Exhibit 10.7
SECOND AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AND MATTEL SALES CONTINUING GUARANTY
THIS SECOND AMENDMENT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT AND MATTEL SALES CONTINUING
GUARANTY (this "Second Amendment") is dated as of November
8, 1993 and is entered into by and among MATTEL, INC., a
Delaware corporation (the "Company"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and
collectively as the "Banks"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION as the agent for the Banks (the
"Agent") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as the collateral agent for the Banks (the
"Collateral Agent") and amends (a) the Third Amended and
Restated Credit Agreement dated as of March 19, 1993 among
the Company, the Banks, the Agent and the Collateral Agent,
as amended by a First Amendment to Third Amended and
Restated Credit Agreement dated as of July 19, 1993 (as so
amended, the "Credit Agreement") and (b) the Continuing
Guaranty executed by Mattel Sales Corp. dated as of March
19, 1993 in favor of the Collateral Agent.
PRELIMINARY STATEMENTS.
A. The parties hereto desire to release all
Collateral pledged under the Collateral Documents. In
furtherance thereof, the parties hereto desire to terminate
all Collateral Documents, including without limitation the
Pledge and Security Agreement, the Receivables Purchase
Subordination Agreement, the Mattel Sales Security
Agreement, and the Intercreditor Agreement.
B. The Company is acquiring Fisher-Price in the
Fisher-Price Acquisition and the parties hereto desire to
amend the Credit Agreement to permit the Fisher-Price
Acquisition.
C. The parties hereto desire to amend certain
other provisions of the Loan Documents.
In consideration of the premises and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
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1. Terms. All capitalized terms used herein
shall have the same meanings as in the Loan Documents unless
otherwise defined herein. All references to the Loan
Documents shall mean the Loan Documents as hereby amended.
2. Amendments to Credit Agreement. The parties
hereto agree that the Credit Agreement is amended as
follows:
2.1 All references to "Collateral," "Collateral
Agent," "Collateral Documents" and "Intercreditor Agreement"
are hereby deleted. From and after the effective date
hereof, the Collateral Agent shall no longer be a party to
any Loan Document.
2.2 Section 1.1 of the Credit Agreement is
amended by inserting the following new definitions in proper
alphabetical order:
"'Fisher-Price' means Fisher-Price, Inc., a
Delaware corporation.
"'Fisher-Price Acquisition' means the
transaction contemplated by that certain Agreement
and Plan of Merger dated as of August 19, 1993
among the Company, Mat Acquisition, Inc. and
Fisher-Price.
2.3 Section 5.12 of the Credit Agreement is
deleted in its entirety and "Intentionally left blank" is
inserted in lieu thereof.
2.4 Section 8.1(c)(ii) of the Credit Agreement is
amended by replacing "and" before "8.8" in the last line
thereof with a comma and inserting "and 8.10" immediately
before the semi-colon at the end of such subsection.
2.5 A new Section 8.10 is inserted immediately
following Section 8.9 of the Credit Agreement as follows:
"8.10 Interest Coverage Ratio. The Company
shall not permit, as of the last day of each
fiscal quarter, the ratio of (a) the sum of (i)
its net income from continuing operations, for the
four consecutive fiscal quarters ending on such
date, before (A) special items, (B) minority
interest, (C) gains on reacquisition of debt, plus
(ii) income taxes accrued for the four consecutive
fiscal quarters ending on such date, plus (iii)
interest accrued for the four consecutive fiscal
quarters ending on such date, excluding
capitalized interest and without regard to
interest income plus (iv) depreciation and
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amortization for the four consecutive fiscal
quarters ending on such date to (b) interest
incurred for the four consecutive fiscal quarters
ending on such date, including capitalized
interest and without regard to interest income, to
be less than 3.5 to 1."
2.6 Section 9.1 of the Credit Agreement is
amended by deleting "and" at the end of subsection (p),
replacing the period at the end of subsection (q) with ";
and" and inserting a new subsection (r) immediately
following subsection (q) as follows:
"(r) The Company and its Subsidiaries may
remain liable in respect of Indebtedness of
Fisher-Price; provided, however, that such
Indebtedness existed on the date of the Fisher-
Price Acquisition and was not incurred in
anticipation thereof; provided, further, that such
Indebtedness does not otherwise cause a Default or
Event of Default hereunder."
2.7 Section 9.2 of the Credit Agreement is
amended by deleting "and" at the end of subsection (o),
replacing the period at the end of subsection (p) with ";
and" and inserting a new subsection (q) immediately
following subsection (p) as follows:
"(q) Any Liens on assets of Fisher-Price;
provided, however, that such Liens existed on the
date of the Fisher-Price Acquisition and were not
created in anticipation thereof; provided,
further, that such Liens do not otherwise cause a
Default or Event of Default hereunder."
2.8 Section 9.4 of the Credit Agreement is
amended by deleting "and" at the end of subsection (l),
replacing the period at the end of subsection (m) with ";
and" and inserting a new subsection (n) immediately
following subsection (m) as follows:
"(n) Contingent Obligations of Fisher-Price;
provided, however, that such Contingent
Obligations existed on the date of the Fisher-
Price Acquisition and were not incurred in
anticipation thereof; provided, further, that such
Contingent Obligations do not otherwise cause a
Default or Event of Default hereunder."
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2.9 Section 9.5 of the Credit Agreement is
amended by deleting "and" at the end of subsection (b),
replacing the period at the end of subsection (c) with ";
and" and inserting a new subsection (d) immediately
following subsection (c) as follows:
"(d) the Company may make payments or issue
common stock in respect of warrants to purchase
common stock of Fisher-Price pursuant to the terms
of such warrants; provided, however, that such
warrants existed on the date of the Fisher-Price
Acquisition and were not issued in anticipation
thereof; provided, further, that such payments or
issuances do not otherwise cause a Default or
Event of Default hereunder."
2.10 Section 9.6 of the Credit Agreement is
amended by deleting "and" at the end of subsection (c) and
amending and restating subsection (d) as follows:
"(d) The Company may acquire the stock or
assets of other companies engaged in the business
of the manufacture and sale of toys in exchange
for capital stock of the Company issued after the
Effective Date or the proceeds thereof; provided
that the Company may not acquire the stock or
assets of any Person that results in a Material
Adverse Effect; and
"(e) The Company and its Subsidiaries may
consummate the Fisher-Price Acquisition."
2.11 Section 9.7 of the Credit Agreement is
amended by deleting "and" at the end of subsection (b),
replacing the period at the end of subsection (c) with ";
and" and inserting a new subsection (d) immediately
following subsection (c) as follows:
"(d) Fisher-Price and its Subsidiaries may
sell accounts receivable owed by obligors located
outside the United States generated by foreign
offices of Fisher-Price and such Subsidiaries in
the ordinary course of business."
2.12 Section 9.9 of the Credit Agreement is
amended and restated in its entirety as follows:
"9.9 Restriction on Operating Leases. The
Company will not, and will not permit any of its
Domestic Subsidiaries to, become liable in any
way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of
the lessee under any Operating Lease, except:
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"(a) The lease of certain property located on
Rosecrans Boulevard in El Segundo, California from
Continental Development Corporation;
"(b) Operating Leases in respect of which
Fisher-Price or any Subsidiary thereof is liable
that existed on the date of the Fisher-Price
Acquisition and were not entered into in
anticipation thereof; and
"(c) Other Operating Leases having aggregate
rental and other payments (net of sub-lease
income) which are payable in any future period of
twelve consecutive calendar months not exceeding
$20,000,000."
2.13 Section 10.14 of the Credit Agreement is
deleted in its entirety and "Intentionally left blank" is
inserted in lieu thereof.
2.14 Section 10.17 of the Credit Agreement is
amended by deleting the words after "and second" through the
end of such section and inserting the following in lieu
thereof:
"to the payment to or upon the order of the
Company or to whomsoever may be lawfully entitled
to receive the same or as a court of competent
jurisdiction may direct, of any surplus then
remaining from such proceeds."
2.15 Section 11.11 of the Credit Agreement is
deleted in its entirety.
2.16 Exhibits D (Intercreditor Agreement), H
(Pledge and Security Agreement), K (Receivables Purchase
Subordination Agreement), and N (Mattel Sales Security
Agreement) are deleted in their entirety and "Intentionally
left blank" is inserted in lieu thereof in the table of
contents.
2.17 The Intercreditor Agreement, Pledge and
Security Agreement, Receivables Purchase Subordination
Agreement and the Mattel Sales Security Agreement are hereby
terminated and deemed of no further force or effect.
2.18 The form of Exhibit M to the Credit Agreement
is amended by deleting all references to Collateral Agent
and inserting references to Agent in lieu thereof.
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3. Amendments to Mattel Sales Continuing
Guaranty. The parties hereto agree that the Mattel Sales
Continuing Guaranty is amended as follows:
3.1 All references to Collateral Agent in the
Mattel Sales Continuing Guaranty are deleted and references
to Agent are inserted in lieu thereof. From and after the
effective date hereof, the Agent shall replace the
Collateral Agent as a party to the Mattel Sales Continuing
Guaranty.
3.2 Section 10 of the Mattel Sales Continuing
Guaranty is deleted and "Intentionally left blank" is
inserted in lieu thereof.
4. Representations and Warranties. The Company
represents and warrants to the Banks, the Agent and the
Collateral Agent:
4.1 Authorization. The execution, delivery and
performance of this Second Amendment by the Company has been
duly authorized by all necessary corporate action by the
Company and has been duly executed and delivered by the
Company.
4.2 Binding Obligation. This Second Amendment
and the Loan Documents (except as expressly terminated
hereby) are legal, valid and binding agreements of the
Company, enforceable in accordance with their respective
terms, except to the extent enforceability thereof may be
limited by applicable law relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors' rights generally or by
the application of general principles of equity.
4.3 No Legal Obstacle to Agreements. Neither the
execution of this Second Amendment, the making by the
Company of any borrowings under the Credit Agreement, as
amended hereby, nor the performance of the Loan Documents by
the Company has constituted or resulted in or will
constitute or result in a breach of the provisions of any
material agreement, or the violation of any law, judgment,
decree or governmental order, rule or regulation applicable
to the Company, or result in the creation under any material
agreement of any security interest, lien, charge, or
encumbrance upon any of the assets of the Company. No
approval or authorization of any governmental authority is
required to be obtained by the Company to permit the
execution, delivery or performance by the Company of this
Second Amendment, the Loan Documents, as amended hereby, or
the transactions contemplated hereby or thereby, or the
making of any borrowing by the Company under the Credit
Agreement, as amended hereby.
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4.4 Incorporation of Certain Representations.
The representations and warranties set forth in Section 7 of
the Credit Agreement are true and correct in all material
respects on and as of the date hereof as though made on and
as of the date hereof except to the extent such
representations and warranties expressly relate to an
earlier date, in which case such representations and
warranties were true and correct in all material respects on
and as of such earlier date.
4.5 Default. No Event of Default or Potential
Event of Default under the Credit Agreement has occurred and
is continuing.
5. Conditions, Effectiveness. The effectiveness
of this Second Amendment shall be subject to the compliance
by the Company with its agreements herein contained, and to
the delivery of to the Agent of the following:
5.1 Corporate Resolution. A copy of a resolution
or resolutions passed by the Board of Directors of the
Company, certified by the Secretary or an Assistant
Secretary of the Company as being in full force and effect
on the effective date of this Second Amendment, authorizing
the amendments to the Loan Documents herein provided for and
the execution, delivery and performance of this Second
Amendment and any note or other instrument or agreement
required hereunder.
5.2 Authorized Signatories. A certificate,
signed by the Secretary or an Assistant Secretary of the
Company and dated the date of this Second Amendment, as to
the incumbency of the person or persons authorized to
execute and deliver this Second Amendment and any instrument
or agreement required hereunder on behalf of the Company.
5.3 Other Evidence. Such other evidence with
respect to the Company or any other person as the Agent or
any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the
taking of all corporate action in connection with this
Second Amendment and the Loan Documents and the compliance
with the conditions set forth herein.
6. Miscellaneous.
6.1 Termination of Collateral Documents. The
Intercreditor Agreement, Pledge and Security Agreement,
Receivables Purchase Subordination Agreement and the Mattel
Sales Security Agreement are hereby terminated and deemed of
no further force or effect.
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6.2 Amendments to Mattel Sales Subordination
Agreements. The Company shall cause each Mattel Sales
Subordination Agreement to be amended as set forth in
Section 2.18 of this Second Amendment. From and after the
effective date hereof, the Agent shall replace the
Collateral Agent as a party to the Mattel Sales
Subordination Agreement.
6.3 Effectiveness of the Agreements. Except as
hereby expressly amended or terminated, the Loan Documents
shall remain in full force and effect.
6.4 Termination of Security Interests. The
parties hereto hereby terminate their security interest in
all Collateral.
6.5 Release of Collateral. Upon the
effectiveness of this Second Amendment, the Collateral Agent
shall execute such documents and instruments as may be
reasonably necessary to terminate its security interest in
the Collateral.
6.6 Waivers. This Second Amendment is specific
in time and in intent and does not constitute, nor should it
be construed as, a waiver of any other right, power or
privilege under the Loan Documents, or under any agreement,
contract, indenture, document or instrument mentioned in the
Loan Documents; nor does it preclude any exercise thereof or
the exercise of any other right, power or privilege, nor
shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Loan
Documents, constitute a waiver of any other default of the
same or of any other term or provision.
6.7 Capacity. Each bank party hereto is
executing and delivering this Second Amendment, and consents
and agrees to the terms hereof in its capacity as a Bank, a
Domestic Bank, a Foreign Bank and, in the case of PNC Bank,
National Association, as Backstop Issuing Bank and, in the
case of NationsBank of Texas, N.A., as Transfer and
Administration Agent.
6.8 Counterparts. This Second Amendment may be
executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute
one and the same instrument. This Second Amendment shall
not become effective until the Company, the Banks, the
Agent, the Collateral Agent, Mattel Sales, the Domestic
Banks, the Foreign Banks and the Backstop Issuing Bank shall
have signed a copy hereof, whether the same or counterparts,
and the same shall have been delivered to the Agent.
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6.9 Collateral Agent's Indemnities. Notwith-
standing the termination of the Collateral Documents, the
provisions of Section 5 of the Intercreditor Agreement,
Sections 13 and 14 of the Pledge and Security Agreement and
Sections 13 and 14 of the Mattel Sales Security Agreement
shall survive and inure to the benefit of Bank of America
National Trust and Saving Association as to any actions
taken or omitted to be taken thereunder while it was
Collateral Agent.
6.10 Jurisdiction. This Second Amendment, and
any instrument or agreement required hereunder, shall be
governed by and construed under the laws of the State of
California.
IN WITNESS WHEREOF, the parties hereto have
executed this Second Amendment by their duly authorized
officers as of the day and year first above written.
MATTEL, INC.
By: /s/ Francesca Luzuriaga
-------------------------
Senior Vice President and
Treasurer
(Signatures continue)
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AGENT AND COLLATERAL
AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
and Collateral Agent
By: /s/ L. Chenevert
----------------
Title: Vice President
BACKSTOP ISSUING PNC BANK, NATIONAL ASSOCIATION
BANK
By: /s/ Ted A. Dunn
--------------------------
Title: Commercial Banking Officer
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Robert W. Troutman
----------------------
Title: Vice President
CHEMICAL BANK
By: /s/ Jeffrey Howe
----------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ J. Peter Mitchell
---------------------
Title: Director
(Signatures continue)
PNC BANK, NATIONAL ASSOCIATION, as
a Bank and as Backstop Issuing Bank
By: /s/ Ted A. Dunn
--------------------------
Title: Commercial Banking Officer
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THE CHASE MANHATTAN BANK, N.A.
By: /s/ Dawn Lee Lum
----------------
Title: Vice President
CONTINENTAL BANK N.A.
By: /s/ Hetty E. Harlon
-------------------
Title: Vice President
MARINE MIDLAND BANK, N.A.
By: /s/ William M. Holland
----------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A., as a Bank and
as Transfer and Administration Agent
By: /s/ J. Blake Seaton
-------------------
Title: Vice President
THE BANK OF CALIFORNIA, N.A.
By: /s/ Thomas H. Tegart
--------------------
Title: Vice President
(Signatures continue)
THE TORONTO-DOMINION BANK
By: /s/ Debbie A. Greene
---------------------
Title: Manager Credit Admin.
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CONSENT OF MATTEL SALES CORP.
The undersigned Mattel Sales Corp. hereby consents to the
foregoing Second Amendment to Third Amended and Restated Credit
Agreement dated as of November 8, 1993, and reaffirms the Second
Amended and Restated Continuing Guaranty dated as of March 19, 1993
executed and delivered by Mattel Sales Corp.
Date: November 8, 1993
MATTEL SALES CORP.
By: /s/ Francesca Luzuriaga
-------------------------
Title: Senior Vice President and
Treasurer
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