EXHIBIT 10.2

 

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 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

 

(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 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

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Commission Rate

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From 9 months to less than 1 year

  

0.125%

From 1 year to less than 18 months

  

0.150%

From 18 months to less than 2 years

  

0.200%

From 2 years to less than 3 years

  

0.250%

From 3 years to less than 4 years

  

0.350%

From 4 years to less than 5 years

  

0.450%

From 5 years to less than 6 years

  

0.500%

From 6 years to less than 9 years

  

0.550%

From 9 years to less than 15 years

  

0.600%

From 15 years to less than 20 years

  

0.700%

From 20 years to less than 30 years

  

0.750%

30 years and beyond

  

To be negotiated

 

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 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 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:

 

(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 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 performance by the
Company of its obligations hereunder or thereunder as the Agents may from time
to time reasonably request.

 

(g)  The Company shall notify the Agents promptly in writing of any downgrading,
or of its receipt of any notice of any intended or potential downgrading or of
any review for possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company’s securities by any
“nationally recognized statistical rating organization,” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act.

 

(h)  The Company will, whether or not any sale of Notes is consummated, pay all
expenses incident to the performance of its obligations under this Agreement and
any Terms Agreement, including: (i) the preparation and filing of the
Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of the Company’s counsel and accountants and of the
Trustee and its counsel, (iv) the qualification of the Notes under securities or
Blue Sky laws in accordance with the provisions of Section 3(e), including
filing fees and the fees and disbursements of counsel for the Agents in
connection therewith and in connection 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

 

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pursuant to such Terms Agreement, (ii) Notes previously agreed to be sold by the
Company, and (iii) commercial paper and short-term bank loans issued in the
ordinary course of business), except as may otherwise be provided in such Terms
Agreement.

 

4.    Conditions of the Obligations of the Agents.    Each Agent’s obligation to
solicit offers to purchase Notes as agent of the Company, each Agent’s
obligation to purchase Notes pursuant to any Terms Agreement and the obligation
of any other purchaser to purchase Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of the Company’s officers made in each certificate
furnished pursuant to the provisions hereof and to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed (in the case of an Agent’s obligation to
solicit offers to purchase Notes, at the time of such solicitation, and, in the
case of an Agent’s or any other purchaser’s obligation to purchase Notes, at the
time the Company accepts the offer to purchase such Notes and at the time of
issuance and delivery) and (in each case) to the following additional conditions
precedent when and as specified:

 

(a)  Prior to such solicitation or purchase, as the case may be:

 

(i)  there shall not have occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus, as amended or supplemented at the
time of such solicitation or at the time such offer to purchase was made, that,
in the judgment of the relevant Agent, is material and adverse and that makes
it, in the judgment of such Agent, impracticable to market the Notes on the
terms and in the manner contemplated by the Prospectus, as so amended or
supplemented;

 

(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

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(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;

 

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(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 governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, the Notes, the Indenture and any applicable Terms
Agreement, except such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Notes;

 

(F)    to the best of such counsel’s knowledge, neither the Company nor any of
its subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property employed by
them in connection with the business operated by the Company or its subsidiaries
which, singly or in

 

15

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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

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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
particular 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

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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

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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

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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

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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

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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

 

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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

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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:

 

Name

--------------------------------------------------------------------------------

    

Principal Amount 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 payment upon acceleration:

 

Index maturity:

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-4

--------------------------------------------------------------------------------

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 Pricing Supplement:

  

If any offer to purchase a Book-Entry Note is accepted by or on behalf of the
Company, the Company will prepare a pricing supplement (a “Pricing Supplement”)
reflecting the terms of such Note. The Company (i) will arrange to file such
Pricing Supplement with the Commission in accordance with the applicable
paragraph of Rule 424(b) under the Securities Act of 1933, as amended, and (ii)
will, as soon as possible and in any event not later than 11:00 a.m. on the
business day immediately following the applicable trade date, deliver the number
of copies of such Pricing Supplement to the relevant Agent as such Agent shall
request at the following address:

    

If to Morgan Stanley:

    

Morgan Stanley & Co. Incorporated

1585 Broadway, 2nd Floor

New York, New York 10036

    

Attn: Medium Term Note Trading Desk,

Carlos Cabrera

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 Procedures:

 

Settlement Procedures with regard to each Book-Entry Note sold by the Company to
or through an Agent (unless otherwise specified pursuant to a Terms Agreement)
shall be as follows:

   

A.

  

The relevant Agent will advise the Company by telephone that such Note is a
Book-Entry Note and of the following settlement information:

        

1.    Principal amount.

        

2.    Maturity Date.

        

3.    In the case of a Fixed Rate Book-Entry Note, the Interest Rate, whether
such Note will pay interest annually or semi-annually and whether such Note is
an Amortizing Note, and, if so, the amortization schedule, or, in the case of a

 

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

Procedures

Timetable:

  

For sales by the Company of Book-Entry Notes to or through an Agent (unless
otherwise specified pursuant to a Terms Agreement) for settlement on the first
Business Day after the sale date, Settlement Procedures “A” through “J” set
forth above shall be completed as soon as possible but not later than the
respective times in New York City set forth below:

 

Settlement Procedure

--------------------------------------------------------------------------------

  

Time

--------------------------------------------------------------------------------

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.

 

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Failure

to Settle:

  

If the Trustee fails to enter an SDFS deliver order with respect to a Book-Entry
Note pursuant to Settlement Procedure “F”, the Trustee may deliver to DTC,
through DTC’s Participant Terminal System, as soon as practicable a withdrawal
message instructing DTC to debit such Note to the Trustee’s participant account,
provided that the Trustee’s participant account contains a principal amount of
the Global Security representing such Note that is at least equal to the
principal amount to be debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a Global Security, the
Trustee will mark such Global Security “cancelled,” make appropriate entries in
the Trustee’s records and send such cancelled Global Security to the Company.
The CUSIP number assigned to such Global Security shall, in accordance with the
procedures of the CUSIP Service Bureau of Standard & Poor’s Corporation, be
cancelled and not immediately reassigned. If a withdrawal message is processed
with respect to one or more, but not all, of the Book-Entry Notes represented by
a Global Security, the Trustee will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry Note or Notes and shall
be cancelled immediately after issuance and the other of which shall represent
the remaining Book-Entry Notes previously represented by the surrendered Global
Security and shall bear the CUSIP number of the surrendered Global Security.

 

If the purchase price for any Book-Entry Note is not timely paid to the
Participants with respect to such Note by the beneficial purchaser thereof (or a
person, including an indirect participant in DTC, acting on behalf of such
purchaser), such Participants and, in turn, the relevant Agent may enter SDFS
deliver orders through DTC’s Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures “F” and “G”, respectively. Thereafter,
the Trustee will deliver the withdrawal message and take the related actions
described in the preceding paragraph. Notwithstanding the foregoing, upon any
failure to settle with respect to a Book-Entry Note, DTC may take any actions in
accordance with its SDFS operating procedures then in effect.

 

In the event of a failure to settle with respect to one or more, but not all, of
the Book-Entry Notes to have been represented by a Global Security, the Trustee
will provide, in accordance with Settlement Procedures “D” and “F”, for the
authentication and issuance of a Global Security representing the Book-Entry
Notes to be represented by such Global Security and will make appropriate
entries in its records.

 

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PART II:    ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES

 

The Trustee will serve as Registrar in connection with the Certificated Notes.

 

Issuance:

  

Each Certificated Note will be dated and issued as of the date of its
authentication by the Trustee. Each Certificated Note will bear an Original
Issue Date, which will be (i) with respect to an original Certificated Note (or
any portion thereof), its original issuance date (which will be the settlement
date) and (ii) with respect to any Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a Certificated Note or in lieu of a
destroyed, lost or stolen Certificated Note, the original issuance date of the
predecessor Certificated Note, regardless of the date of authentication of such
subsequently issued Certificated Note.

Preparation

of Pricing

Supplement:

  

If any offer to purchase a Certificated Note is accepted by or on behalf of the
Company, the Company will prepare a Pricing Supplement reflecting the terms of
such Note. The Company (i) will arrange to file such Pricing Supplement with the
Commission in accordance with the applicable paragraph of Rule 424(b) under the
Act and (ii) will, as soon as possible and in any event not later than 11:00
a.m. on the Business Day immediately following the applicable trade date,
deliver the number of copies of such Pricing Supplement to the relevant Agent as
such Agent shall request at the following address:

 

If to Morgan Stanley:

 

Morgan Stanley & Co. Incorporated

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

 

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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.

 

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Settlement

Procedures:

  

   Settlement Procedures with regard to each Certificated Note sold by the
Company to or through an Agent (unless    otherwise specified pursuant to a
Terms Agreement) shall be as follows:

 

  A.   The relevant Agent will advise the Company by telephone that such Note is
a Certificated Note and of the following settlement information:

 

  1.   Name in which Note is to be registered (“Registered Owner”).

 

  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.

 

 

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  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.

 

 

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  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 Procedures Timetable:

  

   For sales by the Company of Certificated Notes to or through an Agent (unless
otherwise specified pursuant to a    Terms Agreement), Settlement Procedures “A”
through “F” set forth above shall be completed on or before the    respective
times in New York City set forth below:

 

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Settlement Procedure

--------------------------------------------------------------------------------

  

Time

--------------------------------------------------------------------------------

settlement date

    

A

  

2:00 P.M. on the day before

             

settlement date

    

B

  

3:00 P.M. on the day before

                    

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