EXHIBIT 10.1
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement is entered into as of September
13, 1996 among Mattel Sales Corp., a California corporation ("Mattel
Sales"), as seller, Fisher-Price, Inc., a Delaware corporation
("Fisher-Price"), as seller (Fisher-Price and Mattel Sales, in their
capacities as sellers, being referred to herein collectively as the
"Sellers" and individually as a "Seller"), Mattel, Inc., a Delaware
corporation ("Mattel"), as servicer (the "Servicer") and as guarantor (the
"Guarantor"), and Bank of America National Trust and Savings Association, a
national banking association ("Bank of America"), as purchaser (in such
capacity, together with its successors and assigns in such capacity, the
"Purchaser"). Certain terms that are capitalized and used herein are
defined in Exhibit I.
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. On the terms and conditions
hereinafter set forth, the Purchaser hereby agrees to purchase from each
Seller, without recourse (except as expressly provided herein), undivided
percentage ownership interests in such Seller's Listed Receivables and
other items included in the related Purchased Interest.
Section 1.2. Making Purchases. (a) Each purchase of undivided
percentage ownership interests hereunder shall be made upon the Servicer's
irrevocable written notice, substantially in the form of Exhibit VIII
hereto (a "Purchase Notice"), delivered to the Purchaser in accordance with
Section 4.2 (which Purchase Notice must be received by the Purchaser not
later than 9:00 a.m., Los Angeles time) on the second Business Day prior to
the related Purchase Date. Each Purchase Notice shall specify, with
respect to each Seller, (A) the aggregate outstanding principal balances of
such Seller's Eligible Receivables with respect to which such Seller
proposes to sell an undivided percentage ownership interest to the
Purchaser and (B) the proposed date (which must be a Business Day) on which
each Seller proposes to sell to the Purchaser such undivided percentage
ownership interest (each such date, a "Purchase Date"). No day shall be
selected as a Purchase Date if the related Due Date would occur after the
Facility Termination Date.
Not later than 9:00 a.m. (Los Angeles time) on the Business Day
following its receipt of each Purchase Notice, the Purchaser shall send to
the Servicer a notice setting forth a calculation of the Purchased Interest
relating to each Seller, including a description of (i) the amount to be
paid by the Purchaser with respect to such Purchased Interest to the
Servicer on the related Purchase Date for the account of the applicable
Seller (such amount with respect to such Purchased Interest being referred
to as the "Purchaser's Investment") and (ii) the aggregate Yield to accrue
with respect to such Purchased Interest for the actual number of days in
the Yield Period commencing on the applicable Purchase Date (such aggregate
Yield with respect to such Purchased Interest being referred to as the
"Yield
-1-
Reserve"), it being understood and agreed that the calculation of
the Yield Reserve shall not limit the effect of the proviso to the
definition of Yield in Exhibit I or the effect of Exhibit VII. The
Purchaser shall calculate the Purchaser's Investment with respect to a
Purchased Interest as an amount which, when added to the related Yield
Reserve, is as close is as reasonably practicable to (but not in excess of)
the aggregate outstanding principal balance of the related Eligible
Receivables set forth in the related Purchase Notice; it being understood
and agreed that the aggregate outstanding Purchaser's Investments shall not
exceed the Purchaser's Investment Limit and that this sentence shall not
limit any other provision of this Agreement (including Exhibit VII).
Each Seller shall send to the Purchaser for receipt by the Purchaser
not later than the Business Day prior to the related Purchase Date, a list
of such Seller's Receivables the outstanding principal balances of which
were reflected in the related Purchase Notice (such Receivables being
referred to as the "Listed Receivables"), which list shall identify the
invoice number, outstanding principal balance and maturity date of each
such Receivable (in each case as of the date of the related Purchase
Notice).
(b) On each Purchase Date, the Purchaser shall, upon satisfaction of
the applicable conditions set forth in Exhibit II hereto, pay to the
Servicer, for the account of the related Seller, in same day funds, an
amount equal to the Purchaser's Investment relating to the undivided
percentage ownership interest then being purchased from such Seller, by
remitting such funds to Bank of America National Trust and Savings
Association, ABA No. 121000358, Account No. 1233112850, reference "Mattel
Sales Receivables", or to such other account as the Sellers may designate
in writing to the Purchaser.
(c) On each Purchase Date, effective upon the payment contemplated by
Section 1.2(b) (and without the necessity of any formal or other instrument
of assignment or other further action), each Seller hereby severally sells
and assigns to the Purchaser an undivided percentage ownership interest in
(i) each Listed Receivable of such Seller, (ii) all Related Security with
respect to such Receivables, (iii) all Collections with respect to such
Receivables (including Collections received on and after the date on which
the related Purchase Notice is sent to the Purchaser and prior to the
related Purchase Date), and (iv) all proceeds of, and all amounts received
or receivable under any or all of, the foregoing.
(d) To secure all of the obligations (monetary or otherwise) of each
Seller Party under this Agreement and the other Transaction Documents to
which it is a party, whether now or hereafter existing or arising, due or
to become due, direct or indirect, absolute or contingent, each Seller
hereby severally grants to the Purchaser a security interest in all of such
Seller's right, title and interest (including any undivided interest of
such Seller) in, to and under all of the following, whether now or
hereafter owned, existing or arising: (A) all Listed Receivables of such
Seller, (B) all Related Security with respect to such Receivables, (C) all
Collections with respect to such Receivables (including Collections
received on and after the date that the related Purchase Notice is sent to
the Purchaser and prior to the related Purchase Date), and (D) all proceeds
of, and all amounts received or receivable under any or all of, the
foregoing. The Purchaser shall have, with respect to the property
described in this Section 1.2(d), and in addition to all the other rights
and remedies available to the Purchaser, all the rights and remedies of a
secured party under any applicable UCC.
Section 1.3. Servicing and Settlement Procedures. The servicing,
administering and collection of the Listed Receivables shall be conducted
in accordance with Exhibit VI hereto. Each Seller shall provide to the
Servicer on a timely basis all information needed for such servicing,
-2-
administration and collection, including notice of the occurrence of any
Termination Event Day. Subject to paragraph (c)(iv) of Exhibit VI, the
Servicer shall hold in trust (and, during the continuance of a Termination
Event, at the request of the Purchaser, segregate) for the Purchaser, from
Collections received by each Seller or the Servicer with respect to such
Seller's Listed Receivables, the percentage of such Collections represented
by the related Purchased Interest. On each Due Date, the Servicer shall
(x) deposit into the Purchaser's Account the amount of Collections required
to be held for the Purchaser pursuant to the preceding sentence and (y) pay
to the applicable Seller the remaining portion, if any, of Collections then
held by the Servicer.
Section 1.4. Payments and Computations, Etc. All amounts to be paid
or deposited by a Seller Party hereunder shall be paid or deposited no
later than noon (Los Angeles time) on the day when due in same day funds to
the Purchaser's Account. All amounts received after noon (Los Angeles
time) will be deemed to have been received on the immediately succeeding
Business Day. Each Seller and Mattel, solely in its capacity as the
Servicer, as the case may be, shall, to the extent permitted by law, pay
interest on any amount not paid or deposited by such Person which is
required to be paid or deposited by such Person hereunder when due
hereunder, at the Termination Rate (without duplication), payable on
demand. All computations of interest, Yield and other amounts hereunder
shall be made on the basis of a year of 360 days for the actual number of
days elapsed. Whenever any payment or deposit to be made hereunder shall
be due on a day other than a Business Day, such payment or deposit shall be
made on the next succeeding Business Day and such extension of time shall
be included in the computation of such payment or deposit. All payments
received by the Purchaser hereunder on account of a Purchased Interest
shall be applied by the Purchaser first to pay itself accrued Yield with
respect to the related Purchaser's Investment and second to repay such
Purchaser's Investment.
Section 1.5. Facility Termination Date. The "Facility Termination
Date" means the later of (i) March 31, 1997 and (ii) any subsequent date
agreed upon from time to time by the parties hereto in accordance with this
Section 1.5. During the thirty (30) day period ending on the thirtieth
(30th) day before the then existing Facility Termination Date, the
Servicer, the Sellers and the Guarantor may, by sending a letter
substantially in the form of Exhibit IX to the Purchaser, request that the
Facility Termination Date be extended for an additional 364 days. The
Purchaser may, in its sole discretion, agree to extend such Facility
Termination Date or decline to extend such Facility Termination Date. If
the Purchaser agrees to extend such Facility Termination Date, then it
shall sign a copy of such letter and send the same to the Servicer and the
Facility Termination Date shall be extended to, and shall be deemed to have
been amended to be, the applicable date specified in such letter. If the
Purchaser does not sign a copy of such letter and send the same to the
Servicer prior to the then existing Facility Termination Date, then the
Purchaser shall be deemed to have declined to extend (and to have declined
to amend) the Facility Termination Date.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION
Section 2.1. Representations and Warranties; Covenants. The Seller
Parties hereby severally make the representations and warranties, and
hereby agree to perform and observe the covenants, set forth in Exhibits
III and IV, respectively, hereto.
-3-
Section 2.2. Indemnities by the Sellers. Each Seller shall pay and
indemnify the Indemnified Parties in accordance with Exhibit VII hereto.
ARTICLE III.
GUARANTY
Section 3.1. Guaranty of Obligations. For valuable consideration,
the Guarantor unconditionally, absolutely and irrevocably guarantees and
promises to pay to the Purchaser on demand, in lawful money of the United
States and in immediately available funds, any and all present or future
payment and performance obligations of the Sellers hereunder owing to the
Purchaser (such guarantee and promise being referred to as this
"Guaranty"). The phrase "payment and performance obligations of the
Sellers" (hereinafter collectively referred to in this Article III as the
"Obligations") is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations, and liabilities of the Sellers,
now or hereafter made, incurred, or created, whether voluntarily or
involuntarily, and however arising, including any and all reasonable
attorneys' fees, costs, charges, Yield or interest (including interest at
the Termination Rate as contemplated by Section 1.4, it being understood
and agreed that the reference in Section 1.4 to Mattel in its capacity as
the Servicer shall not limit the effect of this Article III) owed by the
Sellers to the Purchaser, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether the Sellers
may be liable individually or jointly with others, whether recovery upon
such advances, debts, obligations or liabilities may be or hereafter
becomes barred by any statute of limitations or whether such advances,
debts, obligations or liabilities may be or hereafter become otherwise
unenforceable.
Section 3.2. Guaranty Continuing. This Guaranty is a continuing
guaranty which relates to any Obligations, including those which arise
under successive transactions which shall either cause the Sellers to incur
new Obligations, continue the Obligations from time to time, or renew them
after they have been satisfied. The Guarantor agrees that nothing shall
discharge or satisfy its obligations created hereunder except for the full
payment of the Obligations with interest as applicable. Any payment by the
Guarantor shall not reduce its maximum obligation hereunder.
Section 3.3. Guarantor Directly Liable. The Guarantor agrees that
it is directly and primarily liable to the Purchaser, that its obligations
hereunder are independent of the Obligations of the Sellers, or of any
other guarantor, and that a separate action or actions may be brought and
prosecuted against the Guarantor, whether action is brought against a
Seller or whether a Seller is joined in any such action or actions. The
Guarantor agrees that any releases which may be given by the Purchaser to a
Seller or any other guarantor shall not release it from this Guaranty.
Section 3.4. No Impairment. The obligations of the Guarantor under
this Guaranty shall not be affected, modified or impaired upon the
occurrence from time to time of any of the following, whether or not with
notice to or the consent of the Guarantor: (a) the compromise, settlement,
change, modification, amendment (whether material or otherwise) or partial
termination of any or all of the Obligations; (b) the failure to give
notice to the Guarantor of the occurrence of any Termination Event under
the terms and provisions of this Agreement; (c) the waiver of the payment,
performance or observance of any of the Obligations; (d) the taking or
omitting to take any actions referred to in this Agreement or of any action
under this Guaranty; (e) any failure, omission or delay
-4-
on the part of the Purchaser to enforce, assert or exercise any right, power
or remedy conferred in this Agreement or any other indulgence or similar act
on the part of the Purchaser in good faith and in compliance with applicable
law; (f) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshalling of
assets, receivership, insolvency, bankruptcy, readjustment, assignment for
the benefit of creditors, or other similar proceedings which affect the
Guarantor, any other guarantor of any of the Obligations of either Seller
or any of the assets of any of them, or any allegation of invalidity or
contest of the validity of this Guaranty in any such proceeding; or (g) to
the extent permitted by law, the release or discharge of any other
guarantors of the Obligations from the performance or observance of any
obligation, covenant or agreement contained in any guaranties of the
Obligations by operation of law. To the extent any of the foregoing refers
to any actions which the Purchaser may take, the Guarantor hereby agrees
that the Purchaser may take such actions in such manner, upon such terms,
and at such times as the Purchaser, in its discretion, deems advisable,
without, in any way or respect, impairing, affecting, reducing or releasing
the Guarantor from its undertakings hereunder and the Guarantor hereby
consents to each and all of the foregoing actions, events and occurrences.
Section 3.5. Waiver. The Guarantor hereby waives: (a) any and all
rights to require the Purchaser to prosecute or seek to enforce any
remedies against either Seller or any other Person liable to the Purchaser
on account of the Obligations; (b) any right to assert against the
Purchaser any defense (legal or equitable), set-off, counterclaim, or claim
which the Guarantor may now or at any time hereafter have against the
Sellers or any other Person liable to the Purchaser in any way or manner
under this Agreement; (c) all defenses, counterclaims and offsets of any
kind or nature, arising directly or indirectly from the present or future
lack of perfection, sufficiency, validity or enforceability of this
Agreement and the security interest granted pursuant hereto; (d) any
defense arising by reason of any claim or defense based upon an election of
remedies by the Purchaser, including any direction to proceed by judicial
or nonjudicial foreclosure or by deed in lieu thereof, which in any manner
impairs, affects, reduces, releases, destroys or extinguishes the
Guarantor's subrogation rights, rights to proceed against the Sellers for
reimbursement, or any other rights of the Guarantor to proceed against the
Sellers, against any other guarantor, or against any other security, with
the Guarantor understanding that the exercise by the Purchaser of certain
rights and remedies may offset or eliminate the Guarantor's right of
subrogation against the Sellers, and that the Guarantor may therefore incur
partially or totally nonreimbursable liability hereunder; (e) all
presentments, demands for performance, notices of non-performance,
protests, notices of protest, notices of dishonor, notices of default,
notice of acceptance of this Guaranty, and notices of the existence,
creation, or incurring of new or additional advances, debts, obligations or
liabilities, and all other notices or formalities to which the Guarantor
may be entitled; and (f) without limiting the generality of the foregoing,
the Guarantor hereby expressly waives any and all benefits of (i)
California Civil Code Sections 2809, 2810, 2819, 2825, 2839, 2845 through
2850, 2899 and 3433 and (ii) California Code of Civil Procedure Sections
580(a), 580(b) and 726.
Section 3.6. Subrogation. The Guarantor hereby agrees that, unless
and until all Obligations have been paid to the Purchaser in full, it shall
not have any rights of subrogation, reimbursement or contribution as
against the Sellers or any other guarantor, if any, and shall not seek to
assert or enforce the same. The Guarantor understands that the exercise by
the Purchaser of certain rights and remedies contained in this Agreement
may affect or eliminate the Guarantor's right of subrogation, if any,
against the Sellers and that the Guarantor may therefore incur a partially
or totally non-reimbursable liability hereunder; nevertheless, the
Guarantor hereby authorizes and empowers the Purchaser to exercise, in its
sole discretion, any right or remedy, or any combination thereof, which
-5-
may then be available, since it is the intent and purpose of the Guarantor
that the obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances.
Section 3.7. Information. The Guarantor is presently informed of
the financial condition of the Sellers and of all other circumstances which
diligent inquiry would reveal and which bear upon the risk of nonpayment of
the Obligations. The Guarantor hereby covenants that it will continue to
keep itself informed of the financial condition of the Sellers and of all
other circumstances which bear upon such risk of nonpayment. The Guarantor
hereby waives its right, if any, to require the Purchaser to disclose to it
any information which the Purchaser may now or hereafter acquire concerning
such condition or circumstances including the release of any other
guarantor.
Section 3.8. Evidence of Obligations. The Purchaser's books and
records evidencing the Obligations shall be admissible in any action or
proceeding and shall be binding upon the Guarantor for the purpose of
establishing the terms set forth therein and shall constitute prima facie
proof thereof.
ARTICLE IV.
MISCELLANEOUS
Section 4.1. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by any Seller Party
herefrom shall be effective unless in a writing signed by the Purchaser
(including any successor or assign to the extent such amendment or waiver
directly affects the interest of such successor or assign in the Listed
Receivables), and, in the case of any amendment, by such Seller Party and
then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure
on the part of the Purchaser to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
Section 4.2. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and sent or delivered, to each party
hereto, at its address set forth under its name on Schedule I hereto
(except that Purchase Notices shall be sent to the address set forth in the
form of Purchase Notice attached as Exhibit VIII) or at such other address
as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by hard copy sent by first class mail),
and notices and communications sent by other means shall be effective when
received.
Section 4.3. Assignability. This Agreement and the Purchaser's
rights and obligations herein (including ownership of each Purchased
Interest) shall be assignable, in whole or in part, by the Purchaser and
its successors and assigns to an Eligible Assignee in a minimum amount of
twenty-five million dollars ($25,000,000); provided that unless a
Termination Event has occurred and is continuing, no such assignment shall
be effective without the prior written consent of Mattel, which consent
shall not be unreasonably withheld; provided, however, that no consent of
Mattel shall be required in connection with any assignment by the Purchaser
or its successors and assigns to an Affiliate of the Purchaser which is
otherwise an Eligible Assignee (each such assignee, an
-6-
"Assignee"); provided, further, however, that the Seller Parties may continue
to deal solely and directly with the Purchaser in connection with the interest
so assigned to an Assignee until written notice of such assignment, together
with payment instructions, addresses and related information with respect
to the Assignee, shall have been given to the Servicer by the Purchaser and
the Assignee. From and after the date that such notice and information
shall have been so given, the Assignee shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it,
shall have the rights and obligations of the Purchaser under the
Transaction Documents, and (ii) the Purchaser shall, to the extent that
rights and obligations hereunder and under the other Transaction Documents
have been assigned by it, relinquish its rights and be released from its
obligations under the Transaction Documents. No Seller Party may assign
its rights or delegate its obligations hereunder or any interest herein
without the prior written consent of the Purchaser, except as expressly
provided for in Exhibit VI with respect to the Servicer.
Section 4.4. Survival of Termination. The provisions of Sections
4.4 and 4.5, and the provisions of Article III and Exhibit VII, shall
survive any termination of this Agreement.
Section 4.5. Mattel Credit Agreement. Sections 10.1(f), 10.4, 10.5,
10.7, 10.11, 10.12 and 10.14 of the Mattel Credit Agreement are hereby
incorporated by reference as if set forth in full herein, except that for
purposes of such incorporation by reference: (i) all references to "the
Company" shall be deemed to be references to each Seller Party,
individually; (ii) all references to "Notes" or "Loan Documents" shall be
deemed to be references to the Transaction Documents; (iii) all references
to "Agent" or "Bank" shall be deemed to be references to the Purchaser;
(iv) all references to "Event of Default" shall be deemed to be references
to a Termination Event; (v) the reference to "Section 2.13" shall be deemed
to be a reference to this Agreement; (vi) all references to "Obligations"
shall be deemed to be references to the obligations of any Seller Party
under any Transaction Document; (vii) all references to "Loans" shall be
deemed to be deleted; (viii) the reference to "any Bank Affiliate" shall be
deemed to be a reference to any Affiliate; and (ix) all references to "this
Agreement" shall be deemed to be references to this Agreement.
-7-
Section 4.6. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto, and supersedes all
prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof, it being
understood and agreed that this sentence shall not limit the incorporation
by reference of terms of the Mattel Credit Agreement to the extent such
terms are specifically incorporated by reference herein. The Exhibits and
Schedules hereto are incorporated by reference herein.
[SIGNATURES FOLLOW]
-8-
IN WITNESS WHEREOF, the parties have caused this Receivables Purchase
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
MATTEL SALES CORP., as a Seller
By:/s/ William Stavro
--------------------------------
William Stavro
Senior Vice President, Treasurer
FISHER-PRICE, INC., as a Seller
By:/s/ William Stavro
--------------------------------
William Stavro
Senior Vice President, Treasurer
MATTEL, INC., as the Servicer and as
the Guarantor
By:/s/ William Stavro
--------------------------------
William Stavro
Senior Vice President, Treasurer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as the Purchaser
By:/s/ Robert W. Troutman
--------------------------
Robert W. Troutman
Managing Director
-9-
EXHIBIT I
DEFINITIONS
As used in the Receivables Purchase Agreement dated as of September
13, 1996 among Mattel Sales Corp., as Seller, Fisher-Price, Inc., as
Seller, Mattel, Inc., as Servicer, and Bank of America National Trust and
Savings Association, as Purchaser (as the same may be amended, amended and
restated, or otherwise modified from time to time, this "Agreement" or this
"Receivables Purchase Agreement"), including its Exhibits, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Exhibit and Schedule references in
this Agreement (including in this Exhibit) are to Sections of and Exhibits
and Schedules to this Agreement. Unless the context otherwise requires,
capitalized terms used without definition in this Agreement have the
meanings set forth in the Mattel Credit Agreement.
"Adverse Claim" means a lien, security interest or other charge
or encumbrance, or any other type of right or claim, it being understood
and agreed that a lien, security interest or other charge or encumbrance,
or any other type of right or claim, in favor of the Purchaser shall not
constitute an Adverse Claim.
"Bankruptcy Code" means the United States Bankruptcy Reform Act
of 1978 (11 U.S.C. Section 101, et seq.), as amended from time to time.
"Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in Los Angeles, California are authorized or
required by law to close and, if the applicable Business Day relates to the
Eurodollar Rate, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Collections" means, with respect to any Listed Receivable, (a)
all funds which are received by the related Seller or the Servicer in
payment of any amounts owed in respect of such Listed Receivable
(including, without limitation, purchase price, finance charges, interest
and all other charges), or applied to amounts owed in respect of such
Listed Receivable (including, without limitation, insurance payments and
net proceeds of the sale or other disposition of repossessed goods or other
collateral or property of the Obligor or any other Person directly or
indirectly liable for the payment of such Listed Receivable and available
to be applied thereon), and (b) all other proceeds of such Listed
Receivable.
"Contract" means, with respect to any Listed Receivable, any and
all contracts, understandings, instruments, agreements, leases, invoices,
notes, or other writings pursuant to which such Listed Receivable arises or
which evidences such Listed Receivable or under which the Obligor becomes
or is obligated to make payment in respect of such Listed Receivable.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Sellers in effect on the date of
this Agreement, as amended from time to time to the extent permitted
herein.
I-1
"Dilution" means any adjustment in the outstanding principal
balance of a Listed Receivable attributable to any credits, rebates,
billing errors, sales or similar taxes, discounts, setoffs, disputes,
chargebacks, returns, allowances or similar items.
"Due Date" means, with respect to any Purchase Date, the
numerically corresponding day in the third month immediately following the
month in which such Purchase Date occurs; provided, however, that if such
day in such third month is not a Business Day, then the Due Date shall be
the next Business Day after such day; provided, further, however that if
such next Business Day falls in the month after such third month, then the
Due Date shall be the Business Day immediately preceding the numerically
corresponding day referred to earlier in this sentence.
"Eligible Receivables" means, on an applicable Purchase Date, any
Receivable: (i) which has a stated maturity and which stated maturity is
not later than the related Due Date; (ii) which is an "account" as defined
in the UCC of any applicable jurisdiction; (iii) which is denominated and
payable only in United States dollars in the United States; (iv) which,
together with the Contract related thereto, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor
enforceable against the Obligor in accordance with its terms and subject to
no offset, counterclaim or other defense; (v) which, together with the
Contract related thereto, does not contravene in any material respect any
Governmental Rules applicable thereto and with respect to which no part of
the Contract related thereto is in violation of any such Governmental Rule
in any material respect; (vi) which satisfies all applicable requirements
of the Credit and Collection Policy; (vii) which was generated in the
ordinary course of the related Seller's business; and (viii) which was
generated by the applicable Seller at such time as the Obligor had long-
term, unsecured debt rated at least A+ by S&P and A1 by Moody's.
"Eurodollar Rate" means, for any Yield Period, an interest rate
per annum (rounded upward to the nearest 1/16th of 1%) determined pursuant
to the following formula:
Eurodollar Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any Yield Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to
the nearest 1/100th of 1%) in effect on the date LIBOR for such Yield
Period is determined under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred
to as "Eurocurrency liabilities") having a term comparable to such
Yield Period; and
"LIBOR" means the rate of interest per annum determined by the
Purchaser to be the rate of interest at which dollar deposits in the
approximate amount of the Purchaser's Investment associated with such
Yield Period would be offered to major banks in the London interbank
market at their request at or about 11:00 a.m. (London time) on the
second Business Day prior to the commencement of such Yield Period.
"Event of Default" has the meaning set forth in the Mattel Credit
Agreement.
I-2
"Facility Termination Date" has the meaning set forth in Section
1.5.
"Guarantor" has the meaning set forth in the preamble.
"Indemnified Amounts" means any and all claims, damages, costs,
expenses, losses and liabilities (including all reasonable fees and other
charges of any law firm or other external counsel, the reasonable allocated
cost of internal legal services and all reasonable other charges of
internal counsel).
"Indemnified Parties" means the Purchaser and its Affiliates and
their respective employees, agents, successors, transferees and assigns.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Person relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; and in the case of clause (a) or (b),
undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"Listed Receivables" has the meaning set forth in Section 1.2(a).
"Listed Receivables Balance" means, with respect to a Purchased
Interest and the related Seller, the outstanding principal balance, as of
the date the related Purchase Notice is sent to the Purchaser, of the
related Listed Receivables.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, operations, properties, assets, business prospects or
condition (financial or otherwise) of Mattel and its Subsidiaries, taken as
a whole, or (ii) a material impairment of the ability of Mattel to perform
its obligations under this Agreement.
"Mattel Credit Agreement" means the 1995 Credit Agreement (as
defined below), as amended or amended and restated from time to time. The
"1995 Credit Agreement" means the Credit Agreement dated as of March 10,
1995, among Mattel, the Banks named therein, and Bank of America, as Agent.
In the event that any term of or section number in the 1995 Credit
Agreement that is incorporated by reference in this Agreement (including
pursuant to Section 4.5 of this Agreement or pursuant to paragraph (b) of
Exhibit VII of this Agreement) is changed by any amendment or amendment and
restatement of the 1995 Credit Agreement (e.g., an amendment and
restatement that renumbers Section 10.14 of the 1995 Credit Agreement as
Section 10.16 of the amended and restated agreement), the parties hereto
will cooperate in good faith to amend this Agreement in order to correct
the references herein to the applicable terms and section numbers of the
Mattel Credit Agreement incorporated by reference in this Agreement.
"Obligor" means Wal-Mart Stores, Inc.
"Purchase Date" has the meaning set forth in Section 1.2(a).
"Purchase Notice" has the meaning set forth in Section 1.2(a).
I-3
"Purchased Interest" means, at any time, with respect to a
Seller, the undivided percentage ownership interest of the Purchaser
acquired pursuant to this Agreement from such Seller in such Seller's
Listed Receivables, Related Security with respect to such Receivables,
Collections with respect to such Receivables, and proceeds of, and amounts
received or receivable under any or all of, the foregoing. Such undivided
percentage ownership interest shall be computed as
PI + YR
-------
LRB
where:
PI = the Purchaser's Investment with respect to such Seller
at the related Purchase Date.
YR = the Yield Reserve of such Purchased Interest at the
related Purchase Date; and
LRB = the related Listed Receivables Balance as of the date
the related Purchase Notice is sent to the Purchaser.
Each Purchased Interest with respect to a Seller shall be computed in
accordance with Section 1.2(a) and shall remain constant until such time as
the related Purchaser's Investment and accrued Yield thereon shall have
been paid in full. Upon payment of the items described in the preceding
sentence the related Purchased Interest shall be zero.
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"Purchaser Rate" means a rate per annum equal to the Eurodollar
Rate plus one-quarter of one percent (0.25%). The Purchaser Rate for a
Yield Period shall be established on the applicable day contemplated by the
definition of LIBOR.
"Purchaser's Account" means Account No. 12331-83980, reference
"Mattel Receivables Payment", ABA No. 121000358, maintained at the
Purchaser, or any other account designated in writing by the Purchaser to
the Servicer and the Sellers from time to time.
"Purchaser's Investment" has the meaning set forth in Section
1.2(a). The amount of each Purchaser's Investment shall be reduced by
payments received by the Purchaser and applied on account of such
Purchaser's Investment pursuant to this Agreement.
"Purchaser's Investment Limit" means one hundred million dollars
($100,000,000).
"Receivable" means any indebtedness and other obligations owed to
a Seller or any right of a Seller to payment from or on behalf of the
Obligor whether constituting an account, chattel paper, instrument or
general intangible, arising in connection with the sale or lease of goods
or the rendering of services by such Seller, and includes, without
limitation, the obligation to pay any finance charges, fees and other
charges with respect thereto.
I-4
"Related Security" means with respect to any Listed Receivable:
(i) all of the related Seller's interest in any goods (including returned
goods), and documentation of title evidencing the shipment or storage of
any goods (including returned goods), relating to any sale giving rise to
such Receivable; (ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all UCC financing statements or similar filings
signed by the Obligor relating thereto; and (iii) all guarantees,
indemnities, insurance and other agreements (including the related
Contract) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable or otherwise relating to
such Receivable whether pursuant to the Contract related to such Receivable
or otherwise.
"Seller Party" means each of the Sellers and Mattel (in its
capacity as the Servicer or the Guarantor).
"Sellers" has the meaning set forth in the preamble to this
Agreement. A reference to the "related" Seller means (i) with respect to a
Receivable, that such Receivable by its original terms was owed to such
Seller, and (ii) with respect to a Purchased Interest, that such Purchased
Interest pertains to an investment in such Receivables.
"Servicer" has the meaning set forth in the preamble to this
Agreement.
"Termination Event" has the meaning specified in Exhibit V.
"Termination Event Day" means a day on which a Termination Event
exists.
"Termination Rate" means a rate per annum equal to the Base Rate
plus two percent (2.0%).
"Transaction Documents" means this Agreement and all
certificates, instruments, UCC financing statements, reports, notices,
letters, agreements and documents executed or delivered by any Seller Party
under or in connection with this Agreement (including notices and letter
agreements based on Exhibit VIII or Exhibit IX), thereby excluding, for
example, the Mattel Credit Agreement.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction.
"UCC Filing Date" means the first date on which any UCC financing
statement is filed pursuant to paragraph (c) of Exhibit VI.
"Yield", for any Purchased Interest for each day in a related
Yield Period, means an amount determined as follows:
PR x PI x 1/360
where:
PR = the Purchaser Rate for such Yield Period; and
I-5
PI = the Purchaser's Investment with respect to such Purchased
Interest during such Yield Period;
provided that if one or more Termination Event Days shall occur during any
Yield Period, the Yield for such Purchased Interest for each such
Termination Event Day in such Yield Period shall be deemed to accrue in
accordance with the following formula:
TR x PI x 1/360
where:
TR = the Termination Rate on such Termination Event Day; and
PI = the Purchaser's Investment with respect to such Purchased
Interest on such Termination Event Day.
It is hereby agreed and understood no provision of this Agreement
shall require the payment or permit the collection of Yield in excess of
the maximum permitted by applicable law.
"Yield Period" means each period from and including a Purchase
Date to but excluding the related Due Date.
Other Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles. All terms used in Division 9 of the UCC in the State of
California, and not specifically defined herein, are used herein as defined
in such Division 9. Unless the context otherwise requires, "or" means
"and/or", and "including" (and with correlative meaning "include" and
"includes") means including without limiting the generality of any
description preceding such term.
I-6
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The initial
purchase under this Agreement is subject to the conditions precedent that
the Purchaser shall have received on or before the related Purchase Date
the following, each in form and substance (including the date thereof)
satisfactory to the Purchaser: (a) a counterpart of this Agreement duly
executed by the Seller Parties; (b) favorable opinions of (x) the General
Counsel or an Assistant General Counsel of Mattel, relating to the Seller
Parties and (y) Latham & Watkins, special counsel to the Seller Parties;
(c) a certificate of the Assistant Secretary of each Seller Party
certifying in each case (i) the names and signatures of its applicable
officers that shall execute and deliver the Transaction Documents (on which
certificate the Purchaser may conclusively rely until such time as the
Purchaser shall receive a revised certificate meeting the requirements of
this clause), (ii) that attached thereto is a true and correct copy of the
certificate or articles of incorporation (certified by the Secretary of
State of Delaware or California, as the case may be) and by-laws of such
Seller Party, in each case as in effect on the date of such certification,
(iii) that attached thereto are true and complete copies of excerpts of
resolutions adopted by the Board of Directors of such Seller Party,
approving the execution, delivery and performance of this Agreement and all
other Transaction Documents to which such Seller Party is a party; and (iv)
that attached thereto are good standing certificates (x) issued by the
Secretary of State of California with respect to Mattel Sales and (y)
issued by the Secretary of State of Delaware with respect to Fisher-Price
and Mattel; and (d) UCC-1 financing statements (x) signed by Mattel Sales
in form for filing with the Secretary of State of California and (y) signed
by Fisher-Price in form for filing with the Department of State of New
York, it being understood and agreed that such financing statements are to
be filed only in the circumstances contemplated by paragraph (c) of Exhibit
VI.
2. Conditions Precedent to All Purchases. Each purchase
(including the initial purchase) hereunder shall be subject to the further
conditions precedent that: (a) on the date of such purchase the following
statements shall be true (and acceptance of the proceeds of such purchase
shall be deemed a representation and warranty by the Sellers that such
statements are then true): (i) the representations and warranties contained
in Exhibit III are true and correct on and as of the date of such purchase
as though made on and as of such date (except to the extent any
representation and warranty is expressly made as of an earlier date); and
(ii) no event has occurred and is continuing, or would result from such
purchase, that constitutes a Termination Event or that would constitute a
Termination Event but for the requirement that notice be given or time
elapse or both; (b) after giving effect to the payment contemplated by
Section 1.2 on the date of such purchase, the aggregate outstanding
Purchaser's Investments shall not exceed the Purchaser's Investment Limit;
(c) the Purchaser shall have received a fee of three thousand dollars
($3,000) with respect to such purchase on or before the date of such
purchase; (d) the Purchaser shall have received a list of Eligible
Receivables from each Seller in accordance with the last paragraph of
Section 1.2(a); and (e) the related Due Date is on or prior to the Facility
Termination Date.
II-1
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
Each Seller Party severally represents and warrants, as to itself
alone, as applicable, to the Purchaser as follows:
(a) Such Seller Party is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly qualified to do business, and is in good
standing, as a foreign corporation in every jurisdiction where the nature
of its business requires it to be so qualified, except in jurisdictions in
which the failure to be qualified or in good standing has or will have no
Material Adverse Effect.
(b) The execution, delivery and performance by such Seller Party
of this Agreement and the other Transaction Documents to which it is a
party, including such Seller Party's use of the proceeds of purchases, (i)
are within such Seller Party's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene or
result in a default under or conflict with (1) such Seller Party's charter
or by-laws, (2) any law, rule or regulation applicable to such Seller
Party, the violation of which would result in a Material Adverse Effect,
(3) any Contractual Obligation of such Seller Party the violation of which
would have a Material Adverse Effect or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting such Seller Party or
its property, the violation of which would result in a Material Adverse
Effect, and (iv) do not result in or require the creation of any material
Adverse Claim upon or with respect to any of its material properties. This
Agreement and the other Transaction Documents to which it is a party have
been duly executed and delivered by such Seller Party.
(c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Person or other Person is
required for the due execution, delivery and performance by such Seller
Party of this Agreement or any other Transaction Document to which it is a
party, it being understood and agreed that the Purchaser has the right to
file UCC-1 financing statements pursuant to Exhibit VI.
(d) This Agreement and the other Transaction Documents to which
it is a party constitutes the legal, valid and binding obligation of such
Seller Party enforceable against such Seller Party in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating
to or limiting creditors' rights generally.
(e) There is no pending or, to the knowledge of such Seller
Party, threatened action or proceeding affecting such Seller Party or any
of its Subsidiaries before any Governmental Person or arbitrator which, in
the reasonable opinion of such Seller Party, would result in a Material
Adverse Effect, or which affects or purports to affect the legality,
validity or enforceability of this Agreement or the other Transaction
Documents.
(f) With respect to each Seller, such Seller is the legal and
beneficial owner of its Listed Receivables (and all Related Security) free
and clear of any Adverse Claim; upon each purchase, the Purchaser shall
have a valid and enforceable first priority (and, on and after the UCC
Filing Date, perfected) undivided percentage ownership interest or security
interest in each such
III-1
Listed Receivable and in the Related Security and Collections and other
proceeds with respect thereto, in each case free and clear of any Adverse
Claim. No effective financing statement or other instrument similar in
effect covering any related Contract or any such Receivable or the Related
Security or Collections with respect thereto is on file in any recording
office other than any financing statement or similar instrument in favor
of the Purchaser.
(g) All exhibits, financial statements, documents, books,
records, other information or reports furnished or to be furnished at any
time by or on behalf of such Seller Party to the Purchaser in connection
with this Agreement are or will be accurate in all material respects as of
their respective dates or (except as otherwise disclosed to the Purchaser
at such time) as of the date so furnished, and no such item contains or
will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were
made, not misleading, except to the extent that any such statement or
omission that was untrue or misleading at the time made or that
subsequently became untrue or misleading has been superseded or corrected
by information provided to the Purchaser prior to the date of this
Agreement.
(h) With respect to each Seller, the principal place of business
and chief executive office (as such terms are used in the UCC) of such
Seller and the office where such Seller keeps its records concerning the
Listed Receivables are located at the address referred to in paragraph (b)
of Exhibit IV.
(i) Such Seller Party is not in violation of any order of any
court, arbitrator or Governmental Person, which violation would have a
Material Adverse Effect.
(j) With respect to each Seller, no proceeds of any purchase
from such Seller will be used for any purpose that violates any applicable
law, rule or regulation, including Regulations G or U of the Federal
Reserve Board.
(k) No event has occurred and is continuing, or would result
from a purchase in respect of the related Purchased Interest or from the
application of the proceeds therefrom, which constitutes a Termination
Event.
(l) With respect to each Seller, such Seller has accounted for
each sale of undivided percentage ownership interests in its Listed
Receivables in its books and financial statements as sales, consistent with
generally accepted accounting principles.
(m) With respect to each Seller Party, such Seller Party has
complied with all of the material terms, covenants and agreements contained
in this Agreement and the other Transaction Documents and applicable to it,
except, in any such case, where the consequences, direct or indirect, of
any such noncompliance, if any, would not result in a Material Adverse
Effect.
(n) With respect to each Seller, such Seller's complete
corporate name is set forth in the preamble to this Agreement, and such
Seller does not use and has not during the last five years used any other
corporate name, trade name, doing business name or fictitious name, except
as set forth on Schedule II and except for names first used after the date
of this Agreement and set forth in a notice delivered to the Purchaser
pursuant to paragraph (b) of Exhibit IV.
III-2
EXHIBIT IV
COVENANTS
Until the latest of (i) the date on which no Purchaser's Investment of
or Yield in respect of any Purchased Interest shall be outstanding, (ii)
the date all other amounts owed by the Sellers or the Servicer under this
Agreement to the Purchaser and any other Indemnified Party shall be paid in
full and (iii) the Facility Termination Date:
(a) Compliance with Laws, Etc. Each Seller Party shall comply
in all material respects with all applicable laws, rules, regulations and
orders, and preserve and maintain its corporate existence, rights,
franchises, qualifications, and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the failure
so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not result in a Material Adverse
Effect.
(b) Offices, Records and Books of Account; Etc. Each Seller (i)
shall keep its principal place of business and chief executive office (as
such terms are used in the UCC) and the office where it keeps its records
concerning the Listed Receivables at the address of such Seller set forth
under its name on Schedule I to this Agreement or, upon at least 15 days'
prior written notice of a proposed change to the Purchaser, at any other
locations (provided that, if the UCC Filing Date has occurred, then, prior
to making such a change, such Seller shall have taken all actions in any
applicable jurisdiction that may be requested by the Purchaser in
accordance with paragraph (d) of this Exhibit); and (ii) shall provide the
Purchaser with at least 15 days' written notice prior to making any change
in such Seller's name or making any other change in such Seller's identity
or corporate structure (including a merger) which could render any UCC
financing statement theretofore filed with respect to such Person by any
other Person (including, if applicable, any UCC financing statements filed
in connection with this Agreement) "seriously misleading" as such term is
used in the UCC (provided that, if the UCC Filing Date has occurred, then,
prior to making such a change, such Seller shall have taken all actions in
any applicable jurisdiction that may be requested by the Purchaser in
accordance with paragraph (d) of this Exhibit); each notice to the
Purchaser pursuant to this sentence shall set forth the applicable change
and the effective date thereof. Each Seller also will maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Listed Receivables and related Contracts in the
event of the destruction of the originals thereof), and keep and maintain
all documents, books, records, computer tapes and disks and other
information reasonably necessary or advisable for the collection of all
Listed Receivables (including records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to
each existing Listed Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. Each Seller Party shall, at its expense, timely and
fully perform and comply in all material respects with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables, and timely and fully comply
in all material respects with the Credit and Collection Policy with regard
to each such Listed Receivable and the related Contract.
(d) Ownership Interest, Etc. Each Seller shall, at its expense,
take all action necessary or desirable to establish and maintain a valid,
enforceable and first priority (and, after the
IV-1
UCC Filing Date, perfected) security interest in the items described in
Section 1.2(d), free and clear of any Adverse Claim, in favor of the
Purchaser, including taking such action to protect (and, on and after the
UCC Filing Date, to perfect) or more fully evidence the interest of the
Purchaser under this Agreement as the Purchaser may request.
(e) Sales, Liens, Etc. Neither Seller shall sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Adverse Claim upon or with respect to, any or all of its
right, title or interest in, to or under, any item described in Section
1.2(d) (including such Seller's undivided interest in any Listed
Receivable, Related Security, or Collections), or upon or with respect to
any account to which any Collections of any Listed Receivables are sent
(except the rights of the depository institution that maintains such
account), or assign any right to receive income in respect of any items
contemplated by this paragraph (e).
(f) Extension or Amendment of Receivables. Except as expressly
provided in this Agreement, no Seller Party shall adjust the outstanding
principal balance of, or otherwise modify the terms of, any of the Listed
Receivables, or amend, modify or waive any term or condition of any related
Contract; provided that notwithstanding any other provision of this
Agreement, no Seller Party shall extend the maturity of any Listed
Receivable.
(g) Change in Business or Credit and Collection Policy. No
Seller Party shall make any material change in the character of its
business, or in the Credit and Collection Policy, that would result in a
Material Adverse Effect. Neither Seller shall make any other change in the
Credit and Collection Policy without the prior written consent of the
Purchaser.
(h) Audits. Each Seller Party shall, from time to time during
regular business hours (and with reasonable advance notice) as requested by
the Purchaser, permit the Purchaser, or its agents or representatives, (x)
to examine and make copies of and abstracts from all books, records and
documents (including computer tapes and disks) in the possession or under
the control of such Seller relating to Listed Receivables and the Related
Security, including the related Contracts, and (y) to visit the offices and
properties of such Seller Party for the purpose of examining such materials
described in clause (x) above, and to discuss matters relating to Listed
Receivables and the Related Security or such Seller Party's performance
hereunder or under the Contracts with any of the officers, employees,
agents or contractors of such Seller Party having knowledge of such
matters. Without limiting the foregoing, such examinations, copies,
abstracts, visits and discussions may cover, among other things, maturity
dates, agings, past dues, charge-offs, and offsets with respect to the
Listed Receivables.
(i) Status of Listed Receivables. In the event that any third
party and any Seller Party enter into negotiations or discussions regarding
the provision of financing (whether in the form of a loan, purchase or
otherwise) with respect to any Receivable that is a Listed Receivable, such
Seller Party shall inform such third party that the applicable Seller has
sold an undivided percentage ownership interest in such Listed Receivable
to the Purchaser.
(j) Reporting Requirements.
IV-2
(x) If a Purchaser's Investment with respect to an
undivided interest purchased by the Purchaser on a Purchase Date
remains outstanding on the related Due Date after giving effect
to Section 1.3, then the related Seller or the Servicer shall
provide to the Purchaser on a weekly basis a report, in form and
substance satisfactory to the Purchaser, with respect to the
related Listed Receivables (including with respect to collection
efforts pertaining thereto).
(y) Each Seller Party shall provide to the Purchaser as
soon as possible and in any event within five Business Days after
the occurrence of each Termination Event or event which, with the
giving of notice or lapse of time, or both, would constitute a
Termination Event, a statement of the chief financial officer of
such Seller Party setting forth details of such Termination Event
or event and the action that such Seller Party has taken and
proposes to take with respect thereto.
(z) Each Seller Party shall provide to the Purchaser such
other information respecting its Listed Receivables or the
condition or operations, financial or otherwise, of such Seller
or any of its Affiliates as the Purchaser may from time to time
reasonably request.
IV-3
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) Any Seller Party shall fail (i) to make when due any payment
or deposit to be made by it under this Agreement with respect to the
related Purchased Interest (including, in the case of the Servicer, failing
to deliver to the Purchaser on any Due Date an amount equal to the
Purchaser's Investments plus accrued Yield thereon) or (ii) to perform or
observe in any material respect, within 15 days after written notice
thereof, any other material term, covenant or agreement contained in any
Transaction Document on its part to be performed or observed or
(b) Any representation or warranty made or deemed made by any
Seller Party (or any of its officers) under or in connection with any
Transaction Document or any material information or report delivered by any
Seller Party pursuant to any Transaction Document shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered; or
(c) Any Event of Default shall have occurred; or
(d) The Purchaser shall fail to have a valid and enforceable
first priority (and, on and after the UCC Filing Date, perfected) undivided
percentage ownership interest or security interest in each Receivable and
the Related Security and Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim; or
(e) There shall have occurred any event not otherwise covered by
this Exhibit which has or will have a Material Adverse Effect.
V-1
EXHIBIT VI
ADMINISTRATION AND COLLECTION
(a) Appointment of Servicer. Mattel is hereby designated as,
and hereby agrees to perform the duties and obligations of, the Servicer
pursuant to the terms hereof; provided that, with respect to any group of
Listed Receivables, Mattel (solely in its capacity as Servicer) may, at any
time, upon prior written notice to the Purchaser, delegate any or all of
its duties and obligations as Servicer under this Agreement to an Affiliate
of Mattel; provided, however, that notwithstanding any such delegation,
Mattel shall remain liable for the performance of the duties and
obligations of the Servicer in accordance with the terms of this Agreement
without diminution of such liability by virtue of such delegation and to
the same extent and under the same terms and conditions as if Mattel alone
were performing such duties and obligations. Subject to the foregoing,
Mattel hereby delegates to Fisher-Price all of Mattel's duties and
obligations under paragraph (b) below with respect to the Listed
Receivables of Fisher-Price. Mattel acknowledges that the Purchaser has
relied on the agreement of Mattel to act as the Servicer hereunder in
making its decision to execute and deliver this Agreement. Accordingly,
Mattel agrees that it will not voluntarily resign as the Servicer.
(b) Duties of Servicer. The Servicer shall take or cause to be
taken all such action as may be necessary or advisable to collect each
Listed Receivable from time to time, all in accordance with this Agreement
and all applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy;
provided, however, that the Servicer shall not extend the maturity of any
Listed Receivable. Each Seller shall deliver to the Servicer and the
Servicer shall hold for the benefit of such Seller and the Purchaser in
accordance with their respective interests, all records and documents
(including computer tapes or disks) with respect to such Seller's Listed
Receivables. Notwithstanding anything to the contrary contained herein,
the Purchaser may direct the Servicer to commence or settle any legal
action to enforce collection of any Listed Receivable or to foreclose upon
or repossess any Related Security; provided, however, that no such
direction may be given unless (x) a Termination Event has occurred and is
continuing and (y) the Purchaser believes in good faith that failure to
commence, settle, or effect such legal action, foreclosure or repossession
could materially and adversely affect a material portion of the Listed
Receivables.
(c) Enforcement Rights. Notwithstanding any other provision of
this Agreement, during the continuation of a Termination Event:
(i) at any time and from time to time the Purchaser may direct
the Obligor that payment of all amounts payable under any Listed
Receivable be made directly to the Purchaser or its designee;
(ii) at any time and from time to time the Purchaser may
instruct each Seller to give notice of the Purchaser's Interest in
such Seller's Listed Receivables to the Obligor, which notice shall
direct that payments be made directly to the Purchaser or its
designee, and upon such instruction from the Purchaser such Seller
shall give such notice at the expense of such Seller;
(iii) at any time and from time to time the Purchaser may request
each Seller Party to, and upon such request such Seller Party shall,
assemble all of the records necessary or
VI-1
desirable to collect such the Listed Receivables and the Related
Security, and transfer or license the use of, to the Purchaser, all
software necessary or desirable to collect such Listed Receivables and
the Related Security, and make the same available to the Purchaser or
its designee at a place selected by the Purchaser;
(iv) at any time and from time to time the Purchaser may request
each Seller Party to, and upon such request such Seller Party shall as
soon as is practicable and in any event within five Business Days of
such request, segregate all cash, checks and other instruments
received by it from time to time constituting Collections with respect
to the Listed Receivables in a manner acceptable to the Purchaser and,
promptly upon receipt, remit all such cash, checks and instruments,
duly endorsed or with duly executed instruments of transfer, to the
Purchaser or its designee;
(v) at any time and from time to time the Purchaser may request
the Sellers to, and upon such request the Sellers shall, sign and
deliver to the Purchaser UCC financing statements with respect to the
items described in Section 1.2(d), in form and substance satisfactory
to the Purchaser, and the Purchaser shall have the right to file such
financing statements (and the UCC financing statements delivered
pursuant to Exhibit II) in such jurisdictions as it deems to be
necessary or appropriate to protect its interest in such items; and
(vi) each Seller Party hereby authorizes the Purchaser, and
irrevocably appoints the Purchaser as its attorney-in-fact with full
power of substitution and with full authority in the place and stead
of such Seller Party, which appointment is coupled with an interest,
to take any and all steps in the name of such Seller Party and on
behalf of such Seller Party necessary or desirable, in the
determination of the Purchaser, to collect any and all amounts or
portions thereof due under any and all of the Listed Receivables or
Related Security, including endorsing the name of such Seller Party on
checks and other instruments representing Collections and enforcing
such Listed Receivables, Related Security and the related Contracts.
Notwithstanding anything to the contrary contained in this paragraph,
none of the powers conferred upon such attorney-in-fact pursuant to
the immediately preceding sentence shall subject such attorney-in-fact
to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
(d) Responsibilities of the Sellers. Anything herein to the
contrary notwithstanding, each Seller shall (x) perform all of its
obligations under the Contracts related to its Listed Receivables to the
same extent as if interests in such Listed Receivables had not been
transferred hereunder and the exercise by the Purchaser of its rights
hereunder shall not relieve such Seller from such obligations, and (y) pay
when due any taxes, including any sales taxes payable in connection with
the Listed Receivables and their creation and satisfaction. The Purchaser
shall not have any obligation or liability with respect to any Listed
Receivable, any Related Security or any related Contract, nor shall the
Purchaser be obligated to perform any of the obligations of a Seller under
any of the foregoing.
VI-2
EXHIBIT VII
INDEMNIFICATION
(a) Indemnification. Without limiting any other rights that the
Indemnified Parties may have hereunder or under applicable law, each Seller
hereby severally agrees (x) to indemnify each Indemnified Party from and
against any and all Indemnified Amounts awarded against or incurred by such
Indemnified Party arising out of or resulting from this Agreement or the
use of proceeds of purchases or the ownership of the Purchased Interest
relating to such Seller, or any interest therein, or in respect of any
Receivable of such Seller or any related Contract, and (y) to pay within 15
days of demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against such Indemnified Amounts,
including Indemnified Amounts relating to or resulting from any of the
following: (i) the failure of any information provided to the Purchaser
with respect to Listed Receivables, Collections, Related Security or this
Agreement to be true and correct; (ii) the failure of any representation or
warranty or statement made or deemed made by such Seller or the Servicer
under or in connection with this Agreement to have been true and correct in
all respects when made (it being understood and agreed that for purposes of
this Exhibit VII, in determining whether any such representation or
warranty or statement was true and correct in all respects when made, any
qualification in Exhibit III as to materiality or to a Material Adverse
Effect or to limitations on enforcement shall be disregarded); (iii) the
failure by such Seller or the Servicer to comply with any applicable law,
rule or regulation with respect to any Listed Receivable of such Seller or
the related Contract, or the failure of any Listed Receivable of such
Seller or the related Contract to conform to any such applicable law, rule
or regulation; (iv) the failure to vest in the Purchaser a valid and
enforceable first priority perfected (A) undivided percentage ownership
interest, to the extent of the related Purchased Interest, in the Listed
Receivables of such Seller and the Related Security and Collections with
respect thereto and (B) security interest in the items described in Section
1.2(d), in each case free and clear of any Adverse Claim; (v) any dispute,
claim, counterclaim, offset or defense (other than discharge in an
Insolvency Proceeding of the Obligor) of the Obligor to the payment of any
Listed Receivable of such Seller (including a defense based on such Listed
Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its
terms), any Dilution or other adjustment with respect to a Listed
Receivable of such Seller (whether or not contemplated by Exhibit VI),
excluding, however, adjustments required as a matter of law because the
Obligor is a party to an Insolvency Proceeding, or any claim resulting from
the sale of the goods or services related to such Listed Receivable or the
furnishing or failure to furnish such goods or services or relating to
collection activities with respect to such Listed Receivable; (vi) any
failure of such Seller or the Servicer to perform its duties or obligations
in accordance with the provisions of this Agreement, or to perform its
duties or obligations under any Contract (it being understood and agreed
that for purposes of this Exhibit VII, in determining whether a Seller or
the Servicer has performed its duties or obligations in accordance with the
provisions of this Agreement or has performed its duties or obligations
under any Contract, any qualification in Exhibit IV or Exhibit VI as to
materiality or to a Material Adverse Effect or to the rights of any
depository institution that maintains any account to which any Collections
of Listed Receivables are sent shall be disregarded); (vii) any breach of
warranty, products liability or other claim, investigation, litigation or
proceeding arising out of or in connection with goods or services which are
the subject of any Contract relating to such Seller's Listed Receivables;
(viii) the commingling of Collections of such Seller's Listed Receivables
at any time with other funds; (ix) any investigation, litigation or
proceeding related to this Agreement or the use of proceeds of purchases or
the ownership of the related Purchased Interest or in respect of any Listed
VII-1
Receivable of such Seller or any Related Security or Contract in respect
thereof; (x) the occurrence of any Termination Event and the resulting
increase in Yield with respect to the Purchased Interest relating to such
Seller; (xi) the failure of any Purchased Interest relating to that Seller
to be less than or equal to one hundred percent (100%); (xii) the failure
of any of such Seller's Listed Receivables to be Eligible Receivables;
(xiii) the failure of such Seller or the Servicer to comply with the terms
of the Credit and Collection Policy; (xiv) the failure of any Contract
relating to such Seller's Listed Receivables to have terms that are
consistent with customary terms for such Seller's industry and type of
Receivable; (xv) the failure of such Seller to complete the sale and
delivery of the goods (or the performance of the services, if any) which
are the subject of any of such Seller's Listed Receivables; (xvi) the
existence of any contingent performance requirements of such Seller in
respect of any of its Listed Receivables; or (xvii) any action or inaction
by such Seller or the Servicer which impairs the interest of the Purchaser
in such Seller's Listed Receivables. Without limiting the foregoing, the
parties hereto agree that if (A) the Purchaser is paid less than the
Purchaser's Investments plus accrued Yield thereon on a Due Date pursuant
to Section 1.3 (the difference between (x) the amount so paid on such Due
Date and (y) such Purchaser's Investments plus such Yield being referred to
as the "deficiency amount"), and (B) the deficiency amount did not result
from the Obligor being a party to an Insolvency Proceeding, then for each
day following such Due Date until the Purchaser shall have received an
amount equal to the deficiency amount, the Indemnified Amounts shall
include an amount equal to the amount of interest (determined by the
Purchaser) that the Purchaser would have earned on such day on the
deficiency amount had such amount been paid to the Purchaser on such Due
Date; provided, however, that this sentence shall not limit the applicable
Seller's obligation to pay the deficiency amount to the Purchaser to the
extent that the deficiency amount otherwise would be so payable pursuant to
this Exhibit. Notwithstanding the first sentence of this paragraph, no
Seller shall be obligated to indemnify any Indemnified Party for (x)
Receivables which are uncollectible because the Obligor is a party to an
Insolvency Proceeding, it being understood and agreed that this clause (x)
shall not limit any Seller's obligations under this Exhibit arising out of
or relating to any other event, occurrence or circumstance which would give
rise to an obligation of such Seller pursuant to this Exhibit (to the
extent that such event, occurrence or circumstance adversely affects
repayment of the Purchaser's Investments plus accrued Yield thereon during
or in connection with such Insolvency Proceeding), (y) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or
any political subdivision thereof or (z) Indemnified Amounts resulting from
the gross negligence or willful misconduct on the part of the Indemnified
Party proposed to be indemnified. Notwithstanding any other provision of
this Agreement, in the event that the Obligor becomes a party to any
Insolvency Proceeding: (i) each Seller Party shall promptly (and in any
event not later than thirty days) after receipt provide to the Purchaser a
copy of any document, pleading, report, notice, information or other
writing provided to such Seller Party, during or in connection with such
Insolvency Proceeding, by or on behalf of the Obligor, any committee,
court, other Governmental Person, trustee, receiver, liquidator, custodian
or similar official in such Insolvency Proceeding, relating to the forms,
procedures, bar date or other timing issues with respect to the filing of a
Proof of Claim in such Insolvency Proceeding, provided, however, that this
clause (i) shall not become effective until the Purchaser shall have sent a
notice to the Servicer to the effect that the Purchaser desires that the
Seller Parties comply with this clause (i); (ii) the Servicer, as agent for
each Seller, shall file Proofs of Claim, at the request and direction of
the Purchaser, with respect to the Listed Receivables with such court,
other Governmental Person, trustee, receiver, liquidator, custodian or
similar official, which Proofs of Claim shall be in form and substance
reasonably satisfactory to the Purchaser, it being understood and agreed
that the Purchaser shall reimburse the Servicer for its reasonable expenses
in making such filing to the extent that such expenses relate to the Listed
VII-2
Receivables; and (iii) the Purchaser, as agent for each Seller, shall have
the right but not the obligation to file Proofs of Claim with respect to
the Listed Receivables with such court, other Governmental Person, trustee,
receiver, liquidator or similar official, it being understood and agreed
that the Purchaser shall not file such a Proof of Claim until the earlier
to occur of (x) the sixtieth day following the date on which the Purchaser
has sent a written request to the Sellers requesting such Sellers to file
such a Proof of Claim and (y) the thirtieth day prior to the bar date or
equivalent last day on which such a Proof of Claim may be filed in such
Insolvency Proceeding. As used herein, "Proof of Claim" shall refer
individually, and "Proofs of Claim" shall refer collectively, to proofs of
claim under the Bankruptcy Code or any analogous or similar item or items
which may or shall be filed by or on behalf of a creditor of any party to
an Insolvency Proceeding.
Without limiting the foregoing, if and to the extent the Purchaser
shall be required for any reason to pay over to any Seller, the Servicer or
an Obligor (or any trustee, receiver, custodian or similar official in any
Insolvency Proceeding) any amount received by the Purchaser hereunder, such
amount shall be deemed not to have been so received but rather to have been
retained by the Sellers and, accordingly, the Purchaser shall have a claim
against the applicable Seller for such amount, payable on demand.
(b) Capital Adequacy, Etc. Sections 3.1(a)-(e), 3.2, 3.3(a) and
(b), 3.4, 3.5 (excluding the first sentence thereof) and 3.6 of the Mattel
Credit Agreement are hereby incorporated by reference as if set forth in
full herein, except that for purposes of such incorporation by reference:
(i) all references to "the Company" shall be deemed to be references to
each Seller, individually; (ii) all references to "Bank", "Agent" or
"Reference Banks" shall be deemed to be references to the Purchaser; (iii)
all references to "Lending Office" shall be deemed to be a reference to the
office of the Purchaser identified on the signature page to this Agreement;
(iv) all references to "this Agreement" or "Loan Documents" shall be deemed
to be references to this Agreement or any other Transaction Documents; (v)
all references to "Loans" shall be deemed to be references to the
Purchaser's Investments; (vi) all references to "Eurodollar Rate Loans"
shall be deemed to be references to Purchaser's Investments with respect to
which Yield would then be calculated based on the Eurodollar Rate; (vii)
all references to "Base Rate Loans" shall be deemed to be references to
Purchaser's Investments with respect to which Yield would then be
calculated based on the Termination Rate; (viii) all references to "CD
Rate" or "CD Rate Loans" shall be deemed to have been deleted; (ix) all
references to "interest" shall be deemed to be references to Yield; and (x)
the following words in Section 3.3(b) of the Mattel Credit Agreement,
"pursuant to Section 2.4, either on the last day of the Interest Period
thereof if the Bank may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or promptly, if the Bank may not lawfully continue to
maintain such Eurodollar Rate Loans", shall be deemed to be replaced by the
word "promptly".
VII-3
EXHIBIT VIII
[FORM OF] PURCHASE NOTICE
[Date]
VIA FACSIMILE (510-675-7531 or 510-675-7532)
- --------------------------------------------
Bank of America National Trust
and Savings Association
1850 Gateway Boulevard
Global Payments Operations
#5693
Concord, California 94520
Attention: Cheryl Davidson
Ladies and Gentlemen:
This Purchase Notice is being delivered to you pursuant to Section 1.2
of the Receivables Purchase Agreement dated as of September 13, 1996 (as
amended, amended and restated or otherwise modified from time to time in
accordance with its terms, the "Receivables Purchase Agreement") among
Mattel Sales Corp., Fisher-Price, Inc., Mattel, Inc., and Bank of America
National Trust and Savings Association. Capitalized terms used herein
without definition shall have the meanings assigned thereto in the
Receivables Purchase Agreement.
The Servicer hereby notifies the Purchaser that each Seller proposes
to sell to the Purchaser on [insert date] (the "Purchase Date") an
undivided percentage ownership interest in such Seller's Eligible
Receivables and other items contemplated by Section 1.2(c) of the
Receivables Purchase Agreement. As of the date of this Purchase Notice,
the aggregate outstanding principal balances of the Eligible Receivables of
Mattel Sales with respect to which Mattel Sales proposes to sell an
undivided percentage ownership interest to the Purchaser is $ ,
-------------
and the aggregate outstanding principal balances of the Eligible
Receivables of Fisher-Price with respect to which Fisher-Price proposes to
sell an undivided percentage ownership interest to the Purchaser is
$ .
-------------
Very truly yours,
MATTEL, INC., as the Servicer
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
VIII-1
EXHIBIT IX
[FORM OF] REQUEST TO EXTEND FACILITY TERMINATION DATE
[Date]
Bank of America National Trust
and Savings Association
Credit Products #5618
555 S. Flower Street
Los Angeles, California 90071
Attention: Robert W. Troutman
Ladies and Gentlemen:
This letter is being delivered to you pursuant to Section 1.5 of the
Receivables Purchase Agreement dated as of September 13, 1996 (as amended,
amended and restated or otherwise modified from time to time in accordance
with its terms, the "Receivables Purchase Agreement") among Mattel Sales
Corp., Fisher-Price, Inc., Mattel, Inc., and Bank of America National Trust
and Savings Association. Capitalized terms used herein without definition
shall have the meanings assigned thereto in the Receivables Purchase
Agreement.
The current Facility Termination Date is [insert date]. The
undersigned hereby request that the Facility Termination Date be extended
to (and amended to be) [insert date], which is 364 days after the current
Facility Termination Date. If you agree to such extension (and amendment),
please sign a copy of this letter where indicated below and return such
copy to the Servicer.
Very truly yours,
MATTEL SALES CORP., as a Seller
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
FISHER-PRICE, INC., as a Seller
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
MATTEL, INC., as the Servicer and as the
Guarantor
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
IX-1
Agreed and Acknowledged:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as the Purchaser
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
IX-2
SCHEDULE I
ADDRESSES FOR NOTICES
---------------------
Bank of America National Trust
and Savings Association
Credit Products #5618
555 S. Flower Street
Los Angeles, California 90071
Attention: Robert W. Troutman
Telephone: (213) 228-3866
Facsimile: (213) 623-7923
Mattel, Inc.
333 Continental Blvd.
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Facsimile: (310) 252-3861 or
(310) 252-2179
Mattel Sales Corp.
333 Continental Blvd.
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Facsimile: (310) 252-3861 or
(310) 252-2179
Fisher-Price, Inc.
636 Girard Avenue
East Aurora, New York 14052
Attention: Mary Casey
Telephone: (716) 687-3000
Facsimile: (716) 687-3660
with a copy to:
William Stavro
Mattel, Inc.
333 Continental Blvd.
El Segundo, California 90245
Telephone: (310) 252-3202
Facsimile: (310) 252-3861 or
(310) 252-2179
SCHEDULE II
TRADE NAMES
-----------
Mattel Sales Corp.
- ------------------
Mattel Sales
Mattel
Fisher-Price, Inc.
- ------------------
Fisher-Price
FPI, Inc.