Exhibit 1.3
THE CHARLES SCHWAB CORPORATION
MEDIUM TERM NOTES
DISTRIBUTION AGREEMENT
May 19, 2000
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, as amended (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, as amended (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.
Subject to the terms and conditions stated herein, and subject to
the reservation by the Company of the right to appoint additional Agents that
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 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
warrants to and agrees with each Agent as of the Commencement Date (as
hereinafter defined), 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 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 hereinafter 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, fraudulent transfer or conveyance,
reorganization, moratorium 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 Indenture and delivered to and duly paid for by the purchasers
thereof, the Notes will be 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 enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization,
moratorium or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h)The 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 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 and territories in connection
with the offer and sale of the Notes; provided, however, that no representation
is made as to whether the purchase of the Notes 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.
(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.
2. Solicitations as Agent; Purchases as Principal.
(a)Solicitations as Agent. In connection with an Agent's actions
as agent hereunder, such Agent agrees to use reasonable efforts to solicit
offers to purchase Notes upon the terms and conditions set forth in the
Prospectus as then amended or supplemented.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase Notes. 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). If the Registration Statement or Prospectus is
amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the Notes
or for a change the Agents deem to be immaterial), no Agent shall be required to
resume soliciting offers to purchase Notes until the Company has delivered such
certificates, opinions and letters as such Agent may request.
The Company agrees to pay to each Agent, as consideration for the
sale of each Note resulting from a solicitation made or an offer to purchase
received by such Agent, a commission in the form of a discount from the purchase
price of such Note equal to the percentage set forth below of the purchase price
of such Note:
Term of Note Commission Rate
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, which may be 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.
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
perform their 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 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 or (ii) the first date on which the Company accepts any
offer by an Agent to purchase Notes pursuant to a Terms Agreement. The date of
delivery of such documents is referred to herein as the "Commencement Date."
(e) Obligations Several. The Company acknowledges that the
obligations of the Agents under this Agreement are several and not joint.
3. Agreements. The Company agrees with each Agent that:
(a)Prior to the termination of the offering of the Notes pursuant
to this Agreement or any Terms Agreement, the Company will not file any
Prospectus Supplement relating to the Notes or any amendment to the Registration
Statement unless the Company has previously furnished to the Agents copies
thereof for their review and will not file any such proposed supplement or
amendment to which the Agents reasonably object; provided, however, that (i) the
foregoing requirement shall not apply to any of the Company's periodic filings
with the Commission required to be filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, copies of which filings the Company will cause to be
delivered to the Agents promptly after being transmitted for filing with the
Commission and (ii) any Prospectus Supplement that merely sets forth the terms
or a description of particular Notes shall only be reviewed and approved by the
Agent or Agents offering such Notes. Subject to the foregoing sentence, the
Company will promptly cause each Prospectus Supplement to be filed with or
transmitted for filing to the Commission in accordance with Rule 424(b) under
the Securities Act. The Company will promptly advise the Agents (i) of the
filing of any amendment or supplement to the Basic Prospectus (except that
notice of the filing of an amendment or supplement to the Basic Prospectus that
merely sets forth the terms or a description of particular Notes shall only be
given to the Agent or Agents offering such Notes), (ii) of the filing and
effectiveness of any amendment to the Registration Statement, (iii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Basic Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Notes for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use 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 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
conformed 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 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 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:
(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:
(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 or court
decisions 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 and
established in conformity with the provisions of the relevant
Indenture and, if such Note is duly executed by the Company
and completed and authenticated by the Trustee in accordance
with the terms of the relevant Indenture and delivered to and
duly 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 or other similar laws
or court decisions 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 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 or articles of incorporation or by-laws of the
Company or Charles Schwab, or constitute a default under the
Revolving Credit Facility, consisting of (i) a Credit
Agreement (364-Day Commitment), between the Company, Bank of
America National Trust and Savings Association, as
Administrative Agent, and the banks listed therein, as
lenders, dated as of June 25, 1999, and the Promissory Notes
issued pursuant thereto, and (ii) nine separate but
substantially identical Credit Agreement (3-Year Commitment),
between the Company and each of the banks listed in those
Credit Agreements, each dated as of June 26, 1998, as amended,
and the 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 for which indebtedness 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 Notes 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
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 that the statements in the
Prospectus, as amended or supplemented, under the caption
"Certain United States Federal Income Tax Consequences" are
accurate in all material respects.
The letter containing such opinion shall also contain a
statement that although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Prospectus and such counsel makes no
representation that it has independently verified the accuracy,
completeness or fairness of such statements (except as to those
matters stated in subparagraphs (F) and (G) above), such counsel
has no reason to believe (1) that any 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), did not comply 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) that
(except for the financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief, 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 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) 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) do not comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (4) that (except for
the 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 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.
(ii) The opinion, dated as of such date, of the Office of
Corporate 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 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 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 and (2) no
facts have come to the attention of such counsel to lead them
to believe that (except for the 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 the last subparagraph of 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 the last
subparagraph 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 respect to
clauses (2), (3) and (4) of the last subparagraph 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 Corporate 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.
(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 Office of Corporate 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 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 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 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 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 11
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 120-30, 101 Montgomery Street, 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 120-30, 101 Montgomery Street, 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.
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.
<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/ Christopher V. Dodds
--------------------------------
Name: Christopher V. Dodds
Title: Executive Vice President, Chief Financial Officer
The foregoing Agreement
is hereby confirmed
and accepted as of the
date first above written.
MORGAN STANLEY & CO. INCORPORATED
By /s/ Harold J. Hendershot, III
---------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By /s/ Goldman, Sachs & Co.
---------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Julie A. Keogh
---------------------------------
Name: JULIE A. KEOGH
Title: AUTHORIZED SIGNATORY
CHARLES SCHWAB & CO., INC.
By /S/ Christopher V. Dodds
----------------------------------
Name: Christopher V. Dodds
Title: Executive Vice President, Chief Financial Officer
<PAGE>
EXHIBIT A
THE CHARLES SCHWAB CORPORATION
MEDIUM-TERM NOTES, SERIES A
TERMS AGREEMENT
, 200
--------------- --
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, California 94104
Attention:
Re: Distribution Agreement dated , 2000
----------- ----
(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.
All Notes: Fixed Rate Notes: Floating Notes:
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:
Initial Redemption
Date:
Initial Redemption
Percentage
Reduction:
Annual Redemption
Percentage
Reduction:
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.]**
-------------------------------------------
** Delete if the transaction will not be syndicated.
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.
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:
<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 , 2000 (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, as amended (the
"Senior Debt Indenture"), between the Company and The Chase Manhattan Bank
(formerly Chemical Bank) ("Chase"), as trustee. The Senior Subordinated Notes
will be issued pursuant to the provisions of a senior subordinated indenture
dated as of July 15, 1993, as amended (the "Senior Subordinated Debt
Indenture"), between the Company and Chase, as 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.
Chase will be the Registrar, Calculation Agent, Authenticating
Agent and Paying Agent for both the Senior Notes and the Senior Subordinated
Notes and will perform the duties specified herein. Each Note will be
represented by either a Global Security (as defined below) delivered to Chase,
as custodian for The Depository Trust Company ("DTC"), and recorded in the
book-entry system maintained by DTC (a "Book-Entry Note") or a certificate
delivered to the holder thereof or a person designated by such holder (a
"Certificated Note"). Except as set forth in the 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, Chase 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 Chase to DTC, dated as of August 3, 1993 (the "Letter of
Representation"), as amended, and a Medium-Term Note Certificate Agreement
between Chase and DTC, dated as of December 2, 1988 (the "MTN Certificate
Agreement") , and its obligations as a participant in DTC, including DTC's
Same-Day Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Company will
issue a single global security in fully registered form
without coupons (a "Global Security") representing up to
U.S. $200,000,000 principal amount of all such Notes that
have the same Original Issue Date, Maturity Date and
other terms. Each Global Security will be dated and
issued as of the date of its authentication by Chase.
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. Book-Entry Notes may be payable only in U.S.
dollars. No Global Security will represent any
Certificated Note.
Denominations: Book-Entry Notes will be issued in principal amounts of
U.S. $1,000 or any amount in excess thereof that is an
integral multiple of U.S. $1,000. Global Securities will
be denominated in principal amounts not in excess of U.S.
$200,000,000. If one or more Book-Entry Notes having an
aggregate principal amount in excess of $200,000,000
would, but for the preceding sentence, be represented by
a single Global Security, then one Global Security will
be issued to represent each U.S. $200,000,000 principal
amount of such Book-Entry Note or Notes and an additional
Global Security will be issued to represent any remaining
principal amount of such Book-Entry Note or Notes. In
such a case, each of the Global Securities representing
such Book-Entry Note or Notes shall be assigned the same
CUSIP number.
Preparation If any offer to purchase a Book-Entry Note is accepted by
of Pricing or on behalf of the Company, the Company will prepare a
Supplement: 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
Attn.: Medium-Term Note Trading Desk
Telephone: (212) 761-1322
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 Procedures with regard to each Book-Entry Note sold by
Procedures: 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 Book-Entry Note and of
the following settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed Rate Book-Entry Note, the
Interest Rate, whether such Note will pay
interest annually or 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 Chase 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 Chase and the relevant Agent of
such CUSIP number by telephone as soon as
practicable.
C. Chase 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 Chase.
D. Chase will complete and authenticate the Global
Security representing such Note.
E. DTC will credit such Note to Chase's participant
account at DTC.
F. Chase will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i)
debit such Note to Chase's participant account and
credit such Note to the relevant Agent's participant
account and (ii) debit such Agent's settlement
account and credit Chase'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 Chase to DTC that (a) the Global Security
representing such Book-Entry Note has been issued and
authenticated and (b) Chase 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. Chase 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 Chase 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, Chase will send to the Company a statement
setting forth the principal amount of Notes
outstanding as of that date under the Indentures
and setting forth a brief description of any sales
of which the Company has advised Chase 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 to
Timetable: a Terms Agreement and reasonably acceptable to Chase) 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 2:00 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, Chase, 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 immediately preceding the scheduled settlement date.
Failure to If Chase fails to enter an SDFS deliver order with
Settle: respect to a Book-Entry Note pursuant to Settlement
Procedure "F", Chase may deliver to DTC, through DTC's
Participant Terminal System, as soon as practicable a
withdrawal message instructing DTC to debit such Note to
Chase's participant account, provided that Chase'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, Chase
will mark such Global Security "cancelled," make
appropriate entries in Chase'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,
Chase 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,
Chase will deliver the withdrawal message and take the
related actions described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect.
In the event of a failure to settle with respect to
one or more, but not all, of the Book-Entry Notes to
have been represented by a Global Security, Chase will
provide, in accordancef 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.
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Chase 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 Chase. Each Certificated
Note will bear an Original Issue Date, which will be (i)
with respect to an original Certificated Note (or any
portion thereof), its original issuance date (which will
be the settlement date) and (ii) with respect to any
Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a Certificated
Note or in lieu of a destroyed, lost or stolen
Certificated Note, the original issuance date of the
predecessor Certificated Note, regardless of the date of
authentication of such subsequently issued Certificated
Note.
Preparation If any offer to purchase a Certificated Note is accepted
of Pricing by or on behalf of the Company, the Company will prepare
Supplement: 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 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 regard 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).
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 Chase 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 Chase 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 Chase:
1. Note with customer confirmation.
2. Stub One - For Chase.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. Chase 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 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, 3rd 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
Attn: Christopher V. Dodds
Telephone: (415)
------- ---
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.
F. Chase will send Stub Three to the Company by
first-class mail. Periodically, Chase 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 Chase 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 to
Timetable: a Terms Agreement and reasonably acceptable to Chase),
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 Chase by telephone and return
such Note to Chase. 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 Chase, 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, Chase will mark such
Note "cancelled," make appropriate entries in Chase's
records and send such Note to the Company.
