EXHIBIT 99.6
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SECOND AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
by and among
MATTEL SALES CORP.,
as a Transferor,
and
FISHER-PRICE, INC.,
as a Transferor
and
MATTEL, INC.,
as Guarantor and Servicer,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent,
and
THE BANKS NAMED HEREIN
Dated as of March 10, 1995
Arranged By
NationsBanc Capital Markets, Inc.
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TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS
1.1 Certain Defined Terms....................................................... 2
1.2 Other Terms................................................................. 16
1.3 Computation of Time Periods................................................. 16
ARTICLE II PURCHASES AND SETTLEMENTS
2.1 Facility.................................................................... 17
2.2 Transfers................................................................... 17
2.3 Discount, Fees and Other Costs and Expenses................................. 19
2.4 Settlement Procedures....................................................... 20
2.5 Protection of Ownership Interest of the Banks............................... 20
2.6 Deemed Collections; Application of Payments................................. 22
2.7 Payments and Computations, Etc.............................................. 23
2.8 Reports..................................................................... 23
2.9 Collection Account.......................................................... 24
2.10 Deficiency Advances......................................................... 25
2.11 Adjustment of Facility Limit............................................... 25
2.12 Inability to Determine LIBOR............................................... 26
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Transferors........................... 27
3.2 Representations and Warranties of Mattel, Inc............................... 32
3.3 Reaffirmation of Representations and Warranties............................. 36
ARTICLE IV CONDITIONS PRECEDENT
4.1 Conditions to Closing....................................................... 37
ARTICLE V COVENANTS
5.1 Affirmative Covenants of the Transferors.................................... 39
5.2 Negative Covenants of the Transferors....................................... 41
5.3 Affirmative Covenants of Mattel, Inc........................................ 42
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ARTICLE VI ADMINISTRATION AND COLLECTIONS
6.1 Appointment of Servicer..................................................... 45
6.2 Duties of Servicer and Agent................................................ 45
6.3 Rights After Designation of New Servicer.................................... 48
6.4 Responsibilities of the Transferors......................................... 48
ARTICLE VII SERVICER DEFAULT AND TERMINATION EVENTS
7.1 Servicer Default............................................................ 50
7.2 Servicer Default Remedies................................................... 50
7.3 Termination Events.......................................................... 51
7.4 Termination Event Remedies.................................................. 52
7.5 Potential Termination Event Remedies........................................ 52
ARTICLE VIII INDEMNIFICATION; EXPENSES; RELATED MATTERS
8.1 Indemnities by the Transferors.............................................. 54
8.2 Indemnity for Taxes, Reserves and Expenses.................................. 55
8.3 Other Costs, Expenses and Related Matters................................... 57
8.4 Reconveyance Under Certain Circumstances.................................... 58
ARTICLE IX THE AGENT
9.1 Appointment................................................................. 59
9.2 Attorneys-in-fact........................................................... 59
9.3 Limitation on Liability..................................................... 59
9.4 Reliance.................................................................... 60
9.5 Notice of Termination Event................................................. 60
9.6 No Representations.......................................................... 61
9.7 Indemnification............................................................. 61
9.8 Bank........................................................................ 62
9.9 Resignation................................................................. 62
9.10 Sharing of Payments, etc.................................................... 63
9.11 Independent Agreements...................................................... 64
ARTICLE X GUARANTY
10.1 Guaranty of Obligations..................................................... 65
10.2 Guaranty Continuing......................................................... 65
10.3 Guarantor Directly Liable................................................... 65
10.4 No Impairment............................................................... 66
10.5 Waiver...................................................................... 67
10.6 Subrogation................................................................. 68
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10.7 Information................................................................ 68
10.8 Evidence of Obligations.................................................... 69
ARTICLE XI MISCELLANEOUS
11.1 Term of Agreement.......................................................... 70
11.2 Waivers; Amendments........................................................ 70
11.3 Notices.................................................................... 71
11.4 Governing Law; Integration................................................. 72
11.5 Severability; Counterparts................................................. 72
11.6 Successors and Assigns..................................................... 73
11.7 Confidentiality............................................................ 73
11.8 Characterization of the Transactions Contemplated by the Agreement......... 74
11.9 Assignments; Participations................................................ 74
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EXHIBITS
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EXHIBIT A Form of Written Agreement
EXHIBIT B Form of Weekly Servicer's Certificate
EXHIBIT C Form of Transfer Notice
EXHIBIT D [Reserved]
EXHIBIT E [List of Actions, Suits and Proceedings
against the Transferors]
EXHIBIT F Location of Records
EXHIBIT G List of Tradenames
EXHIBIT H [List of Actions, Suits and Proceedings
against the Guarantor]
EXHIBIT I Form of Opinion of Counsel to the
Transferors
EXHIBIT J Form of Opinion of Counsel for the
Guarantor/Servicer
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SECOND AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
SECOND AMENDED AND RESTATED TRANSFER AND ADMINISTRATION AGREEMENT
(this "Agreement"), dated as of March 10, 1995, by and among MATTEL SALES CORP.,
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a California corporation, and FISHER-PRICE, INC., a Delaware corporation, as
transferors (each, a "Transferor"), MATTEL, INC., a Delaware corporation, as
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guarantor and servicer (the "Guarantor" and the "Servicer"), THE BANKS LISTED ON
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THE SIGNATURE PAGES HEREOF (collectively, the "Banks") and NATIONSBANK OF TEXAS,
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N.A., a national banking association, as agent on behalf of the Banks (the
"Agent").
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PRELIMINARY STATEMENTS
WHEREAS, the parties hereto intend to amend and restate that certain
Amended and Restated Transfer and Administration Agreement, dated as of March
18, 1994, by and among Mattel Sales Corp., as transferor thereunder, the
Guarantor and Servicer, the Banks and the Agent, on the terms and conditions set
forth herein;
WHEREAS, the Transferors may desire to convey, transfer and assign,
from time to time, undivided percentage interests in certain accounts receivable
with respect to which Toys "R" Us, Inc. ("Toys "R" Us") is the named obligor,
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and the Agent, on behalf of and for the benefit of the Banks, shall accept such
conveyance, transfer and assignment of such undivided percentage interests,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Adjusted Certificate of Deposit Rate" means, with respect to a
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Tranche and the related Tranche Period, the sum (rounded upward to the next
highest 1/100 of 1%) of (i) the rate obtained by dividing (x) the Certificate of
Deposit Rate by (y) a percentage equal to 100% minus the full reserve
requirement percentage as specified by the Board of Governors of the Federal
Reserve System that the Agent determines would be applicable on the date of
determination to a certificate of deposit of the Agent in excess of $100,000
with a maturity comparable to the related Tranche Period (including, without
limitation, any marginal, emergency, supplemental, special or other reserves if
the Agent, in its sole discretion, determines that it is required to maintain
any such reserves on such day), plus (ii) the then daily net annual assessment
rate as estimated by the Agent for determining the current annual assessment
payable by the Agent to the Federal Deposit Insurance Corporation for insuring
certificates of deposit with a maturity comparable to the related Tranche
Period.
"Adverse Claim" means a lien, security interest, charge or
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encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affiliate", as applied to any Person, means any other Person directly
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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.
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"Agent" means NationsBank of Texas, N.A., a national banking
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association, in its capacity as agent on behalf of the Banks.
"Aggregate Unpaids" means at any time, an amount equal to the sum of
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(i) the aggregate accrued and unpaid Discount (including any additional Discount
due pursuant to Section 7.4) with respect to all Tranche Periods at such time,
(ii) the Total Outstanding Investment at such time, and (iii) all amounts owed
(whether due or accrued) hereunder by the Transferors to the Agent or the Banks
at such time.
"Alternate Rate" means a rate per annum equal to 2% in excess of the
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prime rate of interest announced by the Agent from time to time, changing when
and as said prime rate changes (such rate not necessarily being the lowest or
best rate charged by the Agent).
"Arranger" means NationsBanc Capital Markets, Inc.
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"Bank" means each of the financial institutions listed on the
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signature pages hereto, and any successors in accordance with Section 11.6.
"Bank Commitment" for each Bank means such Bank's Percentage of the
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Facility Limit.
"Base Rate" means a fluctuating rate per annum which is the higher of
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(a) the Federal Funds Rate plus one-half of one percent (1/2%) per annum and (b)
the Reference Rate.
"Business Day" means any day excluding Saturday, Sunday and any day on
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which banks in Dallas, Texas, New York, New York, Pittsburgh, Pennsylvania, or
San Francisco, California are authorized or required by Governmental Rule to
close; provided, however, when used with respect to LIBOR, "Business Day" means
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any day on which dealings in deposits of United States dollars are transacted in
the applicable offshore United States dollar interbank market.
"Certificate of Deposit Rate" means, with respect to a Tranche and the
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related Tranche Period, the average of the consensus bid rates determined by the
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Agent on the date of determination of two or more New York certificate of
deposit dealers of recognized standing selected by the Agent for the purchase in
New York at face value from the Reference Banks of certificates of deposit of
the Reference Banks in an amount comparable to the amount of the related
Transfer Price to be funded by the Agent, and with a maturity comparable to the
related Tranche Period.
"Close-Out Collections" means Collections received with respect to any
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Close-Out Receivable.
"Close-Out Receivable" means any Receivable which is due and payable
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prior to the Remittance Date following the date of creation of such Receivable.
"Closing Date" means March 10, 1995.
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"Collection Account" means the account established and maintained by
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the Agent for the benefit of the Banks pursuant to Section 2.9.
"Collections" means, with respect to any Receivable, all cash
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collections and other cash proceeds of such Receivable including, without
limitation, any Deemed Collections and Close-Out Collections.
"Commitment Commission Rate" means the per annum rate payable by the
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Transferors to the Banks (calculated on the basis of actual number of days
elapsed divided by 360), determined in accordance with the following table, and
based upon the second highest of Toys "R" Us, Inc.'s long-term senior unsecured
debt ratings:
Toys "R" Us, Inc.'s
long-term senior
unsecured debt ratings Commitment
S&P/Moody's/Duff Commission
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AA-/Aa3/AA-or higher 10.0 bps
A/A2/A or higher 15.0 bps
A-/A3/A- 18.75 bps
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The Commitment Commission Rate as of the Closing Date is 10.0 basis
points. Upon a rating change, the Agent shall determine the applicable
Commitment Commission Rate and shall promptly notify the Banks and the
Transferors of the Commitment Commission Rate so determined. Such determination
by the Agent shall be conclusive absent manifest error. The new applicable
Commitment Commission Rate will be effective as of the date of notification to
the Banks.
"Commitment Fee" means a fee equal to the applicable Commitment
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Commission Rate payable by the Transferors on each Remittance Date on the
difference between the average Facility Limit as set forth on each Weekly Report
and the average Total Outstanding Investment as set forth on each Weekly Report
for the one year period preceding such date.
"Contingent Obligation", as applied to any Person, means, without
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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 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
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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 United States dollars shall be equal to the
United States dollar equivalent of such Contingent Obligation.
"Contract" means, with respect to any Receivable, both the Written
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Agreement and the invoice related thereto, pursuant to or under which the
Obligor shall be obligated to pay for merchandise sold by the related Transferor
to the Obligor.
"Contractual Obligation", as applied to any Person, means any
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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.
"Credit Agreement" means the Credit Agreement, dated as of March 10,
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1995, by and among Mattel, Inc., the banks named therein and Bank of America
National Trust and Savings Association, as Agent, as such agreement may be
amended and supplemented from time to time.
"Credit and Collection Policy" means each Transferor's credit and
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collection policies and practices relating to Contracts and Receivables with
respect to such Transferor existing on the date hereof, as modified from time to
time in compliance with Section 5.2(c).
"Deemed Collections" means any Collections on any Receivable deemed to
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have been received pursuant to Section 2.6(a) or (b).
"Defaulted Receivable" means a Receivable: (i) as to which any
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payment, or part thereof, remains unpaid as of the close of business on the
Remittance Date next succeeding the date such Receivable is created; (ii) as to
which an Event of Bankruptcy has occurred with respect to the Obligor; (iii)
which has been identified by the applicable Transferor or the Servicer as
uncollectible; or (iv) which, consistent with the Credit and Collection
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Policy, should be written off the related Transferor's books as uncollectible.
"Deficiency Advance" has the meaning specified in Section 2.10.
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"Discount" means, for each Tranche, an amount equal to the product of
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(a) the related Transfer Price (minus any amounts released from the Collection
Account by the Agent pursuant to Section 2.9(b) to fund all or a portion of such
Transfer Price) and (b) the applicable Participation Rate and (c) a fraction,
the numerator of which is the number of days in such Tranche Period and the
denominator of which is 360; provided, however, that no provision of this
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Agreement shall require the payment or permit the collection of Discount in
excess of the maximum permitted by applicable Governmental Rule; and provided,
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further, that Discount shall not be considered paid by any distribution of
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Collections if at any time such distribution is rescinded or must be returned
for any reason.
"Discount Reserve" means, at any time, the aggregate amount of
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Discount for all outstanding Tranches.
"Duff" means Duff & Phelps Credit Ratings Co.
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"Eligible Receivable" means, at any time, any Receivable:
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(i) the Obligor of which is Toys "R" Us, Inc.;
(ii) which is not a Defaulted Receivable at the time of the
initial creation of an interest of the Agent, on behalf of the Banks,
therein;
(iii) which is an "account" within the meaning of Section 9-106
of the UCC of all applicable jurisdictions;
(iv) which is denominated and payable only in United States
dollars in the United States;
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(v) which, together with the Contract related thereto, is in
full force and effect and constitutes the legal, valid and binding
obligation of the Obligor enforceable against the Obligor in accordance
with its terms and subject to no offset, counterclaim or other defense;
(vi) which, together with the Contract related thereto, does not
contravene in any material respect any Governmental Rules applicable
thereto and with respect to which no part of the Contract related thereto
is in violation of any such Governmental Rule in any material respect;
(vii) for which the Obligor has been directed and has agreed to
remit all payments to the Collection Account;
(viii) which satisfies all applicable requirements of the Credit
and Collection Policy;
(ix) the term of which does not extend beyond the Remittance
Date next succeeding the date such Receivable is created; and
(x) which was generated in the ordinary course of the related
Transferor's business.
"Environmental Claims" means all claims, however asserted, by any
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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,
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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.
8
"ERISA Affiliate", as applied to any Person, means any trade or
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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 of 1986, as amended.
"Event of Bankruptcy", with respect to any Person, means (i) that such
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Person shall generally not pay its debts as such debts become due or shall admit
in writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against such Person seeking to adjudicate it as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any Governmental Rule
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a corporation, such Person shall take any corporate
action to authorize any of the actions set forth in the preceding clause (i).
"Facility Limit" means $250,000,000, as such amount may be adjusted as
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provided herein.
"Federal Funds Rate" means the weighted average of the rates on
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overnight Federal funds transactions with members of the 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.
"GAAP" means generally accepted accounting principles set forth in the
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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
9
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Person" means the government of the United States or the
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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 Board of
Governors of the Federal Reserve System, any central bank or any comparable
authority.
"Governmental Rule" means any law, statute, rule, regulation,
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ordinance, order, judgment, guidelines or decision of any Governmental Person.
"Guarantor" means Mattel, Inc.
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"Indemnified Amounts" has the meaning specified in Section 8.1.
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"Indemnified Parties" has the meaning specified in Section 8.1.
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"LIBOR" means, with respect to a Tranche and the related Tranche
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Period, the average of the quotations (rounded upwards to the nearest 1/100 of
1%) as of 10:00 a.m. New York time on the second Business Day prior to the
commencement of such Tranche Period, if any, offered to first class banks in the
offshore dollar market by the Reference Banks for U.S. Dollar deposits of
amounts in same day funds comparable to the Transfer Price of such Tranche (net
of amounts payable in accordance with Section 2.9(b)), with a maturity
comparable to such Tranche Period to which LIBOR will apply.
"Material Adverse Effect" means (i) a material adverse effect upon the
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business, operations, properties, assets, business prospects or condition
(financial or otherwise) of Mattel, Inc. (together with its Subsidiaries), taken
as a whole, or (ii) a material impairment of the ability of Mattel, Inc. to
perform its obligations under this Agreement.
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"Moody's" means Moody's Investors Service, Inc.
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"Multiemployer Plan" means a "multiemployer plan" as defined in
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Section 4001(a)(3) of ERISA which is maintained for employees of a Person or any
ERISA Affiliate of such Person.
"Notice of Termination" means a notice delivered by the Agent to the
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Transferors, the Guarantor and the Banks pursuant to Section 7.4.
"Obligations" has the meaning set forth in Section 10.1.
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"Obligor" means Toys "R" Us, Inc., a Delaware corporation, which is
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obligated to the Transferors to make payments for the provision of goods
pursuant to Contracts.
"Participant" has the meaning set forth in Section 11.9.
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"Participation Rate" means, for any Tranche and related Tranche
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Period, LIBOR (or the Adjusted Certificate of Deposit Rate pursuant to Section
2.12) plus the applicable spread. Such spread shall mean the per annum rate
(calculated on the basis of the actual number of days elapsed divided by 360),
determined in accordance with the following table, and based upon the second
highest of Toys "R" Us, Inc.'s long-term unsecured senior debt ratings:
Toys "R" Us, Inc.'s long-
term senior unsecured
debt ratings
S&P/Moody's/Duff Spread
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AA-/Aa3/AA-or higher 20.0 bps
A/A2/A or higher 22.5 bps
A-/A3/A- 35.0 bps
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Such spread as of the Closing Date is 20 basis points. Upon a rating
change, the Agent shall determine the applicable spread and shall promptly
notify the Banks
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and the Transferors of the spread so determined. Such determination by the Agent
shall be conclusive absent manifest error. The new applicable spread will be
effective as of the date of notification to the Banks and will be applicable to
all Tranches.
"Pension Plan" means any employee plan which is subject to Section 412
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of the Internal Revenue Code of 1986, as amended, and which is maintained for
employees of a Person or any ERISA Affiliate of such Person other than a
Multiemployer Plan.
"Percentage" means, with respect to any Bank at any time, the
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percentage set forth next to its name on the signature page hereof, which is the
equivalent of a fraction the numerator of which is equal to such Bank's Bank
Commitment, and the denominator of which is equal to the Facility Limit.
"Percentage Factor" means the percentage computed at any time of
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determination as follows:
TOI + DR
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ERB
Where:
TOI = the Total Outstanding Investment at the time of such computation.
DR = the Discount Reserve at the time of such computation.
ERB = the aggregate outstanding balance of the Eligible Receivables at the
time of such computation.
In no event shall the Percentage Factor exceed one hundred percent.
The Percentage Factor shall be calculated by the Agent on the day of the initial
Transfer hereunder. Thereafter, the Percentage Factor shall remain constant
from the time as of which any such computation is made until the time as of
which a subsequent Transfer shall be made pursuant to Section 2.2. The
Percentage Factor, as calculated at the close of business on the date as of
which any such Transfer is made shall remain constant at all times thereafter
until such time
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as an additional Transfer is made or until such time as the Banks shall have
received the full amount of the Aggregate Unpaids, at which time the Percentage
Factor shall be recomputed.
"Person" means any corporation, natural person, firm, joint venture,
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partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Potential Termination Event" means any condition or event which, with
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the giving of notice or the lapse of time or both, would constitute a
Termination Event.
"Proceeds" means "proceeds" as defined in Section 9.306(1) of the UCC.
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"Receivable" means the indebtedness denominated in United States
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dollars to a Transferor by the Obligor (without giving effect to any purchase
hereunder by the Agent, on behalf of the Banks, at any time) under a Contract
whether constituting an account, chattel paper, instrument or general
intangible, including all other obligations of the Obligor with respect thereto.
Notwithstanding the foregoing, once a Receivable has been deemed collected
pursuant to Section 2.6 hereof, it shall no longer constitute a Receivable
hereunder.
"Records" means all Contracts and other documents, books, records and
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other information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the Obligor.
"Reference Banks" means Bank of America National Trust and Savings
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Association, NationsBank of Texas, N.A. and PNC Bank, National Association. 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 "LIBOR", 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.
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"Reference Rate" means the rate of interest publicly announced from
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time to time by NationsBank of Texas, N.A. in Dallas as its reference rate, as
in effect on such date of determination. The reference rate is set by
NationsBank of Texas, N.A. based on various factors including NationsBank of
Texas, N.A.'s costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans. NationsBank of
Texas, N.A. may make loans at, above or below the rate announced as its
reference rate.
"Remittance Date" means December 18, 1995, December 17, 1996, and
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December 17, 1997, as applicable, or, if such day is not a Business Day, the
next succeeding Business Day.
"Requisite Banks" means, at any date of determination, Banks having at
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least 66-2/3% of the aggregate Bank Commitments at such time.
"S&P" means Standard & Poor's Ratings Group.
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"Servicer" means Mattel, Inc. or, after a Servicer Default, a servicer
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appointed by the Agent.
"Servicer Default" has the meaning specified in Section 7.1.
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"Subsidiary" means any corporation, association or other business
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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.
"Termination Date" means the earlier of (i) December 17, 1997, unless
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such date is otherwise extended, or (ii) the date on which the Agent delivers a
Notice of Termination to the Transferors.
"Termination Event" means an event described in Section 7.3.
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"Total Outstanding Investment" means the sum of the Transfer Prices
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paid to the Transferors for all Transfers less any amounts released from the
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Collection
14
Account by the Agent pursuant to Section 2.9(b) to fund all or a
portion of any such amounts paid to the Transferors and less the aggregate
----
amount of Collections received and applied by the Agent to reduce such Total
Outstanding Investment pursuant to Section 2.4 or 2.9(b); provided that the
--------
Total Outstanding Investment shall be restored in the amount of any Collections
so received and applied if at any time the distribution of such Collections is
rescinded or must otherwise be returned for any reason; and provided further
-------- -------
that the Total Outstanding Investment shall at no time exceed the Facility
Limit.
"Tranche" means a portion of the Total Outstanding Investment
-------
allocated to a Tranche Period.
"Tranche Period" means, with respect to a Tranche, the period from the
--------------
date of the Transfer related thereto to the following Remittance Date.
"Transaction Costs" has the meaning specified in Section 8.3.
-----------------
"Transfer" means a conveyance, transfer and assignment by a Transferor
--------
to the Agent, on behalf of the Banks, of an undivided percentage ownership
interest in Receivables hereunder.
"Transfer Date" means, with respect to each Transfer, the Business Day
-------------
on which such Transfer is made.
"Transfer Price" means, with respect to any Transfer, the amount paid
--------------
to the related Transferor by the Banks as described in the Transfer Notice
related to such Transfer.
"Transfer Notice" has the meaning given to it in Section 2.2.
---------------
"Transferred Interest" means, at any time of determination, an
--------------------
undivided percentage ownership interest in (i) each and every then outstanding
Receivable, (ii) all Collections with respect thereto, and (iii) other Proceeds
of the foregoing, equal to the Percentage Factor at such time. The Transferred
Interest in each Receivable and the Collections and Proceeds with respect
thereto, shall at all times be in proportion to the Transferred
15
Interest in each other Receivable, and Collections and Proceeds with respect
thereto.
"UCC" means, with respect to any state, the Uniform Commercial Code as
---
from time to time in effect in such state.
"Weekly Report" means a report prepared on a Weekly basis by the
-------------
Servicer in the form attached hereto as Exhibit B and delivered to the Agent in
accordance with Section 2.8.
"Written Agreement" means the agreement between the Obligor and the
-----------------
Transferors in the form of Exhibit A.
SECTION 1.2. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of California, and not specifically defined
herein, are used herein as defined in such Article 9. All other terms not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
SECTION 1.3. Computation of Time Periods. Unless otherwise stated in
---------------------------
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
16
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility. Upon the terms and subject to the conditions
--------
herein set forth, each Transferor may, at its option, convey, transfer and
assign to the Agent, on behalf of the Banks, and the Banks shall, subject to the
terms and conditions hereof, accept such conveyance, transfer and assignment
from such Transferor, without recourse except as provided herein, undivided
percentage ownership interests in the Receivables, together with Collections
with respect thereto, from time to time.
SECTION 2.2. Transfers. Upon the terms and subject to the conditions
---------
herein set forth, each Transferor may, prior to the Termination Date, convey,
transfer and assign to the Agent, on behalf of the Banks, and the Banks shall,
subject to the terms and conditions hereof, accept such conveyance, transfer and
assignment from such Transferor, without recourse except as otherwise provided
herein, undivided percentage ownership interests in Receivables, together with
Collections with respect thereto (each, a "Transfer") from time to time for an
--------
aggregate Transfer Price (less any amounts released from the Collection Account
pursuant to Section 2.9(b) to fund all or a portion of any Transfer) not to
exceed the Facility Limit; provided that in no event may there be more than one
--------
Transfer per Transferor per week, and no Transfer shall be made by a Transferor
between two Business Days prior to any Remittance Date and the next succeeding
March 17. Each Transferor shall convey, transfer and assign to the Agent, on
behalf of the Banks, undivided percentage ownership interests in its Receivables
by delivering to the Agent, not later than 1:00 p.m., Dallas, Texas time, on the
third Business Day prior to the proposed date of transfer, notice of each
Transfer in substantially the form of Exhibit C hereto (a "Transfer Notice").
---------------
Each Transfer Notice shall specify (i) the Transfer Price based on an estimated
Participation Rate, (ii) an initial estimate of the Discount relating to such
Transfer based on an estimated Participation Rate, (iii) the date of such
Transfer, (iv) the Tranche Period related thereto, (v) the aggregate outstanding
balance of the Eligible Receivables as of the day of such notice and (vi) the
estimated Percentage Factor after giving effect
17
to such Transfer. After giving effect to such Transfer, the Total Outstanding
Investment plus the Discount Reserve shall not be greater than 80% of the
aggregate outstanding balance of the Eligible Receivables. Promptly after 10:00
a.m., Dallas, Texas time, on the second Business Day prior to the date of a
proposed Transfer, the Agent will notify the related Transferor of the LIBOR (or
the Adjusted Certificate of Deposit Rate, if applicable pursuant to Section
2.12) and the Participation Rate applicable to such Transfer, and such
Transferor will notify the Agent in writing of the finalized Transfer Price and
the finalized Percentage Factor. The finalized Transfer Price shall be an
amount not in excess of the amount which, when added to the Total Outstanding
Investment immediately prior to such Transfer, would cause the Total Outstanding
Investment plus the Discount Reserve to be greater than 80% of the aggregate
outstanding balance of the Eligible Receivables. The Transfer Price (net of any
amounts released from the Collection Account pursuant to Section 2.9(b) to fund
all or a portion of any Transfer) with respect to each Transfer shall not be
less than $5,000,000 and shall be in increments of $500,000 in excess thereof.
Each Transfer Notice shall be executed by duly authorized officers of the
Transferors. The Agent, on behalf of the Banks, shall accept such offer to
convey, transfer and assign undivided percentage ownership interests in writing.
The terms of each Transfer shall be as set forth herein and in the related
Transfer Notice.
Promptly after receipt of a Transfer Notice, the Agent shall notify
each Bank of the proposed Transfer (such notice to normally be given within two
hours of receipt by the Agent). Each Bank shall make available to the Agent its
pro rata share of the Transfer Price by remitting such funds to the Agent for
credit to NationsBank of Texas, N.A., ABA No. 111000025, Attention: Commercial
Loan Operations, Account No. 0180019828, Ref. Mattel Sales Inc., no later than
2:00 p.m., Dallas, Texas time on the date of such Transfer. The Agent shall
make available to the related Transferor on the date of such Transfer the
aggregate of the amounts so made available by the Banks by causing an amount of
same-day funds equal to such aggregate amount received by the Agent to be
credited to the account of the Transferors at Bank of America National Trust and
Savings Association (ABA No. 121000358, Account No. 1233112850, reference:
Mattel
18
Sales Receivables); provided that, upon prior written notice to the Agent, each
--------
Transferor may at any time direct the Agent to credit such amounts to another
account of such Transferor.
Each Transfer Notice shall be irrevocable and binding on the
Transferors, and the Transferors shall indemnify the Agent and the Banks against
any loss or expense incurred by the Agent or the Banks arising from or relating
to any failure by the Transferor to complete such Transfer including, without
limitation, any loss or expense incurred by the Agent or the Banks by reason of
the liquidation or reemployment of funds acquired by the Banks in anticipation
of funding such Transfer.
Each Transfer shall constitute a purchase of undivided percentage
ownership interests in each and every Receivable, together with all Collections
and Proceeds with respect thereto. The aggregate undivided percentage ownership
interest of the Agent, on behalf of the Banks, in the Receivables, together with
all Collections and Proceeds with respect thereto, shall equal the Percentage
Factor in effect from time to time.
SECTION 2.3. Discount, Fees and Other Costs and Expenses. (a)
-------------------------------------------
Notwithstanding any limitation on recourse contained herein, the Transferors
shall pay to the Agent (i) on each Remittance Date and on each day thereafter
until the Total Outstanding Investment has been reduced to zero, the amounts
required pursuant to Section 7.4 hereof, and (ii) as and when due in accordance
with this Agreement, all amounts payable pursuant to Article VIII hereof, if
any.
(b) Notwithstanding any limitation on recourse contained in this
Agreement, Mattel, Inc. and the Transferors, as appropriate, shall pay the
following non-refundable fees calculated on the basis of the actual number of
days elapsed divided by 360:
(i) on each Remittance Date occurring from the date of execution
hereof, the Transferors shall pay the Commitment Fee; and
19
(ii) the Transferors shall pay to the Agent the fee referenced
in that certain letter agreement, dated January 25, 1995, between the
Transferors and the Agent.
(c) Nothing in this Agreement shall limit in any way the obligations
of the Transferors to pay the amounts set forth in this Section 2.3.
SECTION 2.4. Settlement Procedures. On each Remittance Date and each
---------------------
day thereafter until the Aggregate Unpaids have been paid in full, the Agent
shall apply (i) amounts on deposit in the Collection Account pursuant to Section
2.6 or 7.3(h) and (ii) the Percentage Factor of all remaining amounts on deposit
in the Collection Account in the following order of priority: first, in payment
-----
of the accrued Discount for each Tranche Period, second, in payment of the
------
Commitment Fee, third, in payment of any additional Discount due pursuant to
-----
Section 7.4, fourth, in payment of the aggregate of all other amounts then owed
------
(whether due or accrued) hereby by Transferors to the Banks or the Agent (other
than the Total Outstanding Investment), and fifth, in reduction of the Total
-----
Outstanding Investment. In the event that on any Remittance Date and any day
thereafter, the Aggregate Unpaids have not been paid in full after giving effect
to the preceding sentence, the Agent shall apply any other amounts on deposit in
the Collection Account to the payment in full of the Aggregate Unpaids in
accordance with the foregoing priority. Following the date on which the Total
Outstanding Investment has been reduced to zero, all accrued Discount and
applicable fees have been paid in full, all other Aggregate Unpaids have been
paid in full and this Agreement shall have terminated pursuant to Section 11.1,
(i) the Agent shall recompute the Percentage Factor, (ii) the Agent, on behalf
of the Banks, shall be considered to have reconveyed to the applicable
Transferor any interest in the Receivables (including the Transferred Interest),
(iii) the Agent shall release to such Transferor any remaining Collections held
in the Collection Account pursuant to this Section 2.4 and (iv) the Agent, on
behalf of the Banks, shall execute and deliver to such Transferor, such
documents or instruments as are necessary to terminate the Agent's interest in
the Receivables. Any such documents shall be prepared by or on behalf of the
related Transferor.
20
SECTION 2.5. Protection of Ownership Interest of the Banks. Each
---------------------------------------------
Transferor agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all action necessary,
and such other actions as may be reasonably requested by the Agent, in order to
perfect or protect the Transferred Interest or to enable the Agent to exercise
or enforce any of its or any Bank's rights hereunder. Without limiting the
foregoing, each Transferor will, in order to accurately reflect this purchase
and sale transaction, execute and file such financing or continuation statements
or amendments thereto or assignments thereof as are necessary or as may be
requested by the Agent in order to protect, perfect and preserve the Transferred
Interest of the Agent, and agrees to mark its master data processing records and
other documents with a legend describing the purchase by the Agent, on behalf of
the Banks, of the Transferred Interest. Each Transferor shall, upon request of
the Agent, obtain such additional search reports as the Agent shall reasonably
request. To the fullest extent permitted by applicable Governmental Rule, the
Agent shall be permitted to sign and file continuation statements and amendments
thereto and assignments thereof without the applicable Transferor's signature.
Carbon, photographic or other reproduction of this Agreement or any financing
statement shall be sufficient as a financing statement. No Transferor shall
change its name, identity or corporate structure (within the meaning of Section
9-402(7) of the UCC as in effect in the State of California), nor relocate its
chief executive office or any office where Records are kept, unless it shall
have: (i) given the Agent at least thirty (30) days' prior written notice
thereof and (ii) prepared at such Transferor's expense and delivered to the
Agent all financing statements, instruments and other documents necessary to
preserve, perfect and protect the Transferred Interest of the Agent or
reasonably requested by the Agent in connection with such change or relocation.
Any filings under the UCC or otherwise that are occasioned by such change in
name or location shall be made at the expense of the related Transferor. As of
the date hereof, each Transferor has instructed the Obligor to cause all
Collections to be deposited directly into the Collection Account, and such
Transferor shall not change such arrangement unless the Agent shall have given
its prior written consent thereto. If either Transferor receives any Collections
or is deemed to receive any
21
Collections pursuant to Section 2.6, such Transferor shall immediately remit
such Collections to the Collection Account administered by the Agent for the
benefit of the Banks.
SECTION 2.6. Deemed Collections; Application of Payments. (a) In
-------------------------------------------
the event that on any day the outstanding balance of a Receivable is either (x)
reduced as a result of any defective or returned merchandise, any cash discount
or any adjustment by the related Transferor, or (y) reduced or canceled as a
result of a setoff in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction),
then within ten (10) days, either (i) the Servicer shall deliver a Weekly Report
evidencing that the aggregate outstanding balance of Eligible Receivables is at
least 125% of the Total Outstanding Investment and the Discount Reserve or (ii)
such Transferor shall deposit to the credit of the Collection Account the amount
of such reduction or cancellation and the Agent shall be considered to have
reconveyed to such Transferor any interest in such Receivables (including the
Transferred Interest therein). The Agent agrees that it shall execute and
return to the related Transferor such documents or instruments as are reasonably
requested by such Transferor and necessary to terminate the Agent's interest on
behalf of the Banks in such Receivables. Any such documents shall be prepared
by or on behalf of such Transferor.
(b) In the event that on any day any of the representations or
warranties in Article III is no longer true with respect to a Receivable, then
within ten (10) days of such occurrence, either (i) the related Transferor shall
cure the breach of the applicable representation or warranty or (ii) the
Servicer shall deliver a Weekly Report evidencing that the aggregate outstanding
balance of Eligible Receivables (not including the aggregate outstanding balance
of the Receivables subject to any such breach of a representation or warranty)
is at least 125% of the Total Outstanding Investment and the Discount Reserve or
(iii) such Transferor shall deposit to the credit of the Collection Account the
outstanding balance of such Receivable in full and the Agent, on behalf of the
Banks, shall be considered to have reconveyed to such Transferor any interest in
such Receivables (including the Transferred Interest therein). The Agent
22
agrees that it shall execute and return to the related Transferor such documents
or instruments as are reasonably requested by such Transferor and necessary to
terminate the Agent's interest on behalf of the Banks in such Receivables. Any
such documents shall be prepared by or on behalf of such Transferor.
SECTION 2.7. Payments and Computations, Etc. All amounts to be paid
------------------------------
or deposited by the Transferors hereunder shall be paid or deposited in
accordance with the terms hereof no later than 1:00 p.m. (New York City time) on
the day when due in immediately available funds; if such amounts are payable to
the Agent, on behalf of the Banks, they shall be paid or deposited in the
Collection Account, until otherwise notified by the Agent. The Transferors
shall, to the extent permitted by Governmental Rule, pay to the Agent, for the
benefit of the Banks, upon demand, interest on all amounts not paid or deposited
when due to the Banks hereunder at a rate equal to the highest Participation
Rate applicable to any Tranche then outstanding plus 2% or, if no Tranche is
then outstanding, the Alternate Rate. All computations of discount, interest
and all per annum fees hereunder shall be made on the basis of a year of 360
days for the actual number of days (including the first but excluding the last
day) elapsed. Any computations by the Agent of amounts payable by the
Transferors hereunder to the Banks or the Agent shall be binding absent manifest
error. All payments made to the Agent in respect of the Total Outstanding
Investment and Discount shall be made to the Agent for the account of the Banks
pro rata based on their respective Percentages. The Agent shall promptly remit
- --- ----
to each Bank such Bank's pro rata share of such payments (such payments to
--- ----
normally be remitted within two hours of receipt by the Agent).
SECTION 2.8. Reports. At any time the Total Outstanding Investment
-------
is greater than zero, commencing on the date hereof, and on each subsequent
Monday (or, if such day is not a Business Day, the next succeeding Business Day)
the Servicer shall prepare and forward to the Agent a Weekly Report for the
preceding calendar week, and (ii) such other information as the Agent may
reasonably request. On the second Business Day prior to each Remittance Date,
the Transferors shall provide the Agent and each Bank with a certificate
detailing the amount of Collections expected as of that Remittance
23
Date, together with the Total Outstanding Investment and the Discount Reserve.
SECTION 2.9. Collection Account. (a) There shall be established on
------------------
the day of the initial Transfer hereunder and maintained, in the name of the
Agent for the benefit of the Banks, a segregated account (the "Collection
----------
Account"), at NationsBank of Texas, N.A., bearing a designation clearly
- -------
indicating that the funds deposited therein are held for the benefit of the
Banks. (The wiring instructions for deposits to such account are: ABA No.
111000025, Account No. 1290154724.) Any interest and earnings (net of losses
and investment expenses) on funds on deposit in the Collection Account shall be
retained in the Collection Account and be available to make any payments
required to be made hereunder (including Discount) to the Agent or the Banks.
On the date on which the Total Outstanding Investment is zero and the Aggregate
Unpaids have been paid in full to the Banks, any funds remaining on deposit in
the Collection Account shall be released to the Transferors in same-day funds.
(b) Close-Out Collections deposited to the credit of the Collection
Account shall be retained in the Collection Account by the Agent until the
earlier of (w) the next succeeding Remittance Date, at which time such amounts
shall be applied pursuant to Section 2.4, and (x) the next succeeding Transfer
Date, at which time the Agent shall release to the Transferors the amount of
such Collections minus the Percentage Factor (as calculated as of the latest
-----
Transfer Date) of such Collections. In the event that Collections of Close-Out
Receivables are to be applied pursuant to clause (x) above, the Transferors may
request that the Percentage Factor of such Collections be applied toward (i) all
or a portion of the Transfer Price of the Transfer occurring on such Transfer
Date (in which case such amounts shall be paid to the Transferors) or (ii) the
reduction of the Total Outstanding Investment (in which case such amounts shall
be paid to the Banks). In the case of any such reduction of the Total
Outstanding Investment, the Agent shall, in its sole discretion, determine the
Tranche(s) with respect to which such reduction shall be applied; provided
--------
further, however, that in the case of any such reduction of the Total
- ------- -------
Outstanding Investment, each Transferor agrees to reimburse each Bank and to
hold each Bank
24
harmless from any loss or expense which such Bank may sustain or incur as a
consequence of such reduction of the Total Outstanding Investment, including any
such loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain its funding hereunder or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the payment in full of the Aggregate Unpaids.
SECTION 2.10. Deficiency Advances. No Bank shall be responsible for
-------------------
any default of any other Bank in respect of such other Bank's obligation to fund
any portion of a Transfer hereunder, nor shall the commitment of any Bank
hereunder be increased as a result of such default by any other Bank. Without
limiting the generality of the foregoing, in the event any Bank shall fail to
advance funds as provided herein, the Agent may, in its discretion but shall not
be obligated to, advance as a Bank all or any portion of such amount (the
"Deficiency Advance") and shall thereafter be entitled to payments on such
- -------------------
Deficiency Advance in the same manner and at the same rate(s) to which such
other Bank would have been entitled had it made such advance itself; provided
--------
that, upon payment to the Agent from such other Bank of the entire outstanding
amount of such Deficiency Advance, together with interest thereon, at the
Participation Rate applicable to the related Tranche, then such payment shall be
credited against the Agent's share of the Total Outstanding Investment in full
payment of such Deficiency Advance. Acceptance by a Transferor of a Deficiency
Advance from the Agent shall in no way limit the rights of such Transferor
against the Bank failing to fund its pro rata portion (based on its Percentage)
--- ----
of the Transfer Price of any Transfer hereunder.
SECTION 2.11. Adjustment of Facility Limit. (a) The Transferors
----------------------------
shall have the right, at any time and from time to time; to terminate in whole
or permanently reduce in part, without premium or penalty, the Facility Limit;
provided that the Facility Limit, as reduced, shall equal or exceed the Total
- --------
Outstanding Investment as of the date of such reduction.
(b) The Transferors shall give not less than three Business Days'
prior written notice to the Agent designating the date (which shall be a
Business Day) and the amount of such termination or reduction.
25
Any partial reduction shall be in an aggregate minimum amount of $10,000,000 and
integral multiples of $1,000,000 in excess of that amount. Promptly after
receipt of a notice of such termination or partial reduction, the Agent shall
notify each Bank and Bank of America National Trust and Savings Association as
agent under the Credit Agreement of the proposed termination or reduction. Such
termination or reduction shall be effective on the date specified in the
Transferors' notice and shall terminate or reduce the dollar amount of each
Bank's Bank Commitment.
SECTION 2.12. Inability to Determine LIBOR. If for any reason the
----------------------------
Reference Banks shall have determined that for any reason adequate and
reasonable means do not exist for ascertaining LIBOR for any proposed Tranche
Period, or if the Requisite Banks advise the Agent in writing that LIBOR for any
proposed Tranche Period does not adequately and fairly reflect the cost to such
Banks of funding the Total Outstanding Investment during such Tranche Period,
the Agent will forthwith give notice of such determination to the Transferors
and each Bank. In such event, the Participation Rate with respect to such
proposed Tranche Period and related Tranche shall be determined by reference to
the Adjusted Certificate of Deposit Rate. If for any reason the Reference Banks
shall have determined that for any reason adequate and reasonable means do not
exist for ascertaining the Adjusted Certificate of Deposit Rate for any proposed
Tranche Period, or if the Requisite Banks advise the Agent in writing that the
Adjusted Certificate of Deposit Rate for any proposed Tranche Period does not
adequately and fairly reflect the cost to such Banks of funding the Total
Outstanding Investment during such Tranche Period, the Agent will forthwith give
notice of such determination to the Transferors and each Bank. In such event,
the Participation Rate with respect to such proposed Tranche Period and related
Tranche shall be determined by reference to the Base Rate.
26
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Transferors. Each
-------------------------------------------------
Transferor hereby represents and warrants to each of the Banks that:
(a) Perfection. Immediately preceding each Transfer hereunder, the
----------
related Transferor shall be the owner of all of the Receivables which are the
subject of each such Transfer, free and clear of all liens, encumbrances,
security interests, preferences or other security arrangements of any kind or
nature whatsoever. On or prior to each Transfer, all financing statements and
other documents required to be recorded or filed in order to perfect the
Transferred Interest against all creditors and purchasers from such Transferor
will have been duly filed in each filing office necessary for such purpose and
all filing fees and taxes, if any, payable in connection with such filings have
been paid in full.
(b) Accuracy of Information. All information heretofore furnished by
-----------------------
a Transferor to the Banks or the Agent for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by such Transferor to the Banks or the Agent
will be, true and accurate in every material respect, on the date such
information is stated or certified.
(c) Place of Business. The chief place of business and chief
-----------------
executive office of the Transferors are located at the addresses of the
Transferors indicated on Exhibit F hereto, and the offices where each Transferor
keeps its Records are located at the address of such Transferor indicated on
Exhibit F hereto or at such other locations notified to the Agent in accordance
with Section 2.5 in jurisdictions where all action required by Section 2.5 has
been taken and completed.
(d) Payments. The Obligor has, with respect to each Receivable, been
--------
directed by the related Transferor to remit all payments in respect of such
Receivable directly to the Collection Account administered by the Agent.
27
(e) Good Title. Upon each Transfer and each recomputation of the
----------
Transferred Interest, the Agent, on behalf of the Banks, shall acquire a valid
and perfected first priority undivided percentage ownership interest to the
extent of the Transferred Interest or a first priority perfected security
interest in each Receivable which exists on the date of such Transfer and
recomputation and all Collections with respect thereto free and clear of any
Adverse Claim.
(f) Tradenames, etc.. As of the date hereof: (i) neither Transferor
----------------
has any subsidiaries or divisions; and (ii) neither Transferor has, within the
last five (5) years, operated under any tradenames except as set forth on
Exhibit G hereto and, within the last five (5) years, has not changed its name,
merged with or into or consolidated with any other corporation or been the
subject of any proceeding under Title 11 of the United States Code (Bankruptcy).
(g) No Termination Event. No event has occurred and is continuing,
--------------------
and no condition exists, which constitutes a Potential Termination Event or
Termination Event.
(h) Organization and Powers. Each Transferor is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and 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 to enter into this Agreement and to
carry out the transactions contemplated hereby.
(i) Good Standing. Each Transferor 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.
(j) Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action by each
Transferor.
28
(k) No Conflict. The execution, delivery and performance by each
-----------
Transferor of this Agreement do not and will not (a) violate the Certificate of
Incorporation or Bylaws of such Transferor, (b) violate any provision of law
applicable to such Transferor, or any material order, judgment or decree of any
court or other agency of government binding on such Transferor, 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 such Transferor, (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, other than Liens created in favor of the Agent, or (e) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of such Transferor.
(l) Governmental Consents. The execution, delivery and performance
---------------------
by the Transferors of this Agreement, and each agreement, document, or
instrument required hereunder 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.
(m) Binding Obligation. This Agreement when executed and delivered
------------------
will be the legally valid and binding obligation of the Transferors, enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(n) 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.
(o) Litigation; Adverse Facts. There is no action, suit, proceeding
-------------------------
or arbitration (whether or not purportedly on behalf of either Transferor) at
law or in equity or before or by any Federal, state, municipal or other
governmental department, commission, board,
29
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of the related Transferor, threatened against or affecting such
Transferor or any of its properties which, in the reasonable judgment of such
Transferor and its executive officers (assuming adverse determination of facts
which such Transferor 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 Transferor 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 such Transferor, threatened against or affecting
such Transferor which provides a reasonable basis for questioning the validity
or the enforceability of this Agreement.
(p) Payment of Taxes. All tax returns and reports of either
----------------
Transferor required to be filed by any of them have been timely filed, and all
taxes, assessments, fees and other governmental charges upon such Transferor and
upon its 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 of the Credit Agreement. Neither Transferor
knows of any proposed tax assessment against it that would result in a Material
Adverse Effect.
(q) Agreements. Neither Transferor is a party to nor is it subject
----------
to any material agreement or instrument or charter or other internal restriction
which results in a Material Adverse Effect.
30
(r) Performance. Neither Transferor is in default in the
-----------
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of such Transferor,
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.
(s) Governmental Regulation. Neither Transferor 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
limiting its ability to transfer interests in its Receivables hereunder.
(t) Employee Benefit Plans. Each Transferor and each of its
----------------------
respective 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 Transferor nor any of its
respective 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.
(u) Disclosure. No representation or warranty of a Transferor
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by such Transferor since January 1, 1995 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 Transferor 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 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.
(v) Environmental Matters. Each Transferor conducts in the ordinary
---------------------
course of business a review of the effect of existing Environmental Laws and
31
existing Environmental Claims on its business, operations and properties, and as
a result thereof each Transferor 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.
SECTION 3.2. Representations and Warranties of Mattel, Inc. Mattel,
----------------------------------------------
Inc. represents and warrants to the Banks that:
(a) Servicing. Since January 1, 1995, there has been no material
---------
change in the ability of Mattel, Inc. to service the Receivables.
(b) Organization and Powers. Mattel, Inc. 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 authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into this Agreement and to carry out the transactions
contemplated hereby and thereby.
(c) Good Standing. Mattel, Inc. 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.
(d) Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action by Mattel,
Inc.
(e) No Conflict. The execution, delivery and performance by Mattel,
-----------
Inc. of this Agreement do not and will not (a) violate the Restated Certificate
of Incorporation or Bylaws of Mattel, Inc., (b) violate any provision of law
applicable to Mattel, Inc., or any material order, judgment or decree of any
court or other agency of government binding on Mattel, Inc., 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 Mattel, Inc., (d) result in or require the
creation or imposition of any
32
material lien, security interest, charge or encumbrance of any nature whatsoever
upon any of its material properties or assets, other than Liens created in favor
of the Agent, or (e) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Mattel, Inc.
(f) Governmental Consents. The execution, delivery and performance
---------------------
by Mattel, Inc. of this Agreement, and each agreement, document, or instrument
required hereunder 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.
(g) Binding Obligation. This Agreement when executed and delivered
------------------
will be the legally valid and binding obligation of Mattel, Inc., enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(h) Financial Condition. Mattel, Inc. has heretofore delivered to
-------------------
the Banks a consolidated balance sheet of Mattel, Inc. 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 Mattel, Inc.
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 Mattel, Inc. and its Subsidiaries as at the
date thereof and the consolidated results of operations and statement of cash
flow of Mattel, Inc. and its Subsidiaries for the period then ended. Neither
Mattel, Inc. nor any of its Subsidiaries has any material Contingent Obligation,
liability for taxes or long-term lease which as of the date of this 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.
33
(i) Changes, Etc. Since December 31, 1992 there has been no event or
------------
events that have, either individually or in the aggregate, resulted in a
Material Adverse Effect.
(j) Title to Properties. Mattel, Inc. 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 of the Credit
Agreement 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 or the Credit 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.
(k) Litigation; Adverse Facts. There is no action, suit, proceeding
-------------------------
or arbitration (whether or not purportedly on behalf of Mattel, Inc.) 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 Mattel, Inc., threatened against or
affecting Mattel, Inc. or any of its Subsidiaries or any of Mattel, Inc.'s or
such Subsidiaries' properties which, in the reasonable judgment of Mattel, Inc.
and its executive officers (assuming adverse determination of facts which
Mattel, Inc. 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 Mattel, Inc. 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
Mattel, Inc., threatened against or affecting Mattel,
34
Inc. or any of its Subsidiaries which provides a reasonable basis for
questioning the validity or the enforceability of this Agreement.
(l) Payment of Taxes. All tax returns and reports of Mattel, Inc.
----------------
and its Subsidiaries required to be filed by any of them have been timely filed,
and all taxes, assessments, fees and other governmental charges upon Mattel,
Inc. 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 of the Credit
Agreement. Mattel, Inc. knows of no proposed tax assessment against it or any of
its Subsidiaries that would result in a Material Adverse Effect.
(m) Agreements. Neither Mattel, Inc. 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.
(n) Performance. Neither Mattel, Inc. 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
Mattel, Inc., 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.
(o) Governmental Regulation. Neither Mattel, Inc. 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 transfer interests in the
Receivables hereunder.
(p) Employee Benefit Plans. Mattel, Inc. 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 there-
35
under with respect to all Pension Plans. Neither Mattel, Inc. 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.
(q) Disclosure. No representation or warranty of Mattel, Inc.
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Banks by Mattel, Inc. since January 1, 1995 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 Mattel, Inc. 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 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.
SECTION 3.3. Reaffirmation of Representations and Warranties. On
-----------------------------------------------
each day that a Transfer is made hereunder (a) the related Transferor, by
accepting the proceeds of such Transfer, shall be deemed to have certified that
(i) all representations and warranties described in Section 3.1 are correct on
and as of such day as though made on and as of such day, and (ii) no event has
occurred or is continuing or would result from any such Transfer, which
constitutes a Termination Event or a Potential Termination Event and (b) Mattel,
Inc. as Guarantor and as Servicer shall be deemed to have certified that (i) all
representations and warranties described in Section 3.2 are correct on and as of
such day as though made on and as of such day and (ii) if Mattel, Inc. is then
the Servicer, that no event has occurred or is continuing or would result from
any such Transfer, which constitutes, or with the passage of time or the giving
of notice or both, would constitute a Servicer Default.
36
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. On or prior to the date of
---------------------
execution hereof and prior to the effectiveness of this Agreement, the
Transferors and the Guarantor shall have delivered to the Agent and the Banks
originally executed copies of this Agreement, together with originals to the
Agent and copies to the Banks of the following documents and instruments, all in
form and substance acceptable to the Agent:
(a) a Certificate of the Secretary of Mattel, Inc. (i) certifying
that, since March 18, 1994, there have been no changes in the Restated
Certificate of Incorporation, by-laws and incumbency signatures of Mattel, Inc.
(or, if changes have been made with respect thereto, specifying the nature of
such changes and attaching copies thereof to such Certificate) and (ii)
attaching copies of resolutions of the Board of Directors authorizing the
execution, delivery and performance of this Agreement and related documents to
which it is a party;
(b) good standing certificates of Mattel, Inc. from each of the
Secretaries of State of Delaware and California, each to be dated a recent date
prior to the Closing Date;
(c) (i) a Certificate of the Secretary of Fisher-Price, Inc.
attaching copies of the Certificate of Incorporation, by-laws and incumbency
signatures of such Transferor, together with copies of resolutions of the Board
of Directors authorizing the execution, delivery and performance of this
Agreement and related documents to which it is a party and (ii) a Certificate of
the Secretary of Mattel Sales Corp. (1) certifying that, since March 18, 1994,
there have been no changes in the Certificate of Incorporation, by-laws and
incumbency signatures of such Transferor (or, if changed have been made with
respect thereto, specifying the nature of such changes and attaching copies
thereof to such Certificate) and (2) attaching copies of resolutions of the
Board of Directors authorizing the execution, delivery and perfor-
37
mance of this Agreement and related documents to which it is a party;
(d) good standing certificate of Mattel Sales Corp. from the
Secretary of State of California and a good standing certificate of Fisher-
Price, Inc. from the Secretary of State of the State of Delaware to be dated a
recent date prior to the Closing Date;
(e) proper financing statements (Form UCC-1) naming each Transferor
as the debtor/transferor and the Agent, as agent on behalf of the Banks, as
purchaser or other similar instruments or documents as may be necessary or in
the opinion of the Agent desirable under the UCC of all appropriate
jurisdictions or any comparable Governmental Rule to perfect the ownership
interest of the Agent, on behalf of the Banks, in all Receivables related to
both Transferors;
(f) certified copies of request for information or copies (Form UCC-
11) (or a similar search report certified by parties acceptable to the Banks)
dated a date reasonably near the date of the initial Transfer listing all
effective financing statements which name the Transferors (under their present
names and any previous names) as Debtor and which are filed in jurisdictions in
which the filings were made pursuant to item (i) above together with copies of
such financing statements (none of which shall cover any Receivables or
Contracts);
(g) a favorable opinion of Robert J. Normile, counsel for the
Transferors, in substantially the form of Exhibit I hereto and as to such other
matters as the Agent may reasonably request;
(h) a favorable opinion of Robert J. Normile, counsel for the
Guarantor, in substantially the form of Exhibit J hereto and as to such other
matters as the Agent may reasonably request;
(i) a favorable opinion of Latham & Watkins, special counsel for the
Transferors, as to such matters as the Agent may reasonably request; and
(j) an executed copy of the Written Agreement.
38
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of the Transferors. At all times
----------------------------------------
for the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) Conduct of Business. Each Transferor will carry on and conduct
-------------------
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and will do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and will maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is presently conducted.
(b) Compliance with Governmental Rules. Each Transferor will comply
----------------------------------
with all Governmental Rules, writs, judgments, injunctions, decrees or awards to
which it may become subject.
(c) Furnishing of Information and Inspection of Records. Each
---------------------------------------------------
Transferor will furnish to the Agent and the Banks from time to time such
information with respect to the Receivables as the Agent or the Banks may
reasonably request, including, without limitation, listings identifying the
outstanding balance for each Receivable. Each Transferor will at any time and
from time to time during regular business hours permit the Agent or the Banks,
or their agents or representatives, (i) to examine and make copies of and
abstracts from all Records and (ii) to visit the offices and properties of such
Transferor for the purpose of examining such Records, and to discuss matters
relating to the Receivables or such Transferor's performance hereunder with any
of the officers, directors, employees, agents or independent public accountants
of such Transferor having knowledge of such matters.
(d) Keeping of Records and Books of Account. Each Transferor will
---------------------------------------
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evi-
39
dencing Receivables in the event of the destruction of the originals thereof),
and keep and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
Receivable). Each Transferor will give the Agent notice of any material change
in the administrative and operating procedures referred to in the previous
sentence.
(e) Performance and Compliance with Receivables and Contracts. Each
---------------------------------------------------------
Transferor will at its expense timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables.
(f) Credit and Collection Policies. Each Transferor will comply in
------------------------------
all material respects with its Credit and Collection Policy in regard to each
Receivable and the related Contract.
(g) Accounting Treatment. Each Transferor shall report the
--------------------
transactions contemplated by the Agreement on its financial statements as a sale
of the Transferred Interest to the Agent on behalf of the Banks.
(h) Knowledge. Promptly upon any executive officer of a Transferor
---------
obtaining knowledge of any condition or event which constitutes a Termination
Event or Potential Termination Event or becoming aware that the Agent or any
Bank has given any notice or taken any other action with respect to a claimed
Termination Event or Potential Termination Event under this Agreement, such
Transferor shall provide to the Agent an officer's certificate specifying the
nature and period of existence of any such condition or event, or specifying the
notice given and the nature of such claimed Termination Event or Potential
Termination Event, together with what action the Transferor has taken, is taking
and proposes to take with respect thereto.
(i) Written Agreement. For so long as this Agreement is in effect,
-----------------
and prior to the delivery by the Transferors of the initial Transfer Notice of
each calendar year, the Transferors shall provide the Agent
40
and the Banks with a copy of a Written Agreement in the form of Exhibit A
hereto, duly executed by the Transferors and the Obligor and appropriately
revised to reflect the Remittance Date of such calendar year.
(j) Environmental Laws. Each Transferor shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, expect where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 5.2. Negative Covenants of the Transferors. At all times
-------------------------------------
during the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) No Sales, Liens, etc. Except as otherwise provided herein,
--------------------
neither Transferor will sell, assign (by operation of Governmental Rule or
otherwise) or otherwise dispose of, or create or knowingly suffer to exist any
Adverse Claim upon (or the filing of any financing statement) or with respect
to, any Receivable, or upon or with respect to any account to which any
Collections of any Receivable are sent.
(b) Extension or Amendment of Receivables. Neither Transferor will
-------------------------------------
extend the term of any Receivable beyond the Remittance Date next succeeding the
date such Receivable was created. Neither Transferor will amend or modify any
Receivable or amend, modify or waive any term or condition of any Contract
related thereto except in accordance with its normal business practices as
reflected in the Credit and Collection Policy.
(c) No Change in Business or Credit and Collection Policy. Neither
-----------------------------------------------------
Transferor will make any change in the character of its business or in the
Credit and Collection Policy without the prior written consent of the Agent at
the written direction of the Requisite Banks.
(d) No Modification of Written Agreement. Neither Transferor will
------------------------------------
amend, supplement, alter or otherwise modify the Written Agreement.
41
SECTION 5.3. Affirmative Covenants of Mattel, Inc. At all times
-------------------------------------
during the term of this Agreement, unless the Requisite Banks shall otherwise
consent in writing:
(a) Financial Information. Mattel, Inc. will maintain a system of
---------------------
accounting established and administered in accordance with generally accepted
accounting principles, and will furnish to the Agent and the Banks:
(i) as soon as practicable and in any event not later than
fifty-five (55) days after the end of each of the first three (3) fiscal
quarters of Mattel, Inc., consolidated balance sheets of Mattel, Inc. and
its Subsidiaries as at the end of such period and for the fiscal year to
date and the related consolidated and consolidating 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 Mattel,
Inc. that the consolidated statements (and to the best of his belief, the
consolidating statements) and other materials required by this clause
(a)(i) fairly present the financial condition of Mattel, Inc. 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;
(ii) as soon as practicable and in any event not later than one
hundred (100) days after the end of each fiscal year of Mattel, Inc.,
consolidated and consolidating balance sheets of Mattel, Inc. and its
Subsidiaries as at the end of such year (such consolidating statements
shall specifically detail the Transferors) and the related consolidated
(and, as to statements of income only, consolidated and consolidating)
statements of income, stockholders' equity and cash flow of Mattel, Inc.
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 (x) in the case of such consolidated financial
statements, accompanied by a report there-
42
on of Price Waterhouse or other independent accountants of recognized
national standing selected by Mattel, Inc., which report shall state that
such consolidated financial statements present fairly the financial
position of Mattel, Inc. 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 generally accepted accounting principles 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 (y) in the case of such
consolidating financial statements, certified by the chief financial or
accounting officer of Mattel, Inc.; and
(iii) together with each delivery of financial statements of
Mattel, Inc. and its Subsidiaries as provided above in clauses (i) and
(ii), an officer's certificate stating that the signers thereof have
reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions
and condition of Mattel, Inc. 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
the signers do not have knowledge of the existence as of the date of such
officer's certificate, of any condition or event which constitutes a
Termination Event or Potential Termination Event or, if any such condition
or event existed or exists, specifying the nature and period of existence
thereof.
(b) Conduct of Business. Mattel, Inc. will carry on and conduct its
-------------------
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted (provided, however, that Mattel, Inc.
may engage in the production and sale of CD-ROM products and coin-operated
arcade games related to its existing lines of business) and will do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and will maintain
all requisite authority to conduct its business in each
43
jurisdiction in which its business is presently conducted.
(c) Compliance with Governmental Rule. Mattel, Inc. will comply with
---------------------------------
all Governmental Rules, writs, judgments, injunctions, decrees or awards to
which it may become subject.
(d) Furnishing of Information and Inspection of Records. Mattel,
---------------------------------------------------
Inc. will furnish to the Agent from time to time such information with respect
to its obligations as Guarantor and Servicer hereunder as may be reasonably
requested by the Agent. Mattel, Inc. will at any time and from time to time
during regular business hours permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of Mattel, Inc. for the
purpose of examining such Records, and to discuss matters relating to the
Receivables or Mattel, Inc.'s performance hereunder as Guarantor and as
Servicer, as the case may be, with any of the officers, directors, employees,
agents or independent public accounts of Mattel, Inc. having knowledge of such
matters.
(e) Keeping of Records and Books of Account. Mattel, Inc. will
---------------------------------------
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable). Mattel, Inc. will give the
Agent notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(f) Knowledge. Promptly upon any executive officer of Mattel, Inc.
---------
obtaining knowledge of any condition or event which constitutes a Termination
Event or Potential Termination Event or becoming aware that the Agent or any
Bank has given any notice or taken any other action with respect to a claimed
Termination Event or Potential Termination Event under this Agreement, Mattel,
Inc. shall provide to the Agent an officer's certificate
44
specifying the nature and period of existence of any such condition or event, or
specifying the notice given and the nature of such claimed Termination Event or
Potential Termination Event, together with what action Mattel, Inc. has taken,
is taking and proposes to take with respect thereto.
45
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Servicer. The servicing and
-----------------------
administering of the Receivables shall be conducted by the Servicer. Until the
Agent gives notice to the Transferors of the designation of a new Servicer,
Mattel, Inc. is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Servicer pursuant to the terms hereof; provided that,
--------
with respect to any group of Receivables, Mattel, Inc. may, at any time, upon
prior notice to the Agent, designate any Affiliate of Mattel, Inc. as
subservicer hereunder, provided that such Affiliate shall not become the
--------
Servicer hereunder and Mattel, Inc. shall remain liable for the performance of
the duties and obligations of the Servicer in accordance with the terms hereof;
provided further that Mattel, Inc. hereby designates Fisher-Price, Inc. as
- -------- -------
subservicer with respect to Receivables transferred by it hereunder. On and
after the occurrence of a Servicer Default, the Agent, on behalf of the Banks,
may designate as Servicer any Person (including the Agent) to succeed Mattel,
Inc. or any successor Servicer, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
SECTION 6.2. Duties of Servicer and Agent. (a) The Servicer shall
----------------------------
take or cause to be taken all such action as may be necessary or advisable to
facilitate the collection of each Receivable from time to time, all in
accordance with applicable Governmental Rules, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. Each of the
Transferors, the Agent and the Banks hereby appoints as its agent the Servicer,
from time to time designated pursuant to Section 6.1, to enforce its respective
rights and interests in and under the Receivables and the Contracts. Neither
the Transferors nor the Servicer may extend the maturity of any Receivable
beyond the Remittance Date next succeeding the date of creation of such
Receivable. Each Transferor shall deliver to the Servicer, and the Servicer
shall hold in trust for such Transferor and the Agent in accordance with their
respective interests, all Records which evidence or relate to any Receivables
relating to such Transferor. Notwithstanding
46
anything to the contrary contained herein, the Agent shall have the
absolute and unlimited right to direct the Servicer to commence or settle any
legal action to enforce collection of any Receivable. In the event that the
Obligor defaults in the performance of the Written Agreement and the Servicer
fails to take action with respect to the Obligor as directed by the Agent
pursuant to the preceding sentence, notwithstanding anything to the contrary
contained herein, the Agent shall have the absolute and unlimited right to take
any and all steps in the related Transferor's name and on behalf of such
Transferor necessary or desirable, in the determination of the Requisite Banks,
to collect all amounts due under any and all Receivables including, without
limitation, endorsing such Transferor's name on checks and other instruments
representing Collections and enforcing such Receivables and the Written
Agreement.
(b) The Agent shall, as soon as practicable following receipt
thereof, turn over to the applicable Transferor any collections of any
indebtedness of the Obligor which is not a Receivable.
(c) On and after the occurrence of a Servicer Default, the Agent
shall have the right to require the Servicer to cause a firm of independent
public accountants (who may also render other services to the Servicer or the
Transferors) to furnish a report to the Agent to the effect that they have (i)
compared the information contained in the Transfer Notices and the Weekly
Reports with the information contained in the Records and the Servicer's records
and computer systems for such period, and that, on the basis of such examination
and comparison, such firm is of the opinion that the information contained in
such Transfer Notices and Weekly Reports reconciles with the information
contained in the Receivables and the Servicer's records and computer system and
that the servicing of the Receivables has been conducted in compliance with this
Agreement, (ii) confirmed the Eligible Receivables balance as set forth on such
Transfer Notices and Weekly Reports, and (iii) confirmed that the Receivables
treated by the Agent as Eligible Receivables in fact satisfied the requirements
of the definition thereof contained herein, except, in each case for (a) such
exceptions as such firm shall believe to be immaterial (which exceptions need
not be
47
enumerated) and (b) such other exceptions as shall be set forth in such
statement.
SECTION 6.3. Rights After Designation of New Servicer. At any time
----------------------------------------
following the designation of a Servicer pursuant to Section 6.1:
(i) Each Transferor shall, at the Agent's request and at such
Transferor's expense, give notice of the Banks' ownership of Receivables to
the Obligor and direct that payments be made directly to the Agent or its
designee or designate a new Collection Account.
(ii) Each Transferor shall, at the Agent's request, (A) assemble
all of the Records, and shall make the same available to the Agent at a
place selected by the Agent or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Receivables in a manner reasonably acceptable to the Agent
and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
(iii) Each Transferor hereby authorizes the Agent to take any
and all reasonable steps in such Transferor's name and on behalf of such
Transferor necessary or desirable, in the determination of the Agent, to
collect all amounts due under any and all Receivables including, without
limitation, endorsing such Transferor's name on checks and other
instruments representing Collections and enforcing such Receivables and the
Written Agreement.
SECTION 6.4. Responsibilities of the Transferors. Anything herein to
-----------------------------------
the contrary notwithstanding, each Transferor shall (i) perform all of its
obligations under the Contracts related to its Receivables to the same extent as
if interests in such Receivables had not been sold hereunder and the exercise by
the Agent of its rights hereunder shall not relieve such Transferor from such
obligations and (ii) pay when due any taxes, including without limitation, any
sales taxes payable in connection with its Receivables and their creation and
satisfaction. Neither the Agent nor the Banks shall have
48
any obligation or liability with respect to any Receivable or related Contracts,
nor shall they be obligated to perform any of the obligations of the related
Transferor thereunder.
49
ARTICLE VII
SERVICER DEFAULT AND TERMINATION EVENTS
SECTION 7.1. Servicer Default. The occurrence of any one or more of
----------------
the following events shall constitute a default by the Servicer hereunder (each,
a "Servicer Default"):
----------------
(a) (i) the Servicer shall fail to perform or observe any term,
covenant or agreement hereunder (other than as referred to in this Section 7.1)
and such failure shall remain unremedied for ten (10) Business Days or (ii) the
Servicer shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) any representation, warranty, certification or statement made by
the Servicer in this Agreement or in any other document delivered pursuant
hereto shall prove to have been incorrect in any material respect when made or
deemed made; or
(c) the Agent, on behalf of the Banks, shall fail to have a valid and
perfected first priority ownership or security interest in and to the
Receivables; or
(d) any Event of Bankruptcy shall occur with respect to the
Servicer; or
(e) the Servicer shall merge with or into any entity whereby it
is not the surviving entity; or
(f) [reserved]
(g) an event of acceleration with respect to any indebtedness in
excess of $20,000,000 under any agreement to which the Servicer or any one of
its domestic subsidiaries is a party occurs.
SECTION 7.2. Servicer Default Remedies. If a Servicer Default
-------------------------
occurs, the Agent shall, upon written request of the Requisite Banks, by notice
to the Transferors, terminate the Servicer's rights as Servicer hereunder and
appoint a successor Servicer (which successor Servicer may be itself).
50
SECTION 7.3. Termination Events. The occurrence of any one or more
------------------
of the following events shall constitute a Termination Event hereunder:
(a) the occurrence of a Servicer Default; or
(b) either Transferor or the Guarantor shall fail to make any payment
or deposit required to be made by it hereunder when due; or
(c) any Event of Bankruptcy shall occur with respect to a
Transferor or the Guarantor; or
(d) the material breach of any representation or warranty contained
herein, or the failure to comply with any material covenant contained herein, by
either Transferor or the Guarantor; or
(e) the Agent, on behalf of the Banks, shall fail to have a valid and
perfected first priority ownership or security interest in and to the
Receivables; or
(f) either Transferor or the Guarantor shall merge with or into any
entity whereby it is not the surviving entity; provided that the merger of any
--------
Transferor or the Guarantor with or into the other shall not constitute a
Termination Event under this Section 7.3(f); or
(g) any material adverse change in the operations of either
Transferor or the Guarantor, or any other event which materially affects the
ability of such Transferor or the Guarantor to perform its obligations
hereunder; or
(h) at any time the Percentage Factor exceeds 80% unless the
Transferors, within ten (10) days of such occurrence, either (i) deposit into
the Collection Account an amount equal to the amount by which the Total
Outstanding Investment plus the Discount Reserve exceeds 80% of the aggregate
----
outstanding balance of Eligible Receivables or (ii) otherwise reduce the
Percentage Factor to less than or equal to 80%; or
51
(i) the second highest short-term unsecured debt rating assigned to
the Obligor by S&P, Moody's or Duff falls below "A-1", "P-1" or "D-1",
respectively, or the second highest long-term senior unsecured debt rating
assigned to the Obligor by S&P, Moody's or Duff falls below "A-", "A3" or "A-",
respectively; or
(j) the Obligor fails to remit full payment in respect of the
Receivables on any Remittance Date to the Collection Account; or
(k) the occurrence of an event of acceleration with respect to any
indebtedness in excess of $20,000,000 under any agreement to which the Guarantor
or any one of its domestic subsidiaries is a party; or
(l) the occurrence of an Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
SECTION 7.4. Termination Event Remedies. Upon the occurrence of a
--------------------------
Termination Event described in clause (c) or (e) of Section 7.3 above, all
outstanding Tranches shall thereafter accrue additional Discount at a rate equal
to the difference, for each respective Tranche, between (x) the highest
Participation Rate applicable to any Tranche plus 2% and (y) the Participation
Rate applicable to such Tranche at the time of such Termination Event, and the
commitment of the Banks to purchase undivided interests in the Receivables from
the Transferors shall automatically terminate. Upon the occurrence of a
Termination Event other than an event described in clause (c) or (e) of Section
7.3, the Agent, upon the written request of the Requisite Banks, shall, by
written notice to the Transferors, the Guarantor and the Banks, (a "Notice of
---------
Termination") (i) specify that additional Discount with respect for each
- -----------
outstanding Tranche shall thereafter accrue as described in this Section 7.4
and/or (ii) terminate the commitment of the Banks to purchase undivided
interests in the Receivables from the Transferors. In the event that any Total
Outstanding Investment remains unpaid on and after any Remittance Date, such
Total Outstanding Investment will thereafter accrue Discount at the Alternate
Rate until paid in full.
52
SECTION 7.5. Potential Termination Event Remedies. Upon the
------------------------------------
occurrence of a Potential Termination Event, the Agent, upon the written request
of the Requisite Banks shall, by notice to the Transferors, terminate the
commitment of the Banks to purchase undivided interests in the Receivables from
the Transferors.
53
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferors. Without limiting any
------------------------------
other rights which the Agent or the Banks may have hereunder or under applicable
Governmental Rule, each Transferor hereby agrees to indemnify the Agent and the
Banks and any permitted assigns and their respective officers, directors and
employees (collectively, "Indemnified Parties") from and against any and all
-------------------
damages, losses, claims, liabilities, costs and expenses, including reasonable
attorneys' fees (which such attorneys may be employees of the Agent or any one
of the Banks) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
-------------------
arising out of or as a result of this Agreement or the ownership, either
directly or indirectly, by the Agent or the Banks of a Transferred Interest
related to such Transferor, excluding, however, (i) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of an
Indemnified Party or (ii) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables related to such Transferor.
Without limiting the generality of the foregoing, the applicable Transferor
shall indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) reliance on any material representation or warranty made by
such Transferor or Mattel, Inc. (or any officers of such Transferor or
Mattel, Inc.) under or in connection with this Agreement, any Transfer
Notice, Weekly Report or any other information or report delivered by such
Transferor or Mattel, Inc. pursuant hereto, which shall have been false or
incorrect in any material respect when made or deemed made; or
(ii) the failure by such Transferor to comply with any
applicable Governmental Rule with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract
with any such applicable Governmental Rule; or
54
(iii) the failure to vest and maintain vested in the Agent, on
behalf of the Banks, an undivided percentage ownership interest, to the
extent of a Transferred Interest related to Receivables originated by such
Transferor, in the Receivables included in such Transferred Interest, free
and clear of any Adverse Claim; or
(iv) the failure to file by such Transferor, or any delay in
filing by such Transferor, any required financing statements, continuation
statements, or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable Governmental Rules with respect
to any Receivable included in a Transferred Interest related to Receivables
originated by such Transferor; or
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable included in a Transferred Interest related to Receivables
originated by such Transferor (including, without limitation, a defense
based on such Receivable or the related Contract not being legal, valid and
binding obligation of the Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of merchandise
related to such Receivable or the furnishing or failure to furnish such
merchandise; or
(vi) any failure of Mattel, Inc., as Servicer or otherwise, to
perform its duties or obligations in accordance with the provisions of
Article VI; or
(vii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or services
which are the subject of any Receivable.
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses. (a) If
------------------------------------------
after the date hereof, the adoption of any Governmental Rule or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future Governmental Rule or bank regulatory guideline
55
by any Governmental Person charged with the administration, interpretation or
application thereof, or the compliance with any directive of any Governmental
Person (in the case of any bank regulatory guideline, whether or not having the
force of Governmental Rule):
(i) shall subject any Indemnified Party to any tax, duty or
other charge with respect to this Agreement, any Transferred Interest, the
Receivables or payments of amounts due hereunder, or shall change the basis
of taxation of payments to any Indemnified Party of amounts payable in
respect of this Agreement, any Transferred Interest, the Receivables or
payments of amounts due hereunder or otherwise in respect of this
Agreement, any Transferred Interest or the Receivables (except for changes
in the rate of general corporate, franchise, net income or other income tax
imposed on such Indemnified Party by the jurisdiction in which such
Indemnified Party's principal executive office or any funding office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party or shall impose on any Indemnified Party
or on the United States market for certificates of deposit or the
Eurodollar interbank market any other condition affecting this Agreement,
any Transferred Interest, the Receivables or payments of amounts due
hereunder or otherwise in respect of this Agreement, any Transferred
Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and expenses,
and expenses of litigation or preparation therefor in contesting any of the
foregoing) with respect to this Agreement, any Transferred Interest, the
Receivables or payments of amounts due hereunder or otherwise in respect of
this Agreement, the Transferred Interests or the Receivables, and the
result of any of the foregoing is to increase the cost to such Indemni-
56
fied Party with respect to this Agreement, any Transferred Interest, the
Receivables, the obligations hereunder, or the funding of any purchases
hereunder, by an amount deemed by such Indemnified Party to be material,
then, within ten (10) days after demand by the Agent, the applicable
Transferor shall pay to such Indemnified Party such additional amount or
amounts as will compensate such Indemnified Party for such increased cost.
(b) If any Indemnified Party shall have determined that after the
date hereof, the adoption of any applicable Governmental Rule or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation thereof by any Governmental Person, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of Governmental Rule) of any such Governmental
Person, has or would have the effect of reducing the rate of return on capital
of such Indemnified Party (or its parent) as a consequence of such Indemnified
Party's obligations hereunder or with respect hereto to a level below that which
such Indemnified Party (or its parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Indemnified Party
to be material, then from time to time, within ten (10) days after demand by
such Indemnified Party, the applicable Transferor shall pay to such Indemnified
Party such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.
(c) Each Bank will promptly notify the Agent, and the Agent will
promptly notify the applicable Transferor of any event of which such Bank has
knowledge, occurring after the date hereof, which will entitle an Indemnified
Party to compensation pursuant to this Section. Any notice by the Agent, acting
on behalf of a Bank, claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attributing methods.
57
SECTION 8.3. Other Costs, Expenses and Related Matters. Each
-----------------------------------------
Transferor agrees, upon receipt of a written invoice, to pay or cause to be
paid, and to save the Agent harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountant's and other third parties' fees and expenses, any filing fees and
expenses incurred by officers or employees of the Agent) incurred by or on
behalf of the Agent (i) in connection with the negotiation, execution, delivery
and preparation of this Agreement and any documents or instruments delivered
pursuant hereto and the transactions contemplated hereby (including, without
limitation, the perfection or protection of the Transferred Interest related to
such Transferor) and (ii) from time to time (a) relating to any amendments,
waivers or consents under this Agreement, (b) arising in connection with the
Agent's or their agents' enforcement or preservation of rights (including,
without limitation, the perfection and protection of the Transferred Interest
related to Receivables originated by such Transferor under this Agreement), or
(c) arising in connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving this Agreement (all of such amounts,
collectively, "Transaction Costs").
-----------------
SECTION 8.4. Reconveyance Under Certain Circumstances. Each
----------------------------------------
Transferor agrees to accept the reconveyance from the Agent, on behalf of the
Banks, of the Transferred Interest related to Receivables originated by such
Transferor if the Agent notifies such Transferor of a material breach of any
representation or warranty made or deemed made pursuant to Article III of this
Agreement, and such Transferor shall fail to cure such breach within ten (10)
days (or, in the case of the representations and warranties in Sections 3.1(a)
and 3.1(e), five (5) days) of such notice. The reconveyance price (which shall
be an amount equal to the Aggregate Unpaids) shall be paid by such Transferor
directly to the Agent for the account of the Banks (and not to the Collection
Account) in immediately available funds on such tenth day (or fifth day, if
applicable).
58
ARTICLE IX
THE AGENT
SECTION 9.1. Appointment. Each Bank hereby irrevocably designates
-----------
and appoints NationsBank of Texas, N.A., as the Agent of the Banks under this
Agreement, and each of the Banks hereby irrevocably authorizes NationsBank of
Texas, N.A., as the Agent for such Bank, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers as are expressly
delegated to the Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any of the Banks, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Agent.
SECTION 9.2. Attorneys-in-fact. The Agent may execute any of its
-----------------
duties under this Agreement by or through agents 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 gross negligence or willful
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 9.3. Limitation on Liability. Neither the Agent nor any of
-----------------------
its officers, directors, employees, agents or attorneys-in-fact shall be liable
to the Banks for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Banks for any recitals,
statements, representations or warranties made by the Transferors, the Servicer
or the Guarantor, or any officer or partner thereof contained in this Agreement,
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 or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, or for any failure of the Transferors, the
Servicer or the Guarantor to perform their obligations thereunder. The Agent
shall not be under any obligation to any of the Banks to
59
ascertain or to inquire as to the observance or performance of any of the terms,
covenants or conditions of this Agreement on the part of the Transferors, the
Servicer or the Guarantor or to inspect the properties, books or records of the
Transferors, the Servicer or the Guarantor.
SECTION 9.4. Reliance. The Agent shall be entitled to rely, and
--------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy or telex
message, statement, order 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, without
limitation, counsel to the Transferors, the Servicer or the Guarantor),
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 unless it shall first receive advice or concurrence of the Requisite
Banks as provided in this Agreement (or from all of the Banks if so specified
herein) or 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
in accordance with a request of the Requisite Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks.
SECTION 9.5. Notice of Termination Event. The Agent shall not be
---------------------------
deemed to have knowledge or notice of the occurrence of any Termination Event or
Servicer Default hereunder unless the Agent has received written notice from a
Bank, either Transferor, the Servicer or the Guarantor, describing such
Termination Event or Servicer Default. In the event that the Agent receives
such a notice, the Agent shall promptly give notice thereof to the Banks and
Bank of America National Trust and Savings Association as agent under the Credit
Agreement. Except as otherwise provided herein, the Agent shall take such action
to enforce this Agreement as shall be directed by the Requisite Banks. In the
event that any remedy is exercised pursuant to Section 7.4 of this
60
Agreement, each Bank and the Agent shall pursue remedies designated by the
Requisite Banks to the same extent as though such demand was caused by the
action of all Banks, and each Bank agrees to act as expeditiously as possible so
as to maximize recovery. Each Bank agrees that no Bank shall have any right
individually to take action with respect to the Transferred Interest, it being
understood and agreed that such rights and remedies with respect to any portion
of the Transferred Interest may be exercised by the Agent as directed by the
Requisite Banks for the ratable benefit of the Banks.
SECTION 9.6. No Representations. Each Bank expressly acknowledges
------------------
that neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Transferor or the Guarantor, 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 or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
financial condition, creditworthiness, affairs, status and nature of the
Transferors and the Guarantor and made its own decision to enter into this
Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, 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 to make such investigation as its deems necessary to inform
itself as to the status and affairs, financial or otherwise, of the Transferors
and the Guarantor. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Transferors and the Guarantor which may come into the possession of the Agent or
any of its affiliates.
SECTION 9.7. Indemnification. The Banks agree to indemnify the Agent
---------------
in its capacity as such (to the extent not reimbursed by the Transferors or the
Guarantor and without limiting any obligations of the Transferors
61
or the Guarantor so to do, ratably according to their respective Percentages as
then in effect) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time (including without
limitation at any time following the payment of the Aggregate Unpaids) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other document contemplated by or referred
to herein or the transactions contemplated hereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
--------
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the termination of
this Agreement.
SECTION 9.8. Bank. The Agent and its affiliates may make loans to,
----
accept deposits from and generally engage in any kind of business with the
Obligor, the Transferors and the Guarantor as though it were not the Agent
hereunder. With respect to its loans made or renewed by it and any note issued
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" shall, unless the context otherwise indicates, include
the Agent in its individual capacity.
SECTION 9.9. Resignation. If the Agent shall resign as Agent under
-----------
this Agreement, then the Requisite Banks may appoint a successor Agent for the
Banks, which shall be a commercial bank organized under the Governmental Rules
of the United States or any state thereof, having a combined surplus and capital
of not less than $500,000,000, whereupon such successor Agent shall succeed to
the rights, powers and duties of the former Agent and the obligations of the
former Agent shall be terminated and cancelled, without any other or further act
or deed on the part of such former Agent or any of the parties to this
Agreement; provided, however, that the former Agent's resignation shall not
-------- -------
become effective until such successor Agent has been appointed and has
succeeded of record to all right, title and interest of
62
the former Agent in the Receivables; provided, further however, if the Requisite
-------- ------- -------
Banks cannot agree as to a successor Agent within ninety (90) days after such
resignation, the Agent shall appoint a successor Agent and the parties hereto
agree to execute whatever documents are necessary to effect such action under
this Agreement or any other document executed pursuant to this Agreement;
provided, however, in such event all provisions of this Agreement shall remain
- -------- -------
in full force and effect. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 9.10. Sharing of Payments, etc. The Banks agree that (i)
-------------------------
with respect to all amounts received by each of them with respect to the
Aggregate Unpaids, whether in the nature of a return of any investment or
discount, or amounts due to a particular Bank in respect of any commitment fees
or facility fees hereunder, equitable adjustment will be made so that, in
effect, all such amounts will be shared among the Banks in proportion to the
portion of the Aggregate Unpaids due each Bank, whether received by voluntary
payment, or by the exercise of the right of set-off or banker's lien or secured
claims under the Bankruptcy Code as now or hereafter amended, altered, modified
or replaced, by counterclaim or cross-action or by the enforcement of this
Agreement; (ii) if any of them shall exercise any right of counterclaim, set-
off, banker's lien or otherwise or as adequate protection of a deposit treated
as cash collateral under the Bankruptcy Code, receives payment or reduction of
any amounts due to such Bank hereunder, which is greater than the proportion
received by any other Bank in respect of the amounts due hereunder to such other
Bank, then the Bank receiving such proportionately greater payment shall (x)
notify each other Bank and the Agent of such receipt and (y) purchase
participations (which it shall be deemed to have done simultaneously upon the
receipt of such payment) in the amounts due hereunder to the other Banks so that
all such recoveries of amounts due hereunder shall be shared by the Banks in
proportion to the amounts due them hereunder; provided that the foregoing
--------
provisions shall not apply to any such amount received by a foreign branch,
subsidiary or affiliate of any Bank which is applied by that Bank to the payment
of any indebtedness of a foreign subsidiary. If all or any portion of
63
such payment is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
SECTION 9.11. Independent Agreements. The provisions contained in
----------------------
Sections 9.1 through 9.8 and 9.10 of this Article IX constitute independent
obligations and agreements of the Agent and the Banks, and the Transferors and
the Guarantor shall not be deemed parties thereto nor bound thereby. The
Transferors and the Guarantor do acknowledge the rights of the Banks and the
Agent under Section 9.8.
64
ARTICLE X
GUARANTY
SECTION 10.1. Guaranty of Obligations. For valuable consideration,
-----------------------
the 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 payment
and performance obligations of the Transferors hereunder owing to the Agent and
the Banks. The phrase "payment and performance obligations of the Transferors"
(hereinafter collectively referred to as the "Obligations") is used herein in
its most comprehensive sense and includes any and all advances, debts,
obligations, and liabilities of the Transferors, now, or hereafter made,
incurred, or created, whether voluntarily or involuntarily, and however arising,
including, without limitation, any and all attorneys' fees, costs, premiums,
charges, or interest owed by the Transferors to the Agent and/or the Banks,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, whether the Transferors 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.
SECTION 10.2. Guaranty Continuing. This guaranty is a continuing
-------------------
guaranty which relates to any Obligations, including those which arise under
successive transactions which shall either cause the Transferors to incur new
Obligations, continue the Obligations from time to time, or renew them after
they have been satisfied. The Guarantor agrees that nothing shall discharge or
satisfy its obligations created hereunder except for the full payment of the
Obligations with interest as applicable. Any payment by the Guarantor shall not
reduce its maximum obligation hereunder.
SECTION 10.3. Guarantor Directly Liable. The Guarantor agrees that
-------------------------
it is directly and primarily liable to the Agent for the benefit of the Banks,
that its obligations hereunder are independent of the Obligations of the
Transferors, 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
65
a Transferor or whether a Transferor is joined in any such action or actions.
The Guarantor agrees that any releases which may be given by the Agent and the
Banks to a Transferor or any other guarantor shall not release it from this
Guaranty.
SECTION 10.4. No Impairment. The obligations of the Guarantor under
-------------
this Guaranty shall not be affected, modified or impaired upon the occurrence
from time to time of any of the following, whether or not with notice to or the
consent of the Guarantor:
(a) the compromise, settlement, change, modification, amendment
(whether material or otherwise) or partial termination of any or all of the
Obligations;
(b) the failure to give notice to the Guarantor of the occurrence of
any Termination Event or Servicer Default under the terms and provisions of this
Agreement;
(c) the waiver of the payment, performance or observance of any
of the Obligations;
(d) the taking or omitting to take any actions referred to in
this Agreement or of any action under this guaranty;
(e) any failure, omission or delay on the part of the Agent and/or
the Banks to enforce, assert or exercise any right, power or remedy conferred in
this Agreement or any other indulgence or similar act on the part of the Agent
and/or the Banks 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 either Transferor or
any of the assets of any of them, or any allegation of invalidity or contest of
the validity of this Guaranty in any such proceeding; or
66
(g) to the extent permitted by law, the release or discharge of any
other guarantors of the Obligations from the performance or observance of any
obligation, covenant or agreement contained in any guaranties of the Obligations
by operation of law.
To the extent any of the foregoing refers to any actions which the
Agent or the Banks may take, the Guarantor hereby agrees that the Agent and/or
the Banks may take such actions in such manner, upon such terms, and at such
times as the Agent or the Banks, 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.
SECTION 10.5. Waiver. The Guarantor hereby waives:
------
(a) any and all rights to require the Agent or the Banks to prosecute
or seek to enforce any remedies against the Transferors or any other party
liable to the Agent or the Banks on account of the Obligations;
(b) any right to assert against the Agent or the Banks any defense
(legal or equitable), set-off, counterclaim, or claim which the Guarantor may
now or at any time hereafter have against the Transferors or any other party
liable to the Agent or the Banks in any way or manner under this 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 this Agreement 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 Banks 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 Transferors for reimbursement, or any
67
other rights of the Guarantor to proceed against the Transferors, against any
other guarantor, or against any other security, with the Guarantor understanding
that the exercise by the Agent and/or the Banks of certain rights and remedies
may offset or eliminate the Guarantor's right of subrogation against the
Transferors, 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 (i) California Civil Code
Sections 2809, 2810, 2819, 2825, 2839, 2845 through 2850, 2899 and 3433 and (ii)
California Code of Civil Procedure Sections 580(a), 580(b), 580(d) and 726.
SECTION 10.6. Subrogation. The Guarantor hereby agrees that unless
-----------
and until this Agreement has terminated and all Obligations have been paid to
the Agent and the Banks in full, it shall not have any rights of subrogation,
reimbursement or contribution as against the Transferors or any other guarantor,
if any, and shall not seek to assert or enforce the same. Guarantor understands
that the exercise by Agent of certain rights and remedies contained in this
Agreement may affect or eliminate Guarantor's right of subrogation if any,
against the Transferors and that Guarantor may therefore incur a partially or
totally non-reimbursable liability hereunder; nevertheless, Guarantor hereby
authorizes and empowers the Agent and the Banks 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.
SECTION 10.7. Information. The Guarantor is presently informed of
-----------
the financial condition of the Transferors and of all other circumstances which
a dili-
68
gent 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 Transferors 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 Banks 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.
SECTION 10.8. Evidence of Obligations. 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.
69
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Term of Agreement. This Agreement shall terminate
-----------------
following the later of (i) the Termination Date or (ii) the date on which the
Total Outstanding Investment has been reduced to zero, all accrued Discount has
been paid in full and all other Aggregate Unpaids have been paid in full;
provided, however, that (i) the rights and remedies of the Banks with respect to
- -------- -------
any representation and warranty made or deemed to be made by either Transferor
pursuant to this Agreement, (ii) the indemnification and payment provisions of
Article VIII and (iii) the agreement set forth in Section 9.10, shall be
continuing and shall survive any termination of this Agreement.
SECTION 11.2. Waivers; Amendments. No failure or delay on the part
-------------------
of the Agent or the Banks in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. No notice to or
demand on the Transferors, the Servicer or the Guarantor in any case shall
entitle the Transferors, the Servicer or the Guarantor, as the case may be, to
any other or further notice or demand in similar or other circumstances. The
rights and remedies herein provided shall be cumulative and nonexclusive of any
rights or remedies provided by Governmental Rule. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by the Transferors, the Servicer, the Guarantor, the Agent and the
Requisite Banks; provided, however, that no such waiver, amendment or consent
-------- -------
shall, unless in writing and signed by all of the Banks, the Transferors, the
Servicer, the Guarantor and acknowledged by the Agent, (a) increase or extend
any Bank's Bank Commitment or subject any Bank to additional obligations; (b)
postpone or delay any date fixed for any payment of fees or any other amounts
due to the Banks (or any of them) hereunder; (c) reduce any fees or other
amounts payable to the Banks (or any Bank) hereunder; (d) change any Bank's
Percentage; (e) amend this Section 11.2 or Section 9.10; or (f) release the
Guarantor from any obligation undertaken by it pursuant to this Agreement.
70
SECTION 11.3. Notices. Except as provided below, all communications
-------
and notices provided for hereunder shall be in writing and shall be sent by
telecopy and shall be given to the other party at its telecopy number set forth
on the signature page hereof or at such other telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice or
other communication shall be effective when such telecopy is transmitted to the
telecopy number specified below and when confirmation of delivery is received:
If to the Transferors:
Mattel Sales Corp.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
Fisher-Price, Inc.
c/o Mattel Sales Corp.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
If to the Guarantor or Servicer:
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245
Attention: William Stavro
Telephone: (310) 252-3202
Telecopy: (310) 252-3215
If to the Agent:
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Ms. Tammy Grier
Telephone: (214) 508-0987
Telecopy: (214) 508-2515
71
If to the Banks, to their addresses set forth on the signature pages
hereto.
SECTION 11.4. Governing Law; Integration. (a) This Agreement shall
--------------------------
be governed by and construed in accordance with the laws of the State of
California, without regard to the conflicts of Governmental Rules provisions
thereof. This Agreement contains the final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire Agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings.
(b) Any legal action or proceeding with respect to this Agreement 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 Guarantor, the Transferors and the Banks consents, for
itself and in respect of its property, to the non-exclusive jurisdiction of
those courts. Each of the Guarantor, the Transferors 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 Guarantor, the Transferors 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.
SECTION 11.5. Severability; Counterparts. This Agreement may be
--------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
72
SECTION 11.6. Successors and Assigns. This Agreement shall be
----------------------
binding on the parties hereto and their respective successors; provided,
--------
however, that subject to Section 11.9, no party to this Agreement may assign any
- -------
of its rights or delegate any of its duties hereunder.
SECTION 11.7. Confidentiality. 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 Guarantor or any Subsidiary of the
Guarantor, or by the Agent on such Guarantor's or Subsidiary's behalf, in
connection with this Agreement or any documents related hereto, 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;
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 (ii) was or
becomes available on a non-confidential basis from a source other than the
Guarantor, provided that such source is not bound by a confidentiality agreement
with the Guarantor 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 Guarantor in
advance of providing such information so that the Guarantor 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 Guarantor authorizes each Bank to disclose to
any Participant or Assignee and to any prospective Participant or Assignee, such
financial and other information in such Bank's possession concerning the
Guarantor or its Subsidiaries which has been delivered to the Agent or the Banks
pursuant to this Agreement or which has been delivered to the Agent or the Banks
by the Guarantor in connection with the Banks' credit evaluation of the
Guarantor prior to entering into this Agreement; provided that, unless otherwise
--------
agreed by
73
the Guarantor, such Participant or Assignee agrees in writing to such
Bank to keep such information confidential to the same extent required of the
Banks hereunder.
SECTION 11.8. Characterization of the Transactions Contemplated by
----------------------------------------------------
the Agreement. It is the intention of the parties that the transactions
- -------------
contemplated hereby constitute the sale of the Transferred Interest, conveying
good title thereto free and clear of any Adverse Claims to the Agent, on behalf
of the Banks, and that the Transferred Interest not be part of either
Transferor's estate in the event of an insolvency. If, notwithstanding the
foregoing, the transactions contemplated hereby should be deemed a financing,
the parties intend that each Transferor shall be deemed to have granted to the
Agent on behalf of the Banks, and each Transferor hereby grants to the Agent, on
behalf of the Banks, a first priority perfected security interest in all of such
Transferor's right, title and interest in, to and under the Receivables, and
that this Agreement shall constitute a security agreement under applicable law.
SECTION 11.9. Assignments; Participations. (a) Any Bank may, with
---------------------------
the advance written consent of the Transferors at all times other than during
the existence of a Termination Event and the Agent, which consent of the
Transferors shall not be unreasonably withheld, at any time assign and delegate
to one or more Eligible Assignees (provided that no consent of the Transferors
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 Transferred Interest 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 Credit Agreement; provided, however, that the Transferors and the Agent
may continue to 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 Transferors and the Agent
by such Bank and the Assignee; (ii) such Bank and its Assignee shall have
delivered to the Transferors and the Agent an executed assignment together with
any note or notes subject to such assignment and (iii) the
74
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
assignment 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 assignment,
shall have the rights and obligations of a Bank under this Agreement, and (ii)
the assignor Bank shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such assignment, relinquish its rights and
be released from its obligations hereunder.
(c) Upon advance written notice to the Transferors, each Bank shall
have the right at any time to sell or otherwise transfer participations in all
or any part of their pro rata portion of the Transferred Interest, to one or
--- ----
more Affiliates of such Bank or to one or more commercial banks, merchant banks,
savings and loan associations or any other institution (a "Participant");
provided that such Bank shall concurrently with any sale of a participation
- --------
herein sell a ratable participation under the Credit Agreement and thereafter
cause any such participation herein to remain ratable with such participation
under the Credit Agreement. The Transferor hereby acknowledges and agrees that
any such disposition will give rise to a direct obligation of the Transferor to
the Participant and the Participant shall be entitled to the benefit of Section
9.10 as if it were a "Bank"; provided further, that in the case of a
-------- -------
participation, (i) the Bank's obligations under this Agreement shall remain
unchanged, (ii) the Bank shall remain solely responsible for the performance of
such obligations, (iii) the Transferors and the Agent shall continue to deal
solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement, and (iv) 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.
In the case of any such participa-tion, the Participant shall not have any
rights under this Agreement, or any
75
documents related hereto, and all amounts payable by the Transferors 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 a
Termination Event, 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.
76
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
MATTEL SALES CORP.,
as Transferor
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
FISHER-PRICE, INC.,
as Transferor
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
MATTEL, INC., as Guarantor
and Servicer
By: /s/ William Stavro
_______________________
Name: William Stavro
Title: Vice President and Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ J. Blake Seaton
_______________________
Name: J. Blake Seaton
Title: Vice President
77
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
11.538461538 28,846,153.85 NATIONSBANK OF TEXAS,
N.A.
By: /s/ J. Blake Seaton
________________________
Name: J. Blake Seaton
Title: Vice President
Notice Address: 444 S. Flower Street, Suite 1500
Los Angeles, California 90071
Attn: J. Blake Seaton
78
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
15.384615387 38,461,538.44 BANK OF AMERICA
NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Robert W. Troutman
__________________________
Name: Robert W. Troutman
Title: Managing Director
Notice Address: 555 Flower Street, 11th Floor
Los Angeles, California 90071
Attn: Robert W. Troutman
79
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,023.08 PNC BANK, NATIONAL
ASSOCIATION
By: /s/ Ted A. Dunn
__________________________
Name: Ted A. Dunn
Title: Assistant Vice President
Notice Address: 55 South Lake Avenue, Suite 650
Pasadena, California 91101
Attn: David Corcoran
80
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
11.538461538 28,846,153.85 CHEMICAL BANK
By: /s/ David J. Corcoran
___________________________
Name: David J. Corcoran
Title: Vice President
Notice Address: Corporate Banking Group
270 Park Avenue, 10th Floor
New York, New York 10017
Attn: David Corcoran
81
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,923.08 THE FIRST NATIONAL
BANK OF BOSTON
By: /s/ Patti A. Stoil
__________________________
Name: Patti A. Stoil
Title: Director
Notice Address: 100 Federal Street, 6th Floor
Boston, Massachusetts 02110
Attn: Debra Zurka
82
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
9.230769231 23,076,023.08 TORONTO-DOMINION
(TEXAS), INC.
By: /s/ Diane Bailey
__________________________
Name: Diane Bailey
Title: Vice President
Notice Address: 909 Fannin
Houston, Texas 77010
Attn: Lisa Allison
83
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
3.076923077 7,692,307.69 CITICORP USA, INC.
By: /s/ Barbara A. Cohen
________________________
Name: Barbara A. Cohen
Title: Vice President
Notice Addresses: c/o Citicorp North America, Inc.
725 South Figueroa Street
5th Floor
Los Angeles, California 90017
Attn: Deborah Ironson
c/o Citibank, N.A.
One Court Square, 7th Floor
Long Island City, New York 11120
Attn: Mark Wrigley
84
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 ABN AMRO BANK N.V.
By: /s/ Matthew S. Thomson
__________________________
Name: Matthew S. Thomson
Title: Group Vice President
By: /s/ Patrick A. Russo
__________________________
Name: Patrick A. Russo
Title: Assistant Vice President
Notice Address: Los Angeles International Branch
300 South Grand Avenue, Suite 1115
Los Angeles, California 90071
Attn: Matthew S. Thomson
85
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 DRESDNER BANK AG
Los Angeles Agency
By: /s/ Jon M. Bland
__________________________
Name: Jon M. Bland
Title: Senior Vice President
By: /s/ Dennis G. Blank
__________________________
Name: Dennis G. Blank
Title: Vice President
Notice Address: Los Angeles Agency
725 South Figueroa Street, Suite 3950
Los Angeles, California 90017
Attn: Dennis Blank
86
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 MANUFACTURERS &
TRADERS TRUST CO.
By: /s/ Geoffrey R. Fenn
__________________________
Name: Geoffrey R. Fenn
Title: Vice President
Notice Address: 1 Fountain Plaza
Buffalo, New York 14203
Attn: Geoffrey R. Fenn
87
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 ISTITUTO BANCARIO SAN
PAOLO DI TORINO SPA
By: /s/ Donald W. Brown
__________________________
Name: Donald W. Brown
Title: Branch Manager
By: /s/ Glen Binder
__________________________
Name: Glen Binder
Title: Vice President
Notice Address: 444 South Flower Street
Suite 4550
Los Angeles, California 90071
Attn: Glen Binder
88
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,461.54 THE BANK OF
CALIFORNIA, N.A.
By: /s/ Thomas H. Teagart
__________________________
Name: Thomas H. Teagart
Title: Vice President
Notice Address: 550 South Hope Street
Fifth Floor
Los Angeles, California 90071
Attn: Thomas Tegart
89
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
4.615384615 11,538,642.54 BANQUE NATIONALE
DE PARIS
By: /s/ Clive Bettles
__________________________
Name: Clive Bettles
Title: Vice President
By: /s/ Deborah Gohh
__________________________
Name: Deborah Gohh
Title: Vice President
Notice Address: 725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attn: Clive Bettles
90
Dollar Amount
of Percentage
of Original
Facility
Percentage (%) Limit ($)
- -------------- --------------
3.076923077 7,692,307.69 MARINE MIDLAND BANK
By: /s/ William M. Holland
_________________________
Name: William M. Holland
Title: Vice President
Notice Address: 140 Broadway, 4th Floor
New York, New York 10005
Attn: William M. Holland
91
EXHIBIT A
[Toys "R" Us, Inc. Letterhead]
[Date]
Mr. William Stavro
Vice President and Treasurer
Mattel, Inc.
333 Continental Boulevard
El Segundo, CA 90245-5012
Dear Bill:
With reference to the Second Amended and Restated Transfer and Administration
Agreement, dated as of March 10, 1995, among Mattel Sales Corp., Fisher-Price,
Inc., NationsBank of Texas, N.A., and a syndicate of banks, it is our
understanding that Mattel and Fisher-Price would like to sell from time to time
undivided interests in their domestic accounts receivable from TOYS "R" US and
that to do so, it is necessary that TOYS "R" US commit for the benefit of the
banks to certain payment terms which will apply regardless of any contrary
language in any purchase order or other document.
TOYS "R" US hereby consents to such sales of accounts receivable and agrees,
unconditionally, to pay by wire transfer of immediately available funds on or
before [current Remittance Date] to the account designated by you an amount
equal to not less than eighty percent (80%) of the total amount of all invoices,
supported by bills of lading, issued by Mattel and Fisher-Price to TOYS "R" US
in the United States that are outstanding at such date. Modification or
revocation of the terms of this letter shall be effective only if in writing and
signed by you or the Chief Financial Officer of Mattel and by one of the
following duly authorized officers of TOYS "R" US: Louis Lipschitz, Jon
Friedman and Jon Kimmins.
[It is our intent that the remaining twenty percent (20%) of invoiced amounts
will be settled in accordance with normal settlement procedures between Mattel,
Fisher-Price and TOYS "R" US.] TOYS "R" US agrees that any invoiced amounts
remaining after settlement in accordance with
A-1
normal settlement procedures will be paid by TOYS "R" US to the account
referenced in the prior paragraph.
Very truly yours,
Jon Kimmins
Vice President and Treasurer
Agreed to and accepted by:
Mattel, Inc.
By: ____________________________
William Stavro
Vice President and Treasurer
A-2
EXHIBIT B
FORM OF WEEKLY SERVICER'S CERTIFICATE
For the calendar week ended __________, 19__
The undersigned, a duly authorized representative of Mattel, Inc. as
Servicer, pursuant to the Second Amended and Restated Transfer and
Administration Agreement, dated as of March 10, 1995 (as amended and modified
from time to time, the "TAA"), among Mattel Sales Corp. and Fisher-Price, Inc.,
as Transferors, Mattel, Inc., as Guarantor and Servicer, NationsBank of Texas,
N.A., as Agent, and the Banks, does hereby certify as follows:
1. Eligible Receivables as of the last day
of the previous week......................................... $______
2. plus Eligible Receivables generated during
----
the week..................................................... $______
3. less Close-Out Collections received during
----
the week..................................................... $______
4. less Deemed Collections during the week...................... $______
----
5. Eligible Receivables as of the last day
of the week.................................................. $______
6. Total Outstanding Investment as of the
last day of the week......................................... $______
7. Discount Reserve as of the last day of
the week..................................................... $______
8. Percentage Factor as of the last day of
the week ([line 6 + line 7] / line 5)........................ ______%
9. Average Facility Limit during the week....................... $______
10. [Eligible Receivables as of the last day of the week are equal to at least
125% of the sum of the Total Outstanding Investment and the Discount
Reserve] or [The Transferor is depositing to the credit of the Collection
Account the outstanding balance of certain Receivables as
B-1
required by Section 2.6(b) of the TAA, and such amount is equal to $____].
11. As of the date hereof, no Termination Event or Potential Termination Event
has occurred under the TAA.
12. As of the date hereof, no default in the performance of the obligations of
the Servicer under the TAA has occurred or is continuing except as follows:
[if applicable, insert "none"]
13. As of the date hereof, no lien has been placed on the Receivables other than
pursuant to the TAA.
Capitalized terms used herein have their respective meanings as set forth in the
TAA.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this certificate this ___ day of _______, 19__.
MATTEL, INC.
as Servicer
By:
-----------------------
Name:
Title:
B-2
EXHIBIT C
FORM OF TRANSFER NOTICE
MATTEL SALES CORP. and FISHER-PRICE, INC. (together, the
"Transferors") hereby conveys, transfers and assigns to the Agent, on behalf of
the Banks, pursuant to the terms and conditions of the Second Amended and
Restated Transfer and Administration Agreement, dated as of March 10, 1995 (the
"TAA"), among Mattel Sales Corp., Fisher-Price, Inc., Mattel, Inc., as Guarantor
and Servicer, NationsBank of Texas, N.A., as Agent, and the Banks, an undivided
percentage ownership interest in the Receivables, together with Collections with
respect thereto. The terms of such Transfer shall be as follows:
Transfer Date: __________
Transfer Price: $_________ (line 5 + line 6)
Receivables related to Mattel Sales Corp.......................... $______
Receivables related to Fisher-Price, Inc.......................... $______
THE TRANSFEROR DOES HEREBY CERTIFY AS FOLLOWS:
1. Eligible Receivables as of the last day of the prior week..... $______
2. Total Outstanding Investment as of the last day of the
prior week.................................................... $______
3. Discount Reserve as of the last day of the prior week......... $______
4. Funds on deposit in the Collection Account as of the date
hereof........................................................ $______
5. Close-Out Collections to be released from the Collection
Account on the Transfer Date to fund a portion of the
Transfer Price................................................ $______
6. Tranche amount (Transfer Price less line 5)................... $______
7. Tranche Period related to this Tranche........................ __ days
C-1
8. Estimated LIBOR related to this Tranche....................... ______%
9. Estimated Participation Rate related to this Tranche
(line 8 + applicable spread).................................. ______%
10. Discount related to this Tranche
(line 6 x line 9 x line 7 / 360).............................. $_______
11. Total Outstanding Investment after giving effect to the
requested Tranche amount (line 2 + line 6).................... $_______
12. Discount Reserve after giving effect to the requested
Transfer (line 3 + line 10).................................. $_______
13. The Percentage Factor after giving effect to the requested
Tranche Amount and Discount will be (should not exceed 80%)
([line 11 + line 12] / line 1)............................... ______%
This Transfer Notice is irrevocable and may be accepted by the Agent, on behalf
of the Banks, at any time prior to 1:00 PM (Dallas, Texas time) on the third
Business Day immediately preceding the Transfer Date specified above. Upon such
acceptance of the terms of this Transfer Notice, the Transferors shall have
conveyed, transferred and assigned an undivided percentage ownership interest in
the Receivables, together with Collections with respect thereto to the Agent on
behalf of the Banks. The Transferors and the Banks intend that this transfer of
Receivables constitutes a sale of accounts under Section 9-102(1)(b) of the
Uniform Commercial Code as in effect in all applicable jurisdictions ("UCC").
In the event that the conveyance hereunder is characterized as a financing, this
notice shall be a security agreement under the UCC and the Transferors hereby
grant a security interest (as defined in the UCC) in the Receivables related to
each of them and the proceeds thereof to secure the payment to the Banks of the
Aggregate Unpaids. The Banks' rights with respect to such undivided ownership
interest shall be as set forth in the TAA. Capitalized terms used herein have
their respective meanings as set forth in the TAA.
C-2
IN WITNESS WHEREOF, the undersigned has executed this Transfer
Notice on this ___ day of __________, 199_.
MATTEL SALES CORP.,
as Transferor
By: ______________________
Name:
Title:
FISHER-PRICE, INC.,
as Transferor
By: ______________________
Name:
Title:
Agreed and accepted:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: ___________________________
Name:
Title:
C-3
EXHIBIT D
[Reserved]
D-1
EXHIBIT E
[List of Actions, Suits and Proceedings
against the Transferors]
Mattel Sales Corp.
- -----------------
NONE.
Fisher-Price, Inc.
- -----------------
NONE.
E-1
EXHIBIT F
Location of Records
-------------------
Mattel Sales Corp.
- -----------------
Corporate Headquarters
333 Continental Boulevard
El Segundo, CA 90245
Mattel Computer Center
2424 West Desert Cove
Phoenix, AZ 85029
Fisher-Price, Inc.
- -----------------
636 Girard Avenue
East Aurora, New York 14052
F-1
EXHIBIT G
List of Tradenames
------------------
Mattel Sales Corp.
- -----------------
Mattel Sales Corp.
Mattel Sales
Mattel
Fisher-Price, Inc.
- -----------------
Fisher-Price
FPI, Inc.
G-1
EXHIBIT H
[List of Actions, Suits and Proceedings
against the Guarantor]
None.
H-1
EXHIBIT I
[Letterhead of Counsel to the Transferors]
March 10, 1995
NationsBank of Texas, N.A.,
as Agent
[Address)
[Bank]
[Bank]
Re: Second Amended and Restated Transfer and
Administration Agreement, dated as of
March 10, 1995, among Mattel Sales Corp.,
Fisher-Price, Inc., Mattel, Inc., NationsBank
of Texas, N.A. and the banks named therein
---------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1(g) of the Second
Amended and Restated Transfer and Administration Agreement dated as of March 10,
1995 (the "Agreement") among Mattel Sales Corp., a California corporation, and
Fisher-Price, Inc., a Delaware corporation (together, the "Transferors"),
Mattel, Inc., a Delaware corporation, as guarantor (the "Guarantor") and
NationsBank of Texas, N.A., as agent (the "Agent") on behalf of the banks named
therein (collectively, the "Banks"). Terms defined in this Agreement and not
otherwise defined herein are used in this opinion with the meanings so defined.
I am Senior Vice President -- General Counsel for Mattel, Inc. and have
acted as counsel to the Transferors in connection with the preparation of the
Agreement and the transactions and other documents contemplated thereby.
I have examined, on the date hereof, the Agreement and all exhibits thereto
(including the form of Transfer Notice
I-1
attached thereto as Exhibit C), the form of initial Transfer Notice, [to be]
dated ___________ 1995, relating to the initial transfers of Receivables (each,
an "Initial Transfer Notice"), certificates of public officials and of officers
of the Transferors and certified copies of the Transferors' certificate of
incorporation, by-laws, the Boards of Directors' resolutions authorizing the
Transferors' participation in the transactions contemplated by the Agreement,
copies of each of the above having been delivered to you, copies of the
financing statements on Form UCC-l filed in the filing offices of the Secretary
of State of the State of California [and _________] [this is intended to refer
to the local filing office, if applicable] (together, the "Filing Offices")
executed by each Transferor, as debtor, in favor of the Agent on behalf of the
Banks, substantially in the form attached hereto as Exhibit A (the "Financing
Statements") [and copies of the financing statements on Form UCC-3 filed in the
Filing Offices executed by ______ and ______, substantially in the form attached
hereto as Exhibit B (the "Releases")]. I have also examined the closing
documents delivered pursuant to the Agreement and copies of all such documents
and records, and have made such investigations of law, as I have deemed
necessary and relevant as a basis for our opinion. With respect to the accuracy
of material factual matters which were not independently established, I have
relied on certificates and statements of officers of the Transferors.
Certain of the opinions rendered herein are qualified by the discussion
following the numbered paragraphs of this opinion.
On the basis of the foregoing, and in reliance thereon, I am of the opinion
that:
1. Each Transferor is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, has the
power and authority to own its properties and to carry on its business as now
being conducted, and had at all relevant times, and now has, all necessary
power, authority, and legal right to acquire and own the Receivables, and is
duly qualified, in good standing and is authorized to do business in each
foreign jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the aggregate,
has not had and will not have a materially adverse effect upon the business
properties of either Transferor or its ability to perform its obligations under
the Agreement.
I-2
2. Each Transferor has the corporate power and has taken all necessary
corporate action to execute, deliver and perform the Agreement, the Initial
Transfer Notice and each other Transfer Notice delivered pursuant to the
Agreement, each in accordance with its respective terms, and to consummate the
transactions contemplated thereby. The Agreement and the Initial Transfer
Notice have been duly executed and delivered by the Transferors and constitute,
and each Transfer Notice subsequently delivered by either Transferor pursuant to
the Agreement, when executed and delivered by the related Transferor, will
constitute the legal, valid and binding obligations of such Transferor,
enforceable against such Transferor in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
3. The execution, delivery and performance in accordance with their terms
by the Transferors of the Agreement, the Initial Transfer Notice and each other
Transfer Notice delivered pursuant to the Agreement, and the consummation of the
transactions contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any stockholder of the
Transferors that has not been obtained, (ii) violate or conflict with, result in
a breach of, or constitute a default under (a) the certificates of incorporation
or the by-laws of the Transferors, (b) any other agreement to which either
Transferor is a party or by which such Transferor or any of its properties may
be bound, or (c) any applicable law, or any order, rule, or regulation
applicable to the Transferors of any court or of any federal or state regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferors or any of their respective properties, or
(iii) result or require in the creation or imposition of any lien upon any of
the assets, property or revenue of the Transferors other than as contemplated by
the Agreement.
4. [Except as set forth on Exhibit E to the Agreement,] [and] [T][t]o the
best of my knowledge, there are not, in any court or before any arbitrator of
any kind or before or by any governmental or non-governmental body, any actions,
suits, proceedings or investigations, pending or threatened, (i) against the
Transferors or the business or any property of the Transferors except actions,
suits or proceedings that, if adversely determined, would not, singly or in the
aggregate, have a materially adverse effect on the Transferors, or on the
ability of either Transferor to perform its respective obligations under the
I-3
Agreement, the Initial Transfer Notice and each other Transfer Notice
delivered pursuant to the Agreement or (ii) relating to the Agreement, the
Initial Transfer Notice or each other Transfer Notice delivered pursuant to the
Agreement.
5. The Agreement and each Initial Transfer Notice create a valid "security
interest" (as such term is defined in Section 1-201(37) of the Uniform
Commercial Code as in effect in the State of California (the "California UCC"),
under Article 9 of the California UCC in favor of the Agent, on behalf of the
Banks, in the Receivables in existence and thereafter created and the proceeds
thereof, subject to the provisions of Section 9-306 of the California UCC. The
Financing Statements have been filed in the filing office located in the State
of California and _____, which are the only offices in which filings are
required under the California UCC to perfect the Agent's security interest in
such Receivables and the proceeds thereof, and accordingly the Agent's security
interest in the Receivables in existence and thereafter created and the proceeds
thereof will, on the date[s] of the Initial Transfer Notice, be perfected under
Article 9 of the California UCC. All filing fees and all taxes required to be
paid as a condition to or upon the filing of the Financing Statements in the
State of California and ______ have been paid in full. As of the date hereof,
there were no (i) UCC financing statements naming either Transferor as debtor,
seller or assignor and covering any Receivables or any interest therein or (ii)
notices of the filing of any federal tax lien (filed pursuant to Section 6323 of
the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation
(filed pursuant to Section 4068 of the Employment Retirement Insurance Act)
covering any Receivable or any interest therein. The filing of the Financing
Statements in the Filing Offices will create a first priority security interest
in each Receivable and the proceeds thereof. Such perfection and priority will
continue, provided that appropriate continuation statements are timely filed
where and when required under the California UCC.
6. Neither Transferor is 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.
With respect to my opinion in paragraph 5 (i) I call your attention to the
necessity of filing continuation statements from time to time under the
applicable provisions of the California UCC and to the fact that additional
filings under the California UCC may be required, among other things, upon the
change of location of the debtor as provided in Section 9-l03(3)(e) of
I-4
the California UCC or the change of the name of the debtor as provided in
Section 9-402(7) thereof; and (ii) I call your attention to the fact that under
certain circumstances described in Section 9-306(4) of the California UCC, the
right of a secured party to enforce a perfected security interest in the cash
proceeds of collateral may be limited.
To the extent that the obligations of the Transferors may be dependent upon
such matters, I assume for purposes of this opinion that the parties to the
Agreement (other than the Transferors and the Guarantor) are duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation; that the Agreement has been duly authorized,
executed and delivered by the parties to the Agreement (other than the
Transferors and the Guarantor), and constitutes their legally valid and binding
obligations, enforceable against them in accordance with their respective terms;
and that the parties to the Agreement (other than the Transferors and the
Guarantor) have the requisite corporate or other organizational power and
authority to perform their respective obligations under the Agreement. I am not
expressing any opinion as to the effect of compliance of the parties to the
Agreement (other than the Transferor and the Guarantor) with any state or
federal laws or regulations applicable to the transactions.
I am admitted to the bar of the State of California, and I express no
opinion herein other than with respect to the laws of the State of California
and the Federal laws of the United States of America. This opinion is rendered
only to you and is solely for your benefit in connection with the above
transactions. This opinion may not be relied upon by you for any 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, and as
otherwise compelled by legal process.
Very truly yours,
Robert J. Normile
I-5
EXHIBIT J
[Letterhead of Counsel to the Guarantor/Servicer]
March 10, 1995
NationsBank of Texas, N.A.,
as Agent
[Address]
[Bank]
[Bank]
Re: Second Amended and Restated Transfer and Administration
Agreement, dated as of March 10, 1995, among Mattel Sales Corp.,
Fisher-Price, Inc., Mattel, Inc., NationsBank of Texas, N.A. and
------------------
the banks named therein
--------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1(m) of the
Second Amended and Restated Transfer and Administration Agreement dated as of
March 10, 1995 (the "Agreement") among Mattel Sales Corp., a California
corporation, and Fisher-Price, Inc., a Delaware corporation (together, the
"Transferors"), Mattel, Inc., a Delaware corporation, as guarantor (the
"Guarantor") and NationsBank of Texas, N.A., as agent (the "Agent") on behalf of
the banks named therein (collectively, the "Banks"). Terms defined in this
Agreement and not otherwise defined herein are used in this opinion with the
meanings so defined.
I am Senior Vice President -- General Counsel for the Guarantor and
have acted as counsel to the Guarantor in connection with the preparation of the
Agreement and the transactions and other documents contemplated thereby.
J-1
I have examined, on the date hereof, the Agreement and all exhibits
thereto, certificates of public officials and of officers of the Guarantor and
certified copies of the Guarantor's certificate of incorporation, by-laws, the
Board of Directors' resolutions authorizing the Guarantor's participation in the
transactions contemplated by the Agreement, copies of each of the above having
been delivered to you. I have also examined the closing documents delivered
pursuant to the Agreement and copies of all such documents and records, and have
made such investigations of law, as we have deemed necessary and relevant as a
basis for our opinion. With respect to the accuracy of material factual matters
which were not independently established, I have relied on certificates and
statements of officers of the Guarantor.
Certain of the opinions rendered herein are qualified by the
discussion following the numbered paragraphs of this opinion.
On the basis of the foregoing, and in reliance thereon, I am of the
opinion that:
1. The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the power and
authority to own its properties and to carry on its business as now being
conducted, and had at all relevant times, and now has, all necessary power,
authority, and legal right to perform its obligations under the Agreement, and
is duly qualified, in good standing and is authorized to do business in each
foreign jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the aggregate,
has not had and will not have a materially adverse effect upon the business
properties of the Guarantor or its ability to perform its obligations under the
Agreement.
2. The Guarantor has the corporate power and has taken all necessary
corporate action to execute, deliver and perform the Agreement in accordance
with its terms, and to consummate the transactions contemplated thereby. The
Agreement has been duly executed and delivered by the Guarantor and constitutes
the legal, valid and binding obligation of the Guarantor, enforceable against
the Guarantor in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
J-2
3. The execution, delivery and performance in accordance with its
terms by the Guarantor of the Agreement, and the consummation of the
transactions contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any stockholder of the
Guarantor that has not been obtained, (ii) violate or conflict with, result in a
breach of, or constitute a default under (a) the certificate of incorporation or
the by-laws of the Guarantor, (b) any other agreement to which the Guarantor is
a party or by which the Guarantor or any of its properties may be bound, or (c)
any applicable law, or any order, rule, or regulation applicable to the
Guarantor of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Guarantor or any of its properties, or (iii) result or require in the
creation or imposition of any lien upon any of the assets, property or revenue
of the Guarantor other than as contemplated by the Agreement.
4. [Except as set forth on Exhibit H to the Agreement,] [and][T][t]o
the best of my knowledge, there are not, in any court or before any arbitrator
of any kind or before or by any governmental or non-governmental body, any
actions, suits, proceedings or investigations, pending or threatened, (i)
against the Guarantor or the business or any property of the Guarantor except
actions, suits or proceedings that, if adversely determined, would not, singly
or in the aggregate, have a materially adverse effect on the Guarantor, or on
the ability of the Guarantor to perform its obligations under the Agreement or
(ii) relating to the Agreement.
5. The Guarantor 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.
To the extent that the obligations of the Guarantor may be dependent
upon such matters, I assume for purposes of this opinion that the parties to the
Agreement (other than the Guarantor and the Transferors) are duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation; that the Agreement has been duly authorized,
executed and delivered by the parties to the Agreement (other than the Guarantor
and the Transferors), and constitutes their legally valid and binding
obligations, enforceable against them in accordance with their respective terms;
and that the parties to the Agreement (other than the Guarantor and the
Transferors) have the requisite corporate or other organizational power and
authority to perform their respective obligations under
J-3
the Agreement. I am not expressing any opinion as to the effect of compliance
of the parties to the Agreement (other than the Guarantor and the Transferors)
with any state or federal laws or regulations applicable to the transactions.
I am admitted to the bar of the State of California, and I express no
opinion herein other than with respect to the corporate laws of the State of
Delaware and the Federal laws of the United States of America.
This opinion is rendered only to you and is solely for your benefit in
connection with the above transactions. This opinion may not be relied upon by
you for any 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, and as otherwise compelled by legal process.
Very truly yours,
Robert J. Normile
J-4