<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1997
REGISTRATION NO. ________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
MATTEL, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-1567322
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Continental Boulevard
El Segundo, California 90245-5012
(310) 252-2000
(Address, including zip code, and telephone number, including
area code of registrant's principal executive offices)
----------------------
LELAND P. SMITH, ESQ.
Assistant General Counsel and Assistant Secretary
MATTEL, INC.
333 Continental Boulevard
El Segundo, California 90245-5012
(310) 252-4821
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
COPIES TO:
CYNTHIA M. DUNNETT
THOMAS M. CLEARY
Riordan & McKinzie
300 South Grand Avenue, 29th Floor
Los Angeles, California 90071
(213) 629-4824
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form S-3 are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being offered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
TITLE OF EACH CLASS OF TO BE OFFERING AGGREGATE OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share 892,748 shares $34.0625 $30,409,228 $9,215.00
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act, based on the average
of the high and low sales prices, $34.50 and $33.625, respectively, on
August 15, 1997, as reported on the New York Stock Exchange.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RISK FACTORS AND FORWARD-LOOKING STATEMENTS..................... 3
THE COMPANY..................................................... 3
USE OF PROCEEDS................................................. 4
THE SELLING STOCKHOLDERS........................................ 4
DESCRIPTION OF CAPITAL STOCK.................................... 4
General....................................................... 4
Common Stock.................................................. 5
Description of Preference Share Purchase Rights............... 5
Preferred Stock............................................... 7
Convertible Notes............................................. 19
PLAN OF DISTRIBUTION............................................ 19
TRADEMARK MATTERS............................................... 20
LEGAL OPINION................................................... 20
EXPERTS......................................................... 20
</TABLE>
i
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS SUBJECT TO COMPLETION
DATED AUGUST 21, 1997
892,748 Shares
MATTEL, INC.
Common Stock
Par Value $1.00 Per Share
------------------------
The 892,748 shares (the "Shares") of Common Stock, par value $1.00 per share
("Common Stock"), of Mattel, Inc. ("Mattel" or the "Company") are offered by the
entity or entities named herein under "Selling Stockholders" and may be resold
by the Selling Stockholders in the public market.
The Selling Stockholders may resell the Shares from time to time in transactions
on the New York Stock Exchange (the "NYSE") or the Pacific Exchange, Inc. (the
"PSE"), at prices prevailing on such exchanges, or in negotiated transactions,
among other forms of distribution. See "Plan of Distribution." Sales of the
Shares may be effected by selling such securities to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the sellers thereof. Such sellers and any
broker-dealer who acts in connection with the sales of Shares may be deemed to
be "underwriters" as that term is defined in the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions received by them and profit
on any resale of the Shares might be deemed to be underwriting discounts and
commissions under the Securities Act.
None of the proceeds from the sale of the Shares will be received by Mattel.
Mattel has agreed to bear all expenses (other than selling commissions) in
connection with the registration and sale of the Shares being registered hereby.
See "Plan of Distribution."
The Common Stock is traded on the NYSE and the PSE under the symbol "MAT." On
August 15, 1997, the reported closing price of Mattel's Common Stock on the NYSE
was $33.8125 per share.
The date of this Prospectus is August __, 1997.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OTHER
PERSON. ALL INFORMATION CONTAINED IN THIS PROSPECTUS IS AS OF THE DATE OF THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR IN THE FACTS HEREIN SET FORTH SINCE THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES COVERED
BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO OR SOLICITATION OF ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY
BE MADE.
<PAGE>
AVAILABLE INFORMATION
Mattel has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement and the Exhibits and Schedules thereto.
Mattel is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and the rules and
regulations thereunder, and in accordance therewith files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed by Mattel can be inspected and copied at
the public reference facilities maintained by the Commission at Room 24,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Room 3190, Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661-2511; and 13th Floor, 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information concerning the Company are also
available for inspection at the offices of the NYSE at 20 Broad Street, New
York, New York 10005 and the PSE at 301 Pine Street, San Francisco, California
94104, on which exchanges certain securities of Mattel are listed.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which Mattel has filed with the Commission pursuant
to the Exchange Act, are hereby incorporated by reference in, and shall be
deemed to be a part of, this Prospectus:
(i) Mattel's Annual Report on Form 10-K for the year ended
December 31, 1996;
(ii) The portions of Mattel's Notice of Annual Meeting of
Stockholders and Proxy Statement, dated March 24, 1997, that have been
incorporated by reference into the Form 10-K for the year ended December 31,
1996;
(iii) Mattel's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(iv) Mattel's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
(v) Current Reports on Form 8-K filed by Mattel with the
Commission dated February 5, 1997; February 14, 1997; March 5, 1997; March 19,
1997; March 20, 1997; March 27, 1997; April 17, 1997; April 25, 1997; May 15,
1997; July 25, 1997; and July 30, 1997;
(vi) The description of the Company's Series B and Series C
Preferred Stock and Series C Depositary Shares set forth in Mattel's and Tyco
Toys, Inc.'s joint proxy statement and prospectus filed with the Commission on
Form S-4 dated February 14, 1997; and
(vii) The description of the Company's Common Stock contained in
the Company's Current Report on Form 8-K filed with the Commission on July 22,
1996.
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<PAGE>
All documents filed by Mattel pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part thereof from the respective
dates of filing of such documents. Any statement contained in this Prospectus
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference in
this Prospectus) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents which have been incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference therein). Requests for such copies
should be directed to: Secretary, Mattel, Inc., 333 Continental Boulevard, El
Segundo, California 90245-5012, telephone (310) 252-2000.
RISK FACTORS AND FORWARD-LOOKING STATEMENTS
Certain information incorporated by reference into this Prospectus includes
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and is subject to the safe harbor created by that
Act. Forward-looking statements can be identified by the use of forward-looking
terminology, such as "may," "will," "should," "expect," "anticipate,"
"estimate," "continue," "plans," "intends" or other similar terminology. Such
forward-looking statements, which relate to, among other things, the financial
condition, results of operations and business of the Company, are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those set forth in such statements. These include without
limitation: the Company's dependence on the timely development, introduction and
customer acceptance of new products; possible weaknesses of international
markets; the impact of competition on revenues and margins; the effect of
currency fluctuations on reportable income; and other risks and uncertainties as
may be detailed from time to time in the Company's public announcements and
filings with the Commission. Additional information on the risks and
uncertainties that could affect the Company's financial condition, results of
operations and business is included in the documents incorporated by reference
herein.
THE COMPANY
Mattel, Inc. designs, manufactures, markets and distributes a broad variety
of toy products on a worldwide basis. The Company's business is dependent in
great part on its ability each year to redesign, restyle and extend existing
core products and product lines and to design and develop innovative new toys
and product lines. New products have limited lives, ranging from one to three
years, and generally must be updated and refreshed each year.
Core brands have historically provided the Company with relatively stable
growth. Among the Company's major core brands are BARBIE fashion dolls and doll
clothing and accessories; the Company's Disney-licensed toys; FISHER-PRICE toys
and juvenile products; SESAME STREET characters; HOT WHEELS vehicles and
playsets; MATCHBOX; CABBAGE PATCH KIDS; Tyco Electric Racing and Tyco Radio
Control; the UNO and SKIP-BO card games; and the SCRABBLE game, which the
Company markets outside of the United States and Canada.
Mattel was incorporated in California in 1948 and reincorporated in Delaware
in 1968. Its executive offices are located at 333 Continental Boulevard, El
Segundo, California 90245-5012, telephone (310) 252-2000.
3
<PAGE>
USE OF PROCEEDS
The Shares are being sold by the holders thereof (the "Selling Stockholders")
and, accordingly, the Company will receive none of the proceeds therefrom. The
Selling Stockholders have received the Shares upon conversion of the entire
$16,033,765.13 in principal amount of the 7% Convertible Subordinated Notes of
Mattel (the "Convertible Notes").
THE SELLING STOCKHOLDERS
All of the shares of Common Stock offered hereby are offered by the Selling
Stockholders. Any sales of such Shares will be for the account of such persons
or entities and none of the proceeds of such offering will be received by the
Company.
The following table sets forth, with respect to the Selling Stockholders, the
number of shares of Common Stock owned by each Selling Stockholder prior to this
offering, the number of shares of Common Stock offered for each Selling
Stockholder's account and the number of shares held by each Selling Stockholder
after the anticipated completion of this offering. None of the Selling
Stockholders owned prior to this offering, and none will own after this
offering, more than one percent (1%) of the Company's outstanding Common Stock
(based on the number of shares outstanding on the date of this Prospectus).
None of the Selling Stockholders has any affiliation with the Company.
<TABLE>
<CAPTION>
Shares of Shares After
Common Stock Shares of Completion
Owned Prior to Common of this
Name of Selling Stockholder this Offering Stock Offered Offering
--------------------------- -------------- ------------- -----------
<S> <C> <C> <C>
SBC Warburg Inc. 22,195(1) 892,748 22,195(2)
TOTALS: 22,195(1) 892,748 22,195(2)
</TABLE>
____________________
(1) As of August 15, 1997. SBC Warburg Inc. also owns prior to the Offering
$16,033,765.13 in Convertible Notes, which it intends to convert into the
shares of Common Stock to be offered hereby upon effectiveness of the
Registration Statement, at a conversion price of $17.96 per share. Cash will
be paid in lieu of issuing fractional shares upon conversion.
(2) As of August 15, 1997, on a pro forma basis giving effect to completion of
this offering.
DESCRIPTION OF CAPITAL STOCK
The following statements with respect to the Company's capital stock are
subject to the detailed provisions of the Company's Restated Certificate of
Incorporation (as amended, the "Certificate of Incorporation") and Bylaws, as
amended (the "Bylaws"), the Rights Agreement (as defined below) and the Deposit
Agreement (as defined below). These statements do not purport to be complete
and are qualified in their entirety by reference to the terms of the Certificate
of Incorporation, the Bylaws, the Rights Agreement and the Deposit Agreement,
which are incorporated by reference as exhibits to the Registration Statement.
GENERAL
Mattel's authorized capital stock as of the date of this Prospectus consists
of 600,000,000 shares of Common Stock, $1.00 par value per share, 3,000,000
shares of Preferred Stock, $1.00 par value per share, and 20,000,000 shares of
Preference Stock, $.01 par value per share. Mattel does not presently have
outstanding, and Mattel's Certificate of Incorporation does not authorize, any
other classes of capital stock. The issued and
4
<PAGE>
outstanding shares of Common Stock and Preferred Stock are duly authorized,
validly issued, fully paid and nonassessable.
COMMON STOCK
Holders of shares of Common Stock have no preemptive, redemption or
conversion rights. The holders of Common Stock are entitled to receive
dividends when and as declared by the Mattel Board of Directors out of funds
legally available therefor. Upon liquidation, dissolution or winding up of
Mattel, the holders of Common Stock may share ratably in the net assets of
Mattel and liquidating distributions to holders of Preferred Stock or Preference
Stock, if any. Each holder of Common Stock is entitled to one vote per share of
Common Stock held of record by such holder and may cumulate its votes in the
election of directors. As of July 31, 1997, there were 290,874,412 shares of
Common Stock outstanding. Each outstanding share of Common Stock is accompanied
by a right to purchase one one-hundredth (128/37,500ths as adjusted to reflect a
series of stock splits) of a share of Mattel Series E Junior Participating
Preference Stock, $.01 par value per share (the "Series E Preference Shares").
There are 1,500,000 shares of Series E Preference Shares authorized for
issuance. There are currently no Series E Preference Shares outstanding. See
"--Description of Preference Share Purchase Rights."
The registrar and transfer agent for the Common Stock is The First National
Bank of Boston.
DESCRIPTION OF PREFERENCE SHARE PURCHASE RIGHTS
On February 7, 1992, the Mattel Board of Directors declared a dividend of one
preference share purchase right (a "Right") for each outstanding share of Common
Stock. The dividend was paid on February 17, 1992 (the "Record Date") to the
stockholders of record on that date. At the date the dividend was declared and
paid, each Right entitled the registered holder to purchase from the Company one
one-hundredth of a Series E Preference Share at a price per share of $150 (the
"Purchase Price"), subject to adjustment. Subsequent to the Record Date, and
pursuant to the terms of the Rights, the number of one one-hundredths of a share
of Series E Preference Shares purchasable from the Company upon exercise of a
Right was adjusted to 128/37,500ths of a share of Series E Preference Shares,
reflecting a series of stock splits in the underlying Common Stock paid in the
form of a series of dividends on the Common Stock. The description and terms of
the Rights are set forth in a Rights Agreement dated as of February 7, 1992 (the
"Rights Agreement") between the Company and The First National Bank of Boston,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
Common Stock or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights are evidenced, with respect to
any Common Stock certificate outstanding as of the Record Date, by such Common
Stock certificate with a copy of the Summary of Rights pertaining to such Rights
(the "Summary of Rights") attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date,
5
<PAGE>
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 17, 2002 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Series E Preference Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series E
Preference Shares, (ii) upon the grant to holders of the Series E Preference
Shares of certain rights or warrants to subscribe for or purchase Series E
Preference Shares at a price, or securities convertible into Series E Preference
Shares with a conversion price, less than the then-current market price of the
Series E Preference Shares or (iii) upon the distribution to holders of the
Series E Preference Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Series E Preference Shares) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preference Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivision, consolidation or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Series E Preference Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preference Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 292.969 (as adjusted) times the dividend declared per share of
Common Stock. In the event of liquidation, the holders of the Series E
Preference Shares will be entitled to a minimum preferential liquidation payment
of $100 per share but will be entitled to an aggregate payment of 292.969 (as
adjusted) times the payment made per share of Common Stock. Each Series E
Preference Share will have 292.969 (as adjusted) votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each Series E
Preference Share will be entitled to receive 292.969 (as adjusted) times the
amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the Series E Preference Shares' dividend,
liquidation and voting rights, the value of the fractional interest
(128/37,500ths as adjusted) in a Preference Share purchasable upon exercise of
each Right should approximate the value of one share of Common Stock.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provisions
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common Stock
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth (128/37,500ths as adjusted) of a Series E Preference Share
(or of a share of a class or series of the Company's preference stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
6
<PAGE>
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Series E Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Series E
Preference Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Series E Preference Shares on the last trading
date prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.0034133 per Right (as adjusted) (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to lower certain thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding shares of Common
Stock then known to the Company to be beneficially owned by any person or group
of affiliated or associated persons (other than (a) the Company, (b) any
subsidiary of the Company, (c) any employee benefit plan of the Company or any
subsidiary of the Company, (d) any entity holding Common Stock for or pursuant
to the terms of any such plan or (e) E.M. Warburg, Pincus & Co., Inc., a
Delaware corporation, and its affiliates and associates) and (ii) 10%, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person, no such amendment may adversely affect the
interests of the holders of the Rights.
For the purpose of calculating the various percentage ownership thresholds
contained in the Rights Agreement, shares issued in connection with the capital
investment approved by the Company's shareholders at the 1984 Annual Meeting and
still owned by the original owner, or owned by certain qualified transferees,
are excluded from the amount deemed to be beneficially owned by such persons.
However, if such original owner or qualified transferee becomes a member of a
group with certain other persons, such shares will be included in the amount
attributable to, and will be deemed to be beneficially owned by, such other
persons.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Mattel on
terms not approved by Mattel's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Mattel Board of Directors since the Rights may be redeemed by Mattel at the
Redemption Price prior to the time that a person or group has acquired
beneficial ownership of 20% or more of the Common Stock.
PREFERRED STOCK
The Mattel Board of Directors has the power, without further vote of
shareholders, to authorize the issuance of up to 3,000,000 shares of Preferred
Stock and 20,000,000 shares of Preference Stock and to fix and determine the
terms, limitations and relative rights and preferences of any shares of
Preferred Stock or Preference Stock that it causes to be issued. This power
includes the authority to establish voting, dividend, redemption, conversion,
liquidation and other rights of any such shares. No shares of Preference Stock
are now outstanding.
7
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SERIES B VOTING CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
Mattel is authorized and has issued 53,631 shares of Series B Preferred
Stock.
The Series B Preferred Stock has an annual dividend yield of 6%, payable in
cash. The Series B Preferred Stock has a liquidation value of $1,050 per share
and will be convertible, at the option of the holder, into shares of Common
Stock at a conversion price per share of approximately $20.46 subject to certain
adjustments set forth in the Certificate of Designations for the Series B
Preferred Stock. Commencing in April 1999, the shares of Series B Preferred
Stock will be convertible into Common Stock for designated periods at the then
market price, but not less than a price per share of approximately $10.23.
Holders of Series B Preferred Stock are entitled to vote (on an as-converted
basis) with the holders of Common Stock and Series C Preferred Stock as a single
class on all matters on which the holders of Common Stock may vote.
The Company has the option, at any time, to exchange Series B Preferred Stock
for 6% convertible subordinated notes of Mattel. The Company may redeem Series
B Preferred Stock at any time for an amount equal to 105.25% of its liquidation
value if the average closing price (as defined in the Certificate of
Designations relating to the Series B Preferred Stock) of Common Stock exceeds
175% of the then current conversion price of the Series B Preferred Stock. The
175% threshold is reduced to 150% for redemptions after April 15, 1998 and
eliminated for redemptions commencing April 15, 1999. In addition, the
redemption price is reduced over time from 105.25% of the liquidation value to
100% in 2004. On April 15, 2004, the Company is required to redeem all
outstanding shares of Series B Preferred Stock and the redemption price shall be
paid, at the Company's option, in cash or in shares of Common Stock.
Pursuant to the terms of a registration rights agreement among the Company
and the holders of the Series B Preferred Stock, the Company has granted the
holders thereof certain demand and incidental registration rights with respect
to the Series B Preferred Stock, any Common Stock issued upon conversion of such
preferred stock or any notes issued in exchange for such preferred stock.
SERIES C MANDATORILY CONVERTIBLE REDEEMABLE PREFERRED STOCK
The Company is authorized to and has issued 772,800 shares of Series C
Preferred Stock.
Dividends
Holders of Series C Preferred Stock are entitled to receive, when and as
dividends on the Series C Preferred Stock are declared by the Board of Directors
out of funds legally available therefor, cash dividends from the issue date,
accruing at the rate per share of 8.25% per annum (or $10.3125 per annum or
$2.5781 per quarter), payable quarterly in arrears on January 1, April 1, July 1
and October 1 of each year, or, if any such date is not a business day, the next
succeeding business day; provided, however that with respect to any dividend
period during which a redemption occurs, the Company may, at its option, declare
accrued dividends to, and pay such dividends on, the date fixed for redemption,
in which case such dividends would be payable in cash to the holders of Series C
Preferred Stock as of the record date for such dividend payment and would not be
included in the calculation of the Call Price (as defined herein) related to the
Series C Preferred Stock as set forth below. Dividends will cease to accrue in
respect of the Series C Preferred Stock on July 1, 2000 (the "Mandatory
Conversion Date") or on the date of their earlier conversion or redemption.
Dividends are payable to holders of record as they appear on the stock
register of the Company on such record dates, not less than 15 nor more than 60
days preceding the payment date thereof, as shall be fixed by the Board.
Dividends for any period less than a full quarterly dividend period are computed
on the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in any period less than one month.
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Dividends accrue whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on Series C Preferred Stock will accumulate as of
the dividend payment date on which they first become payable, but no interest
will accrue on accumulated but unpaid dividends on Series C Preferred Stock.
The Series C Preferred Stock ranks on a parity, both as to payment of
dividends and distribution of assets upon liquidation, with the Series B
Preferred Stock and any future preferred stock issued by Mattel that by its
terms ranks pari passu with the Series C Preferred Stock.
As long as any shares of Series C Preferred Stock are outstanding, no
dividends (other than dividends payable in shares of, or warrants, rights or
options exercisable for or convertible into shares of Common Stock or any other
capital stock of the Company ranking junior to the Series C Preferred Stock as
to the payment of dividends and the distribution of assets upon liquidation
("Junior Stock") and cash in lieu of fractional shares in connection with any
such dividend) will be paid or declared in cash or otherwise, nor will any other
distribution be made (other than a distribution payable in Junior Stock and cash
in lieu of fractional shares in connection with any such distribution), on any
Junior Stock unless (i) full dividends on preferred stock (including the Series
C Preferred Stock) that do not constitute Junior Stock ("Parity Preferred
Stock") have been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such Junior Stock dividend or
distribution payment to the extent such dividends are cumulative; (ii) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Company has paid or set aside all amounts,
if any, then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Company is not in default on any of its obligations to redeem any Parity
Preferred Stock.
In addition, as long as any shares of Series C Preferred Stock are
outstanding, no shares of any Junior Stock may be purchased, redeemed, or
otherwise acquired by the Company or any of its subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock (and cash in lieu of fractional shares in
connection therewith) or the purchase, redemption or other acquisition of any
Junior Stock with any Junior Stock (and cash in lieu of fractional shares in
connection therewith)), nor may any funds be set aside or made available for any
sinking fund for the purchase or redemption of any Junior Stock unless: (i) full
dividends on Parity Preferred Stock have been paid, or declared and set aside
for payment, for all dividend periods terminating at or before the date of such
purchase or redemption to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been paid, or
declared and set aside for payment, on all Parity Preferred Stock to the extent
such dividends are cumulative; (iii) the Company has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for any Parity Preferred Stock;
and (iv) the Company is not in default on any of its obligations to redeem any
Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Stock) as may be determined
by the Board may be declared and paid on the shares of any Junior Stock from
time to time and Junior Stock may be purchased, redeemed or otherwise acquired
by the Company or any of its subsidiaries from time to time. In the event of
the declaration and payment of any such dividends or other distributions, the
holders of such Junior Stock will be entitled, to the exclusion of holders of
Parity Preferred Stock, to share therein according to their respective
interests.
As long as any shares of Series C Preferred Stock are outstanding, dividends
or other distributions may not be declared or paid on any Parity Preferred Stock
(other than dividends or other distributions payable in Junior Stock and cash in
lieu of fractional shares in connection therewith), and the Company may not
purchase, redeem or otherwise acquire any Parity Preferred Stock (except with
any Junior Stock and cash in lieu of fractional shares in connection therewith),
unless either: (i)(a) full dividends on Parity Preferred Stock have been paid,
or declared and set aside for payment, for all dividend periods terminating at
or before the date of such Parity Preferred Stock dividend, distribution,
purchase, redemption or other acquisition payment to the
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extent such dividends are cumulative; (b) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside for payment,
on all Parity Preferred Stock to the extent such dividends are cumulative; (c)
the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement and sinking funds,
if any, for any Parity Preferred Stock; and (d) the Company is not in default on
any of its obligations to redeem any Parity Preferred Stock; or (ii) with
respect to the payment of dividends only, any such dividends will be declared
and paid pro rata so that the amounts of any dividends declared and paid per
share of Series C Preferred Stock and each other share of Parity Preferred Stock
will in all cases bear to each other the same ratio that accrued dividends
(including any accumulation with respect to unpaid dividends for prior dividend
periods, if such dividends are cumulative) per share of Series C Preferred Stock
and such other shares of Parity Preferred Stock bear to each other.
Mandatory Conversion of the Series C Preferred Stock
On the Mandatory Conversion Date, each outstanding share of Series C
Preferred Stock will automatically convert into (i) 13.5753 shares of Common
Stock (the "Mandatory Conversion Rate"), and (ii) the right to receive cash in
an amount equal to all accrued and unpaid dividends on such Series C Preferred
Stock (other than previously declared dividends payable to a holder of record as
of a prior date) to the Mandatory Conversion Date, whether or not declared, out
of funds legally available for the payment of dividends, subject to (1) the
right of the Company to redeem the Series C Preferred Stock on or after July 1,
1999 (the "First Call Date") and before the Mandatory Conversion Date (as
described below) and (2) the conversion of the Series C Preferred Stock to
Common Stock at the option of the holder at any time before the Mandatory
Conversion Date (as described below). See "--Series C Depositary
Shares/Redemption or Conversion of Series C Depositary Shares." The Mandatory
Conversion Rate is subject to adjustment as described below. Dividends will
cease to accrue on the Mandatory Conversion Date in respect of the Series C
Preferred Stock then outstanding.
Optional Redemption of the Series C Preferred Stock
The shares of Series C Preferred Stock are not redeemable prior to the First
Call Date. At any time and from time to time on or after that date until
immediately before the Mandatory Conversion Date, the Company has the right to
redeem, in whole or in part, the outstanding Series C Preferred Stock. Upon any
such redemption, the holder of the Series C Preferred Stock shall receive in
exchange for each share of Series C Preferred Stock, unless previously redeemed
or converted, the greater of (i) the number of shares of Common Stock equal to
the quotient of (a) the applicable Call Price (as described below) in effect on
the redemption date, divided by (b) the Current Market Price (as defined herein)
of the Common Stock, determined as of the trading day immediately preceding the
Notice Date (as defined below) and (ii) 10.0159 shares of Common Stock (the
"Optional Rate"). The Optional Rate is subject to adjustment as described
below. Dividends will cease to accrue on the Series C Preferred Stock on the
date fixed for their redemption.
The "Call Price" for each share of Series C Preferred Stock is equal to the
sum of (i)(a) $127.575 (the equivalent of $5.103 per Series C Depositary Share)
on and after the First Call Date, to and including September 30, 1999; (b)
$126.925 (the equivalent of $5.077 per Series C Depositary Share) on and after
October 1, 1999, to and including December 31, 1999; (c) $126.30 (the equivalent
of $5.052 per Series C Depositary Share) on and after January 1, 2000, to and
including March 31, 2000; (d) $125.65 (the equivalent of $5.026 per Series C
Depositary Share) on and after April 1, 2000, to and including May 31, 2000; or
(e) $125.00 (the equivalent of $5.00 per Series C Depositary Share) on and after
June 1, 2000, to and including June 30, 2000; and (ii) all accrued and unpaid
dividends thereon to but not including the date fixed for redemption (other than
previously declared dividends payable to a holder of record as of a prior date).
The "Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (i) the average of the closing sale prices of
the Common Stock as reported on the NYSE Composite Tape on the 15 consecutive
trading days ending on and including such date of determination or (ii) the
closing
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sale price of the Common Stock as reported on the NYSE Composite Tape for such
date of determination; provided, however, that with respect to any redemption of
shares of Series C Preferred Stock, if any event resulting in an adjustment of
the Mandatory Conversion Rate occurs during the period beginning on the first
day of such 15-day period and ending on the applicable redemption date, the
Current Market Price as determined pursuant to the foregoing will be
appropriately adjusted to reflect the occurrence of such event. The "Notice
Date" with respect to any notice given by the Company in connection with a
redemption of the Series C Preferred Stock means the date on which first occurs
either the public announcement of such redemption or the commencement of mailing
of such notice to the holders of Series C Preferred Stock.
If fewer than all outstanding shares of Series C Preferred Stock are to be
called for redemption, the Series C Preferred Stock to be called will be
selected by the Company, from outstanding Series C Preferred Stock not
previously called, by lot or pro rata (as nearly as may be possible) or by any
other method determined by the Board, in its sole discretion, to be equitable.
The Company will provide notice of any redemption of Series C Preferred Stock
to holders of record of shares of Series C Preferred Stock to be called for
redemption not less than 15 nor more than 60 days before the date fixed for
redemption. Accordingly, the earliest Notice Date for any call for redemption
of Series C Preferred Stock will be July 1, 1999. Any such notice will be
provided by mail, sent to the holders of record of Series C Preferred Stock to
be called at each such holder's address as it appears on the stock register of
the Company, first class postage prepaid; provided however, that failure to give
such notice or any defect therein will not affect the validity of the proceeding
for redemption of any Series C Preferred Stock to be redeemed except as to the
holder to whom the Company has failed to give such notice or whose notice was
defective. On and after the redemption date, all rights of the holders of
Series C Preferred Stock called for redemption will terminate except the right
to receive the Call Price (unless the Company defaults on the payment of the
Call Price). A public announcement of any call for redemption will be made by
the Company before, or at the time of the mailing of such notice of redemption.
Each holder of Series C Preferred Stock called for redemption must surrender
the certificates evidencing such shares of Series C Preferred Stock to the
Company at the place designated in the notice of redemption and will thereupon
be entitled to receive certificates for shares of Common Stock equal to the Call
Price, divided by the Current Market Price of the Common Stock and cash for any
fractional share amount.
Conversion at the Option of the Holder
Shares of Series C Preferred Stock are convertible in whole or in part, at
the option of the holder thereof at any time before the Mandatory Conversion
Date, unless previously redeemed, into shares of Common Stock at the Optional
Rate (which, as previously defined, is equal to 10.0159). The Optional Rate is
subject to adjustment as described below. The right to convert shares of Series
C Preferred Stock called for redemption will terminate immediately before the
close of business on any redemption date with respect to such shares.
Conversion of Series C Preferred Stock at the option of the holder may be
effected by delivering certificates evidencing such Series C Preferred Stock
together with written notice of conversion and a proper assignment of such
certificates to the Company or in blank (and, if applicable, cash payment of an
amount equal to the dividend attributable to the current quarterly dividend
period payable on such shares), to the office of the transfer agent for the
Series C Preferred Stock or to any other office or agency maintained by the
Company for that purpose and otherwise in accordance with conversion procedures
established by the Company. Each optional conversion will be deemed to have
been effected immediately before the close of business on the date on which the
foregoing requirements have been satisfied. The conversion will be at the
Optional Rate in effect at such time and on such date.
Holders of Series C Preferred Stock at the close of business on a record date
for any payment of declared dividends will be entitled to receive the dividend
payable on such Series C Preferred Stock on the corresponding
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dividend payment date notwithstanding the optional conversion of such Series C
Preferred Stock following such record date and before such dividend payment
date. However, shares of Series C Preferred Stock surrendered for conversion
after the close of business on a record date for any payment of declared
dividends and before the opening of business on the corresponding dividend
payment date must be accompanied by payment in cash of an amount equal to the
dividend attributable to the current quarterly dividend period payable on such
date (unless such shares of Series C Preferred Stock are subject to redemption
on a redemption date between such record date and such dividend payment date).
A holder of shares of Series C Preferred Stock called for redemption on the
First Call Date or any other dividend payment date will receive the dividend on
such Series C Preferred Stock payable on that date and will be able to convert
such Series C Preferred Stock after the record date for such dividend without
paying an amount equal to such dividend to the Company upon conversion. Upon
any optional conversion of shares of Series C Preferred Stock, the Company will
make no payment of or allowance for previously declared dividends or
distributions on the shares of Common Stock issued upon such conversion.
The Series C Depositary Shares are subject to conversion and redemption upon
the same terms and conditions (including those as to notice to the owners of
Series C Depositary Shares and as to selection of depositary shares to be called
if fewer than all Series C Depositary Shares are to be called) as the Series C
Preferred Stock held by the Depositary, adjusted to reflect the fact that 25
Series C Depositary Shares are the equivalent of one share of Series C Preferred
Stock. See "--Series C Depositary Shares--Redemption or Conversion of Series C
Depositary Shares."
Conversion Adjustments
The Mandatory Conversion Rate and the Optional Rate are each subject to
adjustment as appropriate in certain circumstances, including if the Company (i)
pays a stock dividend or makes a distribution with respect to its Common Stock
in shares of Common Stock; (ii) subdivides or splits its outstanding Common
Stock; (iii) combines its outstanding Common Stock into a smaller number of
shares; (iv) issues any shares of Common Stock by reclassification of its shares
of Common Stock; (v) issues certain rights or warrants to all holders of its
Common Stock; or (vi) pays a dividend or distributes to all holders of its
Common Stock evidences of its indebtedness, cash or other assets (including
capital stock of the Company but excluding (a) any Permitted Cash Dividends (as
defined below) or (b) distributions and dividends referred to in clause (i)
above written). In addition, the Company will be entitled (but will not be
required) to make upward adjustments in the Mandatory Conversion Rate, the
Optional Rate and the Call Price as the Company, in its discretion, determines
to be advisable, in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any transaction which
could be treated as any of the foregoing transactions under Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by the Company to its
shareholders will not be taxable. "Permitted Cash Dividends" means, with
respect to any consecutive 12-month period, all cash dividends and cash
distributions on the Common Stock (other than cash dividends and cash
distributions for which a prior adjustment to the Mandatory Conversion Rate and
the Optional Rate was previously made) not in excess of, on a per share of
outstanding Common Stock basis, 10% of the average of the closing share price of
the Common Stock as reported on the NYSE Composite Tape over such period. All
adjustments to the Mandatory Conversion Rate, the Optional Rate and the Call
Price will be calculated to the nearest 1/100th of a share of Common Stock. No
adjustment in the Mandatory Conversion Rate or the Optional Rate will be
required unless such adjustment would require an increase or decrease of at
least 1% therein; provided, however, that any adjustments which, by reason of
the foregoing, are not required to be made will be carried forward and taken
into account in any subsequent adjustment. All adjustments will be made
successively.
Whenever the Mandatory Conversion Rate, the Optional Rate and the Call Price
are adjusted as provided in the preceding paragraph, the Company will file with
the transfer agent for the Series C Preferred Stock a certificate with respect
to such adjustment, make a prompt public announcement thereof and mail notice to
holders of the Series C Preferred Stock providing specified information with
respect to such adjustment. At least 10 business days before taking any action
that would result in adjustment to the Mandatory Conversion Rate, the
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Optional Rate or the Call Price, the Company will notify each record holder of
Mattel Series C Preferred Stock concerning such proposed action.
Adjustments for Certain Transactions
Unless sooner redeemed or converted, in case of any reclassification of the
Common Stock, any consolidation of the Company with, or merger of the Company
into, any other entity, any merger of any entity into the Company (other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of the outstanding shares of the Common Stock), any sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property (a "Transaction"), then each share of Series
C Preferred Stock will, after consummation of such Transaction, be entitled to
be converted (i) on the Mandatory Conversion Date into the kind and amount of
securities, cash or other property receivable upon consummation of such
Transaction by a holder of the number of shares of Common Stock into which such
Series C Preferred Stock would have been converted if the conversion on the
Mandatory Conversion Date had occurred immediately before the date of
consummation of such Transaction, plus the right to receive cash in an amount
equal to all accrued and unpaid dividends on such Series C Preferred Stock
(other than previously declared dividends payable to a holder of record as of a
prior date), (ii) upon redemption by the Company on any redemption date into the
kind and amount of securities, cash or other property receivable upon
consummation of such Transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such Series C Preferred Stock immediately
before consummation of such Transaction (assuming that, if the Notice Date for
such redemption is not before such Transaction, the Notice Date had been the
date of such Transaction; and assuming in each case that such holder of shares
of Common Stock failed to exercise rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon consummation of
such Transaction (provided that, if the kind or amount of securities, cash or
other property receivable upon consummation of such transaction is not the same
for each non-electing share, then the kind and amount of securities, cash or
other property receivable upon consummation of such Transaction for each non-
electing share will be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares)) or (iii) at the option of the
holder, into the kind and amount of securities, cash or other property
receivable upon consummation of such Transaction by a holder of the number of
shares of Common Stock into which such Series C Preferred Stock might have been
converted immediately before consummation of such Transaction. The kind and
amount of securities into or for which the Series C Preferred Stock will be
convertible or redeemed after consummation of such Transaction will be subject
to adjustment as described under "Conversion Adjustments" following the date of
consummation of such Transaction.
Fractional Shares
No fractional shares of Common Stock will be issued upon redemption or
conversion of the Series C Preferred Stock. In lieu of any fractional share
otherwise issuable in respect of the aggregate number of shares of Series C
Preferred Stock of any holder that are redeemed or converted, such holder will
be entitled to receive an amount in cash equal to the same fraction of the
Current Market Price of the Common Stock, determined as of the Notice Date, in
the case of redemption by the Company, or the trading day immediately preceding
(i) the Mandatory Conversion Date, in the case of a mandatory conversion, or
(ii) the effective date of conversion, in the case of an optional conversion by
a holder.
Rights Agreement
Shares of Common Stock issued upon conversion of the Series C Preferred Stock
will be entitled to receive Rights in accordance with the terms and conditions
of the Rights Agreement. The method of calculation
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of the Current Market Price of the Common Stock does not take into account any
separate value of the Rights, except to the extent any such value may be
reflected in the Current Market Price.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, and subject to the rights of holders of any other
series of preferred stock, the holders of outstanding Series C Preferred Stock
are entitled to receive an amount equal to $125, plus accrued and unpaid
dividends thereon, out of the assets of the Company available for distribution
to shareholders, before any distribution of assets is made to holders of Common
Stock or any other Junior Stock upon liquidation, dissolution or winding up.
If upon any voluntary or involuntary liquidation, dissolution, or winding up
of the Company, the assets of the Company are insufficient to permit the payment
of the full preferential amounts payable with respect to the Series C Preferred
Stock and all other series of Parity Preferred Stock, the holders of Series C
Preferred Stock and of all other series of Parity Preferred Stock will share
ratably in any distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment of
the full amount of the liquidating distribution to which they are entitled, the
holders of Series C Preferred Stock will not be entitled to any other
participation in any distribution of assets by the Company. A Transaction will
not be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company.
Voting Rights
The holders of Series C Preferred Stock have the right with the holders of
Common Stock to vote in the election of directors and upon each other matter
coming before any meeting of the holders of Common Stock. Each share of Series
C Preferred Stock is entitled to 12.219 votes. The holders of Series C
Preferred Stock, Common Stock and Series B Preferred Stock vote together as one
class on such matters except as otherwise provided by law or by the Certificate
of Incorporation of the Company.
In the event that the equivalent of six quarterly dividends payable on the
Series C Preferred Stock shall be in arrears, the number of directors of the
Company will be increased by two and the holders of the Series C Preferred Stock
shall have the exclusive right, voting separately and as a class, with each
share of Series C Preferred Stock entitled to 12.219 votes, to elect the two
additional directors (the "Series C Directors"). Such right shall continue
until all dividends in arrears and dividends in full for the current quarterly
period have been paid or declared and set apart for payment. The term of office
of any director elected by the holders of the Series C Preferred Stock will
terminate on the earlier of (i) the next annual meeting of shareholders at which
a successor has been elected and qualified, or (ii) the termination of the right
of holders of the Series C Preferred Stock to elect Series C Directors.
The Company may not, without the approval of the holders of at least 66 2/3%
of the Series C Preferred Stock then outstanding: (i) amend, alter, or repeal
any of the provisions of the Company's Certificate of Incorporation or Bylaws so
as to affect adversely the powers, preferences or rights of the holders of the
Series C Preferred Stock then outstanding or reduce the minimum time for any
required notice to which the holders of the Series C Preferred Stock then
outstanding may be entitled (an amendment of the Certificate of Incorporation to
authorize or create, or to increase the authorized amount of Common Stock or
other Junior Stock or any stock of any class ranking on a parity with the Series
C Preferred Stock being deemed not to affect adversely the powers, preferences
or rights of the holders of the Series C Preferred Stock); (ii) authorize or
create, or increase the authorized amount of, any stock of any class, or any
security convertible into capital stock of any class, ranking prior to the
Series C Preferred Stock either as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Company; (iii) merge or consolidate with or into any other corporation, unless
each holder of Series C Preferred Stock immediately preceding such merger or
consolidation receives or continues to hold an equivalent number of shares in
the resulting
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corporation, with substantially the same rights and preferences, as correspond
to the Series C Preferred Stock so held as contemplated above under "--
Adjustments for Certain Transactions," or (iv) voluntarily dissolve, liquidate
or wind up the affairs of the Company.
The Company may not, without the approval of the holders of at least a
majority of the shares of Series C Preferred Stock then outstanding, create, or
increase the authorized number of shares of any other class or classes of Parity
Preferred Stock, other than the Series B Preferred Stock, or create any stock or
other security convertible into or exchangeable for or evidencing the right to
purchase any Parity Preferred Stock, or increase the authorized number of shares
of any such other class or amount of such other stock or security.
Notwithstanding the provisions summarized in the preceding two paragraphs, no
such approval described therein of the holders of the Series C Preferred Stock
will be required if at or before the time when such amendment, alteration or
repeal is to take effect or when the authorization, creation, increase or
issuance of any such prior or parity stock or convertible security is to be
made, or when such consolidation or merger is to take effect, as the case may
be, provision is made for the redemption of all Series C Preferred Stock at the
time outstanding in accordance with the Certificate of Designations.
Transfer Agent and Registrar
First City Transfer Company (or a successor thereto selected by the Company)
acts as transfer agent and registrar for, and paying agent for the payment of
dividends on, the Series C Preferred Stock.
Miscellaneous
The Series C Preferred Stock is fully paid and nonassessable. Holders of
Series C Preferred Stock have no preemptive rights. The Company at all times
shall reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of Series C
Preferred Stock, such number of shares of Common Stock as will from time to time
be issuable upon the conversion or redemption of all the Series C Preferred
Stock then outstanding. The Series C Preferred Stock redeemed for, or converted
into Common Stock or otherwise reacquired by the Company will resume the status
of authorized and unissued shares of Preferred Stock, undesignated as to series,
and will be available for subsequent issuance.
MATTEL SERIES C DEPOSITARY SHARES
General
Each Series C Depositary Share will represent one twenty-fifth of a share of
Mattel Series C Preferred Stock to be deposited under the Deposit Agreement,
dated as of June 24, 1996 (as amended, the "Deposit Agreement"), among the
Company (as successor to Tyco), First National Bank of Boston, as successor to
Midlantic Bank, N.A., as Depositary (the "Depositary"), and all holders from
time to time of depositary receipts issued thereunder (the "Depositary
Receipts"). Subject to the terms of the Deposit Agreement, each owner of a
Series C Depositary Share will be entitled to all the rights and preferences of
the Series C Preferred Stock represented thereby (including dividend, voting,
redemption, conversion and liquidation rights) and subject, proportionately, to
all of the limitations of the Series C Preferred Stock represented thereby,
contained in the Certificate of Designations summarized under "--Series C
Mandatorily Convertible Redeemable Preferred Stock."
The Series C Depositary Shares are evidenced by Depositary Receipts
previously issued in respect of Tyco Series C Depositary Shares. The Company
has applied to the Depository Trust Company for continued acceptance of the
Depositary Receipts for its book-entry settlement system.
15
<PAGE>
Dividends and Other Distributions
The Depositary distribute all cash distributions and other distributions
received in respect of the Series C Preferred Stock to the record holders of
Series C Depositary Shares in proportion to the number of such Series C
Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Series C Depositary
Shares entitled thereto, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds from
such sale to such holders.
Record Date
Whenever (i) any cash dividend or other cash distribution becomes payable,
any distribution of property other than cash is made, or any rights, preferences
or privileges are at any time offered with respect to the Series C Preferred
Stock, or (ii) the Depositary receives notice of any meeting at which holders of
Series C Preferred Stock are entitled to vote or of which holders of Series C
Preferred Stock are entitled to notice or any solicitation of consents in
respect of the Series C Preferred Stock, or any call or conversion of any Series
C Preferred Stock, or if at any time the Depositary and the Company otherwise
deem it appropriate, the Depositary will in each such instance fix a record date
(which shall be the same date as the record date for the Series C Preferred
Stock) for the determination of the holders of Depositary Receipts who are
entitled to (a) receive such dividend, distribution, rights, preferences or
privileges, net proceeds from the sale of such property, or, (b) receive notice
of, and give instructions for the exercise of voting or consent rights at, any
such meeting or (c) receive notice of any such call or conversion, subject to
the provisions of the Deposit Agreement.
Withdrawal of Series C Preferred Stock
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Series C Depositary Shares have been
previously called for redemption), the holder of the Series C Depositary Shares
evidenced thereby is entitled to delivery at such office to or upon his order of
the number of whole shares of Series C Preferred Stock and any money or other
property represented by such Series C Depositary Shares. Holders of Series C
Depositary Shares would be entitled to receive whole shares of Series C
Preferred Stock on the basis of one share of Series C Preferred Stock for each
25 Series C Depositary Shares, but holders of such whole shares of Series C
Preferred Stock will not thereafter be entitled to receive Series C Depositary
Shares in exchange therefor. If the Depositary Receipts delivered by the holder
evidence a number of Series C Depositary Shares in excess of the number of
Series C Depositary Shares representing the number of whole shares of Series C
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of Series C
Depositary Shares.
Redemption or Conversion of Series C Depositary Shares
As described under "--Series C Mandatorily Convertible Redeemable Preferred
Stock--Mandatory Conversion of the Series C Preferred Stock," "--Optional
Redemption of the Series C Preferred Stock" and "--Conversion at the Option of
the Holder," the Series C Preferred Stock is subject to automatic conversion
into shares of the Common Stock on the Mandatory Conversion Date, the Company's
right to redeem the Series C Preferred Stock for Common Stock at any time on or
after the First Call Date and before the Mandatory Conversion Date and the
holder's right to convert the Series C Preferred Stock into Common Stock at its
option. The Series C Depositary Shares are subject to redemption or conversion
upon the same terms and conditions (including as to notice to the owners of
Series C Depositary Shares and as to selection of Series C Depositary Shares to
be called if fewer than all of the outstanding Series C Depositary Shares are to
be called)
16
<PAGE>
as the Series C Preferred Stock held by the Depositary using the Common Stock
received by the Depositary, except that the number of shares of Common Stock
received upon conversion of each Series C Depositary Share will be equal to one
twenty-fifth of the number of shares of Common Stock received upon conversion of
each share of the Series C Preferred Stock. To the extent that Series C
Depositary Shares are converted into shares of Common Stock and all such shares
of Common Stock cannot be distributed to the record holders of Depositary
Receipts without creating fractional interests in such shares, the Company will
cause the Depositary to distribute cash to holders in lieu of fractional shares
as provided under "--Series C Mandatorily Convertible Redeemable Preferred
Stock--Fractional Shares." The amount distributed in the foregoing case will be
reduced by any amount required to be withheld by the Company or the Depositary
on account of taxes or otherwise required pursuant to a law, regulation or court
process.
Voting of Series C Preferred Stock
Upon receipt of notice of any meeting at which holders of Series C Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Series C Depositary
Shares relating to Series C Preferred Stock. Each record holder of such Series
C Depositary Shares on the record date (which will be the same date as the
record date of the Series C Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the amount of
shares of Series C Preferred Stock represented by such holder's Series C
Depositary Shares. The Depositary will use its best efforts, insofar as
practicable, to vote the amount of shares of Series C Preferred Stock
represented by such Series C Depositary Shares in accordance with such
instructions and the Company will agree to take all reasonable action which may
be deemed necessary by the Depositary in order to enable the Depositary to do
so. The Depositary will abstain from voting Series C Preferred Stock to the
extent it does not receive specific instructions from the holders of Series C
Depositary Shares representing Series C Preferred Stock.
Each Series C Depositary Share shall entitle the holder to instruct the
Depositary to cast one twenty-fifth of a share of Series C Preferred Stock share
vote on each matter submitted to a vote of the stockholders of the Company. See
"--Series C Mandatorily Convertible Redeemable Preferred Stock-Voting Rights."
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Series C Depositary Shares and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Series C Depositary Shares
(or, which relates to or affects rights to receive dividends or distributions,
or voting or redemption rights) will not be effective unless such amendment has
been approved by the holders of at least two-thirds of the Series C Depositary
Shares then outstanding. In no event may any amendment impair the right of any
holder of Depositary Receipts, subject to the conditions specified in the
Deposit Agreement, upon such surrender of the Depositary Receipts evidencing
such Series C Depositary Shares, to receive shares of Series C Preferred Stock
or upon conversion of the Series C Preferred Stock represented by the Depositary
Receipts, to receive shares of Common Stock, and in each case any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law.
The Deposit Agreement may be terminated by the Company or the Depositary only
if (i) all outstanding Series C Depositary Shares have been redeemed or
converted, (ii) there has been a final distribution in respect of the Series C
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts, or (iii) upon consent of holders of Depositary Receipts
representing not less than two-thirds of the Series C Depositary Shares then
outstanding.
17
<PAGE>
Whenever the Deposit Agreement is to be terminated pursuant to clause (iii)
of the preceding paragraph the Depositary will mail notice of such termination
to the record holders of all Depositary Receipts then outstanding at least 30
days prior to the date fixed in such notice for such termination. The Depositary
may likewise terminate the Deposit Agreement if at any time 90 days shall have
expired after the Depositary shall have delivered to the Company a written
notice of its election to resign and a successor depositary shall not have been
appointed and accepted its appointment. If any Depositary Receipts remain
outstanding after the date of termination, the Depositary thereafter will
discontinue the transfer of Depositary Receipts, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notices of such termination) or perform any further acts under the
Deposit Agreement except as provided below and except that the Depositary will
continue to (i) collect dividends on the Series C Preferred Stock and any other
distributions with respect thereto and (ii) deliver the Series C Preferred Stock
together with such dividends and distributions and the net proceeds of any sales
of rights, preferences, privileges or other property, without liability for
interest thereon, in exchange for Depositary Receipts surrendered. At any time
after the expiration of three years from the date of termination, the Depositary
may sell the Series C Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability or interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered. The Company does not intend to terminate the Deposit Agreement or
to permit the resignation of the Depositary without appointing a successor
depositary. In the event the Deposit Agreement is terminated, the Company will
use all reasonable efforts to have the Series C Preferred Stock listed on the
NYSE.
Charges of Depositary
The Company pays all transfer and other governmental charges arising solely
from the existence of the depositary arrangements. The Company will pay charges
of the Depositary in connection with any redemption of Series C Preferred Stock.
Holders of Depositary Receipts will pay transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts. The Depositary may refuse to effect
any transfer of a Depositary Receipt or any withdrawal of Series C Preferred
Stock evidenced thereby until all such taxes and charges with respect to such
Depositary Receipt or such Series C Preferred Stock are paid by the holder
thereof.
Miscellaneous
The Depositary will forward to holders of Series C Preferred Stock all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of Series
C Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and the Company and the Depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any Series C
Depositary Shares or Series C Preferred Stock unless satisfactory indemnity is
furnished. They may rely on written advice of counsel or accountants, or
information provided by persons presenting Series C Preferred Stock for deposit,
holders of Series C Depositary Shares or other persons believed to be competent
and on documents believed to be genuine.
Resignation and Removal of Depositary
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<PAGE>
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary.
Any such resignation or removal of the Depositary will take effect upon the
appointment of a successor Depositary, which successor Depositary must be
appointed within 90 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital surplus of at least $50 million.
CONVERTIBLE NOTES
The Convertible Notes were originally issued by Tyco, and were reissued to
the predecessors-in-interest to SBC Warburg Inc. on March 27, 1997, upon
consummation of the Company's acquisition of Tyco. The Convertible Notes are
convertible into Common Stock at a price of $17.96 per share, which is less than
the market price of the Common Stock on the date of this Prospectus. The
Selling Stockholders have demanded registration of the Shares pursuant to
registration rights granted by Tyco, and succeeded to by the Company as a result
of the acquisition of Tyco. The Shares issued upon conversion of the
Convertible Notes will be duly issued, fully paid and nonassessable.
PLAN OF DISTRIBUTION
The Shares are being registered to permit public secondary sales of the
Shares by the Selling Stockholders from time to time for 90 days following the
effective date of the Registration Statement of which this Prospectus is a part.
The Company has agreed, among other things, to bear all expenses in connection
with the registration and sale of the Shares, including without limitation all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, fees and disbursements of counsel for the Company, reasonable
fees and disbursements of one counsel chosen by the holders of a majority of the
Convertible Notes and all independent certified public accountants and other
Persons retained by the Company.
The Shares may be sold from time to time to purchasers directly by the
Selling Stockholders. Alternatively, the Selling Stockholders may from time to
time offer the Shares to or through underwriters, brokers, dealers or agents,
who may receive compensation in the form of underwriting discounts, concessions
or commissions from the Selling Stockholders or the purchasers of such
securities for whom they may act as agents. The Selling Stockholders and any
underwriters, brokers, dealers or agents that participate in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker, dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
Any distribution hereunder of the Common Stock by the Selling Stockholders
may be effected from time to time in one or more of the following transactions:
(a) on the NYSE, the PSE, or through brokers acting as principal or agent, in
transactions (which may involve block transactions), in special offerings, or in
the over-the-counter market, or otherwise, at market prices obtainable at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, (b) to underwriters who will acquire shares of Common
Stock for their own account and resell such shares in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may be changed
from time to time), (c) directly or through brokers or agents in private sales
at negotiated prices, (d) to lenders pledged as collateral to secure loans,
credit or other financing arrangements and any subsequent foreclosure, if any,
thereunder, or (e) by any other legally available means. Also, offers to
purchase the Common Stock may be solicited by agents designated by the Selling
Stockholders from time to time.
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<PAGE>
SBC Warburg Inc. has advised the Company that it intends to sell its Shares
in ordinary trading transactions on the New York Stock Exchange. SBC Warburg
Inc. may also purchase Common Stock to cover a short position established prior
to the effectiveness of the Registration Statement.
In order to comply with the securities laws of certain states, if applicable,
the Common Stock will be sold hereunder in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold hereunder unless the Common Stock has been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and complied with.
The Company has been advised that, as of the date hereof, the Selling
Stockholders have made no arrangement with any broker for the sale of their
shares of Common Stock.
The Selling Stockholders will be indemnified by the Company, to the extent
permitted by law, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith. The Company will be indemnified by the Selling
Stockholders severally, to the extent permitted by law, against certain civil
liabilities, including certain liabilities under the Securities Act, subject to
certain limitations.
TRADEMARK MATTERS
The trademarks Barbie, Fisher-Price, Hot Wheels, Matchbox, Tyco, Tyco Radio
Control and Tyco Electric Racing, are all United States registered trademarks
owned by Mattel or its subsidiaries. The trademark Cabbage Patch Kids is owned
by Original Appalachian Artworks, Inc. and used under license by Mattel. The
trademark Disney is owned by The Walt Disney Company, and used under license by
Mattel. The trademark Sesame Street is owned by Children's Television Workshop,
Inc. and used under license by Mattel, as successor to Tyco.
LEGAL OPINION
Certain legal matters with respect to the legality of the Shares offered
hereby has been passed upon for the Company by Leland P. Smith, Assistant
General Counsel of the Company.
EXPERTS
The historical financial statements of the Company as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996
incorporated by reference in this Prospectus to the Company's Annual Report on
Form 10-K and the audited financial statements, restated to give effect to the
merger with Tyco accounted for as a pooling of interests, for the aforementioned
periods incorporated by reference in this Prospectus to the Company's Current
Report on Form 8-K dated July 30, 1997 have been so incorporated in reliance on
the reports of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting and, with respect
to the historical financial statements of Tyco for the aforementioned periods,
in reliance on the report of Deloitte & Touche LLP, independent auditors,
given upon their authority as experts in accounting and auditing.
20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee............... $ 9,215
Blue Sky fees and expenses..... 0*
Accounting fees and expenses... 5,000*
Legal fees and expenses........ 20,000*
Transfer Agent Fees............ 0*
Miscellaneous.................. 1,000*
Total.......................... 35,215
</TABLE>
All such expenses will be borne by the Company.
____________________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Mattel, Inc. (the "Company" or the "Registrant") has adopted provisions in
its Restated Certificate of Incorporation (the "Certificate") which require the
Company to indemnify any and all persons whom it has the power to indemnify
pursuant to the Delaware General Corporation Law (the "DGCL") against any and
all expenses, judgments, fines, amounts paid in settlement, and any other
liabilities to the fullest extent permitted by the DGCL.
The Certificate also empowers the Registrant by action of its Board of
Directors to purchase and maintain insurance, at its expense, to protect itself
and such persons against any such expense, judgment, fine, amount paid in
settlement or other liability, whether or not the Registrant would have the
power to indemnify any such individual under the DGCL.
In addition, the Registrant's Bylaws require that each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer, employee or
agent of the Registrant or is or was serving at the request of the Registrant, a
director, officer, employee or agent of the Registrant as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent, or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Registrant to the fullest extent authorized by the
DGCL, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Registrant to
provide broader indemnification rights than said law permitted the Registrant to
provide prior to such amendment) against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that except for claims by such persons for non-payment of
entitled indemnification claims against the Registrant, the Registrant shall
indemnify such person seeking indemnification in connection with a proceeding
initiated by such person only if such proceeding was authorized by the
Registrant's Board of Directors. The Bylaws specify that the right to
indemnification so provided is a contract right, set forth certain procedural
and evidentiary standards
II-1
<PAGE>
applicable to the enforcement of a claim under the Bylaws, entitle the person to
be indemnified to be reimbursed for the expenses of prosecuting any such claim
against the Registrant and entitle them to have all expenses incurred in advance
of the final disposition of a proceeding paid by the Registrant. Such
provisions, however, are intended to be in furtherance and not in limitation of
the general right to indemnification provided in the Bylaws.
The Company has entered into indemnity agreements (the "Indemnity
Agreements") with each director of the Company, including directors who are also
officers and employees of the Company, and certain senior officers of the
Company. The Indemnity Agreements provide that the Company will pay any costs
which an indemnitee actually and reasonably incurs because of claims made
against him or her by reason of the fact that he or she is or was a director or
officer of the Company. The payments to be made under the Indemnity Agreements
include, but are not limited to, expenses of investigation, judicial or
administrative proceedings or appeals, damages, judgments, fines, amounts paid
in settlement, and attorneys' fees and disbursements, except the Company is not
obligated to make any payment under the Indemnity Agreements which the Company
is prohibited by law from paying as indemnity, or where (a) indemnification is
provided to an indemnitee under an insurance policy, except for amounts in
excess of insurance coverage, (b) the claim is one for which an indemnitee is
otherwise indemnified by the Company, (c) final determination is rendered in a
claim based upon the indemnitee obtaining a personal profit or advantage to
which he or she is not legally entitled, (d) final determination is rendered on
a claim for an accounting of profits made in connection with a violation of
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), or
similar state or common law provisions, (e) the indemnitee was adjudged to be
deliberately dishonest, or (f) (with respect to a director) liability arises out
of a breach of certain of his or her fiduciary duties.
The directors and officers of the Company and its subsidiaries are insured
under certain insurance policies against claims made during the period of the
policies against liabilities arising out of claims for certain acts in their
capacities as directors and officers of the Company and its subsidiaries.
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------ -----------
4.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.0 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993).
4.2 Certificate of Amendment of Restated Certificate of Incorporation
(incorporated by reference to Exhibit B to the Company's Proxy Statement
dated March 23, 1996).
4.3 By-laws of the Company, as amended to date.+
4.4 Rights Agreement, dated as of February 7, 1992, between the Company and The
First National Bank of Boston, as Rights Agent (incorporated by reference
to Exhibit 1 to the Company's Registration Statement on Form 8-A, dated
February 12, 1992).
4.5 Form of Common Stock Certificate (incorporated by reference to the
Company's Current Report on Form 8-K filed on July 22, 1996).
4.6 Certificate of Designation of Series B Preferred Stock dated March 26,
1997.+
4.7 Certificate of Designation of Series C Preferred Stock dated March 26,
1997.+
4.8 Deposit Agreement dated June 24, 1996 among Tyco, Midlantic Bank, N.A., as
Depositary, and all holders from time to time of depositary receipts issued
thereunder (incorporated by reference to Exhibit 4.2 to Tyco Toys, Inc.'s
Registration Statement on Form S-3, dated June 20, 1996).
II-2
<PAGE>
Exhibit
Number Description
- ------ -----------
5 Opinion of Leland P. Smith.+
23.1 Consent of Price Waterhouse LLP.+
23.2 Consent of Deloitte and Touche LLP.+
23.3 Consent of Leland P. Smith (included in Exhibit 5).
24 Power of Attorney with respect to the Company (see page II-4).+
_________________________
+ Included in this filing.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
----
fide offering thereof.
- ----
(5) To deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of El Segundo, State of California, on the 20th day of
August, 1997.
MATTEL, INC.
By: /s/ Harry Pearce
--------------------------------------
Harry Pearce, Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below on this registration statement hereby constitutes and appoints Jill E.
Barad, Ned Mansour, Robert Normile, Leland P. Smith and John L. Vogelstein,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for them and in their name, place and stead, in
any and all capacities (unless revoked in writing) to sign any and all
amendments to this registration statement to which this power of attorney is
attached, including any post-effective amendments as well as any related
registration statement (or amendment thereto) filed in reliance upon Rule 462(b)
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission,
granting to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in connection therewith, as fully to all intents and purposes as they
might and could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ John W. Amerman Chairman of the Board August 20, 1997
- -----------------------
John W. Amerman
/s/ Jill E. Barad Director, President and August 20, 1997
- ----------------------- Chief Executive Officer
Jill E. Barad
/s/ Harry Pearce Chief Financial Officer August 20, 1997
- ----------------------- (Principal Financial Officer)
Harry Pearce
/s/ Kevin M. Farr Senior Vice President and Controller August 20, 1997
- ----------------------- (Chief Accounting Officer)
Kevin M. Farr
II-5
<PAGE>
/s/ Dr. Harold Brown Director August 20, 1997
- ---------------------------
Dr. Harold Brown
/s/ Tully M. Friedman Director August 20, 1997
- ---------------------------
Tully M. Friedman
/s/ Joseph C. Gandolfo Director and President, August 20, 1997
- --------------------------- Worldwide Manufacturing
Joseph C. Gandolfo Operations
/s/ Ronald M. Loeb Director August 20, 1997
- ---------------------------
Ronald M. Loeb
/s/ Ned Mansour Director and President, August 20, 1997
- --------------------------- Corporate Operations
Ned Mansour
/s/ Edward N. Ney Director August 20, 1997
- ---------------------------
Edward N. Ney
/s/ William D. Rollnick Director August 20, 1997
- ---------------------------
William D. Rollnick
/s/ Christopher A. Sinclair Director August 20, 1997
- ---------------------------
Christopher A. Sinclair
/s/ Bruce L. Stein Director and President, August 20, 1997
- --------------------------- Mattel Worldwide
Bruce L. Stein
/s/ John L. Vogelstein Director August 20, 1997
- ---------------------------
John L. Vogelstein
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
4.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.0 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993).
4.2 Certificate of Amendment of Restated Certificate of Incorporation
(incorporated by reference to Exhibit B to the Company's Proxy Statement
dated March 23, 1996).
4.3 By-laws of the Company, as amended to date.+
4.4 Rights Agreement, dated as of February 7, 1992, between the Company and The
First National Bank of Boston, as Rights Agent (incorporated by reference
to Exhibit 1 to the Company's Registration Statement on Form 8-A, dated
February 12, 1992).
4.5 Form of Common Stock Certificate (incorporated by reference to the
Company's Current Report on Form 8-K filed on July 22, 1996).
4.6 Certificate of Designation of Series B Preferred Stock dated March 26,
1997.+
4.7 Certificate of Designation of Series C Preferred Stock dated March 26,
1997.+
4.8 Deposit Agreement dated June 24, 1996 among Tyco, Midlantic Bank, N.A., as
Depositary, and all holders from time to time of depositary receipts issued
thereunder (incorporated by reference to Exhibit 4.2 to Tyco Toys, Inc.'s
Registration Statement on Form S-3, dated June 20, 1996).
5 Opinion of Leland P. Smith.+
23.1 Consent of Price Waterhouse LLP.+
23.2 Consent of Deloitte and Touche LLP.+
23.3 Consent of Leland P. Smith (included in Exhibit 5).
24 Power of Attorney with respect to the Company (see page II-4).+
_________________________
+ Included in this filing.
II-7
<PAGE>
MATTEL, INC.
BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
---------------------------
An annual meeting of the stockholders, for the election of directors
to succeed those whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
on such date, and at such time as the Board of Directors shall each year fix,
which date shall be within thirteen months subsequent to the later of the date
of incorporation or the last annual meeting of stockholders.
Section 2. Special Meetings.
-----------------------------
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of Directors
or the chief executive officer and shall be held at such place, on such date,
and at such time as they or he shall fix.
Section 3. Notice of Meetings.
-------------------------------
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held to each stockholder
entitled to vote at such meeting, except as otherwise provided herein, in the
Restated Certificate of Incorporation or required by law.
When a meeting is adjourned to another place, date, or time, written
notice need not be given of the adjourned meeting if the place, date, and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
-------------------
At any meeting of the stockholders, the holders of a majority of all
of the shares of the stock entitled to vote at the meeting, present in person or
by proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law.
<PAGE>
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of the stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date, or time.
If a notice of any adjourned special meeting of stockholders is sent
to all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, then except as otherwise required by law,
those present at such adjourned meeting shall constitute a quorum, and all
matters shall be determined by a majority of the votes cast at such meeting.
Section 5. Organization.
-------------------------
Such person as the Board of Directors may have designated or, in the
absence of such a person, the highest ranking officer of the corporation who is
present shall call to order any meeting of the stockholders and act as chairman
of the meeting. In the absence of the Secretary of the corporation, the
secretary of the meeting shall be such person as the chairman appoints.
Section 6. Conduct of Business.
--------------------------------
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order.
Section 7. Proxies and Voting.
-------------------------------
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his name on the record date for the meeting,
except as otherwise provided herein or required by law. As provided by the
Certificate of Incorporation, at all elections of directors each stockholder who
is entitled to vote shall be entitled to as many votes as shall equal the number
of votes which (except for the provisions as to cumulative voting contained in
the Certificate of Incorporation) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by the number of
directors to be elected, and he may cast all of such votes for a single director
or may distribute them among the number to be voted for, or for any two or more
of them as he may see fit.
All voting, except for the election of directors and where otherwise
required by law, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or his proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. Every vote
2
<PAGE>
taken by ballots shall be counted by an inspector or inspectors appointed by the
chairman of the meeting.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law, all other matters shall be determined
by a majority of the votes cast.
Section 8. Stock List.
-----------------------
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
name, shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
Section 9. Business Brought Before the Meeting,
------------------------------------------------
At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 9. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the corporation. To
be timely, a stockholder's notice must be delivered or mailed to and received at
the principal executive offices of the corporation not less than thirty (30)
days prior to the date of the annual meeting; provided, however, that in the
event that less than forty (40) days notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter such stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation's capital stock that are beneficially
owned by such stockholder and (iv) any material interest of such stockholder in
such business. Notwithstanding anything in the Bylaws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the provisions of this Section 9. The officer of the
corporation or
3
<PAGE>
other person presiding over the annual meeting shall, if the facts so warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 9 and, if
he should so determine, he shall so declare to the meeting and any such business
so determined to be not properly brought before the meeting shall not be
transacted.
At any special meeting of the stockholders, only such business shall
be conducted as shall have been brought before the meeting by or at the
direction of the Board of Directors.
Section 10. Nomination for Election to Board.
----------------------------------------------
Only persons who are nominated in accordance with the procedures set
forth in these Bylaws shall be eligible for election as directors. Nominations
of persons for election to the Board of Directors of the corporation may be made
at a meeting of stockholders at which directors are to be elected only (i) by or
at the direction of the Board of Directors (ii) by any stockholder of the
corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 10. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received at the principal executive offices of the corporation not less
than thirty (30) days prior to the date of the meeting; provided, however, that
in the event that less than forty (40) days notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (i) as to each person whom such stockholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
as to serving as a director if elected); and (ii) as to the stockholder giving
the notice (x) the name and address, as they appear on the corporation's books,
of such stockholder and (y) the class and number of shares of the corporation's
capital stock that are beneficially owned by such stockholder. At the request
of the Board of Directors any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the provisions
of this Section 10. The officer of the corporation or other person presiding at
the meeting shall, if the facts so warrant, determine and declare to the meeting
that a nomination was not made in accordance with such provisions and, if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
4
<PAGE>
ARTICLE II - BOARD OF DIRECTORS
Section 1. Number and Term of Office.
--------------------------------------
The Board of Directors shall consist of one or more members, the
number thereof to be determined from time to time by resolution of the Board of
Directors. Each director shall hold office until the annual meeting of
stockholders next succeeding his election and until his successor is elected and
qualified, except as otherwise provided herein or required by law.
Whenever the authorized number of directors is increased between
annual meetings of the stockholders, a majority of the directors then in office
shall have the power to elect such new directors for the balance of a term and
until their successors are elected and qualified. Any decrease in the
authorized number of directors shall not become effective until the expiration
of the term of the directors then in office unless, at the time of such
decrease, there shall be vacancies on the board which are being eliminated by
the decrease.
Section 2. Vacancies.
----------------------
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his successor is elected and
qualified.
Section 3. Regular Meetings.
-----------------------------
Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
-----------------------------
Special meetings of the Board of Directors may be called by one-third
of the directors then in office or by the chief executive officer and shall be
held at such place, on such date, and at such time as they or he shall fix.
Notice of the place, date and time of each such special meeting shall be given
each director by whom it is not waived by mailing written notice not less than
three days before the meeting or by telegraphing or sending by facsimile
transmission the same not less than eighteen hours before the meeting. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 5. Quorum.
-------------------
At any meeting of the Board of Directors, one-third of the total
number of the whole board, but not less than two, shall constitute a quorum for
all purposes. If a quorum
5
<PAGE>
shall fail to attend any meeting, a majority of those present may adjourn the
meeting to another place, date, or time, without further notice or waiver
thereof.
Section 6. Conduct of Business.
--------------------------------
At any meeting of the Board of Directors, business shall be transacted
in such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
Section 7. Powers.
-------------------
The Board of Directors may, except as otherwise required by law,
exercise all such power and do all such acts and things as may be exercised or
done by the corporation, including, without limiting the generality of the
foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with
law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind, negotiable
or non-negotiable, secured or unsecured, and to do all things
necessary in connection therewith;
(4) To remove any officer of the corporation with or without
cause, from time to time to devolve the powers and duties of any
officer upon any other person for the time being;
(5) To confer upon any officer of the corporation the power to
appoint, remove and suspend subordinate officers and agents;
(6) To adopt from time to time such bonus or other compensation
plans for directors, officers and agents of the corporation and its
subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers and agents of the
corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with
these Bylaws, for the management of the corporation's business and
affairs.
6
<PAGE>
Section 8. Compensation of Directors.
--------------------------------------
Directors, as such, may receive, pursuant to resolution of the Board
of Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
directors.
Section 9. Action without Meeting.
-----------------------------------
Any action required or permitted to be taken at any meeting of the
Board of Directors or of any Committee thereof may be taken without a meeting if
all members of the Board or Committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of the Board or Committee.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
-------------------------------------------------
The Board of Directors, by a vote of a majority of the whole Board,
may from time to time designate committees of the Board, including an
Executive/Finance Committee, with the powers and duties it thereby confers, to
serve at the pleasure of the Board and shall, for those committees and any
others provided for herein, elect the director or directors to serve as the
member or members, designating, if it desires, other directors as alternate
members who may replace any absent or disqualified member at any meeting of the
committee. Committees other than the Executive/Finance Committee may have only
one member. In the absence or disqualification of any member of any committee
and any alternate member in his place, the member or members of the committee
present at the meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may by unanimous vote appoint another member of the
Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Section 2. Executive/Finance Committee.
----------------------------------------
If the Board of Directors shall designate an Executive/Finance
Committee, said Committee shall have the following powers:
During the intervals between meetings of the Board of Directors, that
Committee shall have all of the powers and duties of the Board of Directors,
except with respect to matters delegated to another committee and except as
shall have been otherwise provided by the Board of Directors. All action taken
by the Executive/Finance Committee since the last meeting of the Board of
Directors shall be reported to the Board at its next meeting.
7
<PAGE>
During the intervals between meetings of the Executive/Finance
Committee, the chairman thereof shall have such of the powers and duties of such
Committee as shall have been conferred upon him by the Board of Directors or the
Committee.
Section 3. Conduct of Business.
--------------------------------
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the members, but not less
than two, shall constitute a quorum; and all matters shall be determined by a
majority vote of the members present.
Section 4. Emergency Management Committee.
-------------------------------------------
If as a result of a catastrophe or other emergency condition a quorum
of any committee of the Board of Directors having power to act in the premises
cannot readily be convened and a quorum of the Board of Directors cannot readily
be convened, then all the powers and duties of the Board of Directors shall
automatically vest and continue, until a quorum of the Board of Directors can be
convened, in the Emergency Management Committee, which shall consist of all
readily available members of the Board of Directors and two of whose members
shall constitute a quorum. The Emergency Management Committee shall call a
meeting of the Board of Directors as soon as circumstances permit for the
purpose of filling any vacancies on the Board of Directors and its committees
and taking such other action as may be appropriate.
ARTICLE IV - OFFICERS
Section 1. Generally,
----------------------
The officers shall consist of a Chairman (or any number of Co-
Chairmen) of the Board of Directors, a President, one or more Vice Presidents
(who may at the pleasure of the Board of Directors be designated as Senior Vice
Presidents, Executive Vice Presidents, Vice Presidents in charge of a particular
function such as Vice President-Administration, or merely Vice President), a
Secretary, a Treasurer, a Controller, and such assistants to such officers as
may from time to time be appointed by the Board of Directors.
Officers shall be elected by the Board of Directors, which shall
consider that subject at its first meeting after every annual meeting of
stockholders. Each officer shall hold his office at the pleasure of the Board
of Directors and until his successor is elected and qualified or until his
earlier resignation or removal. The Chairman (or Co-Chairmen) of the Board of
Directors shall be a director. Any number of offices may be held by the same
person.
The Board of Directors may appoint such other officers as the business
of the corporation may require, each of whom shall have such authority and
perform such duties as
8
<PAGE>
are provided in these Bylaws or as the Board of Directors or the Chairman of the
Board may from time to time specify.
Section 2. Chairman of the Board of Directors.
-----------------------------------------------
The Chairman of the Board of Directors (or, if there are Co-Chairmen,
that Co-Chairman who is designated by the Board of Directors) shall be the chief
executive officer of the corporation. Subject to the provisions of these Bylaws
and to the direction of the Board of Directors, he shall have the responsibility
for the general management and control of the affairs and business of the
corporation and shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to him by the
Board of Directors.
The Chairman (or any Co-Chairmen) of the Board of Directors shall have
power to sign all stock certificates, contracts and other instruments of the
corporation which are authorized. He shall have general supervision and
direction of all of the other officers and agents of the corporation.
Section 3. President.
----------------------
The President shall have such duties and powers as may from time to
time be delegated to him by the Board of Directors or by the Chairman of the
Board of Directors (or if there are Co-Chairmen of the Board of Directors, the
chief executive officer). In the absence or disability of the Chairman (or Co-
Chairmen) of the Board of Directors, or during the period of a vacancy in that
office, he shall act as the chief executive officer of the corporation and shall
have the duties and powers of the chairman.
Section 4. Vice Presidents.
----------------------------
Each of the Vice Presidents shall have such duties and powers as may
from time to time be delegated to him by the Board of Directors, by the Chairman
(or any Co-Chairman) of the Board of Directors, or by the President. In the
absence or disability of the President, the Vice President designated by:
(a) the Board of Directors, or if no such designation is made, then by
(b) the Chairman (or any Co-Chairman) of the Board of Directors, or if no
such designation is made, then by
(c) the President
shall have the duties and powers of the President.
Section 5. The Treasurer.
--------------------------
The Treasurer shall have the custody of all monies and securities of
the corporation and shall keep regular books of account. He shall make such
disbursement of the funds of the corporation as are proper and shall render from
time to time an account of all such
9
<PAGE>
transactions and of the financial condition of the corporation. He shall have
such other duties and powers as are commonly incident to this office or are
delegated to him by the Board of Directors, by the Chairman (or any Co-Chairman)
of the Board of Directors, or by the President.
Section 6. The Secretary.
--------------------------
The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He
shall have charge of the corporate books. He shall have such other duties and
powers as are commonly incident to his office or are delegated to him by the
Board of Directors, by the Chairman (or any co-chairman) of the Board of
Directors, or by the President.
Section 7. Delegation of Authority.
------------------------------------
The Board of Directors may from time to time delegate the powers or
duties of any officer to any other officer or agents, notwithstanding any
provision hereof.
Section 8. Removal.
--------------------
Any officer of the corporation may be removed at any time, with or
without cause, by the Board of Directors.
Section 9. Action with Respect to Securities of Corporation.
-------------------------------------------------------------
Unless otherwise directed by the Board of Directors, the Chairman (or
Co-Chairman) of the Board and the President, and each of them, shall have power
to vote and otherwise act on behalf of the corporation, in person or by proxy,
at any meeting of stockholders of or with respect to any action of stockholders
of any other corporation in which this corporation may hold securities and
otherwise to exercise any and all rights and powers which this corporation may
possess by reason of its ownership of securities in such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
----------------------------------
Each stockholder shall be entitled to a certificate signed by, or in
the name of the corporation by, the Chairman of the Board of Directors, or the
President or a Vice President, and by the Secretary or an Assistant Secretary,
or the Treasurer or an Assistant Treasurer, certifying the number of shares
owned by him. Signatures required on such certificates may be manually signed
by the transfer agent, registrar or officer, or such signatures may be
facsimile.
10
<PAGE>
Section 2. Transfer of Stock.
------------------------------
Transfers of stock shall be made only upon the transfer books of the
corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 4 of ARTICLE V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Dates.
-------------------------
(a) The Board of Directors may fix a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of any meeting
of stockholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described (except as otherwise set forth in paragraph (b) of
this Section), as of which there shall be determined the stockholders who are
entitled: to notice of or to vote at any meeting of stockholders or any
adjournment thereof; to receive payment of any dividend or other distribution or
allotment of any rights; or to exercise any rights with respect to any change,
conversion or exchange of stock or with respect to any other lawful action.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the Board of Directors within ten (10) days
of the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the Board of Directors adopts the
resolution taking such prior action.
11
<PAGE>
Section 4. Lost, Stolen or Destroyed Certificates.
---------------------------------------------------
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
------------------------
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI - INDEMNIFICATION
Section 1. Right to Indemnification.
-------------------------------------
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or person of whom he or she is the legal
representative, is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
------------------
that, except as provided in Section 2 of this ARTICLE IV, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the corporation.
The right to indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided,
--------
however, that, if the Delaware General Corporation Law requires, the payment of
- -------
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a
12
<PAGE>
proceeding, shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise.
Section 2. Right of Claimant to Bring Suit.
--------------------------------------------
If a claim under Section 1 of this ARTICLE VI, is not paid in full by
the corporation within ninety days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 3. Non-Exclusivity of Rights.
--------------------------------------
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
ARTICLE VI shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or otherwise.
Section 4. Insurance.
----------------------
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
13
<PAGE>
ARTICLE VII - NOTICES
Section 1. Notices.
--------------------
Whenever notice is required to be given to any stockholder, director,
officer, or agent, such requirement shall not be construed to mean personal
notice. Such notice may in every instance be effectively given by depositing a
writing in a post office or letter box, in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram, addressed to such stockholder, director,
officer, or agent at his or her address as the same appears on the books of the
corporation. The time when such notice is dispatched shall be the time of the
giving of the notice.
Section 2. Waivers.
--------------------
A written waiver of any notice, signed by a stockholder, director,
officer or agent, whether before or after the time of the event for which notice
is to be given, shall be deemed equivalent to the notice required to be given to
such stockholder, director, officer, or agent. Neither the business nor the
purpose of any meeting need be specified in such a waiver.
ARTICLE VIII - MISCELLANEOUS
Section 1. Facsimile Signatures.
--------------------------------
In addition to the provisions for the use of facsimile signatures
elsewhere specifically authorized in these bylaws, facsimile signatures of any
officer or officers of the corporation may be used whenever and as authorized by
the Board of Directors or the Executive Committee.
Section 2. Corporate Seal.
---------------------------
The Board of Directors shall provide a suitable seal, containing the
name of the corporation, which seal shall be in charge of the Secretary. If and
when so directed by the Board of Directors or by the Executive Committee,
duplicates of the seal may be kept and used by the Treasurer or by any Assistant
Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
-----------------------------------------------------
Each director, each member of any committee designated by the Board of
Directors, and each officer of the corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the corporation, including reports made to the corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
14
<PAGE>
Section 4. Fiscal Year.
------------------------
The fiscal year of the corporation shall terminate at the end of
business on December 31 in each year, and the following year shall begin on the
next day thereafter.
Section 5. Time Periods.
-------------------------
In applying any provision of these Bylaws which require that an act be
done or not done a specified number of days prior to an event or that an act be
done during a period of a specified number of days prior to any event, calendar
days shall be used, the day of the doing of the act shall be excluded, and the
day of the event shall be included.
Section 6. Independent Accountants.
------------------------------------
The Board of Directors shall appoint on an annual basis such firm of
independent public accountants as it shall deem appropriate to examine the
Company's financial books and records on at least an annual basis. The
appointment of said independent accountants shall, at the next succeeding annual
meeting of stockholders be presented to the stockholders of the Company for
ratification. Should the stockholders fail to ratify the appointment by the
Board of Directors of said independent public accountants, the Board of
Directors shall take the matter under consideration and the vote of the
stockholders in that regard shall be deemed advisory in nature.
Section 7. Gender.
-------------------
Any reference to the masculine gender in these Bylaws shall be
construed to mean the feminine gender, as the situation may demand.
ARTICLE IX - AMENDMENTS
Section 1. Amendments.
-----------------------
These Bylaws may be amended or repealed by the Board of Directors at
any meeting or by the stockholders at any meeting.
15
<PAGE>
MATTEL, INC.
CERTIFICATE OF DESIGNATIONS
PREFERENCES, RIGHTS AND LIMITATIONS OF
SERIES B VOTING CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
Mattel, Inc. (hereinafter referred to as the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, as amended (the "Delaware Code"), does
HEREBY CERTIFY that the following resolution has been duly adopted by the
Directors of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Directors of the Corporation (the "Directors") by the provisions of the
Restated Certificate of Incorporation of the Corporation, as amended (the
"Certificate of Incorporation"), there hereby is created, out of the 3,000,000
shares of Preferred Stock of the Corporation authorized in Article Fourth of the
Certificate of Incorporation (the "Preferred Stock"), a series of Preferred
Stock of the Corporation, to be designated "Series B Voting Convertible
Exchangeable Preferred Stock," consisting of 53,631 shares, which series shall
have the following voting powers, designations, preferences and relative,
participating, optional and other rights, and the following qualifications,
limitations and restrictions (in addition to the powers, designations,
preferences and relative, participating optional and other rights, and the
qualifications, limitations and restrictions, set forth in the Certificate of
Incorporation which are applicable to the Preferred Stock):
Section 1. Dividends.
----------
(a) The holders of shares of Convertible Exchangeable Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors of
the Corporation out of funds legally available therefor, cumulative dividends on
the shares of Convertible Exchangeable Preferred Stock at the rate of 6% of the
liquidation preference per share per year (subject to increase during the
continuance of a Restriction Event as provided in Section 5 hereof), payable
quarterly on the 1st day of each of January, April, July and October,
respectively (each, a "Quarterly Dividend Payment Date"), commencing April 1,
1997 (except that if any such date is a Saturday, Sunday or legal holiday, then
such dividend shall be payable on the next
<PAGE>
day that is not a Saturday, Sunday or legal holiday), in each year with respect
to the quarterly dividend period (or portion thereof) ending on the last day of
the Month ending immediately prior to such Quarterly Dividend Payment Date. Such
dividends shall be payable, in cash. The amount of dividends payable per share
of Convertible Exchangeable Preferred Stock for each quarterly dividend period
shall be computed by dividing the annual amount by four. The amount of dividends
payable on the April 1, 1997 Quarterly Dividend Payment Date shall be the amount
otherwise payable on a Quarterly Dividend Payment Date pursuant to this
paragraph multiplied by a fraction the numerator of which shall be the number of
days from January 15, 1997 through March 31, 1997, inclusive, and the
denominator of which shall be the number of days from January 15, 1997 through
April 14, 1997, inclusive; dividends payable for any future period shorter than
a full quarterly dividend period shall similarly be computed on a proportionate
basis, based on the number of days elapsed.
(b) On each Quarterly Dividend Payment Date all dividends which shall have
accrued on each share of Convertible Exchangeable Preferred Stock outstanding on
such date shall accumulate and shall be deemed to have become due. Additional
dividends shall be paid to reflect amounts equivalent to interest on accrued but
unpaid dividends at the rate of 6.00% per annum (subject to increase during the
continuance of a Restriction Event as provided in Section 5 hereof) from the
Quarterly Dividend Payment Date with respect to which such dividend was not paid
until the date such dividend is paid (whether in cash or, if permitted in
accordance with Section 1(a), in additional shares of Convertible Exchangeable
Preferred Stock).
(c) No dividends or other distributions, other than dividends payable solely
in shares of Common Stock or other capital stock of the Corporation ranking
junior as to dividends and as to any distribution of assets other than by way of
dividends to the Convertible Exchangeable Preferred Stock, shall be paid, or
declared and set apart for payment by the Corporation, and no purchase,
redemption or other acquisition shall be made by the Corporation or any of its
subsidiaries of, any shares of Common Stock or other capital stock of the
Corporation ranking junior as to dividends or as to any distribution of assets
other than by way of dividends to the Convertible Exchangeable Preferred Stock
(the "Junior Stock") unless and until all accrued and unpaid dividends on the
Convertible Exchangeable Preferred Stock, including the full dividend for the
then current dividend period, shall have been paid or declared and set apart for
payment. No full dividends shall be paid or declared and set apart for payment
on any class or series of the Corporation's capital stock ranking, as to
dividends, on a parity
-2-
<PAGE>
with the Convertible Exchangeable Preferred Stock (the "Parity Dividend Stock")
for any period unless full cumulative dividends have been, or contemporaneously
are, paid or declared and set apart for payment on the Convertible Exchangeable
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such full dividends. No full dividends shall be paid or
declared and set apart for payment on the Convertible Exchangeable Preferred
Stock for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for payment on the Parity
Dividend Stock for all dividend periods terminating on or prior to the date of
payment of such full dividends. When dividends are not paid in full upon the
Convertible Exchangeable Preferred Stock and the Parity Dividend Stock, all
dividends paid or declared and set aside for payment upon shares of Convertible
Exchangeable Preferred Stock and the Parity Dividend Stock shall be paid or
declared and set aside for payment pro rata so that the amount of dividends paid
or declared and set aside for payment per share on the Convertible Exchangeable
Preferred Stock and the Parity Dividend Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of Convertible Exchangeable Preferred Stock and the Parity Dividend Stock bear
to each other.
Section 2. Voting Rights.
--------------
In addition to any voting rights provided by law and the rights set forth in
Section 5, the holders of shares of Convertible Exchangeable Preferred Stock
shall have the following voting rights:
(a) So long as the Convertible Exchangeable Preferred Stock is outstanding,
each share of Convertible Exchangeable Preferred Stock shall entitle the holder
thereof to vote on all matters voted on by holders of the capital stock of the
Corporation into which such share of Convertible Exchangeable Preferred Stock is
convertible, voting together as a single class with the other shares entitled to
vote, at all meetings of the stockholders of the Corporation. With respect to
any such vote, each share of Convertible Exchangeable Preferred Stock shall
entitle the holder thereof to cast the number of votes equal to the number of
votes which could be cast in such vote by a holder of the number of shares of
capital stock of the Corporation into which such share of Convertible
Exchangeable Preferred Stock is convertible on the record date for such vote.
(b) So long as any shares of Convertible Exchangeable Preferred Stock are
outstanding, subject to the provisions
-3-
<PAGE>
of Section 275(c) of the Delaware Code, the Corporation shall not, without
consent of the holders of at least a majority of the number of shares of
Convertible Exchangeable Preferred Stock at the time outstanding, given in
person or by proxy, either in writing or by vote at a special meeting called for
the purpose, enter into any plan of complete liquidation or dissolution or
otherwise effect the voluntary liquidation, dissolution or winding up of the
Corporation unless, as a result of such liquidation, dissolution or winding-up,
the liquidation preference on the Convertible Exchangeable Preferred Stock is
satisfied in full pursuant to Section 6 herein.
(c) Except as otherwise required by applicable law, the consent of a majority
of the number of shares of Convertible Exchangeable Preferred Stock at the time
outstanding, given in person or by proxy, either in writing or by vote, at a
special or annual meeting, shall be necessary to amend or waive any provision of
this Certificate of Designation.
Section 3. Conversion.
-----------
At the option of the holder thereof and upon surrender thereof for conversion
to the Corporation at the office of the Transfer Agent of the Corporation's
Common Stock in the Borough of Manhattan, the City of New York, each share of
Convertible Exchangeable Preferred Stock shall be convertible at any time (or if
such share is called or surrendered for redemption, then in respect of such
share to and including, but not after, the close of business on the redemption
date, unless the Corporation shall default in the payment of the redemption
price, in which case such right shall not terminate at such time and date) into
that number of fully paid and nonassessable shares of Common Stock (calculated
as to each conversion to the nearest 1/100 of a share) obtained by dividing
$1,050.00 by the Conversion Price (as defined below) in effect at such time.
The "Conversion Price" shall mean and be the quotient produced by dividing $10
by 0.48876, subject to adjustment from time to time by the Corporation as
follows:
(a) In case the Corporation shall, at any time or from time to time while any
of the shares of Convertible Exchangeable Preferred Stock are outstanding, (i)
pay a dividend or make a distribution on its Common Stock in shares of its
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares or (iv) issue by reclassification of its shares
of Common Stock any shares of its capital stock (each such transaction being
called a "Stock Transaction"), then and in each such case, the Conversion Price
in effect immediately prior thereto shall be
-4-
<PAGE>
adjusted so that the holder of a share of Convertible Exchangeable Preferred
Stock surrendered for conversion after the record date fixing stockholders to be
affected by such Stock Transaction shall be entitled to receive upon conversion
the number of such shares of Common Stock or other capital stock of the
Corporation that he would have owned or been entitled to receive after the
happening of such event had such share of Convertible Exchangeable Preferred
Stock been converted immediately prior to such record date (or, if no record
date, the effective date). Such adjustment shall be made whenever any of such
events shall happen, but shall also be effective retroactively as to shares of
Convertible Exchangeable Preferred Stock converted between such record date and
the date of the happening of any such event.
(b) (i) In case the Corporation shall, at any time or from time to time
while any of the shares of Convertible Exchangeable Preferred Stock are
outstanding, issue, sell or exchange shares of Common Stock (other than (x)
pursuant to any right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible into or
exchangeable for shares of Common Stock), (y) pursuant to any employee or
director incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement but excluding any employee stock ownership
plan within the meaning of Section 4975(e)(7) of the Internal Revenue Code of
1986, as amended (an "ESOP"), whether presently existing or to be established in
the future, of the Corporation or any subsidiary of the Corporation heretofore
or hereafter adopted, and (z) as provided in paragraph (a) of this Section 3)
for a consideration having a Fair Market Value (as defined below) on the date of
such issuance, sale or exchange that is less than the Market Price (as defined
below) of such shares on the date of such issuance, sale or exchange, then and
in each case, the Conversion Price shall be adjusted by multiplying such
Conversion Price by a fraction (which shall not be greater than 1), the
numerator of which shall be the sum of (x) the Current Market Price per share of
Common Stock as of the trading day immediately preceding the date of the public
announcement of the actual terms (including the pricing terms) of such issuance,
sale or exchange (or if there is no such public announcement prior to the
effective date of such issuance, sale or exchange, such effective date)
multiplied by the number of shares of Common Stock outstanding immediately prior
to such issuance, sale or exchange plus (y) the aggregate Fair Market Value of
the consideration received by the Corporation in respect of such issuance, sale
or exchange of shares of Common Stock, and the denominator of which shall be the
product of (x) the Current Market Price per share of Common Stock referred to in
the immediately preceding clause (x) multiplied by (y) the
-5-
<PAGE>
sum of the number of shares of Common Stock outstanding on such day plus the
number of shares of Common Stock so issued, sold or exchanged by the
Corporation. For purposes of the preceding sentence, the aggregate consideration
receivable by the Corporation in connection with the issuance, sale or exchange
of shares of Common Stock shall be deemed to be equal to the sum of the
aggregate offering price (before deduction of reasonable underwriting discounts
or commissions and expenses) of all such shares.
(ii) In the event the Corporation shall, at any time or from time to time
while any shares of Convertible Exchangeable Preferred Stock are outstanding,
issue, sell or exchange any right or warrant to purchase or acquire shares of
Common Stock (including as such a right or warrant any security convertible into
or exchangeable for shares of Common Stock) (other than (x) any issuance, sale
or exchange to holders of shares of Common Stock as a dividend or distribution
(including by way of a reclassification of shares or a recapitalization of the
Corporation), and (y) pursuant to any employee or director incentive or benefit
plan or arrangement (excluding any ESOP), of the Corporation or any subsidiary
of the Corporation heretofore or hereafter adopted), for a consideration having
a Fair Market Value on the date of such issuance, sale or exchange less than the
Fair Market Value of such rights or warrants on the date of such issuance, sale
or exchange, then and in each case, the Conversion Price shall be adjusted by
multiplying such Conversion Price by a fraction (which shall not be greater than
1), the numerator of which shall be the sum of (a) the Current Market Price per
share of Common Stock as of the trading date immediately preceding the date of
the public announcement of the actual terms (including the price terms) of such
issuance, sale or exchange (or if there is no such public announcement prior to
the effective date of such issuance, sale or exchange, such effective date)
multiplied by the number of shares of Common Stock outstanding immediately prior
to such issuance, sale or exchange plus (b) the aggregate Fair Market Value of
the consideration received by the Corporation in respect of such issuance, sale
or exchange of such right or warrant, and the denominator of which shall be the
sum of (i) the Current Market Price per share of Common Stock referred to in the
preceding clause (a) multiplied by the number of shares of Common Stock
outstanding immediately prior to such issuance, sale or exchange plus (ii) the
aggregate Fair Market Value of such rights or warrants at the time of such
issuance. For the purposes of the preceding sentence, the aggregate
consideration receivable by the Corporation in connection with the issuance,
sale or exchange of any such right or warrant shall be deemed to be equal to the
sum of the aggregate offering price (before
-6-
<PAGE>
deduction of reasonable underwriting discounts or commissions and expenses) of
all such rights or warrants.
(c) In the event the Corporation or any of its subsidiaries shall, at any
time or from time to time while any shares of Convertible Exchangeable Preferred
Stock are outstanding, repurchase or redeem any of the Corporation's outstanding
capital stock at a premium over the average Market Price per share on the
trading day immediately preceding such repurchase or redemption (a
"Repurchase"), then and in the case of each Repurchase the Conversion Price in
effect immediately prior thereto shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which is (i) the product of (x)
the number of shares of Common Stock outstanding immediately before such
repurchase or redemption multiplied by (y) the average Market Price per share of
Common Stock on the five trading days immediately following the consummation of
such Repurchase minus (ii) the aggregate purchase price of the Repurchase and
the denominator of which shall be the product of (x) the number of shares of
Common Stock outstanding immediately before such Repurchase minus the number of
shares of Common Stock repurchased or redeemed by the Corporation multiplied by
(y) the average Market Price per share of Common Stock on such five trading days
referred to in the preceding clause (i)(y); provided, however, that the
-------- -------
conversion price shall not be so adjusted with respect to (i) any Repurchase of
the Convertible Exchangeable Preferred Stock pursuant to Section 6 or 7 hereof.
(d) In the event the Corporation shall at any time or from time to time while
any shares of Convertible Exchangeable Preferred Stock are outstanding, declare
and pay or make a dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or rights or warrants
to subscribe for securities of the Corporation or any of its subsidiaries by way
of dividend or distribution or evidences of indebtedness of the Corporation or
any other person) on its Common Stock, other than (A) regular quarterly
dividends payable in cash (it being understood that the failure to pay a regular
quarterly dividend for one or more quarters shall not affect the treatment of
any other dividend as a regular quarterly dividend), (B) shares of Common Stock
for which an adjustment is made under paragraph (a) of this Section 3 or (C)
any other dividend or distribution on the Corporation's Common Stock if in
conjunction with such other dividend or distribution the Corporation declares
and makes (or pays) a dividend or distribution on each share of Convertible
Exchangeable Preferred Stock which is the same as the dividend or distribution
that would have been made or paid with respect to such share of Convertible
Exchangeable Preferred Stock had
-7-
<PAGE>
such share been converted into shares of Common Stock immediately prior to the
record date for any such dividend or distribution on the Corporation's Common
Stock, then, and in each such case, an appropriate adjustment to the Conversion
Price shall be made by multiplying the Conversion Price in effect immediately
prior to the record date fixed for the determination of stockholders entitled to
receive such dividend or distribution by a fraction, the numerator of which
shall be the Current Market Price per share of the Common Stock as of the fifth
business day preceding such record date less the Fair Market Value per share of
Common Stock of such dividend or distribution (as determined in good faith by
the Board of Directors of the Corporation, a certified resolution with respect
to which shall be mailed to each holder of shares of Convertible Exchangeable
Preferred Stock) and the denominator of which shall be the Current Market Price
per share of Common Stock as of the fifth business day preceding such record
date; provided, however, that in the event of a distribution of shares of
-------- -------
capital stock of a subsidiary of the Corporation (a "Spin-Off") made to holders
of shares of Common Stock, the numerator of such fraction shall be the Current
Market Price per share of Common Stock as of the 30th trading day after the
effective date of such Spin-Off and the denominator of which shall be the sum of
the Current Market Price per share of Common Stock as of such 30th trading day
and the Current Market Price of the number of shares (or the fraction of a
share) of capital stock of the subsidiary which is distributed in such Spin-Off
in respect of one share of Common Stock as of such 30th trading day.
Notwithstanding the foregoing, no adjustment shall be made with respect to any
distribution of rights or warrants to purchase securities of the Corporation if
the holder of shares of Convertible Exchangeable Preferred Stock would otherwise
be entitled to receive such rights upon conversion at any time of shares of
Convertible Exchangeable Preferred Stock into Common Stock unless such rights
are subsequently redeemed by the Corporation, in which case such redemption
shall be treated for purposes of this Section as a dividend on Common Stock. An
adjustment made pursuant to this paragraph (d) shall be made upon the opening of
business on the next business day following the date on which any such dividend
or distribution is made and shall be effective retroactively immediately after
the close of business on the record date fixed for the determination of
stockholders entitled to receive such dividend or distribution; provided,
--------
however, if the proviso to the second preceding sentence applies, then such
- -------
adjustment shall be made and be effective as of such 30th trading day after the
effective date of such Spin-Off.
-8-
<PAGE>
(e) For the purposes of any computation under paragraphs (a) through (d) of
this Section 3, the following definitions shall apply:
(i) "Closing Price" of publicly traded shares of Common Stock or any
other class of capital stock or other security of the Corporation or any other
issuer for a day shall mean the last reported sales price, regular way, or, in
case no sale takes place on such day, the average of the reported closing bid
and asked prices, regular way, in either case as reported on the New York Stock
Exchange -- Composite Transactions Tape or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq Stock Market, Inc.'s National Market ("NASDAQ") or, if such security is
not quoted on NASDAQ, the average of the closing bid and asked prices on each
such day in the over-the counter market as reported by NASDAQ or, if bid and
asked prices for such security on each such day shall not have been reported
through NASDAQ, the average of the bid and asked prices of such day as furnished
by any New York Stock Exchange member firm regularly making a market in such
security selected for such purpose by the Board of Directors of the Corporation
or a committee thereof. If the Common Stock or other class of capital stock or
security in question is not publicly held, or so listed, or publicly traded,
"Closing Price" shall mean the Fair Market Value thereof.
(ii) "Current Market Price" per share of Common Stock as of any date
shall be deemed to be the average of the daily Closing Prices per share for the
10 consecutive trading days ending on and including the day in question.
(iii) "Fair Market Value" of any consideration other than cash or of any
securities shall mean the amount which a willing buyer would pay to a willing
seller in an arm's length transaction as determined by an independent investment
banking or appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the Corporation or
a committee thereof.
(iv) "Market Price" per share at any date shall be the Closing Price on
the specified date; provided that, in the case of the issuance, sale or exchange
--------
of shares of Common Stock pursuant to paragraph (b) of this Section 3 that are
not registered under the Securities Act of 1933, the Market Price shall be
reduced by an amount, if any (as determined by an in-
-9-
<PAGE>
dependent investment banking or appraisal firm experienced in the valuation of
such securities or property selected in good faith by the Board of Directors of
the Corporation or a committee thereof), to compensate for the fact that such
shares are not so registered, and in making such determination any registration
rights granted by the Corporation shall be taken into account.
(f) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this paragraph (f)
- -------- -------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 3 shall be made
to the nearest one-hundredth of a share.
(g) No fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon the conversion of any share of Convertible
Exchangeable Preferred Stock. If the conversion thereof results in a fraction,
an amount equal to such fraction multiplied by the Current Market Price per
share of Common Stock (as defined above) as of the conversion date shall be paid
to such holder in cash by the Corporation.
(h) In the event of any capital reorganization (other than a capital
reorganization covered by paragraph (d) of this Section 3) or reclassification
of outstanding shares of Common Stock (other than a reclassification covered by
paragraph (a) of this Section 3), or in case of any merger, consolidation or
other corporate combination of the Corporation with or into another corporation,
or in case of any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety (each of the
foregoing being referred to as a "Transaction"), each share of Convertible
Exchangeable Preferred Stock shall continue to remain outstanding if the
Corporation is the Surviving Person (as defined below) of such Transaction, and
shall be subject to all the provisions of the Certificate of Designation of
Series B Convertible Exchangeable Preferred Stock which embodies this
resolution, as in effect prior to such Transaction (including, without
limitation, the provisions of Section 4 hereof if such Transaction also
constitutes a Change of Control (as hereinafter defined)), or if the Corporation
is not the Surviving Person in such Transaction, then each holder of shares of
Convertible Exchangeable Preferred Stock may elect (which election shall be made
within twenty days of the Transaction) to either (1) have Section 4 hereof be
applicable to such holder's shares of Convertible Exchangeable Preferred Stock
or (2) if the con-
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<PAGE>
sideration to be received by stockholders of the Corporation in the Transaction
does not consist entirely of cash, have each share of Convertible Exchangeable
Preferred Stock be exchanged for a new series of senior preferred stock of the
Surviving Person, or in the case of a Surviving Person other than a corporation,
comparable securities of such Surviving Person, in either case having economic
terms as nearly equivalent as possible to, and with the same voting and other
rights as, the Convertible Exchangeable Preferred Stock (including the right to
convert into Survivor Common Stock); provided, however, that, at the option of
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the holder of any shares of Convertible Exchangeable Preferred Stock (which
election shall be made within such twenty days), each share of Convertible
Exchangeable Preferred Stock then outstanding or deemed to be outstanding, as
the case may be, shall entitle the holder thereof to receive, upon presentation
of the certificate therefor to the Surviving Person subsequent to the
consummation of such Transaction the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of such Transaction by a holder of that number of shares of Common Stock into
which one share of Convertible Exchangeable Preferred Stock was convertible
immediately prior to such Transaction; provided, further, that if in connection
--------
with the Transaction a tender or exchange offer shall have been made and there
shall have been acquired pursuant thereto more than 50% of the outstanding
shares of Common Stock, and if the holder of shares of Convertible Exchangeable
Preferred Stock so designates in the notice given to the Corporation which
specifies such holder's selection of this alternative, such holder of such
shares shall be entitled to receive upon conversion thereof, the amount of
securities or other property to which such holder would actually have been
entitled as a holder of shares of Common Stock if such holder had converted such
shares of Convertible Exchangeable Preferred Stock prior to the expiration of
such tender or exchange offer and accepted such offer and had sold therein the
percentage of all the shares of Common Stock issuable upon conversion of its
shares of Convertible Exchangeable Preferred Stock equal to the percentage of
shares of the then outstanding Common Stock so purchased in the tender or
exchange offer, with the remaining portion of its shares of Convertible
Exchangeable Preferred Stock thereafter being convertible into the amount of
securities or other property to which such holder would actually have been
entitled upon the consummation of the Transaction as a holder of shares of
Common Stock if such holder had converted such shares of Convertible
Exchangeable Preferred Stock immediately prior to such Transaction (subject to
adjustments from and after the consummation of the Transaction as nearly
equivalent as possible to the adjustments provided for in this Section 3). In
any such case, if
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<PAGE>
necessary, appropriate adjustment (as determined by the Board of Directors in
good faith) shall be made in the application of the provisions set forth in this
Section 3 with respect to the rights and interests thereafter of the holders of
shares of Convertible Exchangeable Preferred Stock to the end that the
provisions set forth herein for the protection of the conversion rights of the
Convertible Exchangeable Preferred Stock shall thereafter be applicable, as
nearly as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the shares of Convertible
Exchangeable Preferred Stock remaining outstanding (with such adjustments in the
conversion price and number of shares issuable upon conversion and such other
adjustments in the provisions hereof as the Board of Directors in good faith
shall determine to be appropriate). In case securities or property other than
Common Stock shall be issuable or deliverable upon conversion as aforesaid, then
all references in this Section 3 shall be deemed to apply, so far as appropriate
and as nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the Corporation
will not effect any Transaction unless, prior to the consummation thereof, (i)
proper provision is made to ensure that the holders of shares of Convertible
Exchangeable Preferred Stock will be entitled to receive the benefits afforded
by this paragraph (h) of Section 3, and (ii) if, following the Transaction, one
or more entities other than the Corporation shall be required to deliver
securities or other property upon the conversion of the Convertible Exchangeable
Preferred Stock, such entity or entities shall assume, by written instrument
delivered to each holder of shares of Convertible Exchangeable Preferred Stock,
if such shares are held by 10 or fewer holders or groups of affiliated holders,
or to each Transfer Agent for the shares of Convertible Exchangeable Preferred
Stock, if such shares are held by a greater number of holders, the obligation to
deliver to such holder the amounts in cash to which, in accordance with the
foregoing provisions, such holder is entitled.
For purposes of this paragraph (h) of Section 3, the following terms shall
have the meanings as described to them below:
(i) "Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviv-
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<PAGE>
ing Person, but in connection with which the Convertible Exchangeable Preferred
Stock or Common Stock of the Corporation is exchanged, converted or reclassified
into the securities of any other Person or cash or any other property.
(ii) "Survivor Common Stock" with respect to any Person shall mean shares
of such Person of any class or series which has no preference or priority in the
payment of dividends or in the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and which is
not subject to redemption by such Person provided, however; that if (x) the
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shares of such class or series are not (or upon consummation of such Transaction
will not be) listed on the New York Stock Exchange or the American Stock
Exchange or on NASDAQ or any successor thereto or comparable system, and (y) the
Surviving Person is a direct or indirect subsidiary of a Qualified Person, the
Survivor Common Stock shall be the common stock (or equivalent equity securities
referred to in the definition of "Qualified Person") of such Qualified Person.
(iii) "Qualified Person" shall mean any Person that, immediately after
giving effect to the applicable Transaction, is a solvent corporation or other
entity organized under the laws of any state of the United States of America
having its common stock or, in the case of an entity other than a corporation,
equivalent equity securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by NASDAQ or any successor thereto or
comparable system.
(iv) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(v) "Current Market Price" shall have the meaning set forth in paragraph
(e) of this Section 3.
(i) In case at any time or from time to time, the Corporation shall pay any
dividend or make any other distribution to the holders of its Common Stock of,
or shall offer for subscription pro rata to the holders of its Common Stock, any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Corporation or merger, consolidation or other corporate combination of the
Corporation with or into another corporation, or any sale or conveyance to
another corporation of the property of the Corporation as an entirety or
substantially as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up the Corporation, then, in any one or more
of said cases the Corporation shall give written notice at the same time as, or
as soon as
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<PAGE>
practicable after, such event is first communicated (including by announcement
of a record date in accordance with the rules of any stock exchange on which the
Common Stock is listed or admitted to trading) to holders of Common Stock, but
in any event at least 10 days prior to the record date for such event specified
below (the time of mailing of such notice shall be deemed to be the time of
delivery thereof) to the registered holders of the Convertible Exchangeable
Preferred Stock at the addresses of each as shown on the books of the
Corporation maintained by the Transfer Agent thereof of the date on which (x)
the books of the Corporation shall close or a record shall be taken for such
stock dividend, distribution or subscription rights or (y) such reorganization,
reclassification, merger, consolidation, corporate combination, sale or
conveyance, dissolution, liquidation or winding up shall take place, as the case
may be. Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in said dividend, distribution,
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, corporate combination, sale or
conveyance or participate in such dissolution, liquidation or winding up, as the
case may be, as well as the conversion price and the number of shares into which
each share of Convertible Exchangeable Preferred Stock may be converted at such
time. Failure to give such notice shall not invalidate any action so taken.
(j) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversions of shares of
Convertible Exchangeable Preferred Stock, the full number of shares of Common
Stock deliverable upon the conversion of all outstanding shares of Convertible
Exchangeable Preferred Stock not theretofore converted. For purposes of this
Section 3(j), the number of shares of Common Stock which shall be deliverable
upon the conversion of all outstanding shares of Convertible Exchangeable
Preferred Stock shall be computed as if at the time of computation all
outstanding shares of Convertible Exchangeable Preferred Stock were held by a
single holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversion of the shares of Convertible Exchangeable Preferred
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corpora-
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<PAGE>
tion may validly and legally issue fully paid and non-assessable shares of
Common Stock at such adjusted Conversion Price.
(k) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock upon conversions of shares of Convertible Exchangeable Preferred
Stock pursuant hereto.
(l) Upon any adjustment of the Conversion Price, then, and in each such case,
the Corporation shall promptly deliver to the transfer agent of the Convertible
Exchangeable Preferred Stock and the Common Stock, a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the Conversion Price then in
effect following such adjustment. The Corporation shall also promptly after the
making of such adjustment give written notice to the registered holders of the
Convertible Exchangeable Preferred Stock at the address of each holder as shown
on the books of the Corporation maintained by the transfer agent thereof, which
notice shall state the Conversion Price then in effect, as adjusted, and shall
set forth in reasonable detail the method of calculation of the same and a brief
statement of the facts requiring such adjustment. Where appropriate, such
notice to holders of the Convertible Exchangeable Preferred Stock may be given
in advance and included as part of the notice required under the provisions of
Section 3(i).
Section 4. Change of Control.
------------------
(a) (i) In the event that any Change of Control (as hereinafter defined)
shall occur at any time and from time to time while any shares of Convertible
Preferred Stock are outstanding, each holder of Convertible Exchangeable
Preferred Stock shall have the right to give notice that it is exercising a
Change of Control election (a "Change of Control Election"), with respect to all
or any number of such holder's shares of Convertible Exchangeable Preferred
Stock, during the period (the "Exercise Period") beginning on the 30th day and
ending on the 180th day after the date of such Change of Control. Upon any such
election, the Corporation shall either, at its option, (x) redeem each such
holder's shares for which such an election is made, out of funds lawfully
available therefor, at the redemption price set forth below or (y) adjust the
conversion price as provided herein; provided, however, that the Corporation
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shall choose the same option for all holders giving a Change of Control Election
and the Corporation shall
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<PAGE>
be entitled to choose the option set forth in the preceding clause (y) only if
the circumstances set forth in the first sentence of Section 4(a)(ii) are then
satisfied. If such holders' shares are to be redeemed, the redemption price
shall be a per share price equal to the sum of (A) the applicable redemption
price per share (expressed as a percentage of the liquidation preference) set
forth below, plus (B) an amount equal to all accrued and unpaid dividends to the
date of purchase of such holder's shares by the Corporation together with any
additional dividends pursuant to Section 1(b).
Redemption
Redemption Period Price
----------------- ----------
April 15, 1994, through April 14, 1995 106.00%
April 15, 1995, through April 14, 1996 105.40%
April 15, 1996, through April 14, 1997 104.80%
April 15, 1997, through April 14, 1998 104.20%
April 15, 1998, through April 14, 1999 103.60%
April 15, 1999, through April 14, 2000 103.00%
April 15, 2000, through April 14, 2001 102.40%
April 15, 2001, through April 14, 2002 101.80%
April 15, 2002, through April 14, 2003 101.20%
April 15, 2003, through April 14, 2004 100.60%
(a)(ii) In the event that any Change of Control shall occur at any time when
any shares of Convertible Exchangeable Preferred Stock are outstanding, the
circumstances under which the Corporation may elect the option set forth in
Section 4(a)(i)(y) are that the redemption (or the obligation of the Corporation
to effect such redemption) of all or any such shares pursuant to Section
4(a)(i)(x) would constitute a breach of the Corporation's obligations under
Section 4.09 of the Indenture dated as of August 15, 1992, between the
Corporation (as successor to Tyco Toys, Inc.), certain of its subsidiaries and
Bankers Trust, as Trustee, as supplemented by a Supplemental Indenture dated
October 17, 1992, a Second Supplemental Indenture dated June 8, 1993, and as
supplemented by a Third Supplemental Indenture dated on or about March 27, 1997
(but without giving effect to any other amendment thereto), and compliance
therewith has not been waived or the failure of the Corporation to be able to
exercise such option would cause the Shares not to be deemed to be Qualified
Capital Stock as defined therein. If the Corporation elects to adjust the
Conversion Price as set forth in Section 4(a)(i)(y), then the Conversion Price
in effect immediately prior to the effective date of the Change of Control (the
"Change of Control Date") shall be decreased (but not increased) so as to equal
the product of (1) .70 and (2) the lowest Current Market Price as of any date
during the period (the "Initial Measurement
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<PAGE>
Period") beginning on the date (which shall not be earlier than six months prior
to the Change of Control Date) on which the first public announcement is made
that a transaction constituting a Change of Control has occurred or of the
intention of any person to effect such a transaction (the "Announcement Date")
and ending on the date which is ten days after the Change of Control Date. The
Corporation shall make such election on or prior to the end of the Initial
Measurement Period, and such adjustment shall become effective immediately after
the end of the Initial Measurement Period ; provided, that further adjustments
--------
shall be made successively for six months after the Change of Control Date in
the event and at the time of any decrease in the Current Market Price as of any
date after the end of the Initial Measurement Period and through the end of the
six months following the Change of Control date; provided, however, that no such
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successive adjustment shall be made with respect to the Conversion Price of any
Convertible Exchangeable Preferred Stock that have been converted or redeemed
prior to the event giving rise to such adjustment.
(b) As used herein, "Change of Control" shall mean:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
(the "Acquiring Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of 50% or more of the combined voting power of
the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors, but excluding, for this purpose, any
such action by (x) the Corporation or any of its subsidiaries, (y) any Purchaser
(as defined in Section 5) or (z) any corporation or other entity with respect to
which, following such acquisition, more than 50% of the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors (or if another entity, more than 50% of
the equivalent controlling interests) is then beneficially owned, directly or
indirectly, by individuals and entities who were the beneficial owners of voting
securities of the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to such
acquisition, of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors; or
(ii) consummation of a reorganization, merger or consolidation involving
the Corporation, in each case, with respect to which the individuals and
entities who were the respective beneficial owners of at least 80% of the voting
securities of the Corporation immediately prior to such reorga-
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<PAGE>
nization, merger or consolidation do not or will not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation resulting from such reorganization, merger or consolidation; or
(iii) the sale or other disposition of all or substantially all the
assets of the Corporation in one transaction or series of related transactions;
or
(iv) individuals who would constitute a majority of the members of the
Board of Directors elected at any meeting of stockholders or by written consent
(without regard to any members of the Board of Directors elected pursuant to the
terms of any series of Preferred Stock) shall be elected to the Board of
Directors and the election or the nomination for election by the Corporation's
stockholders of such directors was not approved by a vote of at least a majority
of the directors in office immediately prior to such election or nomination.
(c) On or before the fourteenth day after a Change of Control, the
Corporation shall mail to all holders of record of the Convertible Exchangeable
Preferred Stock at their respective addresses as the same shall appear on the
books of the Corporation as of such date, a notice disclosing (i) the Change of
Control, (ii) if applicable, the redemption price per share of the Convertible
Exchangeable Preferred Stock applicable hereunder and (iii) if applicable, its
election to adjust the Conversion Price in lieu of redeeming the Convertible
Exchangeable Preferred Stock and the initial adjustment thereto and the
procedure which the holder must follow to exercise the redemption right provided
above. The Corporation shall cause a copy of such notice to be published in a
newspaper of general circulation in the Borough of Manhattan, New York. To
exercise such redemption right, if applicable, a holder of the Convertible
Exchangeable Preferred Stock must deliver during the Exercise Period written
notice to the Corporation (or an agent designated by the Corporation for such
purpose) of the holder's exercise of such redemption right, and, to be valid,
any such notice of exercise must be accompanied by each certificate evidencing
shares of the Convertible Exchangeable Preferred Stock with respect to which the
redemption right is being exercised, duly endorsed for transfer. On or prior to
the fifth business day after receipt of such written notice, the Corporation
shall accept for payment all shares of Convertible Exchangeable Preferred Stock
properly surrendered to the Corporation (or an agent designated by the
Corporation for such purpose) during the Exercise Period for redemption in
connection with the valid exercise of such redemption right and
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<PAGE>
shall cause payment to be made in cash for such shares of Convertible
Exchangeable Preferred Stock.
(d) In the event of any Change of Control, proper provision shall be made to
ensure that the holders of shares of Convertible Exchangeable Preferred Stock
will be entitled to receive the benefits afforded by this Section 4; provided,
---------
however, that in the event of any Change of Control effected with the
- -------
Corporation's consent, such provision to ensure the benefits of this Section 4
shall be made prior to such Change of Control. If, following the Change of
Control, one or more entities other than the Corporation shall be required to
deliver securities or other property upon the conversion of the Convertible
Exchangeable Preferred Stock, such entity or entities shall assume, by written
instrument delivered to each holder of shares of Convertible Exchangeable
Preferred Stock, if such shares are held by 10 or fewer holders or group of
affiliated holders, or to each Transfer Agent for the shares of Convertible
Exchangeable Preferred Stock, if such shares are held by a greater number of
holders, the obligation to deliver to such holder the amounts in cash to which,
in accordance with the foregoing provisions, such holder is entitled.
Section 5. Certain Restrictions.
---------------------
(a) In case of the happening of any of the following events ("Restriction
Events"): (i) the Corporation breaches in any material respect (x) any of its
obligations under Section 6(j) or 6(k) of the Stock Purchase Agreement dated as
of April 15, 1994, among the Corporation (as successor to Tyco Toys, Inc.) and
Corporate Partners, L.P., Corporate Offshore Partners, L.P. the State Board of
Administration of Florida (such three entities collectively, the "Purchasers")
and Corporate Advisors, L.P. (the "Stock Purchase Agreement"), (y) any of its
obligations under Section 6(d), 6(e), 6(f), 6(i), 6(l) or 6(m) of the Stock
Purchase Agreement and such breach shall have continued for ten days after
notice thereof by any holder or (z) any of its other obligations under the Stock
Purchase Agreement or any of its obligations under the Registration Rights
Agreement and such breach shall have continued for twenty days after notice
thereof by any holder; (ii) any quarterly dividend (or additional dividends
thereon, if any) payable on the Convertible Exchangeable Preferred Stock as
provided in this Certificate is not paid when due; or (iii) the Corporation
shall not have redeemed any shares of the Convertible Exchangeable Preferred
Stock when required pursuant to this Certificate, then, until such breach is
cured or until such dividends are paid or until such redemption occurs: (x) the
dividend rate payable pursuant to Section 1(a) hereof shall be 7% per year of
the liquidation preference of each share of
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<PAGE>
Convertible Exchangeable Preferred Stock per year and the equivalent interest
rate payable as additional dividends pursuant to Section 1(b) shall be increased
to 7.00% per annum; (y) the number of members of the Board of Directors of the
Corporation shall be increased by two, effective as of the time of election of
such directors as hereinafter provided, and the holders of the outstanding
Convertible Exchangeable Preferred Stock shall have the exclusive right, voting
separately and as a class, to elect two additional directors of the Corporation,
and the remaining directors of the Corporation shall be elected by the other
class or classes of stock entitled to vote therefor (including the Convertible
Exchangeable Preferred Stock in accordance with paragraphs (a) and (b) of
Section 2), also voting separately as a class, at each meeting of the
stockholders held for the purpose of electing directors, provided that, if at
--------
such time there are fewer than 2,381 shares of Convertible Exchangeable
Preferred Stock then outstanding this clause (y) shall not be applicable; and
(z) the Corporation shall not:
(1) declare or pay dividends on, or make any other distributions of cash,
properties or securities of the Corporation on or with respect to any shares of
capital stock ranking junior (either as to dividends or as to any distribution
of assets other than by way of dividends) to the Convertible Exchangeable
Preferred Stock;
(2) redeem or purchase or otherwise acquire for consideration (or make any
sinking fund, purchase fund or other similar payments in respect of) any shares
of capital stock ranking (either as to dividends or as to any distribution of
assets other than by way of dividends) junior to, or on parity with, the
Convertible Exchangeable Preferred Stock, provided that the Corporation may at
--------
any time redeem, purchase or otherwise acquire shares of capital stock ranking
on parity with the Convertible Exchangeable Preferred Stock in exchange for
shares of any capital stock ranking junior to the Convertible Exchangeable
Preferred Stock, or permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of capital stock of the
Corporation unless the Corporation could, pursuant to this Section 5, purchase
such shares at such time and in such manner;
(3) make or permit to remain outstanding after such time when pursuant to its
terms such loan or advance would be due any loan or advance (including any
guarantee of a loan or advance by a third party) by the Corporation or a
subsidiary to any person who beneficially owns any capital stock ranking junior
(either as to dividends or as to any distribution of assets other than by way
of dividends) to the Convertible Ex-
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<PAGE>
changeable Preferred Stock, or any affiliate or associate of such Person; or
(4) without the consent of the holders of at least a majority of the number
of shares of the Convertible Exchangeable Preferred Stock at the time
outstanding, given in person or by proxy, either in writing or by vote at a
special meeting called for the purpose, redeem or purchase or otherwise acquire
for consideration or offer to redeem, purchase or acquire for consideration any
shares of Convertible Exchangeable Preferred Stock except as provided in Section
4 and Section 7; provided that if at such time there are fewer than 2,381 shares
--------
of Convertible Exchangeable Preferred Stock outstanding, this clause (z) shall
be applicable only in the case of a Restriction Event described above in clause
(ii) or (iii) of this sentence.
(b) The foregoing right of the holders of the Convertible Exchangeable
Preferred Stock with respect to the election of two directors may be exercised
initially by written consent or at any special meeting of holders of the
Convertible Exchangeable Preferred Stock called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing directors,
and thereafter at each such annual meeting until such right terminates as
provided herein. If the right to elect directors shall have accrued to the
holders of the Convertible Exchangeable Preferred Stock more than 90 days
preceding the date established for the next annual meeting of stockholders, the
President of the Corporation shall, within 20 days after the delivery to the
Corporation at its principal office of a written request for a special meeting
signed by the holders of at least ten percent (10%) of the Convertible
Exchangeable Preferred Stock then outstanding, call a special meeting of the
holders of the Convertible Exchangeable Preferred Stock to be held within 60
days after the delivery of such request for the purpose of electing such
additional directors. At any such meeting, the presence in person or by proxy
of the holders of shares representing more than 50% in voting power of the then
outstanding shares of Convertible Exchangeable Preferred Stock shall be required
and shall be sufficient to constitute a quorum of such class for the election of
directors by such class. At such time as all arrears in dividends on the
Convertible Exchangeable Preferred Stock shall have been paid and dividends
thereon for the current dividend period shall have been paid or declared and set
apart for payment, the mandatory redemption obligation (if then due) shall have
been satisfied in full or all necessary funds for the satisfaction of such
redemption obligation have been set apart for payment, all breaches of the Stock
Purchase Agreement shall have been cured and no other Restriction Events shall
be continuing, the
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<PAGE>
right of the Convertible Exchangeable Preferred Stock to vote for directors as
provided in this Section 5 (but not any voting rights set forth in Section 2)
shall terminate and the term of office of any director(s) then in office who
were elected by the Convertible Exchangeable Preferred Stock pursuant to this
Section 5 shall terminate.
In case any vacancy shall occur among the directors elected by the holders of
shares of Convertible Exchangeable Preferred Stock, such vacancy may be filled
for the unexpired portion of the term by vote of the remaining director
theretofore elected by such holders (if there is a remaining director), or such
director's successor in office. If any such vacancy is not so filled within 20
days after the creation thereof or if both directors so elected by the holders
of Convertible Exchangeable Preferred Stock shall cease to serve as directors
before their terms shall expire, the holders of the Convertible Exchangeable
Preferred Stock then outstanding and entitled to vote for such directors may, by
written consent or at a special meeting of such holders called as provided
herein, elect successors to hold office for the unexpired terms of the directors
whose places shall be vacant.
Section 6. Liquidation Preference.
-----------------------
In the event of a liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of Convertible Exchangeable
Preferred Stock shall be entitled to receive out of the assets of the
Corporation, whether such assets are stated capital or surplus of any nature, an
amount equal to the dividends accrued and unpaid thereon to the date of final
distribution to such holders, whether or not declared, together with any
additional dividends pursuant to Section 1(b), and a sum equal to $1,050.00 per
share, and no more. Such payments shall be made before any payment shall be
made or any assets distributed to the holders of Common Stock or any other class
or series of the Corporation's capital stock ranking junior as to liquidation
rights to the Convertible Exchangeable Preferred Stock (the "Junior Liquidation
Stock"). The entire assets of the Corporation available for distribution shall
be distributed ratably among the holders of the Convertible Exchange Preferred
Stock and any other class or series of the Corporation's capital stock now
existing or which may hereafter be created having parity as to liquidation
rights with the Convertible Exchangeable Preferred Stock in proportion to the
respective preferential amounts to which each is entitled (but only to an
extent of such preferential amounts). Neither a consolidation, merger or other
business combination of the Corporation's assets for cash, securities or other
property shall be considered a liquidation,
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dissolution or winding up of the Corporation for purposes of this Section 6
(unless in connection therewith the liquidation of the Corporation is
specifically approved).
Section 7. Optional and Mandatory Redemption.
----------------------------------
(a) Except as provided in Section 9, the Corporation may not redeem the
Convertible Exchangeable Preferred Stock prior to April 15, 1997.
(b) The Corporation, at its option, may at any time on and after April 15,
1997, and prior to April 15, 1998, redeem the Convertible Exchangeable Preferred
Stock in whole or in part, at a cash redemption price per share equal to 105.25%
of the liquidation preference, (provided that the Corporation simultaneously
declares and pays all dividends on the Convertible Exchangeable Preferred Stock
accrued and unpaid thereon pro rata to the date fixed for redemption, together
with any additional dividends pursuant to Section 1(b)) if the daily Closing
Price (as defined in Section 3(c)) per share of the Common Stock for any 20
consecutive trading day period that ends at any time during the period
commencing on or after April 15, 1997, and ending prior to April 15, 1998, is
greater than or equal to 175% of the then current Conversion Price.
(c) The Corporation, at its option, may at any time on and after April 15,
1998, and prior to April 15, 1999, redeem the Convertible Exchangeable Preferred
Stock in whole or in part, at a cash redemption price per share equal to 104.50%
of the liquidation preference, provided that the Corporation simultaneously
declares and pays in cash all dividends on the Convertible Exchangeable
Preferred Stock accrued and unpaid thereon, pro rata to the date fixed for
redemption, together with any additional dividends pursuant to Section 1(b), if
the daily Closing Price per share of the Common Stock for any 20 consecutive
trading day period that ends at any time during the period commencing on or
after April 15, 1998, and ending prior to April 15, 1999, is greater than or
equal to 150% of the then current Conversion Price.
(d) The Corporation, at its option, may at any time on and after April 15,
1999, redeem the Convertible Exchangeable Preferred Stock in whole or in part at
the applicable cash redemption prices per share (expressed as a percentage of
the liquidation preference) set forth below:
Redemption
Redemption Period Price
----------------- ----------
April 15, 1999, through April 14, 2000 103.75%
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April 15, 2000, through April 14, 2001 103.00%
April 15, 2001, through April 14, 2002 102.25%
April 15, 2002, through April 14, 2003 101.50%
April 15, 2003, through April 14, 2004 100.75%
provided that the Corporation simultaneously declares and pays in cash all
- --------
dividends on the Convertible Exchangeable Preferred Stock accrued and unpaid
thereon, pro rata to the date fixed for redemption together with any additional
dividends pursuant to Section 1(b).
(e) On April 15, 2004, the Corporation shall redeem all outstanding shares of
Convertible Exchangeable Preferred Stock at a redemption price equal to the
liquidation preference per share, provided that the Corporation simultaneously
--------
declares and pays all accrued and unpaid dividends to and including the date of
redemption, together with any additional dividends pursuant to Section 1(b).
The redemption price shall be paid, at the Corporation's option, in cash or in
shares of Common Stock. If the redemption price is paid in shares of Common
Stock, each share of Common Stock shall be valued at the product of (1) .95 and
(2) the average of the daily Closing Prices per share of the Common Stock for
the 20 consecutive trading days immediately preceding the redemption date.
(f) Not more than 30 nor less than 15 days prior to the redemption date,
notice by first class mail, postage prepaid, shall be given to each holder of
record of the Convertible Exchangeable Preferred Stock to be redeemed, at such
holder's address as it shall appear upon the stock transfer books of the
Corporation. Each such notice of redemption shall be irrevocable and shall
specify the date fixed for redemption, the Redemption Price (or the method by
which such price will be determined), whether such redemption price shall be
paid in cash or in shares of Common Stock, the identification of the shares to
be redeemed (if fewer than all the outstanding shares are to be redeemed), the
place or places of payment, that payment will be made upon presentation and
surrender of the certificate(s) evidencing the shares of Convertible
Exchangeable Preferred Stock to be redeemed, that on and after the redemption
date, dividends will cease to accrue on such shares, the then effective
Conversion Price pursuant to Section 3 and that the right of holders to convert
shares called for redemption shall terminate at the close of business on the
redemption date (unless the Corporation defaults in the payment of the
Redemption Price).
(g) Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Convertible
Exchangeable Preferred
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<PAGE>
Stock receives such notice; and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Convertible Exchangeable Preferred Stock. On or after the date fixed
for redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price in the manner set forth in
the notice. If fewer than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. If, on the date fixed for redemption, funds (or shares of
Common Stock) necessary for the redemption shall be available therefor and shall
have been irrevocably deposited or set aside, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have been
surrendered the dividends with respect to the shares so called shall cease to
accrue after the date fixed for redemption, the shares shall no longer be deemed
outstanding, the holders thereof shall cease to be stockholders, and all rights
whatsoever with respect to the shares so called for redemption (except the right
of the holders to receive the Redemption Price without interest upon surrender
of their certificates therefor) shall terminate.
(h) In the event that any shares of Convertible Exchangeable Preferred Stock
shall be converted into Common Stock pursuant to Section 3, then (i) the
Corporation shall not have the right to redeem such shares and (ii) any funds
which shall have been deposited for the payment of the Redemption Price for such
shares shall be returned to the Corporation immediately after such conversion
(subject to declared dividends payable to holders of shares of Convertible
Exchangeable Preferred Stock on the record date for such dividends being so
payable, to the extent set forth in Section 3 hereof, regardless of whether such
shares are converted subsequent to such record date and prior to the related
dividend payment date).
(i) If fewer than all the shares outstanding are to be redeemed, the
Corporation shall select the shares to be redeemed pro rata.
Section 8. Rank.
-----
All shares of Convertible Exchangeable Preferred Stock shall rank, both as to
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
prior to or pari passu with all classes and series of the Corpora-
-25-
<PAGE>
tion's Preferred Stock, par value $1.00 per share, prior to or pari passu with
all classes and series of the Corporation's Preference Stock, par value $.01 per
share, and prior to all of the Corporation's now or hereafter issued Common
Stock. The term "Common Stock" shall mean the Common Stock, $1.00 par value per
share, of the Corporation as the same exists at the date hereof or as such stock
may be constituted from time to time, except that for the purpose of Section 3,
the term "Common Stock" shall also mean and include stock of the Corporation of
any class, whether now or hereafter authorized, which shall have the right to
participate in the distribution of either dividends or assets of the Corporation
upon liquidation, dissolution or winding up, without limit as to the amount or
percentage.
Section 9. Redemption by Exchange for Notes.
---------------------------------
(a) The shares of Convertible Exchangeable Preferred Stock are redeemable at
the option of the Corporation, in whole but not in part, on any date, by
exchanging such shares for the 6% Convertible Subordinated Notes due 2004 (the
"Notes") of the Corporation, which shall be in substantially the form attached
an exhibit to the Stock Purchase Agreement, completed as set forth therein and
with such changes as may be required by law. Holders of the outstanding shares
of Convertible Exchangeable Preferred Stock will be entitled to receive a
principal amount of the Notes equal to the liquidation preference of each share
of Convertible Exchangeable Preferred Stock held by them at the time of
exchange, and the Corporation shall simultaneously declare and pay in cash all
dividends on the Convertible Exchangeable Preferred Stock accrued and unpaid to
the date of such exchange.
(b) Notwithstanding the foregoing, no such redemption by exchange of shares
of Convertible Exchangeable Preferred Stock for Notes shall be made unless
(a)(i) the Corporation shall not be in arrears with respect to the payment of
any dividends (including cumulative dividends, if applicable) on Convertible
Exchangeable Preferred Stock or on any shares of preferred stock of the
Corporation ranking, as to dividends, prior to or on a parity with the
Convertible Exchangeable Preferred Stock, and (ii) such exchange shall on such
date not be prohibited by applicable law, and (b) on or prior to the date on
which such exchange is to be made (i) the Notes shall have been executed and
delivered by the Corporation and (ii) the holders of Convertible Exchangeable
Preferred Stock shall have received an opinion of counsel to the Corporation
dated such date, substantially to the following effect:
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<PAGE>
(1) the Corporation has duly authorized the exercise of its right to redeem
the Convertible Exchangeable Preferred Stock in exchange for the Notes and has
exercised such option; (2) the Corporation has full corporate power and
authority to issue and deliver the Notes; (3) the Notes constitute legal, valid
and binding obligations of the Corporation enforceable against the Corporation
in accordance with their terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles); (4) no consent, approval, authorization or order of any
court or governmental agency or body is required to be obtained by the
Corporation in connection with the issuance of the Notes and the exchange of the
Shares for the Notes, except such approvals (specified in such opinion) as have
been obtained; and (5) the issuance of the Notes and the performance by the
Corporation of its obligations thereunder and the exchange of the Shares for the
Notes will not be in conflict with or constitute a breach of or a default (with
the passage of time or otherwise) under (w) the Certificate of Incorporation or
Bylaws of the Corporation in effect at the date of such opinion, (x) the
certificate of incorporation or bylaws of any subsidiary of the Corporation,
which conflict, breach or default is material to the Corporation and its
subsidiaries taken as a whole, in effect at the date of such opinion, (y) any
agreement or instrument, known to such counsel, to which the Corporation or any
of its subsidiaries is a party or by which it or any of its subsidiaries is
bound or (z) any statute, law or regulation known to such counsel and in effect
at the date of such opinion to which the Corporation or any of its subsidiaries
or any of their respective properties may be subject or any judgment, decree or
order, known to such counsel, of any court or governmental agency or authority
then in effect and applicable to the Corporation or any of its subsidiaries
(which conflict, breach or default is, in the case of clauses (y) or (z),
individually or in the aggregate, material to the Corporation and its
subsidiaries taken as a whole).
Upon such exchange, the rights of the holders of the Convertible Exchangeable
Preferred Stock as stockholders of the Corporation shall cease (except the right
to receive on the date of exchange an amount in cash equal to the amount of
accrued and unpaid dividends on the Convertible Exchangeable Preferred Stock to
the date of exchange, together with any additional dividends pursuant to Section
1(b), and the Notes), and the person or persons entitled to receive the Notes
issuable upon such redemption and exchange shall be treated for all purposes as
the registered holder or holders of such Notes.
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<PAGE>
(c) The Corporation will mail to each holder of record of Convertible
Exchangeable Preferred Stock, at such holder's last address as it shall appear
upon the stock transfer books of the Corporation, written notice of its
intention to redeem the shares of Convertible Exchangeable Preferred Stock by
exchanging such Shares for the Notes not less than 15 nor more than 30 days
prior to the exchange date. Such notice shall be irrevocable and shall state:
(i) the exchange date; (ii) the place or places where certificates for such
shares are to be surrendered for exchange for Notes; and (iii) that dividends on
the shares to be exchanged will cease to accrue on such exchange date. Upon
surrender in accordance with said notice of the certificates for any shares to
be exchanged (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), the Corporation will cause the
Notes to be authenticated and issued in exchange for such shares of Convertible
Exchangeable Preferred Stock and to be mailed to the holder of the shares of
Convertible Exchangeable Preferred Stock at such holder's address of record or
such other address as the holder shall specify upon such surrender of such
certificates.
(d) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect to the issue or delivery of Notes upon
exchange of shares of Convertible Exchangeable Preferred Stock.
Section 10. Exchange of Convertible Exchangeable Preferred Stock for Common
---------------------------------------------------------------
Stock.
- ------
(a) Subject to and upon compliance with the provisions of this Section 10,
each share of Convertible Exchangeable Preferred Stock shall, at the option of
the holder thereof, be exchangeable (but only if notice of such exchange is
given by such holder during an Exchange Period (as defined below)) into that
number of fully paid and nonassessable shares of Common Stock (calculated as to
each exchange to the nearest 1/100 of a share) obtained by dividing $1,050.00 by
the Exchange Price (as defined below) applicable to such exchange, provided that
--------
the Corporation simultaneously declares and pays all dividends accrued and
unpaid on the Convertible Exchangeable Preferred Stock. In order to exercise
the exchange privilege, the holder of one or more shares of Convertible
Exchangeable Preferred Stock to be exchanged shall deliver an Exchange Notice to
the Corporation stating its intent to effect such exchange, which Exchange
Notice must be received by the Corporation during an Exchange Period and must
specify an Exchange Date not more than 30 nor less than 10 business days after
the date such notice is delivered, upon which Exchange Date such
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<PAGE>
holder shall surrender such shares to the office maintained for such purpose by
the Corporation.
(b) For purposes of this Section 10:
(i) "Exchange Date" shall mean the date (which shall not be a Saturday,
Sunday or legal holiday) specified in an Exchange Notice delivered to the
Corporation upon which the conversion shall be effected, which date shall not be
less than 10 and not more than 30 business days after the date such Exchange
Notice is delivered to the Corporation.
(ii) "Exchange Notice" shall mean a written notice delivered by a holder
of Convertible Exchangeable Preferred Stock to the Corporation during an
Exchange Period stating that such holder has elected to exchange the number of
shares specified therein for shares of Common Stock and specifying the Exchange
Date for such exchange. Such notice shall also state the name or names, together
with the address or addresses, in which the certificates for shares of Common
Stock which shall be issuable in such conversion shall be issued.
(iii) "Exchange Period" shall mean
April 15 through April 29, 1999
April 15 through April 29, 2000
April 15 through April 29, 2001
April 15 through April 29, 2002
April 15 through April 29, 2003
(iv) "Exchange Price" per share of Common Stock with respect to any
exchange shall be deemed to be the average of the daily Closing Prices per share
for the 20 consecutive trading days ending on the trading day immediately
preceding the Exchange Date; provided, however, that the Exchange Price shall
-------- -------
not be less than the quotient obtained by dividing $5.00 by 0.48876 (the
"Minimum Exchange Price"); provided, further, that if any of the events
-------- -------
described in Section 3 hereof shall occur, then and in each such case, the
Minimum Exchange Price in effect immediately prior thereto shall be
appropriately adjusted in the same manner as the Conversion Price would be
adjusted with respect to such event. Such adjustment shall be made whenever any
of such events shall happen, but shall also be effective retroactively as to
shares of Convertible Exchangeable Preferred Stock exchanged between such record
date and the date of the happening of any such event.
(c) Each exchange shall be deemed to have been effected immediately prior to
the close of business on the Exchange Date, and the person or persons in whose
name or names
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<PAGE>
any certificate or certificates for shares of Common Stock shall be issuable
upon such exchange shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date, and such
exchange shall be at the Exchange Price in effect at such time on such date,
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such person or persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be at the
Exchange Price in effect on the Exchange Date.
(d) No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon exchange of Preferred Stock. If more than one share
of Convertible Exchangeable Preferred Stock shall be surrendered for exchange at
one time by the same holder the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate of
$1,050.00 for each such share so surrendered. Instead of any fractional
interest in a share of Common Stock which would otherwise be delivered upon the
exchange of any shares of Convertible Exchangeable Preferred Stock, the
Corporation shall pay to the holder of such shares an amount in cash (computed
to the nearest cent) equal to the Exchange Price multiplied by the fractional
interest (expressed as a percentage) that otherwise would have been deliverable
upon conversion of such share.
(e) If a holder of shares of Convertible Exchangeable Preferred Stock shall
have delivered an Exchange Notice with respect to some or all of such holder's
shares, the Corporation may, at its option, in lieu of issuing shares of Common
Stock to such holder on the applicable Exchange Rate, redeem all but not less
than all of the shares of Convertible Exchangeable Preferred Stock to be
exchanged at a cash redemption price per share of Convertible Exchangeable
Preferred Stock equal to the liquidation preference, provided that the
--------
Corporation simultaneously declares and pays in cash all dividends on the
Convertible Exchangeable Preferred Stock accrued and unpaid thereon.
(f) If the Corporation elects to redeem shares of Convertible Exchangeable
Preferred Stock with respect to which an Exchange Notice shall have been herein
delivered, the Corporation shall give notice to such holder by first class mail,
postage prepaid, not less than 5 business days prior to the Exchange Date, at
such holder's address as it shall appear upon the stock transfer books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption (which shall be the Exchange Date), the redemption price, the
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<PAGE>
place or places or payment, that payment will be made upon presentation and
surrender of the certificate(s) evidencing the shares of Convertible
Exchangeable Preferred Stock to be redeemed and that on and after the redemption
date, dividends will cease to accrue on such shares.
(g) Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Convertible
Exchangeable Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Convertible Exchangeable Preferred Stock.
On or after the date fixed for redemption as stated in such notice, each holder
of the shares called for redemption shall surrender the certificate evidencing
such shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price. If fewer than
all the shares represented by any such surrendered certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares. If, on the
date fixed for redemption, funds necessary for the redemption shall be available
therefor and shall have been irrevocably deposited or set aside, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be stockholders, and all rights whatsoever with respect to the shares so called
for redemption (except the right of the holders to receive the redemption price
without interest upon surrender of their certificates therefor) shall terminate.
Section 11. Notice. All notices hereunder shall be in writing.
------
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed
and attested this 26th day of March, 1997.
MATTEL, INC.
By: /s/ Ned Mansour
----------------------------------
Name: Ned Mansour
Title: President, Corporate Operations
Attest:
/s/ Barnett Rosenberg
- -------------------------
Name: Barnett Rosenberg
Title: Senior Vice President,
General Counsel
and Secretary
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<PAGE>
As Corrected by
Certificate of Correction
Filed June 24, 1997
-------------------
MATTEL, INC.
CERTIFICATE OF DESIGNATIONS
PREFERENCES, RIGHTS AND LIMITATIONS OF
SERIES C MANDATORILY CONVERTIBLE
REDEEMABLE PREFERRED STOCK
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
Mattel, Inc. (hereinafter referred to as the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, as amended (the "Delaware
Code"), does HEREBY CERTIFY that the following resolution has been duly adopted
by the Directors of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Directors of the Corporation (the "Directors") by the provisions of the
Restated Certificate of Incorporation of the Corporation, as amended (the
"Certificate of Incorporation"), there hereby is created, out of the 3,000,000
shares of Preferred Stock of the Corporation authorized in Article Fourth of the
Certificate of Incorporation (the "Preferred Stock"), a series of Preferred
Stock of the Corporation, to be designated "Series C Mandatorily Convertible
Redeemable Preferred Stock," consisting of 772,800 shares, which series shall
have the following voting powers, designations, preferences and relative,
participating, optional and other rights, and the following qualifications,
limitations and restrictions (in addition to the powers, designations,
preferences and relative, participating optional and other rights, and the
qualifications, limitations and restrictions, set forth in the Certificate of
Incorporation which are applicable to the Preferred Stock):
SECTION I. DESIGNATION AND SIZE OF ISSUE; RANKING. A. The designation of
the series of preferred stock shall be "Series C Mandatorily Convertible
Redeemable Preferred Stock" (the "Series C Preferred Stock") and the number of
shares constituting the Series C Preferred Stock shall be 772,800 shares.
B. Any share of Series C Preferred Stock which at any time has been
redeemed for, or converted into, shares of Common Stock, par value $1.00 per
share, of the Corporation (the "Common
<PAGE>
Stock") or otherwise reacquired by the Corporation shall, after such redemption,
conversion or other acquisition, resume the status of authorized and unissued
shares of preferred stock, par value $1.00 per share, of the Corporation (the
"Preferred Stock"), without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors.
C. The shares of Series C Preferred Stock shall rank on a parity, both
as to payment of dividends and distribution of assets upon liquidation, with the
Corporation's Series B Voting Convertible Exchangeable Preferred Stock (the
"Series B Preferred") and any future Preferred Stock issued by the Corporation
after the date of this Certificate of Designations that by its terms ranks pari
passu with the Series C Preferred Stock.
SECTION II. DIVIDENDS. A. The holders of record of the shares of Series
C Preferred Stock shall be entitled to receive, when and as declared by the
Board of Directors out of funds legally available therefor, cash dividends
("Dividends") from the date of the issuance of the shares of Series C Preferred
Stock accruing at the rate per share of $10.3125 per annum or $2.5781 per
quarter, for each share of Series C Preferred Stock, payable quarterly in
arrears, on each January 1; April 1; July 1 and October 1 (each a "Dividend
Payment Date") or, if any such date is not a business day (as defined herein),
the Dividend due on such Dividend Payment Date shall be paid on the next
succeeding business day; provided, however, that, with respect to any dividend
-------- -------
period during which a redemption occurs, the Corporation may, at its option,
declare accrued Dividends to, and pay such Dividends on, the date fixed for
redemption, in which case such Dividends shall be payable in cash to the holders
of the shares of Series C Preferred Stock as of the record date for such
dividend payment and shall not be included in the calculation of the related
Call Price (as defined herein). The first dividend shall be paid on the first
Dividend Payment Date subsequent to issuance of Series C Preferred Stock in
connection with the merger of Tyco Toys, Inc. with and into the Company.
Dividends on shares of Series C Preferred Stock shall be cumulative and shall
accumulate from the date of original issuance of the Series C Preferred Stock.
Dividends on shares of Series C Preferred Stock shall cease to accrue on and
after the Mandatory Conversion Date (as defined herein) or on and after the date
of the earlier conversion or redemption of the Series C Preferred Stock, as the
case may be. Dividends shall be payable to holders of record as they appear on
the stock register of the Corporation on such record dates, not less than 15 nor
more than 60 days preceding the payment date thereof, as shall be fixed by the
Board of Directors. Dividends payable on shares of Series C
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<PAGE>
Preferred Stock for any period less than a full quarterly dividend period (or,
in the case of the first Dividend, from the date of initial issuance of the
shares of Series C Preferred Stock to but excluding the first Dividend Payment
Date) shall be computed on the basis of a 360-day year of twelve 30-day month
and the actual number of days elapsed in any period less than one month.
Dividends shall accrue on a daily basis whether or not there are funds of the
Corporation legally available for the payment of such dividends and whether or
not such Dividends are declared. Accrued but unpaid Dividends shall cumulate as
of the Dividend Payment Date on which they first become payable, but no interest
shall accrue on accumulated but unpaid Dividends.
B. As long as shares of Series C Preferred Stock are outstanding, no
dividends (other than dividends payable in shares of, or warrants, rights or
options exercisable for or convertible into shares of Common Stock or any other
capital stock of the Corporation ranking junior to the shares of Series C
Preferred Stock as to the payment of dividends and the distribution of assets
upon liquidation (collectively, the "Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) shall be paid or
declared in cash or otherwise, nor shall any other distribution be made (other
than a distribution payable to Junior Stock and cash in lieu of fractional
shares in connection with any such distribution), on any Junior Stock unless (i)
full dividends on Preferred Stock (including the shares of Series C Preferred
Stock) that does not constitute Junior Stock (such Preferred Stock being "Parity
Preferred Stock") have been paid, or declared and set aside for payment, for all
dividend periods terminating at or before the date of such Junior Stock dividend
or distribution payment to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been paid, or
declared and set aside for payment, on all Parity Preferred Stock to the extent
such dividends are cumulative; (iii) the Corporation has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement, and sinking funds, if any, for any Parity Preferred Stock;
and (iv) the Corporation is not in default on any of its obligations to redeem
any Parity Preferred Stock.
C. As long as any shares of Series C Preferred Stock are outstanding,
no shares of any Junior Stock may be purchased, redeemed or otherwise acquired
by the Corporation or any, of its subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares in connection therewith) or
the purchase, redemption or other acquisition of any Junior Stock with any
Junior Stock (and cash in lieu of fractional shares in connection therewith))
nor may any funds be
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<PAGE>
set aside or made available for any sinking fund for the purchase or redemption
of any Junior Stock unless: (i) full dividends on Parity Preferred Stock have
been paid, or declared and set aside for payment, for all dividend periods
terminating at or before the date of such purchase, redemption or other
acquisition to the extent such dividends are cumulative; (ii) dividends in full
for the current quarterly dividend period have been paid, or declared and set
aside for payment, on all Parity Preferred Stock to the extent such dividends
are cumulative; (iii) the Corporation has paid or set aside all amounts, of any,
then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Corporation is not in default on any of its obligations to redeem any Parity
Preferred Stock.
D. As long as any shares of Series C Preferred Stock are outstanding,
dividends or other distributions may not be declared or paid on any Parity
Preferred Stock (other than dividends or other distributions payable in Junior
Stock and cash in lieu of fractional shares in connection therewith), and the
Corporation may not purchase, redeem or otherwise acquire any Parity Preferred
Stock (except with any Junior Stock and cash in lieu of fractional shares in
connection therewith), unless either: (i) (a) full dividends on Parity
Preferred Stock have been paid, or declared and set aside for payment, for all
dividend periods terminating at or before the date of such Parity Preferred
Stock dividend, distribution, purchase redemption or other acquisition payment
to the extent such dividends are cumulative; (b) dividends in full for the
current quarterly dividend period have been paid, or declared and set aside for
payment, on all Parity Preferred Stock to the extent such dividends are
cumulative; (c) the Corporation has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any Parity Preferred Stock; and (d) the
Corporation is not in default on any of its obligations to redeem any Parity
Preferred Stock; or (ii) with respect to the payment of dividends only, any such
dividends shall be declared and paid pro rata so that the amounts of any
dividends declared and paid per share of Series C Preferred Stock and each other
share of Parity Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends (including any accumulation with respect to unpaid
dividends for prior dividend periods, if such dividends are cumulative) per
share of Series C Preferred Stock and such other shares of Parity Preferred
Stock bear to each other.
SECTION III. CONVERSION OR REDEMPTION. A. Unless previously either
redeemed by the Corporation or converted at the option of the holder in
accordance with the provisions of
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Section III(C), on July 1, 2000 (the "Mandatory Conversion Date") each
outstanding share of Series C Preferred Stock shall mandatorily convert (the
"Mandatory Conversion") into (i) shares of authorized Common Stock at the
Mandatory Conversion Rate (as defined herein) in effect on the Mandatory
Conversion Date and (ii) the right to receive cash in an amount equal to all
accrued and unpaid dividends on such share of Series C Preferred Stock (other
than previously declared dividends payable to a holder of record as of a prior
date) to but excluding the Mandatory Conversion Date, whether or not declared,
out of funds legally available for the payment of dividends, subject to the
right of the Corporation to redeem the shares of Series C Preferred Stock on or
after July 1, 1999 (the "First Call Date") and before the Mandatory Conversion
Date and the conversion of the shares of Series C Preferred Stock at the option
of the holder at any time before the Mandatory Conversion Date. The "Mandatory
Conversion Rate" shall initially be, for each share of Series C Preferred Stock,
a number of shares of Common Stock equal to the product obtained by multiplying
27.775 by 0.48876, and shall be subject to adjustment as set forth in Sections
III(D) and III(E). Shares of Series C Preferred Stock shall cease to be
outstanding on the Mandatory Conversion Date. The Corporation shall make such
arrangements as it deems appropriate for the issuance of certificates
representing shares of Common Stock and for the payment of cash in respect of
such accrued and unpaid dividends, if any, or cash in lieu of fractional shares,
if any, in exchange for and contingent upon surrender of certificates
representing the shares of Series C Preferred Stock, and the Corporation may
defer the payment of dividends on such shares of Common Stock and the voting
thereof until, and make such payment and voting contingent upon, the surrender
of certificates representing the shares of Series C Preferred Stock; provided,
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that the Corporation shall give the holders of the shares of Series C Preferred
Stock such notice of any such actions as the Corporation deems appropriate and
upon surrender such holders shall be entitled to receive such dividends declared
and paid, if any, on such shares of Common Stock subsequent to the Mandatory
Conversion Date.
B. (i) Shares of Series C Preferred Stock are not redeemable by the
Corporation before the First Call Date. At any time and from time to time on or
after that date until immediately before the Mandatory Conversion Date, the
Corporation shall have the right to redeem, in whole or in part, the outstanding
shares of Series C Preferred Stock (subject to the notice provisions set forth
in Section III(B)(iii)). Upon any such redemption, the Corporation shall
deliver to each holder thereof, in exchange for each such share of Series C
Preferred Stock subject to redemption, the greater of:
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(a) the number of shares of Common Stock equal to the quotient of (1) the
applicable Call Price (as defined below) in effect on the redemption date,
divided by (b) the Current Market Price of the Common Stock, determined as
of the trading day immediately preceding the Notice Date (as defined
below); or
(b) a number of shares of Common Stock equal to the product obtained by
multiplying 20.4925 by 0.48876 (the "Optional Rate").
Dividends on the shares of Series C Preferred Stock shall cease to accrue on and
after the date fixed for their redemption.
The "Call Price" of each share of Series C Preferred Stock shall be the
sum of (x) $127.575 on and after the First Call Date, to and including September
30, 1999; $126.925 on and after October 1, 1999, to and including December 31,
1999; $126.30 on and after January 1, 2000, to and including March 31, 2000;
$125.65 on and after April 1, 2000, to and including May 31, 2000; and $125.000
on and after June 1, 2000, to and including June 30, 2000; and (y) all accrued
and unpaid Dividends thereon to but not including the date fixed for redemption
(other than previously declared Dividends payable to a holder of record as of a
prior date). If fewer than all of the outstanding shares of Series C Preferred
Stock are to be called for redemption, the shares of Series C Preferred Stock to
be called for redemption shall be selected by the Corporation by lot or on a pro
rata basis (as nearly as may be) from the outstanding shares of Series C
Preferred Stock not previously called for redemption or by any other method
determined by the Board of Directors in its sole discretion to be equitable.
(ii) The term "Current Market Price" per share of the Common Stock on
any date of determination means the lesser of (x) the average of the Closing
Prices (as defined herein) of the Common Stock for the 15 consecutive Trading
Days ending on and including such date of determination, or (y) the Closing
Price of the Common Stock on such date of determination; provided, however, that
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with respect to any redemption of shares of Series C Preferred Stock, if any
event resulting in an adjustment of the Mandatory Conversion Rate occurs during
the period beginning on the first day of such 15-day period and ending on the
applicable redemption date, the Current Market Price as determined pursuant to
the foregoing shall be appropriately adjusted to reflect the occurrence of such
event.
(iii) The Corporation shall provide notice of any redemption of the
shares of Series C Preferred Stock to holders of record of the shares of Series
C Preferred Stock to be called
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for redemption not less than 15 nor more than 60 days before the date fixed for
redemption. Any such notice shall be provided by mail, sent to the holders of
record of the shares of Series C Preferred Stock to be called at each such
holder's address as it appears on the stock register of the Corporation, first
class postage prepaid; provided, however, that failure to give such notice or
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any defect therein shall not affect the validity of the proceeding for
redemption of any shares of Series C Preferred Stock to be redeemed except as to
the holder to whom the Corporation has failed to give such notice or whose
notice was defective. A public announcement of any call for redemption shall be
made by the Corporation before, or at the time of, the mailing of such notice of
redemption. The term "Notice Date" with respect to any notice given by the
Corporation in connection with a redemption of the shares of Series C Preferred
Stock means the date on which first occurs either the public announcement of
such redemption or the commencement of mailing of the notice to the holders of
shares of Series C Preferred Stock, in each case pursuant to this Section
III(B)(iii).
Each such notice shall state, as appropriate, the following and may
contain such other information as the Corporation deems advisable:
(a) the redemption date;
(b) that all outstanding shares of Series C Preferred Stock are
to be redeemed or, in the case of a redemption of fewer than all
outstanding shares of Series C Preferred Stock, the number of such
shares held by such holder to be redeemed;
(c) the Call Price, the number of shares of Common Stock
deliverable upon the redemption of each share of Series C Preferred
Stock to be redeemed and the Current Market Price used to calculate such
number of shares of Common Stock;
(d) the place or places where certificates for shares of Series
C Preferred Stock are to be surrendered for redemption; and
(e) that dividends on the shares of Series C Preferred Stock to
be redeemed shall cease to accrue on and after such redemption date
(except as otherwise provided herein).
(iv) The Corporation's obligation to deliver shares of Common Stock and
provide funds (in lieu of fractional share
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amounts) upon redemption in accordance with this Section III(B) shall be deemed
fulfilled if, on or before a redemption date, the Corporation shall deposit with
a bank or trust company, or an affiliate of a bank or trust company, having an
office or agency in New York, New York and having (or such affiliate having) a
combined capital and surplus of at least $50,000,000 according to its last
payable statement of condition, or shall set aside or make other reasonable
provision for the issuance of, such number of shares of Common Stock as are
required to be delivered by the Corporation pursuant to this Section III(B) upon
the occurrence of the related redemption of shares of Series C Preferred Stock
and for the payment of cash in lieu of the issuance of fractional share amounts,
in trust for the account of the holders of such shares of Series C Preferred
Stock to be redeemed (and so as to be and continue to be available therefor),
with irrevocable instructions and authority to such bank or trust company that
such shares and funds be delivered upon redemption of the shares of Series C
Preferred Stock so called for redemption. Any interest accrued on such funds
shall be paid to the Corporation from time to time. Any shares of Common Stock
or funds so deposited and unclaimed at the end of two years from such redemption
date shall be repaid and released to the Corporation, after which the holder or
holders of such shares of Series C Preferred Stock so called for redemption
shall look only to the Corporation for delivery of shares of Common Stock and
the payment of any other funds due in connection with the redemption of the
shares of Series C Preferred Stock.
(v) Each holder of shares of Series C Preferred Stock called for
redemption must surrender the certificates evidencing such shares (properly
endorsed or assigned for transfer if the Board of Directors shall so require and
the notice shall so state) to the Corporation at the place designated in the
notice of such redemption and shall thereupon be entitled to receive
certificates evidencing shares of Common Stock and to receive any funds payable
pursuant to this Section III(B) following such surrender and following the date
of such redemption. In case fewer than all the shares represented by any such
surrendered certificate are called for redemption, a new certificate shall be
issued at the expense of the Corporation representing the unredeemed shares. If
such notice of redemption shall have been given, and if on the date fixed for
redemption shares of Common Stock and funds necessary for the redemption shall
have been irrevocably either set aside by the Corporation separate and apart
from its other funds or assets in trust for the account of the holders of the
shares to be redeemed (and so as to be and continue to be available therefor) or
deposited with a bank or trust company or an affiliate thereof as provided
herein or the Corporation shall have made other reasonable provision therefor,
then, notwithstanding that the certificates evidencing any shares
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of Series C Preferred Stock so called for redemption shall not have been
surrendered, the shares represented thereby so called for redemption shall be
deemed no longer outstanding and Dividends with respect to the shares so called
for redemption and all rights with respect to the shares so called for
redemption shall forthwith on and after such date cease and terminate (unless
the Corporation defaults on the payment of the redemption price), except for (a)
the rights of the holders to receive the shares of Common Stock and funds, if
any, payable pursuant to the Section III(B), without interest, upon surrender of
their certificates therefor and (b) the right of the holders, pursuant to
Section III(C), to convert the shares of Series C Preferred Stock called for
redemption until immediately before the close of business on any redemption
date; provided, however, that holders of shares of Series C Preferred Stock at
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the close of business on a record date for any payment of Dividends shall be
entitled to receive the Dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares following
such record date and before the Dividend Payment Date. Holders of shares of
Series C Preferred Stock that are redeemed shall not be entitled to receive
dividends declared and paid on the shares of Common Stock payable therefor
pursuant to this Section III(B), and such shares of Common Stock shall not be
entitled to vote, until such shares of Common Stock are issued upon the
surrender of the certificates representing such shares of Series C Preferred
Stock and upon such surrender such holders shall be entitled to receive such
dividends declared and paid on such shares of Common Stock subsequent to such
redemption date.
C. Shares of Series C Preferred Stock are convertible, in whole or in
part, at the option of the holder thereof ("Optional Conversion"), at any time
before the Mandatory Conversion Date, unless previously redeemed, into shares of
Common Stock at the Optional Rate, subject to adjustment as set forth below. The
right of Optional Conversion of shares of Series C Preferred Stock called for
redemption shall terminate immediately before the close of business on any
redemption date with respect to such shares.
Optional Conversion of shares of Series C Preferred Stock may be
effected by delivering certificates evidencing such shares of Series C Preferred
Stock, together with written notice of conversion and a proper assignment of
such certificates to the Corporation or in blank (and, if applicable, cash
payment of an amount equal to the Dividend attributable to the current quarterly
dividend period payable on such shares), to the office of the transfer agent for
the shares of Series C Preferred Stock or to any other office or agency
maintained by the Corporation for that purpose and otherwise in accordance with
Optional Conversion procedures established by the Corporation. Each
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Optional Conversion shall be deemed to have been effected immediately before the
close of business on the date on which the foregoing requirements shall have
been satisfied. The Optional Conversion shall be at the Optional Rate in effect
at such time and on such date.
Holders of shares of Series C Preferred Stock at the close of business
on a record date for any declared Dividends shall be entitled to receive such
Dividend on the corresponding Dividend Payment Date notwithstanding the Optional
Conversion of such shares of Series C Preferred Stock following such record date
and before such Dividend Payment Date. However, shares of Series C Preferred
Stock surrendered for Optional Conversion after the close of business on a
record date for any declared Dividend and before the opening of business on the
next succeeding Dividend Payment Date must be accompanied by payment in cash of
an amount equal to the Dividends payable on such date that are attributable to
the current quarterly dividend period (unless such shares of Series C Preferred
Stock are subject to redemption on a redemption date between such record date
established for such Dividend Payment Date and such actual Dividend Payment
Date). Except as provided above, the Corporation shall make no payment of or
allowance for unpaid Dividends, whether or not in arrears, on such shares of
Series C Preferred Stock as to which Optional Conversion has been effected or
for previously declared dividends or distributions on the shares of Common Stock
issued upon Optional Conversion.
D. The Mandatory Conversion Rate and the Optional Rate are each subject
to adjustment from time to time as provided below in this paragraph (D).
(i) If the Corporation shall pay a stock dividend or make a
distribution with respect to its Common Stock in shares of Common Stock
(including by way of reclassification of any shares of its Common Stock), the
Mandatory Conversion Rate and the Optional Rate in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall each
be increased by multiplying such Mandatory Conversion Rate and Optional Rate by
a fraction of which the numerator shall be the sum of the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination, immediately before such dividend or distribution, plus the total
number of shares of Common Stock constituting such dividend or other
distribution, and of which the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination, immediately before such dividend or distribution, such increase
to become effective immediately after the opening of business on the day
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<PAGE>
following the date fixed for such determination. For the purposes of this clause
(i) the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury.
(ii) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Mandatory Conversion
Rate and the Optional Rate in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall each be
proportionately increased, and, conversely, in case outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, the
Mandatory Conversion Rate and the Optional Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall each be proportionately reduced, such increased or reductions,
as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.
(iii) If the Corporation shall, after the date of this Certificate of
Designations, issue rights or warrants to all holders of its Common Stock
entitling them (for a period not exceeding 90 days from the date of such
issuance) to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price of the Common Stock on the record date
for the determination of shareholders entitled to receive such rights or
warrants, then in each case the Mandatory Conversion Rate and the Optional Rate
shall each be adjusted by multiplying the Mandatory Conversion Rate and the
Optional Rate in effect on such record date by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants, immediately before such issuance, plus the
number of additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights or warrants, immediately before such issuance, plus the number of shares
of Common Stock which the aggregate offering price of the total number of shares
of Common Stock so offered for subscription or purchase pursuant to such rights
or warrants would purchase at such Current Market Price (determined by
multiplying such total number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such Current Market Price).
Shares of Common Stock held by the Corporation or by another corporation of
which a majority of the shares entitled to vote in the election of directors are
held, directly or indirectly, by the Corporation shall not be deemed to be
outstanding for purposes of such computation. Such adjustment shall become
effective at the
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opening of business on the business day next following the record date for the
determination of shareholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such right or warrants, the Mandatory Conversion Rate and the Optional Rate
shall each be readjusted to the Mandatory Conversion Rate and the Optional Rate
which would then be in effect had the adjustments made after the issuance of
such rights or warrants been made upon the basis of issuance of rights or
warrants in respect of only the number of shares of Common Stock actually
delivered.
(iv) If the Corporation shall pay a dividend or make a distribution to
all holders of its Common Stock consisting of evidences of its indebtedness,
cash or other assets (including shares of capital stock of the Corporation other
than Common Stock but excluding any cash dividends or distributions, other than
Extraordinary Cash Distributions (as defined herein) and dividends referred to
in clauses (i) and (ii) above) or shall issue to all holders of its Common Stock
rights or warrants to subscribe for or purchase any of its securities (other
than those referred to in clause (iii) above), then in each such case, the
Mandatory Conversion Rate and the Optional Rate shall each be adjusted by
multiplying the Mandatory Conversion Rate and the Optional Rate in effect on the
record date for such dividend or distribution or for the determination of
shareholders entitled to receive such rights or warrants, as the case may be, by
a fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on such record date, and of which the denominator shall be such
Current Market Price per share of Common Stock less either (a) the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive) on such record date of the portion of the assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, or (b) if applicable, the amount of the
Extraordinary Cash Distribution. Such adjustment shall become effective on the
opening of business on the business day next following the record date for such
dividend or distribution or for the determination of holders entitled to receive
such rights or warrants, as the case may be. The term "Extraordinary Cash
Distribution" means, with respect to any consecutive 12-month period, all cash
dividends and cash distributions on the Common Stock during such period (other
than cash dividend and cash distributions for which prior adjustment to the
Mandatory Conversion Rate and Optional Rate was previously made) to the extent
such dividends and distributions exceed, on a per share of Common Stock basis,
10% of the average daily Closing Price of the Common Stock over such period.
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(v) Any shares of Common Stock issuable in payment of a dividend or
other distribution shall be deemed to have been issued immediately before the
close of business on the record date for such dividend or other distribution for
purposes of calculating the number of outstanding shares of Common Stock under
this Section III.
(vi) Anything in this Section III notwithstanding, the Corporation
shall be entitled (but shall not be required) to make such upward adjustments in
the Mandatory Conversion Rate, the Optional Rate and the Call Price in addition
to those set forth by this Section III, as the Corporation, in its sole
discretion, shall determine to be advisable, in order that any stock dividends,
subdivision of stock, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock (or any
transaction that could be treated as any of the foregoing transactions pursuant
to Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made
by the Corporation to its shareholders shall not be taxable.
(vii) In any case in which this Section III(D) shall require that an
adjustment as a result of any event become effective at the opening of business
on the business day next following a record date and the date fixed for
conversion pursuant to Section III(A) or redemption pursuant to Section III(B),
on and after such record date, but before the occurrence of such event, the
Corporation may, in its sole discretion, elect to defer paying to such holder
any amount in cash in lieu of a fractional share of Common Stock pursuant to
Section IV until after the occurrence of such event.
(viii) All adjustments to the Mandatory Conversion Rate and the Optional
Rate shall be calculated to the nearest 1/100th of a share of Common Stock. No
adjustment in the Mandatory Conversion Rate or in the Optional Rate shall be
required unless such adjustment would require an increase or decrease of at
least one percent therein; provided, however, that any adjustments which by
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reason of this Section III(D) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All adjustments to
the Mandatory Conversion Rate and Optional Rate shall be made successively.
(ix) Before taking any action that would result in an adjustment
affecting the Mandatory Conversion Rate or the Optional Rate such that the
conversion price (for purposes of this Section, an amount equal to the Call
Price divided by the Mandatory Conversion Rate or the Optional Rate,
respectively, as in effect from time to time) would be below the then par value
of
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the Common Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock at
the Mandatory Conversion Rate or the Optional Rate as so adjusted.
(x) Before redeeming any shares of Series C Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock upon such redemption.
E. In case of any reclassification of the Common Stock, any
consolidation of the Corporation with, or merger of the Corporation into, any
other entity, any merger of any entity into the Corporation (other than a merger
that does not result in a reclassification, conversion, exchange or cancellation
of the outstanding shares of Common Stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
other property (a "Transaction"), then each share of Series C Preferred Stock
will, after consummation of such Transaction, be entitled to be converted (i) on
the Mandatory Conversion Date into the kind and amount of securities, cash or
other property receivable upon consummation of such Transaction by a holder of
the number of shares of Common Stock into which such share of Series C Preferred
Stock would have been converted if the conversion on the Mandatory Conversion
Date had occurred immediately before the date of consummation of such
Transaction, plus the right to receive cash in an amount equal to all accrued
and unpaid dividends on such share of Series C Preferred Stock (other than
previously declared dividends payable to a holder of record as of a prior date),
(ii) upon redemption by the Corporation on any redemption date in exchange for
the kind and amount of securities, cash or other property receivable upon
consummation of such Transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such share of Series C Preferred Stock
immediately before consummation of such Transaction (assuming that, if the
Notice Date for such redemption is not before such Transaction, the Notice Date
had been the date of such Transaction; and assuming in each case that such
holder of share of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash or other property receivable upon
consummation of such transaction (provided that, if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each non-electing share, then the kind and
amount of securities, cash or other property receivable upon consummation
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of such transaction for each non-electing share will be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares))
or (iii) at the option of the holder, into the kind and amount of securities,
cash or other property receivable upon consummation of such Transaction by a
holder of the number of shares of Common Stock into which such share of Series C
Preferred Stock might have been converted immediately before consummation of
such Transaction. The kind and amount of securities into or for which the shares
of Series C Preferred Stock will be convertible or redeemable after consummation
of such Transaction will be subject to adjustment as described in Section III(D)
following the date of consummation of such Transaction.
F. Whenever the Mandatory Conversion Rate and the Optional Rate are
adjusted as provided in Section III(D), the Corporation shall: (i) forthwith
compute the adjusted Mandatory Conversion Rate and Optional Rate in accordance
with this Section III and prepare a certificate signed by the Chief Financial
Officer, any Vice President, the Treasurer or the Controller of the Corporation
setting forth the adjusted Mandatory Conversion Rate and the Optional Rate, the
method of calculations thereof in reasonable detail and the facts requiring such
adjustment and upon which such adjustment is based, which certificate shall be
conclusive, final and binding evidence of the correctness of the adjustment, and
shall file such certificate forthwith with the transfer agent for the shares of
Series C Preferred Stock and the Common Stock, and (ii) promptly mail a notice
stating that the Mandatory Conversion Rate and the Optional Rate have been
adjusted, the facts requiring such adjustment and upon which such adjustment is
based and setting forth the adjusted Mandatory Conversion Rate and Optional
Rate, to the holders of record of the outstanding shares of Series C Preferred
Stock.
G. In case, at any time while any of the shares of Series C Preferred
Stock are outstanding, (i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock, excluding any cash dividends other than
Extraordinary Cash Distributions; (ii) the Corporation shall authorize the
issuance to all holders of the Common Stock of rights or warrants to subscribe
for or purchase shares of the Common Stock or of any other subscription rights
or warrants; or (iii) the Corporation shall enter into or authorize the entry
into any Transaction; then the Corporation shall cause to be filed at each
office or agency maintained for the purpose of conversion of the shares of
Series C Preferred Stock, and shall cause to be mailed to the holders of shares
of Series C Preferred Stock at their last addresses as they shall appear on the
stock register of the Corporation, at least 10 business days before the date
hereinafter specified in clause (A) or (B) below (or the
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earlier of the dates hereinafter specified, in the event that more than one date
is specified), a notice stating (A) the date on which a record is to be taken
for the purpose of such dividend distribution, rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants are to
be determined, or (B) the date on which any such Transaction is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities
or other property (including cash), if any, deliverable upon such Transaction.
The failure to give or receive the notice required by the paragraph (G) or any
defect therein shall not affect the legality or validity of any such dividend,
distribution, right or warrant of other action.
SECTION IV. NO FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon redemption or conversion of any the shares of the Series C
Preferred Stock. In lieu of any fractional share otherwise issuable in respect
of the aggregate number of shares of the Series C Preferred Stock of any holder
that are redeemed or converted on any redemption date or upon Mandatory
Conversion or Optional Conversion, such holder shall be entitled to receive an
amount in cash (computed to the nearest cent) equal to the same fraction of the
Current Market Price of the Common Stock, determined as of the Notice Date, in
the case of redemption by the Corporation, or the trading day immediately
preceding (i) the Mandatory Conversion Date, in the case of a Mandatory
Conversion, or (ii) the effective date of conversion, in the case of an Optional
Conversion by the holder. If more than one share of Series C Preferred Stock
shall be surrendered for conversion or redemption at one time by or for the same
holder the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of the
Series C Preferred Stock so surrendered or redeemed.
SECTION V. RESERVATION OF COMMON STOCK. The Corporation shall at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of shares of the
Series C Preferred Stock, as herein provided, free from preemptive rights, such
maximum number of shares of Common stock as shall from time to time be issuable
upon the Mandatory Conversion or Optional Conversion or redemption of all the
shares of Series C Preferred Stock then outstanding.
SECTION VI. DEFINITIONS. As used in this Certificate of Designations:
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(i) The term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close;
(ii) The term "Closing Price", on any day, shall mean the last sale
price as shown on the New York Stock Exchange Composite Tape on such day, or, in
case no such sale takes place on such day, the average of the reported closing
bid and asked prices on the New York Stock Exchange, or, if the Common Stock is
not listed or admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices of the Common Stock on the
Nasdaq Stock Market Inc.'s National Market ("Nasdaq"), or, if the Common Stock
is not included on Nasdaq, any interdealer quotation system or any comparable
system, or if not available in such manner, as furnished by any New York Stock
Exchange member firm selected in good faith from time to time by the Board of
Directors for that purpose;
(iii) The term "record date" shall be such date as from time to time
fixed by the Board of Directors with respect to the receipt of dividends, the
receipt of a redemption price upon redemption or the taking of any action or
exercise of any voting right permitted hereby; and
(iv) The term "Trading Day" shall mean a date on which the New York
Stock Exchange (or any successor to such Exchange) is open for the transaction
of business.
SECTION VII. PAYMENT OF TAXES. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
shares of Series C Preferred Stock pursuant to Section III; provided, however,
-------- -------
that the Corporation shall not be required to pay any tax which may be payable
in respect of any registration of transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the registered holder of
shares of Series C Preferred Stock redeemed or converted or to be redeemed or
converted, and no such issue or delivery shall be made unless and until the
period requesting such issue has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corporation, that such tax
has been paid.
SECTION VIII. LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation, and
subject to the rights of holders of any
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other series of Preferred Stock, the holders of outstanding shares of Series C
Preferred Stock are entitled to receive the sum of $125 per share, plus an
amount equal to any accrued and unpaid Dividends thereon, out of the assets of
the Corporation available for distribution to shareholders, before any
distribution of assets is made to holders of Common Stock or any other capital
stock ranking junior to the shares of Series C Preferred Stock upon liquidation,
dissolution, or winding up. If upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the assets of the Corporation are
insufficient to permit the payment of the full preferential amounts payable with
respect to the shares of Series C Preferred Stock and all other series of Parity
Preferred Stock, the holders of shares of Series C Preferred Stock and of all
other series of Parity Preferred Stock shall share ratably in any distribution
of assets of the Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the holders of shares of
Series C Preferred Stock shall not be entitled to any further participation in
any distribution of assets by the Corporation. A Transaction will not be deemed
to be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
SECTION IX. VOTING RIGHTS. A. The holders of shares of Series C
Preferred Stock shall have the right with the holders of Common Stock to vote in
the election of directors and upon each other matter coming before any meeting
of the holders of Common Stock. Each share of Series C Preferred Stock will be
entitled to a number of votes equal to the product obtained by multiplying 25 by
0.48876. The holders of shares of Series C Preferred Stock and the holders of
Common Stock shall vote together as one class on such matters except as
otherwise provided by law or by the Articles of Incorporation.
B. In the event that the equivalent of six quarterly dividends payable
on the Series C Preferred Stock shall be in arrears, the number of directors of
the Corporation will be increased by two and the holders of shares of Series C
Preferred Stock shall have the exclusive right, voting separately and as a
class, with each share of Series C Preferred Stock entitled to 20 votes, to
elect the two additional directors (the "Series C Preferred Stock Directors").
Such right shall continue until all dividends in arrears and dividends in full
for the currently quarterly period have been paid or declared and set apart for
payment. The term of office of any director elected by the holders of shares of
Series C Preferred Stock will terminate on the earlier of (i) the next annual
meeting of shareholders at which a successor has been elected and qualified or
(ii) the
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<PAGE>
termination of the right of holders of shares of Series C Preferred Stock to
elect the Series C Preferred Stock Directors.
C. The Corporation shall not, without the approval of the holders of at
least 66-2/3 percent of the shares of Series C Preferred Stock then outstanding:
(i) amend, alter, or repeal any of the provisions of the Certificate of
Incorporation or By-Laws of the Corporation so as to affect adversely the
powers, preferences or rights of the holders of shares of Series C Preferred
Stock then outstanding or reduce the minimum time for any required notice to
which the holders of shares of Series C Preferred Stock then outstanding may be
entitled (an amendment of the Certificate of Incorporation to authorize or
create, or to increase the authorized amount of, Common Stock or other Junior
Stock or any stock of any class ranking on a parity with the Series C Preferred
Stock being deemed not to affect adversely the powers, preferences or rights of
the holders of the shares of Series C Preferred Stock); (ii) authorize or
create, or increase the authorized amount of, any stock of any class, or any
security convertible into capital stock of any class, ranking prior to the
Series C Preferred Stock either as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation; (iii) merge or consolidate with or into any other corporation,
unless each holder of shares of Series C Preferred Stock immediately preceding
such merger or consolidation receives or continues to hold in the resulting
corporation the same number of shares, with substantially the same rights and
preferences, as correspond to the shares of Series C Preferred Stock so held as
contemplated by Section III(E); or (iv) voluntarily dissolve, liquidate or wind
up the affairs of the Corporation.
D. The Corporation shall not, without the approval of the holders of at
least a majority of the shares of Series C Preferred Stock then outstanding:
(i) increase the authorized number of shares of Preferred Stock; or (ii) create
any other class or classes of capital stock of the Corporation ranking on a
parity with the Preferred Stock, either as to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, or create any stock or other security convertible into or
exchangeable for or evidencing the right to purchase any stock of such other
class ranking on a parity with the Preferred Stock, or increase the authorized
number of shares of any such other class or amount of such other stock or
security.
E. Notwithstanding the provisions set forth in Sections IX(C) and IX(D)
no such approval described therein of the holders of the shares of Series C
Preferred Stock shall be required if, at or before the time when such amendment,
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<PAGE>
alteration or repeal is to take effect or when the authorization, creation,
increase or issuance of any such prior or parity stock or convertible security
is to be made, or when such consolidation or merger, voluntary liquidation,
dissolution or winding up, sale, lease, conveyance, purchase or redemption is to
take effect, as the case may be, provision is made for the redemption of all
shares of Series C Preferred Stock at the time outstanding.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and attested this 26th day of March, 1997.
MATTEL, INC.
By: /s/ Ned Mansour
----------------------------
Name: Ned Mansour
Title: President, Corporate
Operations
Attest:
/s/ Barnett Rosenberg
- ------------------------
Name: Barnett Rosenberg
Title: Senior Vice President,
General Counsel and
Secretary
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<PAGE>
EXHIBIT 5
[LETTERHEAD OF MATTEL, INC.]
August 6, 1997
Ladies and Gentlemen:
I am the Assistant General Counsel of Mattel, Inc., a Delaware corporation
(the "Company"). I am delivering this opinion in connection with the
registration under the Securities Act of 1933, as amended (the "1933 Act"), of
892,748 authorized and issued shares of the Common Stock (the "Shares"), $1.00
par value per share, of the Company to be sold by certain selling stockholders.
This opinion is delivered in accordance with the requirements of Item 601(b)(5)
of Regulation S-K under the 1933 Act in connection with the Registration
Statement on Form S-3 (the "Registration Statement"), for the aforementioned
sale, filed with the Securities and Exchange Commission (the "Commission") under
the 1933 Act.
In rendering the opinion set forth herein, I have made such investigations
of fact and law, and examined such documents and instruments, or copies thereof
established to my satisfaction to be true and correct copies thereof, as I have
deemed necessary under the circumstances.
Based upon the foregoing and such other examination of law and fact as I
have deemed necessary, and in reliance thereon, I am of the opinion that, the
Shares were duly authorized and are validly issued, fully paid and
non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus which is a part of the Registration Statement. In
giving such consent, I do not thereby admit that I am in the category of persons
whose consent is required under Section 7 of the 1933 Act or the rules and
regulations of the Commission thereunder.
Best regards,
/s/ Leland P. Smith
Leland P. Smith
LPS/Idy
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 5, 1997 (July 18, 1997 with respect to the merger with Tyco Toys, Inc.
and other subsequent events described in Note 11), which appears in the Current
Report on Form 8-K dated July 30, 1997. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Los Angeles, California
August 19, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Mattel, Inc. on Form S-3 of our report dated February 4, 1997 (except for note
15, as to which the date is March 27, 1997) relating to the financial statements
of Tyco Toys, Inc. and subsidiaries not presented separately herein, appearing
in Mattel's Current Report on Form 8-K dated July 30, 1997, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
August 19, 1997
