<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1995
REGISTRATION NO. 33-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE CHARLES SCHWAB CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3025021
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
101 MONTGOMERY STREET
SAN FRANCISCO, CA 94104
(415) 627-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
CHRISTOPHER V. DODDS
SENIOR VICE PRESIDENT
AND TREASURER
THE CHARLES SCHWAB CORPORATION
101 MONTGOMERY STREET
SAN FRANCISCO, CA 94104
(415) 627-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF AGENT FOR SERVICE)
----------------
LAWRENCE B. RABKIN, ESQ.
HOWARD, RICE, NEMEROVSKI, JOHN M. BRANDOW, ESQ.
CANADY, FALK & RABKIN DAVIS POLK & WARDWELL
A PROFESSIONAL CORPORATION 450 LEXINGTON AVENUE
THREE EMBARCADERO CENTER, 7TH FLOOR NEW YORK, NEW YORK 10017
SAN FRANCISCO, CA 94111
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective as determined by
market conditions.
If the securities being registered on the form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED OFFERING PRICE(1) FEE
-------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities(2)(3)...................... $100,000,000 $34,483
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) This Registration Statement also relates to offers and sales of Debt
Securities in connection with market-making transactions by and through
Charles Schwab & Co., Inc., an affiliate of the Registrant.
(3) Pursuant to Rule 429, the Prospectus in this Registration Statement also
relates to up to $40,000,000 of Debt Securities covered by Registration
Statement No. 33-50923, upon which a registration fee of approximately
$13,793 has been paid, but which have not been offered or sold.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED AUGUST 18, 1995
$140,000,000
THE CHARLES SCHWAB CORPORATION
DEBT SECURITIES
-----------
The Company may offer and issue from time to time in one or more series debt
securities (the "Debt Securities") with an initial aggregate offering price not
to exceed U.S. $140,000,000. The Company will offer Debt Securities to the
public on terms determined by market conditions. Debt Securities will be
issuable in registered form without coupons. Debt Securities will be sold for
U.S. dollars; principal of, premium, if any, and any interest on Debt
Securities will likewise be payable in U.S. dollars.
The accompanying Prospectus Supplement sets forth the ranking as senior or
senior subordinated Debt Securities, the specific designation, aggregate
principal amount, purchase price, maturity, interest rate (or manner of
calculation thereof), time of payment of interest, listing (if any) on a
securities exchange and any other specific terms of the Debt Securities and the
name of and compensation to each dealer, underwriter or agent (if any) involved
in the sale of such Debt Securities. The managing underwriters with respect to
each series sold to or through underwriters will be named in the accompanying
Prospectus Supplement. Any such underwriters (and any representative thereof),
dealers or agents may include Morgan Stanley & Co. Incorporated, Goldman Sachs
& Co. and Charles Schwab & Co., Inc.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
Debt Securities may be offered through dealers, underwriters or agents
designated from time to time, as set forth in the accompanying Prospectus
Supplement. Net proceeds to the Company will be the purchase price in the case
of a dealer, the public offering price less discount in the case of an
underwriter or the purchase price less commission in the case of an agent--in
each case, less other expenses attributable to issuance and distribution. The
Company may also sell Debt Securities directly to investors on its own behalf.
In the case of sales made directly by the Company, no commission will be
payable. See "Plan of Distribution" for possible indemnification arrangements
for dealers, underwriters and agents.
This Prospectus and the accompanying Prospectus Supplement may be used by
Charles Schwab & Co., Inc., which is a wholly owned subsidiary of the Company,
in connection with offers and sales of Debt Securities in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale or otherwise. Charles Schwab & Co., Inc. may act as principal or
agent in such transactions.
, 1995
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 or at its Regional Offices located
at 500 West Madison, Suite 1400, Chicago, Illinois 60601 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common
Stock, par value $.01 per share (the "Common Stock"), is listed on the New York
Stock Exchange ("NYSE") and the Pacific Stock Exchange. Reports, proxy
statements and other information concerning the Company can be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005 and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104 or 618 South
Spring Street, Los Angeles, California 90014.
The Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained
in the Registration Statement in accordance with the rules and regulations of
the Commission. Reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company and the
Debt Securities. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company has filed with the Commission (File No. 1-9700) its Annual Report
on Form 10-K for the year ended December 31, 1994 and its Quarterly Reports on
Form 10-Q for the quarters ended March 31 and June 30, 1995, which are
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the later of (i) the termination of the offering of the Debt Securities and
(ii) the date on which Charles Schwab & Co., Inc. ("Schwab") ceases offering
and selling previously issued Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
Copies of the above documents (excluding exhibits) may be obtained upon
request by persons to whom this Prospectus is delivered without charge from the
Corporate Communications Department, 101 Montgomery Street, San Francisco,
California 94104 (telephone number 415/627-7810).
IN CONNECTION WITH THE OFFERING OF CERTAIN DEBT SECURITIES, THE UNDERWRITERS
MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF SUCH OFFERED SECURITIES OR OTHER SECURITIES OF THE COMPANY AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
THE CHARLES SCHWAB CORPORATION
The Charles Schwab Corporation (the "Company"), through its principal
operating subsidiary, Schwab, provides brokerage and related investment
services to approximately 3,100,000 active investor accounts through over 200
offices nationwide. The Company provides similar services to British investors
through its English subsidiary, ShareLink Investment Services plc. Mayer &
Schweitzer, Inc. ("M&S"), a market maker in Nasdaq securities, provides trade
execution services to institutions and broker-dealer clients.
The Company was incorporated in Delaware in November 1986. Schwab was
incorporated in California in 1971 and merged in 1983 with a subsidiary of
BankAmerica Corporation. The Company acquired Schwab in a management-led
leveraged buyout in March 1987 and became a publicly held company in September
1987. Its principal executive offices are located at 101 Montgomery Street, San
Francisco, CA 94104 (telephone number 415/627-7000).
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company for the periods indicated.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------- ------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
(unaudited)................................ 1.8 2.3 2.0 2.4 1.8 1.4 1.1
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before extraordinary charge, income taxes and fixed
charges. Fixed charges for the purpose of calculating the ratio of earnings to
fixed charges consist of interest expense incurred on payables to customers,
subordinated borrowings, term debt, capitalized interest and one-third of
rental expense, which is estimated to be representative of the interest factor.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, which may include additions to working capital,
investing in or extending credit to subsidiaries, capital expenditures, stock
repurchases, repayment of indebtedness and acquisitions. Further details
relating to the use of the net proceeds may be set forth in the applicable
Prospectus Supplement.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or senior subordinated debt
of the Company and will be issued, in the case of Debt Securities that will be
senior debt, under a Senior Indenture dated as of July 15, 1993 (the "Senior
Debt Indenture") between the Company and Chemical Bank, as trustee (the
"Trustee"), and, in the case of Debt Securities that will be senior
subordinated debt, under a Subordinated Indenture dated as of July 15, 1993
(the "Senior Subordinated Debt Indenture") between the Company and the Trustee.
The Senior Debt Indenture and the Senior Subordinated Debt Indenture are
sometimes hereinafter referred to individually as an "Indenture" and
collectively as the "Indentures." The Indentures are included as exhibits to
the Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indentures and the Debt Securities do
not purport to be complete and such summaries are subject to the detailed
provisions of the applicable Indenture to which reference is hereby made for a
full description of such provisions, including the definition of certain terms
used herein, and for other information regarding the Debt Securities. Numerical
references in parentheses below are to sections in the applicable Indenture.
Wherever particular sections or defined terms of the applicable Indenture are
referred to, such sections or defined terms are incorporated herein by
reference as part of the statement made, and the statement is qualified in its
entirety by such reference. The Indentures are substantially identical, except
for the provisions relating to subordination and the Company's negative pledge.
See "Senior Subordinated Debt" and "Certain Covenants of the Company." The Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement are referred to herein as the "Offered Debt Securities."
GENERAL
Neither of the Indentures limits the amount of additional indebtedness that
the Company may incur. The Debt Securities will be unsecured senior or senior
subordinated obligations of the Company. The Company is a holding company, the
consolidated operations of which are carried out through wholly owned
subsidiaries. Therefore, the Company's rights and the rights of its creditors,
including holders of Debt Securities, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the subsidiary.
In addition, dividends, loans and advances from certain subsidiaries, including
Schwab, to the Company are restricted by net capital requirements under the
Exchange Act and under rules of certain exchanges and various regulatory
bodies.
The Indentures provide that Debt Securities may be issued from time to time
in one or more series.
Reference is made to the Prospectus Supplement for the following terms of and
information relating to the Offered Debt Securities (to the extent such terms
are applicable to such Offered Debt Securities): (i) classification as senior
or senior subordinated Debt Securities, the specific designation, aggregate
principal amount, purchase price and denomination; (ii) any date of maturity;
(iii) interest rate or rates (or the method by which such rate will be
determined); (iv) the dates on which any such interest will be payable; (v) the
place or places where the principal of, premium, if any, and interest on the
Offered Debt Securities will be payable; (vi) any redemption, repayment or
sinking fund provisions; (vii) any applicable United States federal income tax
consequences; and (viii) any other specific terms of the Offered Debt
Securities, including any additional events of default or covenants provided
for with respect to such Offered Debt Securities, and any terms which may be
required by or be advisable under applicable laws or regulations.
Debt Securities may be presented for exchange and registration of transfer in
the manner, at the places and subject to the restrictions set forth in the Debt
Securities and the Prospectus Supplement. Subject to the limitations provided
in the applicable Indenture, such services will be provided without charge,
other than any tax or other governmental charge payable in connection
therewith.
Debt Securities will bear interest at a fixed rate (a "Fixed Rate Security")
or a floating rate (a "Floating Rate Security"). Certain Debt Securities may be
treated as having been issued at a discount for United States federal income
tax purposes, as described in the relevant Prospectus Supplement.
5
<PAGE>
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
fully registered global securities (a "Registered Global Security") that will
be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series and
registered in the name of the Depositary or a nominee thereof. In such case,
one or more Registered Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Debt Securities of the series to be represented by such
Registered Global Security or Registered Global Securities. Unless and until it
is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor of
such Depositary or a nominee of such successor. The Depositary currently
accepts only securities that are payable in U.S. dollars.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
for such Registered Global Security (with respect to interests of participants)
and on the records of participants (with respect to interests of persons
holding through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Debt Securities represented by such Registered Global Security for all
purposes under the applicable Indenture. Except as set forth below, owners of
beneficial interests in a Registered Global Security will not be entitled to
have the Debt Securities represented by such Registered Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of such Debt Securities in definitive form and will not be considered
the owners or holders thereof under the applicable Indenture. Accordingly, each
person owning a beneficial interest in a Registered Global Security must rely
on the procedures of the Depositary for such Registered Global Security and, if
such person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the applicable Indenture. The Company understands that under existing industry
practices, if the Company requests any action of holders or if an owner of a
beneficial interest in a Registered Global Security desires to give or take any
action which a holder is entitled to give or take under the applicable
Indenture, the Depositary for such Registered Global Security would authorize
the participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal, premium, if any, and interest on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its
6
<PAGE>
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Trustee or any other agent of the Company or
agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium, if any, or interest in respect of such Registered Global Security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in such
Registered Global Security held through such participants will be governed by
standing customer instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name," and
will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary or ceases
to be a clearing agency registered under the Exchange Act, and a successor
Depositary registered as a clearing agency under the Exchange Act is not
appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Registered Global Securities representing such Debt Securities. Any
Debt Securities issued in definitive form in exchange for a Registered Global
Security will be registered in such name or names as the Depositary shall
instruct the Trustee. It is expected that such instructions will be based upon
directions received by the Depositary from participants with respect to
ownership of beneficial interests in such Registered Global Security.
SENIOR DEBT
The Debt Securities that will constitute part of the senior debt of the
Company ("Senior Debt Securities") will be issued under the Senior Debt
Indenture and will rank pari passu with all other unsecured and unsubordinated
debt of the Company.
SENIOR SUBORDINATED DEBT
The Debt Securities that will constitute part of the senior subordinated debt
of the Company ("Senior Subordinated Debt Securities") will be issued under the
Senior Subordinated Debt Indenture and will be subordinate and junior in right
of payment, to the extent and in the manner set forth in the Senior
Subordinated Debt Indenture, to all "Senior Indebtedness" of the Company. The
Senior Subordinated Debt Indenture defines "Senior Indebtedness" as the
principal of and premium, if any, and interest on (a) indebtedness of the
Company, whether outstanding on the date of the Senior Subordinated Debt
Indenture or thereafter created, that is (i) for money borrowed by the Company
(including, without limitation, capitalized lease obligations), (ii) for money
borrowed by others and guaranteed, directly or indirectly, by the Company or
(iii) constituting purchase money indebtedness, or indebtedness secured by
property at the time of the acquisition of such property by the Company, for
the payment of which the Company is directly or contingently liable, and (b)
all deferrals, renewals, extensions and refundings of, and amendments,
modifications and supplements to (whether outstanding on the date of the Senior
Subordinated Debt Indenture or thereafter created), any such indebtedness,
unless by the terms of the instrument creating or evidencing any such
indebtedness referred to in clause (a) or clause (b) above it is expressly
provided that such indebtedness is not superior in right of payment to the
Senior Subordinated Debt Securities and/or it is expressly provided that such
indebtedness is itself subordinated to any other indebtedness of the Company.
As used in the preceding sentence, the term "purchase money indebtedness" means
indebtedness evidenced
7
<PAGE>
by a note, debenture, bond or other instrument (whether or not secured by any
lien or other security interest) issued or assumed as all or a part of the
consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise. The term Senior Indebtedness shall not include (i)
indebtedness of the Company to a subsidiary of the Company for money borrowed
or advances from a subsidiary of the Company or (ii) the Senior Subordinated
Debt Securities. (Senior Subordinated Debt Indenture, Section 1.1)
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or (b) that (i) a
default shall have occurred with respect to the payment of principal of (and
premium, if any) or any interest on or other monetary amounts due and payable
on any Senior Indebtedness or (ii) there shall have occurred an event of
default (other than a default in the payment of principal, premium, if any, or
interest, or other monetary amount due and payable) with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the
maturity thereof (with notice or lapse of time, or both), and such event of
default shall have continued beyond the period of grace, if any, in respect
thereof, and such default or event of default shall not have been cured or
waived or shall not have ceased to exist, or (c) that the principal of and
accrued interest on the Senior Subordinated Debt Securities shall have been
declared due and payable upon an Event of Default pursuant of Section 5.1 of
the Senior Subordinated Debt Indenture and such declaration shall not have been
rescinded and annulled as provided therein, then the holders of all Senior
Indebtedness shall first be entitled to receive payment of the full amount
unpaid thereon, or provision shall be made for such payment in money or money's
worth, before the holders of any of the Senior Subordinated Debt Securities are
entitled to receive a payment on account of the principal of (and premium, if
any) or any interest on the indebtedness evidenced by such Senior Subordinated
Debt Securities, other than a payment constituting shares of stock of the
Company, as reorganized or readjusted, or securities of the corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated to the payment of the Senior Indebtedness which may at the time
be outstanding. (Senior Subordinated Debt Indenture, Section 13.1) If this
Prospectus is being delivered in connection with a series of Senior
Subordinated Debt Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Indebtedness outstanding as of the end of the most recent
fiscal quarter.
CERTAIN COVENANTS OF THE COMPANY
The following restrictions apply to each series of Debt Securities unless the
terms of such series of Debt Securities provide otherwise.
NEGATIVE PLEDGE. The Senior Debt Indenture provides that the Company and any
successor corporation will not, and will not permit any Subsidiary (as defined
in such Indenture) to, create, assume, incur or guarantee any indebtedness for
borrowed money secured by a pledge, lien or other encumbrance (except for
certain liens specifically permitted by such Indenture) on the Voting
Securities (as defined in such Indenture) of Schwab, M&S or Schwab Holdings,
Inc. (a wholly owned subsidiary of the Company that owns all of the common
stock of Schwab) without making effective provision whereby the Debt Securities
issued under such Indenture will be secured equally and ratably with such
secured indebtedness. (Senior Debt Indenture, Section 3.6)
MERGER, CONSOLIDATION, SALE, LEASE, OR CONVEYANCE. Each Indenture provides
that the Company will not merge or consolidate with any other corporation and
will not sell, lease or convey all or substantially all its assets to any
person, unless the Company shall be the continuing corporation, or the
successor corporation in any merger or consolidation (if other than the
Company) or the person that acquires or leases all or substantially all the
assets of the Company shall be a corporation organized under the laws of the
United States or a State thereof or the District of Columbia and shall
expressly assume all obligations of the Company under such Indenture and the
Debt Securities issued thereunder, and immediately after such merger,
8
<PAGE>
consolidation, sale, lease or conveyance, the Company, such person or such
successor corporation shall not be in default in the performance of the
covenants and conditions of such Indenture to be performed or observed by the
Company. (Senior and Senior Subordinated Debt Indentures, Section 9.1)
This covenant would not apply to a recapitalization transaction, a change of
control of the Company or a highly leveraged transaction unless such
transactions or change of control were structured to include a merger or
consolidation or sale, lease or conveyance of all or substantially all of the
assets of the Company. Except as may be described in a Prospectus Supplement
applicable to a particular series of Debt Securities, there are no covenants or
other provisions in the Indentures providing for a put or increased interest or
otherwise that would afford holders of Debt Securities additional protection in
the event of a recapitalization transaction, a change of control of the Company
or a highly leveraged transaction.
EVENTS OF DEFAULT
An Event of Default is defined under each Indenture with respect to Debt
Securities of any series issued under such Indenture as being: (a) default in
payment of any principal of the Debt Securities of such series, either at
maturity (or upon any redemption), by declaration or otherwise; (b) default for
30 days in payment of any interest on any Debt Securities of such series; (c)
default for 60 days after written notice in the observance or performance of
any other covenant or agreement in the Debt Securities of such series or such
Indenture other than a covenant included in such Indenture solely for the
benefit of a series of Debt Securities other than such series; (d) certain
events of bankruptcy, insolvency or reorganization; (e) failure by the Company
to make any payment at maturity, including any applicable grace period, in
respect of indebtedness, which term as used in each Indenture means obligations
(other than non-recourse obligations or the Debt Securities of such series
issued under such Indenture) of, or guaranteed or assumed by, the Company for
borrowed money (including, without limitation, capitalized lease obligations)
or evidenced by bonds, debentures, notes or other similar instruments
("Indebtedness") in an amount due and payable at maturity in excess of
$10,000,000 and continuance of such failure for a period of 30 days after
written notice thereof to the Company by the Trustee, or to the Company and the
Trustee by the holders of not less than 25% in principal amount of the
outstanding Debt Securities (treated as one class) issued under such Indenture;
or (f) a default with respect to any Indebtedness, which default results in the
acceleration of Indebtedness in an amount in excess of $10,000,000 without such
Indebtedness having been discharged or such acceleration having been cured,
waived, rescinded, or annulled for a period of 30 days after written notice
thereof to the Company by the Trustee, or to the Company and the Trustee by the
holders of not less than 25% in principal amount of the outstanding Debt
Securities (treated as one class) issued under such Indenture; provided,
however, that if any such failure, default or acceleration referred to in
clause (e) or (f) above shall cease or be cured, waived, rescinded or annulled,
then the Event of Default by reason thereof shall be deemed likewise to have
been thereupon cured. (Senior and Senior Subordinated Debt Indentures, Section
5.1)
Each Indenture provides that (a) if an Event of Default due to the default in
payment of principal of, premium, if any, or any interest on, any series of
Debt Securities issued under such Indenture or due to the default in the
performance or breach of any other covenant or warranty of the Company
applicable to the Debt Securities of such series but not applicable to all
outstanding Debt Securities issued under such Indenture shall have occurred and
be continuing, either the Trustee or the holders of not less than 25% in
principal amount of the Debt Securities of each affected series (treated as one
class) issued under such Indenture and then outstanding may then declare the
principal of all Debt Securities of each such affected series and interest
accrued thereon to be due and payable immediately; and (b) if an Event of
Default due to a default in the performance of any other of the covenants or
agreements in such Indenture applicable to all outstanding Debt Securities
issued thereunder and then outstanding or due to certain events of bankruptcy,
insolvency and reorganization of the Company shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all Debt Securities issued under such Indenture and then outstanding
(treated as one class) may declare the principal of all such Debt Securities
and interest
9
<PAGE>
accrued thereon to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal of (or premium, if any) or any
interest on such Debt Securities) by the holders of a majority in principal
amount of the Debt Securities of all such affected series then outstanding.
(Senior and Senior Subordinated Debt Indentures, Section 5.1 and Section 5.10)
Each Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the holders of Debt Securities (treated as one class)
issued under such Indenture before proceeding to exercise any right or power
under such Indenture at the request of such holders. (Senior and Senior
Subordinated Debt Indentures, Section 6.2) Subject to such provisions in each
Indenture for the indemnification of the Trustee and certain other limitations,
the holders of a majority in principal amount of the outstanding Debt
Securities (treated as one class) issued under such Indenture may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee. (Senior
and Senior Subordinated Debt Indentures, Section 5.9)
Each Indenture provides that no holder of Debt Securities issued under such
Indenture may institute any action against the Company under such Indenture
(except actions for payment of overdue principal or interest) unless such
holder previously shall have given to the Trustee written notice of default and
continuance thereof and unless the holders of not less than 25% in principal
amount of the Debt Securities of each affected series (treated as one class)
issued under such Indenture and then outstanding shall have requested the
Trustee to institute such action and shall have offered the Trustee reasonable
indemnity, the Trustee shall not have instituted such action within 60 days of
such request and the Trustee shall not have received direction inconsistent
with such written request by the holders of a majority in principal amount of
the Debt Securities of each affected series (treated as one class) issued under
such Indenture. (Senior and Senior Subordinated Debt Indentures, Section 5.6
and Section 5.9)
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any default
that exists. (Senior and Senior Subordinated Debt Indentures, Section 3.5) See
"Concerning the Trustee," below.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or defease its obligation under each Indenture as
set forth below. (Senior and Senior Subordinated Debt Indentures, Section 10.1)
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of any series of Debt Securities issued under such
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee cash or U.S. Government Obligations (as
defined in such Indenture) as trust funds in an amount certified to be
sufficient to pay at maturity (or upon redemption) the principal of and
interest on such Debt Securities.
The Company may also discharge any and all of its obligations to holders of
any series of Debt Securities issued under an Indenture at any time
("defeasance"), but may not thereby avoid its duty to register the transfer or
exchange of such series of Debt Securities, to replace any temporary,
mutilated, destroyed, lost, or stolen series of Debt Securities or to maintain
an office or agency in respect of such series of Debt Securities. Under terms
satisfactory to the Trustee, the Company may instead be released with respect
to any outstanding series of Debt Securities issued under the relevant
Indenture from the obligations imposed by Sections 3.6 and 9.1, in the case of
the Senior Debt Indenture, and Section 9.1, in the case of the Senior
Subordinated Debt Indenture (which contain the covenants described above
limiting liens and consolidations, mergers, asset sales and leases), and omit
to comply with such Sections without creating an Event of Default ("covenant
10
<PAGE>
defeasance"). Defeasance or covenant defeasance may be effected only if, among
other things: (i) the Company irrevocably deposits with the Trustee cash or
U.S. Government Obligations, as trust funds in an amount certified to be
sufficient to pay at maturity (or upon redemption) the principal of and
interest on all outstanding Debt Securities of such series issued under such
Indenture; (ii) the Company delivers to the Trustee an opinion of counsel to
the effect that the holders of such series of Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and that defeasance or
covenant defeasance will not otherwise alter such holders' United States
federal income tax treatment of principal and interest payments on such series
of Debt Securities (in the case of a defeasance, such opinion must be based on
a ruling of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of such Indenture, since such a result
would not occur under current tax law); and (iii) in the case of the Senior
Subordinated Debt Indenture (a) no event or condition shall exist that,
pursuant to certain provisions described under "Senior Subordinated Debt"
above, would prevent the Company from making payments of principal of (and
premium, if any) and interest on the Senior Subordinated Debt Securities at the
date of the irrevocable deposit referred to above or at any time during the
period ending on the 91st day after such deposit date and (b) the Company
delivers to the Trustee an opinion of counsel to the effect that (1) the trust
funds will not be subject to any rights of holders of Senior Indebtedness and
(2) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally, except that if a court
were to rule under any such law in any case or proceeding that the trust funds
remained property of the Company, then the Trustee and the holders of the
Senior Subordinated Debt Securities would be entitled to certain rights as
secured creditors in such trust funds.
MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any Debt Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or correct
any inconsistency in such Indenture, (e) establish the forms or terms of Debt
Securities of any series and (f) evidence the acceptance of appointment by a
successor trustee. (Senior and Senior Subordinated Debt Indentures, Section
8.1)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of all series issued under such Indenture
and then outstanding and affected (voting as a class), to add any provisions
to, or change in any manner or eliminate any of the provisions of, such
Indenture or modify in any manner the rights of the holders of the Debt
Securities of each series so affected; provided that the Company and the
Trustee may not, without the consent of the holder of each outstanding Debt
Security affected thereby, (a) extend the stated maturity of the principal of
any Debt Security, or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or impair the right to institute suit for the enforcement of
any payment on any Debt Security when due or (b) reduce the aforesaid
percentage in principal amount of Debt Securities of any series issued under
such Indenture, the consent of the holders of which is required for any such
modification. (Senior and Senior Subordinated Debt Indentures, Section 8.2)
The Senior Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Senior Subordinated Debt Securities without
the consent of each holder of Senior Indebtedness then outstanding that would
be adversely affected thereby. (Senior Subordinated Debt Indenture, Section
8.6)
GOVERNING LAW
The Indentures and the Securities will be governed by, and construed in
accordance with, the laws of the State of California. (Senior and Senior
Subordinated Debt Indentures, Section 11.8)
11
<PAGE>
CONCERNING THE TRUSTEE
Pursuant to the Trust Indenture Act of 1939, as amended, should a default
occur with respect to either the Debt Securities issued under the Senior Debt
Indenture or the Debt Securities issued under the Senior Subordinated Debt
Indenture, Chemical Bank would be required to resign as Trustee under one of
the Indentures within 90 days of such default unless such default were cured,
duly waived or otherwise eliminated. The Trustee is one of a number of banks
with which the Company and its subsidiaries maintain ordinary banking
relationships and with which the Company and its subsidiaries maintain credit
facilities.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby in four ways:
(i) directly to purchasers, (ii) through agents, (iii) through underwriters and
(iv) through dealers. Any such underwriters, dealers or agents may include
Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and Charles Schwab &
Co., Inc.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a reasonable
efforts basis for the period of its appointment. Agents may be entitled under
agreements which may be entered into with the Company to indemnification by the
Company against certain liabilities, including liabilities under the Securities
Act, and may be customers of, engage in transactions with or perform services
for the Company in the ordinary course of business.
If any underwriters are utilized in the sale of the Debt Securities in
respect of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set
forth in the Prospectus Supplement, which will be used by the underwriters to
make resales of the Debt Securities in respect of which this Prospectus is
delivered to the public. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase Offered Debt Securities from the Company at the public offering price
set forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to only those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such offers.
Schwab is a wholly owned subsidiary of the Company. Each offering of Debt
Securities will be conducted in compliance with the requirements of Schedule E
of the By-Laws of the National Association of Securities Dealers, Inc. ("NASD")
regarding a NASD member firm's distributing the securities of an affiliate.
Following
12
<PAGE>
the initial distribution of any Debt Securities, Schwab may offer and sell such
Debt Securities in the course of its business as a broker-dealer. This
Prospectus may be used by Schwab in connection with such transactions. Such
sales, if any, will be made at varying prices related to prevailing market
prices at the time of sale or otherwise. Schwab may, but is not obligated to,
make a market in the Debt Securities and may discontinue any market-making
activities at any time without notice.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the Company by
Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional Corporation.
Certain directors of that firm beneficially own an aggregate of less than 1% of
the Common Stock of the Company.
Certain legal matters relating to the Debt Securities will be passed upon on
behalf of dealers, underwriters or agents by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedules incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated except the
Securities and Exchange Commission registration fee and National Association of
Securities Dealers, Inc. filing fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 34,483
NASD fee........................................................ 10,500
Printing and engraving expenses................................. 20,000
Accountants' fees and expenses.................................. 25,000
Legal fees and expenses......................................... 70,000
Fees and expenses for qualification under state securities laws. 20,000
Trustee's fees and expenses..................................... 6,000
Rating agency fees.............................................. 60,000
Miscellaneous................................................... 4,017
--------
Total....................................................... $250,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation provides that, pursuant
to Delaware law, its directors will not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, with specified exceptions. The exceptions relate to (i) any breach of
a director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions that are not in good faith or that involve intentional misconduct or
a knowing violation of law, (iii) approval by a director of certain unlawful
dividend payments, distributions or stock redemptions or repurchases or (iv)
engaging in a transaction from which a director derives an improper personal
benefit. Among the types of breaches for which directors will not be liable are
those resulting from negligent or grossly negligent behavior.
The Company's Amended and Restated Bylaws also provide for the
indemnification of both its directors and officers within the limitations
permitted by Delaware law. Section 145 of the Delaware General Corporation Law
authorizes indemnification of directors and officers for actions taken in good
faith and in a manner such person reasonably believed to be in, or not opposed
to, the best interests of the Company. This provision is sufficiently broad to
permit indemnification under certain circumstances for liabilities (and for
reimbursement of expenses incurred) arising under the Securities Act of 1933,
as amended. The Company has entered into indemnity agreements with its
directors that contain provisions that are in some respects broader than the
specified indemnification provisions contained in Delaware law.
The Company has obtained directors' and officers' liability and corporate
reimbursement insurance covering all officers and directors of the Company and
its subsidiaries and providing for the reimbursement of amounts paid by the
Company or its subsidiaries to directors and officers pursuant to
indemnification arrangements, subject to certain deductibles and coinsurance
provisions.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1 Form of Underwriting Agreement
4.1 Form of Senior Debt Indenture filed on July 1, 1993 as Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (registration number 33-
65342) and incorporated herein by reference.
4.2 Form of Senior Subordinated Debt Indenture filed on July 1, 1993 as Ex-
hibit 4.2 to the Company's Registration Statement on Form S-3 (registra-
tion number 33-65342) and incorporated herein by reference.
5.1 Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation.
12.1 Computation of Consolidated Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation (included in Exhibit 5.1).
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Inden-
ture Act of 1939 of Chemical Bank.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement.
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SAN FRANCISCO, STATE OF CALIFORNIA ON THE 17TH DAY
OF AUGUST, 1995.
The Charles Schwab Corporation
/s/ A. John Gambs
By: _________________________________
A. John Gambs,
Executive Vice President--Finance
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
COMPANY IN THE CAPACITIES INDICATED AND ON AUGUST 17, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Charles R. Schwab
-------------------------------------------
Charles R. Schwab* Chairman, Chief Executive Officer and
Director (principal executive officer)
/s/ Lawrence J. Stupski
-------------------------------------------
Lawrence J. Stupski* Vice Chairman and Director
/s/ A. John Gambs
-------------------------------------------
A. John Gambs Executive Vice President--Finance and Chief
Financial Officer (principal financial and
accounting officer)
/s/ David S. Pottruck President, Chief Operating Officer and
------------------------------------------- Director
David S. Pottruck*
/s/ Nancy H. Bechtle
-------------------------------------------
Nancy H. Bechtle* Director
/s/ C. Preston Butcher
-------------------------------------------
C. Preston Butcher* Director
/s/ Donald G. Fisher
-------------------------------------------
Donald G. Fisher* Director
/s/ Anthony M. Frank
-------------------------------------------
Anthony M. Frank* Director
/s/ James R. Harvey
-------------------------------------------
James R. Harvey* Director
/s/ Stephen T. McLin
-------------------------------------------
Stephen T. McLin* Director
/s/ Roger O. Walther
-------------------------------------------
Roger O. Walther* Director
</TABLE>
/s/ A. John Gambs
*By__________________________________
A. John Gambs
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Form of Senior Debt Indenture filed on July 1, 1993 as Exhibit 4.1 to
the Company's Registration Statement on Form S-3 (registration number
33-65342) and incorporated herein by reference.
4.2 Form of Senior Subordinated Debt Indenture filed on July 1, 1993 as
Exhibit 4.2 to the Company's Registration Statement on Form S-3
(registration number 33-65342) and incorporated herein by reference.
5.1 Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation.
12.1 Computation of Consolidated Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation (included in Exhibit 5.1).
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Chemical Bank.
</TABLE>
<PAGE>
EXHIBIT 1.1
THE CHARLES SCHWAB CORPORATION
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(DEBT SECURITIES)
_______ __, 199_
From time to time, The Charles Schwab Corporation, a Delaware corporation
(the "Company"), may enter into one or more underwriting agreements that provide
for the sale of designated securities to the several underwriters named therein.
The standard provisions set forth herein may be incorporated by reference in any
such underwriting agreement (an "Underwriting Agreement"). The Underwriting
Agreement, including the provisions incorporated therein by reference, is herein
sometimes referred to as this Agreement. Terms defined in the Underwriting
Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Debt Securities and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "Prospectus Supplement") specifically relating to the
Offered Securities pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"). The term "Registration Statement" means the
registration statement, including the exhibits thereto, as amended to the date
of this Agreement. The term "Basic Prospectus" means the prospectus included in
the Registration Statement. The term "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. The term "preliminary prospectus"
means a preliminary prospectus supplement specifically relating to the Offered
Securities, together with the Basic Prospectus. As used herein, the terms
"Basic Prospectus," "Prospectus" and "preliminary prospectus" shall include in
each case the documents, if any, incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the
<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The term Contract Securities means the Offered Securities to be purchased
pursuant to the delayed delivery contracts substantially in the form of Schedule
I hereto, with such changes therein as the Company may approve (the "Delayed
Delivery Contracts"). The term "Underwriters' Securities" means the Offered
Securities other than Contract Securities.
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(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 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 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 any Underwriter
furnished to the Company in writing by such Underwriter through the Manager
expressly for use therein or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee.
(c) The Company is a duly incorporated, validly existing corporation in
good standing under the laws of the State of Delaware, has the corporate power
and authority to own its property and conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
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standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Each of Schwab Holdings, Inc. ("Holdings"), Charles Schwab & Co., Inc.
("Charles Schwab"), Mayer & Schweitzer, Inc. ("M&S") and each other subsidiary
of the Company that is a "significant subsidiary" within the meaning of Rule 1-
02 of Regulation S-X of the Commission (each, a "Significant Subsidiary" and
collectively, the "Significant Subsidiaries") is a duly incorporated, validly
existing corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and
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 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) This Agreement has been duly authorized, executed and delivered by the
Company.
(f) Each of the Senior Debt Indenture dated as of July 15, 1993 (the
"Senior Debt Indenture") and the Senior Subordinated Debt Indenture dated as of
July 15, 1993 (the "Senior Subordinated Debt 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.
(g) The Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company and are valid and binding agreements 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) the availability of equitable
remedies may be limited by equitable principles of general applicability.
(h) The Offered Securities have been duly authorized and, when executed
and authenticated in accordance with the provisions of the relevant Indenture
and delivered to and paid
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for by the Underwriters in accordance with the terms of the Underwriting
Agreement, in the case of the Underwriters' Securities, or by institutional
investors in accordance with the terms of the Delayed Delivery Contracts, in the
case of the Contract Securities, will be entitled to the benefits of the
relevant Indenture and will be valid and binding obligations of the Company, in
each case 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, if
any, and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(i) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement, the Senior Debt Indenture,
the Senior Subordinated Debt Indenture, the Offered Securities and the Delayed
Delivery Contracts will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or Charles Schwab 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 Senior Debt Indenture, the Senior Subordinated Debt
Indenture, the Offered Securities or the Delayed Delivery Contracts, or for the
performance by Charles Schwab of its obligations under this Agreement, except
such as have been obtained, and such as may be required by the securities or
Blue Sky laws of the various states or similar laws in connection with the offer
and sale of the Offered Securities.
(j) There has not occurred any material adverse change, or any development
which could reasonably be expected to result in a 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 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, filed or incorporated as
4
<PAGE>
required.
(l) 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.
(m) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(n) Each of the Company and its Significant Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the Prospectus,
except to the extent that the failure to obtain or file would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(o) Each of the Company and its Significant Subsidiaries is duly
registered as a broker-dealer, municipal securities broker or dealer, investment
adviser, or transfer agent, as the case may be, in each jurisdiction wherein the
conduct of its business requires such registration, and each of the Company and
its Significant Subsidiaries is in compliance in all material respects with all
applicable laws, rules, regulations, orders, by-laws and similar requirements in
connection with such registrations, except to the extent that the failure to be
so registered or be in compliance would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(p) Charles Schwab is a member in good standing of the associations and
exchanges indicated in the Prospectus and is registered as a broker-dealer with
the Commission and in all 50 states, the District of Columbia and Puerto Rico,
except to the extent that the failure to be in good standing or be so registered
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(q) M&S is a member in good standing of the associations and exchanges,
and is registered as a broker-dealer with the Commission and in each of the
jurisdictions, indicated in the Prospectus, except to the extent that the
failure to be in good standing or be so registered would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
2. Delayed Delivery Contracts. If the Prospectus
5
<PAGE>
provides for sales of Offered Securities pursuant to Delayed Delivery Contracts,
the Company hereby authorizes the Underwriters to solicit offers to purchase
Contract Securities on the terms and subject to the conditions set forth in the
Prospectus pursuant to Delayed Delivery Contracts. Delayed Delivery Contracts
may be entered into only with institutional investors approved by the Company.
On the Closing Date, the Company will pay to the Manager as compensation for the
accounts of the Underwriters the commission set forth in the Underwriting
Agreement in respect of the Contract Securities. The Underwriters will not have
any responsibility in respect of the validity or the performance of any Delayed
Delivery Contracts.
If the Company executes and delivers Delayed Delivery Contracts with
institutional investors, the aggregate amount of Offered Securities to be
purchased by the several Underwriters shall be reduced by the aggregate amount
of Contract Securities; such reduction shall be applied to the commitment of
each Underwriter pro rata in proportion to the amount of Offered Securities set
forth opposite such Underwriter's name in the Underwriting Agreement, except to
the extent that the Manager determines that such reduction shall be applied in
other proportions and so advises the Company; provided, however, that the total
amount of Offered Securities to be purchased by all Underwriters shall be the
aggregate amount set forth above, less the aggregate amount of Contract
Securities.
3. Public Offering. The Company is advised by the Manager that the
propose to make a public offering of their respective portions of the
Underwriters' Securities as soon after this Agreement has been entered into as
in the Manager's judgment is advisable. The terms of the public offering of the
Underwriters' Securities are set forth in the Prospectus.
4. Purchase and Delivery. Except as otherwise provided in this Section 4,
payment for the Underwriters' Securities shall be made by certified or official
bank check or checks payable to the order of the Company in New York Clearing
House funds at the time and place set forth in the Underwriting Agreement, upon
delivery to the Manager for the respective accounts of the several Underwriters
of the Underwriters' Securities, registered in such names and in such
denominations as the Manager shall request in writing not less than two full
business days prior to the date of delivery, with any transfer taxes payable in
connection with the transfer of the Underwriters' Securities to the Underwriters
duly paid.
5. Conditions to Closing. The several obligations of the Underwriters
hereunder are subject to the following conditions:
6
<PAGE>
(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,
(i) 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; and
(ii) there shall not have occurred any change, or any development
which could reasonably be expected to result in a 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,
that, in the judgment of the Manager, is material and adverse and that
makes it, in the judgment of the Manager, impracticable to market the
Offered Securities on the terms and in the manner contemplated in the
Prospectus, as amended or supplemented.
(b) The Manager shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing 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 the
Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Manager shall have received on the Closing Date an opinion of
Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation, counsel for the Company, dated the Closing Date, to the effect
that:
(i) Schwab is a duly incorporated, validly existing corporation
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its
property and conduct its business as described in the Prospectus;
(ii) this Agreement has been duly authorized,
7
<PAGE>
executed and delivered by the Company;
(iii) each of the Senior Debt Indenture and the Senior
Subordinated Debt 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;
(iv) the Delayed Delivery Contracts have been duly authorized,
executed and delivered by the Company and are valid and binding
agreements of the Company;
(v) the Offered Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
relevant Indenture and delivered to and paid for by the Underwriters
in accordance with the terms of the Underwriting Agreement, in the
case of Underwriters' Securities, or by institutional investors in
accordance with the terms of the Delayed Delivery Contracts, in the
case of the Contract Securities, will be entitled to the benefits of
the relevant Indenture and will be valid and binding obligations of
the Company, in each case enforceable in accordance with their
respective terms;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Senior Debt Indenture, the Senior Subordinated Debt Indenture, the
Offered Securities and the Delayed Delivery Contracts, at the time the
Offered Securities were issued, did not (a) contravene (1) any
provision of applicable law (other than the securities or Blue Sky
laws of the various states as to which such counsel need express no
opinion) or (2) the certificate of incorporation or by-laws of the
Company or Charles Schwab, or (b) constitute a default under any of
the Revolving Subordinated Loan Agreement as of September 29, 1988,
between the Company and Charles Schwab, the Credit Agreement dated as
of June 29, 1995, between the Company and the banks listed therein; or
to the best knowledge of such counsel, after reasonable investigation,
any other instrument or agreement binding upon the Company or any
subsidiary evidencing or related to indebtedness for borrowed money,
except such instruments and other agreements relating to capitalized
lease obligations and
8
<PAGE>
installment purchase agreements for the acquisition of fixed assets,
indebtedness pursuant to which does not in the aggregate exceed $5
million); 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 Senior Debt Indenture, the Senior Subordinated Debt
Indenture, the Offered Securities or the Delayed Delivery Contracts,
or for the performance by Charles Schwab of its obligations under this
Agreement, except such as are specified and have been obtained or may
be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Offered Securities;
(vii) the statements (1) in the Prospectus under the captions
"Description of Debt Securities," "Plan of Distribution," "Description
of Notes," "Underwriting" and similar captions and (2) in the
Registration Statement under Item 15, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(viii) such counsel is of the opinion ascribed to it in the
Prospectus under the caption "Certain United States Federal Income Tax
Consequences"; and
(ix) (1) such counsel is of the opinion that each
9
<PAGE>
document, if any, filed by the Company pursuant to the Exchange Act
and incorporated by reference in the Prospectus (except for financial
statements and schedules and other financial and statistical data
included therein, and except for any proxy statement of the Company)
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, (2)
no facts have come to the attention of such counsel to lead them to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief and except for the parts of the Registration
Statement that constitute the Form T-1 heretofore referred to or any
proxy statement of the Company) any part of the Registration
Statement, when such part became effective, and, as of the date such
opinion is delivered, 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, (3) such
counsel is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules and other
financial and statistical data included therein, and except for any
proxy statement of the Company, as to which such counsel need not
express any opinion), comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (4) no facts have come to the attention of
such counsel to lead them to believe that (except for financial
statements and schedules and other financial and statistical data, and
except for any proxy statement of the Company, as to which such
counsel need not express any belief) the Prospectus as of the date
such opinion is delivered contained any untrue statement of a material
fact or omitted 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.
(d) The Manager shall have received on the Closing Date an opinion of
Mary B. Templeton, General Counsel of the Company, dated the Closing Date,
to the effect that:
(i) the Company is a duly incorporated, validly existing
corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and 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 leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing
10
<PAGE>
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) each of Holdings and M&S is a duly incorporated, validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority to own its property and conduct its business as described in
the Prospectus and is duly qualified to transact business; and each
Significant Subsidiary 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;
(iii) each of the Company and its Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates
and permits of and from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals,
to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, as
amended or supplemented, except to the extent that the failure to
obtain or file would not have a material adverse effect on the Company
and its consolidated subsidiaries, taken as a whole;
(iv) the statements (1) in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus and (2) in "Item 1 - Legal Proceedings" of
Part II of the Company's quarterly reports on Form 10-Q, if any, filed
since such annual report, and (3) under the caption "Employment
Agreement and Name Assignment" in the Company's Proxy Statement for
its Annual Meeting of Stockholders immediately succeeding the filing
of the Company's most recent annual report on Form 10-K incorporated
by reference in the Prospectus, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(v) after due inquiry, such counsel does not know of any
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, filed or incorporated as required;
(vi) each of the Company and its Significant
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Subsidiaries are duly registered as a broker-dealer, municipal
securities broker or dealer, investment adviser, or transfer agent, as
the case may be, in each jurisdiction wherein the conduct of its
business requires such registration, and each of the Company and its
Significant Subsidiaries is in compliance in all material respects
with all applicable laws, rules, regulations, orders, by-laws and
similar requirements in connection with such registrations, except to
the extent that the failure to be so registered or be in compliance
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(vii) Charles Schwab is a member in good standing of the
associations and exchanges indicated in the Prospectus and is
registered as a broker-dealer with the Commission and in all 50
states, the District of Columbia and Puerto Rico, except to the extent
that the failure to be so registered or be in compliance would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; and
(viii) M&S is a member in good standing of the associations and
exchanges, and is registered as a broker-dealer with the Commission
and in each jurisdiction, indicated in the Prospectus, except to the
extent that the failure to be in good standing or be so registered
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(ix) the execution and delivery by the Company of the Agreement, the
Notes and the Indentures and the performance by the Company of its
obligations under the Agreement, the Notes and the Indentures at the
time the Notes were issued did not violate, to such counsel's best
knowledge, after reasonable investigation, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary (except for such contravention that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole);
(x) after due inquiry, such counsel does not know of any 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 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 or regulations that are required to be described in the
Registration Statement or the Prospectus, as then amended or
supplemented, that are not described as required; and
(xi) (1) Such counsel is of the opinion that the proxy statement
most recently filed by the Company pursuant to the Exchange Act and
incorporated by reference in the Prospectus, as then amended or
supplemented (except for financial statements and schedules and other
financial and statistical data included therein, as to which such
counsel need not express an 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, (2) no facts have
come to the attention of such counsel to lead them to believe that
(except for financial statements and schedules and other financial and
statistical data, as to which such counsel need not express any
belief) the proxy statement most recently filed pursuant to the
Exchange Act by the Company and incorporated by reference in the
Prospectus, when such part of Registration Statement became effective,
and as of the date such opinion is delivered, 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.
(e) The Manager shall have received on the Closing Date an opinion of
Davis Polk & Wardwell, special counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (ii),
(iii), (iv), (v), (vii) (but only as to the statements in the Prospectus
under "Description of Debt Securities" and "Plan of Distribution") and (ix)
(2), (3) and (4) of paragraph (c) above.
In giving the opinions referred to in paragraph (c) hereof, Howard,
Rice, Nemerovski, Canady, Falk & Rabkin, A Professional Corporation, may
rely on the opinion of Davis Polk & Wardwell as to any matters governed by
the laws of New York, and in giving the opinion referred to in paragraph
(e) hereof, Davis Polk & Wardwell may rely on the opinion of Howard, Rice,
Nemerovski, Canady, Falk & Rabkin, A Professional Corporation, as to any
matters governed by laws of California. With respect to subparagraph (x) of
paragraph (c) above, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation, may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement
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and Prospectus and any amendments or supplements thereto (but not including
documents incorporated therein by reference) and review and discussion of
the contents thereof (including documents incorporated therein by
reference), but are without independent check or verification, except as
specified. With respect to clauses (2), (3) and (4) of subparagraph (ix) of
paragraph (c) above, Davis Polk & Wardwell may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (but not including documents incorporated therein by reference) and
review and discussion of the contents thereof (including documents
incorporated therein by reference), but are without independent check or
verification, except as specified.
The opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation, described in paragraph (c) above shall be
rendered to you at the request of the Company and shall so state therein.
The opinion of Mary B. Templeton, General Counsel of the Company,
described in paragraph (d) above shall be rendered to you at the request of
the Company and shall so state therein.
(f) The Manager shall have received on the Closing Date a letter,
dated the Closing Date, in form and substance satisfactory to the Manager,
from the Company's independent auditors, containing statements and
information of the type ordinarily included in accountants' "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.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To furnish the Manager, without charge, a signed copy of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and, during the period mentioned in paragraph
(c) below, as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the
Registration Statement as the Manager may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus with respect to the Offered
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Securities, to furnish to the Manager a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which the Manager reasonably objects; provided, however, that
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, copies of which filings the Company
will cause to be delivered to each Underwriter promptly after being
transmitted for filing with the Commission.
(c) If, during such period after the first date of the public
offering of the Offered Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with law,
forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters, and to the dealers (whose names and addresses
the Manager will furnish to the Company) to which Offered Securities may
have been sold by the Manager on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Offered Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Manager
shall reasonably request and to maintain such qualification for as long as
the Manager shall reasonably request.
(e) To make generally available to its security holders and to the
Manager as soon as practicable an earning statement covering a twelve month
period beginning on the first day of the first full fiscal quarter after
the date of this Agreement, which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder. 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
14
<PAGE>
thereby.
(f) During the period beginning on the date of the Underwriting
Agreement and continuing to and including the Closing Date, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of the
Company or warrants to purchase debt securities of the Company
substantially similar to the Offered Securities (other than (i) the Offered
Securities and (ii) commercial paper issued in the ordinary course of
business), without the prior written consent of the Manager.
(g) Whether or not any sale of Offered Securities is consummated, to
pay all expenses incident to the performance of its obligations under this
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 Offered Securities,
(iii) the fees and disbursements of the Company's counsel and accountants
and of the Trustee and its counsel, (iv) the qualification of the Offered
Securities under securities or Blue Sky laws in accordance with the
provisions of Section 6(d), including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and
in connection with the preparation of any Blue Sky or Legal Investment
Memoranda, (v) the printing and delivery to the Underwriters 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) any fees charged by rating agencies for the rating of the
Offered Securities, (vii) the fees and expenses, if any, incurred with
respect to any filing with the National Association of Securities Dealers,
Inc. and (viii) all reasonable document production charges and reasonable
expenses of counsel to the Underwriters (but not including their fees for
professional services) in connection with the preparation of this
Agreement.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter 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 Underwriter 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,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements
15
<PAGE>
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 any Underwriter
furnished to the Company in writing by such Underwriter through the Manager
expressly for use therein, provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased Offered Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished to such Underwriter any such
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Offered Securities to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities.
(b) Each Underwriter 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 Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Manager expressly for use in the Registration Statement, any preliminary
prospectus, 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 proceeding
16
<PAGE>
(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 the Manager, 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, 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 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, 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 the Underwriters on the
other hand from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above 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
17
<PAGE>
but also the relative fault of the Company on the one hand and of the
Underwriters 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 the Underwriters on the other hand in connection
with the offering of the Offered Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such Offered
Securities (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus Supplement, bear
to the aggregate public offering price of the Offered Securities. The relative
fault of the Company on the one hand and of the Underwriters 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
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters 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 the immediately preceding paragraph 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 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter 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 7 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.
8. Termination. This Agreement shall be subject to termination, by
notice given by the Manager to the Company, if (a) after the execution and
delivery of the Underwriting
18
<PAGE>
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Manager, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event, singly or together with
any other such event, makes it, in the judgment of the Manager, impracticable to
market the Offered Securities on the terms and in the manner contemplated in the
Prospectus.
9. Defaulting Underwriters. If, on the Closing Date, any one or more
of the Underwriters shall fail or refuse to purchase Underwriters' Securities
that it has or they have agreed to purchase on such date, and the aggregate
amount of Underwriters' Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate amount of the Underwriters' Securities to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the amount of Underwriters' Securities set forth opposite their respective
names in the Underwriting Agreement bears to the aggregate amount of
Underwriters' Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Manager may specify, to
purchase the Underwriters' Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the amount of Underwriters' Securities that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such amount of
Underwriters' Securities without the written consent of such Underwriter. If,
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Underwriters' Securities and the aggregate amount of Underwriters'
Securities with respect to which such default occurs is more than one-tenth of
the aggregate amount of Underwriters' Securities to be purchased on such date,
and arrangements satisfactory to the Manager and the Company for the purchase of
such Underwriters' Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company. In any such case either the Manager or
the Company shall have the right to postpone the Closing 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
19
<PAGE>
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering of the Offered Securities.
10. Representations and Indemnities to Survive. The respective
indemnity and contribution agreements and the representations, warranties and
other statements of the Company, its officers and the Underwriters set forth in
this Agreement will remain in full force and effect, regardless of any
termination of this Agreement, any investigation made by or on behalf of any
Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Section 8 and delivery of and payment for the Offered
Securities.
11. Successors. This Agreement will enure 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 7, and no
other person will have any right or obligation hereunder.
12. Counterparts. The Underwriting 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.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. 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.
20
<PAGE>
UNDERWRITING AGREEMENT
___________, 199_
THE CHARLES SCHWAB CORPORATION
101 Montgomery Street
San Francisco, California 94104
Ladies and Gentlemen:
We (the "Manager") are acting on behalf of the underwriter or
underwriters (including ourselves) named below (such underwriter or underwriters
being herein called the "Underwriters"), and we understand that The Charles
Schwab Corporation, a Delaware corporation (the "Company"), proposes to issue
and sell [Currency and Principal Amount] aggregate initial offering price of
[Full title of Debt Securities] (the "Debt Securities") (The Debt Securities
are also referred to herein as the "Offered Securities"). The Debt Securities
will be issued pursuant to the provisions of a [Senior/Subordinated] Indenture
dated as of July 15, 1993 (the "[Senior/Subordinated] Debt Indenture") between
the Company and Chemical Bank, as Trustee (the "Trustee").
Subject to the terms and conditions set forth or incorporated by
reference herein, the Company hereby agrees to sell and the Underwriters agree
to purchase, severally and not jointly, the respective principal amounts of Debt
Securities set forth below opposite their names at a purchase price of ____% of
the principal amount of Debt Securities[, plus accrued interest, if any, from
[Date of Offered Securities] to the date of payment and delivery]:/1/:
------------
1 To be added only if the transaction does not close flat.
<PAGE>
Principal Amount of
Name Debt Securities
---- -------------------
Morgan Stanley & Co.
Incorporated
Morgan Stanley International
Goldman, Sachs & Co.
Charles Schwab & Co., Inc.
[Insert syndicate list]
Total . . . . . .
===========
[The principal amount of Debt Securities to be purchased by the several
Underwriters shall be reduced by the aggregate principal amount of Debt
Securities sold pursuant to delayed delivery contracts.]/2/
The Underwriters will pay for the Offered Securities [(less any Offered
Securities sold pursuant to delayed delivery contracts)]/3/ upon delivery
thereof at [office] at ______ a.m. (New York time) on ___________, 199_, or at
such other time, not later than 5:00 p.m. (New York time) on __________, 199_,
as shall be designated by the Manager. The time and date of such payment and
delivery are hereinafter referred to as the Closing Date.
The Offered Securities shall have the terms set forth in the Prospectus
dated ___________, 199_, and the Prospectus Supplement dated ____________, 199_,
including the following:
____________
2 To be added only if delayed delivery contracts are contemplated.
2
<PAGE>
Terms of Debt Securities
Maturity Date: ___________ __, ____
Interest Rate:
Redemption Provisions:
Interest Payment Dates: ____________ __ and
____________ __ commencing
____________ __, ____
[(Interest accrues from
____________ __, ____)]/3/
Form and Denomination:
Ranking: The Debt Securities will be [senior/
subordinated] indebtedness of the
Company issued under the [Senior/
Subordinated] Indenture dated as
of July 15, 1993, between the
Company and Chemical Bank, as trustee.
[Other Terms:]
[The commission to be paid to the Underwriters in respect of the Offered
Securities purchased pursuant to delayed delivery contracts arranged by the
Underwriters shall be ___% of the principal amount of the Debt Securities so
purchased.]/4/
All provisions contained in the document entitled The Charles Schwab
Corporation Underwriting Agreement Standard Provisions (Debt Securities) dated
_________, 199_, a copy of which is attached hereto, are herein incorporated by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions had been set forth in full herein,
except that (i) if any term defined in such document is otherwise defined
herein, the definition set forth herein shall control, (ii) all references in
such document to a type of security that is not an Offered Security shall not be
deemed to be a part of this Agreement and (iii) all references in such document
to a type of agreement that has not been entered into in connection with the
transactions contemplated hereby shall not be deemed to be a part of this
Agreement.
____________
3 To be added only if the transaction does not close flat.
4 To be added only if delayed delivery contracts are contemplated.
3
<PAGE>
[SIGNATURE PAGE WHERE MORGAN STANLEY
------------------------------------
OR MORGAN STANLEY INTERNATIONAL IS A CO-LEAD MANAGER]
-----------------------------------------------------
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
[MORGAN STANLEY & CO. INCORPORATED]
[MORGAN STANLEY INTERNATIONAL]
[GOLDMAN, SACHS & CO.]
[CHARLES SCHWAB & CO., INC.]
[Name of Other Lead Managers]
On behalf of themselves and the other
Underwriters named herein
By: [MORGAN STANLEY & CO. INCORPORATED]
[MORGAN STANLEY INTERNATIONAL]
By:__________________________________
Name:
Title:
Accepted:
THE CHARLES SCHWAB CORPORATION
By:___________________________
Name:
Title:
4
<PAGE>
[SIGNATURE PAGE WHERE MORGAN STANLEY
-------------------------------------
OR MORGAN STANLEY INTERNATIONAL IS SOLE MANAGER]
------------------------------------------------
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
[MORGAN STANLEY & CO. INCORPORATED,]
[MORGAN STANLEY INTERNATIONAL,]
acting severally on behalf of itself
and the several Underwriters named herein
By:___________________________________
Name:
Title:
Accepted:
THE CHARLES SCHWAB CORPORATION
By:___________________________
Name:
Title:
5
<PAGE>
Schedule I
DELAYED DELIVERY CONTRACT
________, 199_
Dear Sirs:
The undersigned hereby agrees to purchase from The Charles Schwab
Corporation, a Delaware corporation (the "Company"), and the Company agrees to
sell to the undersigned the Company's securities described in Schedule A annexed
hereto (the "Securities"), offered by the Company's Prospectus dated _______,
19__ and Prospectus Supplement dated ________, 19__, receipt of copies of which
is hereby acknowledged, at a purchase price stated in Schedule A and on the
further terms and conditions set forth in this Agreement. The undersigned does
not contemplate selling Securities prior to making payment therefor.
The undersigned will purchase from the Company Securities in the
principal amount and numbers on the delivery dates set forth in Schedule A.
Each such date on which Securities are to be purchased hereunder is hereinafter
referred to as a "Delivery Date."
Payment for the Securities which the undersigned has agreed to purchase
on each Delivery Date shall be made to the Company or its order by certified or
official bank check in New York Clearing House funds at the office of
____________, San Francisco, California at 10:00 A.M. (New York time) on the
Delivery Date, upon delivery to the undersigned of the Securities to be
purchased by the undersigned on the Delivery Date, in such denominations and
registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for the Securities on the Delivery Date shall be subject to the conditions that
(1) the purchase of Securities to be made by the undersigned shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which the
undersigned is subject and (2) the Company shall have sold, and delivery shall
have taken place to the underwriters (the "Underwriters") named in the
Prospectus Supplement referred to above of, such part of the Securities as is to
be sold to them.
<PAGE>
Promptly after completion of sale and delivery to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
Failure to take delivery of and make payment for Securities by any
purchaser under any other Delayed Delivery Contract shall not relieve the
undersigned of its obligations under this agreement.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
If this Agreement is acceptable to the Company, it is requested that the
Company sign the form of acceptance below and mail or deliver one of the
counterparts hereof to the undersigned at its address set forth below. This
will become a binding agreement, as of the date first above written, between the
Company and the undersigned when such counterpart is so mailed or delivered.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
Yours very truly,
___________________________
(Purchaser)
By ________________________
___________________________
(Title)
___________________________
___________________________
(Address)
Accepted:
The Charles Schwab Corporation
2
<PAGE>
By ________________________
PURCHASER --- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone and department of the representative of the
Purchaser with whom details of delivery on the Delivery Date may be discussed is
as follows: (Please print.)
Telephone No.
Name (Including Area Code) Department
---- --------------------- ----------
________________ _______________ _________________
3
<PAGE>
SCHEDULE A
----------
Securities:
----------
Principal Amounts or Numbers to be Purchased:
--------------------------------------------
Purchase Price:
--------------
Delivery Dates:
--------------
4
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF HOWARD
RICE
NEMEROVSKI
CANADY
FALK
& RABKIN]
August 18, 1995
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, California 94014
Ladies and Gentlemen:
You have requested our opinion as counsel for The Charles Schwab
Corporation, a Delaware corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and the public offering by the Company of up
to $100,000,000 of debt securities (the "Debt Securities").
We have examined the Company's Registration Statement on Form S-3 in the
form to be filed with the Securities and Exchange Commission on or about August
18, 1995 (the "Registration Statement"). We further have examined the
Certificate of Incorporation of the Company as certified by the Secretary of
State of the State of Delaware, the Bylaws and the minute books of the Company,
the Senior Indenture and Senior Subordinated Indenture entered into as of July
15, 1993 by and between the Company and Chemical Bank as trustee (each, an
"Indenture") and the form of Underwriting Agreement between the Company and the
underwriters named therein. In addition, we have examined such corporate
records, certificates and other documents (of which we are aware) and such
questions of law as we have considered necessary or appropriate for the purposes
of this opinion.
Based on the foregoing examination, we are of the opinion that, when the
issuance of Debt Securities has been duly authorized by appropriate corporate
action and the Debt Securities have been duly completed, executed, authenticated
<PAGE>
The Charles Schwab Corporation
August 18, 1995
Page 2
and delivered in accordance with the relevant Indenture and sold as described in
the Registration Statement, any amendment thereto, the prospectus and any
supplement thereto, the Debt Securities will be legal, valid and binding
obligations of the Company entitled to the benefits of such Indenture.
In connection with this opinion we have assumed the following: (a) the
authenticity of original documents and the genuineness of all signatures; (b)
the conformity to the originals of all documents submitted to us as copies; (c)
the truth, accuracy and completeness of the information, representations and
warranties contained in the instruments, documents, records and certificates we
have reviewed; (d) the due authorization, execution and delivery on behalf of
the respective parties thereto of the documents referred to herein and, except
for the Debt Securities, the legal, valid and binding nature thereof with
respect to such parties; and (e) the absence of any evidence extrinsic to the
provisions of the written agreements between the parties that the parties
intended a meaning contrary to that expressed by those provisions. We have not
independently verified such assumptions.
We express no opinion as to laws other than the substantive laws of the
State of California (without regard to conflicts-of-laws or choice-of-law
principles), the General Corporation Law of the State of Delaware and the
federal laws of the United States of America, in each case to the extent
applicable and not excepted from the scope of the opinions expressed above.
Our opinion that any document is legal, valid and binding is qualified
as to the effects of:
(a) bankruptcy, reorganization, fraudulent transfer or conveyance,
moratorium, insolvency or other similar laws or court decisions relating
to or affecting the rights of creditors generally;
(b) equitable principles of general applicability (including, without
limitations, concepts of materiality, reasonableness, good faith and fair
dealing, equitable subordination and the possible unavailability of
specific performance or injunctive relief), regardless of whether
codified by statute;
(c) the unenforceability of any indemnity obligation imposed or
undertaken by the Company, to the extent that such obligation does not
<PAGE>
The Charles Schwab Corporation
August 18, 1995
Page 3
satisfy the requirements of Section 2772 et seq. of the California Civil
-- ---
Code and judicial decisions thereunder or otherwise violates public
policy;
(d) the unenforceability of provisions purporting to require the award
of attorneys' fees, expense or costs, where such provisions do not
satisfy the requirement of Section 1717 et seq. of the California Civil
-- ---
Code and judicial decisions thereunder or otherwise violates public
policy;
(e) the unenforceability, under certain circumstances, of provisions
that contain a waiver of (i) broadly or vaguely stated rights, (ii) the
benefits of statutory, regulatory or constitutional rights, unless and
to the extent the statute, regulation or constitution explicitly allows
waiver, (iii) unknown future defenses, and (iv) rights to damages; and
(f) the unenforceability, under certain circumstances, of provisions
of agreements to the effect that rights or remedies are not exclusive,
that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, or that the election of
some particular remedy or remedies does not preclude recourse to one or
another remedy.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name whenever it appears in the
Registration Statement, any amendment thereto, the prospectus and any supplement
thereto.
Very truly yours,
HOWARD, RICE, NEMEROVSKI,
CANADY, FALK & RABKIN
A Professional Corporation
By /s/ Horace L. Nash
-----------------------------
Horace L. Nash
<PAGE>
EXHIBIT 12.1
THE CHARLES SCHWAB CORPORATION
Computation of Ratio of Earnings to Fixed Charges
(Dollar amounts in thousands, unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------- ---------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before taxes on income
and extraordinary charge $136,668 $116,763 $224,343 $206,272 $146,228 $ 88,097 $ 29,109
-------- -------- -------- -------- -------- -------- --------
Fixed charges
Interest expense - customer 150,716 69,336 178,067 114,609 140,819 206,020 222,596
Interest expense - other 16,153 8,994 20,169 17,943 18,712 19,538 15,901
Interest portion of rental expense 10,408 8,225 17,102 15,428 13,314 10,531 8,855
-------- -------- -------- -------- -------- -------- --------
Total fixed charges(a) 177,277 86,555 215,338 147,980 172,845 236,089 247,352
-------- -------- -------- -------- -------- -------- --------
Earnings before taxes on income,
extraordinary charge and fixed
charges (b) $313,945 $203,318 $439,681 $354,252 $319,073 $324,186 $276,461
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges
(b) divided by (a)* 1.8 2.3 2.0 2.4 1.8 1.4 1.1
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges
as adjusted** 6.1 7.8 7.0 7.2 5.6 3.9 2.2
======== ======== ======== ======== ======== ======== ========
</TABLE>
* The ratio of earnings to fixed charges is calculated in a manner consistent
with SEC requirements. For such purposes, "earnings" consist of earnings
before taxes on income, extraordinary charge and fixed charges. "Fixed
charges" consist of interest expense incurred on payables to customers,
subordinated borrowings, term debt, capitalized interest and one-third of
rental expense, which is estimated to be representative of the interest
factor.
** Because interest expense incurred in connection with payables to customers is
completely offset by interest revenue on related investments and margin
loans, the Company considers such interest to be an operating expense.
Accordingly, the ratio of earnings to fixed charges as adjusted reflects the
elimination of such interest expense as a fixed charge.
<PAGE>
EXHIBIT 23.1
Deloitte &
Touche LLP
------------ -----------------------------------------------------
LOGO 50 Fremont Street Telephone: (415) 247-4000
San Francisco, Facsimile: (415) 247-4329
California 94105-2230
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Charles Schwab Corporation on Form S-3 of our reports dated February 27,
1995, appearing in and incorporated by reference in the Annual Report on Form
10-K of The Charles Schwab Corporation for the year ended December 31, 1994 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/ Deloitte & Touche LLP
August 16, 1995
San Francisco, California
---------------
Deloitte Touche
Tohmatsu
International
---------------
<PAGE>
EXHIBIT 24.1
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below (each, a "Signatory"), being a member of the Board of Directors and/or an
officer of The Charles Schwab Corporation (the "Company"), constitutes and
appoints Charles R. Schwab, Lawrence J. Stupski, David S. Pottruck and A. John
Gambs (each, an "Agent," and collectively, "Agents") and each or any of them,
his or her true and lawful attorney-in-fact and agent, each with full power of
substitution and resubstitution, for and in his or her name, place and stead,
in any and all capacities, to sign the Company's Registration Statement on Form
S-3, any and all amendments (including post-effective amendments) thereto and
any Registration Statement relating to the same offering pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and all other documents in connection therewith and with
such Registration Statements, with the Securities and Exchange Commission. Each
Signatory further grants to the Agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary, in the judgment of such Agent, to be done in connection with any
such signing and filing, as full to all intents and purposes as he or she might
or could do in person, and hereby ratifies and confirms all that said Agents,
or any of them, or their or his or her other substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ Charles R. Schwab
-------------------------------------
Charles R. Schwab
/s/ Lawrence J. Stupski
-------------------------------------
Lawrence J. Stupski
/s/ David S. Pottruck
-------------------------------------
David S. Pottruck
/s/ Nancy H. Bechtle
-------------------------------------
Nancy H. Bechtle
/s/ C. Preston Butcher
-------------------------------------
C. Preston Butcher
/s/ Donald G. Fisher
-------------------------------------
Donald G. Fisher
/s/ Anthony M. Frank
-------------------------------------
Anthony M. Frank
/s/ James R. Harvey
-------------------------------------
James R. Harvey
/s/ Stephen T. McLin
-------------------------------------
Stephen T. McLin
/s/ Roger O. Walther
-------------------------------------
Roger O. Walther
/s/ A. John Gambs
-------------------------------------
A. John Gambs
Dated: July 18, 1995
<PAGE>
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____
---------
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
----------
THE CHARLES SCHWAB CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 94-3025021
(State or other jurisdiction of (I.R.S. employer
incorporation or organization identification No.)
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
(Address of principal executive offices) (Zip Code)
----------
DEBT SECURITIES
(Title of the indenture securities)
================================================================================
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 33-84460, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture of 1939 the Trustee,
Chemical Bank, a corporation organized and existing under the laws of the State
of New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of New
York and State of New York, on the 16th day of August, 1995.
CHEMICAL BANK
By /s/ P. Kelly
-------------------------------
P. Kelly
Assistant Vice President
3
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1995, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin... $ 5,573
Interest-bearing balances........................... 2,681
Securities:
Held to maturity securities........................... 6,027
Available for sale securities......................... 18,304
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries, and in
IBF's:
Federal funds sold.................................. 1,516
Securities purchased under agreements to resell..... 287
Loans and lease financing receivables:
Loans and leases, net of unearned income $73,829
Less: Allowance for loan and lease losses 1,885
Less: Allocated transfer risk reserve 104
Loans and leases, net of unearned income, allowance,
and reserve........................................ 71,840
Trading Assets........................................ 25,315
Premises and fixed assets (including capitalized
leases).............................................. 1,395
Other real estate owned............................... 69
Investments in unconsolidated subsidiaries and
associated companies................................. 158
Customer's liability to this bank on acceptances
outstanding.......................................... 1,120
Intangible assets..................................... 484
Other assets.......................................... 7,254
--------
TOTAL ASSETS.......................................... $142,023
========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices.................................. $ 46,128
Noninterest-bearing...........................$16,282
Interest-bearing.............................. 29,846
In foreign offices, Edge and Agreement subsidiaries,
and IBF's........................................... 30,833
Noninterest-bearing...........................$ 199
Interest-bearing.............................. 30,634
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBF's Federal funds purchased...................... 16,779
Securities sold under agreements to repurchase....... 810
Demand notes issued to the U.S. Treasury............... 1,001
Trading liabilities.................................... 20,888
Other Borrowed money:
With original maturity of one year or less........... 6,505
With original maturity of more than one year......... 602
Mortgage indebtedness and obligations under capitalized
leases................................................ 18
Bank's liability on acceptances executed and
outstanding........................................... 1,126
Subordinated notes and debentures...................... 3,411
Other liabilities...................................... 6,287
--------
TOTAL LIABILITIES...................................... 134,388
--------
EQUITY CAPITAL
Common stock........................................... 620
Surplus................................................ 4,524
Undivided profits and capital reserves................. 2,724
Net unrealized holding gains (losses) on available-for-
sale securities....................................... (241)
Cumulative foreign currency translation adjustments.... 8
TOTAL EQUITY CAPITAL................................... 7,635
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND
EQUITY CAPITAL........................................ $142,023
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER ) DIRECTORS
WILLIAM B. HARRISON )
5
