EXHIBIT 99.5
================================================================================
CREDIT AGREEMENT
Dated as of March 10, 1995
among
MATTEL, INC.,
THE BANKS NAMED HEREIN,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
Arranged By
[LOGO OF B of A] BA SECURITIES, INC.
================================================================================
MATTEL INC. CREDIT AGREEMENT
TABLE OF CONTENTS
SECTION 1.
DEFINITIONS.. 1
1.1 Certain Defined Terms.............................. 1
1.2 Other Definitional Provisions...................... 15
SECTION 2.
THE COMMITMENT 15
2.1 The Aggregate Facilities Commitment................ 15
2.2 Loan Accounts and Notes............................ 16
2.3 Borrowing Procedure................................ 16
2.4 Conversion and Continuation Elections.............. 17
2.5 Adjustments of Aggregate Loan Commitment and
Aggregate Receivables Commitment................... 19
2.6 Prepayments........................................ 20
2.7 Repayment of Loans................................. 20
2.8 Interest on the Loans.............................. 20
2.9 Fees............................................... 21
2.10 Calculation of Interest and Fees................... 22
2.11 Payments by the Company............................ 22
2.12 Payments by the Banks to the Agent................. 23
2.13 Sharing of Payments, Etc........................... 24
SECTION 3.
PAYMENTS IN GENERAL. 24
3.1 Taxes.............................................. 24
3.2 Capital Adequacy................................... 27
3.3 Illegality......................................... 28
3.4 Increased Costs and Reduction of Return............ 29
3.5 Funding Losses..................................... 29
3.6 Inability to Determine Rates....................... 30
3.7 Survival........................................... 30
SECTION 4.
CONDITIONS PRECEDENT 30
4.1 Conditions to Effectiveness........................ 30
4.2 Conditions to All Loans............................ 33
SECTION 5.
REPRESENTATIONS AND WARRANTIES. 34
5.1 Organization and Powers............................ 34
5.2 Good Standing...................................... 34
5.3 Subsidiaries....................................... 34
5.4 Authorization of Borrowing......................... 34
5.5 No Conflict........................................ 35
5.6 Governmental Consents.............................. 35
5.7 Binding Obligation................................. 35
5.8 Financial Condition................................ 35
-i-
5.9 Changes, Etc....................................... 36
5.10 Title to Properties................................ 36
5.11 Litigation; Adverse Facts.......................... 36
5.12 Payment of Taxes................................... 36
5.13 Agreements......................................... 37
5.14 Performance........................................ 37
5.15 Governmental Regulation............................ 37
5.16 Employee Benefit Plans............................. 37
5.17 Environmental Matters.............................. 37
5.18 Disclosure......................................... 37
5.19 Subordination Agreements........................... 38
SECTION 6.
AFFIRMATIVE COVENANTS. 38
6.1 Reporting and Information Requirements............. 38
6.2 Corporate Existence, etc........................... 41
6.3 Payment of Taxes and Claims; Tax Consolidation..... 41
6.4 Maintenance of Properties; Insurance............... 42
6.5 Inspection of Property and Books and Records....... 42
6.6 Use of Proceeds of Loans........................... 43
6.7 Environmental Laws................................. 43
6.8 Subordination Agreements........................... 43
SECTION 7.
NEGATIVE COVENANTS. 43
7.1 Indebtedness....................................... 44
7.2 Liens.............................................. 44
7.3 Restriction on Fundamental Changes................. 44
7.4 Sale or Discount of Receivables.................... 45
7.5 Consolidated Funded Indebtedness to Total
Capitalization..................................... 45
7.6 Consolidated Tangible Net Worth.................... 45
7.7 Interest Coverage Ratio............................ 45
7.8 ERISA.............................................. 46
7.9 Amendments or Waivers Under Transfer and
Administration Agreement........................... 46
7.10 Margin Regulations................................. 46
7.11 Independence of Covenants.......................... 46
SECTION 8.
EVENTS OF DEFAULT. 46
8.1 Events of Default.................................. 46
8.2 Remedies........................................... 49
8.3 Rights Not Exclusive............................... 50
SECTION 9.
THE AGENT 50
9.1 Appointment and Authorization...................... 50
9.2 Delegation of Duties............................... 50
9.3 Liability of Agent................................. 50
9.4 Reliance by Agent.................................. 51
-ii-
9.5 Notice of Default.................................. 52
9.6 Credit Decision.................................... 52
9.7 Indemnification.................................... 52
9.8 Agent in Individual Capacity....................... 53
9.9 Successor Agent.................................... 54
SECTION 10.
MISCELLANEOUS 54
10.1 Assignments, Participations, etc................... 54
10.2 Survival of Warranties and of Certain Agreements... 57
10.3 Failure or Indulgence Not Waiver;
Remedies Cumulative................................ 57
10.4 Fees and Expenses.................................. 58
10.5 Set Off............................................ 58
10.6 Notices............................................ 58
10.7 Severability....................................... 59
10.8 Amendments and Waivers............................. 59
10.9 Obligations Several................................ 60
10.10 Certain Changes.................................... 60
10.11 Headings........................................... 60
10.12 Applicable Law..................................... 60
10.13 Successors and Assigns............................. 61
10.14 Counterparts....................................... 61
10.15 Indemnity.......................................... 61
SIGNATURE PAGES.................................... S-1
EXHIBITS
- --------
A Form of Note
B Form of Notice of Borrowing
C Form of Notice of Conversion/Continuation
D Form of Officer's Certificate
E Form of Opinion of Assistant General Counsel of
Company
F-1 Form of Fisher-Price Continuing Guaranty
F-2 Form of Mattel Sales Continuing Guaranty
G-1 Form of Fisher-Price Subordination Agreements
G-2 Form of Mattel Sales Subordination Agreements
H Form of Change in Commitments
I Form of Notice of Assignment and Acceptance
SCHEDULES
- ---------
1.1 Loan Commitments and Pro Rata Share
5.3 Material Subsidiaries of Company
7.2 Certain Liens
10.6 Addresses for Notices and Lending Offices
-iii-
MATTEL, INC.
------------
CREDIT AGREEMENT
----------------
This Credit Agreement (this "Agreement") is dated as of March 10, 1995
and is entered into by and among MATTEL, INC., a Delaware corporation (the
"Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and collectively as the "Banks"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the agent for the
Banks (the "Agent").
SECTION 1.
DEFINITIONS.
-----------
1.1 Certain Defined Terms. The following terms used in this Agreement
---------------------
shall have the following meanings:
"Affiliate", as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" has the meaning assigned to that term in the introduction to
-----
this Agreement.
"Agent-Related Persons" means Bank of America and any successor agent
---------------------
arising under Section 9.9, together with their respective Affiliates (including,
in the case of Bank of America, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Facilities Commitment" means the maximum amount which may
-------------------------------
be outstanding at any one time under this Agreement and the Transfer and
Administration Agreement.
"Aggregate Loan Commitment" means the aggregate commitments of the
-------------------------
Banks to make Loans under this Agreement.
"Aggregate Receivables Commitment" means the aggregate commitments of
--------------------------------
the Banks party to the Transfer and Administration Agreement to purchase
receivables under such Agreement.
"Agreement" means this Credit Agreement, as it may hereafter be
---------
amended, supplemented, restated or otherwise modified from time to time.
"Applicable Amount" means, for each type of Loan, the commitment fee
-----------------
and the utilization fee, the amount (expressed in
-1-
basis points per annum) set forth in the chart below opposite the Applicable
Level then in effect:
(Basis Points Per Annum)
Applicable Commitment Eurodollar CD Utiliza-
Level Fee Rate Rate tion Fee
Loans Loans
============================================================
1 9.50 25.00 37.50 5.00
2 11.00 30.00 42.50 5.00
3 13.75 37.50 50.00 5.00
4 17.50 45.00 57.50 5.00
5 35.00 75.00 87.50 0
============================================================
"Applicable Level" means Level 1, Level 2, Level 3, Level 4 or Level
----------------
5, whichever is then applicable, as determined from the Company's unsecured
long-term debt ratings then in effect as announced by each rating agency. Any
change in the Applicable Level shall become effective upon any public
announcement of any change in any rating that requires a change in the Level in
accordance with the definitions of Level 1, Level 2, Level 3, Level 4 or Level
5.
"Arranger" means BA Securities, Inc., a Delaware corporation.
--------
"Availability Period" means the period from the Effective Date to
-------------------
but excluding the Termination Date.
"Bank" has the meaning assigned to that term in the introduction to
----
this Agreement.
"Bank Affiliate" means a Person engaged primarily in the business of
--------------
commercial banking and that is a Subsidiary of a Bank or of a Person of which a
Bank is a Subsidiary.
"Bank of America" means Bank of America National Trust and Savings
---------------
Association.
"Base Rate" means a fluctuating rate per annum which is the higher of
---------
(a) the Federal Funds Rate plus one-half of one percent (1/2%) per annum and (b)
the Reference Rate.
"Base Rate Loans" means Loans made by the Banks bearing interest at
---------------
rates determined by reference to the Base Rate.
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York or San Francisco,
California are authorized or required by law to close and, if the applicable
Business Day relates to
-2-
any Eurodollar Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Capital Assets" means, as at any date of determination, those assets
--------------
of a Person that would, in conformity with GAAP, be classified as property,
plant or equipment on the balance sheet of that Person.
"Capital Lease" as applied to any Person, means any lease of any
-------------
property (whether real, personal or mixed) by that Person as lessee which would,
in conformity with GAAP, be required to be accounted for as a capital lease on
the balance sheet of that Person other than, in the case of the Company or any
of its Subsidiaries, any such lease under which the Company or any of its
Subsidiaries is the lessor.
"CD Rate" means, for each Interest Period in respect of CD Rate Loans
-------
comprising a part of the same borrowing, the rate of interest (rounded upward to
the nearest 1/100th of 1%) determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.0 - Reserve Percentage Rate
Where:
"Assessment Rate" means, for any day of such Interest Period, the
---------------
rate determined by the Agent as equal to the annual assessment rate in
effect on such day payable to the FDIC by a member of the Bank Insurance
Fund that is classified as adequately capitalized and within supervisory
subgroup "A" (or a comparable successor assessment risk classification
within the meaning of 12 C.F.R. (S)327.3(d)) for insuring time deposits at
offices of such member in the United States; or, in the event that the FDIC
shall at any time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the maximum annual
assessment rate in effect on such day that is payable to the FDIC by
commercial banks (whether or not applicable to any particular Bank) for
insuring time deposits at offices of such banks in the United States.
"Certificate of Deposit Rate" means for any Interest Period for CD
---------------------------
Rate Loans the rate of interest per annum determined by the Agent to be the
arithmetic mean (rounded upward to the nearest 1/100th of 1%) of the rates
notified to the Agent by the Reference Banks as the rates of interest bid
by two or more certificate of deposit dealers of recognized standing
selected by the Reference Banks for the purchase at face value of dollar
certificates of deposit issued by major United States banks, for a maturity
comparable to such Interest Period and in the approximate amount of the CD
Rate Loans to be made, at the time selected by the Agent on the first day
of such Interest Period.
-3-
"Reserve Percentage" means for any Interest Period for CD Rate Loans
------------------
the maximum reserve percentage (expressed as a decimal, rounded upward to
the nearest 1/100th of 1%), as determined by the Agent, in effect on the
first day of such Interest Period (including any ordinary, marginal,
emergency, supplemental, special and other reserve percentages) prescribed
by the Federal Reserve Board for determining the maximum reserves to be
maintained by member banks of the Federal Reserve System with deposits
exceeding $1,000,000,000 for new non-personal time deposits for a period
comparable to such Interest Period and in an amount of $100,000 or more.
"CD Rate Loan" means a Loan that bears interest based on the CD Rate.
------------
"Change in Commitment Notice" means a notice substantially in the form
---------------------------
of Exhibit H hereto with respect to a reallocation of Commitments.
"Commitment" means the Aggregate Loan Commitment or the Aggregate
----------
Receivables Commitment (collectively, the "Commitments").
-----------
"Consolidated Funded Indebtedness" means, at any date of
--------------------------------
determination, for the Company and its Subsidiaries on a consolidated basis, the
sum of (a) all obligations and liabilities, whether current or long-term, for
borrowed money, (b) that portion of obligations with respect to Capital Leases
which is capitalized on the consolidated balance sheet of the Company and its
Subsidiaries, and (c) all guaranties of unconsolidated funded obligations for
borrowed money, all determined in conformity with GAAP.
"Consolidated Net Income" for any period, means the net income (or
-----------------------
loss) of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, as at any date of
-------------------------------
determination, the net worth of the Company and its Subsidiaries on a
consolidated basis minus foreign exchange currency translation adjustments and
-----
intangible assets, all determined in conformity with GAAP.
"Contingent Obligation", as applied to any Person, means, without
---------------------
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will
-4-
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof or (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another and (b) any liability of such Person for the obligations
of another through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another, if in the case of any agreement described under
subclauses (x) or (y) of this sentence the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported. The amount of any Contingent Obligation denominated in a currency
other than Dollars shall be equal to the Dollar Equivalent of such Contingent
Obligation.
"Contractual Obligation", as applied to any Person, means any
----------------------
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Debt" means unsecured Indebtedness for borrowed money by the Company
----
or its Material Subsidiaries that are Domestic Subsidiaries having maturities in
excess of one year, excluding (i) intercompany Indebtedness, (ii) Indebtedness
permitted to be secured under Section 7.2, (iii) Indebtedness incurred under the
Transfer and Administration Agreement and (iv) Indebtedness hereunder.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Dollars" means lawful money of the United States of America.
-------
-5-
"Domestic Subsidiary" means a Subsidiary of the Company that is
-------------------
incorporated in a jurisdiction of the United States of America.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
-------------
"Effective Date" means the date on or after March 10, 1995 on which
--------------
the Existing Credit Agreements terminate and all the conditions in Section 4.1
are satisfied or waived.
"Eligible Assignee" means (i) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; and (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Person or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Person, in each case relating
to environmental, health, safety and land use matters.
"ERISA" means, at any time, the Employee Retirement Income Security
-----
Act of 1974, as amended from time to time and any successor statute, and the
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Person, means any trade or
---------------
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
Section 414(b) and 414(c) of the Internal Revenue Code.
"Eurodollar Rate Loans" means Loans bearing interest at rates
---------------------
determined by reference to the Eurodollar Rate as provided in Section 2.8(a).
-6-
"Eurodollar Rate" means, for each Interest Period for any Eurodollar
---------------
Rate Loan, an interest rate per annum (rounded upward to the nearest 1/16 of one
percent) determined pursuant to the following formula:
Eurodollar Rate = LIBOR
-----------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means the maximum reserve
-----------------------------
percentage (expressed as a decimal rounded upward to the next 1/100 of one
percent) in effect on the date LIBOR for such Interest Period is determined
(whether or not applicable to any Bank) 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 equal to such
Interest Period; and
"LIBOR" means the rate of interest per annum determined by the
-----
Agent to be the arithmetic mean (rounded upward to the nearest 1/16th of
1%) of the rates of interest per annum notified to the Agent by each
Reference Bank as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued as, or
converted into, a Eurodollar Rate Loan by such Reference Bank and having a
maturity comparable to such Interest 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
Interest Period.
"Event of Default" means any of the events set forth in Section 8.1.
----------------
"Exchange Act" means, at any time, the Securities Exchange Act of
------------
1934, as amended from time to time, and any successor statute, and the rules and
regulations promulgated thereunder.
"Existing Credit Agreements" means (i) that certain Credit Agreement
--------------------------
(Multi-Year Facility) dated as of March 18, 1994 among the Company, the banks
party thereto and the Agent, as amended, and (ii) that certain Credit Agreement
(364-Day Facility) dated as of March 18, 1994 among the Company, the banks party
thereto and the Agent, as amended.
"Federal Funds Rate" means the weighted average of the rates on
------------------
overnight Federal funds transactions with members of the
-7-
Federal Reserve System arranged by Federal funds brokers, as published for such
day of determination (or if such day of determination is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transaction received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System or any successor thereof.
"Fisher-Price" means Fisher-Price, Inc., a Delaware corporation,
------------
formerly known as FPI, Inc.
"Fisher-Price Guaranty" means the Continuing Guaranty signed by
---------------------
Fisher-Price substantially in the form of Exhibit F-1 hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Fisher-Price Subordination Agreement" means a Fisher-Price
------------------------------------
Subordination Agreement substantially in the form of Exhibit G-1 attached hereto
signed by the Company and certain Affiliates of the Company with respect to
which Fisher-Price has material outstanding obligations, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time.
"Fitch" means Fitch Investors Service, Inc.
-----
"Funding Date" means the Business Day of the funding of a Loan.
------------
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Person" means the government of the United States or the
-------------------
government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority, body or entity
of the United States or any state or locality therein, including the Federal
Deposit Insurance Company, the Comptroller of the Currency or the Federal
Reserve Board.
-8-
"Governmental Rule" means any law, statute, rule, regulation,
-----------------
ordinance, order, judgment, guidelines or decision of any Governmental Person.
"Indebtedness", as applied to any Person, means (i) all indebtedness
------------
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases which is required to be capitalized on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (y) due more than twelve months from the date of
incurrence of the obligation in respect thereof, or (z) evidenced by a
promissory note and (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person. The amount of any Indebtedness shall be the principal
amount of and all interest, premium, if any, and other fees and expenses accrued
on any of the foregoing.
"Ineligible Securities" means securities which may not be underwritten
---------------------
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. (S) 24, Seventh), as amended.
"Interest Payment Date" means, with respect to any CD Rate Loan or
---------------------
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan and, with respect to any Base Rate Loan, the last day of each calendar
quarter, and with respect to all Loans, the Termination Date; provided, however,
-------- -------
that if any Interest Period for a CD Rate Loan or Eurodollar Rate Loan exceeds
90 days or three months, respectively, interest shall also be paid on the date
which falls 90 days or three months after the beginning of such Interest Period.
"Interest Period" means, (a) with respect to any Eurodollar Rate Loan,
---------------
the period commencing on the Business Day the Eurodollar Rate Loan is disbursed
or continued or on the date on which a Loan is converted into a Eurodollar Rate
Loan and ending on the date one, two, three or six months thereafter, as
selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; and (b) with respect to any CD Rate Loan, the period
commencing on the date the CD Rate Loan is disbursed or continued or on the date
on which a Loan is converted into a CD Rate Loan and ending 30, 60, 90 or 180
days thereafter, as selected by the Company in its Notice of Borrowing or Notice
of Conversion/Continuation; provided that:
--------
-9-
(i) if any Interest Period pertaining to a Eurodollar Rate Loan or CD
Rate Loan would otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Rate Loan, the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period pertaining to a Eurodollar Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Termination
Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter, and the rules and
regulations promulgated thereunder.
"Lending Office" means, with respect to any Bank, the office or
--------------
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office," as the case may be, opposite its name on
Schedule 10.6 hereto, or such other office or offices of the Bank as it may from
time to time specify to the Company and the Agent in writing.
"Level 1" means the Company's senior unsecured long-term debt carries
-------
two or more of the following ratings (provided at least one of such ratings is
from S&P or Moody's):
A- or higher by S&P
A3 or higher by Moody's
A- or higher by Duff & Phelps
A- or higher by Fitch
"Level 2" means that the criteria of Level 1 are not satisfied and
-------
the Company's senior unsecured long-term debt carries two or more of the
following ratings (provided at least one of such ratings is from S&P or
Moody's):
BBB+ or higher by S&P
Baa1 or higher by Moody's
BBB+ or higher by Duff & Phelps
BBB+ or higher by Fitch
"Level 3" means that neither of the criteria of Level 1 nor Level 2
-------
are satisfied and the Company's senior unsecured
-10-
long-term debt carries two or more of the following ratings (provided at least
one of such ratings is from S&P or Moody's):
BBB or higher by S&P
Baa2 or higher by Moody's
BBB or higher by Duff & Phelps
BBB or higher by Fitch
"Level 4" means that none of the criteria of Level 1, Level 2 or
-------
Level 3 are satisfied and the Company's senior unsecured long-term debt carries
two or more of the following ratings (provided at least one of such ratings is
from S&P or Moody's):
BBB- or higher by S&P
Baa3 or higher by Moody's
BBB- or higher by Duff & Phelps
BBB- or higher by Fitch
"Level 5" means that none of the criteria of Level 1, Level 2, Level
-------
3 or Level 4 are satisfied.
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any kind
of security interest).
"Loan Commitment" means the amount set forth under "Loan Commitment"
---------------
on Schedule 1.1, as such amount may be adjusted pursuant to Section 2.5.
"Loan Documents" means this Agreement, any Notes, the Mattel Sales
--------------
Guaranty, the Fisher-Price Guaranty, the Mattel Sales Subordination Agreement,
the Fisher-Price Subordination Agreement and all documents and instruments
delivered in connection therewith (other than the Transfer and Administration
Agreement and the documents delivered pursuant thereto).
"Loans" has the meaning set forth in Section 2.1.
-----
"Margin Stock" has the meaning assigned to the term "Margin Stock" in
------------
Regulation U of the Federal Reserve Board as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
-----------------------
business, operations, properties, assets, business prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or (ii) a material impairment of the ability of the Company to perform the
Obligations or of the Banks to enforce the Obligations.
-11-
"Material Subsidiaries" means those Subsidiaries of the Company
---------------------
designated as such on Schedule 5.3 hereto and any Subsidiary of the Company
formed or acquired after the Effective Date designated by the Board of Directors
of the Company as a "Material Subsidiary".
"Mattel Sales" means Mattel Sales Corp., a California corporation.
------------
"Mattel Sales Guaranty" means the Continuing Guaranty signed by
---------------------
Mattel Sales substantially in the form of Exhibit F-2 hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Mattel Sales Subordination Agreement" means a Mattel Sales
------------------------------------
Subordination Agreement substantially in the form of Exhibit G-2 attached hereto
signed by the Company and certain Affiliates of the Company with respect to
which Mattel Sales has material outstanding obligations, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the Company or
any ERISA Affiliate of the Company.
"Net Issuance Proceeds" means, in respect of any issuance of equity
---------------------
(excluding shares of common stock issued in connection with conversions of the
8% Convertible Subordinated Debentures), the cash proceeds and non-cash proceeds
received or receivable in connection therewith, net of reasonable costs and
expenses paid or incurred in connection therewith in favor of any Person not an
Affiliate of the Company, excluding the exercise of stock options under the
Company's stock option plans. In the case of the issuance of debt securities
after the date hereof that are convertible into equity, "Net Issuance Proceeds"
shall be deemed to be received if and when such debt securities are converted
into equity, and the amount of such Net Issuance Proceeds shall be an amount
equal to the principal amount of the debt being converted.
"Note" means a promissory note of the Company payable to the order of
----
a Bank substantially in the form of Exhibit A hereto, evidencing the Loans made
by such Bank to the Company.
"Notice of Borrowing" means a notice substantially in the form of
-------------------
Exhibit B hereto with respect to a proposed borrowing pursuant to Section
2.3(a).
-12-
"Notice of Conversion/Continuation" means a notice given by the
---------------------------------
Company to the Agent pursuant to Section 2.4, in substantially the form of
Exhibit C hereto.
"Obligations" means all obligations of every nature of the Company,
-----------
Fisher-Price and Mattel Sales from time to time owed to the Agent, the Banks or
any other Person required to be indemnified hereunder, or any of them, under any
Loan Document.
"Officers' Certificate" means a certificate substantially in the form
---------------------
of Exhibit D hereto executed on behalf of the Company by two different officers
of the Company, one of which shall be (a) its Chairman of the Board (if an
officer), its President, one of its Executive Vice Presidents, or one of its
Senior Vice Presidents, and the other one of which shall be (b) its Chief
Financial Officer, its Executive Vice President-Finance, its Treasurer, one of
its Assistant Treasurers, or its Controller, delivered to the Banks by the
Company pursuant to Section 6.1(c).
"Participant" has the meaning set forth in Section 10.1.
-----------
"Pension Plan" means any employee plan which is subject to Section 412
------------
of the Internal Revenue Code and which is maintained for employees of the
Company or any ERISA Affiliate of the Company other than a Multiemployer Plan.
"Person" means any individual, partnership, corporation (including a
------
business trust), joint stock company, joint venture, trust, bank, trust company,
unincorporated association or other entity or a government or any agency or
political subdivision thereof.
"Pro Rata Share" means with respect to each Bank the percentage set
--------------
forth opposite such Bank's name on Schedule 1.1 hereto.
"Receivables Commitment" means the amount set forth for each Bank
----------------------
under "Receivables Commitment" on Schedule 1.1, as such amount may be adjusted
under Section 2.5 and the Transfer and Administration Agreement.
"Reference Banks" means Bank of America, NationsBank of Texas, N.A.
---------------
and PNC Bank, National Association. Subject to Section 3.6, in the event that
at any time of determination only two Banks designated as "Reference Banks" are
providing rates for deposits referred to in the definition of "Eurodollar Rate"
or "Certificate of Deposit Rate," those two Banks shall be the "Reference Banks"
or, if only one such Bank is providing such rates, that Bank shall be the
"Reference Banks" for purposes of this Agreement.
-13-
"Reference Rate" means the rate of interest publicly announced from
--------------
time to time by Bank of America in San Francisco as its reference rate, as in
effect on such date of determination. The reference rate is set by Bank of
America based on various factors including Bank of America's costs and desired
return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. Bank of America may make loans at,
above or below the rate announced by it as its reference rate.
"Regulation D" means Regulation D of the Federal Reserve Board as in
------------
effect from time to time.
"Requisite Banks" means, as at any date of determination, Banks having
---------------
at least 66-2/3% of the then aggregate unpaid principal amount of the Loans (or
if no Loans are then outstanding, Banks having at least 66-2/3% of the Aggregate
Loan Commitment), and Banks having at least 66-2/3% of the then Total
Outstanding Investment (or if no Investment is then outstanding, Banks having at
least 66-2/3% of the Aggregate Receivables Commitment) as at such date of
determination.
"Securities Act" means, at any time, the Securities Act of 1933, as
--------------
amended from time to time, and any successor statute, and the rules and
regulations promulgated thereunder.
"Section 20 Subsidiary" means the Subsidiary of the bank holding
---------------------
company controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"S&P" means Standard & Poor's Ratings Group.
---
"Subsidiary" means any corporation, association or other business
----------
entity of which more than 50% of the total voting power of shares of stock
entitled to vote in the election of directors, managers or trustees thereof is
at the time owned or controlled, directly or indirectly, by any Person or one or
more of the other Subsidiaries of that Person or a combination thereof; provided
--------
that, for purposes of this Agreement (other than financial reporting purposes),
Subsidiaries of the Company shall include only the entities identified in
Schedule 5.3 hereto and any Subsidiary formed or acquired after the Effective
Date designated by the Board of Directors of the Company as a "Material
Subsidiary".
"Termination Date" means March 31, 1998.
----------------
"Total Outstanding Investment" has the meaning set forth in the
----------------------------
Transfer and Administration Agreement.
-14-
"Transfer and Administration Agent" means NationsBank of Texas, N.A.
---------------------------------
in its capacity as agent under the Transfer and Administration Agreement.
"Transfer and Administration Agreement" means the Second Amended and
-------------------------------------
Restated Transfer and Administration Agreement dated as of even date herewith,
among Mattel Sales and Fisher-Price, as transferors, the Company, as guarantor
and servicer, the banks named therein, and NationsBank of Texas, N.A., as
Transfer and Administration Agent for such banks, as it may be amended,
supplemented, restated or otherwise modified from time to time.
1.2 Other Definitional Provisions. References to "Sections" shall be
-----------------------------
to Sections of this Agreement unless otherwise specifically provided. Any of
the terms defined in Section 1.1 may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference.
SECTION 2.
THE COMMITMENTS.
----------------
2.1 The Aggregate Facilities Commitment. Each Bank hereby severally
-----------------------------------
agrees (a) to make advances to the Company ("Loans") on the terms and conditions
set forth in this Agreement in an aggregate principal amount not exceeding such
Bank's Pro Rata Share of the Aggregate Loan Commitment during the Availability
Period and (b) to purchase receivables on the terms and conditions set forth in
the Transfer and Administration Agreement in an amount not exceeding such Bank's
Receivables Commitment during the period from the Closing Date (as defined in
the Transfer and Administration Agreement) to but excluding the Termination Date
(as defined in the Transfer and Administration Agreement); provided, however,
-------- -------
that:
(i) the outstanding principal amount of all Loans hereunder shall
not exceed the Aggregate Loan Commitment; and the amount of the Total
Outstanding Investment shall not exceed the Aggregate Receivables
Commitment;
(ii) if at any time between November 1 of each year and March 1 of
the following year the rating on the Company's long-term unsecured
Indebtedness by any one of S&P, Moody's, Duff & Phelps or Fitch is below
investment grade, there shall be no Loans outstanding for 30 consecutive
days commencing not earlier than such November 1 and ending not later than
March 31, and the Company shall prepay any outstanding Loans pursuant to
Section 2.6(b) to the extent required to not have any Loans outstanding
during such period; and
-15-
(iii) the Aggregate Facilities Commitment shall not exceed
$650,000,000 in the aggregate at any one time.
Within the limits of each Bank's Loan Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.1, prepay
pursuant to Section 2.6 and reborrow pursuant to this Section 2.1.
2.2 Loan Accounts and Notes. (a) Subject to Section 2.2(b), the
-----------------------
Loans made by each Bank shall be evidenced by one or more loan accounts
maintained by such Bank in the ordinary course of business. The loan accounts
or records maintained by the Agent and each Bank shall be conclusive absent
manifest error of the amount of the Loans made by the Banks to the Company and
the interest and payments thereon. Any failure to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans.
(b) Upon the written request of any Bank made through the Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note(s),
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Company with respect thereto. Each such Bank is
irrevocably authorized by the Company to endorse its Note(s) and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
-------- -------
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.3 Borrowing Procedure.
-------------------
(a) Whenever the Company desires to borrow hereunder, it shall
deliver irrevocable telephonic notice to the Agent followed immediately by
written notice in the form of a Notice of Borrowing, which telephonic notice
must be received by the Agent no later than (i) 8:00 a.m. (San Francisco time)
on the proposed Funding Date in the case of Base Rate Loans, (ii) 9:00 a.m. (San
Francisco time) three Business Days in advance of the proposed Funding Date in
the case of Eurodollar Rate Loans, and (iii) 12:00 Noon (San Francisco time) two
Business Days prior to the proposed Funding date in the case of CD Rate Loans,
specifying (A) the proposed Funding Date which shall be a Business Day, (B) the
amount of the proposed borrowing, (C) whether the proposed borrowing shall
consist of Base Rate Loans, Eurodollar Rate Loans or CD Rate Loans, and (D) in
the case of Eurodollar Rate Loans and CD Rate Loans, the requested Interest
Period. Base Rate Loans made on any Funding Date shall be in an aggregate
minimum amount of $1,000,000 and integral
-16-
multiples of $500,000 in excess of that amount. Eurodollar Rate Loans and CD
Rate Loans made on any Funding Date shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $500,000 in excess of that amount.
(b) Promptly (and normally within two hours) after receipt of a
Notice of Borrowing (or telephone notice in lieu thereof), the Agent shall
notify each Bank of the proposed borrowing. Each Bank shall make available to
the Agent its Pro Rata Share of the amount (if any) by which the principal
amount of the proposed borrowing exceeds the principal amount of the Loans (if
any) maturing on the Funding Date, in same day funds, by remitting such funds
to: Bank of America National Trust and Savings Association, ABA No. 121-000-
358, Attn: Agency Management Services No. 5596 For credit to: BANCONTROL
Account No. 12358-88449, Reference: Mattel, Inc. at the office of Bank of
America located at 1850 Gateway Boulevard, Concord, California 94520, no later
than 11:00 a.m. (San Francisco time) on the Funding Date. Upon satisfaction of
the conditions set forth in Section 4.2, the Agent shall make available to the
Company on such Funding Date the aggregate of the amounts (if any) so made
available by the Banks by causing an amount of same day funds equal to such
aggregate amount (if any) received by the Agent to be credited to the account of
the Company at such office of Bank of America. To the extent that Eurodollar
Rate Loans or CD Rate Loans made by the Banks mature on any Funding Date, the
Banks shall apply the proceeds of the Loans made on such Funding Date, to the
extent thereof, to the repayment of such maturing Loans, such Loans and
repayments intended to be a contemporaneous exchange.
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) The Company may upon irrevocable written notice to the Agent: (i)
elect to convert any Base Rate Loans (or any part thereof in an amount not less
than $5,000,000 or an integral multiple of $500,000 in excess thereof) on any
Business Day into Eurodollar Rate Loans or CD Rate Loans; (ii) elect to convert
any Eurodollar Rate Loans or CD Rate Loans (or any part thereof) on the last day
of any Interest Period therefor into Base Rate Loans in an amount not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof, or into CD
Rate Loans or Eurodollar Rate Loans in an amount not less than $5,000,000 or an
integral multiple of $500,000 in excess thereof; or (iii) elect to continue any
Eurodollar Rate Loans or CD Rate Loans (or any part thereof in an amount not
less than $5,000,000 or an integral multiple of $500,000 in excess thereof) on
the last day of any Interest Period therefor; provided, that if the aggregate
--------
amount of Eurodollar Rate Loans or CD Rate Loans shall have been reduced, by
payment, prepayment, or conversion of part thereof to be less than $5,000,000,
the Eurodollar Rate Loans and CD Rate Loans shall automatically convert into
Base Rate Loans, and on
-17-
and after such date the right of the Company to continue such Loans as
Eurodollar Rate Loans or CD Rate Loans shall terminate.
(b) Each conversion or continuation shall be made upon irrevocable
telephonic notice to the Agent followed immediately by written notice in the
form of a Notice of Conversion/ Continuation, which telephonic notice must be
received by the Agent prior to (i) 9:00 a.m. (San Francisco time) at least three
Business Days in advance of the conversion or continuation date, if the Loans
are to be converted into or continued as Eurodollar Rate Loans; (ii) 12:00 Noon
(San Francisco time) at least two Business Days in advance of the conversion or
continuation date, if the Loans are to be converted into or continued as CD Rate
Loans; and (ii) 9:00 a.m. (San Francisco time) on the conversion or continuation
date, if the Loans are to be converted into Base Rate Loans, specifying: (A)
the proposed conversion or continuation date; (B) the aggregate amount of Loans
to be converted or continued; (C) the nature of the proposed conversion or
continuation; and (D) the duration of the requested Interest Period, if
applicable.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans or CD Rate Loans, the Company has failed to select a new
Interest Period to be applicable to such Eurodollar Rate Loans or CD Rate Loans
or type of Loan or if any Default or Event of Default shall then exist, the
Company shall be deemed to have elected to convert such Eurodollar Rate Loans
and CD Rate Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Bank thereof, or, if no timely notice is provided, the
Agent will promptly notify each Bank of the details of any automatic conversion.
All conversions and continuations shall be made pro rata according to the
respective outstanding principal amounts of the Loans with respect to which the
notice was given held by each Bank.
(e) Unless the Requisite Banks shall otherwise agree, after the
occurrence of and during the continuance of a Default or Event of Default, the
Company may not elect to have a Loan be made as, or converted into or continued
as, a Eurodollar Rate Loan or CD Rate Loan.
(f) Notwithstanding any other provision contained in this Agreement,
after giving effect to any conversion or continuation of any Loans, there shall
not be more than five different Interest Periods in effect.
-18-
2.5 Adjustments of Aggregate Loan Commitment and Aggregate
------------------------------------------------------
Receivables Commitment.
- ----------------------
(a) Reduction and Termination of Commitments. The Company may from
----------------------------------------
time to time, in accordance with Section 2.5(c), reduce or terminate the
Aggregate Loan Commitment or the Aggregate Receivables Commitment. Any
reduction or termination of any Commitment pursuant to this Section 2.5(a) shall
be permanent.
(b) Reallocation of Commitments. In addition, the Company may from
---------------------------
time to time, in accordance with Section 2.5(c), (i) reallocate the Aggregate
Receivables Commitment to the Aggregate Loan Commitment and/or (ii) reallocate
the Aggregate Loan Commitment to the Aggregate Receivables Commitment; provided,
--------
however, that (x) the Company may not deliver a Change in Commitment Notice to
- -------
the Agent to reallocate Commitments pursuant to this Section 2.5(b) more than
four times in any consecutive 12-month period, and, as a result of any
reallocation, (y) the Aggregate Receivables Commitment may not exceed
$250,000,000 at any time, and (z) the Aggregate Loan Commitment may not be
reduced to less than $400,000,000 pursuant to this Section 2.5(b) at any time.
(c) Procedures. (i) The Company may effect the termination,
----------
reduction or reallocation of the Aggregate Loan Commitment or the Aggregate
Receivables Commitment by delivering a fully completed Change in Commitment
Notice to the Agent not less than three Business Days' prior to the date of
the requested termination, reduction or reallocation.
(ii) Promptly after receipt of any Change in Commitment Notice
(and in no event later than the end of the following Business Day), the
Agent shall notify each Bank and the Transfer and Administration Agent
thereof. In the case of any reduction, termination or reallocation of the
Aggregate Receivables Commitment, the Agent shall directly contact the
Transfer and Administration Agent for any relevant information.
(iii) Any partial reduction or reallocation of a Commitment
shall be in an aggregate minimum amount of $10,000,000 for each such
Commitment, and integral multiples of $1,000,000 in excess of that amount
for each such Commitment. Any reduction or reallocation of any Commitment
shall be applied to each Bank in accordance with such Bank's Pro Rata Share
thereof. All accrued commitment fees to, but not including the effective
date of any termination of any Commitment, shall be paid on the effective
date of such termination.
-19-
(iv) No reduction, termination or reallocation of any
Commitments shall be permitted if, after giving effect thereto and to any
prepayments made on the effective date thereof, (A) the outstanding
principal amount of the Loans hereunder would exceed the Aggregate Loan
Commitment; or (B) the Total Outstanding Investment would exceed the
Aggregate Receivables Commitment.
(v) Concurrently with any termination, reduction or reallocation
of the Aggregate Loan Commitment, the Company shall sign such amended Notes
as requested by the Banks through the Agent to reflect such change.
2.6 Prepayments. (a) Voluntary. The Company may, upon not less
----------- ---------
than one Business Days' prior written or telephonic notice confirmed in writing
to the Agent (in the case of a prepayment of a Base Rate Loan) or three Business
Days' prior written or telephonic notice confirmed in writing to the Agent (in
the case of a prepayment of a Eurodollar Rate Loan or CD Rate Loan) (which
notice the Agent will promptly transmit by telecopy, telex or telephone to each
Bank), at any time and from time to time prepay (i) any Eurodollar Rate Loans or
CD Rate Loans in whole or in part in an aggregate minimum amount of $3,000,000
and integral multiples of $500,000 in excess of that amount so long as the
unpaid balance is not less than $5,000,000; or (ii) any Base Rate Loans in whole
or in part in an aggregate minimum amount of $1,000,000 and integral multiples
of $100,000 in excess of that amount; provided that in the event of any such
--------
prepayment of any Eurodollar Rate Loans or CD Rate Loans, the Company shall be
obligated to reimburse the Banks in respect thereof pursuant to Section 3.5. If
such notice of prepayment does not specify how such prepayment shall be applied,
it shall be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans or CD Rate Loans, as determined by the
Agent. All prepayments of Eurodollar Rate Loans and CD Rate Loans shall be
applied to the payment of any interest that has accrued to the date of such
prepayment before application to principal. Prepayments of Base Rate Loans
shall be applied to principal only.
(b) Mandatory. Any mandatory prepayments required under Section
---------
2.1(ii) shall be accompanied by any payment required under Section 2.6(a) or
3.5, if applicable.
2.7 Repayment of Loans. Each Loan shall mature and the Company shall
------------------
repay the unpaid principal amount of each Loan on the Termination Date.
2.8 Interest on the Loans.
---------------------
(a) Subject to Section 2.8(c), the Loans shall bear interest on the
unpaid principal amount thereof from the Funding
-20-
Date through maturity (whether by acceleration or otherwise) at a rate per annum
equal to the (i) Eurodollar Rate plus the Applicable Amount or (ii) CD Rate plus
---- ----
the Applicable Amount or (iii) the Base Rate; provided, however, during any
period when the aggregate principal amount of Loans outstanding exceeds 50% of
the Aggregate Loan Commitment, an additional .125% will be added to the
Eurodollar Rate, CD Rate or Base Rate as the case may be.
(b) Subject to Section 2.8(c), from and after the Effective Date,
interest shall be payable in arrears on the Loans on each Interest Payment Date
applicable to that Loan. Interest paid on the date of any partial prepayment of
Loans hereunder shall be paid in respect of the portion of the Loans so prepaid.
(c) Any principal payments on the Loans not paid when due and, to
the extent permitted by applicable law, any interest payments on the Loans not
paid when due, in each case whether at stated maturity, by notice of prepayment,
by acceleration or otherwise, shall thereafter bear interest payable upon demand
at a rate which is 2% per annum in excess of the rate of interest otherwise
payable under this Agreement.
2.9 Fees. (a) The Company agrees to pay a commitment fee equal to
----
the Applicable Amount on the daily average unused portion of the Loan Commitment
during the Availability Period. The Company shall pay the commitment fee to the
Agent for distribution to each Bank in accordance with its Pro Rata Share. The
commitment fee shall be calculated on the basis of a 360-day year and the actual
number of days elapsed and shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, for all amounts accrued to such date, and
on the Termination Date; provided that, in connection with any reduction or
--------
termination of the Loan Commitment pursuant to Section 2.5, the accrued fee
calculated on the portion so terminated or reduced for the period ending on such
date shall also be paid on the date of such reduction or termination.
(b) The Company agrees to pay a utilization fee equal to the
Applicable Amount on the daily average used portion of the Loan Commitment when
utilization of the Loan Commitment exceeds 50% of the Loan Commitment during the
Availability Period. The Company shall pay the utilization fee to the Agent for
distribution to each Bank in accordance with its Pro Rata Share. The
utilization fee shall be calculated on the basis of a 360-day year and the
actual number of days elapsed and shall be payable quarterly in arrears on the
last Business Day of each calendar quarter, for all amounts accrued to such
date, and on the Termination Date; provided that, in connection with any
--------
reduction or termination of the Loan Commitment pursuant to Section 2.5, the
accrued fee calculated on the portion so
-21-
terminated or reduced for the period ending on such date shall also be paid on
the date of such reduction or termination.
(c) The Company shall pay to the Agent and the Arranger other fees in
accordance with a term sheet dated as of February 1, 1995 from the Arranger and
Bank of America to the Company.
(d) The Company shall pay to the Agent such fees as may from time to
time be agreed upon between the Company and the Agent.
2.10 Calculation of Interest and Fees. (a) Interest on all
--------------------------------
Loans and fees payable under this Agreement shall be computed on the basis of a
360-day year and the actual number of days elapsed in the period during which it
accrues. In computing interest on any Loan, the date of the making of the Loan
or the first day of an Interest Period, as the case may be, shall be included
and the date of payment shall be excluded; provided that, if a Loan is repaid on
--------
the same day on which it is made, one day's interest shall be paid on that Loan.
(b) Any change in the interest rate on a Loan resulting from a change
in the Applicable Amount, Reserve Percentage or Eurodollar Reserve Percentage
shall become effective as of the opening of business on the day on which such
change in the Applicable Amount or Eurodollar Reserve Percentage becomes
effective. Each determination of an interest rate by the Agent pursuant hereto
shall be conclusive and binding on the Company and the Banks in the absence of
manifest error.
2.11 Payments by the Company. (a) All payments of principal,
-----------------------
interest and fees hereunder and under any Notes shall be in same day funds and
delivered to the Agent for credit to:
Bancontrol Account No. 12358-88449
Reference: Mattel, Inc.
1850 Gateway Boulevard
Concord, California 94520
for the account of the Banks or the Agent not later than 11:00 a.m. (San
Francisco time) on the date due. The Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided herein)
of such principal, interest, fees or other amounts in like funds received. Any
payment which is received by the Agent after that time shall be deemed to have
been paid by the Company on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions in the definition of "Interest Period",
whenever any payment hereunder shall be stated
-22-
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) Unless the Agent shall have received notice from the Company prior
to the date on which any payment is due to the Banks hereunder that the Company
will not make such payment in full as and when required hereunder, the Agent may
assume that the Company has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the extent
the Company shall not have made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate as in effect for each such day.
2.12 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent shall have received notice from a Bank on the
Effective Date or, with respect to each borrowing after the Effective Date, by
12:00 noon (San Francisco time) one Business Day prior to the date of any
proposed borrowing of Eurodollar Rate Loans or CD Rate Loans, or by 10:00 a.m.
(San Francisco time) on the date of any proposed borrowing of Base Rate Loans,
that such Bank will not make available to the Agent as and when required
hereunder for the account of the Company the amount of that Bank's Pro Rata
Share of the borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the Funding Date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to
the extent any Bank shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the next Business Day
following the date of such borrowing make such amount available to the Agent,
together with interest at the Federal Funds Rate for and determined as of each
day during such period. A notice of the Agent submitted to any Bank with
respect to amounts owing under this Section 2.12(a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Bank's Loan on the date of borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the next
Business Day following the date of such borrowing, the Agent shall notify the
Company of such failure to fund and, upon demand by the Agent, the Company shall
pay such amount to the Agent for the
-23-
Agent's account, together with interest thereon for each day elapsed since the
date of such borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such borrowing.
(b) The failure of any Bank to make any Loan on any date of borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of any
borrowing.
2.13 Sharing of Payments, Etc. If, other than as expressly
-------------------------
provided elsewhere herein, any Bank shall obtain on account of the Loans made by
it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share of payments on
account of the Loans obtained by all the Banks, such Bank shall forthwith (a)
notify the Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of them; provided,
--------
however, that if all or any portion of such excess payment is thereafter
- -------
recovered from the purchasing Bank, such purchase shall to that extent be
rescinded and each other Bank shall repay to the purchasing Bank the purchase
price paid therefor, together with an amount equal to such paying Bank's Pro
Rata Share (according to the proportion of (i) the amount of such paying Bank's
required repayment to (ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. The Company agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section 2.13 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank were the direct creditor of the Company in the amount of such
participation. The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased pursuant
to this Section 2.13 and will in each case notify the Banks following any such
purchases or repayments.
SECTION 3.
PAYMENTS IN GENERAL.
--------------------
3.1 Taxes.
-----
(a) Subject to Section 3.1(d) and Section 3.1(g), any and all payments
by the Company to each Bank or the Agent under this Agreement shall be made free
and clear of, and without deduction or withholding for, any and all present or
future
-24-
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Bank and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or measured
by each Bank's or the Agent's net income by the jurisdiction under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to Section 3.1(g), the Company shall indemnify and hold
harmless each Bank and the Agent for the full amount of Taxes or Other Taxes
(including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.1) paid by such Bank or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date such Bank or the
Agent makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then, subject to Section 3.1(g): (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.1) such
Bank or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made; (ii) the Company shall
make such deductions, and (iii) the Company shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that:
(i) it shall, no later
-25-
than the Effective Date (or, in the case of a Bank which becomes a party hereto
after the Effective Date, the date upon which the Bank becomes a party hereto)
deliver to the Company and the Agent: (A) if any Lending Office is located in
the United States, two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"), and (B) if any
Lending Office is located outside the United States, two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), in each case indicating that the Bank is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for the
account of such Lending Office or Offices under this Agreement free from
withholding of United States Federal income tax; (ii) if at any time the Bank
changes its Lending Office or Offices or selects an additional Lending Office as
herein provided, it shall with reasonable promptness deliver to the Company and
the Agent in replacement for, or in addition to, the forms previously delivered
by it hereunder: (A) if such changed or additional Lending Office is located in
the United States, two accurate and complete signed originals of Form 4224; or
(B) otherwise, two accurate and complete signed originals of Form 1001, in each
case indicating that the Bank is on the date of delivery thereof entitled to
receive payments of principal, interest and fees for the account of such changed
or additional Lending Office under this Agreement free from withholding of
United States Federal income tax; (iii) it shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in the most recent Form 4224 or Form
1001 previously delivered by such Bank and if the delivery of the same be
lawful, deliver to the Company and the Agent two accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms previously
delivered by the Bank; and (iv) it shall, promptly upon the Company's reasonable
request to that effect, deliver to the Company and the Agent such other forms or
similar documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Bank's tax status for
withholding purposes.
(g) The Company will not be required to pay any additional amounts in
respect of United States Federal income tax pursuant to Section 3.1(d) to any
Bank for the account of any Lending Office of such Bank: (i) if the obligation
to pay such additional amounts would not have arisen but for a failure by such
Bank to comply with its obligations under Section 3.1(f) in respect of such
Lending Office; (ii) if such Bank shall have delivered to the Company a Form
4224 in respect of such Lending Office pursuant to Section 3.1(f)(i)(A), and
such Bank shall not be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by the Company hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or in the
-26-
official interpretation of such law or regulations by any Governmental Person
charged with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 4224; or (iii) if the
Bank shall have delivered to the Company a Form 1001 in respect of such Lending
Office pursuant to Section 3.1(f)(i)(B), and such Bank shall not at any time be
entitled to exemption from deduction or withholding of United States Federal
income tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States law or
regulations or any applicable tax treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any Governmental Person
charged with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 1001.
(h) If, at any time, the Company requests any Bank to deliver any
forms or other documentation pursuant to Section 3.1(f)(iv), then the Company
shall, on demand of such Bank through the Agent, reimburse such Bank for any
costs and expenses (including expenses of outside legal counsel and the
allocated costs of in-house counsel) reasonably incurred by such Bank in the
preparation or delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any Bank
or the Agent pursuant to Section 3.1(d), then such Bank shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise disadvantageous to such Bank.
(j) The agreements and obligations of the Company contained in this
Section 3.1 shall survive the payment in full of all other Obligations.
3.2 Capital Adequacy. If (a) any adoption of or any change in or in
----------------
the interpretation of any law, rule or regulation, or (b) compliance with any
guideline, request or directive of any central bank or other Governmental Person
or quasi-governmental authority exercising control over banks or financial
institutions generally or any court (whether or not having the force of law), or
(c) any change in the force or effectiveness of the regulations set forth at 12
C.F.R. Part 3 (Appendix A), 12 C.F.R. Part 225 (Appendix A), 12 C.F.R. Part 208
(Appendix A) or 12 C.F.R. Part 325 (Appendix A) requires that the commitments of
any Bank hereunder (including, without limitation, commitments and obligations
in respect of Loans) be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Bank or any corporation controlling such Bank (a "Change in Law"), the
-27-
result of which is to reduce the rate of return on such Bank's capital as a
consequence of such commitments to a level below that which such Bank could have
achieved but for such Change in Law, taking into consideration such Bank's
policies with respect to capital adequacy, by an amount which such Bank deems to
be material, the Bank shall deliver to the Company a statement of the amount
necessary to compensate such Bank for the reduction in the rate of return on its
capital attributable to such commitments (the "Capital Compensation Amount").
The Bank shall determine the Capital Compensation Amount in good faith, using
reasonable attribution and averaging methods. The Bank shall from time to time
notify the Company of the amount so determined. Such amount shall be due and
payable by the Company to such Bank ten Business Days after such notice is
given. As soon as practicable after any Change in Law, each Bank shall submit
to the Company estimates of the Capital Compensation Amounts that would be
payable as a function of such Bank's commitments hereunder.
3.3 Illegality.
----------
(a) If any Bank shall determine that any Governmental Rule or any
change therein or in the interpretation or administration thereof has made it
unlawful, or that any Governmental Person has asserted that it is unlawful, for
any Bank or its Lending Office to make Eurodollar Rate Loans, then, on notice
thereof by the Bank to the Company through the Agent, the obligation of the Bank
to make Eurodollar Rate Loans shall be suspended until the Bank shall have
notified the Agent and the Company that the circumstances giving rise to such
determination no longer exists.
(b) If a Bank shall determine that any Governmental Rule or any change
therein or in the interpretation or administration thereof has made it unlawful,
or that any Governmental Person has asserted that it is unlawful, for any Bank
or its Lending Office to maintain any Eurodollar Rate Loan, the Company shall
prepay all Eurodollar Rate Loans of the Bank then outstanding, together with
interest accrued thereon, or convert all Eurodollar Rate Loans of the Bank then
outstanding to CD Rate Loans or Base Rate Loans 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, together with any
amounts required to be paid in connection therewith pursuant to Section 3.5.
(c) If the obligation of any Bank to make or maintain Eurodollar Rate
Loans has been terminated, the Company may elect, by giving notice to the Bank
through the Agent that all Loans
-28-
which would otherwise be made by the Bank as Eurodollar Rate Loans shall be
instead CD Rate Loans or Base Rate Loans.
(d) Before giving any notice to the Agent pursuant to this Section
3.3, the affected Bank shall designate a different Lending Office with respect
to its Eurodollar Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
3.4 Increased Costs and Reduction of Return. If any Bank shall
---------------------------------------
determine that, due to either (a) the introduction of or any change (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the CD Rate or the Eurodollar Rate) in or in the
interpretation of any law or regulation or (b) the compliance with any guideline
or request from any Governmental Person (whether or not having the force of
law), there shall be any increase in the cost to such Bank of agreeing to make
or making, funding or maintaining any Eurodollar Rate Loans or CD Rate Loans,
then the Company shall be liable for, and shall from time to time, upon demand
therefor by such Bank (with a copy of such demand to the Agent), pay to such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs. Each Bank agrees to notify the Company of the occurrence of
such an increased cost event promptly after obtaining knowledge thereof.
3.5 Funding Losses. The Company agrees to reimburse each Bank and to
--------------
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Company to make any payment
or prepayment of principal of any Eurodollar Rate Loan or CD Rate Loan
(including payments made after any acceleration thereof); (b) the failure of the
Company to borrow, continue or convert a Loan after the Company has given (or is
deemed to have given) a Notice of Borrowing or a Notice of Conversion/
Continuation; (c) the failure of the Company to make any prepayment after the
Company has given a notice in accordance with Section 2.6; or (d) the prepayment
of a Eurodollar Rate Loan or CD Rate Loan on a day which is not the last day of
the Interest Period with respect thereto; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
its Eurodollar Rate Loans or CD Rate Loans hereunder or from fees payable to
terminate the deposits from which such funds were obtained. Solely for purposes
of calculating amounts payable by the Company to the Banks under this Section
3.3(b) and Sections 3.4 and 3.5, (i) each Eurodollar Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Eurodollar Rate used in
determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a
-29-
comparable period, whether or not such Eurodollar Rate Loan is in fact so funded
and (ii) each CD Rate Loan made by a Bank (and each related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been funded
at the Certificate of Deposit Rate used in determining the CD Rate for such CD
Rate Loan by the issuance of its certificate of deposit in a comparable amount
and for a comparable period, whether or not such CD Rate Loan is in fact so
funded. This covenant shall survive the payment in full of all other
Obligations.
3.6 Inability to Determine Rates. If any two Reference Banks shall
----------------------------
have determined that for any reason adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan or CD Rate Loan, or if the Requisite
Banks advise the Agent in writing that the Eurodollar Rate or the CD Rate
applicable for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan or CD Rate Loan does not adequately and fairly reflect the
cost to such Banks of funding such Loan, the Agent will forthwith give notice of
such determination to the Company and each Bank. Thereafter, the obligation of
the Banks to make or maintain Eurodollar Rate Loans or CD Rate Loans, as the
case may be, hereunder shall be suspended until the Agent upon the instruction
of the Requisite Banks revokes such notice in writing. Upon receipt of such
notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/
Continuation then submitted by it. If the Company does not revoke such notice
with respect to Loans, the Banks shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Eurodollar Rate Loans or CD Rate Loans, as
applicable.
3.7 Survival. The agreements and obligations of the Company in this
--------
Section 3 shall survive the payment of all other Obligations.
SECTION 4.
CONDITIONS PRECEDENT.
--------------------
4.1 Conditions to Effectiveness. This Agreement shall become
---------------------------
effective only upon the Company delivering to the Agent and Banks (or to the
Agent for the Banks with sufficient originally executed copies for each Bank,
except for any Notes):
(a) A copy of the Restated Certificate of Incorporation of the
Company, together with evidence acceptable to Agent that the same has been filed
with the Secretary of State of the State of Delaware and a good standing
certificate from the
-30-
Secretaries of State of the States of Delaware and California, each to be dated
a recent date prior to the Effective Date;
(b) Copies of the Bylaws of the Company, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(c) Resolutions of the Board of Directors of the Company approving
and authorizing the execution, delivery and performance of each Loan Document to
which it is a party or which it is acknowledging and approving and authorizing
the execution, delivery and payment of any Notes, certified as of the Effective
Date by its corporate secretary or an assistant secretary;
(d) A signature and incumbency certificate of the officers of the
Company executing or acknowledging any Loan Document;
(e) A copy of the Certificate of Incorporation of Fisher-Price,
together with evidence acceptable to the Agent that the same has been filed with
the Secretary of State of the State of California and a good standing
certificate from the Secretary of State of the State of California to be dated a
recent date prior to the Effective Date;
(f) Copies of the Bylaws of Fisher-Price, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(g) Resolutions of the Board of Directors of Fisher-Price approving
and authorizing the execution, delivery and performance of each Loan Document to
which it is a party or which it is acknowledging, certified as of the Effective
Date by its corporate secretary or an assistant secretary;
(h) A signature and incumbency certificate of the officers of
Fisher-Price executing or acknowledging any Loan Document;
(i) A copy of the Articles of Incorporation of Mattel Sales,
together with evidence acceptable to the Agent that the same has been filed with
the Secretary of State of the State of California and a good standing
certificate from the Secretary of State of the State of California to be dated a
recent date prior to the Effective Date;
(j) Copies of the Bylaws of Mattel Sales, certified as of the
Effective Date by its corporate secretary or an assistant secretary;
(k) Resolutions of the Board of Directors of Mattel Sales approving
and authorizing the execution, delivery and
-31-
performance of each Loan Document to which it is a party or which it is
acknowledging, certified as of the Effective Date by its corporate secretary or
an assistant secretary;
(l) A signature and incumbency certificate of the officers of Mattel
Sales executing or acknowledging any Loan Document;
(m) A good standing certificate with respect to any Affiliate of the
Company executing a Fisher-Price Subordination Agreement or Mattel Sales
Subordination Agreement from the Secretary of State of the state of its
incorporation, each to be dated a recent date prior to the Effective Date;
(n) Resolutions of the Board of Directors of any Affiliate of the
Company executing a Fisher-Price Subordination Agreement or Mattel Sales
Subordination Agreement approving and authorizing the execution, delivery and
performance of such Fisher-Price Subordination Agreement and such Mattel Sales
Subordination Agreement, certified as of the Effective Date by its corporate
secretary or an assistant secretary;
(o) A signature and incumbency certificate of the officers of any
Affiliate of the Company executing a Fisher-Price Subordination Agreement or
Mattel Sales Subordination Agreement;
(p) Executed copies of this Agreement and, as requested by any Bank,
executed Notes drawn to the order of such Bank and with appropriate insertions;
(q) A certificate or other evidence from the Transfer and
Administration Agent that the Transfer and Administration Agreement shall have
been, or concurrently herewith is being, duly executed and delivered and all
conditions precedent thereunder shall have been, or concurrently herewith are
being, satisfied or waived by the Banks;
(r) Executed copies of one or more favorable written opinions of
Robert Normile, Esq., Assistant General Counsel of the Company dated as of the
Effective Date, substantially in the form of Exhibit E hereto relating to the
Company, Fisher-Price and Mattel Sales and as to such other matters as the Agent
and the Banks may reasonably request;
(s) A certificate signed by one of the officers authorized to deliver
an Officer's Certificate, or other evidence satisfactory to the Agent, of the
ratings on the Company's long-term unsecured Indebtedness by S&P, Moody's, Duff
& Phelps and Fitch;
(t) Evidence of termination of the Existing Credit Agreements dated
the date hereof, together with payment, for
-32-
distribution to the agent and banks parties to the Existing Credit Agreements,
of all fees payable by the Company pursuant to Sections 2.4 and 2.6 of the
Existing Credit Agreements that have accrued through the Effective Date;
(u) Payment of all fees payable pursuant to Section 2.9(b);
(v) The Fisher-Price Guaranty duly executed by Fisher-Price;
(w) The Mattel Sales Guaranty duly executed by Mattel Sales;
(x) The Company shall have performed in all material respects all
agreements which this Agreement provides shall be performed by it on or before
the Effective Date; and
(y) A Mattel Sales Subordination Agreement and a Fisher-Price
Subordination Agreement duly executed by the Company.
4.2 Conditions to All Loans. The obligation of each Bank to make any
-----------------------
Loan is subject to the following further conditions precedent that, as of the
applicable Funding Date:
(a) The Agent shall have received on or before that Funding Date a
Notice of Borrowing signed by the Chief Executive Officer, the Chief Financial
Officer, the Treasurer or an Assistant Treasurer of the Company or any officer
of the Company designated by any of the above described officers on behalf of
the Company in writing delivered to the Agent;
(b) The representations and warranties of the Company contained in
any Loan Document (except the representation and warranty contained in Section
5.9 and, in the case of a borrowing of Loans where the aggregate principal
amount of the Loans being made on that Funding Date equals or is less than the
aggregate principal amount of Loans maturing on that Funding Date, the
representation and warranty contained in Section 5.11), shall be true, correct
and complete in all material respects on and as of that Funding Date, to the
same extent as though made on and as of that Funding Date; and
(c) No Default or Event of Default shall exist or shall result from
such borrowing or continuation or conversion.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the Funding Date,
that the conditions in Section 4.2 are satisfied.
-33-
SECTION 5.
REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Banks and the Agent to enter into this
Agreement and to make any extension of credit hereunder, the Company represents
and warrants to each Bank and the Agent that the following statements are true,
correct and complete:
5.1 Organization and Powers. The Company is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware; and, except for changes in the ordinary course of business or as
permitted or contemplated by this Agreement, each of the Material Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; and each has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted and, in the case of the
Company, to enter into this Agreement, a Fisher-Price Subordination Agreement
and a Mattel Sales Subordination Agreement, to issue the Notes and to carry out
the transactions contemplated hereby and thereby.
5.2 Good Standing. The Company and, except for changes in the
-------------
ordinary course of business or as permitted or contemplated by this Agreement,
each Material Subsidiary is in good standing wherever necessary to carry on its
present business and operations, except in jurisdictions in which the failure to
be in good standing has or will have no Material Adverse Effect.
5.3 Subsidiaries. Except as set forth in the immediately succeeding
------------
sentence and except for changes in the ordinary course of business or as
permitted or contemplated by this Agreement, Schedule 5.3 hereto correctly sets
forth the name, jurisdiction of incorporation and ownership interest of the
Company in each of its Material Subsidiaries as of the date hereof. Except as
identified on Schedule 5.3 hereto and except for changes in the ordinary course
of business or as permitted or contemplated by this Agreement, the Company has
no subsidiaries the book value of whose assets as at December 31, 1993, exceed
$1,000,000 or, when considered in the aggregate with all other subsidiaries not
listed on Schedule 5.3 hereto constitute an amount in excess of $4,000,000.
5.4 Authorization of Borrowing. The execution, delivery and
--------------------------
performance of each Loan Document to which it is a party, and acknowledgement of
the Fisher-Price Subordination Agreement and the Mattel Sales Subordination
Agreement and the issuance, delivery and payment of the Notes have been duly
authorized by all necessary corporate action by the Company.
-34-
5.5 No Conflict. The execution, delivery and performance by the
-----------
Company of this Agreement and the acknowledgement of the Fisher-Price
Subordination Agreement, the Mattel Sales Subordination Agreement and the
issuance, delivery and payment of the Notes do not and will not (a) violate the
Restated Certificate of Incorporation or Bylaws of the Company, (b) violate any
provision of law applicable to the Company, or any material order, judgment or
decree of any court or other agency of government binding on the Company, the
violation of which would result in a Material Adverse Effect, (c) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company, (d) result in or
require the creation or imposition of any material lien, security interest,
charge or encumbrance of any nature whatsoever upon any of its material
properties or assets, or (e) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of the
Company.
5.6 Governmental Consents. The execution, delivery and performance
---------------------
by the Company of each Loan Document to which it is a party and each agreement,
document, or instrument required hereunder, the acknowledgment of the Fisher-
Price Subordination Agreement, Mattel Sales Subordination Agreement, and the
issuance, delivery and payment of the Notes do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any Federal, state or other governmental authority or regulatory
body or other such person.
5.7 Binding Obligation. This Agreement is, and each other Loan
------------------
Document to which it is a party, when executed and delivered hereunder will be,
the legally valid and binding obligations of the Company, enforceable against it
in accordance with their respective 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.
5.8 Financial Condition. The Company has heretofore delivered to the
-------------------
Banks a consolidated balance sheet of the Company and its Subsidiaries for the
fiscal year ended December 31, 1993 and related consolidated statements of
income, shareholders' equity and changes in financial position of the Company
and its Subsidiaries for such fiscal year, audited by Price Waterhouse. All
such statements were prepared in accordance with GAAP and fairly present the
consolidated financial position of the Company and its Subsidiaries as at the
date thereof and the consolidated results of operations and statement of cash
flow of the Company and its Subsidiaries for the period then ended. Neither the
Company nor any of its Subsidiaries has any material Contingent Obligation,
liability for taxes or long-term lease which as of the date of this
-35-
Agreement, individually or in the aggregate, would, if it became absolute,
result in a Material Adverse Effect which is not reflected in the foregoing
statements or in the notes thereto.
5.9 Changes, Etc. Since December 31, 1993, there has been no event or
------------
events that have, either individually or in the aggregate, resulted in a
Material Adverse Effect.
5.10 Title to Properties. The Company and its Subsidiaries
-------------------
have good, sufficient and legal title to all the properties and assets reflected
in the consolidated balance sheet referred to in Section 5.8 except as set forth
in said balance sheet or in the notes thereto, except for assets acquired or
disposed of in the ordinary course of business or as otherwise permitted by this
Agreement since December 31, 1993 and except for immaterial defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect.
5.11 Litigation; Adverse Facts. There is no action, suit,
-------------------------
proceeding or arbitration (whether or not purportedly on behalf of the Company
or any of its Subsidiaries) at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of the Company's or such Subsidiaries' properties which, in
the reasonable judgment of the Company and its executive officers (assuming
adverse determination of facts which the Company in good faith believes it would
not successfully prove, and considering damages which in their best judgment is
the maximum that would be awarded upon, and the likelihood of, an adverse
determination of the claim or the amount which reflects their best judgment as
to that required to be paid to settle the claims) would result in a Material
Adverse Effect and there is no basis known to such executive officers for any
such action, suit or proceeding. Neither the Company nor any of its
Subsidiaries is (i) in violation of any applicable law which could result in a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, injunction, decree, rule or regulation of any court or
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could result in a
Material Adverse Effect. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries which provides a reasonable basis for
questioning the validity or the enforceability of any Loan Document.
5.12 Payment of Taxes. All tax returns and reports of the
----------------
Company and its Material Subsidiaries required to be filed by any of them have
been timely filed, and all taxes,
-36-
assessments, fees and other governmental charges upon the Company and its
Subsidiaries and upon their respective properties, assets, income and franchises
which are due and payable have been paid when due and payable or bonded against,
except to the extent permitted by Section 6.3. The Company knows of no proposed
tax assessment against it or any of its Subsidiaries that would result in a
Material Adverse Effect.
5.13 Agreements. Neither the Company nor any of its
----------
Subsidiaries is a party to or is subject to any material agreement or
instrument or charter or other internal restriction which results in a Material
Adverse Effect.
5.14 Performance. Neither the Company nor any of its
-----------
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any Contractual
Obligation of the Company, and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute such a default, except, in
any such case, where the consequences, direct or indirect, of such default or
defaults, if any, would not result in a Material Adverse Effect.
5.15 Governmental Regulation. Neither the Company nor any of
-----------------------
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or to any Federal or state statute or regulation
limiting its ability in any material way to incur Indebtedness for money
borrowed.
5.16 Employee Benefit Plans. The Company and each of its ERISA
----------------------
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Pension Plans. Neither the Company nor any of its ERISA
Affiliates has participated in or participates in any Multiemployer Plan the
withdrawal from which may result in any liability to any party in an amount in
excess of $1,000,000.
5.17 Environmental Matters. The Company conducts in the
---------------------
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
properties, and as a result thereof the Company has reasonably concluded that
such Environmental Laws and Environmental Claims could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
5.18 Disclosure. No representation or warranty of the Company
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by the
-37-
Company since January 1, 1994 for use in connection with the transactions
contemplated by this Agreement as of the date of this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
the officers of the Company in the case of any document or fact not furnished by
it) necessary in order to make the statements contained herein or therein 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 Banks
prior to the date of this Agreement. The projections and pro forma financial
information contained in such written materials are based upon good faith
estimates and assumptions believed by the Company to be reasonable at the time
made, it being recognized by the Banks that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There is no fact known to the officers of the Company as of the date of this
Agreement (other than matters of a general economic nature) which materially
adversely affects the business, operations, property, assets or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
which has not been disclosed herein or in the written materials referred to in
Section 5.8 other than as disclosed in writing to the Banks on or before the
date hereof.
5.19 Subordination Agreements. Neither Fisher-Price nor Mattel
------------------------
Sales has any material outstanding obligations to any Affiliate of the Company
which has not signed a Fisher-Price Subordination Agreement or a Mattel Sales
Subordination Agreement, respectively.
SECTION 6.
AFFIRMATIVE COVENANTS.
---------------------
The Company agrees from the Effective Date until payment in full of
all Obligations and termination of the Aggregate Facilities Commitment and the
Transfer and Administration Agreement, unless Requisite Banks shall otherwise
give prior written consent, the Company will perform all covenants in this
Section 6.
6.1 Reporting and Information Requirements. The Company will
--------------------------------------
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. The Company
will deliver to the Agent and to each Bank:
(a) as soon as practicable and in any event not later than 55 days
after the end of each of the first three fiscal
-38-
quarters of the Company, consolidated balance sheets of the Company and its
Subsidiaries as at the end of such period and for the fiscal year to date and
the related consolidated statements of income, consolidated statements of
stockholders' equity and consolidated statements of cash flow all in reasonable
detail and certified by the Chief Financial Officer, Executive Vice President
Finance or the Treasurer of the Company that the consolidated statements (and to
the best of his or her belief, the consolidating statements) and other materials
required by this clause (a) fairly present the financial condition of the
Company and its Subsidiaries as at the dates indicated and the results of their
operations for the periods indicated, subject to changes resulting from year-end
audit and normal year-end adjustments;
(b) as soon as practicable and in any event not later than 100 days
after the end of each fiscal year of the Company, consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the end of such year
and the related consolidated (and, as to statements of income only, consolidated
and consolidating) statements of income, stockholders' equity and cash flow of
the Company and its Subsidiaries for such fiscal year, setting forth in each
case, in comparative form the consolidated figures for the previous year, all in
reasonable detail and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of Price Waterhouse or other independent
accountants of recognized national standing selected by the Company which report
shall state that such consolidated financial statements present fairly the
financial position of the Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flow for the periods
indicated in conformity with GAAP and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (ii) in the case of
such consolidating financial statements, certified by the chief financial or
accounting officer of the Company;
(c) together with each delivery of financial statements of the
Company and its Subsidiaries pursuant to clauses (a) and (b) above, an Officers'
Certificate (i) stating that the signers have reviewed the terms of this
Agreement and the Notes and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
the Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Default, or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof,
-39-
and (ii) demonstrating in reasonable detail compliance during (to the extent
required) and at the end of such accounting periods with the restrictions
contained in Sections 7.5, 7.6 and 7.7;
(d) together with each delivery of consolidated financial statements
of the Company and its Subsidiaries pursuant to clause (b) above, a written
statement by the independent accountants giving the report thereon (i) stating
that their audit examination has included a review of the terms of this
Agreement and the Notes as they relate to accounting matters, and (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes an Event of Default or Default has come to their attention,
and if such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided that such accountants shall not
--------
be liable by reason of any failure to obtain knowledge of any such Event of
Default or Default that would not be disclosed in the course of their audit
examination. The Agent shall have the right, from time to time, to discuss the
affairs of the Company directly with such independent certified public
accountants;
(e) promptly upon receipt thereof, copies of all reports submitted to
the Company (including, without limitation, the Company's Board of Directors) by
the Company's independent accountants in connection with each annual, interim or
special audit of the consolidated financial statements of the Company made by
such accountants, including, without limitation, any comment letter submitted by
such accountants to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its security holders or by any Subsidiary of the
Company to its security holders other than the Company or another Subsidiary,
and, promptly upon their becoming effective, and in any event within 15 days of
filing, all regular and periodic reports and all registration statements and
prospectuses that have been filed by the Company or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
Governmental Person succeeding to any of its functions, and all press releases
and other statements made available generally by the Company or any Subsidiary
to the public concerning material developments in the business of the Company
and its Subsidiaries;
(g) promptly upon any executive officer of the Company obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that the Agent or any Bank has given any notice or
taken any other action with respect to a claimed Event of Default or Default
under this Agreement, (ii) of any condition or event which would be required to
be disclosed in a current report filed
-40-
by the Company with the Securities and Exchange Commission on Form 8-K (Items 1,
2, 4 and 6 of such Form as in effect on the date hereof) if the Company were
required to file such reports under the Exchange Act, (iii) that any Person has
given any notice to the Company or any Subsidiary of the Company or taken any
other action with respect to a claimed default or event or condition of the type
referred to in Section 8.1, (iv) of the institution of any litigation involving
an alleged liability of the Company or any of its Subsidiaries equal to or
greater than $20,000,000 or any adverse determination in any litigation
involving a potential liability of the Company or any of its Subsidiaries equal
to or greater than $20,000,000, or (v) of a Material Adverse Effect, in each
case an Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed default, Event of Default,
Default, event or condition, and what action the Company has taken, is taking
and proposes to take with respect thereto;
(h) as soon as available but no later than March 31 of each year,
copies of the Company's consolidated financial plan for the then current fiscal
year as customarily prepared for internal use;
(i) promptly after the acquisition of any Material Subsidiary,
notice of such acquisition;
(j) promptly upon any executive officer of the Company obtaining
knowledge, notice of any change in the ratings on the Company's long-term
unsecured Indebtedness by S&P, Moody's, Duff & Phelps or Fitch; and
(k) with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as from time to time may be
reasonably requested by any Bank or the Agent, including any financial reports
regularly prepared by the Company for internal use.
6.2 Corporate Existence, etc. Except as permitted or not prohibited
------------------------
in Section 7.3, the Company will at all times preserve and keep in full force
and effect its corporate existence and rights and franchises material to its
business and those of each of its Material Subsidiaries; provided that the
--------
corporate existence and the rights and franchises of any Material Subsidiary may
be terminated or permitted to lapse if such termination or lapse is in the best
interest of the Company, is approved by the Board of Directors of the Company
and is not materially disadvantageous to the holder of any Note.
6.3 Payment of Taxes and Claims; Tax Consolidation. The Company
----------------------------------------------
will, and will cause each of its Material
-41-
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if being contested
--------
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor. The Company
will not, nor will it permit any Material Subsidiary to, file or consent to the
filing of any consolidated income tax return with any Person (other than the
Company or a Subsidiary of the Company).
6.4 Maintenance of Properties; Insurance. Except as permitted or
------------------------------------
not prohibited in Section 7.3, the Company will maintain or cause to be
maintained in good repair, working order and condition all material properties
(other than obsolete properties) used or useful in the business of the Company
and its Material Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals, substitutions and replacements thereof.
The Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Material Subsidiaries against loss or damage
of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated, of
such types and in such amounts as are customarily carried under similar
circumstances by such other corporations; provided that the Company may maintain
a program of self insurance for the Company and its Material Subsidiaries in
accordance with sound business practices.
6.5 Inspection of Property and Books and Records. The Company shall
--------------------------------------------
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiaries.
The Company will permit any authorized representatives designated by any Bank at
the expense of that Bank, to visit and inspect any of the properties of the
Company or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom (but not
records relating to intellectual property), and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all
-42-
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested.
6.6 Use of Proceeds of Loans. (a) The Company shall use the
------------------------
proceeds of Loans for general corporate purposes, including, without limitation,
lending to its Subsidiaries and acquiring other Persons or businesses so long as
the acquisition is approved by the board of directors of the Person being
acquired.
(b) The Company shall not, directly or indirectly, use any portion of
the Loan proceeds (i) knowingly to purchase Ineligible Securities from a Section
20 Subsidiary during any period in which such Section 20 Subsidiary makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by a Section 20 Subsidiary, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or privately placed
by a Section 20 Subsidiary and issued by or for the benefit of the Company or
any Affiliate of the Company.
6.7 Environmental Laws. The Company shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.8 Subordination Agreements. If from time to time Fisher-Price or
------------------------
Mattel Sales has any material outstanding obligations owing to any Affiliate of
the Company which has not signed a Fisher-Price Subordination Agreement or a
Mattel Sales Subordination Agreement, respectively, the Company shall cause such
Affiliate to execute deliver a Fisher-Price Subordination Agreement or a Mattel
Sales Subordination Agreement, as the case may be, and deliver to the Agent a
signature and incumbency certificate of the officers of each such Affiliate and
cause Fisher-Price or Mattel Sales, as the case may be, to acknowledge each such
agreement.
SECTION 7.
NEGATIVE COVENANTS.
------------------
The Company agrees from the Effective Date until payment in full of
all Obligations and termination of the Aggregate Facilities Commitment and the
Transfer and Administration Agreement, unless Requisite Banks shall otherwise
give prior written consent, the Company will perform all covenants in this
Section 7.
-43-
7.1 Indebtedness. The Company will not, and will not permit any of
------------
its Material Subsidiaries to, directly or indirectly incur, assume, guaranty or
otherwise become directly or indirectly liable with respect to:
(a) Indebtedness for borrowed money senior or having priority of
payment over the Obligations hereunder or secured by Liens on any of the
Company's or any Subsidiary's assets other than as permitted under Section
7.2 other than Indebtedness existing on the Effective Date; and
(b) Debt in excess of $150,000,000 in the aggregate incurred in any
one calendar year, net of paydowns of Debt in such year, commencing January
1, 1995; provided that any such Debt so incurred (i) will not contain any
--------
terms and conditions that in the aggregate are more restrictive than the
terms and conditions contained in this Agreement and (ii) will not cause
the Company to be in violation of Sections 7.5, 7.6, or 7.7 of this
Agreement.
7.2 Liens. The Company will not, and will not permit any of its
-----
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of the Company or any
Subsidiary to secure Indebtedness for borrowed money in excess of $100,000,000
(excluding Liens existing on the date hereof, Liens securing Indebtedness under
the Transfer and Administration Agreement, Liens listed on Schedule 7.2 and
Liens on newly-acquired Capital Assets); provided that such Liens on assets
--------
located in the United States shall not secure Indebtedness for borrowed money in
excess of $15,000,000.
7.3 Restriction on Fundamental Changes. (a) The Company shall not,
----------------------------------
and shall not permit any of its Material Subsidiaries to, engage in any material
line of business substantially different from those lines of business carried on
by it on the date hereof; provided, however, that the Company may engage in the
-------- -------
production and sale of CD-ROM products and coin-operated arcade games related to
the Company's existing lines of business.
(b) The Company shall not, and shall not suffer or permit any of its
Material Subsidiaries to, merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of whether in one transaction or in a series of
transactions, all or substantially all, of its assets to or in favor of any
Person, except:
(i) any Material Subsidiary of the Company may merge with the
Company, provided that the Company shall be the continuing or surviving
corporation, or with any one or more Material Subsidiaries of the Company,
provided that if any
-44-
transaction shall be between a Subsidiary and a wholly-owned subsidiary,
the wholly-owned subsidiary shall be the continuing or surviving
corporation; and
(ii) any Subsidiary of the Company may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the Company or
another Wholly-Owned Subsidiary of the Company.
7.4 Sale or Discount of Receivables. The Company will not, and will
-------------------------------
not permit any of its Domestic Subsidiaries to, directly or indirectly, sell
with recourse, or discount or otherwise sell for less than the face value
thereof (other than in the ordinary course of receivables financing without
recourse), any of its notes or accounts receivable, except:
(a) The Company and its Domestic Subsidiaries may offer discounts in
the ordinary course of business for early payment of accounts receivable and may
negotiate settlements of bad debts and disputed accounts receivable in the
ordinary course of business; and
(b) The Company, Mattel Sales and Fisher-Price may enter into and
perform under the Transfer and Administration Agreement.
7.5 Consolidated Funded Indebtedness to Total Capitalization. The
--------------------------------------------------------
Company shall not permit the ratio of the sum of (a) Consolidated Funded
Indebtedness plus (b) Total Outstanding Investment to the sum of (x)
----
Consolidated Funded Indebtedness plus (y) Total Outstanding Investment plus (z)
---- ----
Consolidated Tangible Net Worth to exceed 65% at the end of each of the first
three fiscal quarters in each fiscal year and 55% at the end of each fiscal
year.
7.6 Consolidated Tangible Net Worth. The Company shall not permit
-------------------------------
its Consolidated Tangible Net Worth at the end of any fiscal quarter to be less
than $530,000,000 plus 50% of each fiscal quarter's Consolidated Net Income
----
subsequent to December 31, 1993 (but without reduction for any losses) plus 100%
----
of any Net Issuance Proceeds subsequent to December 31, 1993.
7.7 Interest Coverage Ratio. The Company shall not permit, as of the
-----------------------
last day of each fiscal quarter, the ratio of (a) the sum of (i) its net income
from continuing operations, for the four consecutive fiscal quarters ending on
such date, before (A) special items, (B) minority interest, (C) gains on
reacquisition of debt, plus (ii) income taxes accrued for the four consecutive
----
fiscal quarters ending on such date, plus (iii) interest accrued for the four
----
consecutive fiscal quarters ending on such date, excluding capitalized interest
and without regard
-45-
to interest income plus (iv) depreciation and amortization for the four
----
consecutive fiscal quarters ending on such date to (b) interest incurred for the
four consecutive fiscal quarters ending on such date, including capitalized
interest and without regard to interest income, to be less than 3.5 to 1.
7.8 ERISA. The Company will not, and will not permit any of its
-----
ERISA Affiliates to, permit the actuarial present value of all benefit
liabilities under all Pension Plans to exceed the fair market value of the
assets of such Pension Plans (excluding Pension Plans with assets greater than
vested benefits) allocable to such benefit liabilities by more than $10,000,000.
As used in this Section 7.8, the terms "actuarial present value" and "benefit
liabilities" have the meanings specified in Section 4001 of ERISA.
7.9 Amendments or Waivers Under Transfer and Administration
-------------------------------------------------------
Agreement. The Company shall not agree to any amendment or waiver under the
Transfer and Administration Agreement without the consent of the Requisite
Banks.
7.10 Margin Regulations. No portion of the proceeds of any
------------------
borrowing under this Agreement shall be used by the Company for the purpose of
"purchasing" or "carrying" any Margin Stock or used in any manner which might
cause such borrowing or the application of such proceeds to violate Regulation
G, Regulation U, Regulation T, or Regulation X of the Federal Reserve Board or
any other regulation of the Federal Reserve Board or to violate the Exchange
Act, in each case as in effect on the date or dates of such borrowing and the
use of such proceeds.
7.11 Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Default if such action is
taken or condition exists.
SECTION 8.
EVENTS OF DEFAULT.
-----------------
8.1 Events of Default. Any of the following conditions or events
-----------------
shall constitute an "Event of Default:"
(a) Failure to Make Payments When Due. (i) Failure to pay any
---------------------------------
required payment of principal under this Agreement or the Transfer and
Administration Agreement or of any Loan or any Notes, when due, whether at
stated maturity, by acceleration, by
-46-
notice of prepayment or otherwise, (ii) failure to pay any required payment of
interest under this Agreement or the Transfer and Administration Agreement or on
any Loan or any Note or any fees payable pursuant to Section 2 for a period of
five days or more after the date such payment is due, or (iii) failure to pay
any other amount due under this Agreement or the Transfer and Administration
Agreement within 90 days after written notice thereof; or
(b) Default in Other Agreements. (i) Failure of the Company, Fisher-
---------------------------
Price, Mattel Sales or any of its Material Subsidiaries to pay or any default in
the payment of any principal or interest on any Indebtedness in an amount
exceeding $15,000,000 or any default in any other obligation for the payment of
money in an amount in excess of $15,000,000 beyond any period of grace allowed;
or
(ii) any breach or default (unless cured or waived) with respect to
any other term of any evidence of such other Indebtedness for borrowed money in
an amount exceeding $15,000,000 or of any loan agreement, mortgage, indenture or
other agreement relating thereto, if the effect of such failure, default or
breach is to cause such Indebtedness for borrowed money to become or be declared
due prior to its stated maturity; or
(c) Breach of Certain Covenants. Failure of the Company to perform or
---------------------------
comply with any term or condition contained in Sections 6.1(g), 6.2 or Section 7
of this Agreement; or
(d) Breach of Warranty. Any of the Company's, Fisher-Price's or
------------------
Mattel Sales' representations or warranties made in any Loan Document in writing
pursuant hereto or in connection herewith shall be false in any material respect
on the date as of which made; or
(e) Other Defaults Under Agreement. Failure of the Company, Fisher-
------------------------------
Price or Mattel Sales to perform or comply with any other term or condition
contained in this Agreement or the Transfer and Administration Agreement or any
Loan Document other than the conditions referred to in Subsections (a), (b), (c)
and (d) above and such default shall not have been remedied or waived within 30
days after receipt of notice from the Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court
----------------------------------------------------
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Company or any of its Material Subsidiaries in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed, or (ii) any other
similar relief shall be granted under any applicable
-47-
federal or state or applicable foreign law; a petition for an involuntary case
shall be filed against the Company or any of its Material Subsidiaries under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Company or any of its Material
Subsidiaries, or over all or substantially all of its property, shall have been
entered; or an interim receiver, trustee or other custodian of the Company or
any of its Material Subsidiaries for all or substantially all of the property of
the Company or any of its Material Subsidiaries shall be appointed
involuntarily; and the continuance of any such events in clause (ii) for 45 days
unless dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. The Company
--------------------------------------------------
or any of its Material Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in any involuntary case, or to the conversion
from an involuntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, sequestrator,
trustee or other custodian for all or substantially all of its property; the
making by the Company or any of its Material Subsidiaries of any assignment for
the benefit of creditors; or the inability or failure of the Company or any of
its Material Subsidiaries, or the admission by the Company or any of its
Material Subsidiaries in writing of its inability, to generally pay its debts as
such debts become due; or the Board of Directors of the Company or any of its
Material Subsidiaries adopts any resolution or otherwise takes action to approve
any of the foregoing; or
(h) Judgments. Any final money judgment involving in any case an
---------
amount in excess of $20,000,000 or in excess of $40,000,000 in the aggregate at
any one time for all final judgments shall be entered or filed against the
Company or any Material Subsidiary or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 45 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
(i) Dissolution. Any order, judgment or decree shall be entered
-----------
against the Company or any Material Subsidiary decreeing the dissolution or
split up of the Company and such order shall remain undischarged or unstayed for
a period in excess of 30 days; or
(j) ERISA. (i) any Pension Plan maintained by the Company or any of
-----
its ERISA Affiliates shall be terminated within
-48-
the meaning of Title IV of ERISA, or (ii) a trustee shall be appointed by an
appropriate United States district court to administer any Pension Plan, or
(iii) the Pension Benefit Guaranty Corporation (or any successor thereto) shall
institute proceedings to terminate any Pension Plan or to appoint a trustee to
administer any Pension Plan, or (iv) the Company or any of its ERISA Affiliates
shall withdraw (under Section 4063 of ERISA) from a Pension Plan, if, as of the
date of the event listed in clauses (i)-(iv) above or any subsequent date, any
of the Company or its ERISA Affiliates has any liability (such liability to
include, without limitation, any liability to the Pension Benefit Guaranty
Corporation, or any successor thereto, or to any other party under Sections
4062, 4063 or 4064 of ERISA or any other provision of law) resulting from or
otherwise associated with the events listed in clauses (i)-(iv) above for
unfunded guarantied vested benefits under the Pension Plans which exceeds the
current value of assets accumulated in such Pension Plan by more than
$10,000,000; or
(k) Loss of Property. All, or a substantial part of, the property,
----------------
assets or business of the Company or any Material Subsidiary shall be condemned
or seized and such condemnation or seizure shall have (after taking into account
any insurance or condemnation award) a Material Adverse Effect; or
(l) Cessation of Business. The Company or any Material Subsidiary
---------------------
shall at any time voluntarily or involuntarily suspend its business or a
substantial part thereof which would constitute a substantial part of, and would
have a Material Adverse Effect; or
(m) Servicer Default or Termination Event. A Servicer Default or a
-------------------------------------
Termination Event (as each is defined in the Transfer and Administration
Agreement) (other than as set forth in Section 7.3(i) of the Transfer and
Administration Agreement) shall occur and be continuing;
8.2 Remedies. If any Event of Default occurs, the Agent shall, at
--------
the request of, or may, with the consent of, the Requisite Banks, (a) declare
the Loan Commitment of each Bank to make Loans to be terminated, whereupon such
Loan Commitments shall forthwith be terminated; (b) declare the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other Loan Document to
be immediately due and payable; without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and remedies available
to it and the Banks under the Loan Documents or applicable law; provided,
--------
however, that upon the occurrence of any event specified in paragraph (f) or (g)
- -------
of Section 8.1 above (in the case of clause (ii) of paragraph (f) upon the
expiration
-49-
of the 45-day period mentioned therein), the obligation of each Bank to make
Loans shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
8.3 Rights Not Exclusive. The rights provided for in this Agreement
--------------------
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
SECTION 9.
THE AGENT.
---------
9.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall (i)
------------------
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner to
any of the Banks for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement
-50-
or any other Loan Document, or for the value of any Collateral or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the Properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Requisite Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Requisite
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.1 and 4.2, each Bank that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank, unless an
officer of the Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from the Bank prior to any borrowing
specifying its objection thereto and either such objection shall not have been
withdrawn by notice to the Agent to that effect or the Bank shall not have made
available to the Agent the Bank's ratable portion of such borrowing.
-51-
9.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Banks, unless the Agent shall
have received written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Banks and the Transfer
and Administration Agent. The Agent shall take such action with respect to such
Default or Event of Default as shall be requested by the Requisite Banks in
accordance with Section 8; provided, however, that unless and until the Agent
-------- -------
shall have received any such request, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.6 Credit Decision. Each Bank expressly acknowledges that none of
---------------
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also represents
that it will, independently and without reliance upon the Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Company which
may come into the possession of any of the Agent-Related Persons.
9.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby shall be consummated, the Banks shall
-52-
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of the Company and without limiting the obligation of the Company
to do so), ratably from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans and the termination or resignation of
the related Agent) be imposed on, incurred by or asserted against any such
Person any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; provided, however, that no
-------- -------
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable share
of any costs or out-of-pocket expenses (including fees and expenses of counsel
and the allocated cost of in-house counsel) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Company. Without limiting the generality of the
foregoing, if the Internal Revenue Service or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs and
expenses (including fees and expenses of counsel and the allocated cost of in-
house counsel). The obligation of the Banks in this Section shall survive the
payment of all Obligations hereunder.
9.8 Agent in Individual Capacity. Bank of America and its Affiliates
----------------------------
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with the Company and its
Subsidiaries
-53-
and Affiliates as though Bank of America were not the Agent hereunder and
without notice to or consent of the Banks. With respect to its Loans, Bank of
America shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent, and the terms
"Bank" and "Banks" shall include Bank of America in its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the
---------------
Requisite Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent shall resign as Agent under this Agreement, the Requisite Banks shall
appoint from among the Banks a successor agent for the Banks which successor
agent shall be approved by the Company. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 9 and Sections 10.4 and 10.15 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Requisite Banks appoint a successor agent as provided for
above.
SECTION 10.
MISCELLANEOUS.
-------------
10.1 Assignments, Participations, etc. (a) Any Bank may, with
---------------------------------
the advance written consent of the Company at all times other than during the
existence of an Event of Default and the Agent, which consent of the Company
shall not be unreasonably withheld, at any time assign and delegate to one or
more Eligible Assignees (provided that no consent of the Company or the Agent
shall be required in connection with any assignment and delegation by a Bank to
an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee")
--------
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000 and such Bank shall concurrently therewith assign a ratable portion
in the Transfer and Administration Agreement; provided, however, that the
-------- -------
Company and the Agent may continue to
-54-
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Agent by such Bank and
the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent a Notice of Assignment and Acceptance in the form of
Exhibit I ("Notice of Assignment and Acceptance") together with any Note or
- --------- -----------------------------------
Notes subject to such assignment and (iii) the assignor Bank or Assignee has
paid to the Agent a processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Notice of Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Notice of Assignment and Acceptance, shall have the rights and
obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Notice of Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Notice of Assignment and Acceptance and payment
of the processing fee, (and provided that the consents to such assignment have
been obtained in accordance with Section 10.01(a)), the Company shall execute
and deliver to the Agent, any new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Bank has retained a portion of its
Loans and its Commitments, any replacement Notes in the principal amount of the
Loans retained by the assignor Bank (such Notes to be in exchange for, but not
in payment of, the Notes held by such Bank). Immediately upon each Assignee's
making its processing fee payment under the Notice of Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Bank pro tanto.
--- -----
(d) Upon advance written notice to the Company, any Bank may at any
time sell to one or more commercial banks or other Persons not Affiliates of the
Company (a "Participant") participating interests in any Loans, the Commitment
-----------
of that Bank and the other interests of that Bank (the "originating Bank")
hereunder and under the other Loan Documents; provided, however, that (i) such
-------- -------
Bank shall concurrently with any sale of a
-55-
participation herein sell a ratable participation in the Transfer and
Administration Agreement and thereafter cause any such participation herein to
remain ratable with such participation in the Transfer and Administration
Agreement, (ii) the originating Bank's obligations under this Agreement shall
remain unchanged, (iii) the originating Bank shall remain solely responsible for
the performance of such obligations, (iv) the Company and the Agent shall
continue to deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (v) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to this Agreement except to the extent
such amendment, consent or waiver would require unanimous consent as described
in the first proviso to Section 10.8. The Company hereby acknowledges and
agrees that any such disposition will give rise to a direct obligation of the
Company to the Participant and the Participant shall be entitled to the benefit
of Sections 3.1, 3.4 and 10.15 as if it were a "Bank." In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation,
except that if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note(s) held by it in
favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(f) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to
it by the Company or any Subsidiary of the Company, or by the Agent on such
Company's or Subsidiary's behalf, in connection with this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information for any purpose or in any manner other than pursuant to the terms
contemplated by this Agreement and the Transfer and Administration Agreement;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of a disclosure by the Bank, or
-56-
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Bank; provided, however, that any Bank
-------- -------
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Person to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process and when required to do so in accordance with the provisions
of any applicable Governmental Rule; provided, that a Bank shall disclose only
--------
the information required by such request and shall notify the Company in advance
of such disclosure so that the Company may seek an appropriate protective order,
and (C) to such Bank's independent auditors and other professional advisors
provided such Persons are obligated to keep such information confidential.
Notwithstanding the foregoing, the Company authorizes each Bank to disclose to
any Assignee or Participant and to any prospective Assignee or Participant, such
financial and other information in such Bank's possession concerning the Company
or its Subsidiaries which has been delivered to Agent or the Banks pursuant to
this Agreement or which has been delivered to the Agent or the Banks by the
Company in connection with the Banks' credit evaluation of the Company prior to
entering into this Agreement; provided that, unless otherwise agreed by the
--------
Company, such Assignee or Participant agrees in writing to such Bank to keep
such information confidential to the same extent required of the Banks
hereunder.
10.2 Survival of Warranties and of Certain Agreements. (a)
------------------------------------------------
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement, the making of the Loans hereunder and
the execution and delivery of any Notes.
(b) Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Company set forth in Sections 2.9, 3, 10.4
and 10.15 and the agreements of the Banks set forth in Sections 2.13, 9, 10.1(b)
and 10.5 shall survive the payment of the Obligations by the Company and the
termination of this Agreement.
10.3 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any Bank or any holder of any Note in the
exercise of any power, right or privilege hereunder or under any Note shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under
this Agreement or any Notes are cumulative to and not exclusive of, any rights
or remedies otherwise available.
-57-
10.4 Fees and Expenses. Whether or not the transactions contemplated
-----------------
hereby shall be consummated, the Company agrees to pay within 30 days after
submission of an invoice therefor (a) all the actual and reasonable out-of-
pocket costs and expenses of preparation of the Loan Documents and all the costs
of furnishing all opinions by counsel for the Company (including without
limitation any opinions requested by the Banks as to any legal matters arising
hereunder), and of the Company's performance of and compliance with all
agreements and conditions contained therein on its part to be performed or
complied with; (b) the cost of delivering to the Banks any Notes pursuant to the
provisions of this Agreement; (c) the reasonable fees, expenses and
disbursements of the Agent and the Agent's counsel (including the allocated cost
of Agent's inhouse counsel and staff) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and the Loans
and any amendments and waivers hereto; and (d) after the occurrence of an Event
of Default, all actual and reasonable out-of-pocket costs and expenses
(including reasonable fees of law firms engaged by the Banks and the reasonable
estimate of the allocable costs of counsel in the staff of legal departments of
the Banks and costs of settlement) incurred by the Agent and each Bank in
enforcing any Obligations or in collecting any payments due from the Company
hereunder or under any Notes by reason of such Event of Default or in connection
with any refinancing or restructuring of any Loan Document in the nature of a
"work-out" or of any insolvency or bankruptcy proceeding.
10.5 Set Off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of and during the continuance of any Event of Default (after
the giving of any notice and the expiration of any grace period contained in the
definition thereof), each Bank and each subsequent holder of any Note is hereby
authorized by the Company at any time or from time to time, without notice to
the Company, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate any and all deposits (including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured but not including trust accounts) and any other indebtedness at any
time held or owing by that Bank or that subsequent holder or any Bank Affiliate
thereof to or for the credit or the account of the Company and to apply any such
amounts in accordance with the provisions of Section 2.13 irrespective of
whether or not that Bank or that subsequent holder shall have made any demand
hereunder and each such Bank Affiliate is hereby irrevocably authorized to
permit such setoff and appropriation.
10.6 Notices. Unless otherwise specifically provided herein,
-------
any notice or other communication herein required or permitted to be given shall
be in writing and may be
-58-
personally served, telecopied, telexed or sent by United States mail and shall
be deemed to have been given upon delivery in person, receipt of telecopy or
telex or four Business Days after deposit in the United States mail, registered
or certified, with postage prepaid and properly addressed. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 10.6) shall be as set forth under each
party's name on Schedule 10.6 hereto.
10.7 Severability. In case any provision in or obligation
------------
under this Agreement or any Notes 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.
10.8 Amendments and Waivers. No amendment or waiver of any
----------------------
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless the
same shall be in writing and signed by the Requisite Banks and the Company, and
acknowledged by the Agent, and then such waiver shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no such waiver, amendment, or consent shall, unless in writing and
- -------
signed by all the Banks and the Company, and acknowledged by the Agent, do any
of the following:
(a) increase or extend any Bank's Pro Rata Share of the Aggregate Loan
Commitment or the Receivables Commitment or subject any Bank to any additional
obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or of any fees or other amounts payable hereunder or under any Loan
Document;
(d) change the Pro Rata Share of the Aggregate Loan Commitment or the
Aggregate Receivables Commitment or of the aggregate unpaid principal amount of
any extension of credit which shall be required for the Banks or any of them to
take any action hereunder;
(e) amend this Section 10.8 or Section 2.13;
(f) amend Section 2.1, the definitions of "Pro Rata Share" or
"Requisite Banks;" or
-59-
(g) discharge any Guarantor;
provided further, that no amendment, waiver or consent shall (i) unless in
- -------- -------
writing and signed by the Agent in addition to the Requisite Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under any
Loan Document; or (ii) have the effect of making any Bank's Loan Commitment or
Receivables Commitment be nonratable with its Receivables Commitment and its Pro
Rata Share of the Aggregate Unpaids (as defined in the Transfer and
Administration Agreement). No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.8 shall be binding upon each
holder of any Notes at the time outstanding, each future holder of the Notes
and, if signed by the Company, on the Company.
10.9 Obligations Several. The obligation of each Bank
-------------------
hereunder is several, and no Bank shall be responsible for any obligation or
commitment of any other Bank hereunder. Nothing contained in this Agreement and
no action taken by Banks pursuant hereto shall be deemed to constitute Banks to
be a partnership, an association, a joint venture or another entity.
10.10 Certain Changes. If (a) any changes in accounting
---------------
principles from those used in the preparation of the financial statements
referred to in Section 5.8 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or requested by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accounts (or successors thereto or agencies with similar functions) result in a
change in the method of calculation of financial covenants, standards or terms
found in Sections 1, 6 and 7, or (b) the Company changes the manner in which its
fiscal year, fiscal quarters and fiscal months are determined, the parties
hereto agree to enter into negotiations in order to amend the appropriate
provisions of this Agreement so as to equitably reflect such changes with the
desired result that the criteria for evaluating the Company's financial
condition and operations or establishing limitations hereunder shall be the same
after such changes as if such changes had not been made.
10.11 Headings. Section headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.12 Applicable Law. (a) This Agreement, any Notes and the
--------------
other Loan Documents shall be governed by, and shall be construed and enforced
in accordance with, the internal
-60-
laws of the State of California, without regard to conflicts of laws principles.
(b) Any legal action or proceeding with respect to this Agreement and
any other Loan Documents may be brought in the courts of the State of California
or of the United States for the Central District of California, and by execution
and delivery of this Agreement, each of the Company, the Agent and the Banks
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each of the Company, the Agent and the Banks
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any document related hereto. The Company, the Agent and
the Banks each waive personal service of any summons, complaint or other
process, which may be made by any other means permitted by California law.
10.13 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank. No assignment or transfer of any
Bank will be permitted if such assignment or transfer would result in any Bank's
Pro Rata Share hereunder being a different percentage than its pro rata share of
the Total Outstanding Investment.
10.14 Counterparts. This Agreement and any amendments,
------------
waivers, consents, or supplements may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
10.15 Indemnity. Whether or not the transactions contemplated
---------
hereby are consummated, the Company shall indemnify and hold the Agent-Related
Persons, and each Bank and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
------------------
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable fees and out-of-pocket expenses of counsel and the
allocated cost of internal counsel) of any kind or nature whatsoever which may
at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any Bank)
be imposed on, incurred by or asserted against any such Person arising out of
this Agreement or any document contemplated by or referred to herein, or the
-61-
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any proceeding of the
type referred to in Section 8.1(f) or (g) or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Company shall
----------------------- --------
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting from the gross negligence or willful
misconduct of such Indemnified Person.
The agreements in this Section shall survive payment of all other Obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MATTEL, INC.
By /s/ William Stavro
______________________________
Vice President and
Treasurer
AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Kay Warren
____________________________
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Robert W. Troutman
___________________________
Robert W. Troutman
Managing Director
NATIONSBANK OF TEXAS, N.A.
By /s/ J. Blake Seaton
____________________________
Title Vice President
_________________________
(Signatures continue)
-62-
CHEMICAL BANK
By /s/ David J. Corcoran
____________________________
Title: Vice President
_________________________
THE FIRST NATIONAL BANK OF BOSTON
By /s/ J. Peter Mitchell
_____________________________
Title Director
_________________________
PNC BANK, NATIONAL ASSOCIATION
By /s/ Ted A. Dunn
____________________________
Title Assistant Vice President
_________________________
TORONTO-DOMINION (TEXAS), INC.
By /s/ Diane Bailey
____________________________
Title Vice President
_________________________
ABN AMRO BANK N.V.
By /s/ Matthew S. Thomson
____________________________
Title Group Vice President
_________________________
By /s/ Patrick A. Russo
____________________________
Title Assistant Vice President
_________________________
THE BANK OF CALIFORNIA, N.A.
By /s/ Thomas H. Tegart
____________________________
Title Vice President
_________________________
(Signatures continue)
-63-
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
____________________________
Title Vice President
_________________________
By /s/ Deborah Gohh
____________________________
Title Vice President
_________________________
DRESDNER BANK AG, Los Angeles
Agency
By /s/ Barbara J. Readick
____________________________
Title Vice President
_________________________
By /s/ Dennis G. Blank
____________________________
Title Vice President
-------------------------
ISTITUTO BANCARIO SAN PAOLO di TORINO SpA
By /s/ Donald W. Brown
____________________________
Title Branch Manager
_________________________
By /s/ Glen Binder
____________________________
Title Vice President
_________________________
MANUFACTURERS & TRADERS TRUST CO.
By /s/ Geoffrey R. Fenn
____________________________
Title Vice President
_________________________
MARINE MIDLAND BANK
By /s/ William M. Holland
____________________________
Title Vice President
_________________________
CITICORP USA, INC.
By /s/ Barbara A. Cohen
____________________________
Title Vice President
_________________________
-64-
EXHIBIT A
---------
FORM OF NOTE
MATTEL, INC.
PROMISSORY NOTE
DUE MARCH 31, 1998
$___________ Los Angeles, California
March 10, 1995
FOR VALUE RECEIVED, MATTEL, INC., a Delaware corporation (the
"Company"), promises to pay to the order of _______________________ (the
"Payee"), the principal amount of $______________ or, if different, the
aggregate principal amount of Loans made by the Payee to the Company under the
Credit Agreement referred to below outstanding on the Termination Date.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement dated as of March 10, 1995, among the Company, the Banks named therein
and Bank of America National Trust and Savings Association, as Agent (as amended
from time to time, the "Credit Agreement").
This Note (this "Note") is one of the Company's Notes issued pursuant
to and entitled to the benefits of the Credit Agreement to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loans evidenced hereby are made and are to be repaid. Capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of Bank of America for credit to: BANCONTROL Account No. 12358-88449,
reference: Mattel, Inc., at 1850 Gateway Boulevard, Concord, California 94520
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Payee and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid; provided
--------
that the failure to make a notation of any payment made on this Note shall not
limit or otherwise affect the obligation of the Company hereunder with respect
to payments of principal or interest on this Note.
A-1
This Note is subject to prepayment as provided in the Credit
Agreement. Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The Company promises to pay all actual and reasonable costs and
expenses, including reasonable attorneys' fees and the reasonably allocated cost
of inhouse counsel and staff, incurred in the collection and enforcement of this
Note. The Company and endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and the
place first above written.
MATTEL, INC.
By
--------------------------------
Title
-----------------------------
A-2
TRANSACTIONS ON NOTE
--------------------
Type Amount Amount of Outstanding Nota-
of of End of Prin. or Principal tion
Loan Loan Interest Int. Paid Balance Made
Date Made Made Period This Date This Date By
- ---- ---- ---- -------- --------- ---------- -----
A-3
EXHIBIT B
---------
NOTICE OF BORROWING
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Gentlemen:
Pursuant to Section 2.3 of that certain Credit Agreement dated as of
March 10, 1995 (the "Credit Agreement"; capitalized terms used herein shall have
the meanings assigned to them in the Credit Agreement), among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent"),
this represents the Company's request to borrow on __________, 19__ from the
Banks on a pro rata basis the aggregate principal amount of $__________ as [Base
Rate] [Eurodollar Rate] [CD Rate] Loans.
[The initial Interest period for such [Eurodollar Rate] [CD Rate] Loan
is requested to be a ________ month/day period].
The proceeds of such Loans are to be deposited in the Company's
account at Bank of America.
The undersigned officer, to the best of his knowledge, and the
Company certifies that (i) the representations and warranties of the Company
contained in the Credit Agreement are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof; (ii) no Default or Event of Default has occurred and is
continuing under the Credit Agreement or will result from the proposed
borrowing; and (iii) the Company has performed in all material respects all
agreements and satisfied all conditions under the Credit Agreement required to
be performed by it on or before the date hereof.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
B-1
EXHIBIT C
---------
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Gentlemen:
1. Conversion Selection. Pursuant to Section 2.4 of that certain
--------------------
Credit Agreement dated as of March 10, 1995 (the "Credit Agreement") among
Mattel, Inc., a Delaware corporation (the "Company"), the Banks named therein
(the "Banks") and Bank of America National Trust and Savings Association, as
Agent (the "Agent"), please convert an aggregate of $________of existing [Base
Rate, Eurodollar Rate, CD Rate] Loans, the final day of the current Interest
Period (if applicable) of which is __________, 19__, to [Base Rate, Eurodollar
Rate, CD Rate] Loans, as follows:
Interest Period
(Eurodollar Rate and
Dollar Amount CD Rate Loans)
------------- ----------------------
$____________ ________months/days
Maturing on ____, 19__
2. Continuation Selection. Pursuant to Section 2.4 of the
----------------------
Agreement, please continue an aggregate of $_______of existing [Eurodollar Rate,
CD Rate] Loans, the final day of the current Interest Period of which is
__________, 19____, as follows:
Requested
Dollar Amount Interest Period
------------- ---------------
$___________ ______ months/days
Maturing on ______, 19___
C-1
Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to them in the Agreement.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
C-2
EXHIBIT D
---------
OFFICERS' CERTIFICATE
---------------------
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Chairman of the Board, President,
Executive Vice President or Senior Vice President] and [Chief Financial
Officer, Treasurer, Controller Assistant Treasurer or other] of Mattel,
Inc., a Delaware corporation (the "Company");
(2) We have reviewed the terms of the Credit Agreement dated as of
March 10, 1995, among the Company, the Banks named therein and Bank of
America National Trust and Savings Association, as Agent (the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned them in the Credit Agreement), and we have made, or have
caused to be made under our supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements; and
(3) The examinations described in paragraph (2) did not disclose, and
we have no knowledge of, the existence of any condition or event which
constitutes a Default or Event of Default (as defined in the Credit
Agreement) during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Officers'
Certificate, except as set forth below.
Describe below (or in a separate attachment to this Officers'
Certificate) the exceptions, if any, to paragraph (3) by listing, in detail, the
nature of the condition or event and the period during which it has existed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-1
The foregoing certifications, together with the computations set forth
in Attachment No. 1 hereto and the financial statements delivered with this
Officers' Certificate in support hereof, are made and delivered this _____ day
of ______________, 19__ pursuant to subsection 6.1(c) of the Credit Agreement.
MATTEL, INC.
By: __________________________
Title: _______________________
By: _________________________
Title: ______________________
D-2
ATTACHMENT NO. I TO
OFFICERS' CERTIFICATE
As of (Date)
-------------
($000's Omitted Except Ratio Amounts)
I. CONSOLIDATED FUNDED INDEBTEDNESS TO TOTAL CAPITALIZATION AS OF ABOVE DATE.
(Section 7.5)
A. Consolidated Funded Indebtedness:
1. Total liabilities for borrowed money:
-- Notes Payable: $
---------------
-- Current Portion of Long-Term Debt: $
---------------
-- Term Loans: $
---------------
-- Subordinated Debt: $
---------------
-- Senior Long-Term Debt: $
---------------
-- Mortgages: $
---------------
Total liabilities for borrowed money: $
---------------
2. Capital Leases: $
---------------
3. Guaranties of unconsolidated funded obligations for borrowed money: $
---------------
4. Total Consolidated Funded Indebtedness (Lines A1+A2+A3): $
===============
B. Consolidated Tangible Net Worth:
1. Net Worth: $
---------------
2. Foreign exchange currency translation adjustments: $
---------------
3. Intangible assets: $
---------------
4. Consolidated Tangible Net Worth (Line B1 - (B2+B3)): $
===============
C. Total Outstanding Investment: $
---------------
D. Consolidated Funded Indebtedness plus Total Outstanding Investment (Lines A4+C): $
---- ===============
D-3
E. Consolidated Funded Indebtedness plus Total Outstanding Investment plus Consolidated
---- ----
Tangible Net Worth (Lines D+B4): $
===============
F. Actual percentage of Consolidated Adjusted Debt plus Total Outstanding Investment
----
of Consolidated Funded Indebtedness plus Total Outstanding Investment plus
---- ----
Consolidated Tangible Net Worth (Line D/E): %
---------------
G. Permitted maximum percentage of Consolidated Funded Indebtedness plus Total
----
Outstanding Investment to Consolidated Funded Indebtedness plus Total Outstanding
----
Investment plus Consolidated Tangible Net Worth: (55%) (65%)
----
II. CONSOLIDATED TANGIBLE NET WORTH AS OF ABOVE DATE. (Section 7.6)
A. Minimum required Consolidated Tangible Net Worth
1. 50% of Consolidated Net Income for all fiscal quarters subsequent to
December 31, 1993: $
---------------
2. Any Net Issuance Proceeds subsequent to December 31, 1993: $
---------------
3. Minimum Consolidated Tangible Net Worth required by covenant
($530,000,000 + Line A1+A2): $
===============
B. Actual Consolidated Tangible Net Worth (Line I.B4): $
---------------
C. Excess (Deficit) Consolidated Tangible Net Worth (Line B-A3): $
===============
III. INTEREST COVERAGE RATIO AS OF ABOVE DATE. (Section 7.7)
A. Company's net income
1. Company's net income from continuing operations, for the four consecutive
fiscal quarters ending on such date: $
---------------
2. Special items: $
---------------
3. Minority interest: $
---------------
4. Gains on reacquisition of debt: $
---------------
D-4
5. Total (Line A1 - Line A1+A2+A3): $
===============
B. Income taxes accrued for the four consecutive fiscal quarters ending on such date: $
---------------
C. Interest accrued for the four consecutive fiscal quarters ending on such date,
excluding capitalized interest and without regard to interest income: $
---------------
D. Depreciation and amortization for the four consecutive fiscal quarters
ending on such date: $
---------------
E. Total (Lines A5+B+C+D): $
================
F. Interest incurred for the four consecutive fiscal quarters ending on such date,
including capitalized interest and without regard to interest income: $
---------------
G. Actual Ratio (Line E/Line F): ______ to 1
H. Required Minimum Ratio 3.5 to 1
D-5
EXHIBIT E
---------
[FORM OF OPINION OF ASSISTANT
GENERAL COUNSEL OF COMPANY]
[EFFECTIVE DATE]
To: The Banks Listed on Schedule A Hereto and Bank of America National Trust
and Savings Association, as Agent
Re: Credit Agreement dated as of March 10, 1995, among Mattel, Inc., the
Banks named therein and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
I am the Assistant General Counsel of Mattel, Inc., a Delaware corporation
(the "Company"), and in that capacity have acted as counsel to the Company, and
Mattel Sales Corp., a California corporation ("Mattel Sales"), and Fisher-Price,
Inc., a Delaware corporation ("Fisher-Price") in connection with the Credit
Agreement dated as of March 10, 1995 (the "Credit Agreement"). This opinion is
rendered to you in compliance with Section 4.1(r) of the Credit Agreement.
Capitalized terms used herein without definition have the same meanings as in
the Credit Agreement.
In my capacity as such counsel, I have examined originals, or copies
identified to my satisfaction as being true copies, of such records, documents
or other instruments as in my judgment, are necessary or appropriate to enable
me to render the opinions expressed below. These records, documents and
instruments included the following:
(a) The Restated Certificate of Incorporation of the Company, the Articles
of Incorporation of Mattel Sales and the Certificate of Incorporation of
Fisher-Price, each as amended to date;
(b) The respective bylaws of the Company, Mattel Sales and Fisher-Price,
each as amended to date;
(c) All records of proceedings and actions of the respective Boards of
Directors of the Company, Mattel Sales and Fisher-Price with respect to the
Credit Agreement and the transactions contemplated thereby;
(d) The Credit Agreement;
E-1
(e) The Mattel Sales Guaranty and the Fisher-Price Guaranty;
(f) The Mattel Sales Subordination Agreement and the Fisher-Price
Subordination Agreement;
(g) The agreements to which the Company, Mattel Sales and Fisher-Price are
subject and by which any material portion of their assets are bound,
identified to me by responsible officers of the Company and its Subsidiaries
(the "Material Agreements");
(h) The contracts, agreements and instruments involving the borrowing of
money in amounts of $15,000,000 or more currently extended or available for
borrowing to which the Company, Mattel Sales and Fisher-Price are subject or
by which any of their assets are bound, identified to me by responsible
officers of the Company as being all such contracts, agreements and
instruments (the "Other Loan Agreements"); and
(i) The orders, judgments and decrees to which the Company, Mattel Sales
and Fisher-Price are subject or by which any material portion of its assets is
bound, identified to me by responsible officers of the Company as being all
such orders, judgments and decrees (the "Judicial Orders").
I have been furnished with, and with the Banks' consent have relied upon,
certificates of officers of the Company, Mattel Sales and Fisher-Price with
respect to certain factual matters, copies of which have been delivered to the
Banks. In addition, I have obtained and relied upon such certificates and
assurances from public officials as I have deemed necessary, copies of which
have been delivered to the Banks.
I have investigated such questions of law for the purpose of rendering
this opinion as I have deemed necessary. I am opining herein as to the effect
on the subject transactions of only United States federal law, the General
Corporation Law of the State of Delaware and the laws of the State of
California.
Certain of the opinions rendered herein are qualified by the discussion
following the numbered paragraphs of my opinion.
On the basis of the foregoing, and in reliance thereon, I am of the
opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Credit Agreement, the Mattel Sales Subordination
Agreement and the Fisher-Price Subordination
E-2
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement, the Mattel Sales Subordination
Agreement and the Fisher-Price Subordination Agreement.
2. Mattel Sales is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Mattel Sales Guaranty and the Mattel Sales Subordination
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Mattel Sales Guaranty. Mattel Sales is a wholly-owned
subsidiary of the Company.
3. Fisher-Price is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to
execute and deliver the Fisher-Price Guaranty and the Fisher-Price Subordination
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Fisher-Price Guaranty. Fisher-Price is a wholly-owned
subsidiary of the Company.
4. The execution and delivery of the Credit Agreement, the Mattel Sales
Subordination Agreement and the Fisher-Price Subordination Agreement have been
duly authorized by all necessary corporate action on the part of the Company.
The Credit Agreement, the Mattel Sales Subordination Agreement and the Fisher-
Price Subordination Agreement have been duly executed and delivered by the
Company. The Credit Agreement, the Mattel Sales Subordination Agreement and the
Fisher-Price Subordination Agreement constitute the legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
5. The execution and delivery of the Mattel Sales Guaranty and the
acknowledgement of the Mattel Sales Subordination Agreement have been duly
authorized by all necessary corporate action on the part of Mattel Sales. The
Mattel Sales Guaranty has been duly executed and delivered by Mattel Sales, and
the Mattel Sales Subordination Agreement has been duly acknowledged by Mattel
Sales. The Mattel Sales Guaranty constitutes the legally valid and binding
obligations of Mattel Sales, enforceable against Mattel Sales in accordance with
its terms.
6. The execution and delivery of the Fisher-Price Guaranty and the
acknowledgement of the Fisher-Price Subordination Agreement have been duly
authorized by all necessary corporate action on the part of Fisher-Price. The
Fisher-Price Guaranty
E-3
has been duly executed and delivered by Fisher-Price, and the Fisher-Price
Subordination Agreement has been duly acknowledged by Fisher-Price. The Fisher-
Price Guaranty constitutes the legally valid and binding obligations of Fisher-
Price, enforceable against Fisher-Price in accordance with its terms.
7. Neither the execution and delivery of the Credit Agreement, the Mattel
Sales Subordination Agreement, the Mattel Sales Guaranty, the Fisher-Price
Subordination Agreement or the Fisher-Price Guaranty by the Company, Mattel
Sales or Fisher-Price, as the case may be, the acknowledgement of the Mattel
Sales Subordination Agreement by Mattel Sales, the acknowledgement of the
Fisher-Price Subordination Agreement by Fisher-Price nor the consummation of the
transactions contemplated thereby, nor compliance on or prior to the date hereof
with the terms and conditions thereof applicable to the Company, Mattel Sales or
Fisher-Price, as the case may be, (A) conflicts with, results in a breach of, or
constitutes a default under, any of the terms, conditions or provisions of (v)
the Restated Certificate of Incorporation or Bylaws of the Company, (w) the
Articles of Incorporation or Bylaws of Mattel Sales, (x) the Certificate of
Incorporation or Bylaws of Fisher-Price, (y) any Material Agreement, any Other
Loan Agreement or any Judicial Order, or (z) any present federal, California or
Delaware statute binding on the Company, Mattel Sales or Fisher-Price or (B)
results in the creation of any lien upon any of the properties or assets of the
Company, Mattel Sales or Fisher-Price under any Material Agreement, any Other
Loan Agreement or any Judicial Order other than Liens created by or pursuant to
the Transfer and Administration Agreement in favor of the Transfer and
Administration Agent.
8. To the best of my knowledge and without having made any independent
investigation there is no action, suit, proceeding or arbitration at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to my knowledge, threatened against or affecting the
Company, Mattel Sales or Fisher-Price or any of their properties which would
result in any material adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or would materially adversely affect the
Company's, Mattel Sales' or Fisher-Price's ability to perform its Obligations.
9. The making of the Loans and the application of the proceeds thereof by
the Company as provided in the Credit Agreement do not violate Regulations G, T,
U or X of the Board of Governors of the Federal Reserve System.
10. No governmental consents, approvals, authorizations, registrations,
declarations or filings are required by the Company, Mattel Sales or Fisher-
Price under federal or California
E-4
law or under the Delaware General Corporation Law in connection with the
extensions of credit under the Credit Agreement.
11. The Company is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
The opinions expressed in paragraphs 4, 5 and 6 hereof with respect to the
validity, binding effect and enforceability of the Credit Agreement, the Mattel
Sales Guaranty, the Mattel Sales Subordination Agreement, the Fisher-Price
Guaranty and the Fisher-Price Subordination Agreement (the "Documents") are
subject to the following limitations, qualifications and exceptions:
(i) Limitations imposed by law or equitable principles upon the specific
enforceability of any of the remedies, covenants and other provisions of the
Documents and upon the availability of injunctive relief or other equitable
remedies;
(ii) The effect upon the Documents of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
enforceability of creditors' rights generally, including without limitation,
the effect of Bankruptcy Code Section 547 on preferential transfers and
Section 548 on fraudulent transfers and comparable provisions of state law;
(iii) The effect of judicial decisions, invoking statutes or principles
of equity, which have held that certain covenants and provisions of agreements
are unenforceable where (y) the breach of such covenants or provisions imposes
restrictions or burdens upon the debtor, including the acceleration of
indebtedness due under debt instruments, and it cannot be demonstrated that
the enforcement of such restrictions or burdens is reasonably necessary for
the protection of the creditor, or (z) the creditor's enforcement of such
covenants or provisions under the circumstances would violate the creditor's
implied covenant of good faith and fair dealing; however, in my opinion,
acceleration of the maturity date of the Loans would be available as provided
in the Credit Agreement if an Event of Default occurs as a result of a
material breach by the Company of a material covenant contained in the
Documents;
(iv) The unenforceability under certain circumstances of provisions
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(v) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not
E-5
exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, that election of a particular
remedy or remedies does not preclude recourse to one or more other remedies or
that failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any right or remedy;
(vi) The unenforceability under certain circumstances, under state or
federal law or court decisions, of provisions indemnifying a party against
liability for its own wrongful or negligent acts or where such indemnification
is contrary to public policy or prohibited by law;
(vii) The unenforceability under certain circumstances of provisions
imposing penalties, forfeitures, late payment charges or any increase in
interest rate upon delinquency in payment or upon occurrence of a default;
(viii) The effect of California law which provides that, where a contract
permits one party to the contract to recover attorneys' fees, the prevailing
party in any action to enforce any provisions of the contract shall be
entitled to recover its reasonable attorneys' fees; and
(ix) the requirements of the California Commercial Code that party
exercise its rights under the Documents in good faith and in a commercially
reasonable manner.
I also advise you of California statutory provisions and case law to the
effect that, in certain circumstances, a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
consent of the guarantor, elects remedies for default that impair the
subrogation rights of the guarantor against the principal, or otherwise takes
any action without notifying the guarantor that materially prejudices the
guarantor. However, there is also authority to the effect that a guarantor may
validly waive such rights if the waivers are expressly set forth in the
guaranty. While I believe that a California court should hold that the explicit
language contained in the Mattel Sales Guaranty and the Fisher-Price Guaranty
waiving such rights is enforceable, I express no opinion with respect to the
effect of: (i) any modification to or amendment of the obligations of Mattel
Sales or Fisher-price that materially increases such obligations; (ii) any
election of remedies by the Banks following the occurrence of an event of
default under the Documents; or (iii) any other action by the Banks that
materially prejudices the grantor.
The opinions set forth in paragraphs 7 and 10 are based upon consideration
of only those laws and statues which, in my experience, are normally applicable
to unsecured loans and guaranties.
E-6
To the extent that the obligations of the Company and Mattel Sales may be
dependant upon such matters, I assume for purposes of this opinion that the
parties to the Documents (other than the Company, Mattel Sales and Fisher-Price)
are duly incorporated, validly existing and in good standing under the laws of
their respective jurisdiction of incorporation; that the Documents have been
duly authorized, executed and delivered by the parties thereto (other than the
Company, Mattel Sales and Fisher-Price), and constitute their legally valid and
binding obligations, enforceable against them in accordance with their
respective terms; that the parties to the Documents (other than the Company,
Mattel Sales and Fisher-Price) have the requisite corporate or other
organizational power and authority to perform their respective obligations under
the Documents; and that all parties to the Documents (other than the Company,
Mattel Sales and Fisher-Price) have filed any applicable returns and paid any
applicable taxes under the California Franchise Tax Law. I am not expressing
any opinion as to the effect of the compliance by the parties to the Documents
(other than the Company, Mattel Sales and Fisher-Price) with any state or
federal laws or regulations applicable to the transactions. In rendering my
opinions in paragraphs 4, 5 and 6 hereof, I have assumed that each Bank is
exempt from the California usury laws.
This opinion is rendered only to the Agent, the Banks and their permitted
Assignees and Participants and is solely for their benefit in connection with
the above transactions. This opinion may not be relied upon by the Banks for an
other purpose, or relied upon by any other person, firm or corporation for any
purpose without my prior written consent; except that this opinion may be
furnished or quoted to your legal counsel and independent auditors in connection
with the above transactions, to regulatory authorities having jurisdiction over
you, to your holding company and as otherwise compelled by legal process.
Very truly yours,
Robert Normile
Vice President,
Assistant General Counsel
and Assistant Secretary
E-7
SCHEDULE A
Bank of America National Trust
and Savings Association
ABN AMRO Bank N.V.
Banque Nationale de Paris
The Bank of California, N.A.
Chemical Bank
Citicorp USA, Inc.
Dresdner Bank AG, Los Angeles Agency
The First National Bank of Boston
Marine Midland Bank
Istituto Bancario San Paolo di Torino SpA
Manufacturers & Traders Trust Co.
NationsBank of Texas, N.A.
PNC Bank, National Association
Toronto-Dominion (Texas), Inc.
E-8
EXHIBIT F-1
-----------
FISHER-PRICE, INC.
------------------
CONTINUING GUARANTY
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent ("Agent")
PRELIMINARY STATEMENTS:
A. Concurrently herewith, Mattel, Inc., a Delaware corporation (the
"Company"), the Banks named therein (the "Domestic Banks") and Bank of America
National Trust and Savings Association, as agent (the "Agent"), are entering
into a Credit Agreement dated as of even date herewith (said agreement, as it
may hereafter be amended, supplemented, restated or otherwise modified from time
to time, is referred to herein as the "Credit Agreement"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement).
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered into credit facilities with one or more Banks or
foreign affiliates of the Banks (the "Foreign Banks"), and the Company has
guarantied the obligations of such Foreign Subsidiaries under such credit
facilities pursuant to one or more guaranties (the "Foreign Subsidiary
Guaranties"), and it is contemplated that one or more Foreign Subsidiaries may
hereafter enter into such credit facilities with one or more Foreign Banks, and
that the Company may guaranty the obligations of such Foreign Subsidiaries
thereunder pursuant to one or more Foreign Subsidiary Guaranties.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that the Guarantor enter into this Continuing Guaranty guarantying all
obligations of every nature of the Company and Mattel Sales from time to time
owed under or in respect of (i) the Credit Agreement, the Loans, and the other
Loan Documents (all such obligations are referred to herein as the "Domestic
Bank Obligations"), (ii) the Foreign Subsidiary Guaranties (such obligations are
referred to herein as the "Foreign Subsidiary Guaranty Obligations") and (iii)
any letters of credit issued by a Bank in its individual capacity for the
account of the Company outside the Credit Agreement (such obligations are
referred to herein as the "Company Letter of Credit Obligations").
F-1-1
NOW, THEREFORE, the Guarantor agrees as follows:
1. For valuable consideration, the undersigned Guarantor unconditionally,
absolutely and irrevocably guarantees and promises to pay to the Agent, or
order, on demand, in lawful money of the United States and in immediately
available funds, any and all present or future Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
owing to the Agent, the Domestic Banks, the Foreign Banks and the Agent
(collectively, the "Guarantied Parties"). The terms Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
(hereinafter collectively referred to as the "Obligations") are used herein in
their most comprehensive sense and include any and all advances, debts,
obligations, and liabilities of the Company, now, or hereafter made, incurred,
or created, whether voluntary or involuntarily, and however arising, including,
without limitation, any and all attorneys' fees (including the allocated cost of
inhouse counsel), costs, premiums, charges, or interest owed by the Company to
the Guarantied Parties, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether the Company may
be liable individually or jointly with others, whether recovery upon such
indebtedness may be or hereafter becomes barred by any statute of limitations or
whether such indebtedness may be or hereafter become otherwise unenforceable.
2. This Guaranty is a continuing guaranty which relates to any
Obligations, including those which arise under successive transactions which
shall either cause the Company 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. Any payment
by the Guarantor shall not reduce its maximum obligation hereunder.
3. The Guarantor agrees that it is directly and primarily liable to the
Agent for the benefit of the Guarantied Parties, that its obligations hereunder
are independent of the Obligations of the Company, 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 the Company or whether the Company
is joined in any such action or actions. The Guarantor agrees that any releases
which may be given by the Agent and the Guarantied Parties to the Company or any
other guarantor shall not release it from this Guaranty.
4. 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:
F-1-2
(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
Event of Default under the terms and provisions of the 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 any Loan
Document or of any action under this Guaranty;
(e) any failure, omission or delay on the part of the Agent and/or the
Guarantied Parties to enforce, assert or exercise any right, power or remedy
conferred in this Guaranty, the Credit Agreement, any other Loan Document or any
other indulgence or similar act on the part of the Agent and/or the Guarantied
Parties 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, assignment for the benefit of creditors or
readjustment of, or other similar proceedings which affect the Guarantor, any
other guarantor of any of the Obligations of the Company 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;
(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; or
(h) the default or failure of any other guarantors of the Obligations
fully to perform any of their respective obligations set forth in any such
guaranties of the Obligations.
To the extent any of the foregoing refers to any actions which the Agent or
the Guarantied Parties may take, the Guarantor hereby agrees that the Agent
and/or the Guarantied Parties may take such actions in such manner, upon such
terms, and at such times as the Agent or the Guarantied Parties, in their
discretion, deem 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.
F-1-3
5. The Guarantor hereby waives:
(a) any and all rights to require the Agent or the Guarantied Parties to
prosecute or seek to enforce any remedies against the Company or any other party
liable to the Agent or the Guarantied Parties on account of the Obligations;
(b) any right to assert against the Agent or the Guarantied Parties any
defense (legal or equitable), set-off, counterclaim, or claim which the
Guarantor may now or at any time hereafter have against the Company or any other
party liable to the Agent or the Guarantied Parties in any way or manner under
the Credit Agreement;
(c) all defenses, counterclaims and off-sets of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of any Loan Document and the security
interest granted pursuant thereto;
(d) any defense arising by reason of any claim or defense based upon an
election of remedies by the Agent or the Guarantied Parties including, without
limitation, 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 Company for reimbursement, or any other rights of the
Guarantor to proceed against the Company, against any other guarantor, or
against any other security, with the Guarantor understanding that the exercise
by the Agent and/or the Guarantied Parties of certain rights and remedies may
offset or eliminate the Guarantor's right of subrogation against the Company,
and that the Guarantor may therefore incur partially or totally non-reimbursable
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 indebtedness, 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 California Civil Code Sections 2809,
2810, 2819, 2825, 2839 and 2845 through 2850.
6. The Guarantor hereby agrees that unless and until all Obligations have
been paid to the Agent and the Guarantied Parties in full, it shall not have any
rights of subrogation, reimbursement or contribution as against the Company or
any other guarantor, if any, and shall not seek to assert or enforce the
F-1-4
same. Guarantor understands that the exercise by Agent of certain rights and
remedies contained in the Loan Documents may affect or eliminate Guarantor's
right of subrogation if any, against the Company and that Guarantor may
therefore incur a partially or totally non-reimbursable liability hereunder;
nevertheless, Guarantor hereby authorizes and empowers the Agent and the
Guarantied Parties to exercise, in their sole discretion, any right and remedy,
or any combination thereof, which may then be available, since it is the intent
and purpose of Guarantor that the obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.
7. The Guarantor is presently informed of the financial condition of the
Company and of all other circumstances which a 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 Company, the status of other guarantors, if any, and of all
other circumstances which bear upon the risk of nonpayment. The Guarantor
hereby waives its right, if any, to require the Agent or the Guarantied Parties
to disclose to it any information which the Agent or any Bank may now or
hereafter acquire concerning such condition or circumstances including, but not
limited to, the release of any other guarantor.
8. The Agent and each Bank'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.
9. Notwithstanding anything to the contrary contained herein, the
Guarantor's liability pursuant to this Guaranty shall be limited to the greater
of: (a) the 'reasonably equivalent value,' received by the Guarantor or any of
its subsidiaries arising out of the Loan Documents (including, without
limitation, repayment of intercompany or third party debt of, investments made
in, and capital contributions, advances and loans made to, the Guarantor or any
of its subsidiaries, directly or indirectly, by Company or any other subsidiary
with, or as a direct or indirect result of obtaining, the proceeds of any credit
extended under the Loan Documents) in exchange for or in connection with the
Guarantor's guaranty of the Obligations, and (b) 95% of the excess of (i) a
'fair valuation' of the amount of the assets and other property of the Guarantor
and its subsidiaries taken as a whole as of the applicable date of determination
of the incurrence of the Guarantor's obligations hereunder over (ii) a 'fair
----
valuation' of the Guarantor's and its subsidiaries' debts taken as a whole as of
such date, but excluding liabilities arising under this Guaranty and excluding
all liabilities owing by Guarantor and its subsidiaries taken as a whole to the
Company or any other Subsidiary or otherwise subordinated to the Guarantor's
obligations hereunder, it being understood that a
F-1-5
portion of such indebtedness owing to Company shall be discharged on a dollar-
for-dollar basis in an amount equal to the amount paid by Guarantor hereunder.
The meaning of the terms 'reasonably equivalent value' and 'fair valuation,' and
the calculations of assets and other property and debts, shall be determined in
accordance with the applicable federal and California state laws in effect on
the date hereof governing the determination of the insolvency of a debtor and to
further the intent of all parties hereto to maximize the amount payable by the
Guarantor without rendering it insolvent or leaving it with an unreasonably
small amount of capital in relation to its business, in either case, at the
applicable date for the determination of the incurrence of its obligations
hereunder; provided, however, the Guarantor agrees, to the maximum extent
-------- -------
permitted by law, that 'fair valuation' of the Guarantor's and its subsidiaries'
assets and other properties means the fair market sales price as would be
obtained in an arms-length transaction between competent, informed and willing
parties under no compulsion to sell or buy or collections thereof obtained in
the ordinary course of business and 'fair valuation' of its debts means the
amount, in light of the applicable circumstances, at the time, for which the
Guarantor or its subsidiaries is liable for matured known liquidated liabilities
or would reasonably be expected to become liable on contingent or unliquidated
liabilities as they mature and taking into consideration the nature of any such
contingency and the probability that liability would be imposed.
10. The Guarantor represents and warrants for and with respect to itself
that:
(a) The Guarantor is a corporation duly organized and existing under the
laws of the state of California, and is properly licensed and in good standing
in, and where necessary to maintain its rights and privileges have complied with
the fictitious name statute of, every jurisdiction in which it is doing
business, except where the failure to be licensed or be in good standing or
comply with any such statute will not have a material adverse effect on the
ability of the Guarantor to perform its obligations hereunder or under any
instrument or agreement required hereunder;
(b) The execution, delivery and performance of this Guaranty and any
instrument or agreement required hereunder are within the power of the
Guarantor, have been duly authorized by, and are not in conflict with the terms
of any charter, by-law or other organization papers of, the Guarantor;
(c) No approval, consent, exemption or other action by, or notice to or
filing with, any governmental authority is necessary in connection with the
execution, delivery, performance or enforcement of this Guaranty or any
instrument or agreement required hereunder, except as may have been obtained and
F-1-6
certified copies of which have been delivered to Agent and the Guarantied
Parties;
(d) There is no law, rule or regulation, nor is there any judgment,
decree or order of any court or governmental authority binding on the Guarantor,
which would be contravened by the execution, delivery, performance or
enforcement of this Guaranty or any instrument or agreement required hereunder;
(e) This Guaranty is a legal, valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly legal, valid, binding and enforceable, except where
enforceability thereof may be limited by applicable law relating to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the application of general principles of equity;
(f) There is no action, suit or proceeding pending against, or to the
knowledge of the Guarantor, threatened against or affecting the Guarantor,
before any court or arbitrator or any governmental body, agency or official
which in any manner draws into question the validity or enforceability of this
Guaranty; and
(g) The execution, delivery and performance by the Guarantor of this
Guaranty does not constitute, to the best knowledge of Guarantor, a "fraudulent
conveyance," "fraudulent obligation" or "fraudulent transfer" within the
meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent
Transfer Act, as enacted in any jurisdiction.
11. Any one of the following events shall constitute an "Event of
Bankruptcy:"
(a) The Guarantor or the Company is generally not paying or admits in
writing its inability to pay its debts as such debts become due, or files any
petition or action for relief under any bankruptcy, reorganization, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
now or hereafter in effect, or makes any assignment for the benefit of
creditors, or takes any corporate action in furtherance of any of the foregoing;
(b) An involuntary petition is filed against the Guarantor or the Company
under any bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property of
the Guarantor or the Company, unless such petition or appointment is set aside
or withdrawn or ceases to be in effect
F-1-7
within sixty (60) days from the date of said filing or appointment.
Upon the occurrence of an Event of Bankruptcy, without notice or demand, any and
all of the Guarantor's obligations under this Guaranty shall become due, payable
and enforceable against the Guarantor whether or not the Obligations are then
due and payable.
12. All notices and other communications hereunder shall be delivered, in
the manner and with the effect provided in the Credit Agreement and, in the case
of the Guarantor, in care of the Company.
13. This Guaranty shall be binding upon the successors and assigns of the
Guarantor and shall inure to the benefit of the Agent's and the Guarantied
Parties' successors and assigns. This Guaranty cannot be assigned by the
Guarantor without the prior written consent of the Agent and the Guarantied
Parties which shall be in the Agent's and the Guarantied Parties' sole and
absolute discretion.
14. No failure or delay by the Agent or the Guarantied Parties in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
15. The Guarantor shall pay (a) all reasonable out-of-pocket expenses of
the Agent and the Guarantied Parties, including reasonable fees and
disbursements of counsel (including the allocated cost of inhouse counsel and
staff) for the Agent, in connection with any waiver or consent hereunder or any
amendment hereof and (b) all out-of-pocket expenses incurred by the Agent and
the Guarantied Parties, including fees and disbursements of counsel (including
the allocated cost of inhouse counsel and staff), in connection with the
enforcement of this Guaranty (whether or not suit is brought).
16. No modification of this Guaranty shall be effective for any purpose
unless it is in writing and executed by an officer of the Agent authorized to do
so. This Guaranty merges all negotiations, stipulations and provisions relating
to the subject matter of this Guaranty which preceded or may accompany the
execution of this Guaranty.
17. This Guaranty and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of California without reference to the principles of conflicts of laws thereof.
F-1-8
18. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
19. Terms not defined herein shall have the meanings assigned to them in
the Credit Agreement.
20. Any indebtedness of the Company now or hereafter held by Guarantor is
hereby subordinated to the indebtedness of the Company to the Agent and the
Guarantied Parties; and such indebtedness of the Company to the Guarantor if the
Agent so requests shall be collected, enforced and received by Guarantor as
trustee for the Agent and the Guarantied Parties and be paid over to the Agent
on account of the indebtedness of the Company to the Agent and the Guarantied
Parties but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this guaranty.
21. It is not necessary for the Guarantied Parties to inquire into the
powers of any Guaranteed Party or of the officers, directors or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
Executed as of the 10th day of March 1995.
FISHER-PRICE, INC.
By: ____________________________
Title:__________________________
BANK OF AMERICA NATIONAL TRUST
SAVINGS ASSOCIATION, as
Agent
By: ____________________________
Title:_________________________
F-1-9
EXHIBIT F-2
-----------
MATTEL SALES CORP.
------------------
CONTINUING GUARANTY
-------------------
TO: Bank of America National Trust
and Savings Association, as Agent ("Agent")
PRELIMINARY STATEMENTS:
A. Concurrently herewith, Mattel, Inc., a Delaware corporation (the
"Company"), the Banks named therein (the "Domestic Banks") and Bank of America
National Trust and Savings Association, as agent (the "Agent"), are entering
into a Credit Agreement dated as of even date herewith (said agreement, as it
may hereafter be amended, supplemented, restated or otherwise modified from time
to time, is referred to herein as the "Credit Agreement"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement).
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered into credit facilities with one or more Banks or
foreign affiliates of the Banks (the "Foreign Banks"), and the Company has
guarantied the obligations of such Foreign Subsidiaries under such credit
facilities pursuant to one or more guaranties (the "Foreign Subsidiary
Guaranties"), and it is contemplated that one or more Foreign Subsidiaries may
hereafter enter into such credit facilities with one or more Foreign Banks, and
that the Company may guaranty the obligations of such Foreign Subsidiaries
thereunder pursuant to one or more Foreign Subsidiary Guaranties.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that the Guarantor enter into this Continuing Guaranty guarantying all
obligations of every nature of the Company and Fisher-Price from time to time
owed under or in respect of (i) the Credit Agreement, the Loans, and the other
Loan Documents (all such obligations are referred to herein as the "Domestic
Bank Obligations"), (ii) the Foreign Subsidiary Guaranties (such obligations are
referred to herein as the "Foreign Subsidiary Guaranty Obligations") and (iii)
any letters of credit issued by a Bank in its individual capacity for the
account of the Company outside the Credit Agreement (such obligations are
referred to herein as the "Company Letter of Credit Obligations").
F-2-1
NOW, THEREFORE, the Guarantor agrees as follows:
1. For valuable consideration, the undersigned Guarantor unconditionally,
absolutely and irrevocably guarantees and promises to pay to the Agent, or
order, on demand, in lawful money of the United States and in immediately
available funds, any and all present or future Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
owing to the Agent, the Domestic Banks, the Foreign Banks and the Agent
(collectively, the "Guarantied Parties"). The terms Domestic Bank Obligations,
Foreign Subsidiary Guaranty Obligations and Company Letter of Credit Obligations
(hereinafter collectively referred to as the "Obligations") are used herein in
their most comprehensive sense and include any and all advances, debts,
obligations, and liabilities of the Company, now, or hereafter made, incurred,
or created, whether voluntary or involuntarily, and however arising, including,
without limitation, any and all attorneys' fees (including the allocated cost of
inhouse counsel), costs, premiums, charges, or interest owed by the Company to
the Guarantied Parties, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether the Company may
be liable individually or jointly with others, whether recovery upon such
indebtedness may be or hereafter becomes barred by any statute of limitations or
whether such indebtedness may be or hereafter become otherwise unenforceable.
2. This Guaranty is a continuing guaranty which relates to any
Obligations, including those which arise under successive transactions which
shall either cause the Company 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. Any payment
by the Guarantor shall not reduce its maximum obligation hereunder.
3. The Guarantor agrees that it is directly and primarily liable to the
Agent for the benefit of the Guarantied Parties, that its obligations hereunder
are independent of the Obligations of the Company, 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 the Company or whether the Company
is joined in any such action or actions. The Guarantor agrees that any releases
which may be given by the Agent and the Guarantied Parties to the Company or any
other guarantor shall not release it from this Guaranty.
4. 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:
F-2-2
(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
Event of Default under the terms and provisions of the 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 any Loan
Document or of any action under this Guaranty;
(e) any failure, omission or delay on the part of the Agent and/or the
Guarantied Parties to enforce, assert or exercise any right, power or remedy
conferred in this Guaranty, the Credit Agreement, any other Loan Document or any
other indulgence or similar act on the part of the Agent and/or the Guarantied
Parties 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, assignment for the benefit of creditors or
readjustment of, or other similar proceedings which affect the Guarantor, any
other guarantor of any of the Obligations of the Company 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;
(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; or
(h) the default or failure of any other guarantors of the Obligations
fully to perform any of their respective obligations set forth in any such
guaranties of the Obligations.
To the extent any of the foregoing refers to any actions which the Agent or
the Guarantied Parties may take, the Guarantor hereby agrees that the Agent
and/or the Guarantied Parties may take such actions in such manner, upon such
terms, and at such times as the Agent or the Guarantied Parties, in their
discretion, deem 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.
F-2-3
5. The Guarantor hereby waives:
(a) any and all rights to require the Agent or the Guarantied Parties to
prosecute or seek to enforce any remedies against the Company or any other party
liable to the Agent or the Guarantied Parties on account of the Obligations;
(b) any right to assert against the Agent or the Guarantied Parties any
defense (legal or equitable), set-off, counterclaim, or claim which the
Guarantor may now or at any time hereafter have against the Company or any other
party liable to the Agent or the Guarantied Parties in any way or manner under
the Credit Agreement;
(c) all defenses, counterclaims and off-sets of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of any Loan Document and the security
interest granted pursuant thereto;
(d) any defense arising by reason of any claim or defense based upon an
election of remedies by the Agent or the Guarantied Parties including, without
limitation, 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 Company for reimbursement, or any other rights of the
Guarantor to proceed against the Company, against any other guarantor, or
against any other security, with the Guarantor understanding that the exercise
by the Agent and/or the Guarantied Parties of certain rights and remedies may
offset or eliminate the Guarantor's right of subrogation against the Company,
and that the Guarantor may therefore incur partially or totally non-reimbursable
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 indebtedness, 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 California Civil Code Sections 2809,
2810, 2819, 2825, 2839 and 2845 through 2850.
6. The Guarantor hereby agrees that unless and until all Obligations have
been paid to the Agent and the Guarantied Parties in full, it shall not have any
rights of subrogation, reimbursement or contribution as against the Company or
any other guarantor, if any, and shall not seek to assert or enforce the
F-2-4
same. Guarantor understands that the exercise by Agent of certain rights and
remedies contained in the Loan Documents may affect or eliminate Guarantor's
right of subrogation if any, against the Company and that Guarantor may
therefore incur a partially or totally non-reimbursable liability hereunder;
nevertheless, Guarantor hereby authorizes and empowers the Agent and the
Guarantied Parties to exercise, in their sole discretion, any right and remedy,
or any combination thereof, which may then be available, since it is the intent
and purpose of Guarantor that the obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.
7. The Guarantor is presently informed of the financial condition of the
Company and of all other circumstances which a 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 Company, the status of other guarantors, if any, and of all
other circumstances which bear upon the risk of nonpayment. The Guarantor
hereby waives its right, if any, to require the Agent or the Guarantied Parties
to disclose to it any information which the Agent or any Bank may now or
hereafter acquire concerning such condition or circumstances including, but not
limited to, the release of any other guarantor.
8. The Agent and each Bank'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.
9. Notwithstanding anything to the contrary contained herein, the
Guarantor's liability pursuant to this Guaranty shall be limited to the greater
of: (a) the 'reasonably equivalent value,' received by the Guarantor or any of
its subsidiaries arising out of the Loan Documents (including, without
limitation, repayment of intercompany or third party debt of, investments made
in, and capital contributions, advances and loans made to, the Guarantor or any
of its subsidiaries, directly or indirectly, by Company or any other subsidiary
with, or as a direct or indirect result of obtaining, the proceeds of any credit
extended under the Loan Documents) in exchange for or in connection with the
Guarantor's guaranty of the Obligations, and (b) 95% of the excess of (i) a
'fair valuation' of the amount of the assets and other property of the Guarantor
and its subsidiaries taken as a whole as of the applicable date of determination
of the incurrence of the Guarantor's obligations hereunder over (ii) a 'fair
----
valuation' of the Guarantor's and its subsidiaries' debts taken as a whole as of
such date, but excluding liabilities arising under this Guaranty and excluding
all liabilities owing by Guarantor and its subsidiaries taken as a whole to the
Company or any other Subsidiary or otherwise subordinated to the Guarantor's
obligations hereunder, it being understood that a
F-2-5
portion of such indebtedness owing to Company shall be discharged on a dollar-
for-dollar basis in an amount equal to the amount paid by Guarantor hereunder.
The meaning of the terms 'reasonably equivalent value' and 'fair valuation,' and
the calculations of assets and other property and debts, shall be determined in
accordance with the applicable federal and California state laws in effect on
the date hereof governing the determination of the insolvency of a debtor and to
further the intent of all parties hereto to maximize the amount payable by the
Guarantor without rendering it insolvent or leaving it with an unreasonably
small amount of capital in relation to its business, in either case, at the
applicable date for the determination of the incurrence of its obligations
hereunder; provided, however, the Guarantor agrees, to the maximum extent
-------- -------
permitted by law, that 'fair valuation' of the Guarantor's and its subsidiaries'
assets and other properties means the fair market sales price as would be
obtained in an arms-length transaction between competent, informed and willing
parties under no compulsion to sell or buy or collections thereof obtained in
the ordinary course of business and 'fair valuation' of its debts means the
amount, in light of the applicable circumstances, at the time, for which the
Guarantor or its subsidiaries is liable for matured known liquidated liabilities
or would reasonably be expected to become liable on contingent or unliquidated
liabilities as they mature and taking into consideration the nature of any such
contingency and the probability that liability would be imposed.
10. The Guarantor represents and warrants for and with respect to itself
that:
(a) The Guarantor is a corporation duly organized and existing under the
laws of the state of California, and is properly licensed and in good standing
in, and where necessary to maintain its rights and privileges have complied with
the fictitious name statute of, every jurisdiction in which it is doing
business, except where the failure to be licensed or be in good standing or
comply with any such statute will not have a material adverse effect on the
ability of the Guarantor to perform its obligations hereunder or under any
instrument or agreement required hereunder;
(b) The execution, delivery and performance of this Guaranty and any
instrument or agreement required hereunder are within the power of the
Guarantor, have been duly authorized by, and are not in conflict with the terms
of any charter, by-law or other organization papers of, the Guarantor;
(c) No approval, consent, exemption or other action by, or notice to or
filing with, any governmental authority is necessary in connection with the
execution, delivery, performance or enforcement of this Guaranty or any
instrument or agreement required hereunder, except as may have been obtained and
F-2-6
certified copies of which have been delivered to Agent and the Guarantied
Parties;
(d) There is no law, rule or regulation, nor is there any judgment,
decree or order of any court or governmental authority binding on the Guarantor,
which would be contravened by the execution, delivery, performance or
enforcement of this Guaranty or any instrument or agreement required hereunder;
(e) This Guaranty is a legal, valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly legal, valid, binding and enforceable, except where
enforceability thereof may be limited by applicable law relating to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the application of general principles of equity;
(f) There is no action, suit or proceeding pending against, or to the
knowledge of the Guarantor, threatened against or affecting the Guarantor,
before any court or arbitrator or any governmental body, agency or official
which in any manner draws into question the validity or enforceability of this
Guaranty; and
(g) The execution, delivery and performance by the Guarantor of this
Guaranty does not constitute, to the best knowledge of Guarantor, a "fraudulent
conveyance," "fraudulent obligation" or "fraudulent transfer" within the
meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent
Transfer Act, as enacted in any jurisdiction.
11. Any one of the following events shall constitute an "Event of
Bankruptcy:"
(a) The Guarantor or the Company is generally not paying or admits in
writing its inability to pay its debts as such debts become due, or files any
petition or action for relief under any bankruptcy, reorganization, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
now or hereafter in effect, or makes any assignment for the benefit of
creditors, or takes any corporate action in furtherance of any of the foregoing;
(b) An involuntary petition is filed against the Guarantor or the Company
under any bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property of
the Guarantor or the Company, unless such petition or appointment is set aside
or withdrawn or ceases to be in effect
F-2-7
within sixty (60) days from the date of said filing or appointment.
Upon the occurrence of an Event of Bankruptcy, without notice or demand, any and
all of the Guarantor's obligations under this Guaranty shall become due, payable
and enforceable against the Guarantor whether or not the Obligations are then
due and payable.
12. All notices and other communications hereunder shall be delivered, in
the manner and with the effect provided in the Credit Agreement and, in the case
of the Guarantor, in care of the Company.
13. This Guaranty shall be binding upon the successors and assigns of the
Guarantor and shall inure to the benefit of the Agent's and the Guarantied
Parties' successors and assigns. This Guaranty cannot be assigned by the
Guarantor without the prior written consent of the Agent and the Guarantied
Parties which shall be in the Agent's and the Guarantied Parties' sole and
absolute discretion.
14. No failure or delay by the Agent or the Guarantied Parties in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
15. The Guarantor shall pay (a) all reasonable out-of-pocket expenses of
the Agent and the Guarantied Parties, including reasonable fees and
disbursements of counsel (including the allocated cost of inhouse counsel and
staff) for the Agent, in connection with any waiver or consent hereunder or any
amendment hereof and (b) all out-of-pocket expenses incurred by the Agent and
the Guarantied Parties, including fees and disbursements of counsel (including
the allocated cost of inhouse counsel and staff), in connection with the
enforcement of this Guaranty (whether or not suit is brought).
16. No modification of this Guaranty shall be effective for any purpose
unless it is in writing and executed by an officer of the Agent authorized to do
so. This Guaranty merges all negotiations, stipulations and provisions relating
to the subject matter of this Guaranty which preceded or may accompany the
execution of this Guaranty.
17. This Guaranty and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of California without reference to the principles of conflicts of laws thereof.
F-2-8
18. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
19. Terms not defined herein shall have the meanings assigned to them in
the Credit Agreement.
20. Any indebtedness of the Company now or hereafter held by Guarantor is
hereby subordinated to the indebtedness of the Company to the Agent and the
Guarantied Parties; and such indebtedness of the Company to the Guarantor if the
Agent so requests shall be collected, enforced and received by Guarantor as
trustee for the Agent and the Guarantied Parties and be paid over to the Agent
on account of the indebtedness of the Company to the Agent and the Guarantied
Parties but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this guaranty.
21. It is not necessary for the Guarantied Parties to inquire into the
powers of any Guaranteed Party or of the officers, directors or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
Executed as of the 10th day of March 1995.
MATTEL SALES CORP.
By: ____________________________
Title:__________________________
BANK OF AMERICA NATIONAL TRUST
SAVINGS ASSOCIATION, as
Agent
By: ____________________________
Title:_________________________
F-2-9
EXHIBIT G-1
-----------
SUBORDINATION AGREEMENT
-----------------------
(FISHER-PRICE, INC.)
--------------------
Bank of America National
Trust and Savings Association, as Agent
("Agent")
Gentlemen:
The undersigned, ___________________________, a _________________
corporation (hereinafter referred to as "Creditor") is a creditor of Fisher-
price, Inc., a Delaware corporation (hereinafter referred to as "Fisher-
Price").
A. Concurrently herewith, Mattel, Inc. (the "Company"), the Banks named
therein (the "Domestic Banks") and Bank of America, as agent (the "Agent"), are
entering into a Credit Agreement dated as of even date herewith (said credit
agreement, as it may hereafter be amended, continued, renewed, supplemented,
restated or otherwise modified from time to time, is referred to herein as the
"Credit Agreement"). Terms not defined herein have the meanings assigned to
them in the Credit Agreement.
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered, or may from time to time enter, into credit
facilities with one or more Banks or foreign affiliates of the Banks (the
"Foreign Banks"), and the Company has guarantied, or may from time to time
guaranty, the obligations of such Foreign Subsidiaries thereunder pursuant to
one or more guaranties (the Foreign Subsidiary Guaranties"). From time to time
Banks in their individual capacity may issue letters of credit for the account
of the Company outside the Credit Agreement (the "Company Letters of Credit").
The Domestic Banks and the Foreign Banks are collectively referred to herein as
the "Banks."
C. Concurrently herewith Fisher-Price is entering into a Continuing
Guaranty dated as of even date herewith guarantying all obligations of every
nature of the Company and Mattel Sales from time to time owed under or in
respect of the Credit Agreement, the loans thereunder, the other Loan Documents
(as defined therein) and the Foreign Subsidiary Guaranties and the Company
Letters of Credit.
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Creditor enter into this Fisher-Price
G-1-1
Subordination Agreement. For the purpose of inducing the Banks to grant,
continue or renew such financial accommodations to the Company, and in
consideration thereof, Creditor agrees as follows:
1. Any and all claims of Creditor against Fisher-Price, now or hereafter
existing, are, and shall be at all times, subject and subordinate to any and all
claims, now or hereafter existing which Banks or Agent may have against Fisher-
Price (including any claim by Banks or Agent for interest accruing after any
assignment for the benefit of creditors by Fisher-Price or the institution by or
against Fisher-Price of any proceedings under the Bankruptcy Act, or any claim
by Bank for any such interest which would have accrued in the absence of such
assignment or the institution of such proceedings).
2. Creditor agrees not to sue upon, or to collect, or to receive payment
of the principal or interest of any claim or claims now or hereafter existing
which Creditor may hold against Fisher-Price, and not to sell, assign, transfer,
pledge, hypothecate, or encumber such claim or claims except subject expressly
to this Agreement, and not to file or join in any petition to commence any
proceeding under the Bankruptcy Act, nor to take any lien or security on any of
Fisher-Price' property, real or personal, so long as any claim of Banks or Agent
against Fisher-Price shall exist.
3. In case of any assignment for the benefit of creditors by Fisher-Price
or in case any proceedings under the Bankruptcy Act are instituted by or against
Fisher-Price, or in case of the appointment of any receiver for Fisher-Price's
business or assets, or in case of any dissolution or winding up of the affairs
of Fisher-Price: (a) Creditor and any assignee, trustee in bankruptcy,
receiver, debtor in possession or other person or persons in charge are hereby
directed to pay to Agent on behalf of itself and the Banks the full amount of
Banks' and Agent's claims against Fisher-Price (including interest to the date
of payment) before making any payment of principal or interest to Creditor under
any indebtedness, and insofar as may be necessary for that purpose, Creditor
hereby assigns and transfers to Agent on behalf of itself and the Banks all
security or the proceeds thereof and all rights to any payments, dividends or
other distributions, and (b) Creditor hereby irrevocably constitutes and
appoints Agent its true and lawful attorney to act in its name and stead: (i)
to file the appropriate claim or claims on behalf of Creditor if Creditor does
not do so prior to 30 days before the expiration of the time to file claims in
such proceeding and if Agent elects at its sole discretion to file such claim or
claims and (ii) to accept or reject any plan of reorganization or arrangement on
behalf of Creditor, and to
G-1-2
otherwise vote Creditor's claim in respect of any indebtedness now or hereafter
owing from Fisher-Price to Creditor in any manner Agent deems appropriate for
its and the Banks' benefit and protection.
4. Agent on behalf of itself and the Banks is hereby authorized by
Creditor to from time to time: (a) renew, compromise, extend, accelerate or
otherwise change the time of payment, or any other terms, of any existing or
future claim of Banks against Fisher-Price or the Company or any part thereof,
(b) increase or decrease any rate of interest payable thereon, (c) exchange,
enforce, waive, release, or fail to perfect any security therefor, (d) apply
such security and direct the order or manner of sale thereof in such manner as
Agent acting on its behalf and on behalf of the Banks may at its discretion
determine, (e) release Fisher-Price, the Company or any other guarantor of any
indebtedness of the Company from liability, and (f) make optional future
advances to the Company, all without notice to Creditor and without affecting
the subordination provided by this Agreement.
5. Creditor acknowledges and agrees that Creditor shall have the sole
responsibility for obtaining from Fisher-Price or the Company such information
concerning Fisher-Price's or the Company's financial condition or business
operations as Creditor may require, and that neither the Agent nor the Banks has
any duty at any time to disclose to Creditor any information relating to the
business operations or financial condition of Fisher-Price or the Company.
6. On request of Agent, Creditor shall deliver to the Agent the original
of any promissory note or other evidence of any existing or future indebtedness
of Fisher-Price to Creditor, and mark same with a conspicuous legend which reads
substantially as follows:
"THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE
INDEBTEDNESS OWING FROM THE MAKER TO BANK OF AMERICA NT&SA, AS
AGENT, AND ITS ASSIGNS, AND MAY BE ENFORCED ONLY IN ACCORDANCE
WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED MARCH 10, 1995
BETWEEN [CREDITOR] AND BANK OF AMERICA NT&SA, AS AGENT."
7. In the event that any payment or any cash or noncash distribution
is made to Creditor in violation of the terms of this Agreement, Creditor shall
receive same in trust for the benefit of Banks and Agent, and shall forthwith
remit it to Agent in the form in which it was received, together with
G-1-3
such endorsements or documents as may be necessary to effectively negotiate or
transfer same to Agent and/or Banks.
8. For violation of this Agreement, Creditor shall be liable for all
loss and damage sustained by reason of such breach, and upon any such violation
Agent, acting on behalf of the Banks, may accelerate the maturity of any of its
existing or future claims against Fisher-Price.
9. This Agreement shall be binding upon the heirs, successors and
assigns of Fisher-Price, Creditor and Bank. This Agreement and any existing or
future claim of Agent or the Banks against Fisher-Price may be assigned by
Agent, the Banks, in whole or in part, without notice to Fisher-Price or
Creditor.
10. Notwithstanding the provisions of Section 2, so long as there has
been no occurrence of any default under any agreement between Fisher-Price or
the Company and the Agent and the Banks, now existing or hereafter entered
into, Creditor may receive regularly scheduled principal and interest payments
on any indebtedness.
Mattel, Inc.
-------------------------------
Creditor
By:
----------------------------
William Stavro
Vice President and Treasurer
G-1-4
ACCEPTANCE OF SUBORDINATION AGREEMENT BY FISHER-PRICE
The undersigned being the company named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all
the provisions thereof and to recognize all priorities and other rights granted
thereby to Bank of America National Trust and Savings Association, as Agent,
and the Banks (as defined therein) and their respective successors and assigns,
and to perform in accordance therewith.
Dated: March 10, 1995 FISHER-PRICE, INC.
-----------------------
By:
----------------------------
William Stavro
Treasurer
G-1-5
EXHIBIT G-2
-----------
SUBORDINATION AGREEMENT
-----------------------
(MATTEL SALES CORP.)
--------------------
Bank of America National
Trust and Savings Association, as Agent
("Agent")
Gentlemen:
The undersigned, ___________________________, a _________________
corporation (hereinafter referred to as "Creditor") is a creditor of Mattel
Sales Corp., a California corporation (hereinafter referred to as "Mattel
Sales").
A. Concurrently herewith, Mattel, Inc. (the "Company"), the Banks
named therein (the "Domestic Banks") and Bank of America, as agent (the
"Agent"), are entering into a Credit Agreement dated as of even date herewith
(said credit agreement, as it may hereafter be amended, continued, renewed,
supplemented, restated or otherwise modified from time to time, is referred to
herein as the "Credit Agreement"). Terms not defined herein have the meanings
assigned to them in the Credit Agreement.
B. Certain Subsidiaries of the Company that are incorporated in a
jurisdiction outside of the United States of America (the "Foreign
Subsidiaries") have entered, or may from time to time enter, into credit
facilities with one or more Banks or foreign affiliates of the Banks (the
"Foreign Banks"), and the Company has guarantied, or may from time to time
guaranty, the obligations of such Foreign Subsidiaries thereunder pursuant to
one or more guaranties (the Foreign Subsidiary Guaranties"). From time to time
Banks in their individual capacity may issue letters of credit for the account
of the Company outside the Credit Agreement (the "Company Letters of Credit").
The Domestic Banks and the Foreign Banks are collectively referred to herein as
the "Banks."
C. Concurrently herewith Mattel Sales is entering into a Continuing
Guaranty dated as of even date herewith guarantying all obligations of every
nature of the Company and Fisher-Price from time to time owed under or in
respect of the Credit Agreement, the loans thereunder, the other Loan Documents
(as defined therein) and the Foreign Subsidiary Guaranties and the Company
Letters of Credit.
G-2-1
D. It is a condition precedent to the effectiveness of the Credit
Agreement that Creditor enter into this Mattel Sales Subordination Agreement.
For the purpose of inducing the Banks to grant, continue or renew such financial
accommodations to the Company, and in consideration thereof, Creditor agrees as
follows:
1. Any and all claims of Creditor against Mattel Sales, now or
hereafter existing, are, and shall be at all times, subject and subordinate to
any and all claims, now or hereafter existing which Banks or Agent may have
against Mattel Sales (including any claim by Banks or Agent for interest
accruing after any assignment for the benefit of creditors by Mattel Sales or
the institution by or against Mattel Sales of any proceedings under the
Bankruptcy Act, or any claim by Bank for any such interest which would have
accrued in the absence of such assignment or the institution of such
proceedings).
2. Creditor agrees not to sue upon, or to collect, or to receive
payment of the principal or interest of any claim or claims now or hereafter
existing which Creditor may hold against Mattel Sales, and not to sell, assign,
transfer, pledge, hypothecate, or encumber such claim or claims except subject
expressly to this Agreement, and not to file or join in any petition to commence
any proceeding under the Bankruptcy Act, nor to take any lien or security on any
of Mattel Sales' property, real or personal, so long as any claim of Banks or
Agent against Mattel Sales shall exist.
3. In case of any assignment for the benefit of creditors by Mattel
Sales or in case any proceedings under the Bankruptcy Act are instituted by or
against Mattel Sales, or in case of the appointment of any receiver for Mattel
Sales's business or assets, or in case of any dissolution or winding up of the
affairs of Mattel Sales: (a) Creditor and any assignee, trustee in bankruptcy,
receiver, debtor in possession or other person or persons in charge are hereby
directed to pay to Agent on behalf of itself and the Banks the full amount of
Banks' and Agent's claims against Mattel Sales (including interest to the date
of payment) before making any payment of principal or interest to Creditor under
any indebtedness, and insofar as may be necessary for that purpose, Creditor
hereby assigns and transfers to Agent on behalf of itself and the Banks all
security or the proceeds thereof and all rights to any payments, dividends or
other distributions, and (b) Creditor hereby irrevocably constitutes and
appoints Agent its true and lawful attorney to act in its name and stead: (i)
to file the appropriate claim or claims on behalf of Creditor if Creditor does
not do so prior to 30 days before the expiration of the time to file claims in
such proceeding and if Agent elects at its sole discretion to file
G-2-2
such claim or claims and (ii) to accept or reject any plan of reorganization or
arrangement on behalf of Creditor, and to otherwise vote Creditor's claim in
respect of any indebtedness now or hereafter owing from Mattel Sales to Creditor
in any manner Agent deems appropriate for its and the Banks' benefit and
protection.
4. Agent on behalf of itself and the Banks is hereby authorized by
Creditor to from time to time: (a) renew, compromise, extend, accelerate or
otherwise change the time of payment, or any other terms, of any existing or
future claim of Banks against Mattel Sales or the Company or any part thereof,
(b) increase or decrease any rate of interest payable thereon, (c) exchange,
enforce, waive, release, or fail to perfect any security therefor, (d) apply
such security and direct the order or manner of sale thereof in such manner as
Agent acting on its behalf and on behalf of the Banks may at its discretion
determine, (e) release Mattel Sales, the Company or any other guarantor of any
indebtedness of the Company from liability, and (f) make optional future
advances to the Company, all without notice to Creditor and without affecting
the subordination provided by this Agreement.
5. Creditor acknowledges and agrees that Creditor shall have the
sole responsibility for obtaining from Mattel Sales or the Company such
information concerning Mattel Sales's or the Company's financial condition or
business operations as Creditor may require, and that neither the Agent nor the
Banks has any duty at any time to disclose to Creditor any information relating
to the business operations or financial condition of Mattel Sales or the
Company.
6. On request of Agent, Creditor shall deliver to the Agent the
original of any promissory note or other evidence of any existing or future
indebtedness of Mattel Sales to Creditor, and mark same with a conspicuous
legend which reads substantially as follows:
"THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE
INDEBTEDNESS OWING FROM THE MAKER TO BANK OF AMERICA NT&SA, AS
AGENT, AND ITS ASSIGNS, AND MAY BE ENFORCED ONLY IN ACCORDANCE
WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED MARCH 10, 1995
BETWEEN [CREDITOR] AND BANK OF AMERICA NT&SA, AS AGENT."
7. In the event that any payment or any cash or noncash distribution
is made to Creditor in violation of the terms of this Agreement, Creditor shall
receive same in trust for the benefit of Banks and Agent, and shall forthwith
remit it
G-2-3
to Agent in the form in which it was received, together with such endorsements
or documents as may be necessary to effectively negotiate or transfer same to
Agent and/or Banks.
8. For violation of this Agreement, Creditor shall be liable for all
loss and damage sustained by reason of such breach, and upon any such violation
Agent, acting on behalf of the Banks, may accelerate the maturity of any of its
existing or future claims against Mattel Sales.
9. This Agreement shall be binding upon the heirs, successors and
assigns of Mattel Sales, Creditor and Bank. This Agreement and any existing or
future claim of Agent or the Banks against Mattel Sales may be assigned by
Agent, the Banks, in whole or in part, without notice to Mattel Sales or
Creditor.
10. Notwithstanding the provisions of Section 2, so long as there has
been no occurrence of any default under any agreement between Mattel Sales or
the Company and the Agent and the Banks, now existing or hereafter entered
into, Creditor may receive regularly scheduled principal and interest payments
on any indebtedness.
Mattel, Inc.
----------------------------------
Creditor
By:
-------------------------------
William Stavro
Vice President and Treasurer
G-2-4
ACCEPTANCE OF SUBORDINATION AGREEMENT BY MATTEL SALES
The undersigned being the company named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all
the provisions thereof and to recognize all priorities and other rights granted
thereby to Bank of America National Trust and Savings Association, as Agent,
and the Banks (as defined therein) and their respective successors and assigns,
and to perform in accordance therewith.
Dated: March 10, 1995 MATTEL SALES CORP.
-----------------------
By:
-------------------------------
William Stavro
Vice President and Treasurer
G-2-5
EXHIBIT H
---------
CHANGE IN COMMITMENTS NOTICE
----------------------------
For Credit Agreement
and
Transfer and Administration Agreement
TO: Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
NationsBank of Texas, N.A., as Agent
444 South Flower Street, Suite 1500
Los Angeles, Ca 90071-2901
Attn: J. Blake Seaton
Gentlemen:
Pursuant to (a) Section 2.5 of that certain Credit Agreement dated as of
March 10, 1995, as amended (the "Credit Agreement") among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent")
and/or (b) Section 2.11 of that certain Second Amended and Restated Transfer
and Administration Agreement dated as of March 10, 1995, as amended, among
Mattel Sales Corp. and Fisher-Price, Inc., as transferors, the Company, as
guarantor and servicer, the banks named therein, and NationsBank of Texas,
N.A., as Transfer and Administration Agent, please effect the following changes
in the Aggregate Receivables Commitment/Facility Limit and/or the Aggregate
Loan Commitment:
1. Effective Date of Change:
------------------------
______________ ___, 19__
H-1
2. Requested Change:
----------------
a. Please permanently reduce the [Aggregate Receivables
------
Commitment/Facility Limit] [Aggregate Loan Commitment] by
$___________.
b. Please permanently terminate the [Aggregate Receivables Commitment]
---------
[Aggregate Loan Commitment].
c. Please reallocate $___________ from the [Aggregate Receivables
----------
Commitment/Facility Limit] [Aggregate Loan Commitment] to the
--
[Aggregate Loan Commitment] [Aggregate Receivables Commitment/Facility
Limit].
3. Summary of Changes:
------------------
Before Change After Change
in Commitment/ in Commitment/
Facility Limit: Facility Limit:
-------------- --------------
Aggregate Loan Commitment/Facility Limit:
----------------------------------------
Aggregate Loan Commitment $___________ $____________
Aggregate Outstandings $___________ $____________
Aggregate Receivables Commitment/Facility Limit:
-----------------------------------------------
Aggregate Receivables
Commitment/Facility Limit $___________ $____________
Total Outstanding Investment $___________ $____________
Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to them in the Agreement.
H-2
"Facility Limit" is used herein as defined in the above-referenced Amended and
Restated Transfer and Administration Agreement.
DATED: ______________________
MATTEL, INC.
By ___________________________
Name _________________________
Title ________________________
*Signature required only MATTEL SALES CORP.*
when Aggregate Receivables
Commitment changed
By ___________________________
Name _________________________
Title ________________________
*Signature required only FISHER-PRICE, INC.
when Aggregate Receivables
Commitment changed
By ___________________________
Name _________________________
Title ________________________
H-3
EXHIBIT I
---------
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
-------------------------------------------
____________, 19__
TO: Bank of America National Trust
and Savings Association, as Agent
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Kay Warren
Vice President
Reference is made to that certain Credit Agreement dated as of March
10, 1995 (the "Credit Agreement"; capitalized terms used herein shall have the
meanings assigned to them in the Credit Agreement), among Mattel, Inc., a
Delaware corporation (the "Company"), the Banks named therein (the "Banks") and
Bank of America National Trust and Savings Association, as Agent (the "Agent").
1. We hereby give you notice of, and request your consent to, the
assignment by _______________ (the "Assignor") to ________________ (the
"Assignee") of ____% of the right, title and interest of the Assignor in and to
the Loan Documents, including without limitation the right, title and interest
of the Assignor in and to the Loan Commitment of the Assignor, and all
outstanding Loans made by the Assignor. Before giving effect to such
assignment:
(a) the aggregate amount of the Assignor's Loan Commitment is
$_________; and
(b) as of the above date, the aggregate principal amount of its
outstanding Loans is $__________.
2. The Assignor hereby represents and warrants that it has complied
with the requirements of Section 10.1 of the Credit Agreement in connection
with this assignment, including paying, or causing the payment of, the
assignment fee thereunder to the Agent and concurrently assigning a ratable
portion in the Transfer and Administration Agreement.
3. The Assignee agrees that, upon receiving your consent to such
assignment and from and after ______________, the Assignee will be bound by the
terms of the Loan Documents, with respect to the interest in the Loan Documents
assigned to it as specified above, as fully and to the same extent as if the
I-1
Assignee were the Bank originally holding such interest in the Loan Documents.
4. The following administrative details apply to the Assignee:
(a) Designated Offshore Market Office:
Assignee name: ____________________
Address: __________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(b) Domestic Lending Office:
Assignee name: ____________________
Address: __________________________
__________________________
__________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(c) Notice Address:
Assignee name: ____________________
Address: __________________________
__________________________
__________________________
Attention: ________________________
Telephone: (___) __________________
Telecopier: (___) _________________
Telex (Answerback): _______________
(d) Payment Instructions:
Account No.: ______________________
At: ______________________
______________________
______________________
Ref.: ______________________
Attention: ______________________
IN WITNESS WHEREOF, the Assignor and the Assignee have
I-2
caused this Notice of Assignment and Acceptance to be executed by their
respective duly authorized officials, officers or agents as of the date first
above mentioned.
Very truly yours,
[Name of Assignor]
By:______________________
Title:
[Name of Assignee]
By:______________________
Title:
We hereby consent to the
foregoing assignment:
MATTEL, INC.
By: __________________________
Title: _______________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: __________________________
Title: _______________________
I-3
SCHEDULE 1.1
------------
BANK COMMITMENTS
----------------
Aggregate
Loan Receivables Facilities
Bank % Commitment Commitment Commitment
- ----------------------------- -------------- --------------- --------------- ---------------
Bank of America 15.384615387 $ 61,538,461.56 $ 38,461,538.44 $100,000,000.00
NationsBank of Texas, N.A. 11.538461538 46,153,846.15 28,846,153.85 75,000,000.00
Chemical Bank 11.538461538 46,153,846.15 28,846,153.85 75,000,000.00
The First National Bank of 9.230769231 36,923,076.92 23,076,923.08 60,000,000.00
Boston
PNC Bank, National 9.230769231 36,923,076.92 23,076,023.08 60,000,000.00
Association
Toronto-Dominion (Texas), 9.230769231 36,923,076.92 23,076,023.08 60,000,000.00
Inc.
ABN AMRO Bank N.V. 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
The Bank of California, 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
N.A.
Banque Nationale de Paris 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Dresdner Bank AG, Los 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Angeles Agency
Istituto Bancario San 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Paolo di Torino SpA
Manufacturers & Traders 4.615384615 18,461,538.46 11,538,461.54 30,000,000.00
Trust Co.
Marine Midland Bank 3.076923077 12,307,692.31 7,692,307.69 20,000,000.00
Citicorp USA, Inc. 3.076923077 12,307,692.31 7,692,307.69 20,000,000.00
============= =============== =============== ===============
AGGREGATE COMMITMENTS 100.000000000 $400,000,000.00 $250,000,000.00 $650,000,000.00
SCHEDULE 5.3
------------
(Page 1 of 2)
SUBSIDIARIES OF MATTEL, INC.
----------------------------
Parent: Mattel, Inc. (Delaware)
- ------
Percentage of
Voting Securities
Jurisdiction Owned Directly
in Which or Indirectly
Subsidiaries Organized By Parent
- ------------------------------------ --------------- -----------------
ARCO Toys, Limited Hong Kong 100%
Arcotoys, Inc. Delaware 100%
Croner Toys Limited New Zealand 60%
Far West Insurance Company,
Limited Bermuda 100%
Fisher-Price, Inc. Delaware 100%
Fisher-Price, N.V. Belgium 100%
Fisher-Price Inc. Canada 100%
Fisher-Price Beteiligungs-G.m.b.H Germany 100%
Mattel G.m.b.H. Germany 100%
Mattel Toys K.F.T. Hungary 100%
Mattel Spol. S.R.O. Czech Republic 100%
Fisher-Price, S.r.l. Italy 100%
Fisher-Price de Mexico, S.A. de C.V. Mexico 100%
Fisher-Price, S.A. Spain 100%
International Games, Inc. Delaware 100%
Juegos California, S.A. de C.V. Mexico 100%
Mabamex, S.A. de C.V. Mexico 100%
Mattel Argentina S.A. Argentina 100%
Mattel Asia Limited Hong Kong 100%
Mattel B.V. The Netherlands 100%
Mattel Chile S.A. Chile 100%
Mattel Colombia S.A. Columbia 100%
Mattel Espana, S.A. Spain 100%
Mattel Europa B.V. The Netherlands 100%
Mattel France S.A. France 100%
Corolle S.A. France 100%
Mattel Portugal Limitada Portugal 100%
Mattel Gesellschaft m.b.H. Austria 100%
Mattel Holding, Inc. Delaware 100%
Mattel U.K. Limited U.K. 100%
Mattel Group PLC U.K. 100%
J.W. Spear & Sons PLC U.K. 100%
J.W. Spear & Sons Pty. Limited Austria 100%
J.W. Spear S.A. France 100%
J.W. Spear N.V. Belgium 100%
J.W. Spear B.V. The Netherlands 100%
Mattel Holdings Limited Canada 100%
Mattel Canada,Inc. Canada 100%
123
(Page 2 of 2)
SUBSIDIARIES OF MATTEL, INC.
----------------------------
Percentage of
Voting Securities
Jurisdiction Owned Directly
in Which or Indirectly
Subsidiaries Organized By Parent
- ----------------------------------- --------------- ------------------
Mattel I., Inc. Delaware 100%
Mattel Toys, S.r.l. Italy 100%
Mattel A.E.B.E. Greece 100%
Mattel A.G. Switzerland 100%
Mattel Manufacturing Europe,
S.r.l. Italy 100%
Mattel K.K. Japan 100%
Mattel (K.L.) Sdn. Bhd. Malaysia 100%
Mattel (Malaysia) Sdn. Bhd. Malaysia 100%
Mattel Media, Inc. Delaware 100%
Mattel Operations, Inc. Delaware 100%
Mattel Overseas, Inc. California 100%
Mattel Toys Vendor Operations
Limited Hong Kong 100%
Mattel China Vendor Operations
Limited Hong Kong 100%
Mattel Vendor Operations China
Limited Hong Kong 100%
Mattel (Proprietary) Limited South Africa 100%
Mattel Pty. Limited Australia 100%
Mattel Realty Corporation Delaware 100%
Mattel, S.A. de C.V. Mexico 100%
Aurimat, S.A. de C.V. Mexico 100%
Mattel de Mexico, S.A. de C.V. Mexico 100%
Mattel Serivcios, S.A. de C.V. Mexico 100%
Mattel Sales Corp. California 100%
Mattel Scandinavia A/S Denmark 100%
Mattel South Africa South Africa 100%
Mattel T Company Limited Hong Kong 100%
Mattel Tools Sdn.Bhd. Malaysia 100%
Mattel Toys (HK) Limited Hong Kong 100%
Mattel Toys Polska Sp. Z.O.O. Poland 100%
Mattel Toys (Singapore) Pte. Ltd. Singapore 100%
Mattel Toys (Taiwan) Corporation Ltd. Taiwan 100%
Mattel de Venezuela, C.A. Venezuela 100%
Montoi S.A. de C.V. Mexico 100%
P.T. Mattel Indonesia Indonesia 95%
Precision Moulds Limited Hong Kong 100%
124
SCHEDULE 7.2
------------
CERTAIN LIENS
-------------
1. Liens for taxes, assessments or governmental charges or claims the payment
of which is not at the time required by Section 6.3;
2. Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
3. Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
4. Any attachment or judgment Lien, if the judgment or order it secures is
less than $20,000,000, or $40,000,000 in the aggregate for all such
judgments or orders in any calendar year; or any other attachment or
judgment Lien, if the judgment or order it secures shall, within 45 days
after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 45 days after the
expiration of any such stay;
5. Leases or subleases granted to others not interfering with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
6. Easements, rights-of-way, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
and
7. Any interest or title of a lessor under any lease.
SCHEDULE 10.6
-------------
ADDRESSES FOR NOTICES AND LENDING OFFICES
-----------------------------------------
COMPANY
- -------
Mattel, Inc.
333 Continental Blvd.
El Segundo, California 90010
Attention: William Stavro
Treasurer
Telephone: (310) 252-3202
Facsimile: (310) 252-3861/2179
with a copy to the Corporate Counsel
BANK OF AMERICA NATIONAL TRUST
- -------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
AS AGENT
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Kay Warren
Vice President
Telephone: (415) 622-6918
Facsimile: (415) 622-4894
BANK OF AMERICA NATIONAL TRUST
- -------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
AS A BANK
Domestic and Eurodollar Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
555 Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Robert W. Troutman
Managing Director
Credit Products #5618
Telephone: (213) 228-3866
Facsimile: (213) 228-2756
-1-
NATIONSBANK OF TEXAS, N.A.
- --------------------------
Domestic and Eurodollar Lending Office and Notices:
NationsBank of Texas, N.A.
444 S. Flower Street, Suite 1500
Los Angeles, California 90071
Attention: J. Blake Seaton
Telephone: (213) 236-4904
Facsimile: (213) 624-5815
CHEMICAL BANK
- -------------
Domestic and Eurodollar Lending Office and Notices:
Chemical Bank
Corporate Banking Group
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Sheila Hamilton
Telephone: (212) 270-2322
Facsimile: (212) 270-2625
THE FIRST NATIONAL BANK OF BOSTON
- ---------------------------------
Domestic and Eurodollar Lending Office and Notices:
The First National Bank of Boston
100 Federal Street, 6th Floor
Boston, Massachusetts 02110
Attention: J. Peter Mitchell
Telephone: (617) 434-8307
Facsimile: (617) 434-6685
PNC BANK, N.A.
- --------------
Domestic and Eurodollar Lending Office and Notices:
PNC Bank, N.A.
55 S. Lake Avenue, Suite 650
Pasadena, California 91101
Attention: Ted A. Dunn
Telephone: (818) 568-0325
Facsimile: (818) 568-0653
-2-
TORONTO-DOMINION (TEXAS), INC.
- ------------------------------
Domestic and Eurodollar Lending Office and Notices:
Toronto-Dominion (Texas), Inc.
909 Fannin
Houston, Texas 77010
Attention: Lisa Allison
Telephone: (713) 653-8247
Facsimile: (713) 951-9921
ABN AMRO BANK N.V.
- ------------------
Domestic and Eurodollar Lending Office and Notices:
ABN AMRO Bank N.V.
Los Angeles International Branch
300 South Grand Avenue, Suite 1115
Los Angeles, California 90071
Attention: Matthew S. Thompson
Group Vice President
Telephone: (213) 687-2053
Facsimile: (213) 687-2061
THE BANK OF CALIFORNIA, N.A.
- ----------------------------
Domestic and Eurodollar Lending Office and Notices:
The Bank of California, N.A.
550 S. Hope Street, 5th Floor
Los Angeles, California 90071
Attention: Thomas Tegart
Telephone: (213) 243-3510
Facsimile: (213) 243-3552
BANQUE NATIONALE DE PARIS
- -------------------------
Domestic and Eurodollar Lending Office and Notices:
Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, CA 90017
Attention: Clive Bettles
Vice President
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
-3-
DRESDNER BANK AG
- ----------------
Domestic and Eurodollar Lending Office and Notices:
Dresdner Bank
Los Angeles Agency
725 South Figueroa Street, Suite 3950
Los Angeles, CA 90017
Attention: Dennis Blank
Vice President
Telephone: (213) 489-5720
Facsimile: (213) 627-3819
ISTITUTO BANCARIO SAN PAOLO DI TORINO SPA
- -----------------------------------------
Domestic and Eurodollar Lending Office and Notices:
Istituto Bancario San Paolo di Torino SpA
444 S. Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Glen Binder
Telephone: (213) 489-3100
Facsimile: (213) 622-2514
MANUFACTURERS & TRADERS TRUST CO.
- ---------------------------------
Domestic and Eurodollar Lending Office and Notices:
Manufacturers & Traders Trust Co.
1 Fountain Plaza
Buffalo, New York
Attention: Geoffrey R. Fenn
Telephone: (716) 848-7335
Facsimile: (716) 848-7318
MARINE MIDLAND BANK
- -------------------
Domestic and Eurodollar Lending Office:
Marine Midland Bank
140 Broadway, 4th Floor
New York, NY 10005-1196
Attention: William M. Holland
Telephone: (212) 658-5257
Facsimile: (212) 658-5109
-4-
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Marine Midland Bank
HSBC Corporate Banking
140 Broadway, 4th Floor
New York, NY 10005-1196
Attention: William M. Holland
Telephone: (212) 658-5257
Facsimile: (212) 658-5109
CITICORP USA, INC.
- ------------------
Domestic and Eurodollar Lending Office:
Citibank, N.A.
One Court Square, 7th Floor
Long Island City, NY 11120
Attention: Mark Wrigley
Telephone: (718) 248-5732
Facsimile: (718) 248-4845
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Citicorp USA, Inc.
c/o Citicorp North America, Inc.
725 South Figueroa Street, 5th Floor
Los Angeles, CA 90017
Attention: Deborah Ironson
Telephone: (213) 239-1424
Facsimile: (213) 623-3592
-5-