RIGHTS AGREEMENT
AMENDMENT NO. 2
This Amendment No. 2, dated as of November 4, 1999 (the "Amendment") amends
the Rights Agreement, dated as of February 7, 1992, as amended by an amendment,
dated as of May 13, 1999 (the "Rights Agreement"), by and between Mattel, Inc.,
a Delaware corporation (the "Company") and BankBoston N.A., a national banking
association, formerly, The First National Bank of Boston (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interest of the Company and its stockholders to effect certain
amendments to the Rights Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement the Company may,
subject to certain limitations, amend the Rights Agreement without the approval
of any holders of Rights Certificates to make any provisions with respect to the
Rights which the Company deems necessary or desirable;
WHEREAS, the Company and the Rights Agent wish to amend the Rights
Agreement in the manner set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
set forth herein, the parties thereto agree that the Rights Agreement is Amended
as follows:
1. Amendment.
(a) All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given them in the Rights Agreement, and each reference
in the Rights Agreement to "this Agreement," "hereof," "herein," "hereunder" or
"hereby" and each other similar reference shall be deemed to refer to the Rights
Agreement as amended hereby. All references to the Rights Agreement in any other
agreement between or among any of the parties hereto relating to the
transactions contemplated by the Rights Agreement shall be deemed to refer to
the Rights Agreement as amended hereby.
(b) The definition of "Acquiring Person" in Section 1(a) is hereby amended
by replacing it in its entirety with the following:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more
of the Common Shares of the Company then outstanding, but shall not include
(a) the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common
Shares or Softkey Exchangeable Shares for or pursuant to the terms of any
such plan or (b) the holder of the Mattel Special Voting Preferred Share
(as such term is hereinafter defined) in its capacity as holder of such
Mattel Special Voting Preferred Share (but shall include such holder to the
extent that such holder's beneficial ownership of Common Shares would cause
such Person to be an Acquiring Person without reference to such Mattel
Special Voting Share). Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of Common
Shares or Softkey Exchangeable Shares by the Company or Softkey
Exchangeable Shares by Softkey which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share acquisitions by the Company or by Softkey
and shall, after such share acquisitions by the Company or Softkey, become
the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an "Acquiring Person"; and provided
further that for purposes of this definition any Investing Person (as such
term is hereinafter defined) shall be deemed not to be the Beneficial Owner
of any Investment Shares (as such term is hereinafter defined). For
purposes of the second proviso of the foregoing sentence, "Investment
Shares" shall mean Common Shares or Softkey Exchangeable Shares
beneficially owned by any Person (an "Investing Person") (i) who or which
became the Beneficial Owner of such shares in connection with, or as a
direct result of, the Capital Investment (as such term is hereinafter
defined) or (ii) to whom or to which such shares shall have been
transferred from an Investing Person who at the time of such transfer (A)
was an Affiliate or Associate of such transferee and (B) was by reason of
the second proviso of the foregoing sentence deemed not to be the
Beneficial Owner of such shares. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a Person
who would otherwise be an "Acquiring Person", as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of
Common Shares or Softkey Exchangeable Shares so that such Person would no
longer be an Acquiring Person as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to
be an Acquiring Person for any purposes of this Agreement.
Notwithstanding anything in this definition of Acquiring Person to the
contrary, the phrase "then outstanding" when used in this Agreement with
reference to Common Shares shall mean (x) the number of Common Shares then
outstanding plus (y) a number of Common Shares equal to (i) the number of
Softkey Exchangeable Shares then issued and outstanding which are not owned
by the Company, any of its Subsidiaries or any person directly or
indirectly controlled by or under common control of the Company, multiplied
by (ii) the Merger Exchange Ratio, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof."
(b) The definition of "Beneficial Owner" in Section 1(c) is hereby amended
by adding
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the following sentence to the end thereof:
"Any person who owns Softkey Exchangeable Shares shall be deemed to
beneficially own the maximum number of Common Shares issuable to
such holder upon the exchange, retraction or redemption of all such
Softkey Exchangeable Shares at the measurement date."
(c) Section 3(a) is hereby amended by replacing "20%"with "15%" in the
first sentence thereof and by deleting all three occurrences of the phrase "and
Softkey Exchangeable Shares" in clause (ii) thereof.
(d) Section 3(d) is hereby amended by replacing the phrase "paragraph (c)"
with "paragraph (d)" in the first sentence thereof.
(e) Section 24 (a) is hereby amended by deleting all three occurrences of
the phrase "and Softkey Exchangeable Shares" therein.
(f) Section 27 is hereby amended by replacing the final sentence thereof
with the following:
"Without limiting the foregoing, the Company may at any time prior to such
time as any Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections l(a) and 3(a) to not less than the greater of
(i) the sum of .001% and the percentage obtained by dividing (A) the number of
Common Shares then beneficially owned by the Person (other than (I) the Company,
(II) any Subsidiary of the Company, (III) any employee benefit plan of the
Company or any Subsidiary of the Company, (IV) any entity holding Common Shares
for or pursuant to the terms of any such plan or (V) X.X. Xxxxxxx, Xxxxxx & Co.,
Inc., a Delaware corporation, and its Affiliates and Associates) then known to
the Company to be the beneficial owner of the largest number of Common Shares
(excluding, for purposes of calculating any Person's beneficial ownership under
this clause (A), any Common Shares which such Person would be deemed, pursuant
to the second proviso of the second sentence of Section l(a) hereof, not to be
the Beneficial Owner) by (B) the number of Common Shares then outstanding and
(ii) 10%.
(g) Exhibit C to the Rights Agreement is hereby amended and restated in its
entirety, effective as of the date of this Agreement, as set forth in Exhibit C
attached hereto.
2. Miscellaneous.
(a) Choice of Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
(b) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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(c) Severability. If any term or provision of this Amendment is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms and provisions of this Amendment shall
in no way be affected, impaired or invalidated.
(d) Existing Terms. The existing terms and conditions of the Agreement
shall remain in full force and effect except as such terms and conditions are
specifically amended or conflict with the terms of this Amendment.
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IN WITNESS WHEREOF, this Amendment has been duly executed by the respective
authorized officers of the parties hereto, in each case as of the day and year
first above written.
The Company:
MATTEL, INC.
By:
/s/ Xxxxxx Xxxxxxx
-------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Vice President,
General Counsel and Secretary
Rights Agent:
BANKBOSTON, N.A.
By:
/s/ Xxxxxxxxx Xxxxxxxx
----------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: Administration Manager
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERENCE SHARES
On February 7, 1992, the Board of Directors of Mattel, Inc. (the "Company")
declared a dividend of one preference share purchase right (a "Right") for each
outstanding share of common stock, par value $1.00 per share (the "Common
Shares"), of the Company. The dividend is payable on February 17, 1992 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-hundredth of a share
of Series E Junior Participating Preference Stock, par value $.01 per share (the
"Preference Shares"), of the Company at a price of $150 per one one-hundredth of
a Preference Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of February 7, 1992, as amended by Amendment No. 1 to the Rights Agreement dated
as of May 13, 1999 and Amendment No. 2 to the Rights Agreement dated as of
November 4, 1999 (collectively, the "Rights Agreement") between the
Company and BankBoston, N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 15% or more of the outstanding
Common Shares (including any Common Shares that are issuable upon the exchange
of the exchangeable non-voting shares (the "Exchangeable Shares") of Softkey
Software Products Inc., the Company's Canadian subsidiary) or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
the outstanding Common Shares (including any Common Shares that are issuable
upon the exchange of the Exchangeable Shares) (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Share certificates outstanding as of the Record Date, by such
Common Share certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close
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of business on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 17, 2002 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preference Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preference Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case
prior to the Distribution Date.
Preference Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preference Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preference Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each
Preference Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preference Share will be entitled to receive
100 times the amount received per Common Share. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preference Shares' dividend, liquidate and
voting rights, the value of the one one-hundredth interest in a Preference Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons
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becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Shares (including any Common Shares that are issuable upon the exchange
of the Exchangeable Shares), the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preference Share (or of a share of a class or series of
the Company's preference stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preference Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preference
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preference Shares on the last trading day prior to the date
of exercise.
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to lower certain thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding Common Shares
(including any Common Shares that are issuable upon the exchange of the
Exchangeable Shares) then known to the Company to be beneficially owned by any
person or group of affiliated or associated persons (other than (a) the Company,
(b) any subsidiary of the Company, (c) any employee benefit plan of the Company
or any subsidiary of the Company, (d) any entity holding Common Shares or
Exchangeable Shares for or pursuant to the terms of any such plan or (e) X.X.
Xxxxxxx, Xxxxxx & Co., Inc., a Delaware corporation, and its affiliates and
associates) and (ii) 10%, except that from and after such time as any person or
group of affiliated or associated persons becomes an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights.
For the purpose of calculating the various percentage ownership thresholds
contained in the Rights Agreement, shares issued in connection with the capital
investment approved by the Company's shareholders at the 1984 Annual Meeting and
still owned by the original owner, or owned by certain qualified transferees,
are excluded from the amount deemed to be beneficially owned by such persons.
However, if such original owner or qualified transferee becomes a member of a
group with certain other persons, such shares will be included
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in the amount attributable to, and will be deemed to be beneficially owned by,
such other persons.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
February 10, 1992. Copies of Amendments No. 1 and No. 2 to the Rights Agreement
have been filed with the Securities and Exchange Commission as Exhibits to a
Registration Statement on Form 8-A/A dated May 13, 1999 and November 12, 1999,
respectively. A copy of the Rights Agreement (including Amendments No. 1 and
No.2 to the Rights Agreement) is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
