EXHIBIT 99.0
MATTEL, INC.
$350,000,000
Series B Medium-Term Notes
Due More Than Nine Months From Date of Issue
DISTRIBUTION AGREEMENT
April 11, 1996
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Dear Sirs:
Mattel, Inc., a Delaware corporation (the "Company"), confirms its
agreement with each of you with respect to the issue and sale from time to time
by the Company of up to $350,000,000 (or the equivalent thereof in one or more
foreign currencies or composite currencies) aggregate initial public offering
price of its Series B Medium-Term Notes due more than nine months from date of
issue (the "Notes"). The Notes will be issued under an Indenture dated as of
February 15, 1996 (the "Indenture") between the Company and Chemical Trust
Company of California, as Trustee (the "Trustee"), and will have the maturities,
interest rates, redemption provisions, if any, and other terms as set forth in
supplements to the Basic Prospectus referred to below.
The Company hereby appoints Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and CS First Boston Corporation ("CS First Boston") (individually, an
"Agent" and collectively, the "Agents") as its exclusive agents, subject to
Section 12, for the purpose of soliciting and receiving offers to purchase Notes
from the Company by others and, on the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees to use reasonable efforts to solicit and receive offers
to purchase Notes upon terms acceptable to the Company at such times and in such
amounts as the Company shall from time to time specify. In addition, any Agent
may also purchase Notes as principal pursuant to the terms of a terms agreement
relating to such sale (a "Terms Agreement") in accordance with the provisions of
Section 2(b) hereof.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-1307) for the
registration of the Notes under the Securities Act of 1933, as amended (the
"Securities Act") and the offering thereof from time to time in accordance with
Rule 415 of the Rules and regulations of the Commission promulgated pursuant to
the Securities Act. Such registration statement (and any further registration
statements which may be filed by the Company for the purpose of registering
additional Notes and in connection with which this Agreement is included or
incorporated by reference as an exhibit), including all documents incorporated
therein by reference, as from time to time amended or supplemented by the filing
of documents pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act or otherwise, are referred to herein as the
"Registration Statement." The Company proposes to file with the Commission from
time to time, pursuant to Rule 424 under the Securities Act, supplements to the
prospectus included in the Registration Statement that will describe certain
terms of the Notes. The prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "Basic Prospectus."
The term "Prospectus" means the Basic Prospectus together with the prospectus
supplement or supplements (each a "Prospectus Supplement") specifically relating
to Notes, as filed with, or transmitted for filing to, the Commission pursuant
to Rule 424. As used herein, the terms "Basic Prospectus" and "Prospectus"
shall include in each case the documents, if any, incorporated by reference
therein. If the Company elects to rely on Rule 434 promulgated pursuant to the
Securities Act, all references to the Prospectus shall be deemed to include,
without limitation, the form of prospectus and the term sheet, taken together,
provided to the Agents by the Company in reliance on such Rule 434 (the "Rule
434 Prospectus"). Unless the context otherwise requires, all references in this
Agreement to documents, financial statements and schedules and other information
which is "contained," "included," "stated," "described in," or "referred to" in
the Registration Statement or the Prospectus shall be deemed to mean and include
all such documents, financial statements and schedules and other information
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to "amendments" or "supplements" to the Registration Statement or
Prospectus shall be deemed to mean and include the filing of any document under
the Exchange Act after the date of this Agreement which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be. If the Company files a registration statement to register a
portion of the Notes and relies on Rule 462(b) promulgated pursuant to the
Securities Act for such registration statement to become effective upon filing
with the Commission (the "Rule 462 Registration Statement"), then any reference
to "Registration Statement" herein shall be deemed to be to both the
registration statement referred to above (No. 333-1307) and the Rule 462
Registration Statement, as each such registration statement may be amended
pursuant to the Securities Act.
1. Representations and Warranties. The Company represents and
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warrants to and agrees with each Agent as of the Commencement Date (as defined
below), as of each time the Company accepts an offer to purchase Notes
(including any purchase by an Agent pursuant to a Terms Agreement), as of each
time the Company issues and delivers Notes and as of each time the Registration
Statement or the Basic Prospectus is amended or supplemented, as follows (it
being understood that such representations, warranties and
agreements shall be deemed to relate to the Registration Statement, the Basic
Prospectus and the Prospectus, each as amended or supplemented to each such
time):
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened to the Company by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied
or will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii)
each part of the Registration Statement, when such part became effective,
did not contain, and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply, and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder, and
(iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that (1) the representations and warranties set forth in this
Section 1(b) do not apply (A) to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
an Agent furnished to the Company in writing by such Agent expressly for
use therein or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of
the Trustee and (2) the representations and warranties set forth in clauses
(iii) and (iv) above, when made as of the Commencement Date or as of any
time on which the Company accepts an offer to purchase Notes, shall be
deemed not to cover information concerning an offering of particular Notes
to the extent such information will be set forth in a supplement to the
Basic Prospectus.
(c) The financial statements of the Company and its subsidiaries
set forth in the Registration Statement and Prospectus fairly present the
financial condition of the Company and its subsidiaries as of the dates
indicated and the results of operations and changes in financial position
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated therein).
(d) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good
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standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(e) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
except to the extent that the failure of any such subsidiary, singly or in
the aggregate, to be so duly incorporated or validly existing or to have
such corporate power and authority, would not have a material adverse
effect on the Company and its subsidiaries taken as a whole or on the
business of the Company and its subsidiaries taken as a whole. Each
subsidiary of the Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to
the extent that the failure of any such subsidiary, singly or in the
aggregate, to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole or on the business of the Company and its subsidiaries taken as a
whole.
(f) Each of this Agreement and any applicable Written Terms
Agreement (as hereinafter defined) has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(h) The Notes have been duly authorized and established as a
series of securities under the Indenture and, when the terms of a
particular Note and its issuance and sale have been duly authorized and
established by all necessary corporate action in conformity with the
Indenture, and such Note has been duly completed, executed, authenticated
and issued in accordance with the provisions of the Indenture and delivered
to and duly paid for by the purchasers thereof as contemplated by this
Agreement, such Note will be entitled to the benefits of the Indenture and
will be a valid and binding obligation of the Company, enforceable in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
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(i) The execution and delivery by the Company of this Agreement,
the Notes, the Indenture and any applicable Written Terms Agreement, and
the performance by the Company of its obligations under this Agreement, the
Notes, the Indenture and any applicable Terms Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Notes, the Indenture and any applicable Terms Agreement, except such as may
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Notes.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(k) There are no legal or governmental proceedings pending or
threatened to the Company to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed or
incorporated by reference as exhibits to the Registration Statement that
are not described or filed or incorporated as required.
(l) The Company and its subsidiaries own or possess the patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks
and trade names (collectively, the "Intellectual Property") employed by
them in connection with the business operated by them, except to the extent
that the failure to own or possess the Intellectual Property would not have
a material adverse effect on the Company and its subsidiaries taken as a
whole, and neither the Company nor any of its subsidiaries has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
material adverse change, or any notice of any other development with
respect to the foregoing involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries taken as
a whole, except as may be described in writing to, and accepted for
exclusion by, the Agents.
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(m) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries are (i) in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses, and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(o) In the ordinary course of its business, the Company conducts
a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) Neither the Company nor any of its subsidiaries has, directly
or indirectly, paid or delivered any fee, commission or other sum of money
or item or property, however characterized, to any finder, agent,
government official or other party, in the United States or any other
country, which is in any manner related to the business, assets or
operations of Company or any of its subsidiaries, which is, or may be with
the passage of time or discovery, illegal under any federal, state or local
laws of the United States (including without limitation the U.S. Foreign
Corrupt Practices' Act) or any other country having jurisdiction; and
neither the Company nor any of its subsidiaries has participated, directly
or indirectly, in any boycotts or other similar practices affecting any of
its actual or potential customers.
(q) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of
Cuba or with any person or any affiliate located in Cuba.
Notwithstanding the foregoing, the representations and warranties set
forth in Section 1(b)(iii) and (iv), (h) (except as to due authorization of the
Notes) and (i), when made as of the Commencement Date, with respect to any Notes
the payments of principal or interest on which will be determined by reference
to one or more currency exchange rates,
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commodity prices, equity indices or other factors, shall be deemed not to
address the application of the Commodity Exchange Act, as amended, or the rules,
regulations or interpretations of the Commodity Futures Trading Commission.
2. Solicitations as Agent; Purchases as Principal
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(a) Solicitations as Agent. In connection with an Agent's
----------------------
actions as agent hereunder, such Agent agrees to use reasonable efforts to
solicit offers to purchase Notes upon the terms and conditions set forth in
the Prospectus as then amended or supplemented.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase Notes. As soon as
practicable, but in any event not later than one business day in New York,
after receipt of notice from the Company, the Agents will suspend
solicitations of offers to purchase Notes from the Company until such time
as the Company has advised the Agents that such solicitation may be
resumed. While such solicitation is suspended, the Company shall not be
required to deliver any certificates, opinions or letters in accordance
with Sections 5(a), 5(b) and 5(c); provided, however, that if the
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Registration Statement or Prospectus is amended or supplemented during the
period of suspension (other than by an amendment or supplement providing
solely for a change in the interest rates, redemption provisions,
amortization schedules or maturities offered on the Notes or for a change
the Agents deem to be immaterial), no Agent shall be required to resume
soliciting offers to purchase Notes until the Company has delivered such
certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the
sale of each Note resulting from a solicitation made or an offer to
purchase received by such Agent, a commission in the form of a discount
from the purchase price of such Note equal to the percentage set forth
below of the purchase price of such Note:
Term Commission Rate
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From 9 months to less than 1 year 0.125%
From 1 year to less than 18 months 0.150%
From 18 months to less than 2 years 0.200%
From 2 years to less than 3 years 0.250%
From 3 years to less than 4 years 0.350%
From 4 years to less than 5 years 0.450%
From 5 years to less than 6 years 0.500%
From 6 years to less than 9 years 0.550%
From 9 years to less than 15 years 0.600%
From 15 years to less than 20 years 0.700%
From 20 years to less than 30 years 0.750%
30 years and beyond To be negotiated
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Each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Notes received by such Agent as agent that
in its judgment should be considered by the Company. The Company shall
have the sole right to accept offers to purchase Notes and may reject any
offer in whole or in part. Each Agent shall have the right to reject any
offer to purchase Notes that it considers to be unacceptable, and any such
rejection shall not be deemed a breach of its agreements contained herein.
The procedural details relating to the issue and delivery of Notes sold by
the Agents as agents and the payment therefor shall be as set forth in the
Administrative Procedures (as hereinafter defined).
(b) Purchases as Principal. Each sale of Notes to an Agent as
----------------------
principal shall be made in accordance with the terms of this Agreement. In
connection with each such sale, the Company will enter into a Terms
Agreement that will provide for the sale of such Notes to and the purchase
thereof by such Agent. Each Terms Agreement will take the form of either
(i) a written agreement between such Agent and the Company, which may be
substantially in the form of Exhibit A hereto (a "Written Terms
Agreement"), or (ii) an oral agreement between such Agent and the Company
confirmed in writing by such Agent to the Company.
An Agent's commitment to purchase Notes pursuant to a Terms
Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the principal amount of Notes to be purchased by such Agent
pursuant thereto, the maturity date of such Notes, the price to be paid to
the Company for such Notes, the interest rate and interest rate formula, if
any, applicable to such Notes and any other terms of such Notes. Each such
Terms Agreement may also specify any requirements for officers'
certificates, opinions of counsel and letters from the independent public
accountants of the Company pursuant to Section 4 hereof. A Terms Agreement
may also specify certain provisions relating to the reoffering of such
Notes by such Agent.
Each Terms Agreement shall specify the time and place of delivery
of and payment for such Notes. Unless otherwise specified in a Terms
Agreement, the procedural details relating to the issue and delivery of
Notes purchased by an Agent as principal and the payment therefor shall be
as set forth in the Administrative Procedures. Each date of delivery of
and payment for Notes to be purchased by an Agent pursuant to a Terms
Agreement is referred to herein as a "Settlement Date."
Unless otherwise specified in a Terms Agreement, if you are
purchasing Notes as principal you may resell such Notes to other dealers.
Any such sales may be at a discount, which shall not exceed the amount set
forth in the Prospectus Supplement relating to such Notes.
(c) Administrative Procedures. The Agents and the Company agree
-------------------------
to perform the respective duties and obligations specifically provided to
be performed in the Medium-Term Notes Administrative Procedures (attached
hereto as Exhibit B)
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(the "Administrative Procedures"), as amended from time to time. The
Administrative Procedures may be amended only by written agreement of the
Company and the Agents.
(d) Delivery. The documents required to be delivered by Section
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4 of this Agreement as a condition precedent to each Agent's obligation to
begin soliciting offers to purchase Notes as an agent of the Company shall
be delivered at the Los Angeles office of Latham & Watkins, counsel for the
Agents, not later than 1 p.m., Los Angeles time, on the date hereof, or at
such other time and/or place as the Agents and the Company may agree upon
in writing, but in no event later than the day prior to the earlier of (i)
the date on which the Agents begin soliciting offers to purchase Notes and
(ii) the first date on which the Company accepts any offer by an Agent to
purchase Notes pursuant to a Terms Agreement. The date of delivery of such
documents is referred to herein as the "Commencement Date."
(e) Obligations Several. The Company acknowledges that the
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obligations of the Agents under this Agreement are several and not joint.
3. Agreements. The Company agrees with each Agent that:
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(a) Prior to the termination of the offering of the Notes
pursuant to this Agreement or any Terms Agreement, the Company will not
file any Prospectus Supplement relating to the Notes or any amendment to
the Registration Statement unless the Company has previously furnished to
the Agents copies thereof for their review and will not file any such
proposed supplement or amendment to which the Agents reasonably object;
provided, however, that (i) the foregoing requirement shall not apply to
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any of the Company's periodic filings with the Commission required to be
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or
pursuant to Item 5 (including related exhibits filed pursuant to Item 7) of
Form 8-K, copies of which filings the Company will cause to be delivered to
the Agents promptly after being transmitted for filing with the Commission
and (ii) any Prospectus Supplement that merely sets forth the terms or a
description of particular Notes shall only be reviewed and approved by the
Agent or Agents offering such Notes. Subject to the foregoing sentence,
the Company will promptly cause each Prospectus Supplement to be filed with
or transmitted for filing to the Commission in accordance with Rule 424(b)
under the Securities Act. The Company will promptly advise the Agents (i)
of the filing of any amendment or supplement to the Basic Prospectus
(except that notice of the filing of an amendment or supplement to the
Basic Prospectus that merely sets forth the terms or a description of
particular Notes shall only be given to the Agent or Agents offering such
Notes), (ii) of the filing and effectiveness of any amendment to the
Registration Statement, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Basic Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose, and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
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the Notes for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or notice of suspension of
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof. If the Basic Prospectus is amended or supplemented as a result of
the filing under the Exchange Act of any document incorporated by reference
in the Prospectus, no Agent shall be obligated to solicit offers to
purchase Notes so long as it is not reasonably satisfied with such
document.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act, any event occurs or
condition exists as a result of which the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact, or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances when the Prospectus, as then amended or
supplemented, is delivered to a purchaser, not misleading, or if, in the
opinion of the Agents or in the opinion of the Company, it is necessary at
any time to amend or supplement the Prospectus, as then amended or
supplemented, to comply with applicable law, the Company will immediately
notify the Agents by telephone (with confirmation in writing) to suspend
solicitation of offers to purchase Notes and, if so notified by the
Company, the Agents shall forthwith suspend such solicitation and cease
using the Prospectus, as then amended or supplemented. If the Company
shall decide to amend or supplement the Registration Statement or
Prospectus, as then amended or supplemented, it shall so advise the Agents
promptly by telephone (with confirmation in writing) and, at its expense,
shall prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or Prospectus, as
then amended or supplemented, satisfactory in all respects to the Agents,
that will correct such statement or omission or effect such compliance and
will supply such amended or supplemented Prospectus to the Agents in such
quantities as they may reasonably request. If any documents, certificates,
opinions and letters furnished to the Agents pursuant to paragraph (f)
below and Sections 5(a), 5(b) and 5(c) in connection with the preparation
and filing of such amendment or supplement are satisfactory in all respects
to the Agents, upon the filing with the Commission of such amendment or
supplement to the Prospectus or upon the effectiveness of an amendment to
the Registration Statement the Agents will resume the solicitation of
offers to purchase Notes hereunder. Notwithstanding any other provision of
this Section 3(b), until the distribution of any Notes an Agent may own as
principal has been completed if any event described above in this paragraph
(b) occurs, the Company will, at its own expense, forthwith prepare and
cause to be filed promptly with the Commission an amendment or supplement
to the Registration Statement or Prospectus, as then amended or
supplemented, satisfactory in all respects to such Agent, will supply such
amended or supplemented Prospectus to such Agent in such quantities as it
may reasonably request and shall furnish to such Agent pursuant to
paragraph (f) below and Sections 5(a), 5(b) and 5(c) such documents,
certificates, opinions and letters as it may request in connection with the
preparation and filing of such amendment or supplement.
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(c) The Company will make generally available to its security
holders and to the Agents as soon as practicable earning statements that
satisfy the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder covering twelve-month periods
beginning, in each case, not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in Rule 158
under the Securities Act) of the Registration Statement with respect to
each sale of Notes. If such fiscal quarter is the last fiscal quarter of
the Company's fiscal year, such earning statement shall be made available
not later than 90 days after the close of the period covered thereby and in
all other cases shall be made available not later than 45 days after the
close of the period covered thereby.
(d) The Company will furnish to each Agent, without charge, a
signed copy of the Registration Statement, including exhibits and all
amendments thereto, and as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and amendments
thereto as such Agent may reasonably request.
(e) The Company will endeavor to qualify the Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Agents shall reasonably request and to maintain such qualifications for as
long as the Agents shall reasonably request.
(f) The Company shall furnish to the Agents such relevant
documents and certificates of officers of the Company relating to the
business, operations and affairs of the Company, the Registration
Statement, the Basic Prospectus, any amendments or supplements thereto, the
Indenture, the Notes, this Agreement, the Administrative Procedures, any
Terms Agreement and the performance by the Company of its obligations
hereunder or thereunder as the Agents may from time to time reasonably
request.
(g) The Company shall notify the Agents promptly in writing of
any downgrading, or of its receipt of any notice of any intended or
potential downgrading or of any review for possible change that does not
indicate the direction of the possible change, in the rating accorded any
of the Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
(h) The Company will, whether or not any sale of Notes is
consummated, pay all expenses incident to the performance of its
obligations under this Agreement and any Terms Agreement, including: (i)
the preparation and filing of the Registration Statement and the Prospectus
and all amendments and supplements thereto, (ii) the preparation, issuance
and delivery of the Notes, (iii) the fees and disbursements of the
Company's counsel and accountants and of the Trustee and its counsel, (iv)
the qualification of the Notes under securities or Blue Sky laws in
accordance with the provisions of Section 3(e), including filing fees and
the fees and disbursements of counsel for the Agents in connection
therewith and in connection
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with the preparation of any Blue Sky or Legal Investment Memoranda, (v) the
printing and delivery to the Agents in quantities as hereinabove stated of
copies of the Registration Statement and all amendments thereto and of the
Prospectus and any amendments or supplements thereto, (vi) the printing and
delivery to the Agents of copies of any Blue Sky or Legal Investment
Memoranda, (vii) any fees charged by rating agencies for the rating of the
Notes, (viii) the fees and expenses, if any, incurred with respect to any
filing with the National Association of Securities Dealers, Inc., (ix) the
fees and disbursements of counsel for the Agents incurred in connection
with the offering and sale of the Notes, including any opinions to be
rendered by such counsel hereunder, and (x) any reasonable out-of-pocket
expenses incurred by the Agents; provided that any advertising expenses
(including tombstones) incurred by the Agents shall have been approved by
the Company.
(i) Between the date of any Terms Agreement and the Settlement
Date with respect to such Terms Agreement, the Company will not, without
such Agent's prior consent, offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company substantially similar to such
Notes (other than (i) the Notes that are to be sold pursuant to such Terms
Agreement, (ii) Notes previously agreed to be sold by the Company, and
(iii) commercial paper and short-term bank loans issued in the ordinary
course of business), except as may otherwise be provided in such Terms
Agreement.
4. Conditions of the Obligations of the Agents. Each Agent's
-------------------------------------------
obligation to solicit offers to purchase Notes as agent of the Company, each
Agent's obligation to purchase Notes pursuant to any Terms Agreement and the
obligation of any other purchaser to purchase Notes will be subject to the
accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the statements of the Company's officers made in each
certificate furnished pursuant to the provisions hereof and to the performance
and observance by the Company of all covenants and agreements herein contained
on its part to be performed and observed (in the case of an Agent's obligation
to solicit offers to purchase Notes, at the time of such solicitation, and, in
the case of an Agent's or any other purchaser's obligation to purchase Notes, at
the time the Company accepts the offer to purchase such Notes and at the time of
issuance and delivery) and (in each case) to the following additional conditions
precedent when and as specified:
(a) Prior to such solicitation or purchase, as the case may be:
(i) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus, as amended or supplemented at the time of
such solicitation or at the time such offer to purchase was made,
that, in the judgment of the relevant Agent, is material and adverse
and that makes it, in the judgment of such Agent, impracticable to
market the Notes on the terms and in the manner contemplated by the
Prospectus, as so amended or supplemented;
12
(ii) there shall not have occurred any (A) suspension or
material limitation of trading generally on or by, as the case may be,
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (B) suspension of trading of any securities of the Company on
any exchange or in any over-the-counter market, (C) declaration of a
general moratorium on commercial banking activities in New York by
either Federal or New York State authorities, or (D) any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the relevant Agent, is
material and adverse and, in the case of any of the events described
in clauses (ii)(A) through (D), such event, singly or together with
any other such event, makes it, in the judgment of such Agent,
impracticable to market the Notes on the terms and in the manner
contemplated by the Prospectus, as amended or supplemented at the time
of such solicitation or at the time such offer to purchase was made;
and
(iii) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(A) except, in each case described in paragraph (i), (ii) or (iii) above,
as disclosed to the relevant Agent in writing by the Company prior to such
solicitation or, in the case of a purchase of Notes, as disclosed to the
relevant Agent before the offer to purchase such Notes was made, or (B)
unless in each case described in (ii) above, the relevant event shall have
occurred and been known to the relevant Agent before such solicitation or,
in the case of a purchase of Notes, before the offer to purchase such Notes
was made.
(b) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall
have received a certificate, dated the Commencement Date or such Settlement
Date, as the case may be, signed by an executive officer of the Company to
the effect set forth in subparagraph (a)(iii) above and to the effect that
the representations and warranties of the Company contained herein are true
and correct as of such date and that the Company has complied with all of
the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before such date.
The officer signing and delivering such certificate may rely upon
the best of his knowledge as to proceedings threatened.
13
(c) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall
have received:
(i) The opinion, dated as of such date, of Irell & Manella,
counsel for the Company to the effect that:
(A) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus, as then amended or supplemented, and
is duly qualified to transact business and is in good standing in
the State of California;
(B) each of this Agreement and any applicable Written
Terms Agreement has been duly authorized, executed and delivered
by the Company;
(C) the Indenture has been duly qualified under the
Trust Indenture Act and has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of
the Company, enforceable in accordance with its terms except as
(i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
(D) the Notes have been duly authorized and, if
executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the purchasers
thereof on the date of such opinion, will be entitled to the
benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their
respective terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by
equitable principles of general applicability;
(E) the execution and delivery by the Company of this
Agreement, the Notes, the Indenture and any applicable Written
Terms Agreement, and the performance by the Company of its
obligations under this Agreement, the Notes, the Indenture and
any applicable Terms Agreement will not contravene any provision
of applicable law or the certificate of incorporation or by-laws
of the Company or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to
14
the Company and its subsidiaries taken as a whole, or, to the
best of such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, the Notes,
the Indenture and any applicable Terms Agreement, except such as
may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Notes;
(F) to the best of such counsel's knowledge, neither
the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with asserted rights of others
with respect to any Intellectual Property employed by them in
connection with the business operated by the Company or its
subsidiaries which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in any
material adverse change, or notice of any other development with
respect to the foregoing involving a prospective material adverse
change, in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company
and its subsidiaries, taken as a whole, except as may be
disclosed in writing by the Company to, and accepted for
exclusion by, the Agents;
(G) the statements (1) in the Prospectus, as then
amended or supplemented, under the captions "Description of
Notes," "Description of Debt Securities" and "Certain Federal
Income Tax Consequences" or "United States Income Tax
Consequences to Holders" and (2) in the Registration Statement
under Item 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred
to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(H) to the best of such counsel's knowledge after due
inquiry, there are no legal or governmental proceedings pending
or threatened to which the Company or any of its subsidiaries is
a party or to which any of the properties of the Company or any
of its subsidiaries is subject or any developments in such
proceedings that are required to be described in the Registration
Statement or the Prospectus, as then amended or supplemented, and
are not so described or of any statutes, regulations, contracts
or other documents that are required to be described in the
Registration Statement or the Prospectus, as then amended or
supplemented, or to be filed or incorporated by reference as
exhibits to such Registration Statement that are not so described
or filed or incorporated as required;
15
(I) the Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended;
(J) the Registration Statement has become effective
under the Act; the Prospectus, as then amended or supplemented,
has been filed as required hereunder; and to the best knowledge
of such counsel no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission;
(K) such counsel (1) is of the opinion that each
document, if any, filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and the
Prospectus, as then amended or supplemented (except for financial
statements and schedules included therein as to which such
counsel need not express any opinion), complied when so filed as
to form in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder,
and (2) is of the opinion that the Registration Statement and the
Prospectus, as then amended or supplemented (except for financial
statements and schedules included therein as to which such
counsel need not express any opinion), comply as to form in all
material respects with the Securities Act, the rules and
regulations of the Commission thereunder and the Trust Indenture
Act; and
(L) no facts have come to the attention of such counsel
that would lead such counsel to believe that (1) (except for
financial statements and schedules as to which such counsel need
not express any belief and except for that part of the
Registration Statement that constitutes the Form T-1 heretofore
referred to) each part of the Registration Statement, as then
amended, if applicable, when such part became effective did and,
as of the date such opinion is delivered, does contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (2) (except for financial statements
and schedules as to which such counsel need not express any
belief) the Prospectus, as then amended or supplemented, if
applicable, as of the date such opinion is delivered contains any
untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided that in the case of an opinion delivered on
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the Commencement Date or pursuant to Section 5(c), the belief set
forth in clause (2) above shall be deemed not to cover
information concerning an offering of particular Notes to the
extent such information will be set forth in a supplement to the
Basic Prospectus.
16
(ii) The opinion, dated as of such date, of the general
counsel or the assistant general counsel of the Company, to the effect
that:
(A) the Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a
whole;
(B) based upon opinions, oral or written, of foreign
counsel, or of certificates of governmental officials, each of
the subsidiaries of the Company meeting the definition of
"Significant Subsidiary" under Regulation S-X of the Commission
has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the
Prospectus, as then amended or supplemented, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on such
subsidiary;
(C) the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this
Agreement, any applicable Written Terms Agreement, the Notes and
the Indenture will not contravene any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of or qualification with any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, any
applicable Terms Agreement, the Notes and the Indenture, except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the
Notes;
(D) the Company and its subsidiaries own or possess the
Intellectual Property employed by them in connection with the
business operated by them, except to the extent that the failure
to own or possess the Intellectual Property would not have a
material adverse effect on the Company and its subsidiaries taken
as a whole, and neither the Company nor any of its subsidiaries
has received any notice
17
of infringement of or conflict with asserted rights of others
with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in any material adverse change, or notice
of any other development with respect to the foregoing involving
a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, taken as
a whole, except as may be disclosed in writing by the Company to,
and accepted for exclusion by, the Agents;
(E) there are no legal or governmental proceedings
pending or threatened to the Company to which the Company or any
of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject or any
development in such proceedings that are required to be described
in the Registration Statement or the Prospectus, as then amended
or supplemented, and are not so described, or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus, as
then amended or supplemented, or to be filed or incorporated by
reference as exhibits to such Registration Statement that are not
so described or filed or incorporated as required;
(F) such counsel (1) is of the opinion that each
document, if any, filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and the
Prospectus, as then amended or supplemented (except for financial
statements and schedules as to which such counsel need not
express any opinion) complied when so filed as to form in all
material respects with the Exchange Act and the applicable rules
and regulations of the Commission thereunder, and (2) is of the
opinion that the Registration Statement and the Prospectus, as
then amended or supplemented (except for financial statements and
schedules included therein as to which such counsel need not
express any opinion), comply as to form in all material respects
with the Securities Act, the rules and regulations of the
Commission thereunder and the Trust Indenture Act; and
(G) no facts have come to the attention of such counsel
that would lead such counsel to believe that (1) (except for
financial statements and schedules as to which such counsel need
not express any belief and except for that part of the
Registration Statement that constitutes the Form T-1 heretofore
referred to) each part of the Registration Statement, as then
amended, if applicable, when such part became effective did not
and, as of the date such opinion is delivered, does not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and (2) (except for
financial
18
statements and schedules as to which such counsel need not
express any belief) the Prospectus, as then amended or
supplemented, if applicable, as of the date such opinion is
delivered contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that in the case of an
--------
opinion delivered on the Commencement Date or pursuant to Section
5(b), the belief set forth in clause (2) above shall be deemed
not to cover information concerning an offering of particular
Notes to the extent such information will be set forth in a
supplement to the Basic Prospectus.
(iii) The opinion, dated as of such date, of Latham &
Watkins, counsel for the Agents, covering the matters in subparagraphs
(B), (C), (D) and (G) (but only with respect to statements in the
Prospectus, as then amended or supplemented, under the captions
"Description of Notes" and "Description of Debt Securities"), and that
nothing has come to their attention with respect to the matters in
subparagraph (L) in paragraph (c)(i) above.
Notwithstanding the foregoing, the opinions described in
subparagraphs (D) (except as to due authorization of the Notes), (E),
(G)(1) and (L) of paragraph (c)(i) above, when contained in an opinion
delivered on the Commencement Date or pursuant to Sections 5(b) or 5(c),
shall be deemed not to address the application of the Commodity Exchange
Act, as amended, or the rules, regulations or interpretations of the
Commodity Futures Trading Commission to Notes the payments of principal or
interest on which will be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors.
With respect to subparagraph (L) of paragraph (c)(i) above, Irell
& Manella may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified. With respect to subparagraph (L) of paragraph (c)(iii) above,
Latham & Watkins may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto (other than documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by reference),
but are without independent check or verification, except as specified.
The opinion of Irell & Manella described in paragraph (c)(i)
above shall be rendered to the relevant Agents at the request of the
Company and shall so state therein.
19
(d) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the Company's independent
public accountants shall have furnished to the relevant Agents a letter or
letters, dated as of the Commencement Date or such Settlement Date, as the
case may be, in form and substance satisfactory to such Agents containing
statements and information of the type ordinarily included in accountant's
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in or incorporated by reference
into the Prospectus, as then amended or supplemented.
(e) On the Commencement Date and on each Settlement Date, the
Company shall have furnished to the relevant Agents such appropriate
further information, certificates and documents as they may reasonably
request.
5. Additional Agreements of the Company
------------------------------------
(a) Each time the Registration Statement or Prospectus is amended
or supplemented (other than by an amendment or supplement providing solely
for a change in the interest rates, redemption provisions, amortization
schedules or maturities offered on the Notes or for a change the Agents
deem to be immaterial or for an amendment or supplement by filing of a Form
8-K which the Company deems to be immaterial), the Company will deliver or
cause to be delivered forthwith to each Agent a certificate signed by an
executive officer of the Company, dated the date of such amendment or
supplement, as the case may be, in form reasonably satisfactory to the
Agents, of the same tenor as the certificate referred to in Section 4(b)
relating to the Registration Statement or the Prospectus as amended or
supplemented to the time of delivery of such certificate.
(b) Each time the Company furnishes a certificate pursuant to
Section 5(a), the Company will furnish or cause to be furnished forthwith
to each Agent a written opinion of the general counsel or assistant general
counsel of the Company. Any such opinion shall be dated the date of such
amendment or supplement, as the case may be, shall be in a form
satisfactory to the Agents and shall be of the same tenor as the opinion
referred to in Section 4(c)(ii), as the case may be, but modified to relate
to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion. In lieu of such
opinion, counsel last furnishing such an opinion to an Agent may furnish to
each Agent a letter to the effect that such Agent may rely on such last
opinion to the same extent as though it were dated the date of such letter
(except that statements in such last opinion will be deemed to relate to
the Registration Statement and the Prospectus as amended or supplemented to
the time of delivery of such letter.)
(c) Each time the Company files a Form 10-K or an amendment to a
Form 10-K and each time a Terms Agreement calls for a written opinion of
independent counsel for the Company, the Company will furnish or cause to
be furnished forthwith to each Agent a written opinion of independent
counsel for the Company. Any such opinion shall be dated the date of such
amendment or
20
supplement, as the case may be, shall be in a form satisfactory to the
Agents and shall be of the same tenor as the opinion referred to in Section
4(c)(i), as the case may be, but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such opinion. In lieu of such opinion, counsel last furnishing
such an opinion to an Agent may furnish to each Agent a letter to the
effect that such Agent may rely on such last opinion to the same extent as
though it were dated the date of such letter (except that statements in
such last opinion will be deemed to relate to the Registration Statement
and the Prospectus as amended or supplemented to the time of delivery of
such letter.)
(d) Each time the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information or such amended or supplemental information is incorporated by
reference in the Prospectus, the Company shall cause its independent public
accountants forthwith to furnish each Agent with a letter, dated the date
of such amendment or supplement, as the case may be, in form satisfactory
to the Agents, of the same tenor as the letter referred to in Section 4(d),
with regard to the amended or supplemental financial information included
or incorporated by reference in the Registration Statement or the
Prospectus as amended or supplemented to the date of such letter.
6. Indemnification and Contribution
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Agent
and each person, if any, who controls such Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by any Agent or any such controlling person in connection with
investigating or defending any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to such Agent furnished to the Company in writing by such Agent
expressly for use therein.
(b) Each Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Agent, but only with reference to information relating to
such Agent furnished to the Company in writing by such Agent expressly for
use in the Registration Statement or the Prospectus or any amendments or
supplements thereto.
21
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by Morgan
Stanley or, if Morgan Stanley is not an indemnified party and is not
reasonably likely to become an indemnified party, by the Agents that are
indemnified parties, in the case of parties indemnified pursuant to
paragraph (a) above, and by the Company, in the case of parties indemnified
pursuant to paragraph (b) above. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
22
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 6 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein in connection with any offering of Notes, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and each
Agent on the other hand from the offering of such Notes or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and each Agent on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent on
the other hand in connection with the offering of such Notes shall be
deemed to be in the same respective proportions as the total net proceeds
from the offering of such Notes (before deducting expenses) received by the
Company bear to the total discounts and commissions received by each Agent
in respect thereof. The relative fault of the Company on the one hand and
of each Agent on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or by such Agent and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Each Agent's obligation to
contribute pursuant to this Section 6 shall be several (in the proportion
that the principal amount of the Notes the sale of which by or through such
Agent gave rise to such losses, claims, damages or liabilities bears to the
aggregate principal amount of the Notes the sale of which by or through any
Agent gave rise to such losses, claims, damages or liabilities) and not
joint.
(e) The Company and the Agents agree that it would not be just or
equitable if contribution pursuant to this Section 6 were determined by pro
---
rata allocation (even if the Agents were treated as one entity for such
----
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 6, no Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Notes referred to in paragraph (d) above that were offered and sold to the
public through such Agent exceeds the amount of any damages that such Agent
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
23
who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 6 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
7. Position of the Agents. In acting under this Agreement and in
----------------------
connection with the sale of any Notes by the Company (other than Notes sold to
an Agent pursuant to a Terms Agreement), each Agent is acting solely as agent of
the Company and does not assume any obligation towards or relationship of agency
or trust with any purchaser of Notes. An Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company, but
such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company shall default in its
obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall hold the relevant Agent harmless against any loss, claim, damage
or liability arising from or as a result of such default and shall, in
particular, pay to such Agent the commission it would have received had such
sale been consummated.
8. Termination. This Agreement may be terminated at any time by
-----------
the Company or, as to any Agent, by the Company or such Agent upon the giving of
written notice of such termination to the other parties hereto, but without
prejudice to any rights, obligations or liabilities of any party hereto accrued
or incurred prior to such termination. The termination of this Agreement shall
not require termination of any Terms Agreement, and the termination of any such
Terms Agreement shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third paragraph of Section 2(a),
Section 2(e), the last sentence of Section 3(b) and Sections 3(c), 3(h), 6, 7,
9, 11 and 14 shall survive; provided that if at the time of termination an offer
--------
to purchase Notes has been accepted by the Company but the time of delivery to
the purchaser or its agent of such Notes has not occurred, the provisions of
Sections 2(b), 2(c), 3(a), 3(e), 3(f), 3(g), 3(i), 4 and 5 shall also survive
until such delivery has been made.
9. Representations and Indemnities to Survive. The respective
------------------------------------------
indemnity and contribution agreements, representations, warranties and other
statements of the Company, its officers and the Agents set forth in or made
pursuant to this Agreement or any Terms Agreement will remain in full force and
effect, regardless of any termination of this Agreement or any such Terms
Agreement, any investigation made by or on behalf of an Agent or the Company or
any of the officers, directors or controlling persons referred to in Section 6
and delivery of and payment for the Notes.
10. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to Morgan Stanley, will be mailed,
delivered or telefaxed and confirmed to Morgan Stanley at 1585 Broadway, 2nd
Floor, New York, New York 10036, Attention: Manager, Continuously Offered
Products (telefax number: 212-761-0780), with a copy to 1585 Broadway, 2nd
Floor, New York, New York 10036, Attention: Peter Cooper, Investment Banking
Information Center, 34th Floor (telefax number: 212-761-0260), or, if sent to
CS First Boston, will be mailed, delivered or telefaxed and confirmed to CS
First Boston at 55 East 52nd Street, New York, New York 10055, Attention: Medium
Term Note
24
Program (telefax number: 212-318-1498), with a copy to Martha D. Bailey, or, if
sent to the Company, will be mailed, delivered or telefaxed and confirmed to the
Company at 333 Continental Boulevard, El Segundo, California 90245-5012,
Attention: William Stavro, Senior Vice President and Treasurer (telefax number:
310-252-3215), with a copy to Lee Smith, Assistant General Counsel and Assistant
Secretary.
11. Successors. This Agreement and any Terms Agreement will
----------
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers, directors and controlling persons
referred to in Section 6 and the purchasers of Notes (to the extent expressly
provided in Section 4), and no other person will have any right or obligation
hereunder.
12. Amendments. This Agreement may be amended or supplemented
----------
if, but only if, such amendment or supplement is in writing and is signed by the
Company and each Agent; provided that the Company may from time to time, on
--------
seven days' prior written notice to the Agents but without the consent of any
Agent, amend this Agreement to add as a party hereto one or more additional
firms registered under the Exchange Act, whereupon each such firm shall become
an Agent hereunder on the same terms and conditions as the other Agents that are
parties hereto. The Agents shall sign any amendment or supplement giving effect
to the addition of any such firm as an Agent under this Agreement.
13. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement
--------
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
MATTEL, INC.
By /s/ WILLIAM STAVRO
----------------------------------------
William Stavro
Senior Vice President and Treasurer
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ C. DANIEL EWELL
----------------------------------------------------
C. Daniel Ewell
Principal
CS FIRST BOSTON CORPORATION
By:/s/ MICHAEL HARTMEIER
---------------------------------------------------
Michael Hartmeier
Vice President
26
EXHIBIT A
MATTEL, INC.
SERIES B MEDIUM-TERM NOTES
TERMS AGREEMENT
__________ __, 199_
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245-5012
Attention:
Re: Distribution Agreement dated as of
April 11, 1996 (the "Distribution Agreement")
---------------------------------------------
We agree to purchase your Series B Medium-Term Notes (the "Notes")
having the following terms:
We agree to purchase, severally and not jointly, the principal amount
of Notes set forth below opposite our names:
Name Principal Amount
---- of Notes
-----------------
Morgan Stanley & Co.
Incorporated
CS First Boston Corporation
Total..................... $________________
A-1
The Notes shall have the following terms:
All Notes:
- ---------
Principal amount:
Purchase price:
Price to public:
Settlement date and time:
Place of delivery:
Specified currency:
Maturity date:
Initial accrual period OID:
Total amount of OID:
Original yield to maturity:
Optional repayment date(s):
Optional redemption date(s):
Initial redemption date:
Initial redemption percentage:
Annual redemption percentage decrease:
Other terms:
Fixed Rate Notes:
- ----------------
Interest Rate:
Applicability of modified payment upon acceleration:
If yes, state issue price:
Amortization schedule:
Floating Rate Notes:
- -------------------
Base rate:
Index maturity:
Spread:
Spread multiplier:
Alternate rate event spread:
Initial interest rate:
Initial interest reset date:
Interest reset dates:
Interest reset period:
Maximum interest rate:
Minimum interest rate:
Interest payment period:
Interest payment dates:
Calculation agent:
The provisions of Sections 1, 2(b) and 2(c) and 3 through 6, 9, 10, 11
and 14 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
If on the Settlement Date any one or more of the Agents shall fail or
refuse to purchase Notes that it has or they have agreed to purchase on such
date, and the aggregate amount of Notes which such defaulting Agent or Agents
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate amount of the Notes to be purchased on such date, the other Agents
shall be obligated severally in the proportions that the amount of Notes set
forth opposite their respective names above bears to the aggregate amount of
Notes set forth opposite the names of all such non-defaulting Agents, or in such
other proportions as _______________________________ may specify, to purchase
the Notes which such defaulting Agent or Agents agreed but failed or refused to
purchase on such date; provided that in no event shall the amount of Notes that
--------
any Agent has agreed to purchase pursuant to
A-2
this Agreement be increased pursuant to this paragraph by an amount in excess of
one-ninth of such amount of Notes without the written consent of such Agent. If
on the Settlement Date any Agent or Agents shall fail or refuse to purchase
Notes and the aggregate amount of Notes with respect to which such default
occurs is more than one-tenth of the aggregate amount of Notes to be purchased
on such date, and arrangements satisfactory to______________________________
and the Company for the purchase of such Notes are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Agent or the Company. In any such case either
_________________________________________ or the Company shall have the right to
postpone the Settlement Date but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Agent from
liability in respect of any default of such Agent under this Agreement.
This Agreement is subject to termination on the terms incorporated by
reference herein. If this Agreement is so terminated, the provisions of
Sections 3(h), 6, 9, 11 and 14 of the Distribution Agreement shall survive for
the purposes of this Agreement.
A-3
The following information, opinions, certificates, letters and
documents referred to in Section 4 of the Distribution Agreement will be
required:
MORGAN STANLEY & CO. INCORPORATED
By:_________________________________
Name:
Title:
CS FIRST BOSTON CORPORATION
By:_________________________________
Name:
Title:
Accepted:
MATTEL, INC.
By:__________________________
Name:
Title:
A-4
EXHIBIT B
MATTEL, INC.
SERIES B MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
---------------------------------
Explained below are the administrative procedures and specific terms
of the offering of Series B Medium-Term Notes (the "Notes"), on a continuous
basis by Mattel, Inc. (the "Company") pursuant to the Distribution Agreement,
dated as of April 11, 1996 (the "Distribution Agreement") among the Company and
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), and CS First Boston
Corporation ("CS First Boston") (the "Agents"). The Notes will be issued under
an Indenture dated as of February 15, 1996 (the "Indenture") between the Company
and Chemical Trust Company of California, as trustee (the "Trustee"). In the
Distribution Agreement, the Agents have agreed to use reasonable efforts to
solicit purchases of the Notes, and the administrative procedures explained
below will govern the issuance and settlement of any Notes sold through an
Agent, as agent of the Company. An Agent, as principal, may also purchase Notes
for its own account, and if requested by such Agent, the Company and such Agent
will enter into a terms agreement (a "Terms Agreement"), as contemplated by the
Distribution Agreement. The administrative procedures explained below will
govern the issuance and settlement of any Notes purchased by an Agent, as
principal, unless otherwise specified in the applicable Terms Agreement.
Capitalized terms used herein without definition shall have the meaning ascribed
to them in the Notes.
The Trustee will be the Registrar, Calculation Agent, Authenticating
Agent and Paying Agent for the Notes and will perform the duties specified
herein. Each Note will be represented by either a Global Security (as defined
below) delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry
Note") or a certificate delivered to the holder thereof or a person designated
by such holder (a "Certificated Note"). Except as set forth in the Indenture,
an owner of a Book-Entry Note will not be entitled to receive a Certificated
Note.
Book-Entry Notes, which may be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures. Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof. Unless otherwise defined
herein, terms defined in the Indenture, the Notes or any prospectus supplement
relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of the employees of the
Company with whom the Agents are to communicate regarding offers to purchase
Notes and the related settlement details.
B-1
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of April 11, 1996, and a Medium-
Term Note Certificate Agreement between Chemical Bank as agent for the Trustee
and DTC, dated as of December 2, 1988 (the "MTN Certificate Agreement"), and its
obligations as a participant in DTC, including DTC's Same-Day Funds Settlement
System ("SDFS").
Issuance: On any date of settlement (as defined
under "Settlement" below) for one or
more Book-Entry Notes, the Company
will issue a single global security
in fully registered form without
coupons (a "Global Security")
representing up to U.S. $200,000,000
principal amount of all such Notes
that have the same Original Issue
Date, Maturity Date and other terms.
Each Global Security will be dated
and issued as of the date of its
authentication by the Trustee. Each
Global Security will bear an
"Interest Accrual Date," which will
be (i) with respect to an original
Global Security (or any portion
thereof), its original issuance date
and (ii) with respect to any Global
Security (or any portion thereof)
issued subsequently upon exchange of
a Global Security, or in lieu of a
destroyed, lost or stolen Global
Security, the most recent Interest
Payment Date to which interest has
been paid or duly provided for on the
predecessor Global Security (or if no
such payment or provision has been
made, the original issuance date of
the predecessor Global Security),
regardless of the date of
authentication of such subsequently
issued Global Security. Book-Entry
Notes may be payable only in U.S.
dollars. No Global Security will
represent any Certificated Note.
Denominations: Book-Entry Notes will be issued in
principal amounts of U.S. $1,000 or
any amount in excess thereof that is
an integral multiple of U.S. $1,000.
Global Securities will be denominated
in principal amounts not in excess of
U.S. $200,000,000. If one or more
Book-Entry Notes having an aggregate
principal amount in excess of
$200,000,000 would, but for the
preceding sentence, be represented by
a single Global Security, then one
Global Security will be issued to
represent each U.S. $200,000,000
principal amount of such Book-Entry
Note or Notes and an additional
Global Security will be issued to
represent any remaining principal
amount of such Book-Entry Note or
Notes. In such a case, each of the
Global Securities representing such
Book-Entry Note or Notes shall be
assigned the same CUSIP number.
B-2
Preparation of If any offer to purchase a Book-Entry
Pricing Note is accepted by or on behalf of
Supplement: the Company, the Company will prepare
a pricing supplement (a "Pricing
Supplement") reflecting the terms of
such Note. The Company (i) will
arrange to file such Pricing
Supplement with the Commission in
accordance with the applicable
paragraph of Rule 424(b) under the
Securities Act of 1933, as amended,
and (ii) will, as soon as possible
and in any event not later than 11:00
a.m. on the business day immediately
following the applicable trade date,
deliver the number of copies of such
Pricing Supplement to the relevant
Agent as such Agent shall request at
the following address:
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Medium Term Note Trading Desk,
Carlos Cabrera and Lou Napoli
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
with a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
4th Floor
New York, New York 10020
Attn: Manager - Continuously Offered
Products
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
If to CS First Boston:
CS First Boston Corporation
5 World Trade Center, 7th Floor
New York, New York 10048
Attn: Ms. Joan Bryan
Telephone: (212) 322-5105
Telecopy: (212) 803-4096
B-3
with a copy to:
CS First Boston Corporation
MTN Department
Park Avenue Plaza
New York, New York 10055
Attn: J. Walker
Telephone: (212) 909-2732
Telecopy: (212) 318-1498
In each instance that a Pricing
Supplement is prepared, the relevant
Agent will affix the Pricing
Supplement to Prospectuses prior to
their use. Outdated Pricing
Supplements, and the Prospectuses to
which they are attached (other than
those retained for files), will be
destroyed.
Settlement: The receipt by the Company of
immediately available funds in
payment for a Book-Entry Note and the
authentication and issuance of the
Global Security representing such
Note shall constitute "settlement"
with respect to such Note. All
offers accepted by the Company will
be settled on the third Business Day
next succeeding the date of
acceptance pursuant to the timetable
for settlement set forth below,
unless the Company and the purchaser
agree to settlement on another day,
which shall be no earlier than the
next Business Day.
Settlement Settlement Procedures with regard to
Procedures: each Book-Entry Note sold by the
Company to or through an Agent
(unless otherwise specified pursuant
to a Terms Agreement) shall be as
follows:
A. The relevant Agent will advise
the Company by telephone that such
Note is a Book-Entry Note and of the
following settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed Rate
Book-Entry Note, the Interest Rate,
whether such Note will pay interest
annually or semi-annually and whether
such Note is an Amortizing Note, and,
if so, the amortization schedule, or,
in the case of a Floating Rate
Book-Entry Note, the Initial Interest
Rate (if known at such time),
Interest Payment Date(s), Interest
Payment Period, Calculation Agent,
Base Rate, Index Maturity, Interest
Reset Period, Initial Interest Reset
Date, Interest Reset Date, Spread or
Spread Multiplier (if
B-4
any), Minimum Interest Rate (if any),
Maximum Interest Rate (if any), and
the Alternate Rate Event Spread (if
any).
4. Redemption or repayment
provisions (if any).
5. Settlement date and time
(Original Issue Date).
6. Interest Accrual Date.
7. Price.
8. Agent's commission (if any)
determined as provided in the
Distribution Agreement.
9. Whether the Note is an Original
Issue Discount Note (an "OID Note"),
and if it is an OID Note, the total
amount of OID, the yield to
maturity, the initial accrual period
OID and the applicability of
Modified Payment upon Acceleration
(and, if so, the Issue Price).
10. Whether the Note is an Indexed Note,
and if it is an Indexed Note, the
Denominated Currency, the Indexed
Currency or Currencies, the Payment
Currency, the Exchange Rate Agent,
the Reference Dealers, the Face
Amount, the Fixed Amount of each
Indexed Currency, the Aggregate
Fixed Amount of each Indexed
Currency and the Authorized
Denominations (if other than U.S.
Dollars).
11. Whether the Note is a Renewable
Note, and if it is a Renewable Note,
the Initial Maturity Date and the
Final Maturity Date.
12. Whether the Company has the
option to extend the Original
Maturity Date of the Note, and if
so, the Final Maturity Date of such
Note.
13. Whether the Company has the
option to reset the Interest Rate,
the Spread or the Spread Multiplier
of the Note.
14. Any other applicable terms.
B. The Company will advise the
Trustee by telephone or electronic
transmission (confirmed in writing at
any time on the same date) of the
information set forth in Settlement
Procedure "A" above. The Trustee
will then assign a CUSIP number to
the Global Security representing such
Note and will notify the Company
and
B-5
the relevant Agent of such CUSIP
number by telephone as soon as
practicable.
C. The Trustee will enter a pending
deposit message through DTC's
Participant Terminal System,
providing the following settlement
information to DTC, to all relevant
Agents and the CUSIP Bureau of
Standard & Poor's Corporation:
1. The information set forth in
Settlement Procedure "A".
2. The Initial Interest Payment Date
for such Note, the number of days by
which such date succeeds the related
DTC Record Date (which in the case
of Floating Rate Notes which reset
daily or weekly, shall be the date
five calendar days immediately
preceding the applicable Interest
Payment Date and, in the case of all
other Notes, shall be the Record
Date as defined in the Note) and, if
known, the amount of interest
payable on such Initial Interest
Payment Date.
3. The CUSIP number of the Global
Security representing such Note.
4. Whether such Global Security will
represent any other Book-Entry Note
(to the extent known at such time).
5. Whether such Note is an Amortizing
Note (by an appropriate notation in
the comments field of DTC's
Participant Terminal System).
6. The number of participant
accounts to be maintained by DTC on
behalf of the relevant Agent and the
Trustee.
D. The Trustee will complete and
authenticate the Global Security
representing such Note.
E. DTC will credit such Note to the
Trustee's participant account at DTC.
F. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC to (i) debit such
Note to the Trustee's participant
account and credit such Note to the
relevant Agent's participant account
and (ii) debit such Agent's
settlement account and credit the
Trustee's settlement account for an
amount equal to the price of such
Note less such Agent's commission (if
any). The entry of such a deliver
order shall
B-6
constitute a representation and
warranty by the Trustee to DTC that
(a) the Global Security representing
such Book-Entry Note has been issued
and authenticated and (b) the Trustee
is holding such Global Security
pursuant to the MTN Certificate
Agreement.
G. Unless the relevant Agent is the
end purchaser of such Note, such
Agent will enter an SDFS deliver
order through DTC's Participant
Terminal System instructing DTC (i)
to debit such Note to such Agent's
participant account and credit such
Note to the participant accounts of
the Participants with respect to such
Note and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of such
Agent for an amount equal to the
price of such Note.
H. Transfers of funds in accordance
with SDFS deliver orders described in
Settlement Procedures "F" and "G"
will be settled in accordance with
SDFS operating procedures in effect
on the settlement date.
I. The Trustee will credit to the
account of the Company maintained
with respect to any transaction
conducted in U.S. Dollars at Bank of
America, Concord, California 94520,
account number 12354-07478, to the
account of Mattel Toys, ABA
#121000358, or such other account as
the Company shall have specified to
such Agent and the Trustee, and with
respect to any transaction conducted
in any Specified Currency other than
U.S. Dollars, to such account as the
Company shall have specified to such
Agent and the Trustee, in immediately
available funds the amount
transferred to the Trustee in
accordance with Settlement Procedure
"F".
J. Unless the relevant Agent is the
end purchaser of such Note, such
Agent will confirm the purchase of
such Note to the purchaser either by
transmitting to the Participants with
respect to such Note a confirmation
order or orders through DTC's
institutional delivery system or by
mailing a written confirmation to
such purchaser.
K. Monthly, the Trustee will send to
the Company a statement setting forth
the principal amount of Notes
outstanding as of that date under the
Indenture and setting forth a brief
description of any sales of which the
Company has advised the Trustee that
have not yet been settled.
B-7
Settlement For sales by the Company of
Procedures Book-Entry Notes to or through an
Timetable: Agent (unless otherwise specified
pursuant to a Terms Agreement) for
settlement on the first Business Day
after the sale date, Settlement
Procedures "A" through "J" set forth
above shall be completed as soon as
possible but not later than the
respective times in New York City set
forth below:
Settlement Time
Procedure ----
- ---------
A 11:00 A.M. on sale date
B 12:00 Noon on sale date
C 2:00 P.M. on sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
If a sale is to be settled more than
one Business Day after the sale date,
Settlement Procedures "A", "B" and
"C" shall be completed as soon as
practicable but no later than 11:00
A.M., 12:00 Noon and 2:00 P.M.,
respectively, on the first Business
Day after the sale date. If the
Initial Interest Rate for a Floating
Rate Book-Entry Note has not been
determined at the time that
Settlement Procedure "A" is
completed, Settlement Procedures "B"
and "C" shall be completed as soon as
such rate has been determined but no
later than 12:00 Noon and 2:00 P.M.,
respectively, on the first Business
Day before the settlement date.
Settlement Procedure "H" is subject
to extension in accordance with any
extension of Fedwire closing
deadlines and in the other events
specified in the SDFS operating
procedures in effect on the
settlement date.
If settlement of a Book-Entry Note is
rescheduled or cancelled, the
Trustee, after receiving notice from
the Company or the relevant Agent,
will deliver to DTC, through DTC's
Participant Terminal System, a
cancellation message to such effect
by no later than 2:00 p.m. on the
Business Day immediately preceding
the scheduled settlement date.
Failure If the Trustee fails to enter an SDFS
to Settle: deliver order with respect to a
Book-Entry Note pursuant to
Settlement Procedure "F", the Trustee
may deliver to DTC, through DTC's
Participant Terminal System, as soon
as practicable a withdrawal message
instructing DTC to debit such Note to
the Trustee's participant account,
provided that the Trustee's
participant account contains a
principal amount of the Global
Security representing such Note that
is at least equal to the principal
amount to be debited. If a
withdrawal message is processed with
respect to all the Book-Entry Notes
represented by a Global Security, the
Trustee will mark such Global
B-8
Security "cancelled," make
appropriate entries in the Trustee's
records and send such cancelled
Global Security to the Company. The
CUSIP number assigned to such Global
Security shall, in accordance with
the procedures of the CUSIP Service
Bureau of Standard & Poor's
Corporation, be cancelled and not
immediately reassigned. If a
withdrawal message is processed with
respect to one or more, but not all,
of the Book-Entry Notes represented
by a Global Security, the Trustee
will exchange such Global Security
for two Global Securities, one of
which shall represent such Book-Entry
Note or Notes and shall be cancelled
immediately after issuance and the
other of which shall represent the
remaining Book-Entry Notes previously
represented by the surrendered Global
Security and shall bear the CUSIP
number of the surrendered Global
Security.
If the purchase price for any
Book-Entry Note is not timely paid to
the Participants with respect to such
Note by the beneficial purchaser
thereof (or a person, including an
indirect participant in DTC, acting
on behalf of such purchaser), such
Participants and, in turn, the
relevant Agent may enter SDFS deliver
orders through DTC's Participant
Terminal System reversing the orders
entered pursuant to Settlement
Procedures "F" and "G", respectively.
Thereafter, the Trustee will deliver
the withdrawal message and take the
related actions described in the
preceding paragraph.
Notwithstanding the foregoing, upon
any failure to settle with respect to
a Book-Entry Note, DTC may take any
actions in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle
with respect to one or more, but not
all, of the Book-Entry Notes to have
been represented by a Global
Security, the Trustee will provide,
in accordance with Settlement
Procedures "D" and "F", for the
authentication and issuance of a
Global Security representing the
Book-Entry Notes to be represented by
such Global Security and will make
appropriate entries in its records.
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PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the Certificated
Notes.
Issuance: Each Certificated Note will be dated
and issued as of the date of its
authentication by the Trustee. Each
Certificated Note will bear an
Original Issue Date, which will be
(i) with respect to an original
Certificated Note (or any portion
thereof), its original issuance date
(which will be the settlement date)
and (ii) with respect to any
Certificated Note (or portion
thereof) issued subsequently upon
transfer or exchange of a
Certificated Note or in lieu of a
destroyed, lost or stolen
Certificated Note, the original
issuance date of the predecessor
Certificated Note, regardless of the
date of authentication of such
subsequently issued Certificated Note.
Preparation If any offer to purchase a
of Pricing Certificated Note is accepted by or
Supplement: on behalf of the Company, the Company
will prepare a Pricing Supplement
reflecting the terms of such Note.
The Company (i) will arrange to file
such Pricing Supplement with the
Commission in accordance with the
applicable paragraph of Rule 424(b)
under the Act and (ii) will, as soon
as possible and in any event not
later than 11:00 a.m. on the Business
Day immediately following the
applicable trade date, deliver the
number of copies of such Pricing
Supplement to the relevant Agent as
such Agent shall request at the
following address:
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
4th Floor
New York, New York 10020
Attn: Medium Term Note Trading Desk,
Carlos Cabrera and Lou Napoli
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
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with a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
4th Floor
New York, New York 10020
Attn: Manager - Continuously Offered
Products
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
If to CS First Boston:
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attn: J. Walker
Telephone: (212) 909-2732
Telecopy: (212) 318-1498
In each instance that a Pricing
Supplement is prepared, the relevant
Agent will affix the Pricing
Supplement to Prospectuses prior to
their use. Outdated Pricing
Supplements, and the Prospectuses to
which they are attached (other than
those retained for files), will be
destroyed.
Settlement: The receipt by the Company of
immediately available funds in
exchange for an authenticated
Certificated Note delivered to the
relevant Agent and such Agent's
delivery of such Note against receipt
of immediately available funds shall
constitute "settlement" with respect
to such Note. All offers accepted by
the Company will be settled on the
third Business Day next succeeding
the date of acceptance pursuant to
the timetable for settlement set
forth below, unless the Company and
the purchaser agree to settlement on
another date, which date shall be no
earlier than the next Business Day.
Settlement Settlement Procedures with regard to
Procedures: each Certificated Note sold by the
Company to or through an Agent
(unless otherwise specified pursuant
to a Terms Agreement) shall be as
follows:
A. The relevant Agent will advise
the Company by telephone that such
Note is a Certificated Note and of
the following settlement information:
1. Name in which Note is to be
registered ("Registered Owner").
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2. Address of the Registered Owner
and address for payment of principal
and interest.
3. Taxpayer identification number of
the Registered Owner (if available).
4. Principal amount.
5. Maturity Date.
6. In the case of a Fixed Rate
Certificated Note, the Interest Rate,
whether such Note will pay interest
annually or semi-annually and whether
such Note is an Amortizing Note and,
if so, the amortization schedule, or,
in the case of a Floating Rate
Certificated Note, the Initial
Interest Rate (if known at such
time), Interest Payment Date(s),
Interest Payment Period, Calculation
Agent, Base Rate, Index Maturity,
Interest Reset Period, Initial
Interest Reset Date, Interest Reset
Dates, Spread or Spread Multiplier
(if any), Minimum Interest Rate (if
any), Maximum Interest Rate (if any)
and the Alternate Rate Event Spread
(if any).
7. Redemption or repayment
provisions (if any).
8. Settlement date and time
(Original Issue Date).
9. Interest Accrual Date.
10. Price.
11. Agent's commission (if any)
determined as provided in the
Distribution Agreement.
12. Denominations.
13. Specified Currency.
14. Whether the Note is an OID Note,
and if it is an OID Note, the total
amount of OID, the yield to maturity,
the initial accrual period OID and
the applicability of Modified Payment
upon Acceleration (and if so, the
Issue Price).
15. Whether the Note is an Indexed
Note, and if it is an Indexed Note,
the Denominated Currency, the Indexed
Currency or Currencies, the Payment
Currency, the
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Exchange Rate Agent, the Reference
Dealers, the Face Amount, the Fixed
Amount of each Indexed Currency, the
Aggregate Fixed Amount of each
Indexed Currency and the Authorized
Denominations (if other than U.S.
Dollars).
16. Whether the Note is a Renewable
Note, and if it is a Renewable Note,
the Initial Maturity Date and the
Final Maturity Date.
17. Whether the Company has the
option to extend the Original
Maturity Date of the Note, and, if
so, the Final Maturity Date of such
Note.
18. Whether the Company has the
option to reset the Interest Rate,
the Spread or the Spread Multiplier
of the Note.
19. Any other applicable terms.
B. The Company will advise the
Trustee by telephone or electronic
transmissions (confirmed in writing
at any time on the same date) of the
information set forth in Settlement
Procedure "A" above.
C. The Company will have delivered
to the Trustee a packet for such
Note, which packet will contain the
following documents in forms that
have been approved by the Company,
the relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - for the Trustee.
3. Stub Two - for the relevant
Agent.
4. Stub Three - for the Company.
D. The Trustee will complete such
Note and authenticate such Note and
deliver it (with the confirmation)
and Stubs One and Two to the relevant
Agent at the following applicable
addresses: If to Morgan Stanley to
Bank of New York, Dealer Clearance
Department, Window B, 1 Wall Street,
4th Floor, New York, New York 10005,
Attn: For the Account of Morgan
Stanley & Co., and if to CS First
Boston to Five World Trade Center,
New York, New York 10048, Attn: Paul
Riley. Such Agent will acknowledge
receipt of the Note by stamping or
otherwise mailing Stub One and
returning it to the Trustee. Such
delivery will be made only against
such acknowledgment of receipt of
evidence that
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instructions have been given by such
Agent for payment to the account of
the Company with respect to any
transaction conducted in U.S. Dollars
at Bank of America, Concord,
California 94520, account number
12354-07478, to the account of Mattel
Toys, ABA #121000358, or such other
account as the Company shall have
specified to such Agent and the
Trustee, and with respect to any
transaction conducted in any
Specified Currency other than U.S
Dollars, to such account as the
Company shall have specified to such
Agent and the Trustee, in immediately
available funds, of an amount equal
to the price of such Note less such
Agent's commission (if any). In the
event that the instructions given by
such Agent for payment to the account
of the Company are revoked, the
Company will as promptly as possible
wire transfer to the account of such
Agent an amount of immediately
available funds equal to the amount
of such payment made.
E. Unless the relevant Agent is the
end purchaser of such Note, such
Agent will deliver such Note (with
confirmation) to the customer against
payment in immediately available
funds. Such Agent will obtain the
acknowledgment of receipt of such
Note by retaining Stub Two.
F. The Trustee will send Stub Three
to the Company by first-class mail.
Monthly, the Trustee will also send
to the Company a statement setting
forth the principal amount of the
Notes outstanding as of that date
under the Indenture and setting forth
a brief description of any sales of
which the Company has advised the
Trustee that have not yet been
settled.
Settlement For sales by the Company of
Procedures Certificated Notes to or through an
Timetable: Agent (unless otherwise specified
pursuant to a Terms Agreement),
Settlement Procedures "A" through "F"
set forth above shall be completed on
or before the respective times in New
York City set forth below:
Settlement Time
Procedure ----
- ----------
A 2:00 P.M on the day before settlement date
B 3:00 P.M. on the day before settlement date
C-D 2:15 P.M. on settlement date
E 3:00 P.M. on settlement date
F 5:00 P.M. on settlement date
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Failure to Settle: If a purchaser fails to accept
delivery of and make payment for any
Certificated Note, the relevant Agent
will notify the Company and the
Trustee by telephone and return such
Note to the Trustee. Upon receipt of
such notice, the Company will
immediately wire transfer to the
account of such Agent an amount equal
to the price of such Note less such
Agent's commission in respect of such
Note (if any). Such wire transfer
will be made on the settlement date,
if possible, and in any event not
later than the business Day following
the settlement date. If the failure
shall have occurred for any reason
other than a default by such Agent in
the performance of its obligations
hereunder and under the Distribution
Agreement, then the Company will
reimburse such Agent or the Trustee,
as appropriate, on an equitable basis
for its loss of the use of the funds
during the period when they were
credited to the account of the
Company. Immediately upon receipt of
the Certificated Note in respect of
which such failure occurred, the
Trustee will mark such Note
"cancelled," make appropriate entries
in the Trustee's records and send
such Note to the Company.
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