profit Sharing Plan; and
92
<PAGE>
(ii) The requirements (of Code
Section 401(k) and related statutes) for
qualification as a Qualified Cash or Deferred
Arrangement.
18.8 Certain Securities Laws Rules.
Any election or direction made under this Plan by
an individual who is or may become subject to liability
under Section 16 of the Securities Exchange Act of l934, as
amended (the "Exchange Act"), may be conditioned upon such
restrictions as are necessary or appropriate to qualify for
an applicable exemption under Section 16(b) of the Exchange
Act, or any rule promulgated thereunder. To the extent
required by Section 401(a)(4) of the Code, the rules under
this Section 18.8 shall be administered in a non-
discriminatory manner.
18.9 Withholding for Taxes.
Any payments out of the Trust Fund may be subject
to withholding for taxes as may be required by any
applicable federal or state law.
18.10 Limitation on Company; Committee and Trustee
Liability.
Any benefits payable under this Plan shall be paid
or provided for solely from the Trust Fund and neither the
Company, the Committee nor the Trustee assume any
responsibility for the sufficiency of the assets of the
Trust to provide the benefits payable hereunder.
18.11 Successors and Assigns.
This Plan and the Trust established hereunder
shall inure to the benefit or, and be binding upon, the
parties hereto and their successors and assigns.
18.12 Counterparts.
This Plan document may be executed in any number
of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in
evidence or used for any other purpose without the
production of any other counterparts.
IN WITNESS WHEREOF, in order to record the
adoption of this Plan, Mattel, Inc. has caused this
instrument to be executed by its duly authorized officers
93
<PAGE>
this 4th day of May, 1993, effective, however,
as of January 1, 1993, except as otherwise expressly
provided herein.
MATTEL, INC.
By: /s/ Francesca Luzuriaga
---------------------------
By:
---------------------------
94
<PAGE>
EXHIBIT 99.10
MATTEL INC.
PERSONAL INVESTMENT PLAN
FIRST AMENDMENT TO THE 1993 RESTATEMENT
The Mattel, Inc. Personal Investment Plan (the "Plan")
is hereby amended as follows:
(1) Effective January 1, 1994, Section 2.16(e) of the Plan
is hereby amended to read in its entirety as follows:
"(e) Effective for Plan Years commencing on and
after January 1, 1994, the `Compensation' of any
Employee taken into account under the Plan for any Plan
Year shall not exceed $150,000 (or such adjusted amount
as may be prescribed for such Plan Year pursuant to
Section 401(a)(17) of the Code). In determining the
Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code
shall apply, except in applying such rules, the term
`family' shall include only the Spouse of the
Participant and any lineal descendants of the
Participant who have not attained age 19 before the
close of the year. If, as a result of the application
of such rules the adjusted $150,000 limitation is
exceeded, then, the limitation shall be prorated among
the affected individuals in proportion to each such
individual's Compensation as determined under this
Subsection (e) prior to the application of this
limitation."
(2) Effective January 1, 1993, Section 5.8 of the Plan is
hereby amended to read in its entirety as follows:
"5.8 Participant Transfer/Rollover Contributions.
--------------------------------------------
Effective as of an Eligible Employee's Employment
Commencement Date, or such later date as may be
determined by the Administrator, amounts, if any,
distributed to such Eligible Employee or payable to
<PAGE>
such Eligible Employee from another plan that satisfies
the requirements of Code Section 401(a), or held in an
individual retirement account which is attributable
solely to a rollover contribution within the meaning of
Code Section 408(d)(3), may be transferred to this
Plan, including by direct rollover from another plan
that satisfies the requirements of Code Section 401(a),
and credited to the Participant's Transfer/Rollover
Account in accordance with Code Section 402 and rules
which the Committee shall prescribe from time to time;
provided, however, the Committee determines that the
continued qualification of this Plan under Code Section
401(a) or 401(k) would not be adversely affected by
such transfer, or would cause this Plan to become a
`transferee plan,' within the meaning of Code Section
401(a)(11). Any amounts transferred in accordance with
this Section 5.8, which shall be in cash, shall not be
subject to distribution to the Participant except as
expressly provided under the terms of this Plan."
IN WITNESS WHEREOF, Mattel, Inc. has caused this
instrument to be executed by its duly authorized officer this
21st day of December, 1994, effective as of the dates set forth
above.
MATTEL, INC.
By: /s/ E. Joseph McKay
-------------------
-2-
