MATTEL, INC. EXHIBIT 99.2
AWARD CANCELLATION AGREEMENT
This Award Cancellation Agreement (this "Agreement"),
is made and entered into as of February 10, 1994, by and between
____________________ ("Grantee"), and Mattel, Inc. ("Mattel"),
with reference to the following facts:
A. Grantee was granted an award of stock appreciation
rights under the Mattel 1990 Stock Option Plan (the "Plan"),
which was evidenced by that certain Award Agreement dated
February 12, 1991, as amended May 11, 1993 (as amended, the
"Award");
B. Pursuant to the Award, Grantee is entitled to certain
cash payments on two future payment dates based upon the
appreciation of the price of Mattel Common Stock;
C. If the value of the Award were determined based on the
value of Mattel Common Stock on the date hereof rather than on
the Award's future payment dates, Grantee would be entitled to a
substantial cash payment;
D. The Award has resulted in the recognition of certain
financial accounting charges against the earnings of Mattel, and
Mattel desires to eliminate future charges against its earnings
that would likely result from the continuance of the Award;
E. Grantee desires to accommodate Mattel's wishes and is
willing to allow Mattel to cancel the Award in exchange for the
certainty of a fixed sum cash payment by Mattel, and the receipt
of certain stock options from Mattel; and
F. Mattel and Grantee have agreed that it is in their
mutual best interests to cancel the Award in consideration of the
payment to Grantee of the cash sum of $_______________ and the
separate issuance to Grantee, under the Plan, of nonqualified
options to purchase __________ shares of Common Stock of Mattel.
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In consideration of the premises and for good and
valuable consideration, the receipt of which by each party is
hereby acknowledged, the parties agree as follows:
1. Cancellation. The Award is hereby cancelled
and the agreement evidencing the Award and all amendments
thereof, are terminated and shall be of no further force or
effect.
2. Cash Payments. Subject to the provisions of
Section 4, Mattel shall pay to Grantee, or to Grantee's heirs or
legal representatives, the sum of $__________ on March 15, 1995
(the "First Cash Payment"), and the sum of $_________ on
March 15, 1996 (the "Second Cash Payment"; the First Cash Payment
and the Second Cash Payment referred to collectively as the "Cash
Payments").
3. Grant of Option. Effective as of the date
hereof, Mattel shall grant to Grantee under the Plan an option to
purchase __________ shares of common stock of Mattel, at a price
of $24.625 per share (the "Option"), which Option shall vest 50%
on March 15, 1995, and 50% on March 15, 1996, and shall have a
term of 10 years from the date hereof. The Option shall be
evidenced by the Option Agreement of even date herewith, in the
form delivered to Grantee by Mattel concurrently herewith (the
"Option Agreement"), and shall be subject to all of the terms and
conditions in the Option Agreement. In the event of a conflict
or inconsistency between the terms of the Option Agreement and
this Agreement, the terms of the Option Agreement shall govern.
4. Other Provisions. Notwithstanding any other
provision of the Plan to the contrary, the following shall apply:
(a) Termination of Employment. This
Agreement supersedes Section 5, Paragraph (d), Subparagraph (i),
Clause (III) of the Amended and Restated Employment Agreement
dated as of November ___, 1993, between Mattel and Grantee (the
"Employment Agreement"), insofar as it refers to awards of "share
units," it being agreed and acknowledged that the "share units"
constitute the Award which is cancelled hereby. If the
employment of Grantee terminates in accordance with Section 5,
Paragraph (d), Subparagraph (i), or Section 5, Paragraph (e), of
the Employment Agreement, then the Cash Payments shall both be
made (or, if the First Cash Payment has already been made, the
Second Cash Payment shall be made,) no later than the 15th day
following the Date of Termination (as defined in the Employment
Agreement) unless paid sooner pursuant to the provisions of
paragraph (c) below; provided, however, that if such Date of
Termination occurs before March 15, 1995, then (A) the First Cash
Payment shall be reduced to an amount equal to the product of
$__________ times a fraction the numerator of which shall be the
number of full months that have elapsed
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since February 12, 1991,
and the denominator of which shall be the number 49 (this number
being the number of full months between February 12, 1991, and
March 15, 1995), and (B) the Second Cash Payment shall be reduced
to an amount equal to the product of $__________ times a fraction
the numerator of which shall be the number of full months that
have elapsed since February 12, 1991, and the denominator of
which shall be the number 61 (this number being the number of
full months between February 12, 1991, and March 15, 1996);
provided, further, that if such Date of Termination occurs on or
after March 15, 1995, but before March 15, 1996, then the First
Cash Payment shall not be reduced or rebated and the Second Cash
Payment shall be reduced to an amount equal to the product of
$_________ times a fraction the numerator of which shall be the
number of full months that have elapsed since February 12, 1991,
and the denominator of which shall be the number 61. Subject to
the foregoing, if the employment of Grantee terminates, other
than for reasons of death or disability, all unpaid awards shall
be cancelled immediately and no further amounts shall be due or
payable hereunder. In the event of the death or disability of
Grantee, the Cash Payments shall both be made, or if the First
Cash Payment has already been made, the Second Cash Payment shall
be made, no later than the 15th day following the date of death
or disability. For purposes of this Agreement, the date of
disability shall be the date Grantee becomes entitled to receive
disability benefits under the Mattel Long-Term Disability Plan
for exempt employees or any successor plan.
(b) Deferral of Payments - The Cash Payments
under this Agreement may, at the option of the Grantee, be
deferred and paid either in the form of installments or in future
lump sum payments. Such deferral shall be in accordance with and
under the terms of the Mattel Executive Deferred Compensation
Plan.
(c) Change of Control - The Cash Payments
shall become vested and payable on the Distribution Date as that
term is defined in the Company's Rights Agreement dated as of
February 7, 1992 ("Rights Agreement"), or, if the Rights
Agreement has terminated or the Rights have been redeemed, on the
date the Distribution Date would have occurred under Section 3 of
the Rights Agreement had the Rights Agreement not terminated or
the Rights not been redeemed.
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Grantee and Mattel agree that the Cash Payments and
Options are governed by the terms and conditions of this
Agreement and the Plan.
IN WITNESS WHEREOF, the undersigned parties have
executed this Agreement as of February 10, 1994.
GRANTEE MATTEL, INC.
________________________ By: __________________________
Name: ________________________
Title: _______________________
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