EXHIBIT 1.0
MATTEL, INC.
$350,000,000
Series C Medium-Term Notes
Due More Than Nine Months From Date of Issue
DISTRIBUTION AGREEMENT
November 12, 1997
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Credit Suisse 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 C 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 Chase Trust Company
of California (formerly 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 Credit Suisse First Boston Corporation ("Credit Suisse 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.
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The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-38625) 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. 333-38625) 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
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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 standing in each jurisdiction
in which the conduct of its business or its ownership or
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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.
(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
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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.
(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.
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(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 sub stances 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.
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, 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.
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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
---- ---------------
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
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
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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) (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.
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(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 O'Melveny & Myers LLP, 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.
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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 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
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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.
(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.
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(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 perfor mance 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 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
12
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 contem plated by the
Prospectus, as so amended or supplemented;
(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
13
(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.
(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
LLP, 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;
14
(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, when the
final terms of a particular Note and its issuance and sale have
been established in accordance with the provisions of the
Indenture and when the Notes have been 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 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 gov ernmental
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
15
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 "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, in all material
respects, the information called for with respect to such legal
matters, documents and proceedings and fairly summarize, in all
material respects, the matters referred to therein;
(H) to the best of such counsel's knowledge, 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 or incorporated therein by
reference, in the Registration Statement or the Prospectus, as
then amended or supplemented, and are not so described or
incorporated therein by reference, 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;
(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
16
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 contained
any untrue statement of a material fact or omitted 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 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 par ticular
Notes to the extent such information will be set forth in a
supplement to the Basic Prospectus.
(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
17
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 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
18
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 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 O'Melveny &
Myers LLP, counsel for the Agents, covering the matters in
subparagraphs (B), (C), (D)
19
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 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 LLP may state that their opinion and belief are based upon their
participation in conferences in connection with 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, O'Melveny & Myers LLP may state that their
opinion and belief are based upon their participation in conferences in
connection with the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto (other than documents
incorporated therein by reference) and review 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 LLP described in paragraph (c)(i)
above shall be rendered to the relevant Agents at the request of the
Company and shall so state therein.
(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.
20
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 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
21
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.
(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
22
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.
(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
23
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
aggre gate 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 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
24
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
Credit Suisse First Boston, will be mailed, delivered or telefaxed and confirmed
to Credit Suisse First Boston at 11 Madison Avenue, New York, New York 10010,
Attention: Short and Medium Term Finance (telefax number: 212-325-8183), with a
copy to Helena M. Willner at the above address, 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 Leland Smith, Assistant General Counsel and 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
25
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.
26
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/ Michael Fusco
--------------------------
Michael Fusco
Vice President
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Helena M. Willner
--------------------------
Helena M. Willner
Vice President
27
EXHIBIT A
MATTEL, INC.
SERIES C MEDIUM-TERM NOTES
TERMS AGREEMENT
__________ __, 199_
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245-5012
Attention:
Re: Distribution Agreement dated as of
November 12, 1997 (the "Distribution Agreement")
------------------------------------------------
We agree to purchase your Series C 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:
Principal Amount
Name of Notes
---- ----------------
Morgan Stanley & Co.
Incorporated
Credit Suisse First Boston Corporation
Total................. $_______________
A-1
The Notes shall have the following terms:
All Notes: Fixed Rate Notes: Floating Rate Notes:
- --------- ---------------- -------------------
Principal amount: Interest Rate: Base rate:
Purchase price: Applicability of modified Index maturity:
payment upon acceleration:
Price to public: If yes, state issue price: Spread:
Settlement date and time: Amortization schedule: Spread multiplier:
Place of delivery: Alternate rate event spread:
Specified currency: Initial interest rate:
Maturity date: Initial interest reset date:
Initial accrual period OID: Interest reset dates:
Total amount of OID: Interest reset period:
Original yield to maturity: Maximum interest rate:
Optional repayment date(s): Minimum interest rate:
Optional redemption date(s): Interest payment period:
Initial redemption date: Interest payment dates:
Initial redemption percentage: Calculation agent:
Annual redemption percentage
decrease:
Other terms:
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 this Agreement be
A-2
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:
CREDIT SUISSE FIRST BOSTON CORPORATION
By: _________________________________________
Name:
Title:
Accepted:
MATTEL, INC.
By:
Name:
Title:
A-3
EXHIBIT B
MATTEL, INC.
SERIES C MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
Explained below are the administrative procedures and specific terms of the
offering of Series C Medium-Term Notes (the "Notes"), on a continuous basis by
Mattel, Inc. (the "Company") pursuant to the Distribution Agreement, dated as of
November 12, 1997 (the "Distribution Agreement") among the Company and Morgan
Stanley & Co. Incorporated ("Morgan Stanley"), and Credit Suisse First Boston
Corporation ("Credit Suisse First Boston") (the "Agents"). The Notes will be
issued under an Indenture dated as of February 15, 1996 (the "Indenture")
between the Company and Chase Trust Company of California (formerly 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 November 12, 1997, 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 Note is accepted by or
Pricing on behalf of the Company, the Company will prepare a pricing
Supplement: 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
Telephone: (212) 761-1316
Telecopy: (212) 761-0780
with a copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Manager - Continuously Offered Products
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
If to Credit Suisse First Boston:
Credit Suisse 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:
Credit Suisse First Boston Corporation
Short and Medium Term Finance
11 Madison Avenue
New York, New York 10010
Attn: Helena Willner
Telephone: (212) 325-7198
Telecopy: (212) 325-8183
B-4
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 each Book-Entry Note
Procedures: 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
B-5
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 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-6
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
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
B-7
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
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-8
Settlement For sales by the Company of Book-Entry Notes to or through
Procedures an Agent (unless otherwise specified pursuant to a Terms
Timetable: 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.
B-9
Failure If the Trustee fails to enter an SDFS deliver order with
to Settle: 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 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.
B-10
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 Certificated Note is accepted by
of Pricing or on behalf of the Company, the Company will prepare a
Supplement: 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
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Medium Term Note Trading Desk,
Carlos Cabrera
Telephone: (212) 761-1316
Telecopy: (212) 761-0780
with a copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Manager - Continuously Offered Products
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
B-11
If to Credit Suisse First Boston:
Credit Suisse First Boston Corporation
Short and Medium Term Finance
11 Madison Avenue
New York, New York 10010
Attn: Helena Willner
Telephone: (212) 325-7198
Telecopy: (212) 325-8183
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.
B-12
Settlement Settlement Procedures with regard to each Certificated Note
Procedures: 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").
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.
B-13
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 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.
B-14
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 Credit Suisse 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
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 Certificated Notes to or through
Procedures an Agent (unless otherwise specified pursuant to a Terms
Timetable: 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:
B-15
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
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.
B-16