<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1996
REGISTRATION NO. 333-
-----
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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)
<TABLE>
<S> <C>
Delaware 94-3025021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
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)
---------------------
<TABLE>
<S> <C>
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
</TABLE>
---------------------
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.
<PAGE>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Each Class
of Proposed Maximum
Securities Aggregate Amount of
to be Registered Offering Price(1) Registration Fee
------------------- ----------------- ----------------
<S> <C> <C>
Debt Securities(2)(3) $150,000,000 $51,724
</TABLE>
- --------------------------------------------------------------------------------
(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 $46,000,000 of Debt Securities covered by Registration
Statement No. 33-61943, upon which a registration fee of approximately
$15,862 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<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 September 25, 1996
$196,000,000
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. $196,000,000. 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.
, 1996
3
<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 the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
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. In addition, the Commission maintains a Website
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission through the Electronic Data Gathering, Analysis and Retrieval
system. 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, 1995 and its Quarterly
Reports on Form 10-Q for the quarters ended March 31 and June 30, 1996, 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")
4
<PAGE>
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.
Copies of the above documents (excluding exhibits) may be obtained upon
request by persons to whom this Prospectus is delivered without charge from the
Investor Relations Department, 101 Montgomery Street, San Francisco, California
94104 (telephone number415/974-7768).
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 THE LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
5
<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 3,800,000 active investor accounts through over 230
offices nationwide. The Company provides similar services to British investors
through its English subsidiary, ShareLink Investment Services. 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,
------------ ------------------------
1996 1995 1995 1994 1993 1992 1991
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
(unaudited).............................. 1.9 1.8 1.7 2.0 2.4 1.8 1.4
Ratio of earnings to fixed charges as
adjusted (unaudited)..................... 6.2 6.1 5.9 7.0 7.2 5.6 3.9
</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.
For the purpose of calculating the ratio of earnings to fixed charges as
adjusted, interest expense incurred on payables to customers is eliminated as a
fixed charge. The Company considers interest expense incurred in connection
with payables to customers to be an operating expense, since such interest is
completely offset by interest revenue on related investments and margin loans.
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 or acquisitions. Further details
relating to the use of the net proceeds may be set forth in the applicable
Prospectus Supplement.
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 The Chase Manhattan Bank
(formerly Chemical Bank), as trustee (the "Trustee"), and, in the case of Debt
6
<PAGE>
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
7
<PAGE>
discount for United States federal income tax purposes, as described in the
relevant Prospectus Supplement.
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 from, 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
interest 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 any owner of a beneficial interest in a
8
<PAGE>
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 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 the 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
9
<PAGE>
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 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 Indenture provides that the Company and any
successor corporation will not, and will not permit any Subsidiary (as defined
in such Indenture) to, create,
10
<PAGE>
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,
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
11
<PAGE>
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 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.
12
<PAGE>
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
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 the 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,
13
<PAGE>
(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)
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, The Chase Manhattan 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 commission payable by the Company to such
14
<PAGE>
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 Conduct
Rule 2720 of the National Association of Securities Dealers, Inc. ("NASD")
regarding a NASD member firm's distributing the securities of an affiliate.
Following 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.
15
<PAGE>
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 for the year ended December 31, 1995,
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.
16
<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............................................ $ 51,724
NASD fee........................................................ 15,500
Printing and engraving expenses................................. 20,000
Accountants' fees and expenses.................................. 15,000
Legal fees and expenses......................................... 80,000
Fees and expenses for
qualification under state
securities laws................................................ 20,000
Trustee's fees and expenses..................................... 6,000
Rating agency fees.............................................. 45,000
Miscellaneous................................................... 1,776
--------
Total......................................................... $255,000
========
</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 it 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 provides 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.
17
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement filed on August 18, 1995 as Exhibit
1.1 to the Company's Registration Statement on Form S-3
(registration number 33-61943) and incorporated herein by
reference.
1.2 Distribution Agreement filed as Exhibit 1.2 to the Company's Form
8-K dated September 28, 1995 and incorporated herein by reference.
3.1 Second Restated Bylaws of The Charles Schwab Corporation.
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 Independent Auditors' Consent.
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 The Chase Manhattan 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 this 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 this
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.
18
<PAGE>
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.
(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.
19
<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 25th day
of September, 1996.
THE CHARLES SCHWAB CORPORATION
By: /s/ STEVEN L. SCHEID
-----------------------------------
Steven L. Scheid
Executive Vice President-Finance and
Chief Financial Officer
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 September 25, 1996.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<C> <S>
CHARLES R. SCHWAB* Chairman, Chief Executive Officer
____________________________________ and Director
Charles R. Schwab (principal executive
officer)
LAWRENCE J. STUPSKI* Vice Chairman and Director
____________________________________
Lawrence J. Stupski
/s/ STEVEN L. SCHEID Executive Vice President-Finance
____________________________________ and Chief Financial Officer
Steven L. Scheid (principal financial and accounting
officer)
DAVID S. POTTRUCK* President, Chief Operating Officer
____________________________________ and Director
David S. Pottruck
NANCY H. BECHTLE* Director
____________________________________
Nancy H. Bechtle
C. PRESTON BUTCHER* Director
____________________________________
C. Preston Butcher
DONALD G. FISHER* Director
____________________________________
Donald G. Fisher
ANTHONY M. FRANK* Director
____________________________________
Anthony M. Frank
STEPHEN T. MCLIN* Director
____________________________________
Stephen T. McLin
ROGER O. WALTHER* Director
____________________________________
Roger O. Walther
</TABLE>
*By: __/s/ STEVEN L. SCHEID__
Steven L. Scheid,
Attorney-in-Fact
20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Second Restated Bylaws of The Charles Schwab Corporation.
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 Independent Auditors' Consent.
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of
1939 of the Chase Manhattan Bank.
</TABLE>
-21-
<PAGE>
EXHIBIT 3.1
SECOND RESTATED BYLAWS OF
THE CHARLES SCHWAB CORPORATION
ARTICLE I
OFFICES
Section 1.01. Registered Office. The registered office of The Charles
-----------------
Schwab Corporation (the "Corporation") in the State of Delaware shall be at 1209
Orange Street, Wilmington, Delaware, and the name of the registered agent at
that address shall be the Corporation Trust Company.
Section 1.02. Principal Office. The principal office for the
----------------
transaction of the business of the Corporation shall be at 101 Montgomery
Street, San Francisco, California. The Board of Directors (hereafter called the
"Board") is hereby granted full power and authority to change said principal
office from one location to another.
Section 1.03. Other Offices. The Corporation may also have an office
-------------
or offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Annual Meetings. Annual meetings of the stockholders of
---------------
the Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings shall be held each
year on a date and at a time designated by the Board.
Section 2.02. Special Meetings. Special meetings of the stockholders
----------------
for any purpose or purposes may be called by the Chairman of the Board, the
Board or a committee of the Board which has been duly designated by the Board
and whose powers and authority, as provided in a resolution of the Board or in
these Bylaws, include the power to call such meetings. Unless otherwise
prescribed by statute, the Certificate of Incorporation or these Bylaws, special
meetings may not be called by any other person or persons. No business may be
transacted at any special meeting of stockholders other than such business as
may be designated in the notice calling such meeting.
Section 2.03. Place of Meeting. The Board of Directors, the Chairman
----------------
of the Board, or a committee of the Board, as the case may be, may designate the
place of meeting for any annual meeting or for any special meeting of the
stockholders called by the Board of Directors,
<PAGE>
the Chairman of the Board, or a committee of the Board. If no designation is so
made, the place of meeting shall be the principal office of the Corporation.
Section 2.04. Notice of Meeting. Written or printed notice, stating
-----------------
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be de livered by the Corporation not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law.
Only such business shall be conducted at a special meeting of stock holders as
shall have been brought before the meeting pursuant to the Corporation's notice
of meeting. Meetings may be held without notice if all stockholders entitled to
vote are present, or if notice is waived by those not present in accordance with
Section 8.02 of these Bylaws. Any previously scheduled meeting of the
stockholders may be postponed, and (unless the Certificate of Incorporation
otherwise provides) any special meeting of the stockholders may be canceled, by
resolution of the Board upon public notice given prior to the date previously
scheduled for such meeting of stockholders.
Section 2.05. Quorum and Adjournment. Except in the case of any
----------------------
meeting for the election of directors summarily ordered as provided by law, the
holders of record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. Where a separate
vote by a class or classes is required, a majority of the outstanding shares of
such class or classes, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to that vote on that
matter and the affirmative vote of the majority of the shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class. In the absence of a forum at any meeting or any adjournment
thereof, a majority in voting interest of the shareholders present in person or
by proxy and entitled to vote thereat or, in the absence therefrom of all
stockholders, any officer entitled to preside at, or to act as secretary of such
meeting may adjourn such meeting from time to time. The Chairman of the meeting
or a majority of the shares so represented may adjourn the meeting from time to
time, whether or not there is such a quorum. No notice of the time and place of
adjourned meetings need be given except as required by law. No business may be
transacted at a meeting in the absence of a quorum other than the adjournment of
such meeting, except that if a quorum is present at the commencement of a
meeting, business may be transacted until the meeting is adjourned even though
the withdrawal of stockholders results in less than a quorum.
Section 2.06. Notice of Stockholder Business and Nominations.
-----------------------------------------------
<PAGE>
(a) Annual Meetings of Stockholders.
-------------------------------
(i) Nominations of persons for election to the Board and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (A) pursuant to the Corporation's notice of
meeting, (B) by or at the direction of the Board or (C) by any stockholder of
the Corporation who was a stockholder of record at the time of giving of notice
provided for in this Bylaw, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Bylaw.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of paragraph
(a)(i) of this Bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
60th day nor ear lier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (A) as to each person whom the stockholder proposes to
nominate for election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (B) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (C) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (1) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (2) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Bylaw to the contrary, in the event that the number of
directors to be elected to
<PAGE>
the Board of the Corporation is increased and there is no public announcement by
the Corporation naming all of the nominees for director or specifying the size
of the increased Board at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Bylaw
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the Corporation's
notice of meeting (i) by or at the direction of the Board or (ii) provided that
the Board has determined that directors shall be elected at such meeting, by any
stockholder of the Corporation who is a stockholder of record at the time of
giving of notice provided for in this Bylaw, who shall be entitled to vote at
the meeting and who complies with the notice procedures set forth in this Bylaw.
In the event the Corporation calls a special meeting of stockholders for the
purpose of electing one or more directors to the Board, any such stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (a)(ii) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board to be elected at such meeting. In no event shall
the public announcement of an adjournment of a special meeting commence a new
time period for the giving of a stockholder's notice as de scribed above.
(c) General. (i) Only such persons who are nominated in
-------
accordance with the procedures set forth in this Bylaw shall be eligible to
serve as directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Bylaw. Except as otherwise pro vided by law,
the Chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
pro posed, as the case may be, in accordance with the procedures set forth in
this Bylaw and, if any proposed nomination or business is not in compliance with
this Bylaw, to declare that such defective proposal or nomination shall be
disregarded.
<PAGE>
(i) For purposes of this Bylaw, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(ii) Notwithstanding the foregoing provisions of this Bylaw,
a stock holder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect
any rights (A) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(B) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
Section 2.07. Voting.
------
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of these
Bylaws as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then
(a) at the close of business on the day next preceding the day on which notice
of the meeting shall be given or (b) if notice of the meeting shall be waived,
at the close of business on the day next preceding the day on which the meeting
shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Nothing in this section shall be construed as limiting the right of
the Corporation to vote stock, including but not limited to its own stock, held
by it in a fiduciary capacity. Persons holding stock of the Corporation in a
fiduciary capacity shall be entitled to vote such stock. Persons whose stock is
pledging shall be entitled to vote, unless in the transfer by the pledger on the
books of the Corporation he shall have expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent such stock
and vote thereon. Stock having voting power standing of record in the names of
two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety or otherwise, or with
respect to which two or more persons have the
<PAGE>
same fiduciary relationship, shall be voted in accordance with the provisions of
the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto authorized
and delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority of the
shares present in person or by proxy and entitled to vote thereat and thereon, a
quorum being present. The vote at any meeting of the stockholders on any
questions shall be by ballot and each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and it shall state the number
of shares voted. The chairman of the meeting shall fix and announce at the
meeting the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting.
Section 2.08. List of Stockholders. The Secretary of the Corporation
--------------------
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the duration thereof, and may be inspected by any stockholder who is
present.
Section 2.09. Inspectors of Election. The Corporation shall, in
----------------------
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to act at the meeting. If no
inspector or alternative is able to act at a meeting of stockholders, the
chairman of such meeting shall appoint one or more inspectors to act at the
meeting. Each inspector so appointed shall first sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors shall ascertain the number
of shares outstanding and the voting power of each, determine the shares
represented at a meeting and the validity of proxies and ballots, count all
votes and ballots, determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
certify their determination of the number of shares represented at the meeting
and their count of all votes and ballots.
<PAGE>
Reports of the inspectors shall be in writing and subscribed and delivered by
them to the Secretary of the Corporation. The inspectors may appoint or retain
other persons or entities to assist them in the performance of their duties as
inspectors. The inspectors need not be stockholders of the Corporation, and any
officer of the Corporation may be an inspector on any question other than a vote
for or against a proposal in which he shall have a material interest.
Section 2.10. No Stockholder Action by Written Consent. Except as
----------------------------------------
otherwise fixed by or pursuant to the provisions of Article FOURTH of the
Certificate of Incorporation relating to the rights of holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation with respect to such class or series of stock, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders and may not
be effected by any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. General Powers. The property, business and affairs of
--------------
the Corporation shall be managed by or under the direction of the Board.
Section 3.02. Number, Election and Terms. Except as otherwise fixed by
--------------------------
or pursuant to the provisions of Article FOURTH of the Certificate of
Incorporation relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified circumstances, the
number of the directors of the Board of the Corporation shall be fixed from time
to time exclusively pursuant to a resolution adopted by a majority of the
total number of directors which the Corporation would have if there were no
vacancies. Commencing with the 1996 annual meeting of stockholders, the
directors, other than those who may be elected by the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as is
reasonably possible, one class to be originally elected for a term expiring at
the annual meeting of stockholders to be held in 1997, the second class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1998, and the third class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in 1999, with each
director to hold office to hold office until his or her successor is duty
elected and qualified. At each annual meeting of the stockholders of the
Corporation, commencing with the 1997 annual meeting, the successors of the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election, with each director to hold
office until his or her director shall have been duly elected and qualified.
<PAGE>
Section 3.03. Procedure for Election of Directors; Required Vote.
--------------------------------------------------
Election of directors at all meetings of the stockholders at which directors are
to be elected shall be by ballot, and, except as otherwise fixed by or pursuant
to the provisions of Article FOURTH of the Certificate of Incorporation relating
to the rights to the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect directors
under specified circumstances, a plurality of the votes cast thereat shall elect
directors.
Section 3.04. Resignations. Any director of the Corporation may resign
------------
at any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3.05. Removal. Subject to the rights of any class or series of
-------
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any director may
be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of 80% of the combined voting power of the then
outstanding shares of stock entitled to vote generally in the election of
directors, voting together as a single class.
Section 3.06. Vacancies. Subject to applicable law and except as
---------
otherwise provided for or fixed by or pursuant to the provisions of Article
FOURTH of the Certificate of Incorporation relating to the rights of the holders
of any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
and unless the Board of Directors otherwise determines, vacancies resulting from
death, resignation, retirement, disqualification, removal from office or other
cause, and newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by the affirmative vote of a
majority of the remaining directors, though less than a quorum of the Board of
Directors, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the Board of Directors of the Corporation shall shorten
the term of any incumbent director.
Section 3.07. Place of Meeting, Etc. The Board may hold any of its
---------------------
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special
meeting of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
<PAGE>
Section 3.08. First Meeting. The Board shall meet as soon as
-------------
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.09. Regular Meetings. Regular meetings of the Board may be
----------------
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a regular meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting shall be held at the same hour
and place on the next succeeding business day not a legal holiday. Except as
provided by law, notice of regular meetings need not be given.
Section 3.10. Special Meetings. Special meetings of the Board may be
----------------
called by the Chairman of the Board of Directors or the President. Notice of
any special meeting of directors shall be given to each director at his business
or residence in writing by hand delivery, first-class or overnight mail or
courier service, telegram or facsimile transmission, or orally by telephone. If
mailed by first-class mail, such notice shall be deemed adequately delivered
when deposited in the United States mails so addressed, with postage thereon
prepaid, at least five (5) days before such meeting. If by telegram, overnight
mail or courier service, such notice shall be deemed adequately delivered when
the telegram is delivered to the telegraph company or the notice is delivered to
the overnight mail or courier service company at least twenty-four (24) hours
before such meeting. If by facsimile transmission, such notice shall be deemed
adequately delivered when the notice is transmitted at least twelve (12) hours
before such meeting. If by telephone or by hand delivery, the notice shall be
given at least twelve (12) hours prior to the time set for the meeting. Such
notice may be waived by any director and any meeting shall be a legal meeting
without notice having been given if all the directors shall be present thereat
or if those not present shall, either before or after the meeting, sign a
written waiver of notice of, or a consent to, such meeting or shall after the
meeting sign the approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or be made a part of the
minutes of the meeting.
Section 3.11. Quorum and Manner of Acting. Except as otherwise
---------------------------
provided in the Certificate of Incorporation or these Bylaws or by law, the
presence of a majority of the total number of directors then in office shall be
required to constitute a quorum for the transaction of business at any meeting
of the Board. Except as otherwise provided in the Certificate of Incorporation
or these Bylaws or by law, all matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of a majority of the directors
present. In the absence of a quorum, a majority of directors present at any
meeting may adjourn the same from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given. The directors shall act only
as a Board, and the individual directors shall have no power as such.
Section 3.12. Action by Consent. Any action required or permitted to
-----------------
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may
<PAGE>
be, and such written consent is filed with the minutes of proceedings of the
Board or committee.
Section 3.13. Compensation. The directors shall receive only such
------------
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
Section 3.14. Executive Committee. There may be an Executive Committee
-------------------
of two or more directors appointed by the Board, who may meet at stated times,
or in notice to all by any of their own number, during the intervals between the
meetings of the Board; they shall advise and aid the officers of the Corporation
in all matters concerning its interest and the management of its business, and
generally perform such duties and exercise such powers as may be directed or
delegated by the Board from time to time. The Board of Directors may also
designate, if it desires, other directors as alternate members who may replace
any absent or disqualified member of the Executive Committee at any meeting
thereof. To the full extent permitted by law, the Board may delegate to such
committee authority to exercise all the powers of the Board while the Board is
not in session. Vacancies in the membership of the committee shall be filled by
the Board at a regular meeting or at a special meeting for that purpose. In the
absence or disqualification of any member of the Executive Committee and any
alternate member in his or her place, the member or members of the Executive
Committee present at the meeting and not disqualified from voting, whether or
not he or she or they constitute a quorum, may, by unanimous vote, appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member. The Executive Committee shall keep written
minutes of its meeting and report the same to the Board when required. The
provisions of Sections 3.09, 3.10, 3.11 and 3.12 of these Bylaws shall apply,
mutatis mutandis, to any Executive Committee of the Board.
- ----------------
Section 3.15. Other Committees. The Board may, by resolution passed by
----------------
a majority of the whole Board, designate one or more other committees, each such
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may also designate, if it desires, other directors as
alternate members who may replace any absent or disqualified member of any such
committee at any meeting thereof. To the full extent permitted by law, any such
committee shall have and may exercise such powers and authority as the Board may
designate in such resolution. Vacancies in the membership of a committee shall
be filled by the Board at a regular meeting or a special meeting for that
purpose. Any such committee shall keep written minutes of its meeting and
report the same to the Board when required. In the absence or disqualification
of any member of any such committee and any alternate member or members of any
such committee present at the meeting and not disqualified from voting,
<PAGE>
whether or not he or she or they constitute a quorum, may, by unanimous vote,
appoint another member of the Board of Directors to act at the meeting in the
place of the absent or disqualified member. The provisions of Section 3.09,
3.10, 3.11 and 3.12 of these Bylaws shall apply, mutatis mutandis, to any such
----------------
committee of the Board.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall be a
------
Chairman of the Board, a President, one or more Vice Presidents, a Secretary and
a Treasurer. The Chief Executive Officer of the corporation shall be such
officer as the Board shall from time to time designate. The Board may also
elect one or more Assistant Secretaries and Assistant Treasurers. A person may
hold more than one office providing the duties thereof can be consistently
performed by the same person.
Section 4.02. Other Officers. The Board may appoint such other
--------------
officers as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
Section 4.03. Election. Each of the officers of the Corporation,
--------
except such officers as may be appointed in accordance with the provisions of
Section 4.02 or Section 4.05 of this Article, shall be chosen annually by the
Board and shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
Section 4.04. Salaries. The salaries of all executive officers of the
--------
Corporation shall be fixed by the Board or by such committee of the Board as may
be designated from time to time by a resolution adopted by a majority of the
Board.
Section 4.05. Removal; Vacancies. Subject to the express provisions of
------------------
a contract authorized by the Board, any officer may be removed, either with or
without cause, at any time by the Board or by any officer upon whom such power
of removal may be conferred by the Board. Any vacancy occurring in any office
of the Corporation shall be filled by the Board.
Section 4.06. The Chairman of the Board. The Chairman of the Board
-------------------------
shall preside at all meetings of the stockholders and directors and shall have
such other powers and duties as may be prescribed by the Board or by applicable
law. He shall be an ex-officio member of standing committees, if so provided in
the resolutions of the Board appointing the members of such committees.
Section 4.07. The President. The President shall be the managing
-------------
officer of the Corporation. Subject to the control of the Board, the President
shall have general supervision, control and management of the affairs and
business of the Corporation, and general charge and
<PAGE>
supervision of all offices, agents and employees of the Corporation; shall see
that all orders and resolutions of the Board are carried into effect; shall, in
the absence of the Chairman of the Board, preside at all meetings of the
stockholders and Board; and in general shall exercise all powers and perform all
duties incident to President and managing officer of the Corporation and such
other powers and duties as may from time to time be assigned to him by the Board
or as may be prescribed in these Bylaws.
The President may execute bonds, mortgages and other contracts requiring
a seal, under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board to some other
officer or agent of the Corporation.
The President shall be an ex-officio member of standing committees, if
so provided in the resolutions of the Board appointing the members of such
committees.
Section 4.08. The Vice Presidents. In the absence of the President or
-------------------
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board may from time to time prescribe.
Section 4.09. The Secretary and Assistant Secretary. The Secretary
-------------------------------------
shall attend all meetings of the Board and all meetings of the stockholders and
record all the proceedings of the meetings of the Corporation and of the Board
in a book to be kept for that purpose and shall perform like duties for the
standing and special committees of the Board when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board, and shall perform such other duties as may be prescribed
by the Board or President, under whose supervision he shall act. He shall have
custody of the corporate seal of the Corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and, when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The Board may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board (or if there be no such
determination, then in the order of their election), shall, in the absence of
the Secretary or in the event of his inability or his refusal to act, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board may from time to time prescribe.
<PAGE>
Section 4.10. The Treasurer. The Treasurer shall have the custody of
-------------
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board.
He shall disburse the funds of the Corporation as may be ordered by the
Board, making proper vouchers for such disbursements, and shall render to the
President and the Board, at its regular meetings, or when the Board so requires,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation.
If required by the Board , he shall give the Corporation a bond (which
shall be renewed every six (6) years) in such sum and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of his office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 4.11. The Assistant Treasurer. The Assistant Treasurer, or if
-----------------------
there be more than one, the assistant treasurers in the order determined by the
Board (or if there be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board may from time to time prescribe.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01. Checks, Drafts, Etc. All checks, drafts or other orders
-------------------
for payment of money, notes or other evidence of indebtedness payable by the
Corporation and all contracts or agreements shall be signed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such person or persons shall give such bond, if
any, as the Board may require.
Section 5.02. Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the President, any
Vice President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by
<PAGE>
the Board) may endorse, assign and deliver checks, drafts and other orders for
the payment of money which are payable to the order of the Corporation.
Section 5.03. General and Special Bank Accounts. The Board may from
---------------------------------
time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by any officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation to whom
such power shall have been delegated by the Board. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01. Certificates for Stock. Every owner of stock of the
----------------------
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
Chairman, Vice Chairman or President or a Vice President, and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any of or
all of the signatures on the certificates may be a facsimile. In case any
officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any such certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued,
such certificate may nevertheless be issued by the Corporation with the same
effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the respective names
of the persons, firms or corporations owning the stock represented by such
certificates, the number and class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be canceled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases provided
for in Section 6.04.
Section 6.02. Transfers of Stock. Transfers of shares of stock of the
------------------
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such
<PAGE>
fact shall be so expressed in the entry of transfer if, when the certificate or
certificates shall be presented to the Corporation for transfer, both the
transferor and the transferee request the Corporation to do so.
Section 6.03. Regulations. The Board may make such rules and
-----------
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
Section 6.04. Lost, Stolen, Destroyed, and Mutilated Certificates. In
---------------------------------------------------
any case of loss, theft, destruction or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so to do.
Section 6.05. Fixing Date for Determination of Stockholders of Record.
-------------------------------------------------------
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders, or to receive payment of any
dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action except for consenting to corporate action in
writing without a meeting, the Board of Directors may fix a record date, which
shall not precede the date the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, nor more than sixty (60) days
prior to the time for such other action as herein before described; provided,
however, that if no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day preceding the day
on which notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held and, for determining
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or to exercise any rights in respect of any change,
conversion or exchange of stock or any other lawful action except for consenting
to corporate action in writing without a meeting, the record date shall be the
close of business on the day on which the Board of Directors adopts a resolution
relating thereto.
For purposes of determining the stockholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted, as of which shall be determined the
<PAGE>
stockholders of record entitled to consent to corporate action in writing
without a meeting. If no record date has been fixed by the Board of Directors
and no prior action by the Board of Directors is required by the Delaware
General Corporation Law, the record date shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in the manner prescribed in Section 2.09 hereof.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by the Delaware General Corporation Law with
respect to the proposed action, the record date for determining stockholders
entitled to consent to corporate action writing shall be the close of business
on the day in which the Board of Directors adopts the resolutions taking such
prior action.
ARTICLE VII
INDEMNIFICATION
Section 7.01. Indemnification of Officers, Directors, Employees and
-----------------------------------------------------
Agents; Insurance.
- -----------------
(a) Right to Indemnification. Each person who was or is made a
------------------------
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitees in connection therewith and such indemnification shall continue as
to an indemnitee who has ceased to be a director, officer, employee or agent
ands heirs, executors and administrators; provided, however, that except as
-------- -------
provided in paragraph (c) hereof with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized or is subsequently ratified
by the Board of Directors of the Corporation.
(b) Right to Advancement of Expenses. The right to indemnification
--------------------------------
conferred in paragraph (a) of this Section shall include the right to be paid by
the Corporation
<PAGE>
the expenses (including attorneys' fees) incurred in defending any proceeding
for which such right to indemnification is applicable in advance of its final
disposition (hereinafter an "advancement of expenses"); provided,
--------
however, that, if the Delaware General Corporation Law requires, an advancement
- -------
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise.
(c) To obtain indemnification under this Bylaw, a claimant shall
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this paragraph (c), a
determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by the claimant,
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (i) by the Board by a
majority vote of a quorum consisting of Disinterested Directors (as hereinafter
defined), or (ii) if a quorum of the Board consisting of Disinterested Directors
is not obtainable or, even if obtainable, such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to the claimant, or (iii) if a quorum of Disinterested
Directors so directs, by the stockholders of the Corporation. In the event the
determination of entitlement to indemnification is to be made by Independent
Counsel at the request of the claimant, the Independent Counsel shall be
selected by the Board unless there shall have occurred within two years prior to
the date of the commencement of the action, suit or proceeding for which
indemnification is claimed a "Change of Control" as defined in the Senior
Executive Severance Policy, in which case the Independent Counsel shall be
selected by the claimant unless the claimant shall request that such selection
be made by the Board. If is so determined that the claimant is entitled to
indemnification, payment to the claimant shall be made within 10 days after such
determination.
(d) Right of Indemnitee to Bring Suit. The rights to
---------------------------------
indemnification and to the advancement of expenses conferred in paragraphs (a)
and (b) of this Section shall be a contract between the Corporation and each
director or officer of the Corporation who serves or served in such capacity at
any time while this Article VII is in effect. Any repeal or modification of this
Article VII or any repeal or modification of relevant provisions of the Delaware
General Corporation Law or any other applicable laws shall not in any way
diminish any rights to indemnification of such director or officer or the
obligations of the Corporation
<PAGE>
hereunder. If a claim under paragraph (a) or (b) of this Section is not paid in
full by the Corporation within sixty (60) days after a written claim pursuant to
paragraph (c) has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty (20) days, the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by the indemnitee
to enforce a right to an advancement of expenses) it shall be a defense that,
and (ii) in any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the indemnitee has not met
any applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Section or otherwise shall be on the
Corporation.
(e) Non-Exclusivity of Rights. The rights to indemnification and
-------------------------
to the advancement of expenses conferred in this Section shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's certificate of incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise.
(f) Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law, provided that such
--------
insurance is available on acceptable terms, which determination shall be made by
the Board of Directors or by a committee thereof.
<PAGE>
(g) Indemnification of Employees and Agents of the Corporation.
----------------------------------------------------------
The Corporation may, to the extent and in accordance with the terms authorized
from time to time by the board of directors, grant rights to indemnification,
and to the advancement of expenses to any employee or agent of the Corporation
to the fullest extent of the provisions of this Section with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
(h) For purposes of this Section, references to "the Corporation"
shall include, in addition to the Corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this Section with respect to the Corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this Section, references to "serving at the
request of the Corporation" shall include any service as director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Section.
(j) Notwithstanding anything else in this Article VII, in the event
that the express provisions of the Delaware General Corporation Law relating to
indemnification of, or advancement of expenses by the Corporation to, persons
eligible for indemnification or advancement of expenses under this Article VII
are amended to permit broader indemnification or advancement of expenses, then
the Corporation will provide such indemnification and advancement of expenses to
the maximum extent permitted by the Delaware General Corporation Law.
(k) If this Article VII or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each indemnitee of the Corporation as to costs, charges
and expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable portion
of this Article VII that shall not have been invalidated and to the full extent
permitted by applicable law.
<PAGE>
(l) Notwithstanding anything else in this Article VII, at any and
all times at which the Corporation is subject to the provisions of the
California Corporations Code by virtue of the operation of Section 2115 thereof
or otherwise, the indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VII shall be in all respects limited by the
provisions of the California Corporations Code made applicable by such Section
2115 (or such other provision of California law).
(m) If a determination shall have been made pursuant to paragraph
(c) of this Bylaw that the claimant is entitled to indemnification, the
Corporation shall be bound by such determination in any judicial proceeding
commenced pursuant to paragraph (d) of this Bylaw.
(n) The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to paragraph (d) of this Bylaw that the
procedures and presumptions are not valid, binding and enforceable and shall
stipulate in such proceeding that the Corporation is bound by all the provisions
of this Bylaw.
(o) For purposes of this Bylaw:
(i) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the matter in respect of which
indemnification is sought by the claimant.
(ii) "Independent Counsel" means a law firm, a member of a law
firm, or and independent practitioner, that is experienced in matters of
corporation law and shall include any person who, under the applicable standards
of professional conduct then prevailing, would not have a conflict of interest
in representing either the Corporation or the claimant in an action to determine
the claimant's rights under this Bylaw.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Seal. The Board shall provide a corporate seal, which
----
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
Section 8.02. Waiver of Notices. Whenever notice is required to be
-----------------
given by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
Section 8.03. Fiscal Year. The fiscal year of the Corporation shall be
-----------
fixed by resolution of the Board.
<PAGE>
Section 8.04. Amendments. These Bylaws may be altered, amended or
----------
repealed at any meeting of the Board or of the stockholders, provided notice of
the proposed change was given in the notice of the meeting and, in the case of a
meeting of the Board, in a notice given not less than two days prior to the
meeting; provided, however, that, in the case of amendments by stockholders,
notwithstanding any other provisions of these Bylaws or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock of the Corporation required by law, the Certificate of Incorporation of
these Bylaws, the affirmative vote of the holders of at least 80% of the total
voting power of all the then outstanding shares of Voting Stock of the
Corporation, voting together as a single class, shall be required to alter,
amend or repeal this Section 8.04 or any provision of Sections 2.06, 2.10, 3.02,
3.05 and 3.06 of these Bylaws.
Section 8.05. Voting Stock. Any person so authorized by the Board, and
------------
in the absence of such authorization, the Chairman of the Board, the President
or any Vice President, shall have full power and authority on behalf of the
Corporation to attend and to act and vote at any meeting of the stockholders of
any corporation in which the Corporation may hold stock and at any such meeting
shall possess and may exercise any and all rights and powers which are incident
to the ownership of such stock and which as the owner thereof the Corporation
might have possessed and exercised if present. The Board by resolution from
time to time may confer like powers upon any other person or persons.
<PAGE>
EXHIBIT 5.1
Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation, as to the legality of securities being registered.
September 25, 1996
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, CA 94104
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 $150,000,000 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
September 25, 1996 (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 The Chase Manhattan Bank (formerly
Chemical Bank) as trustee (each, and "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, the
issuance of Debt Securities has been duly authorized by appropriate corporate
action and when the Debt Securities have been duly completed, executed,
authenticated 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.
<PAGE>
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 limitation, 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 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, expenses or costs, where such provisions do not
satisfy the requirements 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 wherever 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,
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
Earnings before taxes on income
and extraordinary charge $198,369 $136,668 $277,104 $224,343 $206,272 $146,228 $ 88,097
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed charges
Interest expense - customer 173,206 150,716 321,225 178,067 114,609 140,819 206,020
Interest expense - other 26,955 16,153 35,998 20,169 17,943 18,712 19,538
Interest portion of rental expense 11,261 10,408 20,810 17,102 15,428 13,314 10,531
- ------------------------------------------------------------------------------------------------------------------------------------
Total fixed charges (a) 211,422 177,277 378,033 215,338 147,980 172,845 236,089
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before taxes on income,
extraordinary charge and fixed charges (b) $409,791 $313,945 $655,137 $439,681 $354,252 $319,073 $324,186
====================================================================================================================================
Ratio of earnings to fixed charges (b)/(a)/*/ 1.9 1.8 1.7 2.0 2.4 1.8 1.4
====================================================================================================================================
Ratio of earnings to fixed charges as
adjusted/**/ 6.2 6.1 5.9 7.0 7.2 5.6 3.9
====================================================================================================================================
</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 a 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
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 21,
1996, 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,
1995 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
San Francisco, CA
September 24, 1996
<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 of
The Charles Schwab Corporation (the "Company"), constitutes and appoints Charles
R. Schwab, Lawrence J. Stupski, David S. Pottruck and Steven L. Scheid (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 this
Registration Statement, 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 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.
Dated: September 25, 1996
/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/ Stephen T. McLin
------------------------------
Stephen T. McLin
/s/ Roger O. Walther
------------------------------
Roger O. Walther
<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) ________
________________________________________
THE CHASE MANHATTAN 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)
_____________________________________________________
-1-
<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, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, 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. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank.)
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. 333-06249, 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. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank.)
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.
(On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank.)
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan 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 11TH day of SEPTEMBER, 1996.
THE CHASE MANHATTAN BANK
By /s/ P. Morabito
-----------------------------------
P. Morabito
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, 1996, 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
IN MILLIONS
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin.............................................. $ 4,167
Interest-bearing balance....................................... 5,094
Securities:
Held to maturity securities....................................... 3,367
Available for sale securities..................................... 27,786
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............................................. 7,204
Securities purchased under agreements to resell................ 136
Loans and lease financing receivables:
Loans and leases, net of unearned income $67,215
Less: Allowance for loan and lease losses 1,768
Less: Allocated transfer risk reserve 75
-------
Loans and leases, net of unearned income,
allowance, and reserve......................................... 65,372
Trading Assets.................................................... 28,610
Premises and fixed assets (including capitalized
leases)........................................................ 1,326
Other real estate owned........................................... 26
Investments in unconsolidated subsidiaries and
associated companies........................................... 68
Customer's liability to this bank on acceptances
outstanding.................................................... 995
Intangible assets................................................. 309
Other assets...................................................... 6,993
--------
TOTAL ASSETS...................................................... $151,453
========
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits
In domestic offices............................................ $ 46,917
Noninterest-bearing.....................................$16,711
Interest-bearing.........................................30,206
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's...................................................... 31,577
Noninterest-bearing......................................$2,197
Interest-bearing.........................................29,380
------
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........................................ 12,155
Securities sold under agreements to repurchase................ 8,536
Demand notes issued to the U.S. Treasury.......................... 1,000
Trading liabilities............................................... 20,914
Other Borrowed money:
With a remaining maturity of one year or less.................. 10,018
With a remaining maturity of more than one year................ 192
Mortgage indebtedness and obligations under capitalized
leases......................................................... 12
Bank's liability on acceptances executed and outstanding.......... 1,001
Subordinated notes and debentures................................. 3,411
Other liabilities................................................. 8,091
TOTAL LIABILITIES................................................. 143,824
--------
EQUITY CAPITAL
Common stock...................................................... 620
Surplus........................................................... 4,664
Undivided profits and capital reserves............................ 2,970
Net unrealized holding gains (Losses)
on available-for-sale securities............................... (633)
Cumulative foreign currency translation adjustments............... 8
TOTAL EQUITY CAPITAL.............................................. 7,629
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL......................................... $151,453
========
</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 ) DIRECTOR
THOMAS G. LABRECQUE )
-5-
