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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 6, 1999
THE CHARLES SCHWAB CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9700 94-3025021
- ---------------------------- ------------ ----------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
120 Kearny Street
San Francisco, California 94104
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(Address of principal executive offices)
(415) 627-7000
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(Registrant's telephone number,
including area code)
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Item 5. Other Events. Attached hereto and incorporated herein by reference
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are (i) Distribution Agreement, dated June 29, 1999 by and among The Charles
Schwab Corporation (the "Company"), Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co., Credit Suisse First Boston Corporation, and Charles Schwab & Co.,
Inc., relating to the issuance and sale from time to time by the Company of up
to $250,000,000 aggregate public offering price of such Medium Term Notes
pursuant to Registration Statement No. 333-77381 (the "Offering"); and (ii)
forms of Senior and Senior Subordinated Medium-Term Notes, Series A, relating to
the Offering.
Item 7(c). Exhibits
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1.3 Distribution Agreement, dated June 29, 1999.
4.5 Form of Senior Medium-Term Note, Series A (Fixed Rate).
4.6 Form of Senior Medium-Term Note, Series A (Floating Rate).
4.7 Form of Senior Subordinated Medium-Term Note, Series A (Fixed
Rate).
4.8 Form of Senior Subordinated Medium-Term Note, Series A (Floating
Rate).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 6, 1999 THE CHARLES SCHWAB CORPORATION
By: /s/ Steven L. Scheid
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Name: Steven L. Scheid
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT 1.3
THE CHARLES SCHWAB CORPORATION
Medium-Term Notes, Series A
Due More than 9 Months from Date of Issue
DISTRIBUTION AGREEMENT
June 29, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, California 94104
Dear Ladies/Gentlemen:
The Charles Schwab Corporation, a Delaware corporation (the
"Company"), confirms its agreement with each of you with respect to the issue
and sale from time to time by the Company of such aggregate initial public
offering price of its Medium-Term Notes, Series A, due more than 9 months from
date of issue, as at such time (a) has been duly authorized for issuance and
sale by the Board of Directors of the Company and (b) is covered by one or more
registration statements that have become effective under the Securities Act of
1933, as amended (the "Notes"). The Notes may be issued as senior indebtedness
(the "Senior Notes") or as senior subordinated indebtedness (the "Senior
Subordinated Notes") of the Company. The Senior Notes will be issued pursuant
to the provisions of 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"). The Senior Subordinated Notes will
be issued pursuant to the provisions of a senior subordinated indenture dated as
of July 15, 1993 (the "Senior Subordinated Debt Indenture") between the Company
and 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 Notes will have the maturities,
interest rates, redemption provisions, if any, and other terms as set forth in
supplements to the Basic Prospectus referred to below.
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Subject to the terms and conditions stated herein, and subject to the
reservation by the Company of the right to appoint additional Agents who will
agree to be subject to the terms hereof pursuant to Section 12 hereof and to
sell Notes directly on its own behalf at any time and to any person in those
jurisdictions where such offering by the Company is authorized, the Company
hereby appoints Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Goldman,
Sachs & Co. ("Goldman, Sachs"), Credit Suisse First Boston Corporation("CS First
Boston") and Charles Schwab & Co., Inc. ("Charles Schwab")(individually, an
"Agent" and collectively, the "Agents") as its exclusive agents for the purpose
of soliciting and receiving offers to purchase Notes from the Company by others
and, on the basis of the representations and warranties herein contained, but
subject to the terms and conditions herein set forth, each Agent agrees to use
reasonable efforts to solicit and receive offers to purchase Notes upon terms
acceptable to the Company at such times and in such amounts as the Company shall
from time to time specify. In addition, any Agent may also purchase Notes as
principal pursuant to the terms of a terms agreement relating to such sale (a
"Terms Agreement") in accordance with the provisions of Section 2(b) hereof.
Each Agent acknowledges that, in the case of any sale of Notes by the Company
not resulting from a solicitation made or an offer to purchase received by such
Agent, or arising in connection with a purchase by such Agent as principal, no
commission shall be payable to such Agent with respect to such sale. Each Agent
further acknowledges that in acting under this Agreement and in connection with
the sale of any Notes by the Company (other than Notes sold to such Agent as
principal), such Agent is acting solely as agent of the Company and does not
assume any obligation towards or relationship of agency or trust with any
purchaser of Notes.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, and may in the
future file one or more additional registration statements, in each case
including a prospectus, relating to the Notes. The term "Registration
Statement," as used herein, means, at any time, such of the foregoing
registration statements, including the exhibits thereto, as are being used to
offer Notes at such time. The Company proposes to file with the Commission from
time to time, pursuant to Rule 424 under the Securities Act of 1933, as amended
(the "Securities Act"), supplements to the prospectus included in the
Registration Statement that will describe certain terms of the Notes. The
prospectus in the form in which it appears in the Registration Statement is
hereinafter referred to as the "Basic Prospectus." The term "Prospectus" means
the Basic Prospectus together with the prospectus supplement or supplements
(each a "Prospectus Supplement") specifically relating to Notes, as filed with,
or transmitted for filing to, the Commission pursuant to Rule 424. As used
herein, the terms "Basic Prospectus" and "Prospectus" shall include in each case
the documents, if any, incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). If the Company has filed an abbreviated registration statement
to register additional Debt Securities pursuant
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to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement.
1. Representations and Warranties. The Company represents and
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warrants to and agrees with each Agent as of the Commencement Date, as of each
date on which an Agent solicits offers to purchase Notes, as of each date on
which the Company accepts an offer to purchase Notes (including any purchase by
an Agent pursuant to a Terms Agreement), as of each date the Company issues and
delivers Notes and as of each date the Registration Statement or the Basic
Prospectus is amended or supplemented, as follows (it being understood that such
representations, warranties and agreements shall be deemed to relate to the
Registration Statement, the Basic Prospectus and the Prospectus, each as amended
or supplemented to each such date):
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) each part of
the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iv) the Prospectus does not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that (1) the representations and warranties set forth in this
Section 1(b) do not apply (A) to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to an Agent
furnished to the Company in writing by such Agent expressly for use therein or
(B) to that part of the Registration Statement that constitutes the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), of the Trustee and (2) the representations and
warranties set forth in clauses (iii) and (iv) above, when made as of the
Commencement Date or as of any date on which an Agent solicits offers to
purchase Notes or on which the Company accepts an offer to purchase Notes, shall
be deemed not to cover information concerning an offering of particular Notes to
the extent such information will be set forth in a supplement to the Basic
Prospectus.
(c) The Company is a duly incorporated, validly existing corporation
in good standing under the laws of the State of Delaware, has the corporate
power and
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authority to own its property and conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Each of Schwab Holdings, Inc. ("Holdings"), Charles Schwab, and
each other subsidiary of the Company that is a "significant subsidiary" within
the meaning of Rule 1-02 of Regulation S-X of the Commission (each, a
"Significant Subsidiary" and collectively, the "Significant Subsidiaries") is a
duly incorporated, validly existing corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and authority
to own its property and conduct its business as described in the Prospectus and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(e) Each of this Agreement and any applicable Written Terms Agreement
(as hereafter defined) has been duly authorized, executed and delivered by the
Company.
(f) Each Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the company and is a
valid and binding agreement of the Company, enforceable in accordance with its
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(g) The forms of Notes have been duly authorized and, when the Notes
have been executed and authenticated in accordance with the provisions of the
relevant entitled to the benefits of such Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their
respective terms except as (i) the creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The execution and delivery by the Company of this Agreement. the
Notes, the Indentures and any applicable Written Terms Agreement, and the
performance by the Company of its obligations under this Agreement, the Notes,
the Indentures and any applicable Terms Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or Charles Schwab or any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or
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decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the Notes,
the Indentures and any applicable Terms Agreement, or for the performance by
Charles Schwab of its obligations under this Agreement and any applicable Terms
Agreement, except such as have been obtained, and such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Notes; provided, however, that no representation is made as to
whether the purchase of the Offered Securities constitutes a "prohibited
transaction" under Section 406 of the Employee Retirement Income Security Act of
1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended.
(i) There has not occurred any material adverse change, or any
development which could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed or incorporated by reference as exhibits to the
Registration Statement that are not described, filed or incorporated as
required.
(k) The Company is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(l) Each of the Company and its Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and permits
of and from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities, all self-regulatory organizations and
all courts and other tribunals, to own, lease, license and use its properties
and assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain or file would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(m) Each of the Company and its Significant Subsidiaries is duly
registered as a broker-dealer, municipal securities broker or dealer, investment
adviser, or transfer agent, as the case may be, in each jurisdiction wherein the
conduct of its business requires such registration, and each of the Company and
its Significant Subsidiaries is in compliance in all material respects with all
applicable laws, rules, regulations, orders, by-laws and similar requirements in
connection with such registrations, except to the extent that the failure to be
so registered or be in compliance would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
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(n) Charles Schwab is a member in good standing of the associations
and exchanges indicated in the Prospectus and is registered as a broker-dealer
with the Commission and in all 50 states, the District of Columbia and Puerto
Rico, except to the extent that the failure to be in good standing or be so
registered would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of the
Company or any of its subsidiaries will be affected by the Year 2000 Problem
(that is, any significant risk that computer hardware or software applications
used by the Company and its subsidiaries will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively as
in the case of dates or time periods occurring prior to January 1, 2000); as a
result of such review, the Company has no reason to believe, and does not
believe, that there are any issues related to the Company's preparedness to
address the Year 2000 Problem that are of a character required to be described
or referred to in the Registration Statement or Prospectus which have not been
accurately described or referred to in the Registration Statement or Prospectus.
2. Solicitations as Agent; Purchases as Principal.
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(a) Solicitations as Agent. In connection with an Agent's actions as
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agent hereunder, such Agent agrees to use reasonable efforts to solicit offers
to purchase Notes upon the terms and conditions set forth in the Prospectus as
then amended or supplemented.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one business
day's prior notice from the Company, the Agents will forthwith suspend
solicitations of offers to purchase Notes from the Company until such time as
the Company has advised the Agents that such solicitation may be resumed. While
such solicitation is suspended, the Company shall not be required to deliver any
certificates, opinions or letters in accordance with Sections 5(a), 5(b) and
5(c); provided, however, that if the Registration Statement or Prospectus is
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amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the Notes
or for a change the Agents deem to be immaterial), no Agent shall be required to
resume soliciting offers to purchase Notes until the Company has delivered such
certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the sale
of each Note resulting from a solicitation made or an offer to purchase received
by such Agent, a commission in the form of a discount from the purchase price of
such Note equal to the percentage set forth below of the purchase price of such
Note:
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Term Commission Rate
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From 9 months to less than 12 months .125%
From 12 months to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to 30 years .750%
More than 30 years .875%
Each Agent shall communicate to the Company, orally or in writing,
each offer to purchase Notes received by such Agent as agent that in its
judgment should be considered by the Company. The Company shall have the sole
right to accept offers to purchase Notes and may reject any offer in whole or in
part. Each Agent shall have the right to reject any offer to purchase Notes
that it considers to be unacceptable, and any such rejection shall not be deemed
a breach of its agreements contained herein. The procedural details relating to
the issue and delivery of Notes sold by the Agents as agents and the payment
therefor shall be as set forth in the Administrative Procedures (as hereinafter
defined).
(b) Purchases as Principal. Each sale of Notes to an Agent as
----------------------
principal shall be made in accordance with the terms of this Agreement. In
connection with each such sale, the Company will enter into a Terms Agreement
that will provide for the sale of such Notes to and the purchase thereof by such
Agent. Each Terms Agreement will take the form of either (i) a written agreement
between such Agent and the Company, which may be substantially in the form of
Exhibit A hereto (a "Written Terms Agreement"), or (ii) an oral agreement
between such Agent and the Company confirmed in writing by such Agent to the
Company.
An Agent's commitment to purchase Notes as principal pursuant to a
Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the principal amount of Notes to be purchased by such Agent
pursuant thereto, the maturity date of such Notes, the price to be paid to the
Company for such Notes, the interest rate and interest rate formula, if any,
applicable to such Notes and any other terms of such Notes. Each such Terms
Agreement may also specify any requirements for officers' certificates, opinions
of counsel and letters from the independent auditors of the Company pursuant to
Section 4 hereof. A Terms Agreement may also specify certain provisions relating
to the reoffering of such Notes by such Agent.
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Each Terms Agreement shall specify the time and place of delivery of
and payment for such Notes. Unless otherwise specified in a Terms Agreement,
the procedural details relating to the issue and delivery of Notes purchased by
an Agent as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to be
purchased by an Agent pursuant to a Terms Agreement is referred to herein as a
"Settlement Date."
Unless otherwise specified in a Terms Agreement, if an Agent is
purchasing Notes as principal such Agent may resell such Notes to other dealers.
Any such sales may be at a discount, which shall not exceed the amount set forth
in the Prospectus Supplement relating to such Notes.
(c) Administrative Procedures. The Agents and the Company agree to
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perform the respective duties and obligations specifically provided to be
performed in the Medium-Term Notes, Series A, Administrative Procedures
(attached hereto as Exhibit B) (the "Administrative Procedures"), as amended
from time to time. The Administrative Procedures may be amended only by written
agreement of the Company and the Agents.
(d) Delivery. The documents required to be delivered by Section 4 of
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this Agreement as a condition precedent to each Agent's obligation to begin
soliciting offers to purchase Notes as an agent of the Company shall be
delivered at the office of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation, counsel for the Company, not later than 1:00 p.m.,
California time, on the date hereof, or at such other time and/or place as the
Agents and the Company may agree upon in writing, but in no event later than the
day prior to the earlier of (i) the date on which the Agents begin soliciting
offers to purchase Notes and (ii) the first date on which the Company accepts
any offer by an Agent to purchase Notes pursuant to a Terms Agreement. The date
of delivery of such documents is referred to herein as the "Commencement Date."
(e) Obligations Several. The Company acknowledges that the
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obligations of the Agents under this Agreement are several and not joint.
3. Agreements. The Company agrees with each Agent that:
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(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement or any Terms Agreement, the Company will not file any Prospectus
Supplement relating to the Notes or any amendment to the Registration Statement
unless the Company has previously furnished to the Agents copies thereof for
their review and will not file any such proposed supplement or amendment to
which the Agents reasonably object; provided, however, that (i) the foregoing
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requirement shall not apply to any of the Company's periodic filings with the
Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, copies of which filings the Company will cause to be delivered
to the Agents promptly after being transmitted for filing with the Commission
and (ii) any Prospectus Supplement that merely sets forth the terms or a
description of particular Notes shall only be reviewed and approved by the Agent
or Agents offering such Notes. Subject to the foregoing sentence, the Company
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will promptly cause each Prospectus Supplement to be filed with or transmitted
for filing to the Commission in accordance with Rule 424(b) under the Securities
Act. The Company will promptly advise the Agents (i) of the filing of any
amendment or supplement to the Basic Prospectus (except that notice of the
filing of an amendment or supplement to the Basic Prospectus that merely sets
forth the terms or a description of particular Notes shall only be given to the
Agent or Agents offering such Notes), (ii) of the filing and effectiveness of
any amendment to the Registration Statement, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Basic Prospectus or for any additional information, (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening of any proceeding
for that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use reasonable efforts to prevent the issuance of any
such stop order or notice of suspension of qualification and, if issued, to
obtain as soon as possible the withdrawal thereof. If the Basic Prospectus is
amended or supplemented as a result of the filing under the Exchange Act of any
document incorporated by reference in the Prospectus, no Agent shall be
obligated to solicit offers to purchase Notes so long as it is not reasonably
satisfied with such document.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act, any event occurs or condition
exists as a result of which the Prospectus, as then amended or supplemented,
would include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances when the Prospectus, as then amended or supplemented, is delivered
to a purchaser, not misleading, or if, in the opinion of the Agents or in the
opinion of the Company, it is necessary at any time to amend or supplement the
Prospectus, as then amended or supplemented, to comply with applicable law, the
Company will immediately notify the Agents by telephone (with confirmation in
writing) to suspend solicitation of offers to purchase Notes and, if so notified
by the Company, the Agents shall forthwith suspend such solicitation and cease
using the Prospectus, as then amended or supplemented. If the Company shall
decide to amend or supplement the Registration Statement or Prospectus, as then
amended or supplemented, it shall so advise the Agents promptly by telephone
(with confirmation in writing) and, at its expense, shall prepare and cause to
be filed promptly with the Commission an amendment or supplement to the
Registration Statement or Prospectus, as then amended or supplemented,
satisfactory in all respects to the Agents, that will correct such statement or
omission or effect such compliance and will supply such amended or supplemented
Prospectus to the Agents in such quantities as they may reasonably request. If
any documents, certificates, opinions and letters furnished to the Agents
pursuant to paragraph (f) below and Sections 5(a), 5(b) and 5(c) in connection
with the preparation and filing of such amendment or supplement are satisfactory
in all respects to the Agents, upon the filing with the Commission of such
amendment or supplement to the Prospectus or upon the effectiveness of an
amendment to the Registration Statement, the Agents will
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resume the solicitation of offers to purchase Notes hereunder. Notwithstanding
any other provision of this Section 3(b), until 180 days after the date any
Agent has purchased Notes as principal from the Company, if any event described
above in this paragraph (b) occurs, the Company will, at its own expense,
forthwith prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or Prospectus, as then
amended or supplemented, satisfactory in all respects to such Agent, will supply
such amended or supplemented Prospectus to such Agent in such quantities as it
may reasonably request and shall furnish to such Agent pursuant to paragraph (f)
below and Sections 5(a), 5(b) and 5(c) such documents, certificates, opinions
and letters as it may request in connection with the preparation and filing of
such amendment or supplement.
(c) The Company will make generally available to its security holders
and to the Agents as soon as practicable
earning statements that satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder
covering twelve month periods beginning, in each case, not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in Rule 158 under the Securities Act) of the Registration Statement with
respect to each sale of Notes. If such fiscal quarter is the last fiscal quarter
of the Company's fiscal year, such earning statement shall be made available not
later than 90 days after the close of the period covered thereby and in all
other cases shall be made available not later than 45 days after the close of
the period covered thereby.
(d) The Company will furnish to each Agent, without charge, a signed
copy of the Registration Statement, including exhibits and all amendments
thereto, and as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto as such Agent may
reasonably request.
(e) The Company will endeavor to qualify the Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Agents shall
reasonably request and to maintain such qualification for as long as the Agents
shall reasonably request.
(f) The Company shall furnish to the Agents such relevant documents
and certificates of officers of the Company relating to the business, operations
and affairs of the Company, the Registration Statement, the Basic Prospectus,
any amendments or supplements thereto, the Indentures, the Notes, this
Agreement, the Administrative Procedures, any Terms Agreement and the
performance by the Company of its obligations hereunder or thereunder as the
Agents may from time to time reasonably request.
(g) The Company shall notify the Agents promptly in writing of any
downgrading, or of its receipt of any notice of any intended or potential
downgrading or of any review for possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company's
securities by any "nationally
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recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
(h) The Company will, whether or not any sale of Notes is consummated,
pay all expenses incident to the performance of its obligations under this
Agreement and any Terms Agreement, including: (i) the preparation and filing of
the Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of the Company's counsel and accountants and of the
Trustee and its counsel, (iv) the qualification of the Notes under securities or
Blue Sky laws in accordance with the provisions of Section 3(e), including
filing fees and the fees and disbursements of counsel for the Agents in
connection therewith and in connection with the preparation of any Blue Sky or
Legal Investment Memoranda, (v) the printing and delivery to the Agents in
quantities as hereinabove stated of copies of the Registration Statement and all
amendments thereto and of the Prospectus and any amendments or supplements
thereto, (vi) the printing and delivery to the Agents of copies of any Blue Sky
or Legal Investment Memoranda, (vii) any fees charged by rating agencies for the
rating of the Notes, (viii) the fees and expenses, if any, incurred with respect
to any filing with the National Association of Securities Dealers, Inc., (ix)
the reasonable fees and disbursements of counsel for the Agents incurred in
connection with the offering and sale of the Notes, including any opinions to be
rendered by such counsel hereunder, and (x) any reasonable out-of-pocket
expenses incurred by the Agents; provided that any advertising expenses
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incurred by the Agents shall have been approved by the Company.
(i) Between the date of any Terms Agreement and the Settlement Date
with respect to such Terms Agreement, the Company will not, without the prior
consent of the Agent under such Term Agreement, offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company substantially similar to
the Notes that are to be sold pursuant to such Terms Agreement (other than (i)
such Notes, (ii) Notes previously agreed to be sold by the Company and (iii)
commercial paper issued in the ordinary course of business), except as may
otherwise be provided in such Terms Agreement.
4. Conditions of the Obligations of the Agents. Each Agent's
-------------------------------------------
obligation to solicit offers to purchase Notes as agent of the Company, each
Agent's obligation to purchase Notes pursuant to any Terms Agreement and the
obligation of any other purchaser to purchase Notes will be subject to the
accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the statements of the Company's officers made in each
certificate furnished pursuant to the provisions hereof and to the performance
and observance by the Company of all covenants and agreements herein contained
on its part to be performed and observed (in the case of an Agent's obligation
to solicit offers to purchase Notes, at the time of such solicitation, and, in
the case of an Agent's or any other purchaser's obligation to purchase Notes, at
the time the Company accepts the offer to purchase such Notes and at the time of
issuance and delivery) and (in each case) to the following additional conditions
precedent when and as specified:
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(a) Prior to such solicitation or purchase, as the case may be:
(i) there shall not have occurred any change, or any development which
could reasonably be expected to result in a change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus, as amended or supplemented at the time of such solicitation or
at the time such offer to purchase was made, that, in the judgment of the
relevant Agent, is material and adverse and that makes it, in the judgment
of such Agent, impracticable to market the Notes on the terms and in the
manner contemplated by the Prospectus, as so amended or supplemented;
(ii) there shall not have occurred any (A) suspension or material
limitation of trading generally on or by, as the case may be, the New York
Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (B) suspension of trading of any securities of
the Company on any exchange or in any over-the-counter market, (C)
declaration of a general moratorium on commercial banking activities in New
York by either Federal or New York State authorities or (D) any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the relevant Agent, is material
and adverse and, in the case of any of the events described in clauses
(ii)(A) through (D), such event, singly or together with any other such
event, makes it, in the judgment of such Agent, impracticable to market the
Notes on the terms and in the manner contemplated by the Prospectus, as
amended or supplemented at the time of such solicitation or at the time
such offer to purchase was made; and
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(A) except, in each case described in paragraph (i), (ii) or (iii) above, as
disclosed to the relevant Agent in writing by the Company prior to such
solicitation or, in the case of a purchase of Notes, as disclosed to the
relevant Agent before the offer to purchase such Notes was made or (B) unless in
each case described in (ii) above, the relevant event shall have occurred and
been known to the relevant Agent before such solicitation or, in the case of a
purchase of Notes, before the offer to purchase such Notes was made.
(b) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall have
received:
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(i) The opinion, dated as of such date, of Howard, Rice, Nemerovski,
Canady, Falk & Rabkin, A Professional Corporation, counsel for the Company
to the effect that:
(A) Charles Schwab is a duly incorporated, validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its
property and conduct its business as described in the Prospectus, as
then amended or supplemented;
(B) each of this Agreement and any applicable Written Terms Agreement
has been duly authorized, executed and delivered by the Company;
(C) each Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as enforcement thereof
(a) may be limited by bankruptcy, insolvency, fraudulent transfer or
conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally, (b) is subject to general
principles of equity, regardless of whether codified by statute and
regardless of whether enforcement is considered in a proceeding in
equity or at law, and (c) is subject to certain additional customary
exceptions;
(D) the forms of Notes have been duly authorized by the Company, and
if the terms of a particular Note and its issuance and sale are duly
established in conformity with the relevant Indenture, and if such
Note is duly executed by the Company and the Trustee and completed and
authenticated in accordance with the terms of the relevant Indenture
and delivered to and paid for by the purchasers thereof in accordance
with this Agreement and any applicable Terms Agreement on the date of
such opinion, such Note would be entitled to the benefits of such
Indenture and would be valid and binding obligations of the Company,
enforceable in accordance with their respective terms except as
enforcement thereof (a) may be limited by bankruptcy, insolvency,
fraudulent transfer or conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally, (b) is
subject to general principles of equity, regardless of whether
codified by statute and regardless of whether enforcement is
considered in a proceeding in equity or at law, and (c) is subject to
certain additional customary exceptions;
(E) (1) the execution and delivery by the Company of this Agreement,
the Indentures and any applicable Written Terms Agreement, and the
performance by the Company of its obligations under this Agreement,
the Indentures and any applicable Terms Agreement, as of the
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<PAGE>
Commencement Date (or Settlement Date, if applicable) did not
contravene, and (2) the execution and delivery by the Company of the
Notes, assuming such Notes were executed, issued and delivered in
accordance with this Agreement and the Indentures as of the
Commencement Date (or Settlement Date, if applicable) would not
contravene, (a) any provision of applicable law (other than the
securities or Blue Sky laws of the various states as to which such
counsel need express no opinion), or (b) the certificate of
incorporation or by-laws of the Company or Charles Schwab, or
constitute a default under the Revolving Credit Facility, consisting
of separate but substantially identical Credit Agreements, between the
Company and the banks listed therein, dated as of June 27, 1997, as
amended, and the Revolving Promissory Notes issued pursuant thereto,
or to the best knowledge of such counsel, after reasonable
investigation, any other instrument or agreement binding upon the
Company or any subsidiary and evidencing or related to indebtedness
for borrowed money, except such instruments and other agreements
relating to capitalized lease obligations and installment purchase
agreements for the acquisition of fixed assets, indebtedness pursuant
to which does not in the aggregate exceed $15 million; and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, the Notes (assuming
such Notes were executed, issued and delivered in accordance with this
Agreement and the Indentures as of the Commencement Date or Settlement
Date, if applicable), the Indentures and any applicable Terms
Agreement, or for the performance by Charles Schwab of its obligations
under this Agreement and any applicable Terms Agreement, except such
as are specified and have been obtained, and such as may be required
by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Notes; provided, however, that such
counsel need not express an opinion as to whether the purchase of the
Offered Securities constitutes a "prohibited transaction" under
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended;
(F) the statements (1) in the Prospectus, as then amended or
supplemented, under the captions "Description of Notes" (in the
Prospectus Supplement), "Description of Debt Securities" (in the Basic
Prospectus), "Plan of Distribution" (in the Prospectus Supplement and
in the Basic Prospectus), and (2) in the Registration Statement, as
then amended or supplemented, under Item 15, in each case insofar as
such statements constitute summaries of the legal matters, documents
or
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<PAGE>
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(G) such counsel is of the opinion ascribed to it in the Prospectus,
as then amended or supplemented, under the caption "Certain United
States Federal Income Tax Consequences";
(H) (1) such counsel is of the opinion that each document, if any,
filed by the Company pursuant to the Exchange Act and incorporated by
reference in the Prospectus, as then amended or supplemented (except
for financial statements and schedules and other financial and
statistical data included therein, and except for any proxy statement
of the Company, as to which such counsel need not express any
opinion), complied when so filed as to form in all material respects
with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (2) no facts have come to the attention of such
counsel to lead them to believe that (except for financial statements
and schedules and other financial and statistical data as to which
such counsel need not express any belief and except for that part of
the Registration Statement that constitutes the Form T-1 heretofore
referred to and except for any proxy statement of the Company) any
part of the Registration Statement, as then amended, if applicable, as
of the date such opinion is delivered, contains any untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (3) such counsel is of the opinion that the Registration
Statement and Prospectus, as then amended or supplemented, if
applicable (except for financial statements and schedules and other
financial and statistical data included therein and except for any
proxy statement of the Company, as to which such counsel need not
express any opinion) comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (4) no facts have come to the attention of
such counsel to lead them to believe that (except for financial
statements and schedules and other financial and statistical data and
except for any proxy statement of the Company, as to which such
counsel need not express any belief) the Prospectus, as then amended
or supplemented, if applicable, as of the date such opinion is
delivered, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided that in the case of an opinion delivered on
--------
the Commencement Date or pursuant to Section 5(b), the opinion and
belief set forth in clauses (3) and (4) above shall be deemed not to
cover information concerning an offering of particular Notes to the
extent such information will be set forth in a supplement to the Basic
Prospectus.
15
<PAGE>
(ii) The opinion, dated as of such date, of The Office of General
Counsel of the Company to the effect that:
(A) the Company is a duly incorporated, validly existing corporation
in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and conduct its
business as described in the Prospectus, as then amended or
supplemented, and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(B) each of the Company's Significant Subsidiaries is a duly
incorporated, validly existing corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own its property and conduct its business as
described in the Prospectus, as then amended or supplemented, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(C) each of the Company and its Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates
and permits of and from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the
Prospectus, as amended or supplemented, except to the extent that
the failure to obtain or file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(D) the statements (1) in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus, as then amended or supplemented and (2)
in "Item 1 - Legal Proceedings" of Part II of the Company's
quarterly reports on Form 10-Q, if any, filed since such annual
report, and (3) under the caption "Employment Agreement and Name
Assignment" in the Company's Proxy Statement for its Annual Meeting
of Stockholders immediately succeeding the filing of the Company's
most recent annual report on Form 10-K incorporated by reference in
the Prospectus, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the
16
<PAGE>
information called for with respect to such legal matters, documents
and proceedings and fairly summarize the matters referred to therein;
(E) after due inquiry, such counsel does not know of any contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus, as then amended or supplemented, or to be
filed or incorporated by reference as exhibits to such Registration
Statement that are not described, filed or incorporated as required;
(F) each of the Company and its Significant Subsidiaries is duly
registered as a broker-dealer, municipal securities broker or dealer,
investment adviser, or transfer agent, as the case may be, in each
jurisdiction wherein the conduct of its business requires such
registration, and each of the Company and its Significant Subsidiaries
is in compliance in all material respects with all applicable laws,
rules, regulations, orders, by-laws and similar requirements in
connection with such registrations, except to the extent that the
failure to be so registered or be in compliance would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(G) Charles Schwab is a member in good standing of the associations
and exchanges indicated in the Prospectus, as then amended or
supplemented, and is registered as a broker-dealer with the Commission
and in all 50 states, the District of Columbia and Puerto Rico, except
to the extent that the failure to be in good standing or be so
registered would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and
(H) (1) the execution and delivery by the Company of the Agreement,
the Indentures and any applicable Written Terms Agreement, and the
performance by the Company of its obligations under the Agreement, the
Indentures and any applicable Terms Agreement, as of the Commencement
Date (or Settlement Date, if applicable), did not violate, and (2) the
execution and delivery by the Company of the Notes, assuming such
Notes were executed, issued and delivered in accordance with this
Agreement and the Indentures as of the Commencement Date (or
Settlement Date, if applicable), would not violate, to such counsel's
best knowledge, after reasonable investigation, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary (except for such contravention that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole).
(I) After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be
17
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described in the Registration Statement or the Prospectus, as
then amended or supplemented, and are not so described or of any
statutes or regulations that are required to be described in the
Registration Statement or the Prospectus, as then amended or
supplemented, that are not described as required.
(J) (1) Such counsel is of the opinion that the proxy statement most
recently filed by the Company pursuant to the Exchange Act and
incorporated by reference in the Prospectus, as then amended or
supplemented, (except for financial statements and schedules and other
financial and statistical data included therein, as to which such
counsel need not express an opinion), complied when so filed as to
form in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (2) no facts have
come to the attention of such counsel to lead them to believe that
(except for financial statements and schedules and other financial and
statistical data, as to which such counsel need not express any
belief) the proxy statement most recently filed pursuant to the
Exchange Act by the Company and incorporated by reference in the
Prospectus, when such part of Registration Statement became effective,
and as of the date such opinion is delivered, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) The opinion, dated as of such date, of Davis Polk & Wardwell,
counsel for the Agents, covering the matters in subparagraphs (B), (C), (D)
and (F) (with respect to statements in the Prospectus, as then amended or
supplemented, under the captions "Description of Notes" (in the Prospectus
Supplement), "Description of Debt Securities" (in the Basic Prospectus) and
"Plan of Distribution" (in the Prospectus Supplement and in the Basic
Prospectus)), and clauses (2), (3) and (4) of subparagraph (H) in paragraph
(b)(i) above.
In giving the opinions referred to in paragraph (i) hereof, Howard,
Rice, Nemerovski, Canady, Falk & Rabkin, A Professional Corporation,
may rely on the opinion of Davis Polk & Wardwell as to any matters
governed by the laws of New York, and in giving the opinion referred
to in paragraph (iii) hereof, Davis Polk & Wardwell may rely on the
opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation, as to any matters governed by laws of
California. With respect to subparagraph (H) of paragraph (b)(i)
above, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation, may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto (but not
including documents incorporated therein by reference) and review and
discussion of the contents thereof (including documents incorporated
therein by reference), but are without independent check or
verification, except as specified. With
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<PAGE>
respect to clauses (2), (3) and (4) of subparagraph (H) of paragraph
(b)(i) above, Davis Polk & Wardwell may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or
supplements thereto (but not including documents incorporated therein
by reference) and review and discussion of the contents thereof
(including documents incorporated therein by reference), but are
without independent check or verification, except as specified.
The opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation, described in paragraph (b)(i) above shall be
rendered to the Agents at the request of the Company and shall so
state therein.
The opinion of The Office of General Counsel of the Company described
in paragraph (b)(ii) above shall be rendered to the Agents at the
request of the Company and shall so state therein.
(c) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the relevant Agents shall have
received a certificate, dated the Commencement Date or such Settlement Date, as
the case may be, signed by an executive officer of the Company to the effect set
forth in subparagraph (a)(iii) above and to the effect that the representations
and warranties of the Company contained herein are true and correct as of such
date and that the Company has complied with all of the agreements and satisfied
all of the conditions on its part to be performed or satisfied on or before such
date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(d) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, the Company's independent
auditors shall have furnished to the relevant Agents a letter or letters, dated
as of the Commencement Date or such Settlement Date, as the case may be, in form
and substance satisfactory to such Agents containing statements and information
of the type ordinarily included in accountant's "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus, as
then amended or supplemented.
(e) On the Commencement Date and on each Settlement Date, the Company
shall have furnished to the relevant Agents such appropriate further
information, certificates and documents as they may reasonably request.
5. Additional Agreements of the Company.
------------------------------------
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(a) Each time the Registration Statement or Prospectus is amended or
supplemented (other than by an amendment or supplement providing solely for a
change in the interest rates, redemption provisions, amortization schedules or
maturities offered on the Notes or for a change the Agents deem to be
immaterial), the Company will deliver or cause to be delivered forthwith to each
Agent a certificate signed by an executive officer of the Company, dated the
date of such amendment or supplement, as the case may be, in form reasonably
satisfactory to the Agents, of the same tenor as the certificate referred to in
Section 4(c) relating to the Registration Statement or the Prospectus as amended
or supplemented to the time of delivery of such certificate.
(b) Each time the Company furnishes a certificate pursuant to Section
5(a), the Company will furnish or cause to be furnished forthwith to each Agent
written opinions of (i) independent counsel for the Company and (ii) the General
Counsel for the Company. All such opinions shall be dated the date of such
amendment or supplement, as the case may be, shall be in a form satisfactory to
the Agents and shall be of the same tenor as the opinions referred to in
Sections 4(b)(i) and (ii), but modified to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
opinions. In lieu of such opinions, counsel last furnishing such an opinions to
an Agent may furnish to each Agent a letter to the effect that such Agent may
rely on such last opinions to the same extent as though it were dated the date
of such letter (except that statements in such last opinions will be deemed to
relate to the Registration Statement and the Prospectus as amended or
supplemented to the time of delivery of such letter.)
(c) Each time the Registration Statement or the Prospectus is amended
or supplemented to set forth amended or supplemental financial information or
such amended or supplemental information is incorporated by reference in the
Prospectus, the Company shall cause its independent public accountants forthwith
to furnish each Agent with a letter, dated the date of such amendment or
supplement, as the case may be, in form satisfactory to the Agents, of the same
tenor as the letter referred to in Section 4(d), with regard to the amended or
supplemental financial information included or incorporated by reference in the
Registration Statement or the Prospectus as amended or supplemented to the date
of such letter.
6. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Agent and
each person, if any, who controls such Agent within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Agent or any
such controlling person in connection with investigating or defending any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary
20
<PAGE>
to make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to such Agent furnished to the Company in writing by such Agent expressly for
use therein.
(b) Each Agent agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Agent, but
only with reference to information relating to such Agent furnished to the
Company in writing by such Agent expressly for use in the Registration Statement
or the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley or, if Morgan Stanley is not an
indemnified party and is not reasonably likely to become an indemnified party,
by the Agents that are indemnified parties, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for
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<PAGE>
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 6 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein in
connection with any offering of Notes, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and each Agent on the other hand from the offering of such Notes or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and each Agent on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and each Agent on the other hand in
connection with the offering of such Notes shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such Notes
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by each Agent in respect thereof. The relative fault of
the Company on the one hand and of each Agent on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by such Agent
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Each Agent's
obligation to contribute pursuant to this Section 6 shall be several (in the
proportion that the principal amount of the Notes the sale of which by or
through such Agent gave rise to such losses, claims, damages or liabilities
bears to the aggregate principal amount of the Notes the sale of which by or
through any Agent gave rise to such losses, claims, damages or liabilities) and
not joint.
(e) The Company and the Agents agree that it would not be just or
equitable if contribution pursuant to this Section 6 were determined by pro rata
--- ----
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable
by an indemnified party as a result of
22
<PAGE>
the losses, claims, damages and liabilities referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Agent shall be required to
contribute any amount in excess of the amount by which the total price at which
the Notes referred to in paragraph (d) above that were offered and sold to the
public through such Agent exceeds the amount of any damages that such Agent has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
7. Position of the Agents. In acting under this Agreement and in
----------------------
connection with the sale of any Notes by the Company (other than Notes sold to
an Agent as principal pursuant to a Terms Agreement), each Agent is acting
solely as agent of the Company and does not assume any obligation towards or
relationship of agency or trust with any purchaser of Notes. An Agent shall
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company, but such Agent shall not have any liability to the
Company in the event any such purchase is not consummated for any reason. If the
Company shall default in its obligations to deliver Notes to a purchaser whose
offer it has accepted, the Company shall hold the relevant Agent harmless
against any loss, claim, damage or liability arising from or as a result of such
default and shall, in particular, pay to such Agent the commission it would have
received had such sale been consummated.
8. Termination. This Agreement may be terminated at any time by the
-----------
Company or, as to any Agent, by the Company or such Agent upon the giving of
written notice of such termination to the other parties hereto, but without
prejudice to any rights, obligations or liabilities of any party hereto accrued
or incurred prior to such termination. The termination of this Agreement shall
not require termination of any Terms Agreement, and the termination of any such
Terms Agreement shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third paragraph of Section 2(a),
Section 2(e), the last sentence of Section 3(b) and Sections 3(c), 3(h), 6, 7,
9, 11 and 14 shall survive; provided that if at the time of termination an offer
--------
to purchase Notes has been accepted by the Company but the time of delivery to
the purchaser or its agent of such Notes has not occurred, the provisions of
Sections 2(b), 2(c), 3(a), 3(e), 3(f), 3(g), 3(i), 4 and 5 shall also survive
until such delivery has been made.
9. Representations and Indemnities to Survive. The respective
------------------------------------------
indemnity and contribution agreements, representations, warranties and other
statements of the Company, its officers and the Agents set forth in or made
pursuant to this Agreement or
23
<PAGE>
any Terms Agreement will remain in full force and effect, regardless of any
termination of this Agreement or any such Terms Agreement, any investigation
made by or on behalf of an Agent or the Company or any of the officers,
directors or controlling persons referred to in Section 6 and delivery of and
payment for the Notes.
10. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to Morgan Stanley, will be mailed,
delivered or telefaxed and confirmed to Morgan Stanley at 1585 Broadway, 2nd
Floor, New York, New York 10036, Attention: Manager--Continuously Offered
Products (telefax number: 212-761-0780), with a copy to Morgan Stanley at 1585
Broadway, 29th Floor, New York, New York 10036, Attention: Investment Banking
Information Center (telefax number: 212-761-0260), if sent to Goldman, Sachs,
will be mailed, delivered or telefaxed and confirmed to Goldman, Sachs at 85
Broad Street, New York, New York 10004, Attention: Credit Department, Medium-
Term Notes (telefax number: 212-357-8680), if sent to CS First Boston, will be
mailed, delivered or telefaxed and confirmed to CS First Boston at 61 Madison
Avenue, 5th Floor, New York, NY 10010, Attention: Helena Wilner (telefax number:
212-325-8183), if sent to Charles Schwab, will be mailed, delivered or telefaxed
and confirmed to Charles Schwab at 101 Montgomery Street, 120-30, San Francisco,
California 94104, Attention: Chief Financial Officer (telefax number: 415-636-
5436), or, if sent to the Company, will be mailed, delivered or telefaxed and
confirmed to the Company at 101 Montgomery Street, 120-30, San Francisco,
California 94104, Attention: Chief Financial Officer (telefax number: 415-636-
5436).
11. Successors. This Agreement and any Terms Agreement will inure to
----------
the benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Section 6 and the purchasers of Notes (to the extent expressly provided in
Section 4), and no other person will have any right or obligation hereunder.
12. Amendments. This Agreement may be amended or supplemented if,
----------
but only if, such amendment or supplement is in writing and is signed by the
Company and each Agent; provided that the Company may from time to time, on
--------
seven days prior written notice to the Agents but without the consent of any
Agent, amend this Agreement to add as a party hereto one or more additional
firms registered under the Exchange Act, whereupon each such firm shall become
an Agent hereunder on the same terms and conditions as the other Agents that are
parties hereto. The Agents shall sign any amendment or supplement giving effect
to the addition of any such firm as an Agent under this Agreement.
13. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York.
24
<PAGE>
15. Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
25
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and each of you.
Very truly yours,
THE CHARLES SCHWAB CORPORATION
By /s/ Joseph R. Martinetto
----------------------------------
Name: Joseph R. Martinetto
Title: Treasurer
The foregoing Agreement
is hereby confirmed
and accepted as of the
date first above written.
MORGAN STANLEY & CO. INCORPORATED
By /s/ Harold Hendershot III
------------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By /s/ Goldman, Sachs & Co.
------------------------------------
Name: Goldman, Sachs & Co.
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ J. Keogh
------------------------------------
Name: Julie A. Keogh
Title: Authorized Signatory
CHARLES SCHWAB & CO., INC.
By /s/ Joseph R. Martinetto
------------------------------------
Name: Joseph R. Martinetto
Title: Treasurer
26
<PAGE>
EXHIBIT A
THE CHARLES SCHWAB CORPORATION
MEDIUM-TERM NOTES, SERIES A
TERMS AGREEMENT
_________________, 19__
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, California 94104
Attention:
Re: Distribution Agreement dated ______________, 1998
(the "Distribution Agreement")
-------------------------------------------------
We agree to purchase your Medium-Term Notes, Series A, having the
following terms:
[We agree to purchase, severally and not jointly, the principal
amount of Notes set forth below opposite our names:
Principal Amount
Name of Notes
---- ----------------
Morgan Stanley & Co.
Incorporated
Goldman, Sachs & Co.
Credit Suisse First Boston
Corporation
Charles Schwab & Co., Inc.
Total . . . . $
===========
The Notes shall have the following terms:]/*/
- ----------------
/*/ Delete if the transaction will not be syndicated.
<PAGE>
<TABLE>
<CAPTION>
Fixed Rate Rate Floating
All Notes: Notes: Notes:
- --------- ----- -----
<S> <C> <C>
Principal Interest Base Rate:
Amount: Rate:
Purchase Index Amortization Maturity:
Price: Schedule:
Price to Spread (Plus or Multiplier:
Public: Minus):
Settlement Applicability of Annual Initial Interest
Date and Time: Spread Payments: Rate:
Place of Interest Payment Interest Reset
Delivery: Date(s): Dates:
Original Issue Interest Payment Maximum Interest
Date: Period: Rate:
Interest Accrual Minimum Interest
Date: Rate:
Maturity Calculation Agent:
Date:
Optional Repayment LIBOR
Date(s): Reuters/Telerate:
Optional Redemption
Date(s):
Initial Redemption
Date:
Initial Redemption
Percentage
Reduction:
Annual Redemption
Percentage
Reduction:
</TABLE>
2
<PAGE>
Ranking:
Other Terms:
The provisions of Sections 1, 2(b) and 2(c) and 3 through 6, 9, 10, 11
and 14 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
[If on the Settlement Date any one or more of the Agents shall fail or
refuse to purchase Notes that it has or they have agreed to purchase on such
date, and the aggregate amount of Notes which such defaulting Agent or Agents
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate amount of the Notes to be purchased on such date, the other Agents
shall be obligated severally in the proportions that the amount of Notes set
forth opposite their respective names above bears to the aggregate amount of
Notes set forth opposite the names of all such non-defaulting Agents, or in such
other proportions as _______________ may specify, to purchase the Notes which
such defaulting Agent or Agents agreed but failed or refused to purchase on such
date; provided that in no event shall the amount of Notes that any Agent has
--------
agreed to purchase pursuant to this Agreement be increased pursuant to this
paragraph by an amount in excess of one-ninth of such amount of Notes without
the written consent of such Agent. If on the Settlement Date any Agent or
Agents shall fail or refuse to purchase Notes and the aggregate amount of Notes
with respect to which such default occurs is more than one-tenth of the
aggregate amount of Notes to be purchased on such date, and arrangements
satisfactory to _______________ and the Company for the purchase of such Notes
are not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Agent or the Company. In
any such case either _______________ or the Company shall have the right to
postpone the Settlement Date but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Agent from
liability in respect of any default of such Agent under this Agreement.]/**/
This Agreement is subject to termination on the terms incorporated by
reference herein. If this Agreement is so terminated, the provisions of
Sections 3(h), 6, 9, 11 and 14 of the Distribution Agreement shall survive for
the purposes of this Agreement.
- --------------------
/**/ Delete if the transaction will not be syndicated.
3
<PAGE>
The following information, opinions, certificates, letters and
documents referred to in Section 4 of the Distribution Agreement will be
required: ________________
[NAME OF RELEVANT AGENT(S)]
By ______________________________
Title:
Accepted:
THE CHARLES SCHWAB CORPORATION
By ___________________________
Title:
4
<PAGE>
EXHIBIT B
---------
THE CHARLES SCHWAB CORPORATION
MEDIUM-TERM NOTES, SERIES A
ADMINISTRATIVE PROCEDURES
_________________________________
Explained below are the administrative procedures and specific terms
of the offering of Medium-Term Notes, Series A (the "Notes"), on a continuous
basis by The Charles Schwab Corporation (the "Company") pursuant to the
Distribution Agreement, dated as of ____________________, 1999 (the
"Distribution Agreement") among the Company and Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co., Credit Suisse First Boston Corporation and
Charles Schwab & Co., Inc. (the "Agents"). The Notes may be issued as senior
indebtedness (the "Senior Notes") or senior subordinated indebtedness (the
"Senior Subordinated Notes") of the Company, and as used herein the term "Notes"
includes the Senior Notes and the Senior Subordinated Notes. The Senior Notes
will be issued pursuant to the provisions of 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"). The Senior
Subordinated Notes will be issued pursuant to the provisions of a senior
subordinated indenture dated as of July 15, 1993 (the "Senior Subordinated Debt
Indenture"), between the Company and 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." In the
Distribution Agreement, the Agents have agreed to use reasonable efforts to
solicit purchases of the Notes, and the administrative procedures explained
below will govern the issuance and settlement of any Notes sold through the
Agents, as agents of the Company. An Agent, as principal, may also purchase
Notes for its own account, and in connection with such purchase the Company and
such Agent will enter into a terms agreement (a "Terms Agreement"), as
contemplated by the Distribution Agreement. The administrative procedures
explained below will govern the issuance and settlement of any Notes purchased
by an Agent, as principal, unless otherwise specified in the applicable Terms
Agreement.
Trustee will be the Registrar, Calculation Agent, Authenticating Agent
and Paying Agent for both the Senior Notes and the Subordinated Notes and will
perform the duties specified herein. Each Note will be represented by either a
Global Security (as defined below) delivered to the Trustee, as agent for The
Depository Trust Company ("DTC"), and recorded in the book-entry system
maintained by DTC (a "Book-Entry Note") or a certificate delivered to the
<PAGE>
holder thereof or a person designated by such holder (a "Certificated Note").
Except as set forth in the Indentures, an owner of a Book-Entry Note will not be
entitled to receive a Certificated Note.
Book-Entry Notes, which may be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC'S
operating procedures. Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof. Unless otherwise defined
herein, terms defined in the Indentures, the Notes or any Prospectus Supplement
relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of the employees of the
Company with whom the Agents are to communicate regarding offers to purchase
Notes and the related settlement details.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of August 3, 1993 (the "Letter of
Representation"), as amended, and a Medium-Term Note Certificate Agreement
between the Trustee and DTC, dated as of December 2, 1988 (the "MTN Certificate
Agreement") , and its obligations as a participant in DTC, including DTC's Same-
Day Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry Notes,
the Company will issue a single global security in
fully registered form without coupons (a "Global
Security") representing up to U.S. $150,000,000
principal amount of all such Notes that have the same
Original Issue Date, Maturity Date and other terms.
Each Global Security will be dated and issued as of the
date of its authentication by the Trustee. Each Global
Security will bear an "Interest Accrual Date," which
will be (i) with respect to an original Global Security
(or any portion thereof), its original issuance date
and (ii) with respect to any Global Security (or any
portion thereof) issued subsequently upon exchange of a
Global Security, or in lieu of a destroyed, lost or
stolen Global Security, the most recent Interest
Payment Date to which interest has been paid or duly
provided for on the predecessor Global Security or
Securities (or if no such payment or provision has been
made, the original issuance date of the predecessor
Global Security), regardless of the date of
authentication of such subsequently issued Global
Security.
2
<PAGE>
Book-Entry Notes may be payable only in U.S. dollars.
No Global Security will represent any Certificated
Note.
Denominations: Book-Entry Notes will be issued in principal amounts
of U.S. $1,000 or any amount in excess thereof that is
an integral multiple of U.S. $1,000. Global Securities
will be denominated in principal amounts not in excess
of U.S. $150,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of
$150,000,000 would, but for the preceding sentence, be
represented by a single Global Security, then one
Global Security will be issued to represent each U.S.
$150,000,000 principal amount of such Book-Entry Note
or Notes and an additional Global Security will be
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note
or Notes shall be assigned the same CUSIP number.
Preparation If any offer to purchase a Book-Entry Note is accepted
of Pricing by or on behalf of the Company, the Company will
Supplement: prepare a pricing supplement (a "Pricing Supplement")
reflecting the terms of such Note. The Company (i) will
arrange to file 10 copies (or, if participating in the
Commission's Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR"), such number of copies as is
required by the rules and regulations of the Commission
governing EDGAR filings then in effect) of such Pricing
Supplement with the Commission in accordance with the
applicable paragraph of Rule 424(b) under the Act, (ii)
will, as soon as possible and in any event not later
than 11:00 A.M. on the Business Day following the trade
date, deliver the number of copies of such Pricing
Supplement to the relevant Agent at the address listed
below as such Agent shall request and (iii) will, on
the relevant Agent's behalf, promptly file five copies
of such Pricing Supplement with the National
Association of Securities Dealers, Inc. (the "NASD").
The relevant Agent will cause such Pricing Supplement
to be delivered to the purchaser of the Note.
Pricing Supplements shall be delivered as follows:
If to Morgan Stanley & Co. Incorporated, at:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
3
<PAGE>
Attn.: Medium-Term Note Trading Desk, Carlos Cabrera
Telephone: (212) 761-2000
Telecopier: (212) 761-8846
If to Goldman, Sachs & Co., at:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Credit Department - Medium Term Notes
Telephone: (212) 902-3589
Telecopier: (212) 357-8680
If to Credit Suisse First Boston Corporation, at:
Credit Suisse First Boston Corporation
11 Madison Avenue, 5th Floor
New York, NY 10010
Attn: Helena Wilner
Telephone: (212) 325-7198
Telecopier: (212) 325-8183
In each instance that a Pricing Supplement is prepared,
the relevant Agent will affix the Pricing Supplement to
Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are
attached (other than those retained for files), will be
destroyed.
Settlement: The receipt by the Company of immediately available
funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security
representing such Note shall constitute "settlement"
with respect to such Note. All offers accepted by the
Company will be settled on the third Business Day next
succeeding the date of acceptance pursuant to the
timetable for settlement set forth below, unless the
Company and the purchaser agree to settlement on
another day, which shall be no earlier than the next
Business Day.
Settlement Settlement Procedures with regard to each Book-Entry
Procedures: Note sold by the Company to or through an Agent
(unless otherwise specified pursuant to a Terms
Agreement and reasonably acceptable to the Trustee)
shall be as follows:
A. The relevant Agent will advise the Company by
telephone that such Note is a Book-Entry Note and
4
<PAGE>
of the following settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed
Rate Book-Entry Note, the Interest Rate,
whether such Note will pay interest annually
or semiannually and whether such Note is an
Amortizing Note, and, if so, the
amortization schedule, or, in the case of a
Floating Rate Book-Entry Note, the Initial
Interest Rate (if known at such time),
Interest Payment Date(s), Interest Payment
Period, Calculation Agent, Base Rate (and,
if LIBOR, Reuters or Telerate), Index
Maturity, Interest Reset Period, Initial
Interest Reset Date, Interest Reset Dates,
Spread or Spread Multiplier (if any),
Minimum Interest Rate (if any) and Maximum
Interest Rate (if any).
4. Redemption or repayment provisions (if any).
5. Ranking.
6. Settlement date and time
(Original Issue Date).
7. Interest Accrual Date.
8. Price.
9. Agent's commission (if any) determined as
provided in the Distribution Agreement.
10. Any other applicable terms.
B. The Company will advise the Trustee by telephone
or electronic transmission (confirmed in writing
at any time on the same date) of the information
set forth in Settlement Procedure "A" above and of
the name of the applicable Agent. The Company will
then assign a CUSIP number to the Global Security
representing such Note and will notify the Trustee
and the relevant Agent of such CUSIP number by
5
<PAGE>
telephone as soon as practicable.
C. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System,
providing the following settlement information to
DTC, the relevant Agent and Standard & Poor's
Corporation:
1. The information set forth in Settlement
Procedure "A".
2. The Initial Interest
Payment Date for such Note, the number of
days by which such date succeeds the related
DTC Record Date (which in the case of
Floating Rate Notes which reset daily or
weekly, shall be the date five calendar days
immediately preceding the applicable
Interest Payment Date and, in the case of
all other Notes, shall be the Record Date as
defined in the Note) and, if known, the
amount of interest payable on such Initial
Interest Payment Date.
3. The CUSIP number of the Global Security
representing such Note.
4. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
5. Whether such Note is an Amortizing Note (by
an appropriate notation in the comments
field of DTC's Participant Terminal System).
6. The number of Participant accounts to be
maintained by DTC on behalf of the relevant
Agent and the Trustee.
D. The Trustee will complete and authenticate the
Global Security representing such Note.
E. DTC will credit such Note to the Trustee's
participant account at DTC.
F. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing
6
<PAGE>
DTC to (i) debit such Note to the Trustee's
participant account and credit such Note to the
relevant Agent's participant account and (ii)
debit such Agent's settlement account and credit
the Trustee's settlement account for an amount
equal to the price of such Note less such Agent's
commission (if any). The entry of such a deliver
order shall constitute a representation and
warranty by the Trustee to DTC that (a) the Global
Security representing such Book-Entry Note has
been issued and authenticated and (b) the Trustee
is holding such Global Security pursuant to the
MTN Certificate Agreement.
G. Unless the relevant Agent is the end purchaser of
such Note, such Agent will enter an SDFS deliver
order through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for an
amount equal to the price of such Note.
H. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "F" and
"G" will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
I. The Trustee will credit to the account of the
Company maintained at Citibank, N.A., New York,
New York, in immediately available funds, the
amount transferred to the Trustee in accordance
with Settlement Procedure "F".
J. Unless the relevant Agent is the end purchaser of
such Note, such Agent will confirm the purchase of
such Note to the purchaser either by transmitting
to the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
K. Monthly, the Trustee will send to the Company a
statement setting forth the principal amount of
Notes outstanding as of that date under the
7
<PAGE>
Indentures and setting forth a brief description
of any sales of which the Company has advised the
Trustee that have not yet been settled.
Settlement For sales by the Company of Book-Entry Notes to or
Procedures through an Agent (unless otherwise specified pursuant
Timetable: to a Terms Agreement and reasonably acceptable to the
Trustee) for settlement on the first Business Day after
the sale date, Settlement Procedures "A" through "J"
set forth above shall be completed as soon as possible
but not later than the respective times in New York
City set forth below:
Settlement
Procedure Time
---------- ----
A 11:00 A.M. on the sale date
B 12:00 Noon on the sale date
C 2:00 P.M. on the sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 A.M., 12:00 and 2:00 P.M.,
respectively, on the first Business Day after the sale
date. If the Initial Interest Rate for a Floating Rate
Book-Entry Note has not been determined at the time
that Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as
such rate has been determined but no later than 12:00
and 2:00 P.M., respectively, on the first Business Day
before the settlement date. Settlement Procedure "H" is
subject to extension in accordance with any extension
of Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on
the settlement date.
If settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee, after receiving notice from the
Company or the relevant Agent no later than 12:00 Noon
on the Business Day immediately preceding the scheduled
settlement date, will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to
such effect by no later than 2:00 P.M. on the Business
Day
8
<PAGE>
immediately preceding the scheduled settlement date.
Failure to If the Trustee fails to enter an SDFS deliver order
Settle: with respect to a Book-Entry Note pursuant to
Settlement Procedure "F", the Trustee may deliver to
DTC, through DTC's Participant Terminal System, as soon
as practicable a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account,
provided that the Trustee's participant account
contains a principal amount of the Global Security
representing such Note that is at least equal to the
principal amount to be debited. If a withdrawal message
is processed with respect to all the Book-Entry Notes
represented by a Global Security, the Trustee will mark
such Global Security "cancelled," make appropriate
entries in the Trustee's records and send such
cancelled Global Security to the Company. The CUSIP
number assigned to such Global Security shall, in
accordance with the procedures of the CUSIP Service
Bureau of Standard & Poor's Corporation, be cancelled
and not immediately reassigned. If a withdrawal message
is processed with respect to one or more, but not all,
of the Book-Entry Notes represented by a Global
Security, the Trustee will exchange such Global
Security for two Global Securities, one of which shall
represent such Book-Entry Note or Notes and shall be
cancelled immediately after issuance and the other of
which shall represent the remaining Book-Entry Notes
previously represented by the surrendered Global
Security and shall bear the CUSIP number of the
surrendered Global Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the relevant Agent may enter SDFS deliver orders
through DTC's Participant Terminal System reversing the
orders entered pursuant to Settlement Procedures "F"
and "G", respectively. Upon receipt of notice of such
event, the Trustee will deliver the withdrawal message
and take the related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect.
9
<PAGE>
In the event of a failure to settle with respect to one
or more, but not all, of the Book-Entry Notes to have
been represented by a Global Security, the Trustee will
provide, in accordance with Settlement Procedures "D"
and "F", for the authentication and issuance of a
Global Security representing the Book-Entry Notes to be
represented by such Global Security and will make
appropriate entries in its records.
10
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the
Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as of
the date of its authentication by the Trustee. Each
Certificated Note will bear an Original Issue Date,
which will be (i) with respect to an original
Certificated Note (or any portion thereof), its
original issuance date (which will be the settlement
date) and (ii) with respect to any Certificated Note
(or portion thereof) issued subsequently upon transfer
or exchange of a Certificated Note or in lieu of a
destroyed, lost or stolen Certificated Note, the
original issuance date of the predecessor Certificated
Note, regardless of the date of authentication of such
subsequently issued Certificated Note.
Preparation
of Pricing Supplement: If any offer to purchase a Certificated Note is
accepted by or on behalf of the Company, the Company
will prepare a Pricing Supplement reflecting the terms
of such Note. The Company (i) will arrange to file 10
copies (or, if participating in EDGAR, such number of
copies as is required by the rules and regulations of
the Commission governing EDGAR filings then in effect)
of such Pricing Supplement with the Commission in
accordance with the applicable paragraph of Rule 424(b)
under the Act, (ii) will, as soon as possible and in
any event not later than 11:00 A.M. on the Business Day
following the trade date, deliver the number of copies
of such Pricing Supplement to the relevant Agent at the
address set-forth above as such Agent shall request and
(iii) will, on the relevant Agent's behalf, promptly
file five copies of such Pricing Supplement with the
NASD. The relevant Agent will cause such Pricing
Supplement to be delivered to the purchaser of the
Note.
In each instance that a Pricing Supplement is prepared,
the relevant Agent will affix the Pricing Supplement to
Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are
attached (other than those retained for files), will be
destroyed.
Settlement: The receipt by the Company of immediately available
funds in exchange for an authenticated Certificated
Note delivered to the relevant Agent and such Agent's
delivery of such Note against receipt of immediately
available funds
11
<PAGE>
shall constitute "settlement" with respect to such Note.
All offers accepted by the Company will be settled on or
before the third Business Day next succeeding the date
of acceptance pursuant to the timetable for settlement
set forth below, unless the Company and the purchaser
agree to settlement on another date.
Settlement Settlement Procedures with regards to each Certificated
Procedures: Note sold by the Company to or through an Agent (unless
otherwise specified pursuant to a Terms Agreement and
reasonably acceptable to Chase) shall be as follows:
A. The relevant Agent will advise the Company by
telephone that such Note is a Certificated Note
and of the following settlement information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address
for payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated
Note, the Interest Rate, whether such Note
will pay interest annually or semiannually
and whether such Note is an Amortizing Note
and, if so, the amortization schedule, or,
in the case of a Floating Rate Certificated
Note, the Initial Interest Rate (if known at
such time), Interest Payment Date(s),
Interest Payment Period, Calculation Agent,
Base Rate (and, if LIBOR, Reuters or
Telerate), Index Maturity, Interest Reset
Period, Initial Interest Reset Date,
Interest Reset Dates, Spread or Spread
Multiplier (if any), Minimum Interest Rate
(if any) and Maximum Interest Rate (if any).
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<PAGE>
7. Redemption or repayment provisions (if any).
8. Ranking.
9. Settlement date and time (Original Issue
Date).
10. Interest Accrual Date.
11. Price.
12. Agent's commission (if any) determined as
provided in the Distribution Agreement.
13. Denominations.
14. Any other applicable terms.
B. The Company will advise the Trustee by telephone
or electronic transmission (confirmed in writing
at any time on the same date) of the information
set forth in Settlement Procedure "A" above and of
the name of the applicable Agent.
C. The Company will have delivered to the Trustee a
pre-printed four-ply packet for such Note, which
packet will contain the following documents in
forms that have been approved by the Company, the
relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Note and
authenticate such Note and deliver it (with the
confirmation) and Stubs One and Two to the
relevant Agent at the address set-forth below, and
such Agent will acknowledge receipt of the Note by
stamping or otherwise marking Stub One and
returning it to Chase. In the event that the
instructions given by such Agent for payment to
the account of the Company are revoked, the
Company will as
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<PAGE>
promptly as possible wire transfer to the
account of such Agent an amount of
immediately available funds equal to the
amount of such payment made.
Certificated Notes shall be delivered as follows:
If to Morgan Stanley & Co. Incorporated, at:
Bank of New York
Dealer Clearance Department
1 Wall Street, 4th Floor
New York, New York 10005
Attn: For the Account of
Morgan Stanley & Co. Incorporated
If to Goldman, Sachs & Co., at:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Corporate Bond Operations
Telephone: (212) 902-5836
If to Credit Suisse First Boston Corporation, at:
Credit Suisse First Boston Corporation
11 Madison Avenue, 5th Floor
New York, NY 10010
Attn: Helena Wilner
Telephone: (212) 325-7198
Telecopier: (212) 325-8183
If to Charles Schwab & Co., Inc., at:
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, CA 94104
Att: Steven L. Scheid
Telephone: (415) 627-7444
Telecopier: (415) 627-8188
E. Unless the relevant Agent is the end
purchaser of such Note, such Agent will
deliver such Note (with confirmation) to the
customer against payment in immediately
available funds. Such Agent will obtain the
acknowledgment of receipt of such Note by
retaining Stub Two.
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<PAGE>
F. The Trustee will send Stub Three to the Company by
first-class mail. Periodically, the Trustee will
also send to the Company a statement setting forth
the principal amount of the Notes outstanding as
of that date under each Indenture and setting
forth a brief description of any sales of which
the Company has advised the Trustee that have not
yet been settled.
Settlement For sales by the Company of Certificated Notes to or
Procedures through an Agent (unless otherwise specified pursuant
Timetable: to a Terms Agreement and reasonably acceptable to the
Trustee), Settlement Procedures "A" through "F" set
forth above shall be completed on or before the
respective times in New York City set forth below:
Settlement
Procedure Time
---------- ----
A 2:00 P.M. on day before settlement
date
B 3:00 P.M. on day before settlement
date
C-D 2:15 P.M. on settlement date
E 3:00 P.M. on settlement date
F 5:00 P.M. on settlement date
Failure If a purchaser fails to accept delivery of and make
to Settle: payment for any Certificated Note, the relevant Agent
will notify the Company and the Trustee by telephone
and return such Note to the Trustee. Upon receipt of
such notice, the Company will immediately wire transfer
to the account of such Agent an amount equal to the
amount previously credited thereto in respect of such
Note. Such wire transfer will be made on the settlement
date, if possible, and in any event not later than the
Business Day following the settlement date. If the
failure shall have occurred for any reason other than a
default by such Agent in the performance of its
obligations hereunder and under the Distribution
Agreement, then the Company will reimburse such Agent
or the Trustee, as appropriate, on an equitable basis
for its loss of the use of the funds during the period
when they were credited to the account of the Company.
Immediately upon receipt of the Certificated Note in
respect of which such failure occurred, the Trustee
will mark such Note "cancelled," make appropriate
entries in the Trustee's records and send such Note to
the Company.
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<PAGE>
EXHIBIT 4.5
FACE OF SECURITY
Fixed Rate Senior Note
REGISTERED REGISTERED
No. FXR U.S. $ [PRINCIPAL
AMOUNT]
CUSIP:*
Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) to
the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein.*
THE CHARLES SCHWAB CORPORATION
SENIOR MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
ORIGINAL INITIAL REDEMPTION INTEREST RATE:
ISSUE DATE: DATE:
MATURITY
INTEREST INITIAL REDEMPTION DATE:
ACCRUAL DATE: PERCENTAGE:
OPTIONAL
APPLICABILITY ANNUAL REDEMPTION REPAYMENT
OF ANNUAL PERCENTAGE DATE(S):
INTEREST REDUCTION:
PAYMENTS:
________________
* Applies only if this Note is a Registered Global Security.
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to
, or registered assignees, the principal sum of U.S. $ , on the
Maturity Date specified above (except to the extent previously redeemed or
repaid) and to pay interest thereon at the Interest Rate per annum specified
above from the Interest Accrual Date specified above until the principal hereof
is paid or duly made available for payment (except as provided below),
semiannually in arrears on the first day of March and September in each year
(each such date an "Interest Payment Date") commencing on the Interest Payment
Date next succeeding the Interest Accrual Date specified above, and at maturity
(or on any redemption or repayment date); provided, however, that if the
-------- -------
Interest Accrual Date occurs between a Record Date, as defined below, and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that if this Note is subject to
-------- -------
"Annual Interest Payments," interest payments shall be made annually in arrears
and the term "Interest Payment Date" shall be deemed to mean the first day of
March in each year.
Interest on this Note will accrue from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including the
Interest Accrual Date, until the principal hereof has been paid or duly made
available for payment (except as provided below). The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
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interest payable at maturity (or on any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are
2
<PAGE>
authorized or required by law or regulation to close in The City of New York.
Payment of the principal of this Note, any premium and the interest
due at maturity (or on any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be made
by check mailed to the address of the person entitled thereto as such address
shall appear in the Note register; provided, however, that if the registered
-------- -------
holder of this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date, such holder will be entitled to receive payments of interest, other than
interest due at maturity or on any date of redemption or repayment, by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Indenture, as defined on
the reverse hereof, or be valid or obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By ___________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Senior Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By _____________________________
Authorized Officer
4
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Medium-Term
Notes, Series A, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of July 15, 1993 (the "Senior Indenture"), between the Issuer and The
Chase Manhattan Bank (formerly Chemical Bank), as Trustee (the "Trustee," which
term includes any successor trustee under the Senior Indenture), to which Senior
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
of the Issuer, the Trustee and holders of the Notes and the terms upon which the
Notes are, and are to be, authenticated and delivered. The Issuer has appointed
The Chase Manhattan Bank (formerly Chemical Bank) at its corporate trust office
in The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby incorporated
by reference herein.
This Note will not be subject to any sinking fund and, unless
otherwise provided on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or subject to repayment at the
option of the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption (except as
provided below). Notice of redemption shall be mailed, not less than 30 nor
more than 60 days prior to the date fixed for redemption, to the registered
holders of the Notes designated for redemption at
5
<PAGE>
their addresses as the same shall appear on the Note register, subject to all
the conditions and provisions of the Senior Indenture. In the event of
redemption of this Note in part only, a new Note or Notes for the amount of the
unredeemed portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment (except as
provided below). For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
--------
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the
event of repayment of this Note in part only, a new Note or Notes for the amount
of the unpaid portion hereof shall be issued in the name of the holder hereof
upon the cancellation hereof.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Interest payments for this
Note
6
<PAGE>
will be computed and paid on the basis of a 360-day year of twelve 30-day
months.
In the case where the Interest Payment Date or the Maturity Date (or
any redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured and
---- -----
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the
Trustee will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
-------- -------
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to
7
<PAGE>
repurchase such Note in whole or in part, except the portion of such Note not
required to be repurchased, or (iii) to register the transfer of or exchange
Notes to the extent and during the period so provided in the Senior Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and
registrations of transfer of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default (as
defined in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which this
Note forms a part, or due to the default in the performance or breach of any
other covenant or warranty of the Issuer applicable to the debt securities of
such series but not applicable to all outstanding debt securities issued under
the Senior Indenture shall have occurred and be continuing, either the Trustee
or the holders of not less than 25% in principal amount of the debt
8
<PAGE>
securities of each affected series (voting as a single class) may then declare
the principal of all debt securities of all such 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 the
Senior Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, 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 the Senior Indenture 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 (or premium, if any) or
interest on such debt securities) by the holders of a majority in principal
amount of the debt securities of all affected series then outstanding.
The Trustee also acts as trustee under a Senior Subordinated
Indenture, dated as of July 15, 1993, as amended (the "Senior Subordinated
Indenture" and, together with the Senior Indenture, the "Indentures"), between
the Issuer and the Trustee, with respect to certain other debt securities of the
Issuer. The Senior Indenture provides that, should a default occur with respect
to either the debt securities issued under the Senior Indenture or the debt
securities issued under the Senior Subordinated Indenture, the Trustee 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 Senior Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee may
--------
not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such 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 or
repayment thereof, or change the currency of payment thereof, or impair or
affect the rights of any holder to institute suit for the payment thereof
without the consent of the holder of each debt security so
9
<PAGE>
affected; or (b) reduce the aforesaid percentage in principal amount of debt
securities the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of each debt security
so affected.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none
10
<PAGE>
of the Issuer, the Trustee or any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.
11
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-...........Custodian..............
(Cust) (Minor)
Under Uniform Gifts to Minors Act...................
(State)
Additional abbreviations may also be used though not in the above list.
__________
12
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
________________________________________________________________________________
constituting and appointing such person attorney to transfer
________________________________________________________________________________
such note on the books of the Issuer, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
13
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
__________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid):
____________________________.
Dated:_____________________________________________
NOTICE: The signature on this
Option to Elect Repayment must
correspond with the name as written
upon the face of the within instrument
in every particular without alteration
or enlargement.
14
<PAGE>
EXHIBIT 4.6
FACE OF SECURITY
Floating Rate Senior Note
REGISTERED REGISTERED
No. FLR U.S. $ [principal amount]
CUSIP:/*/
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.*
_________________________
/*/ Applies only if this Note is a Registered Global Security.
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
- --------------------------------------------------------------------------------
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
- --------------------------------------------------------------------------------
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT DATE(S):
- --------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- --------------------------------------------------------------------------------
ALTERNATE RATE EVENT INITIAL INTEREST RESET INTEREST RESET PERIOD:
SPREAD: DATE:
- --------------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATE(S):
- --------------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- --------------------------------------------------------------------------------
INDEX CURRENCY: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
- --------------------------------------------------------------------------------
EXCHANGE RATE AGENT: INITIAL REDEMPTION TOTAL AMOUNT OF OID:
PERCENTAGE:
- --------------------------------------------------------------------------------
OTHER PROVISIONS: ANNUAL REDEMPTION ORIGINAL YIELD TO
PERCENTAGE REDUCTION: MATURITY:
- --------------------------------------------------------------------------------
OPTIONAL REPAYMENT INITIAL ACCRUAL PERIOD OID:
DATE(S):
- --------------------------------------------------------------------------------
DESIGNATED CMT TELERATE
PAGE:
- --------------------------------------------------------------------------------
DESIGNATED CMT MATURITY
INDEX:
================================================================================
2
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to
, or registered assignees, the principal sum of U.S. $ , on
the Maturity Date specified above (except to the extent redeemed or repaid prior
to the Maturity Date) and to pay interest thereon, from the Interest Accrual
Date specified above at a rate per annum equal to the Initial Interest Rate
specified above until the Initial Interest Reset Date specified above, and
thereafter at a rate per annum determined in accordance with the provisions
specified on the reverse hereof until the principal hereof is paid or duly made
available for payment. The Issuer will pay interest in arrears monthly,
quarterly, semiannually or annually as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Interest Accrual Date specified
above, and on the Maturity Date (or any redemption or repayment date); provided,
however, that if the Interest Accrual Date occurs between a Record Date, as
defined below, and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date succeeding the Interest
Accrual Date to the registered holder of this Note on the Record Date with
respect to such second Interest Payment Date; and provided, further, that,
subject to the next succeeding sentence, if an Interest Payment Date would fall
on a day that is not a Business Day, as defined on the reverse hereof, such
Interest Payment Date shall be postponed to the following day that is a Business
Day, except that if the Base Rate specified above is LIBOR and such next
Business Day falls in the next calendar month, the Interest Payment Date shall
be the immediately preceding day that is a Business Day. If the Maturity Date or
redemption or repayment date would fall on a day that is not a Business Day, the
payment of principal and interest will be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and after
such Maturity Date or redemption or repayment date, as the case may be.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from the Interest Accrual Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable on the Maturity Date (or any redemption or repayment date) will
be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest due at
the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or any date of redemption or repayment, will be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Note register; provided, however, that if the registered holder of
this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or more in
aggregate principal amount of Notes having the same Interest Payment Date, such
holder will be entitled to receive
3
<PAGE>
payments of interest, other than interest due at maturity or any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent in
writing not less than 15 calendar days prior to the applicable Interest Payment
Date.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By ______________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes
referred to in the within-
mentioned Senior Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By ______________________________
Authorized Officer
5
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Medium-Term Notes,
Series A, having maturities more than nine months from the date of issue (the
"Notes") of the Issuer. The Notes are issuable under a Senior Indenture, dated
as of July 15, 1993 (the "Senior Indenture"), between the Issuer and The Chase
Manhattan Bank (formerly Chemical Bank), as Trustee (the "Trustee," which term
includes any successor trustee under the Senior Indenture), to which Senior
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
of the Issuer, the Trustee and holders of the Notes and the terms upon which the
Notes are, and are to be, authenticated and delivered. The Issuer has appointed
The Chase Manhattan Bank (formerly Chemical Bank) at its corporate trust office
in The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby incorporated
by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed,
not less than 30 nor more than 60 days prior to the date fixed for redemption,
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption of
this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment. For this Note
to be repaid at the option of the holder hereof, the Paying Agent must receive
at its corporate trust office in the Borough of Manhattan, The City of New York,
at least 15 but not more than 30 days prior to the date of repayment, (i) this
Note with the form entitled "Option
6
<PAGE>
to Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
This Note will bear interest at the rate determined in accordance with the
applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Interest Accrual Date to the Initial Interest Reset Date will be the
Initial Interest Rate and (ii) the interest rate in effect hereon for the 10
days immediately prior to the Maturity Date hereof (or, with respect to any
principal amount to be redeemed or repaid, any redemption or repayment date)
shall be that in effect on the tenth calendar day preceding the Maturity Date
hereof or such date of redemption or repayment, as the case may be. If any
Interest Reset Date would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding day that is a
Business Day, except that if the Base Rate specified on the face hereof is LIBOR
and such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and, with
respect to Notes bearing interest calculated by reference to LIBOR, is also a
London Banking Day (as defined below).
The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the CD Rate, Commercial Paper
Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the second Business
Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to LIBOR shall be the second London Banking Day preceding such
Interest Reset Date. As used herein, "London Banking Day" means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market. The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the Treasury Rate shall be the
day of the week in which such Interest Reset Date falls on which Treasury bills
normally would
7
<PAGE>
be auctioned; provided, however, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding such Interest Reset Date,
the related Interest Determination Date shall be such preceding Friday; and
provided, further, that if an auction shall fall on any Interest Reset Date,
then the Interest Reset Date shall instead be the first Business Day following
the date of such auction.
The "Calculation Date" pertaining to any Interest Determination Date will
be the earlier (i) of the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business Day or
(ii) the Business Day preceding the applicable Interest Payment Date or
maturity, as the case may be.
Determination of CD Rate. If the Base Rate specified on the face hereof is
the CD Rate, the CD Rate with respect to this Note shall be determined on each
Interest Determination Date and shall be the rate on such date for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof set forth in the daily update of H.15(519)
available through the world wide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update or any
successor site or publication ("H.15 Daily Update"). If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such Interest Determination Date will be calculated by the
Calculation Agent referred to on the face hereof and will be the arithmetic mean
of the secondary market offered rates as of 10:00 A.M., New York City time, on
such Interest Determination Date for certificates of deposit in an amount that
is representative for a single transaction in that market at that time with a
remaining maturity closest to the Index Maturity specified on the face hereof of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate specified on the
face hereof is the Commercial Paper Rate, the Commercial Paper Rate with respect
to this Note shall be determined on each Interest Determination Date and shall
be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial Paper-
Nonfinancial," or if not so published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the
Commercial Paper Rate shall be the Money Market Yield of the rate on such
Interest Determination Date for commercial paper of the Index Maturity specified
on the face
8
<PAGE>
hereof as published in the H.15 Daily Update under the heading "Commercial
Paper-Nonfinancial." If neither of such rates is published by 3:00 P.M., New
York City time, on such Calculation Date, then the Commercial Paper Rate shall
be the Money Market Yield of the arithmetic mean of the offered rates as of
11:00 A.M., New York City time, on such Interest Determination Date of three
leading dealers in commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity specified on the
face hereof, placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized rating agency; provided, however, that
if the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = _________ x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate specified on the face
hereof is the Federal Funds Rate, the Federal Funds Rate with respect to this
Note shall be determined on each Interest Determination Date and shall be the
rate on such date for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)," as displayed on Bridge Telerate, Inc., or any
successor service, on page 120 or any other page as may replace the applicable
page on that service, or, if not so published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Federal Funds Rate will be the rate on such Interest Determination Date as
published in the H.15 Daily Update under the heading "Federal Funds/Effective
Rate." If neither of such rates is published by 3:00 P.M., New York City time,
on such Calculation Date, the Federal Funds Rate for such Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the rates for the last transaction in overnight Federal funds as of 9:00
A.M., New York City time, on such Interest Determination Date arranged by three
leading brokers in Federal funds transactions in The City of New York selected
by the Calculation Agent, after consultation with the Company; provided,
however, that if the brokers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
9
<PAGE>
Determination of LIBOR. If the Base Rate specified on the face hereof is
LIBOR, LIBOR with respect to this Note shall be determined as follows:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will
be, as specified on the face hereof, either: (a) the arithmetic mean of the
offered rates for deposits in U.S. dollars having the Index Maturity
specified on the face hereof, commencing on the second London Banking Day
immediately following the LIBOR Interest Determination Date, that appear on
the Reuters Screen LIBO Page as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date, if at least two such offered rates appear on
the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for
deposits in U.S. dollars having the Index Maturity specified on the face
hereof, commencing on the second London Banking Day immediately following
that LIBOR Interest Determination Date, that appears on the Telerate Page
3750 as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified on the face hereof, LIBOR will be determined as if
LIBOR Telerate had been specified. If fewer than two offered rates appear
on the Reuters Screen LIBO Page, or if no rate appears on the Telerate Page
3750, as applicable, LIBOR in respect of that LIBOR Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page, as
specified in (i)(a) above, or on which no rate appears on Telerate Page
3750, as specified in (i)(b) above, as applicable, LIBOR will be determined
on the basis of the rates at which deposits in U.S. dollars having the
Index Maturity specified on the face hereof are offered at approximately
11:00 A.M., London time, on that LIBOR Interest Determination Date by four
major banks in the London interbank market selected by the Calculation
Agent ("Reference Banks") to prime banks in the London interbank market
commencing on the second London Banking Day immediately following that
LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on that LIBOR Interest
Determination Date by three major banks in The City of New York selected by
the Calculation Agent for loans in U.S. dollars to leading European banks
having the Index Maturity specified on the face hereof commencing on the
second London
10
<PAGE>
Banking Day immediately following that LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction
in such market at such time; provided, however, that if the banks selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR with respect to such LIBOR Interest Determination Date will
be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If the Base Rate specified on the face hereof
is the Prime Rate, the Prime Rate with respect to this Note shall be determined
on each Interest Determination Date and shall be the rate set forth in H.15(519)
for such date opposite the caption "Bank Prime Loan." If such rate is not yet
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the rate published in the H.15 Daily Update under the
heading "Bank Prime Loan". If such rate is not yet published in either H.15(519)
or H.15 Daily Update prior to 3:00 P.M., on the Calculation Date pertaining to
such Interest Determination Date, the Prime Rate for such Interest Determination
Date will be the arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME 1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME 1 Page on such
Interest Determination Date, or, if fewer than four such rates appear on the
Reuters Screen USPRIME 1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than four quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates of at least three major banks in
The City of New York selected by the Calculation Agent, after consultation with
the Company, to quote such rate or rates; provided, however, that if the
substitute banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate for such Interest Reset Period will
be the Prime Rate in effect for the immediately preceding Interest Reset Period
(or, if there is no such Interest Reset Period, the Initial Interest Rate).
"Reuters Screen USPRIME 1 Page" means the display designated as Page "USPRIME 1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME 1 Page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Determination of Treasury Rate. If the Base Rate specified on the face
hereof is the Treasury Rate, the Treasury Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate for the
auction held on such date of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as that rate
appears under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc., or any other successor service, on page 56 or any successor to such page
("Telerate Page 56") or page 57 or any successor to such page ("Telerate Page
57"). If such rate is not published on Telerate Page 56 or Telerate Page 57 by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the Treasury Rate will be the bond equivalent
yield of the rate for the applicable Treasury Bills as published in H.15 Daily
Update under the caption "U.S. Government
11
<PAGE>
Securities/Treasury Bills/Auction High" or if not so published by 3:00 p.m., New
York City time, on such Calculation Date, the bond equivalent yield of the
auction rate of the applicable Treasury Bills announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the Index Maturity specified on the face hereof are not
announced by the United States Department of Treasury, or if the auction is not
held, then the Treasury Rate will be the bond equivalent yield of the rate on
the applicable Interest Determination Date of Treasury Bills having the Index
Maturity specified on the face hereof published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market", or if such rate is
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the rate on such date as
published in H.15 Daily Update under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market". If the rate referred to in the
immediately preceding sentence is not so published by 3:00 p.m., New York City
time, on such Calculation Date, then the Treasury Rate will be calculated by the
Calculation Agent as the bond equivalent yield of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
on the face hereof; provided, however, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, the
Treasury Rate for such Interest Reset Date will be the same as the Treasury Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable thereon shall be the Initial
Interest Rate).
Determination of CMT Rate. If the Base Rate specified on the face hereof is
the CMT Rate, the CMT Rate with respect to this Note shall be determined on each
Interest Determination Date and shall be the rate displayed for the Index
Maturity specified on the face hereof on the Designated CMT Telerate Page (as
defined below) under the caption ". . . Treasury Constant Maturities . . .
Federal Reserve Board Release H.15," under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7051, the rate on such Interest Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or is not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to the related Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary
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<PAGE>
market closing offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include
affiliates of the Issuer) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent, after consultation with the
Issuer, and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Notes quotations, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Issuer, and eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest quotation (or, in
the event of equality, one of the lowest)), for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100,000,000. If three or four (and
not five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the Calculation
Agent are quoting as described herein, the CMT Rate for such Interest Reset Date
will be the same as the CMT Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate). If two Treasury Notes with
an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the quotes for the Treasury note with the shorter remaining term to maturity
will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service specified on the face hereof (or any other page as may replace such page
on that service for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519)), for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified on the face
hereof, the Designated CMT Telerate Page shall be 7052, for the most recent
week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent shall
calculate the interest rate hereon in accordance with the foregoing on or before
each Calculation Date.
13
<PAGE>
At the request of the holder hereof, the Calculation Agent will provide to
the holder hereof the interest rate hereon then in effect and, if determined,
the interest rate that will become effective as of the next Interest Reset Date.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be; provided, however, that if
the Interest Reset Period with respect to this Note is daily or weekly, interest
payable on any Interest Payment Date, other than interest payable on any date on
which principal hereof is payable, will include interest accrued through and
including the Record Date next preceding the applicable Interest Payment Date.
Accrued interest hereon shall be an amount calculated by multiplying the face
amount hereof by an accrued interest factor. Such accrued interest factor shall
be computed by adding the interest factor calculated for each day in the period
for which interest is being paid. The interest factor for each such date shall
be computed by dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate or
LIBOR, as specified on the face hereof, or by the actual number of days in the
year if the Base Rate is the Treasury Rate or the CMT Rate, as specified on the
face hereof. All percentages resulting from any calculation of the rate of
interest on this Note will be rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point (.0000001), with five one-millionths of a
percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on this Note will be rounded to the nearest cent (with
one-half cent rounded upward). The interest rate in effect on any Interest Reset
Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate).
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, in denominations of
U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
14
<PAGE>
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal aggregate
principal amount having identical terms and provisions. All such exchanges and
registrations of transfer of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of, premium,
if any, or interest on, any series of debt securities issued under the Senior
Indenture, including the series of Senior Medium-Term Notes of which this Note
forms a part, or due to the default in the performance or breach of any other
covenant or warranty of the Issuer applicable to the debt securities of such
series but not applicable to all outstanding debt securities issued under the
Senior 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 (voting as a single class) may then declare the principal
of all debt securities of all such 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 the Senior Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy, insolvency and reorganization of
the Issuer, 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 the Senior Indenture 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 (or premium, if any) or interest on such debt securities) by the
holders of a majority in principal amount of the debt securities of all affected
series then outstanding.
15
<PAGE>
The Trustee also acts as trustee under a Senior Subordinated Indenture,
dated as of July 15, 1993, as amended (the "Senior Subordinated Indenture" and,
together with the Senior Indenture, the "Indentures"), between the Issuer and
the Trustee, with respect to certain other debt securities of the Issuer. The
Senior Indenture provides that, should a default occur with respect to either
the debt securities issued under the Senior Indenture or the debt securities
issued under the Senior Subordinated Indenture, the Trustee 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 Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then outstanding
and affected (voting as one class), to execute supplemental indentures adding
any provisions to or changing in any manner the rights of the holders of each
series so affected; provided that the Issuer and the Trustee may not, without
the consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such 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 or repayment thereof, or
change the currency of payment thereof, or impair or affect the rights of any
holder to institute suit for the payment thereof without the consent of the
holder of each debt security so affected; or (b) reduce the aforesaid percentage
in principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture, without the consent of the holders
of each debt security so affected.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
16
<PAGE>
No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place, and
rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.
17
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ______________________ Custodian ______________________
(Minor) (Cust)
Under Uniform Gifts to Minors Act ______________________________
(State)
Additional abbreviations may also be used though not in the above list.
_____________________
18
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated: _____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
19
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
______________________; and specify the denomination or denominations (which
shall not be less than the minimum authorized denomination) of the Notes to be
issued to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): ______________________.
Dated: ___________________________ ________________________________________
NOTICE: The signature on this Option to
Elect Repayment must correspond with the
name as written upon the face of the
within instrument in every particular
without alteration or enlargement.
20
<PAGE>
EXHIBIT 4.7
FACE OF SECURITY
Fixed Rate Senior Subordinated Note
REGISTERED REGISTERED
No. FXR U.S. $ [PRINCIPAL
AMOUNT]
CUSIP:*
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New
York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.*
THE CHARLES SCHWAB CORPORATION
SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
ORIGINAL INITIAL REDEMPTION INTEREST RATE:
ISSUE DATE: DATE:
MATURITY
INTEREST INITIAL REDEMPTION DATE:
ACCRUAL DATE: PERCENTAGE:
OPTIONAL
APPLICABILITY ANNUAL REDEMPTION REPAYMENT
OF ANNUAL PERCENTAGE DATE(S):
INTEREST REDUCTION:
PAYMENTS:
______________________
*Applies only if this Note is a Registered Global Security.
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to
, or registered assignees, the principal sum of U.S. $ , on
the Maturity Date specified above (except to the extent previously redeemed or
repaid) and to pay interest thereon at the Interest Rate per annum specified
above from the Interest Accrual Date specified above until the principal hereof
is paid or duly made available for payment (except as provided below),
semiannually in arrears on the first day of March and September in each year
(each such date an "Interest Payment Date") commencing on the Interest Payment
Date next succeeding the Interest Accrual Date specified above, and at maturity
(or on any redemption or repayment date); provided, however, that if the
-------- -------
Interest Accrual Date occurs between a Record Date, as defined below, and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that if this Note is subject to
-------- -------
"Annual Interest Payments," interest payments shall be made annually in arrears
and the term "Interest Payment Date" shall be deemed to mean the first day of
March in each year.
Interest on this Note will accrue from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including the
Interest Accrual Date, until the principal hereof has been paid or duly made
available for payment (except as provided below). The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
-------- -------
interest payable at maturity (or on any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are
2
<PAGE>
authorized or required by law or regulation to close in The City of New York.
Payment of the principal of this Note, any premium and the interest
due at maturity (or on any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be made
by check mailed to the address of the person entitled thereto as such address
shall appear in the Note register; provided, however, that if the registered
-------- -------
holder of this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date, such holder will be entitled to receive payments of interest, other than
interest due at maturity or on any date of redemption or repayment, by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Note to the
Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Subordinated Indenture, as
defined on the reverse hereof, or be valid or obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By __________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Senior Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By _____________________________
Authorized Officer
4
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Subordinated
Medium-Term Notes, Series A, having maturities more than nine months from the
date of issue (the "Notes") of the Issuer. The Notes are issuable under a
Senior Subordinated Indenture, dated as of July 15, 1993 (the "Senior
Subordinated Indenture"), between the Issuer and The Chase Manhattan Bank
(formerly Chemical Bank), as Trustee (the "Trustee," which term includes any
successor trustee under the Senior Subordinated Indenture), to which Senior
Subordinated Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities of the Issuer, the Trustee and holders of the Notes and
the terms upon which the Notes are, and are to be, authenticated and delivered.
The Issuer has appointed The Chase Manhattan Bank (formerly Chemical Bank) at
its corporate trust office in The City of New York as the paying agent (the
"Paying Agent," which term includes any additional or successor Paying Agent
appointed by the Issuer) with respect to the Notes. The terms of individual
Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Senior Subordinated
Indenture. To the extent not inconsistent herewith, the terms of the Senior
Subordinated Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless
otherwise provided on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or subject to repayment at the
option of the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption (except as
provided below). Notice of redemption shall be mailed, not less than 30 nor
more than
5
<PAGE>
60 days prior to the date fixed for redemption, to the registered holders of the
Notes designated for redemption at their addresses as the same shall appear on
the Note register, subject to all the conditions and provisions of the Senior
Subordinated Indenture. In the event of redemption of this Note in part only, a
new Note or Notes for the amount of the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment (except as
provided below). For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
--------
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the
event of repayment of this Note in part only, a new Note or Notes for the amount
of the unpaid portion hereof shall be issued in the name of the holder hereof
upon the cancellation hereof.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment
6
<PAGE>
date), as the case may be. Interest payments for this Note will be computed and
paid on the basis of a 360-day year of twelve 30-day months.
In the case where the Interest Payment Date or the Maturity Date (or
any redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
This Note and all other obligations of the Issuer hereunder will
constitute part of the senior subordinated debt of the Issuer, will be issued
under the Senior Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the Senior
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The Senior
Subordinated Indenture defines "Senior Indebtedness" as the principal of and
premium, if any, and interest on (a) indebtedness of the Issuer, whether
outstanding on the date of the Senior Subordinated Indenture or thereafter
created, that is (i) for money borrowed by the Issuer (including, without
limitation, capitalized lease obligations), (ii) for money borrowed by others
and guaranteed, directly or indirectly, by the Issuer or (iii) constituting
purchase money indebtedness, or indebtedness secured by property at the time of
the acquisition of such property by the Issuer, for the payment of which the
Issuer 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 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 Notes and/or it is expressly provided that
such indebtedness is itself subordinated to any other indebtedness of the
Issuer. 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 Issuer to a
7
<PAGE>
subsidiary of the Issuer for money borrowed or advances from a subsidiary of the
Issuer or (ii) the Notes.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the
Trustee will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
-------- -------
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized denominations of
equal aggregate principal amount having identical terms and provisions. All
such exchanges and registrations of transfer of Notes will be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge in connection therewith. All Notes surrendered for exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof
8
<PAGE>
(together with the indemnity hereinafter referred to and such other documents or
proof as may be required in the premises) shall be delivered to the Trustee, a
new Note of like tenor will be issued by the Issuer in exchange for the Note so
mutilated or defaced, or in lieu of the Note so destroyed or lost or stolen,
but, in the case of any destroyed or lost or stolen Note, only upon receipt of
evidence satisfactory to the Trustee and the Issuer that such Note was destroyed
or lost or stolen and, if required, upon receipt also of indemnity satisfactory
to each of them. All expenses and reasonable charges associated with procuring
such indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed, lost
or stolen.
The Senior Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Senior Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Senior Subordinated Indenture, including the series
of Senior Subordinated Medium-Term Notes of which this Note forms a part, or due
to the default in the performance or breach of any other covenant or warranty of
the Issuer applicable to the debt securities of such series but not applicable
to all outstanding debt securities issued under the Senior Subordinated
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 (voting as a single class) may then declare the principal of all
debt securities of all such 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 the Senior
Subordinated Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, 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 the Senior Subordinated Indenture
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 (or premium,
if any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then outstanding.
9
<PAGE>
The Trustee also acts as trustee under a Senior Indenture, dated as of
July 15, 1993, as amended (the "Senior Indenture" and, together with the Senior
Subordinated Indenture, the "Indentures"), between the Issuer and the Trustee,
with respect to certain other debt securities of the Issuer. The Senior
Subordinated Indenture provides that, should a default occur with respect to
either the debt securities issued under the Senior Subordinated Indenture or the
debt securities issued under the Senior Indenture, the Trustee 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 Senior Subordinated Indenture permits the Issuer and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the debt securities of all series issued under the Senior
Subordinated Indenture then outstanding and affected (voting as one class), to
execute supplemental indentures adding any provisions to or changing in any
manner the rights of the holders of each series so affected; provided that the
--------
Issuer and the Trustee may not, without the consent of the holder of each
outstanding debt security affected thereby, (a) extend the final maturity of any
such 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 or repayment thereof, or change the currency of payment thereof,
or impair or affect the rights of any holder to institute suit for the payment
thereof without the consent of the holder of each debt security so affected; or
(b) reduce the aforesaid percentage in principal amount of debt securities the
consent of the holders of which is required for any such supplemental indenture,
without the consent of the holders of each debt security so affected; provided,
--------
however, that neither this Note nor the Senior Subordinated Indenture may be
- -------
amended to alter the subordination provisions hereof or thereof without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the
10
<PAGE>
Issuer shall keep the Trustee advised of the names and locations of such
agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Note.
Prior to due presentment of this Note for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
11
<PAGE>
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior
Subordinated Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Senior Subordinated Indenture.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-...........Custodian..............
(Cust) (Minor)
Under Uniform Gifts to Minors Act...................
(State)
Additional abbreviations may also be used though not in the above list.
__________
13
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
___________________________________
________________________________________________________________________________
________________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
________________________________________________________________________________
constituting and appointing such person attorney to transfer
________________________________________________________________________________
such note on the books of the Issuer, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
__________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid):
____________________________.
Dated:_____________ _______________________________
NOTICE: The signature on this Option to
Elect Repayment must correspond with the
name as written upon the face of the
within instrument in every particular
without alteration or enlargement.
15
<PAGE>
EXHIBIT 4.8
FACE OF SECURITY
Floating Rate Senior Subordinated Note
REGISTERED REGISTERED
No. FLR [PRINCIPAL AMOUNT]
CUSIP:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.*
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
- --------------------------------------------------------------------------------
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
- --------------------------------------------------------------------------------
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT DATE(S):
- --------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- --------------------------------------------------------------------------------
ALTERNATE RATE EVENT INITIAL INTEREST RESET INTEREST RESET PERIOD:
SPREAD: DATE:
- --------------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATES:
- --------------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- --------------------------------------------------------------------------------
INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
- --------------------------------------------------------------------------------
EXCHANGE RATE AGENT: INITIAL REDEMPTION TOTAL AMOUNT OF OID:
PERCENTAGE:
- --------------------------------------------------------------------------------
INDEX CURRENCY: ANNUAL REDEMPTION ORIGINAL YIELD TO
PERCENTAGE REDUCTION: MATURITY:
- --------------------------------------------------------------------------------
OTHER PROVISIONS: OPTIONAL REPAYMENT INITIAL ACCRUAL PERIOD OID:
DATE(S):
- --------------------------------------------------------------------------------
DESIGNATED CMT TELERATE DESIGNATED CMT MATURITY
PAGE: INDEX:
================================================================================
The Charles Schwab Corporation, a Delaware corporation (together with its
successors and assigns, the "Issuer"), for value received, hereby promises to
pay to , or registered assignees, the
principal sum of U.S. $ on the Maturity Date specified
above (except to the extent redeemed or repaid prior to the Maturity Date) and
to pay interest thereon, from the Interest Accrual Date specified above at a
rate per annum equal to the Initial Interest Rate specified above until the
Initial Interest Reset Date specified above, and thereafter at a rate per annum
determined in accordance with the provisions specified on the reverse hereof
until the principal hereof is paid or duly made available for payment. The
Issuer will pay interest in arrears monthly, quarterly, semiannually or annually
as specified above as the Interest Payment Period on each Interest Payment Date
(as specified above), commencing with the first Interest Payment Date next
succeeding the Interest Accrual Date specified above, and on the Maturity Date
(or any redemption or repayment date); provided, however, that if the Interest
Accrual Date occurs between a Record Date, as defined below, and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date succeeding the Interest Accrual Date to the registered
holder of this Note on the Record Date with respect to such second Interest
Payment Date; and provided, further, that, subject to the next succeeding
sentence, if an Interest Payment Date would fall on a day that is not a Business
Day, as defined on the reverse hereof, such Interest Payment Date shall be
postponed to the following day that is a Business Day,
2
<PAGE>
except that if the Base Rate specified above is LIBOR and such next Business Day
falls in the next calendar month, the Interest Payment Date shall be the
immediately preceding day that is a Business Day. If the Maturity Date or
redemption or repayment date would fall on a day that is not a Business Day, the
payment of principal and interest will be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and after
such Maturity Date or redemption or repayment date, as the case may be.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from the Interest Accrual Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable on the Maturity Date (or any redemption or repayment date) will
be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest due at
the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or any date of redemption or repayment, will be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Note register; provided, however, that if the registered holder of
this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or more in
aggregate principal amount of Notes having the same Interest Payment Date, such
holder will be entitled to receive payments of interest, other than interest due
at maturity or any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Paying Agent in writing not less than 15 calendar days prior to
the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place, including, without limitation, the
provisions relating to the subordination of this Note to the Issuer's Senior
Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Subordinated Indenture, as
defined on the reverse hereof, or be valid or obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By ______________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes
referred to in the within-
mentioned Senior Subordinated
Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By ______________________________
Authorized Officer
4
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Subordinated Medium-
Term Notes, Series A, having maturities more than nine months from the date of
issue (the "Notes") of the Issuer. The Notes are issuable under a Senior
Subordinated Indenture, dated as of July 15, 1993 (the "Senior Subordinated
Indenture"), between the Issuer and The Chase Manhattan Bank (formerly Chemical
Bank), as Trustee (the "Trustee," which term includes any successor trustee
under the Senior Subordinated Indenture), to which Senior Subordinated Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities of the
Issuer, the Trustee and holders of the Notes and the terms upon which the Notes
are, and are to be, authenticated and delivered. The Issuer has appointed The
Chase Manhattan Bank (formerly Chemical Bank) at its corporate trust office in
The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Subordinated Indenture. To the extent
not inconsistent herewith, the terms of the Senior Subordinated Indenture are
hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed,
not less than 30 nor more than 60 days prior to the date fixed for redemption,
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register, subject to all the
conditions and provisions of the Senior Subordinated Indenture. In the event of
redemption of this Note in part only, a new Note or Notes for the amount of the
unredeemed portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment. For this Note
to be repaid at the option of the holder hereof, the Paying Agent must receive
at its corporate trust office in the Borough of Manhattan, The City of New York,
at least 15
5
<PAGE>
but not more than 30 days prior to the date of repayment, (i) this Note with the
form entitled "Option to Elect Repayment" below duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or a trust company in the United States setting forth the name
of the holder of this Note, the principal amount hereof, the certificate number
of this Note or a description of this Note's tenor and terms, the principal
amount hereof to be repaid, a statement that the option to elect repayment is
being exercised thereby and a guarantee that this Note, together with the form
entitled "Option to Elect Repayment" duly completed, will be received by the
Paying Agent not later than the fifth Business Day after the date of such
telegram, telex, facsimile transmission or letter; provided, that such telegram,
telex, facsimile transmission or letter shall only be effective if this Note and
form duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of such repayment option by the holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note or Notes for the
amount of the unpaid portion hereof shall be issued in the name of the holder
hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in accordance with the
applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Interest Accrual Date to the Initial Interest Reset Date will be the
Initial Interest Rate and (ii) the interest rate in effect hereon for the 10
days immediately prior to the Maturity Date hereof (or, with respect to any
principal amount to be redeemed or repaid, any redemption or repayment date)
shall be that in effect on the tenth calendar day preceding the Maturity Date
hereof or such date of redemption or repayment, as the case may be. If any
Interest Reset Date would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding day that is a
Business Day, except that if the Base Rate specified on the face hereof is LIBOR
and such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and, with
respect to Notes bearing interest calculated by reference to LIBOR, is also a
London Banking Day (as defined below).
The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the CD Rate, Commercial Paper
Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the second Business
Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to LIBOR shall be the second London Banking Day preceding such
Interest Reset Date. As used herein, "London Banking Day" means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market. The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the Treasury Rate shall be
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the day of the week in which such Interest Reset Date falls on which Treasury
bills normally would be auctioned; provided, however, that if as a result of a
legal holiday an auction is held on the Friday of the week preceding such
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and provided, further, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the first
Business Day following the date of such auction.
The "Calculation Date" pertaining to any Interest Determination Date will
be the earlier of (i) the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business Day or
(ii) the Business Day preceeding the applicable Interest Payment Date or
maturity, as the case may be.
Determination of CD Rate. If the Base Rate specified on the face hereof is
the CD Rate, the CD Rate with respect to this Note shall be determined on each
Interest Determination Date and shall be the rate on such date for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof set forth in the daily update of H.15(519)
available through the world wide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update or any
successor site or publication ("H.15 Daily Update"). If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such Interest Determination Date will be calculated by the
Calculation Agent referred to on the face hereof and will be the arithmetic mean
of the secondary market offered rates as of 10:00 A.M., New York City time, on
such Interest Determination Date for certificates of deposit in an amount that
is representative for a single transaction in that market at that time with a
remaining maturity closest to the Index Maturity specified on the face hereof of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate specified on the
face hereof is the Commercial Paper Rate, the Commercial Paper Rate with respect
to this Note shall be determined on each Interest Determination Date and shall
be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial Paper-
Nonfinancial," or if not so published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the
Commercial Paper Rate shall be the Money Market Yield of
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the rate on such Interest Determination Date for commercial paper of the Index
Maturity specified on the face hereof as published in the H.15 Daily Update
under the heading "Commercial Paper-Nonfinancial." If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers in commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the Index
Maturity specified on the face hereof, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = _________ x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate specified on the face
hereof is the Federal Funds Rate, the Federal Funds Rate with respect to this
Note shall be determined on each Interest Determination Date and shall be the
rate on such date for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)," as displayed on Bridge Telerate, Inc., or any
successor service, on page 120 or any other page as may replace the applicable
page on that service, or, if not so published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Federal Funds Rate will be the rate on such Interest Determination Date as
published in the H.15 Daily Update under the heading "Federal Funds/Effective
Rate." If neither of such rates is published by 3:00 P.M., New York City time,
on such Calculation Date, the Federal Funds Rate for such Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the rates for the last transaction in overnight Federal funds as of 9:00
A.M., New York City time, on such Interest Determination Date arranged by three
leading brokers in Federal funds transactions in The City of New York selected
by the Calculation Agent, after consultation with the Company; provided,
however, that if the brokers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable hereon shall be the Initial Interest
Rate).
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Determination of LIBOR. If the Base Rate specified on the face hereof is
LIBOR, LIBOR with respect to this Note shall be determined as follows:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will
be, as specified on the face hereof, either: (a) the arithmetic mean of the
offered rates for deposits in U.S. dollars having the Index Maturity
specified on the face hereof, commencing on the second London Banking Day
immediately following the LIBOR Interest Determination Date, that appear on
the Reuters Screen LIBO Page as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date, if at least two such offered rates appear on
the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for
deposits in U.S. dollars having the Index Maturity specified on the face
hereof, commencing on the second London Banking Day immediately following
that LIBOR Interest Determination Date, that appears on the Telerate Page
3750 as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified on the face hereof, LIBOR will be determined as if
LIBOR Telerate had been specified. If fewer than two offered rates appear
on the Reuters Screen LIBO Page, or if no rate appears on the Telerate Page
3750, as applicable, LIBOR in respect of that LIBOR Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page, as
specified in (i)(a) above, or on which no rate appears on Telerate Page
3750, as specified in (i)(b) above, as applicable, LIBOR will be determined
on the basis of the rates at which deposits in U.S. dollars having the
Index Maturity specified on the face hereof are offered at approximately
11:00 A.M., London time, on that LIBOR Interest Determination Date by four
major banks in the London interbank market selected by the Calculation
Agent ("Reference Banks") to prime banks in the London interbank market
commencing on the second London Banking Day immediately following that
LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on that LIBOR Interest
Determination Date by three major banks in The City of New York selected by
the Calculation Agent for loans in U.S. dollars to leading European banks
having the Index Maturity specified on the face hereof, commencing on the
second London
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Banking Day immediately following that LIBOR Interest Determination Date and
in a principal amount that is representative for a single transaction in such
market at such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR with respect to such LIBOR Interest Determination Date will be
the rate of LIBOR in effect on such date.
Determination of Prime Rate. If the Base Rate specified on the face hereof is
the Prime Rate, the Prime Rate with respect to this Note shall be determined on
each Interest Determination Date and shall be the rate set forth in H.15(519)
for such date opposite the caption "Bank Prime Loan." If such rate is not yet
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the rate published in the H.15 Daily Update under the
heading "Bank Prime Loan". If such rate is not yet published in either H.15(519)
or H.15 Daily Update prior to 3:00 P.M., on the Calculation Date pertaining to
such Interest Determination Date, the Prime Rate for such Interest Determination
Date will be the arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME 1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME 1 Page on such
Interest Determination Date, or, if fewer than four such rates appear on the
Reuters Screen USPRIME 1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than four quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates of at least three major banks in
The City of New York selected by the Calculation Agent, after consultation with
the Company, to quote such rate or rates; provided, however, that if the
substitute banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate for such Interest Reset Period will
be the Prime Rate in effect for the immediately preceding Interest Reset Period
(or, if there is no such Interest Reset Period, the Initial Interest Rate).
"Reuters Screen USPRIME 1 Page" means the display designated as Page "USPRIME 1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME 1 Page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
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Determination of Treasury Rate. If the Base Rate specified on the face hereof
is the Treasury Rate, the Treasury Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate for the
auction held on such date of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as that rate
appears under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc., or any other successor service, on page 56 or any successor to such page
("Telerate Page 56") or page 57 or any successor to such page ("Telerate Page
57"). If such rate is not published on Telerate Page 56 or Telerate Page 57 by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the Treasury Rate will be the bond equivalent
yield of the rate for the applicable Treasury Bills as published in H.15 Daily
Update under the caption "U.S. Government Securities/Treasury Bills/Auction
High" or if not so published by 3:00 P.M., New York City time, on such
Calculation Date, the bond equivalent yield of the auction rate of the
applicable Treasury Bills announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury Bills having
the Index Maturity specified on the face hereof are not announced by the United
States Department of Treasury, or if the auction is not held, then the Treasury
Rate will be the bond equivalent yield of the rate on the applicable Interest
Determination Date of Treasury Bills having the Index Maturity specified on the
face hereof published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market", or if such rate is not so published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the rate on such date as published in H.15 Daily
Update under the caption "U.S. Government Securities/Treasury Bills/Secondary
Market". If the rate referred to in the immediately preceding sentence is not so
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Treasury Rate will be calculated by the Calculation Agent as the bond equivalent
yield of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified on the face hereof;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on the face hereof is
the CMT Rate, the CMT Rate with respect to this Note shall be determined on each
Interest Determination Date and shall be the rate displayed for the Index
Maturity specified on the face hereof on the Designated CMT Telerate Page (as
defined below) under the Caption ". . . Treasury Constant Maturities . . .
Federal Reserve Board Release H.15" under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7051, the rate on such Interest Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or
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is not published by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate for such Interest Determination Date will be such
Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the
Interest Determination Date with respect to the related Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519). If such
information is not provided by 3:00 p.m., New York time, on the related
Calculation Date, then the CMT Rate for the Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City of
New York (which may include affiliates of the Issuer) selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent, after consultation with the Issuer, and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT Maturity
Index and remaining term to maturity of not less than such Designated CMT
Maturity Index minus one year. If the Calculation Agent cannot obtain three such
Treasury Notes quotations, the CMT Rate for such Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination Date
of three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent, after consultation with the Issuer,
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the same as
the CMT Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate). If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service specified on the face hereof (or any other page as may replace such page
on that service for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519)), for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified on the face
hereof, the Designated CMT Telerate Page shall be 7052, for the most recent
week.
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"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, specified on the face hereof. The Calculation Agent shall calculate the
interest rate hereon in accordance with the foregoing on or before each
Calculation Date.
At the request of the holder hereof, the Calculation Agent will provide to the
holder hereof the interest rate hereon then in effect and, if determined, the
interest rate that will become effective as of the next Interest Reset Date.
Interest payments on this Note will include interest accrued to but excluding
the Interest Payment Dates or the Maturity Date (or any earlier redemption or
repayment date), as the case may be; provided, however, that if the Interest
Reset Period with respect to this Note is daily or weekly, interest payable on
any Interest Payment Date, other than interest payable on any date on which
principal hereof is payable, will include interest accrued through and including
the Record Date next preceding the applicable Interest Payment Date. Accrued
interest hereon shall be an amount calculated by multiplying the face amount
hereof by an accrued interest factor. Such accrued interest factor shall be
computed by adding the interest factor calculated for each day in the period for
which interest is being paid. The interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the Base
Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate or LIBOR,
as specified on the face hereof, or by the actual number of days in the year if
the Base Rate is the Treasury Rate or the CMT Rate, as specified on the face
hereof. All percentages resulting from any calculation of the rate of interest
on this Note will be rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point (.0000001), with five one-millionths of a
percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on this Note will be rounded to the nearest cent (with
one-half cent rounded upward). The interest rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder will constitute
part of the senior subordinated debt of the Issuer, will be issued under the
Senior Subordinated Indenture and will be subordinate and junior in right of
payment, to the extent and in the manner set forth in the Senior Subordinated
Indenture, to all "Senior Indebtedness" of the Issuer. The Senior Subordinated
Indenture defines "Senior Indebtedness" as the principal of and premium, if any,
and interest on (a) indebtedness of the Issuer, whether outstanding on the date
of the Senior Subordinated Indenture or thereafter created, that is (i) for
money borrowed by the Issuer (including, without limitation, capitalized lease
obligations), (ii) for money borrowed by others and guaranteed, directly or
indirectly, by the Issuer or (iii) constituting purchase money indebtedness, or
indebtedness secured by property at the time of the acquisition of such property
by the Issuer, for the payment of which the Issuer is
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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 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 Notes and/or it is expressly provided that such indebtedness
is itself subordinated to any other indebtedness of the Issuer. 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 Issuer to a subsidiary of the Issuer for money borrowed or
advances from a subsidiary of the Issuer or (ii) the Notes.
This Note, and any Note or Notes issued upon transfer or exchange hereof, is
issuable only in fully registered form, without coupons, in denominations of
U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee will
maintain at its office in The City of New York a register for the registration
and registration of transfer of Notes. The transfer of this Note may be
registered at the aforesaid office of the Trustee by surrendering this Note for
cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized denominations of
equal aggregate principal amount having identical terms and provisions. All
such exchanges and registrations of transfer of Notes will be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge in connection therewith. All Notes surrendered for exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be destroyed,
lost or stolen and such Note or evidence of the loss, theft or destruction
thereof (together with the indemnity hereinafter referred to and such other
documents or proof as may be required in the premises) shall
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be delivered to the Trustee, a new Note of like tenor will be issued by the
Issuer in exchange for the Note so mutilated or defaced, or in lieu of the Note
so destroyed or lost or stolen, but, in the case of any destroyed or lost or
stolen Note, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that such Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.
The Senior Subordinated Indenture provides that, (a) if an Event of Default
(as defined in the Senior Subordinated Indenture) due to the default in payment
of principal of, premium, if any, or interest on, any series of debt securities
issued under the Senior Subordinated Indenture, including the series of Senior
Subordinated Medium-Term Notes of which this Note forms a part, or due to the
default in the performance or breach of any other covenant or warranty of the
Issuer applicable to the debt securities of such series but not applicable to
all outstanding debt securities issued under the Senior Subordinated 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
(voting as a single class) may then declare the principal of all debt securities
of all such 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 the Senior Subordinated Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy, insolvency and reorganization of
the Issuer, 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 the Senior Subordinated Indenture 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 (or premium, if any) or interest on
such debt securities) by the holders of a majority in principal amount of the
debt securities of all affected series then outstanding.
The Trustee also acts as trustee under a Senior Indenture, dated as of July
15, 1993, as amended (the "Senior Indenture" and, together with the Senior
Subordinated Indenture, the "Indentures"), between the Issuer and the Trustee,
with respect to certain other debt securities of the Issuer. The Senior
Subordinated Indenture provides that, should a default occur with respect to
either the debt securities issued under the Senior Subordinated Indenture or the
debt securities issued under the Senior Indenture, the Trustee 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 Senior Subordinated Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the debt securities of all series issued under the Senior Subordinated
Indenture then outstanding and affected (voting as one class), to execute
supplemental indentures adding any provisions to or changing in any manner the
rights of the holders of each series so affected; provided that the Issuer and
the Trustee may not, without the consent of the holder of each outstanding debt
security affected thereby, (a) extend the final maturity
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of any such 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 or repayment thereof, or change the currency of payment
thereof, or impair or affect the rights of any holder to institute suit for the
payment thereof without the consent of the holder of each debt security so
affected; or (b) reduce the aforesaid percentage in principal amount of debt
securities the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of each debt security
so affected; provided, however, that neither this Note nor the Senior
Subordinated Indenture may be amended to alter the subordination provisions
hereof or thereof without the written consent of each holder of Senior
Indebtedness then outstanding that would be adversely affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Subordinated Indenture shall alter
or impair the obligation of the Issuer, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if any,
or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Subordinated Indenture
or any indenture supplemental thereto, against any incorporator,
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shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed in accordance
with, the laws of the State of California.
All terms used in this Note which are defined in the Senior Subordinated
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Senior Subordinated Indenture.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - _________________ Custodian __________________
(Minor) (Cust)
Under Uniform Gifts to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:___________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
______________________; and specify the denomination or denominations (which
shall not be less than the minimum authorized denomination) of the Notes to be
issued to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): ______________________.
Dated:____________________ ____________________________________________
NOTICE: The signature on this Option to
Elect Repayment must correspond with the
name as written upon the face of the within
instrument in every particular without
alteration or enlargement.
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