<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 23, 2000
THE CHARLES SCHWAB CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9700 94-3025021
- ---------------------------- ------------ ----------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
120 Kearny Street
San Francisco, California 94104
-------------------------------
(Address of principal executive offices)
(415) 627-7000
--------------
(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events. Attached hereto and incorporated herein by reference
------------
are (i) Distribution Agreement, dated May 19, 2000 by and among The Charles
Schwab Corporation (the "Company"), Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co., Credit Suisse First Boston Corporation, and Charles Schwab & Co.,
Inc., relating to the issuance and sale from time to time by the Company of up
to $750,000,000 aggregate public offering price of such Medium Term Notes
pursuant to Registration Statement No. 333-36410 (the "Offering"); and (ii)
forms of Senior and Senior Subordinated Medium-Term Notes, Series A, relating to
the Offering.
Item 7(c). Exhibits
--------
1.3 Distribution Agreement, dated May 19, 2000.
4.5 Form of Senior Medium-Term Note, Series A (Fixed Rate).
4.6 Form of Senior Medium-Term Note, Series A (Floating Rate).
4.7 Form of Senior Subordinated Medium-Term Note, Series A (Fixed
Rate).
4.8 Form of Senior Subordinated Medium-Term Note, Series A (Floating
Rate).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 23, 2000 THE CHARLES SCHWAB CORPORATION
By: /s/ Christopher V. Dodds
----------------------------
Name: Christopher V. Dodds
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
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.
<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
26
<PAGE>
Exhibit 4.5
FACE OF SECURITY
Fixed Rate Senior Note
REGISTERED REGISTERED
No. FXR U.S. $ [PRINCIPAL AMOUNT]
CUSIP:*
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.*
- ----------------------
1 Applies only if this Note is a Registered Global Security.
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
ORIGINAL INITIAL REDEMPTION INTEREST RATE:
ISSUE DATE: DATE:
MATURITY
INTEREST INITIAL REDEMPTION DATE:
ACCRUAL DATE: PERCENTAGE:
OPTIONAL
APPLICABILITY ANNUAL REDEMPTION REPAYMENT
OF ANNUAL PERCENTAGE DATE(S):
INTEREST REDUCTION:
PAYMENTS:
2
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to
, or registered assignees, the principal sum of U.S. $ , on the
Maturity Date specified above (except to the extent previously redeemed or
repaid) and to pay interest thereon at the Interest Rate per annum specified
above from the Interest Accrual Date specified above until the principal hereof
is paid or duly made available for payment (except as provided below),
semiannually in arrears on the first day of March and September in each year
(each such date an "Interest Payment Date") commencing on the Interest Payment
Date next succeeding the Interest Accrual Date specified above, and at maturity
(or on any redemption or repayment date); provided, however, that if the
Interest Accrual Date occurs between a Record Date, as defined below, and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that if this Note is subject to
"Annual Interest Payments," interest payments shall be made annually in arrears
and the term "Interest Payment Date" shall be deemed to mean the first day of
March in each year.
Interest on this Note will accrue from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including the
Interest Accrual Date, until the principal hereof has been paid or duly made
available for payment (except as provided below). The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable at maturity (or on any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York.
Payment of the principal of this Note, any premium and the interest due
at maturity (or on any redemption or repayment date) will be made in immediately
available funds upon surrender of this Note at the office or agency of the
Paying Agent, as defined on the reverse hereof, maintained for that purpose in
the Borough of Manhattan, The City of New York, or at such other
3
<PAGE>
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be made
by check mailed to the address of the person entitled thereto as such address
shall appear in the Note register; provided, however, that if the registered
holder of this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date, such holder will be entitled to receive payments of interest, other than
interest due at maturity or on any date of redemption or repayment, by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Indenture, as defined on
the reverse hereof, or be valid or obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED:
THE CHARLES SCHWAB CORPORATION
By ___________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE's CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Senior Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By _____________________________
Authorized Officer
5
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Medium-Term
Notes, Series A, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of July 15, 1993, as amended (the "Senior Indenture"), between the
Issuer and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee (the
"Trustee," which term includes any successor trustee under the Senior
Indenture), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed The Chase Manhattan Bank (formerly Chemical
Bank) at its corporate trust office in The City of New York as the paying agent
(the "Paying Agent," which term includes any additional or successor Paying
Agent appointed by the Issuer) with respect to the Notes. The terms of
individual Notes may vary with respect to interest rates, interest rate
formulas, issue dates, maturity dates, or otherwise, all as provided in the
Senior Indenture. To the extent not inconsistent herewith, the terms of the
Senior Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption (except as
provided below). Notice of redemption shall be mailed, not less than 30 nor more
than 60 days prior to the date fixed for redemption, to the registered holders
of the Notes designated for redemption at their addresses as the same shall
appear on the Note register, subject to all the conditions and provisions of the
Senior Indenture. In the event of redemption of this Note in part only, a new
Note or Notes for the amount of the unredeemed portion
6
<PAGE>
hereof shall be issued in the name of the holder hereof upon the cancellation
hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment (except as
provided below). For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Interest payments for this
Note will be computed and paid on the basis of a 360-day year of twelve 30-day
months.
In the case where the Interest Payment Date or the Maturity Date (or
any redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day
7
<PAGE>
with the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal aggregate
principal amount having identical terms and provisions. All such exchanges and
registrations of transfer of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
8
<PAGE>
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default (as
defined in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which this
Note forms a part, or due to the default in the performance or breach of any
other covenant or warranty of the Issuer applicable to the debt securities of
such series but not applicable to all outstanding debt securities issued under
the Senior Indenture shall have occurred and be continuing, either the Trustee
or the holders of not less than 25% in principal amount of the debt securities
of each affected series (voting as a single class) may then declare the
principal of all debt securities of all such series and interest accrued thereon
to be due and payable immediately and (b) if an Event of Default due to a
default in the performance of any other of the covenants or agreements in the
Senior Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Indenture then outstanding
(treated as one class) may declare the principal of all such debt securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal (or premium, if any) or
interest on such debt securities) by the holders of a majority in principal
amount of the debt securities of all affected series then outstanding.
9
<PAGE>
The Trustee also acts as trustee under a Senior Subordinated Indenture,
dated as of July 15, 1993, as amended (the "Senior Subordinated Indenture" and,
together with the Senior Indenture, the "Indentures"), between the Issuer and
the Trustee, with respect to certain other debt securities of the Issuer. The
Senior Indenture provides that, should a default occur with respect to either
the debt securities issued under the Senior Indenture or the debt securities
issued under the Senior Subordinated Indenture, the Trustee would be required to
resign as trustee under one of the Indentures within 90 days of such default
unless such default were cured, duly waived or otherwise eliminated.
The Senior Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee may
not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the currency of payment thereof, or impair or
affect the rights of any holder to institute suit for the payment thereof
without the consent of the holder of each debt security so affected; or (b)
reduce the aforesaid percentage in principal amount of debt securities the
consent of the holders of which is required for any such supplemental indenture,
without the consent of the holders of each debt security so affected.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
10
<PAGE>
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.
11
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-._______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act_____________________________
(State)
Additional abbreviations may also be used though not in the above list.
----------
12
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- --------------------------------------------
- --------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably
- --------------------------------------------------------------------------------
constituting and appointing such person attorney to transfer
- --------------------------------------------------------------------------------
such note on the books of the Issuer, with full power of
- --------------------------------------------------------------------------------
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
13
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
__________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid):
- ----------------------------.
Dated:_____________ ___________________________________
NOTICE: The signature on this
Option to Elect Repayment must
correspond with the name as written
upon the face of the within
instrument in every particular
without alteration or enlargement.
14
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Exhibit 4.6
FACE OF SECURITY
Floating Rate Senior Note
REGISTERED REGISTERED
No. FLR U.S. $[principal amount]
CUSIP:*
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.*
- ------------------
* Applies only if this Note is a Registered Global Security.
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT DATE(S):
- -------------------------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- -------------------------------------------------------------------------------------------------
ALTERNATE RATE EVENT SPREAD: INITIAL INTEREST RESET DATE: INTEREST RESET PERIOD:
- -------------------------------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATE(S):
- -------------------------------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- -------------------------------------------------------------------------------------------------
INDEX CURRENCY: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
- -------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: INITIAL REDEMPTION PERCENTAGE: TOTAL AMOUNT OF OID:
- -------------------------------------------------------------------------------------------------
OTHER PROVISIONS: ANNUAL REDEMPTION PERCENTAGE ORIGINAL YIELD TO MATURITY:
REDUCTION:
- -------------------------------------------------------------------------------------------------
OPTIONAL REPAYMENT DATE(S): INITIAL ACCRUAL PERIOD OID:
- -------------------------------------------------------------------------------------------------
DESIGNATED CMT TELERATE PAGE:
- -------------------------------------------------------------------------------------------------
DESIGNATED CMT MATURITY INDEX:
=================================================================================================
</TABLE>
2
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to
, or registered assignees, the principal sum of U.S. $
, on the Maturity Date specified above (except to the extent redeemed or
repaid prior to the Maturity Date) and to pay interest thereon, from the
Interest Accrual Date specified above at a rate per annum equal to the Initial
Interest Rate specified above until the Initial Interest Reset Date specified
above, and thereafter at a rate per annum determined in accordance with the
provisions specified on the reverse hereof until the principal hereof is paid or
duly made available for payment. The Issuer will pay interest in arrears
monthly, quarterly, semiannually or annually as specified above as the Interest
Payment Period on each Interest Payment Date (as specified above), commencing
with the first Interest Payment Date next succeeding the Interest Accrual Date
specified above, and on the Maturity Date (or any redemption or repayment date);
provided, however, that if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Interest Accrual Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that,
subject to the next succeeding sentence, if an Interest Payment Date would fall
on a day that is not a Business Day, as defined on the reverse hereof, such
Interest Payment Date shall be postponed to the following day that is a Business
Day, except that if the Base Rate specified above is LIBOR and such next
Business Day falls in the next calendar month, the Interest Payment Date shall
be the immediately preceding day that is a Business Day. If the Maturity Date or
redemption or repayment date would fall on a day that is not a Business Day, the
payment of principal and interest will be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and after
such Maturity Date or redemption or repayment date, as the case may be.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from the Interest Accrual Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable on the Maturity Date (or any redemption or repayment date) will
be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest due
at the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or any date of redemption or repayment, will be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Note register; provided, however, that if the registered holder of
this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or more in
aggregate principal amount of Notes having the same Interest Payment Date, such
holder will be entitled to receive
3
<PAGE>
payments of interest, other than interest due at maturity or any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent in
writing not less than 15 calendar days prior to the applicable Interest Payment
Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Indenture, as defined on
the reverse hereof, or be valid or obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By ______________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE"S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Senior Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By ______________________________
Authorized Officer
5
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Medium-Term
Notes, Series A, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of July 15, 1993, as amended (the "Senior Indenture"), between the
Issuer and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee (the
"Trustee," which term includes any successor trustee under the Senior
Indenture), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed The Chase Manhattan Bank (formerly Chemical
Bank) at its corporate trust office in The City of New York as the paying agent
(the "Paying Agent," which term includes any additional or successor Paying
Agent appointed by the Issuer) with respect to the Notes. The terms of
individual Notes may vary with respect to interest rates, interest rate
formulas, issue dates, maturity dates, or otherwise, all as provided in the
Senior Indenture. To the extent not inconsistent herewith, the terms of the
Senior Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed,
not less than 30 nor more than 60 days prior to the date fixed for redemption,
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption of
this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment. For this Note
to be repaid at the option of the holder hereof, the Paying Agent must receive
at its corporate trust office in the Borough of Manhattan, The City of New York,
at least 15 but not more than 30 days prior to the date of repayment, (i) this
Note with the form entitled "Option
6
<PAGE>
to Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note"s tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
This Note will bear interest at the rate determined in accordance with
the applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Interest Accrual Date to the Initial Interest Reset Date will be the
Initial Interest Rate and (ii) the interest rate in effect hereon for the 10
days immediately prior to the Maturity Date hereof (or, with respect to any
principal amount to be redeemed or repaid, any redemption or repayment date)
shall be that in effect on the tenth calendar day preceding the Maturity Date
hereof or such date of redemption or repayment, as the case may be. If any
Interest Reset Date would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding day that is a
Business Day, except that if the Base Rate specified on the face hereof is LIBOR
and such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and, with
respect to Notes bearing interest calculated by reference to LIBOR, is also a
London Banking Day (as defined below).
The Interest Determination Date pertaining to an Interest Reset Date
for Notes bearing interest calculated by reference to the CD Rate, Commercial
Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the second
Business Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to LIBOR shall be the second London Banking Day preceding such
Interest Reset Date. As used herein, "London Banking Day" means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market. The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the Treasury Rate shall be the
day of the week in which such Interest Reset Date falls on which Treasury bills
normally would
7
<PAGE>
be auctioned; provided, however, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding such Interest Reset Date,
the related Interest Determination Date shall be such preceding Friday; and
provided, further, that if an auction shall fall on any Interest Reset Date,
then the Interest Reset Date shall instead be the first Business Day following
the date of such auction.
The "Calculation Date" pertaining to any Interest Determination Date
will be the earlier (i) of the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day preceding the applicable Interest Payment
Date or maturity, as the case may be.
Determination of CD Rate. If the Base Rate specified on the face hereof
is the CD Rate, the CD Rate with respect to this Note shall be determined on
each Interest Determination Date and shall be the rate on such date for
negotiable certificates of deposit having the Index Maturity specified on the
face hereof as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof set forth in the daily update of H.15(519)
available through the world wide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update or any
successor site or publication ("H.15 Daily Update"). If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such Interest Determination Date will be calculated by the
Calculation Agent referred to on the face hereof and will be the arithmetic mean
of the secondary market offered rates as of 10:00 A.M., New York City time, on
such Interest Determination Date for certificates of deposit in an amount that
is representative for a single transaction in that market at that time with a
remaining maturity closest to the Index Maturity specified on the face hereof of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate specified on
the face hereof is the Commercial Paper Rate, the Commercial Paper Rate with
respect to this Note shall be determined on each Interest Determination Date and
shall be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial
Paper-Nonfinancial," or if not so published prior to 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Commercial Paper Rate shall be the Money Market Yield of the rate on such
Interest Determination Date for commercial paper of the Index Maturity specified
on the face
8
<PAGE>
hereof as published in the H.15 Daily Update under the heading "Commercial
Paper-Nonfinancial." If neither of such rates is published by 3:00 P.M., New
York City time, on such Calculation Date, then the Commercial Paper Rate shall
be the Money Market Yield of the arithmetic mean of the offered rates as of
11:00 A.M., New York City time, on such Interest Determination Date of three
leading dealers in commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity specified on the
face hereof, placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized rating agency; provided, however, that
if the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with
the following formula:
D x 360
Money Market Yield = x 100
-----------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate specified on the
face hereof is the Federal Funds Rate, the Federal Funds Rate with respect to
this Note shall be determined on each Interest Determination Date and shall be
the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)," as displayed on Bridge Telerate, Inc., or
any successor service, on page 120 or any other page as may replace the
applicable page on that service, or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Federal Funds Rate will be the rate on such Interest Determination
Date as published in the H.15 Daily Update under the heading "Federal
Funds/Effective Rate." If neither of such rates is published by 3:00 P.M., New
York City time, on such Calculation Date, the Federal Funds Rate for such
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight
Federal funds as of 9:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent, after
consultation with the Company; provided, however, that if the brokers selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the rate of interest in effect for the applicable period will be the
same as the Federal Funds Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
9
<PAGE>
Determination of LIBOR. If the Base Rate specified on the face hereof
is LIBOR, LIBOR with respect to this Note shall be determined as follows:
(i) With respect to a LIBOR Interest Determination Date,
LIBOR will be, as specified on the face hereof, either: (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars
having the Index Maturity specified on the face hereof, commencing on
the second London Banking Day immediately following the LIBOR Interest
Determination Date, that appear on the Reuters Screen LIBO Page as of
11:00 A.M., London time, on that LIBOR Interest Determination Date, if
at least two such offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity specified on the face hereof, commencing on the
second London Banking Day immediately following that LIBOR Interest
Determination Date, that appears on the Telerate Page 3750 as of 11:00
A.M., London time, on that LIBOR Interest Determination Date ("LIBOR
Telerate"). "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks). "Telerate
Page 3750" means the display designated as page "3750" on the Telerate
Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers" Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR will
be determined as if LIBOR Telerate had been specified. If fewer than
two offered rates appear on the Reuters Screen LIBO Page, or if no rate
appears on the Telerate Page 3750, as applicable, LIBOR in respect of
that LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (i)(a) above, or on which no rate appears on
Telerate Page 3750, as specified in (i)(b) above, as applicable, LIBOR
will be determined on the basis of the rates at which deposits in U.S.
dollars having the Index Maturity specified on the face hereof are
offered at approximately 11:00 A.M., London time, on that LIBOR
Interest Determination Date by four major banks in the London interbank
market selected by the Calculation Agent ("Reference Banks") to prime
banks in the London interbank market commencing on the second London
Banking Day immediately following that LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such market at such time. The Calculation Agent will
request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of that LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on that LIBOR Interest
Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity specified on the face hereof
commencing on the second London
10
<PAGE>
Banking Day immediately following that LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If the Base Rate specified on the face
hereof is the Prime Rate, the Prime Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the rate published in the H.15 Daily Update under the
heading "Bank Prime Loan". If such rate is not yet published in either H.15(519)
or H.15 Daily Update prior to 3:00 P.M., on the Calculation Date pertaining to
such Interest Determination Date, the Prime Rate for such Interest Determination
Date will be the arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME 1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME 1 Page on such
Interest Determination Date, or, if fewer than four such rates appear on the
Reuters Screen USPRIME 1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than four quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates of at least three major banks in
The City of New York selected by the Calculation Agent, after consultation with
the Company, to quote such rate or rates; provided, however, that if the
substitute banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate for such Interest Reset Period will
be the Prime Rate in effect for the immediately preceding Interest Reset Period
(or, if there is no such Interest Reset Period, the Initial Interest Rate).
"Reuters Screen USPRIME 1 Page" means the display designated as Page "USPRIME 1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME 1 Page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Determination of Treasury Rate. If the Base Rate specified on the face
hereof is the Treasury Rate, the Treasury Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate for the
auction held on such date of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as that rate
appears under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc., or any other successor service, on page 56 or any successor to such page
("Telerate Page 56") or page 57 or any successor to such page ("Telerate Page
57"). If such rate is not published on Telerate Page 56 or Telerate Page 57 by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the Treasury Rate will be the bond equivalent
yield of the rate for the applicable Treasury Bills as published in H.15 Daily
Update under the caption "U.S. Government
11
<PAGE>
Securities/Treasury Bills/Auction High" or if not so published by 3:00 p.m., New
York City time, on such Calculation Date, the bond equivalent yield of the
auction rate of the applicable Treasury Bills announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the Index Maturity specified on the face hereof are not
announced by the United States Department of Treasury, or if the auction is not
held, then the Treasury Rate will be the bond equivalent yield of the rate on
the applicable Interest Determination Date of Treasury Bills having the Index
Maturity specified on the face hereof published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market", or if such rate is
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the rate on such date as
published in H.15 Daily Update under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market". If the rate referred to in the
immediately preceding sentence is not so published by 3:00 p.m., New York City
time, on such Calculation Date, then the Treasury Rate will be calculated by the
Calculation Agent as the bond equivalent yield of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
on the face hereof; provided, however, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, the
Treasury Rate for such Interest Reset Date will be the same as the Treasury Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable thereon shall be the Initial
Interest Rate).
Determination of CMT Rate. If the Base Rate specified on the face
hereof is the CMT Rate, the CMT Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate displayed
for the Index Maturity specified on the face hereof on the Designated CMT
Telerate Page (as defined below) under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7051, the rate on such Interest Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week or the month, as applicable,
ended immediately preceding the week in which the related Interest Determination
Date occurs. If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or is not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the Interest Determination Date with respect
to the related Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 p.m., New York
time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary
12
<PAGE>
market closing offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include
affiliates of the Issuer) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent, after consultation with the
Issuer, and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Notes quotations, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Issuer, and eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest quotation (or, in
the event of equality, one of the lowest)), for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100,000,000. If three or four (and
not five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the Calculation
Agent are quoting as described herein, the CMT Rate for such Interest Reset Date
will be the same as the CMT Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate). If two Treasury Notes with
an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the quotes for the Treasury note with the shorter remaining term to maturity
will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service specified on the face hereof (or any other page as may replace
such page on that service for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)), for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519). If no such page is specified on
the face hereof, the Designated CMT Telerate Page shall be 7052, for the most
recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent shall
calculate the interest rate hereon in accordance with the foregoing on or before
each Calculation Date.
13
<PAGE>
At the request of the holder hereof, the Calculation Agent will provide
to the holder hereof the interest rate hereon then in effect and, if determined,
the interest rate that will become effective as of the next Interest Reset Date.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be; provided, however, that if
the Interest Reset Period with respect to this Note is daily or weekly, interest
payable on any Interest Payment Date, other than interest payable on any date on
which principal hereof is payable, will include interest accrued through and
including the Record Date next preceding the applicable Interest Payment Date.
Accrued interest hereon shall be an amount calculated by multiplying the face
amount hereof by an accrued interest factor. Such accrued interest factor shall
be computed by adding the interest factor calculated for each day in the period
for which interest is being paid. The interest factor for each such date shall
be computed by dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate or
LIBOR, as specified on the face hereof, or by the actual number of days in the
year if the Base Rate is the Treasury Rate or the CMT Rate, as specified on the
face hereof. All percentages resulting from any calculation of the rate of
interest on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths of
a percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on this Note will be rounded to the nearest cent (with
one-half cent rounded upward). The interest rate in effect on any Interest Reset
Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate).
This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
14
<PAGE>
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal aggregate
principal amount having identical terms and provisions. All such exchanges and
registrations of transfer of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Indenture provides that, (a) if an Event of Default (as
defined in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which this
Note forms a part, or due to the default in the performance or breach of any
other covenant or warranty of the Issuer applicable to the debt securities of
such series but not applicable to all outstanding debt securities issued under
the Senior Indenture shall have occurred and be continuing, either the Trustee
or the holders of not less than 25% in principal amount of the debt securities
of each affected series (voting as a single class) may then declare the
principal of all debt securities of all such series and interest accrued thereon
to be due and payable immediately and (b) if an Event of Default due to a
default in the performance of any other of the covenants or agreements in the
Senior Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Indenture then outstanding
(treated as one class) may declare the principal of all such debt securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal (or premium, if any) or
interest on such debt securities) by the holders of a majority in principal
amount of the debt securities of all affected series then outstanding.
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<PAGE>
The Trustee also acts as trustee under a Senior Subordinated Indenture,
dated as of July 15, 1993, as amended (the "Senior Subordinated Indenture" and,
together with the Senior Indenture, the "Indentures"), between the Issuer and
the Trustee, with respect to certain other debt securities of the Issuer. The
Senior Indenture provides that, should a default occur with respect to either
the debt securities issued under the Senior Indenture or the debt securities
issued under the Senior Subordinated Indenture, the Trustee would be required to
resign as trustee under one of the Indentures within 90 days of such default
unless such default were cured, duly waived or otherwise eliminated.
The Senior Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee may
not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the currency of payment thereof, or impair or
affect the rights of any holder to institute suit for the payment thereof
without the consent of the holder of each debt security so affected; or (b)
reduce the aforesaid percentage in principal amount of debt securities the
consent of the holders of which is required for any such supplemental indenture,
without the consent of the holders of each debt security so affected.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
16
<PAGE>
No provision of this Note or of the Senior Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - Custodian
------------------
(Minor) (Cust)
Under Uniform Gifts to Minors Act
-------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
---------------
18
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
- ---------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:
-----------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
19
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_______________; and specify the denomination or denominations (which shall not
be less than the minimum authorized denomination) of the Notes to be issued to
the holder for the portion of the within Note not being repaid (in the absence
of any such specification, one such Note will be issued for the portion not
being repaid): ___________.
Dated:
--------------------------------------------
NOTICE: The signature on this Option to
Elect Repayment must correspond with the
name as written upon the face of the within
instrument in every particular without
alteration or enlargement.
20
<PAGE>
Exhibit 4.7
FACE OF SECURITY
Fixed Rate Senior Subordinated Note
REGISTERED REGISTERED
No. FXR U.S. $ [PRINCIPAL AMOUNT]
CUSIP:*
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.*
- --------------------
1 Applies only if this Note is a Registered Global Security.
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
ORIGINAL INITIAL REDEMPTION INTEREST RATE:
ISSUE DATE: DATE:
INTEREST INITIAL REDEMPTION MATURITY
ACCRUAL DATE: PERCENTAGE: DATE:
APPLICABILITY ANNUAL REDEMPTION OPTIONAL
OF ANNUAL RERCENTAGE REPAYMENT
INTEREST REDUCTION: DATE(S):
PAYMENTS:
2
<PAGE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to
, or registered assignees, the principal sum of U.S. $
, on the Maturity Date specified above (except to the extent previously redeemed
or repaid) and to pay interest thereon at the Interest Rate per annum specified
above from the Interest Accrual Date specified above until the principal hereof
is paid or duly made available for payment (except as provided below),
semiannually in arrears on the first day of March and September in each year
(each such date an "Interest Payment Date") commencing on the Interest Payment
Date next succeeding the Interest Accrual Date specified above, and at maturity
(or on any redemption or repayment date); provided, however, that if the
Interest Accrual Date occurs between a Record Date, as defined below, and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that if this Note is subject to
"Annual Interest Payments," interest payments shall be made annually in arrears
and the term "Interest Payment Date" shall be deemed to mean the first day of
March in each year.
Interest on this Note will accrue from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including the
Interest Accrual Date, until the principal hereof has been paid or duly made
available for payment (except as provided below). The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable at maturity (or on any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York.
Payment of the principal of this Note, any premium and the interest due
at maturity (or on any redemption or repayment date) will be made in immediately
available funds upon surrender of this Note at the office or agency of the
Paying Agent, as defined on the reverse hereof, maintained for that purpose in
the Borough of Manhattan, The City of New York, or at such other paying agency
as the Issuer may determine. Payments of interest, other than
3
<PAGE>
interest due at maturity or on any date of redemption or repayment, will be made
by check mailed to the address of the person entitled thereto as such address
shall appear in the Note register; provided, however, that if the registered
holder of this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date, such holder will be entitled to receive payments of interest, other than
interest due at maturity or on any date of redemption or repayment, by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less than 15
calendar days prior to the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Note to the
Issuer"s Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Subordinated Indenture, as
defined on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED: THE CHARLES SCHWAB
CORPORATION
By __________________________
Chairman and Co-Chief
Executive Officer
4
<PAGE>
TRUSTEE"S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Senior Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By _____________________________
Authorized Officer
5
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Subordinated
Medium-Term Notes, Series A, having maturities more than nine months from the
date of issue (the "Notes") of the Issuer. The Notes are issuable under a Senior
Subordinated Indenture, dated as of July 15, 1993, as amended (the "Senior
Subordinated Indenture"), between the Issuer and The Chase Manhattan Bank
(formerly Chemical Bank), as Trustee (the "Trustee," which term includes any
successor trustee under the Senior Subordinated Indenture), to which Senior
Subordinated Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities of the Issuer, the Trustee and holders of the Notes and
the terms upon which the Notes are, and are to be, authenticated and delivered.
The Issuer has appointed The Chase Manhattan Bank (formerly Chemical Bank) at
its corporate trust office in The City of New York as the paying agent (the
"Paying Agent," which term includes any additional or successor Paying Agent
appointed by the Issuer) with respect to the Notes. The terms of individual
Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Senior Subordinated
Indenture. To the extent not inconsistent herewith, the terms of the Senior
Subordinated Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption
(except as provided below). If this Note is subject to "Annual Redemption
Percentage Reduction," the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption (except as
provided below). Notice of redemption shall be mailed, not less than 30 nor more
than 60 days prior to the date fixed for redemption, to the registered holders
of the Notes designated for redemption at their addresses as the same shall
appear on the Note register, subject to all the conditions and provisions of the
Senior Subordinated Indenture. In the event of redemption of this Note in part
only, a new Note or Notes for the amount of the unredeemed
6
<PAGE>
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment (except as
provided below). For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note"s tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Interest payments for this
Note will be computed and paid on the basis of a 360-day year of twelve 30-day
months.
In the case where the Interest Payment Date or the Maturity Date (or
any redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
7
<PAGE>
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
This Note and all other obligations of the Issuer hereunder will
constitute part of the senior subordinated debt of the Issuer, will be issued
under the Senior Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the Senior
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The Senior
Subordinated Indenture defines "Senior Indebtedness" as the principal of and
premium, if any, and interest on (a) indebtedness of the Issuer, whether
outstanding on the date of the Senior Subordinated Indenture or thereafter
created, that is (i) for money borrowed by the Issuer (including, without
limitation, capitalized lease obligations), (ii) for money borrowed by others
and guaranteed, directly or indirectly, by the Issuer or (iii) constituting
purchase money indebtedness, or indebtedness secured by property at the time of
the acquisition of such property by the Issuer, for the payment of which the
Issuer is directly or contingently liable, and (b) all deferrals, renewals,
extensions and refundings of and amendments, modifications and supplements to
(whether outstanding on the date of the Senior Subordinated Indenture or
thereafter created), any such indebtedness, unless by the terms of the
instrument creating or evidencing any such indebtedness referred to in clause
(a) or clause (b) above it is expressly provided that such indebtedness is not
superior in right of payment to the Notes and/or it is expressly provided that
such indebtedness is itself subordinated to any other indebtedness of the
Issuer. As used in the preceding sentence, the term "purchase money
indebtedness" means indebtedness evidenced by a note, debenture, bond or other
instrument (whether or not secured by any lien or other security interest)
issued or assumed as all or a part of the consideration for the acquisition of
property, whether by purchase, merger, consolidation or otherwise. The term
Senior Indebtedness shall not include (i) indebtedness of the Issuer to a
subsidiary of the Issuer for money borrowed or advances from a subsidiary of the
Issuer or (ii) the Notes.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
8
<PAGE>
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder"s attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized denominations of
equal aggregate principal amount having identical terms and provisions. All such
exchanges and registrations of transfer of Notes will be free of charge, but the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge in connection therewith. All Notes surrendered for exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and executed by the registered holder in person or by the holder"s
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, a new Note of like tenor will be issued by the Issuer
in exchange for the Note so mutilated or defaced, or in lieu of the Note so
destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen
Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that such Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.
The Senior Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Senior Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Senior Subordinated Indenture, including the series
of Senior Subordinated Medium-Term Notes of which this Note forms a part, or
9
<PAGE>
due to the default in the performance or breach of any other covenant or
warranty of the Issuer applicable to the debt securities of such series but not
applicable to all outstanding debt securities issued under the Senior
Subordinated Indenture shall have occurred and be continuing, either the Trustee
or the holders of not less than 25% in principal amount of the debt securities
of each affected series (voting as a single class) may then declare the
principal of all debt securities of all such series and interest accrued thereon
to be due and payable immediately and (b) if an Event of Default due to a
default in the performance of any other of the covenants or agreements in the
Senior Subordinated Indenture applicable to all outstanding debt securities
issued thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Subordinated Indenture
then outstanding (treated as one class) may declare the principal of all such
debt securities and interest accrued thereon to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults
may be waived (except a continuing default in payment of principal (or premium,
if any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then outstanding.
The Trustee also acts as trustee under a Senior Indenture, dated as of
July 15, 1993, as amended (the "Senior Indenture" and, together with the Senior
Subordinated Indenture, the "Indentures"), between the Issuer and the Trustee,
with respect to certain other debt securities of the Issuer. The Senior
Subordinated Indenture provides that, should a default occur with respect to
either the debt securities issued under the Senior Subordinated Indenture or the
debt securities issued under the Senior Indenture, the Trustee would be required
to resign as trustee under one of the Indentures within 90 days of such default
unless such default were cured, duly waived or otherwise eliminated.
The Senior Subordinated Indenture permits the Issuer and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the debt securities of all series issued under the Senior
Subordinated Indenture then outstanding and affected (voting as one class), to
execute supplemental indentures adding any provisions to or changing in any
manner the rights of the holders of each series so affected; provided that the
Issuer and the Trustee may not, without the consent of the holder of each
outstanding debt security affected thereby, (a) extend the final maturity of any
such debt security, or reduce the principal amount thereof, or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption or repayment thereof, or change the currency of payment thereof,
or impair or affect the rights of any holder to institute suit for the payment
thereof without the consent of the holder of each debt security so affected; or
(b) reduce the
10
<PAGE>
aforesaid percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture, without the
consent of the holders of each debt security so affected; provided, however,
that neither this Note nor the Senior Subordinated Indenture may be amended to
alter the subordination provisions hereof or thereof without the written consent
of each holder of Senior Indebtedness then outstanding that would be adversely
affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Subordinated Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
11
<PAGE>
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior
Subordinated Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Senior Subordinated Indenture.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-_______________Custodian_____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act_____________________________
(State)
Additional abbreviations may also be used though not in the above list.
----------
13
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
- ---------------------------------------------
- --------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING ZIP CODE, OF ASSIGNEE]
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably
- --------------------------------------------------------------------------------
constituting and appointing such person attorney to transfer
- --------------------------------------------------------------------------------
such note on the books of the Issuer, with full power of
- --------------------------------------------------------------------------------
substitution in the premises.
Dated:_____________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite
name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
__________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid):
- ----------------------------.
Dated:_____________ _______________________________
NOTICE: The signature on this
Option to Elect Repayment must
correspond with the name as written
upon the face of the within
instrument in every particular
without alteration or enlargement.
15
<PAGE>
Exhibit 4.8
FACE OF SECURITY
Floating Rate Senior Subordinated Note
REGISTERED REGISTERED
No. FLR [PRINCIPAL AMOUNT]
CUSIP:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.*
<PAGE>
THE CHARLES SCHWAB CORPORATION
SENIOR SUBORDINATED MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
BASE RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INDEX MATURITY: INTEREST ACCRUAL DATE: INTEREST PAYMENT DATE(S):
- ----------------------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): INITIAL INTEREST RATE: INTEREST PAYMENT PERIOD:
- ----------------------------------------------------------------------------------------------
ALTERNATE RATE EVENT SPREAD: INITIAL INTEREST RESET DATE: INTEREST RESET PERIOD:
- ----------------------------------------------------------------------------------------------
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATES:
- ----------------------------------------------------------------------------------------------
REPORTING SERVICE: MINIMUM INTEREST RATE: CALCULATION AGENT:
- ----------------------------------------------------------------------------------------------
INITIAL REDEMPTION DATE: SPECIFIED CURRENCY:
- ----------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: INITIAL REDEMPTION PERCENTAGE: TOTAL AMOUNT OF OID:
- ----------------------------------------------------------------------------------------------
INDEX CURRENCY: ANNUAL REDEMPTION PERCENTAGE ORIGINAL YIELD TO MATURITY:
REDUCTION:
- ----------------------------------------------------------------------------------------------
OTHER PROVISIONS: OPTIONAL REPAYMENT DATE(S): INITIAL ACCRUAL PERIOD OID:
- ----------------------------------------------------------------------------------------------
DESIGNATED CMT TELERATE PAGE: DESIGNATED CMT MATURITY INDEX:
==============================================================================================
</TABLE>
The Charles Schwab Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to , or
registered assignees, the principal sum of U.S. $ on the Maturity Date
specified above (except to the extent redeemed or repaid prior to the Maturity
Date) and to pay interest thereon, from the Interest Accrual Date specified
above at a rate per annum equal to the Initial Interest Rate specified above
until the Initial Interest Reset Date specified above, and thereafter at a rate
per annum determined in accordance with the provisions specified on the reverse
hereof until the principal hereof is paid or duly made available for payment.
The Issuer will pay interest in arrears monthly, quarterly, semiannually or
annually as specified above as the Interest Payment Period on each Interest
Payment Date (as specified above), commencing with the first Interest Payment
Date next succeeding the Interest Accrual Date specified above, and on the
Maturity Date (or any redemption or repayment date); provided, however, that if
the Interest Accrual Date occurs between a Record Date, as defined below, and
the next succeeding Interest Payment Date, interest payments will commence on
the second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that, subject to the next
succeeding sentence, if an Interest Payment Date would fall on a day that is not
a Business Day, as defined on the reverse hereof, such Interest Payment Date
shall be postponed to the following day that is a Business Day,
2
<PAGE>
except that if the Base Rate specified above is LIBOR and such next Business Day
falls in the next calendar month, the Interest Payment Date shall be the
immediately preceding day that is a Business Day. If the Maturity Date or
redemption or repayment date would fall on a day that is not a Business Day, the
payment of principal and interest will be made on the next succeeding Business
Day, and no interest on such payment shall accrue for the period from and after
such Maturity Date or redemption or repayment date, as the case may be.
Interest on this Note will accrue from the most recent date to which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from the Interest Accrual Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the person in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on the date 15 calendar days prior to such Interest Payment Date (whether or not
a Business Day) (each such date a "Record Date"); provided, however, that
interest payable on the Maturity Date (or any redemption or repayment date) will
be payable to the person to whom the principal hereof shall be payable.
Payment of the principal of this Note, any premium and the interest due
at the Maturity Date (or any redemption or repayment date) will be made in
immediately available funds upon surrender of this Note at the office or agency
of the Paying Agent, as defined on the reverse hereof, maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency as the Issuer may determine. Payments of interest, other than
interest due at maturity or any date of redemption or repayment, will be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Note register; provided, however, that if the registered holder of
this Note is (i) Cede & Co. or (ii) a holder of U.S. $10,000,000 or more in
aggregate principal amount of Notes having the same Interest Payment Date, such
holder will be entitled to receive payments of interest, other than interest due
at maturity or any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Paying Agent in writing not less than 15 calendar days prior to
the applicable Interest Payment Date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Note to the
Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Senior Subordinated Indenture, as
defined on the reverse hereof, or be valid or obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed
under its corporate seal.
DATED: THE CHARLES SCHWAB CORPORATION
By ______________________________
Chairman and Co-Chief
Executive Officer
TRUSTEE"S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes
referred to in the within-
mentioned Senior Subordinated
Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By ______________________________
Authorized Officer
4
<PAGE>
REVERSE OF SECURITY
This Note is one of a duly authorized issue of Senior Subordinated
Medium-Term Notes, Series A, having maturities more than nine months from the
date of issue (the "Notes") of the Issuer. The Notes are issuable under a Senior
Subordinated Indenture, dated as of July 15, 1993, as amended (the "Senior
Subordinated Indenture"), between the Issuer and The Chase Manhattan Bank
(formerly Chemical Bank), as Trustee (the "Trustee," which term includes any
successor trustee under the Senior Subordinated Indenture), to which Senior
Subordinated Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities of the Issuer, the Trustee and holders of the Notes and
the terms upon which the Notes are, and are to be, authenticated and delivered.
The Issuer has appointed The Chase Manhattan Bank (formerly Chemical Bank) at
its corporate trust office in The City of New York as the paying agent (the
"Paying Agent," which term includes any additional or successor Paying Agent
appointed by the Issuer) with respect to the Notes. The terms of individual
Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Senior Subordinated
Indenture. To the extent not inconsistent herewith, the terms of the Senior
Subordinated Indenture are hereby incorporated by reference herein.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or subject to repayment at the option of
the holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed in
whole or in part at the option of the Issuer on or after the Initial Redemption
Date specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed,
not less than 30 nor more than 60 days prior to the date fixed for redemption,
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register, subject to all the
conditions and provisions of the Senior Subordinated Indenture. In the event of
redemption of this Note in part only, a new Note or Notes for the amount of the
unredeemed portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.
If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 (provided that any remaining principal amount hereof shall not be less
than the minimum authorized denomination hereof) at the option of the holder
hereof at a price equal to 100% of the principal amount to be repaid, together
with interest accrued and unpaid hereon to the date of repayment. For this Note
to be repaid at the option of the holder hereof, the Paying Agent must receive
at its corporate trust office in the Borough of Manhattan, The City of New York,
at least 15
5
<PAGE>
but not more than 30 days prior to the date of repayment, (i) this Note with the
form entitled "Option to Elect Repayment" below duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or a trust company in the United States setting forth the name
of the holder of this Note, the principal amount hereof, the certificate number
of this Note or a description of this Note"s tenor and terms, the principal
amount hereof to be repaid, a statement that the option to elect repayment is
being exercised thereby and a guarantee that this Note, together with the form
entitled "Option to Elect Repayment" duly completed, will be received by the
Paying Agent not later than the fifth Business Day after the date of such
telegram, telex, facsimile transmission or letter; provided, that such telegram,
telex, facsimile transmission or letter shall only be effective if this Note and
form duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of such repayment option by the holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note or Notes for the
amount of the unpaid portion hereof shall be issued in the name of the holder
hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in accordance with
the applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing with the Initial Interest Reset
Date specified on the face hereof, the rate at which interest on this Note is
payable shall be reset as of each Interest Reset Date (as used herein, the term
"Interest Reset Date" shall include the Initial Interest Reset Date). The
Interest Reset Dates will be the Interest Reset Dates specified on the face
hereof; provided, however, that (i) the interest rate in effect for the period
from the Interest Accrual Date to the Initial Interest Reset Date will be the
Initial Interest Rate and (ii) the interest rate in effect hereon for the 10
days immediately prior to the Maturity Date hereof (or, with respect to any
principal amount to be redeemed or repaid, any redemption or repayment date)
shall be that in effect on the tenth calendar day preceding the Maturity Date
hereof or such date of redemption or repayment, as the case may be. If any
Interest Reset Date would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding day that is a
Business Day, except that if the Base Rate specified on the face hereof is LIBOR
and such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. As used herein,
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York and, with
respect to Notes bearing interest calculated by reference to LIBOR, is also a
London Banking Day (as defined below).
The Interest Determination Date pertaining to an Interest Reset Date
for Notes bearing interest calculated by reference to the CD Rate, Commercial
Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the second
Business Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated by
reference to LIBOR shall be the second London Banking Day preceding such
Interest Reset Date. As used herein, "London Banking Day" means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market. The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the Treasury Rate shall be
6
<PAGE>
the day of the week in which such Interest Reset Date falls on which Treasury
bills normally would be auctioned; provided, however, that if as a result of a
legal holiday an auction is held on the Friday of the week preceding such
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and provided, further, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the first
Business Day following the date of such auction.
The "Calculation Date" pertaining to any Interest Determination Date
will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day preceeding the applicable Interest Payment
Date or maturity, as the case may be.
Determination of CD Rate. If the Base Rate specified on the face hereof
is the CD Rate, the CD Rate with respect to this Note shall be determined on
each Interest Determination Date and shall be the rate on such date for
negotiable certificates of deposit having the Index Maturity specified on the
face hereof as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)"), under the heading "CDs (Secondary Market)," or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof set forth in the daily update of H.15(519)
available through the world wide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update or any
successor site or publication ("H.15 Daily Update"). If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
CD Rate on such Interest Determination Date will be calculated by the
Calculation Agent referred to on the face hereof and will be the arithmetic mean
of the secondary market offered rates as of 10:00 A.M., New York City time, on
such Interest Determination Date for certificates of deposit in an amount that
is representative for a single transaction in that market at that time with a
remaining maturity closest to the Index Maturity specified on the face hereof of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing in the market for negotiable certificates of deposit; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate specified on
the face hereof is the Commercial Paper Rate, the Commercial Paper Rate with
respect to this Note shall be determined on each Interest Determination Date and
shall be the Money Market Yield (as defined herein) of the rate on such date for
commercial paper having the Index Maturity specified on the face hereof, as such
rate shall be published in H.15(519) under the heading "Commercial Paper-
Nonfinancial," or if not so published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the
Commercial Paper Rate shall be the Money Market Yield of
7
<PAGE>
the rate on such Interest Determination Date for commercial paper of the Index
Maturity specified on the face hereof as published in the H.15 Daily Update
under the heading "Commercial Paper-Nonfinancial." If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers in commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the Index
Maturity specified on the face hereof, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the rate of
interest in effect for the applicable period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with
the following formula:
D x 360
Money Market Yield = x 100
-----------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate specified on the
face hereof is the Federal Funds Rate, the Federal Funds Rate with respect to
this Note shall be determined on each Interest Determination Date and shall be
the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)," as displayed on Bridge Telerate, Inc., or
any successor service, on page 120 or any other page as may replace the
applicable page on that service, or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Federal Funds Rate will be the rate on such Interest Determination
Date as published in the H.15 Daily Update under the heading "Federal
Funds/Effective Rate." If neither of such rates is published by 3:00 P.M., New
York City time, on such Calculation Date, the Federal Funds Rate for such
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight
Federal funds as of 9:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent, after
consultation with the Company; provided, however, that if the brokers selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the rate of interest in effect for the applicable period will be the
same as the Federal Funds Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
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Determination of LIBOR. If the Base Rate specified on the face hereof
is LIBOR, LIBOR with respect to this Note shall be determined as follows:
(i) With respect to a LIBOR Interest Determination Date,
LIBOR will be, as specified on the face hereof, either: (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars
having the Index Maturity specified on the face hereof, commencing on
the second London Banking Day immediately following the LIBOR Interest
Determination Date, that appear on the Reuters Screen LIBO Page as of
11:00 A.M., London time, on that LIBOR Interest Determination Date, if
at least two such offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity specified on the face hereof, commencing on the
second London Banking Day immediately following that LIBOR Interest
Determination Date, that appears on the Telerate Page 3750 as of 11:00
A.M., London time, on that LIBOR Interest Determination Date ("LIBOR
Telerate"). "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks). "Telerate
Page 3750" means the display designated as page "3750" on the Telerate
Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers" Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR will
be determined as if LIBOR Telerate had been specified. If fewer than
two offered rates appear on the Reuters Screen LIBO Page, or if no rate
appears on the Telerate Page 3750, as applicable, LIBOR in respect of
that LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (i)(a) above, or on which no rate appears on
Telerate Page 3750, as specified in (i)(b) above, as applicable, LIBOR
will be determined on the basis of the rates at which deposits in U.S.
dollars having the Index Maturity specified on the face hereof are
offered at approximately 11:00 A.M., London time, on that LIBOR
Interest Determination Date by four major banks in the London interbank
market selected by the Calculation Agent ("Reference Banks") to prime
banks in the London interbank market commencing on the second London
Banking Day immediately following that LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such market at such time. The Calculation Agent will
request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of that LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on that LIBOR Interest
Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity specified on the face hereof,
commencing on the second London
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<PAGE>
Banking Day immediately following that LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If the Base Rate specified on the face
hereof is the Prime Rate, the Prime Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the rate published in the H.15 Daily Update under the
heading "Bank Prime Loan". If such rate is not yet published in either H.15(519)
or H.15 Daily Update prior to 3:00 P.M., on the Calculation Date pertaining to
such Interest Determination Date, the Prime Rate for such Interest Determination
Date will be the arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME 1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME 1 Page on such
Interest Determination Date, or, if fewer than four such rates appear on the
Reuters Screen USPRIME 1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than four quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates of at least three major banks in
The City of New York selected by the Calculation Agent, after consultation with
the Company, to quote such rate or rates; provided, however, that if the
substitute banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate for such Interest Reset Period will
be the Prime Rate in effect for the immediately preceding Interest Reset Period
(or, if there is no such Interest Reset Period, the Initial Interest Rate).
"Reuters Screen USPRIME 1 Page" means the display designated as Page "USPRIME 1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME 1 Page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
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Determination of Treasury Rate. If the Base Rate specified on the face
hereof is the Treasury Rate, the Treasury Rate with respect to this Note shall
be determined on each Interest Determination Date and shall be the rate for the
auction held on such date of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as that rate
appears under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc., or any other successor service, on page 56 or any successor to such page
("Telerate Page 56") or page 57 or any successor to such page ("Telerate Page
57"). If such rate is not published on Telerate Page 56 or Telerate Page 57 by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the Treasury Rate will be the bond equivalent
yield of the rate for the applicable Treasury Bills as published in H.15 Daily
Update under the caption "U.S. Government Securities/Treasury Bills/Auction
High" or if not so published by 3:00 P.M., New York City time, on such
Calculation Date, the bond equivalent yield of the auction rate of the
applicable Treasury Bills announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury Bills having
the Index Maturity specified on the face hereof are not announced by the United
States Department of Treasury, or if the auction is not held, then the Treasury
Rate will be the bond equivalent yield of the rate on the applicable Interest
Determination Date of Treasury Bills having the Index Maturity specified on the
face hereof published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market", or if such rate is not so published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the rate on such date as published in H.15 Daily
Update under the caption "U.S. Government Securities/Treasury Bills/Secondary
Market". If the rate referred to in the immediately preceding sentence is not so
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Treasury Rate will be calculated by the Calculation Agent as the bond equivalent
yield of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified on the face hereof;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable hereon shall be the Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on the face
hereof is the CMT Rate, the CMT Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate displayed
for the Index Maturity specified on the face hereof on the Designated CMT
Telerate Page (as defined below) under the Caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15" under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7051, the rate on such Interest Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week or the month, as applicable,
ended immediately preceding the week in which the related Interest Determination
Date occurs. If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or
11
<PAGE>
is not published by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate for such Interest Determination Date will be such
Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the
Interest Determination Date with respect to the related Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519). If such
information is not provided by 3:00 p.m., New York time, on the related
Calculation Date, then the CMT Rate for the Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City of
New York (which may include affiliates of the Issuer) selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent, after consultation with the Issuer, and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT Maturity
Index and remaining term to maturity of not less than such Designated CMT
Maturity Index minus one year. If the Calculation Agent cannot obtain three such
Treasury Notes quotations, the CMT Rate for such Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination Date
of three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent, after consultation with the Issuer,
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the same as
the CMT Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate). If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service specified on the face hereof (or any other page as may replace
such page on that service for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)), for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519). If no such page is specified on
the face hereof, the Designated CMT Telerate Page shall be 7052, for the most
recent week.
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<PAGE>
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent shall
calculate the interest rate hereon in accordance with the foregoing on or before
each Calculation Date.
At the request of the holder hereof, the Calculation Agent will provide
to the holder hereof the interest rate hereon then in effect and, if determined,
the interest rate that will become effective as of the next Interest Reset Date.
Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be; provided, however, that if
the Interest Reset Period with respect to this Note is daily or weekly, interest
payable on any Interest Payment Date, other than interest payable on any date on
which principal hereof is payable, will include interest accrued through and
including the Record Date next preceding the applicable Interest Payment Date.
Accrued interest hereon shall be an amount calculated by multiplying the face
amount hereof by an accrued interest factor. Such accrued interest factor shall
be computed by adding the interest factor calculated for each day in the period
for which interest is being paid. The interest factor for each such date shall
be computed by dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate or
LIBOR, as specified on the face hereof, or by the actual number of days in the
year if the Base Rate is the Treasury Rate or the CMT Rate, as specified on the
face hereof. All percentages resulting from any calculation of the rate of
interest on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths of
a percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on this Note will be rounded to the nearest cent (with
one-half cent rounded upward). The interest rate in effect on any Interest Reset
Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder will
constitute part of the senior subordinated debt of the Issuer, will be issued
under the Senior Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the Senior
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The Senior
Subordinated Indenture defines "Senior Indebtedness" as the principal of and
premium, if any, and interest on (a) indebtedness of the Issuer, whether
outstanding on the date of the Senior Subordinated Indenture or thereafter
created, that is (i) for money borrowed by the Issuer (including, without
limitation, capitalized lease obligations), (ii) for money borrowed by others
and guaranteed, directly or indirectly, by the Issuer or (iii) constituting
purchase money indebtedness, or indebtedness secured by property at the time of
the acquisition of such property by the Issuer, for the payment of which the
Issuer is
13
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directly or contingently liable, and (b) all deferrals, renewals, extensions and
refundings of and amendments, modifications and supplements to (whether
outstanding on the date of the Senior Subordinated Indenture or thereafter
created), any such indebtedness, unless by the terms of the instrument creating
or evidencing any such indebtedness referred to in clause (a) or clause (b)
above it is expressly provided that such indebtedness is not superior in right
of payment to the Notes and/or it is expressly provided that such indebtedness
is itself subordinated to any other indebtedness of the Issuer. As used in the
preceding sentence, the term "purchase money indebtedness" means indebtedness
evidenced by a note, debenture, bond or other instrument (whether or not secured
by any lien or other security interest) issued or assumed as all or a part of
the consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise. The term Senior Indebtedness shall not include (i)
indebtedness of the Issuer to a subsidiary of the Issuer for money borrowed or
advances from a subsidiary of the Issuer or (ii) the Notes.
This Note, and any Note or Notes issued upon transfer or exchange
hereof, is issuable only in fully registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof.
The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and registration of transfer of Notes. The transfer of this Note
may be registered at the aforesaid office of the Trustee by surrendering this
Note for cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized denominations of
equal aggregate principal amount having identical terms and provisions. All such
exchanges and registrations of transfer of Notes will be free of charge, but the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge in connection therewith. All Notes surrendered for exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or registration of transfer.
In case any Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and such Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall
14
<PAGE>
be delivered to the Trustee, a new Note of like tenor will be issued by the
Issuer in exchange for the Note so mutilated or defaced, or in lieu of the Note
so destroyed or lost or stolen, but, in the case of any destroyed or lost or
stolen Note, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that such Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.
The Senior Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Senior Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Senior Subordinated Indenture, including the series
of Senior Subordinated Medium-Term Notes of which this Note forms a part, or due
to the default in the performance or breach of any other covenant or warranty of
the Issuer applicable to the debt securities of such series but not applicable
to all outstanding debt securities issued under the Senior Subordinated
Indenture shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in principal amount of the debt securities of each
affected series (voting as a single class) may then declare the principal of all
debt securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior
Subordinated Indenture applicable to all outstanding debt securities issued
thereunder, including this Note, or due to certain events of bankruptcy,
insolvency and reorganization of the Issuer, shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all debt securities issued under the Senior Subordinated Indenture
then outstanding (treated as one class) may declare the principal of all such
debt securities and interest accrued thereon to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults
may be waived (except a continuing default in payment of principal (or premium,
if any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then outstanding.
The Trustee also acts as trustee under a Senior Indenture, dated as of
July 15, 1993, as amended (the "Senior Indenture" and, together with the Senior
Subordinated Indenture, the "Indentures"), between the Issuer and the Trustee,
with respect to certain other debt securities of the Issuer. The Senior
Subordinated Indenture provides that, should a default occur with respect to
either the debt securities issued under the Senior Subordinated Indenture or the
debt securities issued under the Senior Indenture, the Trustee would be required
to resign as trustee under one of the Indentures within 90 days of such default
unless such default were cured, duly waived or otherwise eliminated.
The Senior Subordinated Indenture permits the Issuer and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the debt securities of all series issued under the Senior
Subordinated Indenture then outstanding and affected (voting as one class), to
execute supplemental indentures adding any provisions to or changing in any
manner the rights of the holders of each series so affected; provided that the
Issuer and the Trustee may not, without the consent of the holder of each
outstanding debt security affected thereby, (a) extend the final maturity
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<PAGE>
of any such debt security, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any amount
payable on redemption or repayment thereof, or change the currency of payment
thereof, or impair or affect the rights of any holder to institute suit for the
payment thereof without the consent of the holder of each debt security so
affected; or (b) reduce the aforesaid percentage in principal amount of debt
securities the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of each debt security
so affected; provided, however, that neither this Note nor the Senior
Subordinated Indenture may be amended to alter the subordination provisions
hereof or thereof without the written consent of each holder of Senior
Indebtedness then outstanding that would be adversely affected thereby.
So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, registration of transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or
any Paying Agent for payment of the principal of or interest or premium, if any,
on any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.
No provision of this Note or of the Senior Subordinated Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Note.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
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shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of California.
All terms used in this Note which are defined in the Senior
Subordinated Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Senior Subordinated Indenture.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - Custodian
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(Minor) (Cust)
Under Uniform Gifts to Minors Act
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(State)
Additional abbreviations may also be used though not in the above list.
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
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[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
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[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:
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NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at
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(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_______________; and specify the denomination or denominations (which shall not
be less than the minimum authorized denomination) of the Notes to be issued to
the holder for the portion of the within Note not being repaid (in the absence
of any such specification, one such Note will be issued for the portion not
being repaid): _______________.
Dated:
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NOTICE: The signature on this Option to
Elect Repayment must correspond with the
name as written upon the face of the within
instrument in every particular without
alteration or enlargement.
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