Exhibit 10.18

 

AMENDMENT

TO

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

WHEREAS, Mattel, Inc. (“Mattel”) and Neil B. Friedman (the “Executive”) have
entered into an Amended and Restated Executive Employment Agreement dated
January 31, 2000 as amended February 10, 2000, as amended November 14, 2000, as
amended March 17, 2005, and as amended March 27, 2007 (the “Agreement”);

 

WHEREAS, pursuant to Section 12 of the Agreement, Mattel and the Executive may
amend the Agreement pursuant to a written instrument executed by the Executive
and Mattel; and

 

WHEREAS, as a result of the enactment in 2004 of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”), the Company and
the Executive desire to amend the Agreement to evidence the intention that the
terms of the Agreement be exempt from or comply with Section 409A of the Code.

 

NOW, THEREFORE, pursuant to Section 12 of the Agreement, the Agreement is hereby
amended, effective as of December 31, 2008, as follows:

 

1. Capitalized Terms. Capitalized terms that are not defined in this Amendment
shall have the meanings ascribed thereto in the Agreement.

 

2. All references to New York, New York in the Agreement shall be amended to
refer to Los Angeles, California.

 

3. The first sentence of Section 4(a) of the Agreement shall be amended by
adding the following proviso at the end thereof to read as follows:

 

“; provided, further, that all such payments in respect of the Executive’s death
pursuant to this Section 4(a) shall be paid to the Executive’s estate no later
than March 15th of the calendar year following the calendar year in which the
Executive dies, including, if applicable, a final lump sum payment on March 15th
(or the last business day immediately prior thereto) of the calendar year
following the Executive’s death, such that the aggregate of such payments in
respect of the continued Base Salary equals 50% of the Executive’s annual Base
Salary at the rate in effect at the time of death.”

 

4. The first paragraph of Section 4(c) of the Agreement shall be amended in its
entirety to read as follows:

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“(c) Good Reason. The Executive may terminate his employment for Good Reason.
For purposes of this Agreement, “Good Reason” means the good faith determination
by the Executive that any one or more of the following have occurred, provided
that (i) the Executive provides Mattel with written notice of the Good Reason
event within ninety (90) days of the initial existence of such event, (ii) such
event is not remedied by Mattel within thirty (30) days following the delivery
of written notice of such Good Reason event and (iii) the Executive actually
terminates his employment within two (2) years following the initial existence
of such Good Reason event:”

 

5. Section 4(c)(i) of the Agreement shall be amended in its entirety to read as
follows:

 

“(i) without the express written consent of the Executive, any material
diminution in any of the duties, authority, or responsibilities of the Executive
as contemplated by Section 2 of this Agreement;”

 

6. Section 4(c)(iii) of the Agreement shall be amended in its entirety to read
as follows:

 

“(iii) any other action or inaction that constitutes a material breach of this
Agreement by Mattel;”

 

7. Section 4(c)(iv) of the Agreement shall be amended in its entirety to read as
follows:

 

“(iv) any failure by Mattel to obtain the assumption and agreement to perform
this Agreement by a successor as contemplated by Section 11(b), except where
such assumption and agreement occurs by operation of law; or”

 

8. Section 4(d)(i) of the Agreement shall be amended in its entirety to read as
follows:

 

“(i) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either
(i) the then outstanding shares of common stock of Mattel (the “Outstanding
Company Common Stock”) or (ii) the

 

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combined voting power of the then outstanding voting securities of Mattel
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (i), the following shall not constitute a Change of Control: (a) any
acquisition directly from Mattel, (b) any acquisition by Mattel or any
corporation controlled by Mattel, (c) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Mattel or any corporation
controlled by Mattel, (d) any acquisition by a Person of 35% or more of either
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities as a result of an acquisition of common stock of Mattel by Mattel
which, by reducing the number of shares of common stock of Mattel outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 35% or more of either the Outstanding Company Common Stock or the Outstanding
Company Voting Securities; provided, however, that if a Person shall become the
beneficial owner of 35% or more of either the Outstanding Company Common Stock
or the Outstanding Company Voting Securities by reason of a share acquisition by
Mattel as described above and shall, after such share acquisition by Mattel,
become the beneficial owner of any additional shares of common stock of Mattel,
then such acquisition shall constitute a Change of Control or (e) any
acquisition pursuant to a transaction which complies with clauses (a), (b) and
(c) of subsection (iii) of this Section 4(d); or”

 

9. Section 4(d)(iii)(b) of the Agreement shall be amended in its entirety to
read as follows:

 

“(b) no Person (excluding any employee benefit plan (or related trust) of Mattel
or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 35% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and”

 

10. The final paragraph of Section 4(d) of the Agreement shall be deleted in its
entirety and replaced with the following sentence:

 

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“As soon as practicable after a Change of Control, Mattel shall notify the
Executive that a Change of Control has occurred.”

 

11. The final sentence of Section 5(a) of the Agreement shall be amended in its
entirety to read as follows:

 

“As of the Date of Termination, the Executive’s family shall be entitled to
continued healthcare coverage as in effect from time to time on the same terms
and conditions as such insurance is available to active employees of Mattel and
financial counseling benefits through the vendor engaged and paid for by Mattel
until the third anniversary of the Date of Termination.”

 

12. The first paragraph of Sections 5(d)(i) and 5(e)(i) of the Agreement shall
be amended in their entirety to read as follows:

 

“(i) Mattel shall pay to the Executive in a lump sum in cash on the 55th day
after the Date of Termination (or the first business day thereafter) the
aggregate of the following amounts:”

 

13. Sections 5(d)(i)(B), 5(d)(i)(C), 5(e)(i)(B) and 5(e)(i)(C) of the Agreement
shall be amended by adding the phrase, “subject to Section 5(f),” at the
beginning of such provisions.

 

14. Sections 5(d)(iv) and 5(e)(iii) of the Agreement shall be amended in their
entirety to read as follows:

 

“(iv) Mattel shall, promptly upon submission by the Executive of supporting
documentation, pay or reimburse to the Executive any costs and expenses paid or
incurred by the Executive during the Employment Period which would have been
payable under Section 3(e) if his employment had not terminated.”

 

15. Sections 5(d)(v)(A) and 5(e)(iv)(A) of the Agreement shall be amended in
their entirety to read as follows:

 

“(A) a monthly amount equal to the applicable COBRA premium for the level of
coverage that the Executive has as of the Date of Termination (i.e., single,
single plus one, or family) under Mattel’s medical, dental, prescription drug
and vision care group insurance as in effect from time to time, which payment
shall be paid in advance on the first

 

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payroll day of each month, commencing with the month immediately following the
Executive’s Date of Termination; provided, however, that any such payments
otherwise payable to the Executive within the first 54 days following the Date
of Termination shall not be paid on the otherwise scheduled payment date but
shall instead accumulate and be and on the 55th day following the Date of
Termination. During such period, subject to the Executive’s continued payment of
premiums, Mattel will make available to the Executive and the Executive’s
eligible dependents, at the Executive’s cost (in an amount equal to the COBRA
premium cost therefor), coverage under Mattel’s medical, dental, prescription
drug and vision care group insurance (which shall be concurrent with any health
care continuation benefits to which the Executive or his eligible dependents are
entitled under COBRA);”

 

16. Sections 5(d)(v)(E) and 5(e)(iv)(E) of the Agreement shall be amended in
their entirety to read as follows:

 

“(E) membership in one city or country club and related expenses. Mattel shall
cause the membership to be transferred to the Executive at no cost to the
Executive, provided that such transfer shall occur no later than March 15th of
the calendar year following the calendar year in which the Date of Termination
occurs.”

 

17. Sections 5(d)(vi) and 5(e)(v) of the Agreement shall be amended by adding
the following proviso at the end thereof to read as follows:

 

“; provided, however, that such credit for additional years of service and age
shall not accelerate the time of payment under such arrangements in a manner
that would result in the imposition of tax, interest and/or penalties upon the
Executive under Section 409A of the Code (“Section 409A”).”

 

18. The first paragraph of Section 5(e) of the Agreement shall be amended in its
entirety to read as follows:

 

“(e) Change of Control. Except as provided below, if, within 18 months following
a Change of Control, (x) the Executive terminates his employment for Good Reason
, (y) Mattel or the surviving entity terminates the Executive’s employment other
than for Cause or Disability or (z) the Executive terminates his employment for
any reason within

 

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the 30 day period immediately following the six (6) month anniversary of a
Change of Control (the “Window Period”):”

 

19. A new Section 5(f) shall be added to the Agreement to read as follows:

 

“(f) Limitation on Certain Payments. Notwithstanding the provisions of
Sections 5(d) or 5(e), in the event of a Change of Control, the Executive’s
right to receive the lump sum cash payment following a termination of employment
pursuant to Section 5(d)(i)(B), 5(d)(i)(C), 5(e)(i)(B) or 5(e)(i)(C) shall
terminate on March 15th of the calendar year following the calendar year in
which the Window Period commenced, and no such amount shall be payable
thereafter. Subject to the preceding sentence, if a Change of Control occurs
during the Employment Period, then (regardless of when the Employment Period
would otherwise end under any other provision of this Agreement) Section 5(e),
and all other parts of this Agreement which relate to Section 5(e), shall
continue to apply to the Executive for 18 months after the Change of Control.”

 

20. A new Section 5(g) shall be added to the Agreement to read as follows:

 

“(g) Effect of Deferral Elections. If any payment payable pursuant to Section 5
or Section 13 is subject to a valid deferral election under the terms of another
plan or arrangement maintained by Mattel, the payment of such amount shall be in
accordance with the provisions of such deferred compensation plan or arrangement
(including the Executive’s deferral elections regarding the form and timing of
such deferrals).”

 

21. The final sentence of Section 9 of the Agreement shall be amended in its
entirety to read as follows:

 

“The Executive shall not be entitled to any severance payments or other benefits
to which the Executive would otherwise be entitled under subsections (b),
(d) and (e) of Section 5 of this Agreement unless (i) the Executive complies
with the covenants set forth in Section 10 and (ii) the Executive executes the
Release and such Release becomes irrevocable within fifty-five (55) days
following the Executive’s Date of Termination.”

 

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22. The second sentence of Section 14(a) of the Agreement shall be amended in
its entirety to read as follows:

 

“Notwithstanding the foregoing provisions of this Section 14(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Parachute Value of Payments (as defined below) does not exceed 110% of the Safe
Harbor Amount (as defined below), then no Gross-Up Payment shall be made to the
Executive and the Agreement Payments (as defined below), in the aggregate, shall
be reduced (but not below zero) such that the Parachute Value of all Payments
equals the Safe Harbor Amount.”

 

23. Section 14(a) of the Agreement shall be amended by adding the following
language at the end thereof to read as follows:

 

“If a reduction in the Agreement Payments is necessary so that the Parachute
Value of all Payments equals the Safe Harbor Amount and none of the Payments is
a “deferral of compensation” within the meaning of and subject to Section 409A
(“Nonqualified Deferred Compensation”), then the reduction shall occur in the
manner the Executive elects in writing prior to the date of payment. If any
Payment constitutes Nonqualified Deferred Compensation or the Executive fails to
elect an order, then the reduction shall occur in the following order:
(i) cancellation of acceleration of vesting on any equity awards for which the
exercise price exceeds the then fair market value of the underlying equity;
(ii) reduction in the benefits described in Section 5(e)(iv) (with such
reduction being applied to the benefits in the manner having the least economic
impact to the Executive and, to the extent the economic impact is equivalent,
such benefits shall be reduced in the reverse order of when the benefits would
have been provided to the Executive, that is, benefits payable later shall be
reduced before benefits payable earlier); (iii) reduction of cash payments (with
such reduction being applied to the payments in the reverse order in which they
would otherwise be made, that is, later payments shall be reduced before earlier
payments); (iv) cancellation of acceleration of vesting of equity awards not
covered under (i) above; provided, however, that in the event that acceleration
of vesting of equity awards is to be cancelled, such acceleration of vesting
shall be cancelled in the reverse order of the date of grant of such equity
awards, that is,

 

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later equity awards shall be canceled before earlier equity awards.”

 

24. The second sentence of Section 14(b) of the Agreement shall be amended by
adding the following proviso at the end thereof to read as follows:

 

“provided, however, that any Gross-Up Payment shall in all events be paid no
later than the end of the Executive’s taxable year immediately following the
Executive’s taxable year in which the Excise Tax (and any income or other
related taxes or interest or penalties thereon) on a Payment are remitted to the
Internal Revenue Service or any other applicable taxing authority or, in the
case of amounts relating to a claim described in Section 14(c) that does not
result in the remittance of any federal, state, local and foreign income,
excise, social security and other taxes, the calendar year in which the claim is
finally settled or otherwise resolved.”

 

25. The third sentence of Section 14(b) of the Agreement shall be amended in its
entirety to read as follows:

 

“Any determination by the Accounting Firm shall be binding upon Mattel and the
Executive, including any determination by the Accounting Firm of the amount that
equals 110% of the Safe Harbor Amount and any amount of cutback in benefits
necessary because Payments are calculated to have a Parachute Value between 100%
and 110% of the Safe Harbor Amount.”

 

26. The second sentence of the proviso following Section 14(c)(iv) of the
Agreement shall be amended in its entirety to read as follows:

 

“Without limitation on the foregoing provisions of this Section 14(c), Mattel
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing authority in
respect of such claim and may, at its sole option, either pay the tax claimed to
the appropriate taxing authority on behalf of the Executive and direct the
Executive to sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Mattel shall determine; provided,

 

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however, that if Mattel pays such claim and directs the Executive to sue for a
refund, Mattel shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such payment or with respect to any
imputed income with respect to such payment; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.”

 

27. Section 14(d) of the Agreement shall be amended in its entirety to read as
follows:

 

“(d) If, after the receipt by the Executive of a Gross-Up Payment or payment by
Mattel of an amount on the Executive’s behalf pursuant to Section 14(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up relates or with respect to such claim, the Executive
shall (subject to Mattel’s complying with the requirements of Section 14(c))
promptly pay to Mattel the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after payment by
Mattel of an amount on the Executive’s behalf pursuant to Section 14(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and Mattel does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then the amount of such payment shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.”

 

28. Section 14(e) of the Agreement shall be amended in its entirety to read as
follows:

 

“(e) Notwithstanding any other provision of this Section 14, Mattel may withhold
and pay over to the Internal Revenue Service or any other applicable taxing
authority for the benefit of the Executive all or any portion of the Gross-Up
Payment that it determines in good faith that it is or may be in the future
required to withhold, and the Executive hereby consents to such withholding.”

 

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29. The address to which notices and communications intended for the Executive
shall be delivered pursuant to Section 15(b) of the Agreement shall be revised
to be:

 

“Mr. Neil B. Friedman

MATTEL, INC.

333 Continental Blvd.

El Segundo, CA 90245”

 

30. A new Section 16 shall be added to the Agreement to read as follows:

 

“16. Section 409A.

 

(a) It is the parties’ intention that the reimbursements, payments and benefits
to which the Executive could become entitled in connection with the Executive’s
employment under this Agreement be exempt from or comply with Section 409A and
the regulations and other guidance promulgated thereunder. The provisions of
this Section 16 shall qualify and supersede all other provisions of this
Agreement as necessary to fulfill the foregoing intention. If the Executive or
Mattel believes, at any time, that any of such reimbursement, payment or benefit
is not exempt or does not so comply, the Executive or Mattel will promptly
advise the other party and will negotiate reasonably and in good faith to amend
the terms of such arrangement such that it is exempt or complies (with the most
limited possible economic effect on the Executive and on Mattel) or to mitigate
any additional tax, interest and/or penalties that may apply under Section 409A
if exemption or compliance is not practicable. Mattel agrees that it will not,
without the Executive’s prior written consent, knowingly take any action, or
knowingly refrain from taking any action, other than as required by law, that
would result in the imposition of tax, interest and/or penalties upon the
Executive under Section 409A, unless such action or omission is pursuant to the
Executive’s written request.

 

(b) To the extent applicable, each and every payment to be made pursuant to
Section 5 or Section 13 of this Agreement shall be treated as a separate payment
and not as one of a series of payments treated as a single payment for purposes
of Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

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(c) If the Executive is a “specified employee” (determined by Mattel in
accordance with Section 409A and Treasury Regulation Section 1.409A-3(i)(2)) as
of the date that the Executive experiences a “separation from service” with
Mattel, as defined for purposes of Section 409A (a “Separation from Service”),
and if any reimbursement, payment or benefit to be paid or provided under this
Agreement or otherwise both (i) constitutes Nonqualified Deferred Compensation
and (ii) cannot be paid or provided in a manner otherwise provided herein
without subjecting the Executive to additional tax, interest and/or penalties
under Section 409A, then any such reimbursement, payment or benefit that is
payable during the first six (6) months following the Date of Termination shall
be paid or provided to the Executive in a lump sum cash payment to be made on
the earlier of (x) the Executive’s death and (y) the first business day of the
seventh (7th) month immediately following the Executive’s Separation from
Service.

 

(d) Except to the extent any reimbursement, payment or benefit to be paid or
provided under this Agreement does not constitute Nonqualified Deferred
Compensation, (i) the amount of expenses eligible for reimbursement or the
provision of any in-kind benefit (as defined in Section 409A) to the Executive
during any calendar year will not affect the amount of expenses eligible for
reimbursement or provided as in-kind benefits to the Executive in any other
calendar year (subject to any lifetime and other annual limits provided under
Mattel’s health plans), (ii) the reimbursements for expenses for which the
Executive is entitled shall be made on or before the last day of the calendar
year following the calendar year in which the applicable expense is incurred and
(iii) the right to payment or reimbursement or in-kind benefits may not be
liquidated or exchanged for any other benefit.

 

(e) Any reimbursement, payment or benefit to be paid or provided under Section 5
hereof or otherwise to be paid or provided due to a Separation from Service that
is exempt from Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(v) will be paid or provided to the Executive only to the
extent the expenses are not incurred or the benefits are not provided beyond the
last day of the Executive’s second taxable year following

 

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the Executive’s taxable year in which the Separation from Service occurs;
provided, however that Mattel shall reimburse such expenses no later than the
last day of the third taxable year following the Executive’s taxable year in
which the Executive’s Separation from Service occurs.

 

(f) It is the parties’ intention that the definition of Good Reason and the
separation-from-service procedures specified in Section 4(c) hereof satisfy the
conditions set forth in Treasury Regulation Section 1.409A-1(n)(2) for a
termination for Good Reason to be treated as an “involuntary separation from
service” for purposes of Section 409A.

 

(g) Subject to Section 9, any reimbursement, payment or benefit to be paid or
provided under this Agreement that constitutes Nonqualified Deferred
Compensation due upon a termination of employment shall be paid or provided to
the Executive only in the event of a Separation from Service.”

 

31. Ratification and Confirmation. Except as specifically amended hereby, the
Agreement is hereby ratified and confirmed in all respects and remains in full
force and effect.

 

32. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of California, without reference to
principles of conflict of laws.

 

33. Headings. Section headings are for convenience only and shall not be
considered a part of this Amendment.

 

34. Counterparts. This Amendment may be executed (including by facsimile
transmission confirmed promptly thereafter by actual delivery of executed
counterparts) in counterparts, each of which shall be deemed to be an original
and all of which together shall constitute one and the same instrument.

 

(Signature Page Follows)

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IN WITNESS WHEREOF, Mattel and the Executive have caused this Amendment to be
executed, effective as of December 31, 2008.

 

  MATTEL, INC.   /s/ ROBERT A. ECKERT  

Name: Robert A. Eckert

Title: Chairman & CEO

 

Dated: December 19, 2008

  EXECUTIVE   /s/ NEIL B. FRIEDMAN  

Name: Neil B. Friedman

Dated: December 20, 2008