EXHIBIT 10.13
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is entered into as of October
29, 1999, by and between Mattel, Inc., a Delaware corporation ("Lender") and
Neil B. Friedman ("Borrower"). Borrower and Lender are sometimes referred to in
this Agreement as a "Party" or, collectively, as the "Parties."
RECITALS
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WHEREAS, Borrower desires to obtain from Lender a loan in the
principal amount of One Million Dollars ($1,000,000.00) (the "Loan"); and
WHEREAS, as an additional incentive to retain Borrower in the employ
of Lender for a period of at least two years from the date hereof, Lender
desires to grant Borrower the Loan.
NOW, THEREFORE, in consideration of the terms and conditions herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
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1. Loan Terms.
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(a) Principal Amount. Lender shall pay to the order of Borrower,
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on October 29, 1999 (the "Loan Date"), the principal sum of One Million
Dollars ($1,000,000.00) (the "Principal").
(b) Interest. Interest shall accrue on the outstanding Principal
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amount at the rate of seven percent (7%) per annum, compounded annually.
(c) Promissory Note. Borrower's obligation to repay the Loan shall
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be evidenced by a promissory note substantially in the form attached as
Exhibit A hereto (the "Note"). Borrower shall execute and deliver to
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Lender the Note concurrently with execution and delivery of this
Agreement.
(d) Repayment. Borrower shall pay to the order of Lender the
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Principal and accrued interest under the Note on October 30, 2002, provided,
however, that all Principal and accrued, but unpaid, interest shall become
immediately due and payable upon Borrower's termination of employment with
Lender for any reason prior to the Loan Date and shall be subject to forgiveness
as provided below. The Loan shall be unsecured but with full recourse against
Borrower.
(e) Forgiveness. The Loan, and Borrower's obligation to repay all
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outstanding Principal and accrued interest thereunder, shall be forgiven and
cancelled by Lender and the Note shall be cancelled on October 29, 2002 if
Borrower is employed by Lender on October 29, 2002, or earlier upon the date of
the termination of Borrower's employment with
Lender prior to October 29, 2002 if such termination is by Lender without Cause
(as defined below), by Borrower for Good Reason (as defined below) or by reason
of Borrower's death or Disability (as defined below). In addition, if the Loan
is forgiven pursuant to the preceding sentence and if Borrower is employed by
Lender on October 29, 2002 and continues to be employed by Lender, on April 1,
2003, or such earlier date as Borrower shall be required to pay federal, state
or local income taxes with respect to the forgiveness of the Loan, Lender shall
pay Borrower an additional payment (the "Gross-Up Payment") in an amount
required to fully reimburse Borrower with respect to all federal, state and
local income taxes and employment taxes with respect to the forgiveness of the
Loan and with respect to such taxes, such that upon receipt of the Gross-Up
Payment Borrower shall have no remaining obligations with respect to such taxes.
In addition, the Loan shall be forgiven by Lender on the date of a Change of
Control (as defined below) of Lender if Borrower is employed by Lender on such
date and Lender shall pay Borrower the Gross-Up Payment with respect to the
forgiveness of the Loan.
(f) Definitions. For purposes of this Agreement, the following
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terms shall have the meanings indicated below:
"Cause" shall mean a reasonable determination of the Chief Executive
Officer of Lender that at least one of the following has occurred: (i) one or
more factually substantiated willful acts of dishonesty on Borrower's part which
are intended to result in Borrower's substantial personal enrichment at the
expense of Lender; (ii) repeated violations by Borrower of Borrower's employment
obligations to Lender which are demonstrably willful and deliberate on
Borrower's part and which resulted in material injury to Lender; (iii) conduct
of a factually substantiated criminal nature (commonly defined as a "felony" in
criminal statutes) which has or which is more likely than not to have a material
adverse effect on Lender's reputation or standing in the community or on its
continuing relationships with its customers or those who purchase or use its
products; or (iv) factually substantiated fraudulent conduct in connection with
the business or affairs of Lender, regardless of whether said conduct is
designed to defraud Lender or others; provided that, in each case, Borrower has
received written notice of the described activity, has been afforded a
reasonable opportunity to cure or correct the activity described in the notice,
and has failed to substantially cure, correct or cease the activity, as
appropriate.
"Change of Control" shall be deemed to have occurred if:
(i) any "Person," which shall mean a "person" as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (other than Lender, any trustee or other fiduciary
holding securities under an employee benefit plan of Lender) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Lender representing 20% or more of the combined
voting power of Lender's then outstanding voting securities;
(ii) during any period of 24 consecutive months, individuals,
who at the beginning of such period constitute the Board of Directors of Lender,
and any new director whose election by the Board of Directors, or whose
nomination for election by Lender's stockholders, was approved by a vote of at
least one-half (1/2) of the directors then in office
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(other than in connection with a contested election), cease for any reason to
constitute at least a majority of the Board of Directors;
(iii) the stockholders of Lender approve (I) a plan of
complete liquidation of Lender or (II) the sale or other disposition by Lender
of all or substantially all of Lender's assets unless the acquirer of the assets
or its board of directors shall meet the conditions for a merger or
consolidation in subparagraphs (iv)(I) or (iv)(II) below; or
(iv) the consummation of a merger or consolidation of Lender
with any other entity other than:
(I) a merger or consolidation which results in the voting
securities of Lender outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the surviving entity's outstanding voting securities immediately after such
merger or consolidation; or
(II) a merger or consolidation which would result in the
directors of Lender (who were directors immediately prior thereto) continuing to
constitute at least 50% of all directors of the surviving entity immediately
after such merger or consolidation.
In this paragraph (iv), "surviving entity" shall mean only an
entity in which all of Lender's stockholders immediately before such merger or
consolidation (determined without taking into account any stockholders properly
exercising appraisal or similar rights) become stockholders by the terms of such
merger or consolidation, and the phrase "directors of Lender (who were directors
immediately prior thereto)" shall include only individuals who were directors of
Lender at the beginning of the 24 consecutive month period preceding the date of
such merger or consolidation.
"Disability" shall mean that Borrower suffers a disability due to
illness or injury which substantially and materially limits Borrower from
performing each of the essential functions of Borrower's job, even with
reasonable accommodation and becomes entitled to receive disability benefits
under Lender's Long-Term Disability Plan for exempt employees.
"Good Reason" shall mean the good faith determination by Borrower that
any one or more of the following have occurred:
(i) without the express written consent of Borrower, any
change(s) in any of the employment duties, authority, or responsibilities of
Borrower which is (are) inconsistent in any substantial respect with Borrower's
position, authority, duties, or responsibilities as of the date of this
Agreement;
(ii) any failure by Lender to pay Borrower Borrower's salary
or earned bonuses, other than an insubstantial and inadvertent failure remedied
by Lender promptly after receipt of notice thereof given by Borrower; or
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(iii) transferring Borrower outside of the greater New York,
New York area without Borrower's express written consent.
(g) Notwithstanding any other provision in this Agreement, in the
event that Borrower and Lender enter into an amendment to the Employment
Agreement, dated as of October 26, 1999, after the date of this Agreement, the
definition of "Cause," "Change of Control," "Disability," and "Good Reason" as
provided in such Employment Agreement, as amended, shall supercede the
definitions in Section 1(f) of this Agreement.
2. Transfer of Notes. Borrower shall not assign or transfer any of
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Borrower's benefits or obligations arising under the Notes. Lender reserves
the right to assign or transfer all or any part of, or any interest in, Lender's
rights and benefits under this Agreement or the Note to any successor to all or
part of its business or assets so long as any assignee or transferee expressly
agrees to assume and perform this Agreement in the same manner and to the same
extent as Lender would be required to perform if no such assignment or transfer
had taken place.
3. Amendment; Waiver. This Agreement and the Note contain the entire
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agreement between the Parties with respect to the subject matter hereof and may
be amended, modified or changed only by a written instrument executed by the
Parties. No provision of this Agreement or the Note may be waived except by a
writing executed and delivered by the Party sought to be charged. Any such
written waiver will be effective only with respect to the event or circumstance
described therein and not with respect to any other event or circumstance,
unless such waiver expressly provides to the contrary.
4. Choice of Law. This Agreement shall be construed in accordance
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with and governed by the internal laws of the State of California, without
reference to principles of conflict of laws.
5. Headings. The paragraph headings contained in this Agreement are
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for reference purposes only and shall not affect in any way the meaning or
interpretation of the provisions hereof.
6. Notices. All notices and other communications hereunder shall be
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in writing; shall be delivered by hand delivery to the other party or mailed by
registered or certified mail, return receipt requested, postage prepaid; shall
be deemed delivered upon actual receipt; and shall be addressed as follows:
If to Lender:
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MATTEL, INC.
333 Continental Blvd.
El Segundo, CA 90245
If to Borrower:
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Mr. Neil B. Friedman
TYCO PRESCHOOL.
675 Avenue of the Americas, 2nd
New York, NY 10010
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or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
7. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8. Severability. If any provision in or obligation under this
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Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
9. No Third-Party Beneficiary Rights. The Parties do not intend to
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confer and this Agreement shall not be construed to confer any rights or
benefits to any person, firm, group, corporation or entity other than the
Parties.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
Parties on the date first written above.
LENDER
/s/ Alan Kaye
By:________________________________________
Senior Vice President, Human Resources
Its:_______________________________________
BORROWER
/s/ Neil B. Friedman
__________________________________________
Neil B. Friedman
S-1
EXHIBIT A
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Promissory Note
$1,000,000.00 Date: October 29, 1999
Mattel, Inc. (herein referred to as "Holder") has agreed to advance to
Neil B. Friedman (herein referred to as "Maker") on October 29, 1999,
$1,000,000.00, and for said value received Maker promises to repay to the order
of Holder, the principal sum of $1,000,000.00 on or before October 30, 2002.
Maker shall owe to Holder interest on the principal sum in an amount equal to 7%
per annum, commencing on October 29, 1999, compounded annually, payable with
principal on October 30, 2002.
If Maker fails to make any payment set forth above when due, Holder
may elect to declare the entire unpaid principal amount, including all unpaid
interest, immediately due and payable with or without notice.
In the event of the termination of Maker's employment with Holder for
any reason, all outstanding principal and accrued interest hereunder is
immediately due and payable, with or without notice.
This note and the loan it evidences shall be subject to cancellation
and forgiveness under certain circumstances pursuant to the terms of that
certain Loan Agreement, dated as of October 29, 1999, between Holder and Maker.
In the event of commencement of legal action to enforce payment of
this note, Maker agrees to pay the Holder's reasonable attorney's fees and court
costs in connection therewith.
By: /s/ Neil B. Friedman
______________________________________
Neil B. Friedman Date
Witnessed by:
/s/ Alan Kaye 12/6/99
_________________________________________
Date