EXHIBIT 99.4
SEVERANCE AND CONSULTING AGREEMENT
1. PARTIES: The parties to this Severance and Consulting Agreement
(herein "Agreement") are Xxx Xxxxxxx ("Xxxxxxx") and MATTEL, INC. ("Mattel").
2. RECITALS: This Agreement is made with reference to the following
facts:
2.1 Xxxxxxx has been employed by Mattel, Inc. as its President
pursuant to an Amended and Restated Employment Agreement dated as of
November 11, 1993, as amended September 1, 1995, as made subject to an
Interpretive Rider dated September 20, 1995, and as amended and restated as
of July 29, 1996 (herein "Employment Agreement").
2.2 Mattel and Xxxxxxx have agreed that, effective as of March 31,
2000 (the "Termination Date"), Xxxxxxx will resign all of his positions as
an officer (including, without limitation, President) and employee of
Mattel, and will resign all of his positions as an officer and/or employee
of any and all subsidiaries and affiliates of Mattel. In this connection
Xxxxxxx will execute the letter of resignation, a copy of which is attached
as Exhibit "A" hereto. In addition, Mattel and Xxxxxxx have agreed that,
beginning with the first annual meeting of Mattel's stockholders following
the date of this Agreement, Xxxxxxx will not seek re-election as a member
of the Board of Directors of Mattel (the "Board").
2.3 Certain issues have arisen with respect to Xxxxxxx'x right to
receive certain payments and other benefits upon the termination of his
employment pursuant to the provisions of his Employment Agreement.
2.4 It is the intention of the parties hereto to settle and dispose
of, fully and completely, any and all claims, demands and cause or causes
of action each may have against the other, heretofore or hereafter arising
out of, connected with or incidental to the dealings between the parties
hereto prior to the Termination Date, including, without limitation on the
generality of the foregoing, any and all claims, demands and cause or
causes of action arising out of the employment or termination of Xxxxxxx'x
employment with Mattel, or the interpretation or application of any
provision of his Employment Agreement, or with respect to any reason
whatsoever, including any matters not related to those claims.
3. TERMINATION OF EMPLOYMENT AND DIRECTORSHIP; CONSULTING SERVICES:
3.1 Except as expressly set forth herein, effective as of the
Termination Date, the Employment Agreement shall terminate and Mattel and
its subsidiaries and affiliates shall have no further obligation or
liability thereunder.
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3.3 Beginning with the first annual meeting of Mattel's stockholders
following the date of this Agreement, Xxxxxxx shall not seek re-election as
a member of the Board, and Mattel shall have no obligation to nominate or
cause Xxxxxxx to be elected as a member of the Board.
3.4 Effective as of the Termination Date, Xxxxxxx'x status as an
officer and employee of Mattel shall terminate, and Mattel shall engage
Xxxxxxx as a non-exclusive consultant to Mattel for the period commencing
on the Termination Date and ending on December 31, 2000 (the "Consulting
Period"). As a consultant, Xxxxxxx shall provide services from his office
located at his residence, unless requested by the Chief Executive Officer
of Mattel, or his designee, to travel within the United States, or appear
at Mattel's offices, in the ordinary course of completing assignments,
which Mattel agrees to assign with reasonable notice provided, and
consisting of expectations consistent with Xxxxxxx'x experience and
expertise. In no event shall the services requested of Xxxxxxx during the
Consulting Period require performance which exceeds 20 hours in any one
month. As consideration for actual services rendered and/or Xxxxxxx'x
continuing agreement to remain available for assignments on an "on-call"
basis, Mattel shall pay Xxxxxxx $8,000 on a monthly (less all amounts
required to be withheld under applicable law) during the Consulting Period.
Xxxxxxx'x eligibility for Mattel-provided benefits during the Consulting
Period shall be limited to those benefits expressly set forth herein.
Xxxxxxx specifically agrees and acknowledges that as of the Termination
Date, Xxxxxxx shall be ineligible for the receipt of stock option grants,
participation in any incentive programs, including Mattel's Management
Incentive Plan and Mattel's Long Term Incentive Plan, paid vacations or
paid holidays. During the Consulting Period, Xxxxxxx shall be entitled to
receive reimbursement for all reasonable expenses incurred by Xxxxxxx in
accordance with the policies and practices of Mattel as in effect from time
to time with respect to consultants of Mattel.
4. PAYMENT AND OTHER BENEFITS UPON TERMINATION:
4.1 On the Termination Date, Mattel shall pay or cause to be paid to
Xxxxxxx a lump-sum cash payment (the "Payment") in an amount equal to
$5,780,062.00, less all applicable withholding taxes. The Payment is
exclusive of any amounts to which Xxxxxxx may be entitled under any
deferred compensation plan, pension plan or other retirement plan
maintained by Mattel. At Xxxxxxx'x election, any or all of the Payment may
be deferred by Xxxxxxx pursuant to any deferred compensation plan
maintained by Mattel in which Xxxxxxx is eligible to participate, subject
to the terms and conditions of such plan.
4.2 For the period beginning on the Termination Date and ending on
the earlier to occur of the third anniversary of the Termination Date or
the date upon which Xxxxxxx accepts other full-time employment (such
period, the "Benefits Continuation Period"), Mattel shall provide to
Xxxxxxx at Mattel's expense medical, dental, prescription drug and vision
care group insurance in accordance with the coverage in effect immediately
prior to the Termination Date (the last 18 months of Xxxxxxx'x coverage
under such insurance shall be deemed to be participation under an election
to continue such benefits under the Consolidated Omnibus Budget
Reconciliation Act at
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Mattel's expense). From and after the third anniversary of the Termination
Date, Mattel shall provide health insurance to Xxxxxxx and his dependents
in accordance with the terms and conditions of Mattel's Retiree Medical
Plan.
4.3 Exhibit "B" hereto sets forth a list of outstanding stock options
held by Xxxxxxx under Mattel's stock option plans. Xxxxxxx shall be
entitled to continue to hold and exercise stock options previously granted
to him as provided for in Mattel's stock option plans and applicable stock
option agreements (as modified or amended from time to time and Xxxx Xxxx'x
letter dated February 10, 2000) and, with respect to "premium price stock
options," as modified by the provisions of Exhibit "B" hereto. In the event
that any previously granted stock options shall be repriced prior to the
expiration date for any Mattel senior executives, options granted to
Xxxxxxx shall be similarly repriced.
4.4 Xxxxxxx may continue to use the car leased by Mattel that is in
Xxxxxxx'x possession on the Termination Date until the third anniversary of
the Termination Date, at which time Xxxxxxx may purchase the car for $1.00.
Except as set forth in the following sentence, as of the Termination Date,
all expenses related to such leased car, including but not limited to
repairs and maintenance, shall be the sole responsibility of Xxxxxxx.
Notwithstanding the foregoing, Xxxxxxx may continue to use the Company's
credit card for gasoline and associated expenses and Mattel shall pay
Xxxxxxx'x car phone expenses during the Consulting Period.
4.5 Upon the termination of the Consulting Period, Xxxxxxx agrees to
return to Mattel all credit cards in his possession which were provided to
him by Mattel for any purpose.
4.6 Upon the Termination Date, Mattel agrees to transfer to Xxxxxxx
the PC computers currently provided to Xxxxxxx for business purposes.
Thereafter Xxxxxxx will be responsible for costs of maintenance and all
modem connections. Xxxxxxx shall not be required to reimburse Mattel for
such transfer.
4.7 Effective as of the Termination Date, Mattel shall credit Xxxxxxx
with enhanced benefits under Mattel's 1994 Supplemental Executive
Retirement Plan (the "SERP") in accordance with the terms set forth on
Exhibit "C" hereto. Notwithstanding anything contained in the SERP or any
applicable election form delivered by Xxxxxxx thereunder, Xxxxxxx'x
benefits under the SERP shall commence as of the Termination Date.
4.8 For the three year period immediately following the Termination
Date, Mattel shall provide Xxxxxxx with financial planning services in
accordance with the policies of Mattel as in effect from time to time with
respect to executives employed by Mattel.
4.9 Mattel shall continue to provide Xxxxxxx with life insurance
coverage under Mattel's Key Executive Life Insurance Program (in which he
is vested for life) on
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substantially the same terms and conditions as such insurance coverage is
provided to Xxxxxxx immediately prior to the Termination Date, subject to
the terms and conditions of such program as in effect from time to time.
4.10 In lieu of providing Xxxxxxx with outplacement services, Mattel
shall pay Xxxxxxx a lump-sum cash payment in an amount equal to $20,000
(less all applicable withholding taxes) on the Termination Date.
4.11 During the Benefits Continuation Period, Mattel shall provide to
Xxxxxxx, at Mattel's expense, continuation of country-club membership
"signatory/representative" status as in effect immediately prior to the
Termination Date (including the payment by Mattel of normal club dues, fees
and any assessments and the un-spent quarterly minimum expenses. Xxxxxxx
will be responsible for green fees, cart fees, and the purchase of any
product and food). Upon the termination of the Benefits Continuation
Period, Mattel shall cause the membership to be transferred to Xxxxxxx at
no cost to Xxxxxxx (but subject to tax reporting as imputed income
applicable to the year in which the membership is transferred).
4.12 For the three year period immediately following the Termination
Date, Mattel shall reimburse Xxxxxxx for the actual cost incurred by
Xxxxxxx in maintaining the home security system existing at Xxxxxxx'x
residence as of the date hereof.
5. COSTS AND FEES: Mattel shall promptly pay or reimburse Xxxxxxx for all
costs and fees actually incurred by Xxxxxxx in the negotiation, preparation and
delivery of this Agreement, including, without limitation, reasonable attorneys
fees; provided, however, that the aggregate amount of Mattel's obligation under
this paragraph 5 shall not exceed Five Thousand Dollars ($5,000). Except as
otherwise provided herein, each party hereto shall bear their own costs and
attorney's fees.
6. RELEASE OF CLAIMS: In consideration of the payments and promises
provided for herein, and except for rights created by this Agreement, and except
for any indemnification rights Xxxxxxx may have as an officer and/or director of
Mattel under Delaware law, the Mattel Articles of Incorporation or By-laws,
any Directors and Officers liability insurance, or otherwise, Xxxxxxx hereby
releases, remises and forever discharges Mattel, its affiliates, subsidiaries,
subsidiary entitles and the owners, stockholders, predecessors, successors,
assigns, employees, officers, directors, counsel, and agents and Mattel hereby
releases, remises and forever discharges Xxxxxxx, and his successors, assignees,
counsel, and agents from any and all claims, demands, and cause or causes of
action heretofore arising out of, connected with or incidental to the dealings
between the parties hereto prior to the effective date hereof, including,
without limitation on the generality of the foregoing, any and all claims,
demands and cause or causes of action arising out of the employment, or
termination of employment of Xxxxxxx. This includes a release of any rights or
claims Xxxxxxx may have under Title VII of the Civil Rights Act of 1964, as
amended by the Civil Rights Act of 1991, which prohibits discrimination in
employment based on race, color, national origin, religion or sex; the
California Fair Employment and Housing Act, which prohibits discrimination based
on race, color, national origin, ancestry, physical handicap, medical condition,
marital status, sex or age; the Age
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Discrimination in Employment Act which prohibits age discrimination over the age
of forty (40); the Americans With Disability Act, which prohibits discrimination
based on physical handicap; the Equal Pay Act, which prohibits paying men and
women unequal pay for equal work; or any other federal, state or local laws or
regulations prohibiting employment discrimination.
6.1 Xxxxxxx shall have a period of twenty-one (21) days to review and
consider this Agreement before signing it.
6.2 Xxxxxxx may revoke this Agreement within seven (7) days after he
signs it by delivering a written notice of revocation to Mattel's Senior
Vice President of Human Resources at Mattel's headquarters so that it is
received by him not later than the close of business on that day. In the
event of such revocation, it shall not be effective and Xxxxxxx shall not
receive the payments and other benefits provided for herein.
6.3 This Agreement does not waive or release any rights or claims
which Xxxxxxx has under the Age Discrimination in Employment Act which
arise after the execution of this Agreement.
7. REPRESENTATIONS AND WARRANTIES: Each of the parties to this Agreement
represents, warrants, and agrees as follows:
7.1 Each party has received independent legal advice from its
attorneys, with respect to the advisability of making the settlement
provided herein, with respect to the advisability of executing this
Agreement, and with respect to the meaning of California Civil Code Section
1542. By executing this Agreement, Xxxxxxx acknowledges that he has read
it, discussed it with his attorneys, and has executed it in reliance upon
the advice of his attorneys with respect to each of these matters.
7.2 No party (nor any officer, agent, employee, representative, or
attorneys of or for any party), has made any statement or representation to
any other party regarding any fact relied upon in entering into this
Agreement, and each party does not rely upon any statement, representation
or promise of any other party (or of any officer, agent, employee,
representative, or attorney for the other party), in executing this
Agreement, or in making the settlement provided for herein, except as
expressly stated in this Agreement.
7.3 Each party to this Agreement has made such investigation of the
facts pertaining to this settlement and this Agreement and of all the
matters pertaining thereto as it deems necessary.
7.4 Each party executing this Agreement, or in the case of Mattel, a
responsible officer thereof, has read this Agreement and understands the
contents hereof. The officer executing this Agreement on behalf of Mattel
is empowered to do so and thereby binds Mattel.
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7.5 Neither party has heretofore exercised its sole power to assign,
transfer, or grant, or purport to assign, transfer, or grant, any of the
claims, demands, and cause or causes of action disposed of by this
Agreement.
7.6 Each term of this Agreement is contractual and not merely a
recital.
7.7 Xxxxxxx and Mattel are aware that they may hereafter discover
claims or facts in addition to or different from those they now know or
believe to be true with respect to the matters related herein.
Nevertheless, and except as herein provided, it is their intention to
fully, finally and forever settle and release all claims relative thereto
which do now exist, or heretofore have existed between Mattel and Xxxxxxx.
In furtherance of such intention, the releases given herein shall be and
remain in effect as full and complete releases of all such matters,
notwithstanding the discovery of existence of any additional or different
claims or facts relative thereto.
7.8 It is expressly understood and agreed by Xxxxxxx that the sums
specified to be paid by or on behalf of Mattel to him, pursuant to
paragraph 3 above, as well as the other benefits provided for in paragraphs
4 and 5, shall be in lieu of any and all amounts of which Xxxxxxx is now or
may become entitled to from Mattel for any and all claims released, as
described in paragraph 6 of this Agreement.
7.9 Xxxxxxx agrees not to initiate, or cause to be initiated against
Mattel, its affiliates, subsidiaries and the shareholders, directors,
officers and employees, any compliance review, suit, action, appeal,
investigation or proceeding of any kind, or participate in same,
individually or as a representative or member of a class, unless compelled
by law, under any contract (express or implied), tort, law, or regulation
(federal, state or local), pertaining in any way whatsoever to the matters
herein released, nor shall he be entitled to receive any payment from any
such proceeding.
7.10 The parties hereto agree that each and every provision of Part
10 "Confidential Information," contained in the Employment Agreement,
including, without limitation, the non-disclosure provisions of the
Employee Confidential Information and Inventions Agreement, previously
executed by Xxxxxxx, shall by this reference, be incorporated in this
Agreement. Any material violation of this provision by Xxxxxxx which
causes adverse economic results to Mattel shall disqualify him from
exercising any of the stock options he may hold under the Premium Price
Stock Option Plan as modified by the provisions of Exhibit "B" hereto.
7.11 Except as to disclosures required by law, or otherwise made by
Mattel, Xxxxxxx agrees not to disclose the terms of this Agreement to
anyone other than the attorneys involved in this matter, his accountants or
tax preparers or his immediate family; and shall forthwith instruct such
attorneys, accountants or tax preparers and his immediate family not to
disclose the terms and conditions of this Agreement to anyone. Xxxxxxx
acknowledges and agrees that any disclosure of information contrary to the
terms of this paragraph would cause Mattel injury and damage. Any material
violation of this provision by Xxxxxxx which causes adverse economic
results to Mattel shall
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disqualify him from exercising any of the stock options he may hold under
the Premium Price Stock Option Plan as modified by the provisions of
Exhibit "B" hereto.
7.12 Xxxxxxx agrees that he will refrain from making any statements
about Mattel or its senior executives which would disparage, or reflect
unfavorably upon the image or reputation of Mattel or any such senior
executives. Mattel agrees to refrain from making any statements about
Xxxxxxx which would disparage, or reflect unfavorably upon the image or
reputation of Xxxxxxx. Any material violation of this provision by Xxxxxxx
which causes adverse economic results to Mattel shall disqualify him from
exercising any of the stock options he may hold under the Premium Price
Stock Option Plan as modified by the provisions of Exhibit "B" hereto.
7.13 Xxxxxxx agrees that he shall not seek employment with Mattel,
its affiliates, or subsidiaries, which are known to him, at any time in the
future, and that such parties have no obligation to employ, hire, rehire,
or to consider him for hire, other than to continue his employment until
the Termination Date, subject to the terms of the Employment Agreement, and
his consultancy during the Consulting Period. Xxxxxxx'x forbearance from
seeking employment is purely contractual and voluntary, and does not
constitute discrimination or retaliation in any respect.
7.14 Xxxxxxx agrees that for a period ending on the first anniversary
of the Termination Date, he will not directly or indirectly, recruit or
solicit any of Mattel's employees to accept employment with any other
employer. Any material violation of this provision by Xxxxxxx which causes
adverse economic results to Mattel shall disqualify him from exercising any
of the stock options he may hold under the Premium Price Stock Option Plan
as modified by the provisions of Exhibit "B" hereto.
7.15 Xxxxxxx agrees that during the Consulting Period, he will not
accept a position as a director, officer, employee, partner, consultant or
otherwise with any competitor toy company of Mattel with annual sales in
excess of $2 Billion. Nothing contained in this Section 7.15 shall in any
way affect Xxxxxxx'x convenants or obligations under the SERP or Mattel's
stock option plans and applicable stock option agreements pursuant to which
Xxxxxxx has been granted stock options. Any material violation of this
provision by Xxxxxxx which causes adverse economic results to Mattel shall
disqualify him from exercising any of the stock options he may hold under
the Premium Price Stock Option Plan as modified by the provisions of
Exhibit "B" hereto.
7.16 Xxxxxxx agrees that after the Termination Date, upon the request
of Mattel, he shall cooperate with and assist Mattel in undertaking and
preparing for legal and other proceedings relating to the affairs of Mattel
and its subsidiaries. Xxxxxxx shall be reimbursed for the reasonable
expenses he incurs in connection with any such cooperation and/or
assistance, and, after the Termination Date, shall receive from Mattel
reasonable per diem compensation in connection therewith.
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7.17 The parties will execute all such further and additional
documents consistent herewith as shall be reasonable, convenient, necessary
or desirable to carry out the provisions of this Agreement.
7.18 Mattel agrees that it will provide to Xxxxxxx, at his request,
an appropriate letter of recommendation to prospective employers of
Xxxxxxx. Xxxxxxx agrees to request that all prospective employers direct
their requests for reference information to Mattel's senior human resources
executive. Mattel agrees that requests for reference information concerning
Xxxxxxx which it receives shall be directed to its senior human resources
executive.
7.19 The parties hereto acknowledge and agree that they have
previously entered into an Indemnity Agreement substantially in the form of
Exhibit "E" hereto (as amended from time to time, the "Indemnity
Agreement"). Each of Mattel and Xxxxxxx hereby reaffirm their respective
rights and obligations under the Indemnity Agreement and agree to comply
with the terms and conditions thereof.
8. SETTLEMENT: This Agreement affects the settlement of claims which are
denied and contested, and nothing contained herein shall be construed as an
admission by any party hereto of any liability of any kind to any other party.
Each of the parties hereto denies any liability in connection with any claim and
intends merely to avoid litigation and buy its peace.
9. MISCELLANEOUS:
9.1 This Agreement shall be deemed to have been executed and
delivered within the State of California, and the rights and obligations of
the parties hereto shall be construed and enforced in accordance with, and
governed by, the laws of the State of California.
9.2 Xxxxxxx acknowledges and agrees that this Agreement includes the
entire agreement and understanding between the parties with regard to
Xxxxxxx'x employment, the termination thereof, and all amounts to which
Xxxxxxx shall be entitled whether during the term of employment or upon
termination thereof. Except as expressly provided herein, this Agreement
supersedes all prior and contemporaneous oral and written agreements and
discussions, including, without limitation, the Employment Agreement. This
Agreement may be amended only by an agreement in writing signed by all
parties. Xxxxxxx also acknowledges and agrees that his right to receive
the payments and other benefits set forth in Sections 3, 4 and 5 of this
Agreement is contingent upon Xxxxxxx'x execution and acceptance, on the
Termination Date, of the terms and conditions of, and the effectiveness of
the General Release of All Claims (the "Release") attached hereto as
Exhibit "D." If Xxxxxxx fails to execute the Release on the Termination
Date and/or Xxxxxxx revokes the Release within seven (7) days after such
execution,, then Xxxxxxx shall not thereafter be entitled to any payments
or other benefits to which Xxxxxxx would otherwise be entitled under
Sections 3, 4 and 5 of this Agreement.
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9.3 This Agreement is binding upon and shall inure to the benefit of
the parties hereto, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, heirs,
predecessors, successors in interest and shareholders.
9.4 Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party.
9.5 Should any provisions of this Agreement be declared or determined
by any court to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall be deemed not to be a part of this
Agreement.
9.6 Mattel and Xxxxxxx each specifically waive the benefit of the
provisions of Section 1542 of the Civil Code of the State of California, as
follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
9.7 The parties hereto agree that each and every provision of Part 8
"Arbitration of Disputes" contained in the Employment Agreement, shall by
this reference, be incorporated in this Agreement and shall apply to any
issue, controversy or dispute which may arise with respect to the
interpretation or application of this Agreement.
9.8 All notices and other communications shall be in writing; shall
be delivered by hand or mailed by registered or certified mail, return
receipt requested, postage prepaid, to the other party; and shall be deemed
delivered upon actual receipt; and shall be addressed as follows:
To Mattel:
Mattel Inc.
000 Xxxxxxxxxxx Xxxx.
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President, Human Resources
To Xxxxxxx:
Xx. Xxx Xxxxxxx
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or to such other address as either party, in writing shall have
furnished to the other.
9.9 This Agreement consisting of ___ pages is made and entered into
on and as of March 22, 2000 in Los Angeles County, California and is
effective as of this date.
3/23/2000 /s/ Xxx Xxxxxxx
------------ --------------------------------------------
Date XXX XXXXXXX
MATTEL, INC.
3/23/2000
------------ By /s/ Xxxx Xxxx
Date ----------------------
Xxxx Xxxx
Its Senior Vice President, Human Resources
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