<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 9, 2000
REGISTRATION STATEMENT NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
THE CHARLES SCHWAB CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-3025021
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
120 KEARNY STREET
SAN FRANCISCO, CA 94108
(415) 627-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CHRISTOPHER V. DODDS
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
THE CHARLES SCHWAB CORPORATION
120 KEARNY STREET
SAN FRANCISCO, CA 94108
(415) 627-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
LAWRENCE B. RABKIN, ESQ.
HOWARD, RICE, NEMEROVSKI, CANADY,
FALK & RABKIN
A PROFESSIONAL CORPORATION
THREE EMBARCADERO CENTER, 7TH FLOOR
SAN FRANCISCO, CA 94111
TELEPHONE: (415) 434-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
-------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
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Common Stock, $0.01 par value.... 11,713,465 $44.90625 $526,007,788 $138,866
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based
upon the average of the high and low sales price per share of the
registrant's common stock on March 8, 2000, as reported on the New York
Stock Exchange.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
The information in this prospectus statement is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
PROSPECTUS (SUBJECT TO COMPLETION)
DATED MARCH 9, 2000
THE CHARLES SCHWAB CORPORATION
11,713,465 SHARES OF COMMON STOCK
This prospectus covers shares of The Charles Schwab Corporation common
stock, par value $ 0.01 per share, which certain of our shareholders may offer
for sale from time to time. The Selling Shareholders, which are listed on page 5
of this prospectus or in supplements to the prospectus, acquired the shares
being offered in a transaction not involving a public offering. We are
registering the shares under the Securities Act of 1933 on behalf of the Selling
Shareholders in order to permit the public sale or other distribution of the
shares.
The Selling Shareholders may offer and sell the shares from time to time
through ordinary brokerage transactions, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices. We will not realize any proceeds from the sale of the shares by the
Selling Shareholders.
The Selling Shareholders and any broker-dealers or agents that participate
with the Selling Shareholders in the sale of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
they receive and any profit on the resale of the shares they purchase may be
deemed to be underwriting commissions or discounts under the Securities Act.
Our common stock trades on the New York Stock Exchange under the symbol
"SCH." On March 8, 2000, the closing price of our common stock was $45.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
MARCH , 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Note Regarding Forward-Looking Statements................... 3
The Charles Schwab Corporation.............................. 3
Where You Can Find More Information......................... 3
Incorporation of Certain Documents by Reference............. 4
Use of Proceeds............................................. 4
Selling Shareholders........................................ 5
Plan of Distribution........................................ 6
Description of Capital Stock................................ 7
Legal Matters............................................... 7
Experts..................................................... 7
</TABLE>
2
<PAGE> 4
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference, may
contain "forward-looking statements" within the meaning of Section 27A of the
Securities Act, and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are identified by words such as "believe,"
"anticipate," "expect," "intend," "plan," "will," "may" and other similar
expressions. In addition, any statements that refer to expectations, projections
or other characterizations of future events or circumstances are forward-looking
statements. These forward-looking statements are necessarily estimates
reflecting the best judgment of our senior management. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date of this prospectus or, in the case of documents incorporated by
reference, as of the date of those documents. Schwab does not undertake any
obligation to publicly update or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this prospectus
or to reflect the occurrence of unanticipated events.
There are a variety of factors and risks that could cause actual results
experienced to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements or that could affect
the decision to invest in our securities, including, but not limited to, those
set forth in our Annual Report on Form 10-K for the year ended December 31,
1998; in our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999; and in our Current Reports on Form
8-K filed with the Securities and Exchange Commission on July 6, 1999, January
14, 2000 and February 22, 2000 (which are incorporated into this document by
reference).
THE CHARLES SCHWAB CORPORATION
The Charles Schwab Corporation, through its subsidiaries, engages in
securities brokerage and related financial services, including retail brokerage,
mutual funds, support services for independent investment managers, equity
securities market-making and 401(k) defined contribution plans. Charles Schwab &
Co., Inc., our principal operating subsidiary, provides brokerage and related
investment services nationwide and in Puerto Rico and the U.S. Virgin Islands.
Charles Schwab Europe is our retail securities brokerage firm located in the
United Kingdom. Another of our subsidiaries, Schwab Capital Markets L.P.
(formerly Mayer & Schweitzer, Inc.), a market maker in Nasdaq and other
securities, provides trade execution services to broker-dealers and
institutional customers. Charles Schwab Investment Management, Inc. is the
investment advisor for our proprietary mutual funds.
We were incorporated in Delaware in November 1986. Charles Schwab & Co.,
Inc. was incorporated in California in 1971 and merged in 1983 with a subsidiary
of BankAmerica Corporation. We acquired Charles Schwab & Co., Inc. in a
management-led leveraged buyout in March 1987 and became a publicly held company
in September 1987. Our principal executive offices are located at 120 Kearny
Street, San Francisco, CA 94108 (telephone number (415) 627-7000). Our website
is http://www.schwab.com. This reference to our website address does not
constitute incorporation by reference of the information contained in the
website.
All references to "we," "us," "our" or to "Schwab" in this prospectus are
to The Charles Schwab Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and proxy statements and
other information with the Securities and Exchange Commission (File No. 1-9700).
Our SEC filings are available to the public through commercial document
retrieval services and at the Internet web site maintained by the SEC at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
We encourage review of any documents and reports subsequently filed by us
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this prospectus.
3
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this prospectus and prior to the time all of the securities offered by this
prospectus are sold shall be deemed to be incorporated by reference in this
prospectus on the date of filing such documents:
- Schwab's Annual Report on Form 10-K for the year ended December 31, 1998,
filed on March 30, 1999 (except for Item 8. "Financial Statements and
Supplementary Data," which has been updated and incorporated by reference
in this prospectus).
- Schwab's Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, filed on November 10, 1999.
- Schwab's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, filed on August 11, 1999.
- Schwab's Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed on May 11, 1999.
- Schwab's Current Report on Form 8-K, filed on July 6, 1999.
- Schwab's Current Report on Form 8-K, filed on January 14, 2000.
- Schwab's Current Report on Form 8-K, filed on February 22, 2000 which
includes Schwab's audited consolidated financial statements for the year
ended December 31, 1999.
We will furnish without charge to each person to whom this prospectus is
delivered, on the written or oral request of such person, a copy of any or all
of the documents incorporated by reference into this prospectus, except for the
exhibits to such documents. Requests should be made to:
The Charles Schwab Corporation
Investor Relations Department
101 Montgomery Street
San Francisco, California 94104
(415) 636-2787
Any statement contained in a document or information incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document that also is,
or is deemed to be, incorporated by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
The making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other that the date on the front of these documents.
USE OF PROCEEDS
We will not receive any proceeds from the Selling Shareholders' sale of any
shares of common stock, but will pay all expenses related to the registration of
the shares.
4
<PAGE> 6
SELLING SHAREHOLDERS
The shares offered by this document are being offered by the Selling
Shareholders named in the table below. The table contains information concerning
the Selling Shareholders' beneficial ownership of our common stock as of the
date of this prospectus and the number of shares registered in the offering.
Such information was furnished to us by the Selling Shareholders. The Selling
Shareholders have sole voting power and investment power with respect to all
shares of the common stock shown as beneficially owned by them, subject to
community property laws, where applicable.
<TABLE>
<CAPTION>
SHARES SHARES
OWNED PRIOR TO REGISTERED IN
NAME THE OFFERING(1) THE OFFERING(2)
---- --------------- ---------------
<S> <C> <C>
Milestone International, Ltd. .............................. 6,889,447 6,889,447
Tim Brosnan................................................. 1,069,333 1,069,333
McCormick/Mix Wyoming Statutory Business Trust No. 2........ 832,000 802,000
Bradley J. Swearingen....................................... 649,686 568,083
Leslie M. Moor.............................................. 878,056 402,871
Aurora Holdings, SA......................................... 354,216 354,216
Gregory B. Ferris........................................... 320,800 200,500
Vernon H. and Janet C. Jones, Jr. .......................... 193,282 193,282
Dilton Investments.......................................... 173,769 173,769
Austin Technology Ventures Trust............................ 133,666 133,666
David W. Drapela............................................ 106,930 106,930
Greenland Investments Inc. ................................. 106,930 106,930
McCormick Master Statutory Trust............................ 93,566 93,566
Gregory Scott Mogonye....................................... 189,873 86,616
Philip R. Berber............................................ 76,190 76,190
Richard Munoz, Jr. ......................................... 328,820 68,170
Service Life and Casualty Ins. Co. ......................... 66,833 66,833
Service Lloyd's Insurance Co. .............................. 66,833 66,833
Timothy J. Decker........................................... 40,100 40,100
MFC & Associates............................................ 40,100 40,100
William H. Padgett.......................................... 40,100 40,100
WH Investments Partnership.................................. 40,100 40,100
Iris Klein.................................................. 28,070 28,070
Jonathon White.............................................. 20,050 20,050
Rose Abeyta................................................. 32,080 16,040
Vernon S. Holt.............................................. 13,361 13,361
Edward M. Obuchowski........................................ 5,349 5,349
Robin Strickland............................................ 20,050 3,208
Annie T. Moor............................................... 2,406 2,406
Cristin T. Moor............................................. 2,406 2,406
Joseph Hsieh................................................ 1,336 1,336
Ralph Medina................................................ 802 802
Donald D. Moore, Jr. ....................................... 2,406 802
Totals............................................ 12,818,946 11,713,465
</TABLE>
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(1) Each of the Selling Shareholders has beneficial ownership of less than 1% of
our outstanding shares of common stock.
(2) 11.7% of the shares held by each Selling Shareholder, which are offered for
sale by this prospectus (a total of 1,368,421 shares), have been deposited
into an escrow account until March 1, 2002 and will not be available for
sale by the Selling Shareholders until that date. Under certain
circumstances, the escrow shares may be reacquired by us.
Because the Selling Shareholders may use this prospectus to sell all or
some portion of the common stock they presently own, no estimate can be given as
to the number of shares that each Selling Shareholder will hold after any sale.
In addition, the Selling Shareholders may have sold, transferred or otherwise
disposed of
5
<PAGE> 7
all or a portion of their shares since the date on which they provided the
information to us in transactions exempt from the registration requirements of
the Securities Act.
Only Selling Shareholders identified above who beneficially own the common
stock in the table on the effective date of the registration statement of which
this prospectus is a part may sell shares pursuant to this prospectus. We may
from time to time include additional Selling Shareholders in supplements to this
prospectus.
Certain of the Selling Shareholders are employees of CyBerCorp, Inc. which
we acquired in March 2000. Except for their employment, none of the Selling
Shareholders listed above had any material relationship with us, other than as a
result of the ownership of the shares, within the three-year period ending on
the date of this prospectus.
PLAN OF DISTRIBUTION
The shares being offered in this prospectus were originally acquired by the
initial holders of the shares in a private offering on March 1, 2000 as
consideration for our acquisition of CyBerCorp, Inc. As part of the terms of the
acquisition, we entered into a registration rights agreement with the initial
Selling Shareholders. The registration rights agreement required us to file the
registration statement of which this prospectus is a part to cover the resale of
the shares by the Selling Shareholders. We also agreed to use all reasonable
efforts to keep the registration statement effective until March 1, 2001.
All costs, expenses and fees in connection with the registration of the
shares offered by this prospectus will be paid by us. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of shares will be
paid by the Selling Shareholders.
The Selling Shareholders may sell the shares from time to time in one or
more types of transactions (which may include block transactions) on the New
York Stock Exchange, in the over-the-counter market, in negotiated private
transactions not effected on any exchange, through put or call options
transactions relating to the shares, through short sales or a combination of
such methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. Such transactions may or may not involve brokers or dealers.
The Selling Shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or coordinating
broker in connection with the proposed sale of shares by the Selling
Shareholders.
The Selling Shareholders may sell directly to purchasers or to or through
broker-dealers that may act as agents or principals. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders and/or the purchasers of shares for whom such
broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).
The Selling Shareholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
such broker-dealers and any profit on the resale of the shares, including the
shares sold by them while acting as principals, might be deemed to be
underwriting discounts or commissions under the Securities Act.
We have agreed to indemnify each Selling Shareholder against certain
liabilities, including liabilities arising under the Securities Act. The Selling
Shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Shareholders may be
subject to the prospectus delivery requirements of the Securities Act.
6
<PAGE> 8
Selling Shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet its criteria and conform to its requirements.
If a Selling Shareholder notifies us that such Selling Shareholder has
entered into any material arrangement with an underwriter or broker-dealer for a
sale through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required, pursuant to Rule 424(b) under the Securities Act.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 2,000,000,000 shares of common
stock, par value $0.01 per share, of which, as of March 6, 2000, 826,856,600
shares were issued and outstanding, and 9,940,000 shares of preferred stock, par
value $0.01 per share, of which, as of March 6, 2000, no shares were issued and
outstanding.
Common Stock. Each holder of our common stock is entitled to one vote per
share for the election of directors and for all other matters to be voted upon
by our shareholders. Our certificate of incorporation does not provide for
cumulative voting. Our board of directors is divided into three classes.
Holders of shares of our common stock are entitled to receive dividends out
of funds legally available for distribution if and when declared by the board of
directors, and, subject to the rights of any preferred stock that may be
outstanding in the future, to share ratably in the assets legally available for
distribution to our shareholders in the event of our liquidation, dissolution or
winding-up. Holders of our common stock have no preemptive, subscription,
redemption or conversion rights. The shares being sold pursuant to this
prospectus are fully paid and nonassessable.
Preferred Stock. Our board of directors has the power, without further
action by the shareholders, to issue preferred stock as a class without series,
or in one or more series, and to fix the voting rights, designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions applicable to the preferred
stock.
The rights of holders of our common stock as described above will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. The board of directors may
cause shares of preferred stock to be issued to obtain additional financing; in
connection with acquisitions; to our and our subsidiaries' officers, directors
and employees pursuant to benefit plans or otherwise; and for other proper
corporate purposes. Shares of preferred stock issued by us could, under certain
circumstances, make it more difficult for a third party to gain control of us.
We have no current plans or agreements to issue any series of preferred stock in
the future.
LEGAL MATTERS
Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation, will pass on the legality of the common stock offered in this
document. Certain directors of that firm beneficially own an aggregate of less
than 1% of our common stock.
EXPERTS
The audited consolidated financial statements of us and our subsidiaries as
of December 31, 1999 and 1998 and for each of the three years in the period
ended December 31, 1999 incorporated in this prospectus by reference from our
Current Report on Form 8-K, dated February 22, 2000, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report (which
report expresses an unqualified opinion and includes an explanatory paragraph
related to an accounting change to conform with Statement of Position 98-1),
which is incorporated by reference in this prospectus, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
7
<PAGE> 9
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable in connection
with the issuance and distribution of the securities being registered. All
amounts are estimated except the Securities and Exchange Commission registration
fee and the New York Stock Exchange listing fee.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
SEC registration fee........................................ $138,866
New York Stock Exchange listing fee......................... $ 40,997
Printing expenses........................................... $ 15,000
Legal fees and expenses..................................... $ 15,000
Accounting fees and expenses................................ $ 10,000
Miscellaneous............................................... $ 5,137
--------
Total............................................. $225,000
========
</TABLE>
The above fees will be payable by The Charles Schwab Corporation.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Fourth Restated Certificate of Incorporation provides that, pursuant to
Delaware law, our directors will not be personally liable to us or our
stockholders for monetary damages arising from a breach or alleged breach of a
director's fiduciary duty, with specific exceptions. The exceptions relate to
(i) any breach of the director's duty of loyalty to us or our stockholders, (ii)
acts or omissions that are not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) approval by a director of
certain unlawful dividend payments, distributions or stock redemptions or
repurchases or (iv) engaging in a transaction from which a director derives an
improper personal benefit. Among the types of breaches for which directors will
not be liable are those resulting from negligent or grossly negligent behavior.
Our Second Restated Bylaws also provide for the indemnification of both our
directors and officers within the limitations provided by Delaware law. Section
145 of the Delaware General Corporation Law authorizes indemnification of
directors and officers for actions taken in good faith and in a manner such
person reasonably believed to be in, or not opposed to, our best interests. This
provision is sufficiently broad to permit indemnification under certain
circumstances for liabilities (and for reimbursement of expenses incurred)
arising under the Securities Act of 1933, as amended. We have entered into
indemnity agreements with our directors that contain provisions that are in some
respects broader than the specified indemnification provisions contained in
Delaware law.
We have obtained directors' and officers' liability and corporate
reimbursement insurance covering all of our officers and directors and the
officers and directors of our subsidiaries and providing for the reimbursement
of amounts paid by us or our subsidiaries to directors and officers pursuant to
indemnification arrangements, subject to certain deductibles and coinsurance
provisions.
II-1
<PAGE> 10
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT TITLE
------- -------------
<C> <S>
4.1 Fourth Restated Certificate of Incorporation, effective July
30, 1999, of the Registrant, which includes amendments
through May 20, 1999, filed as Exhibit 3.10 to the
Registrant's Current Report on Form 8-K filed on July 6,
1999 and incorporated herein by reference.
4.2 Registration Rights Agreement, dated as of March 1, 2000, by
and among the Registrant and the Selling Shareholders.
5.1* Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation.
23.1 Consent of Deloitte & Touche LLP, independent auditors.
23.2* Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation (contained in its opinion filed
as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney (included on signature page).
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
II-2
<PAGE> 11
the Securities Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements of filing on Form S-3, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, California, on March 8, 2000.
THE CHARLES SCHWAB CORPORATION
By: /s/ DAVID S. POTTRUCK
------------------------------------
David S. Pottruck
President and Co-Chief Executive
Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Charles R. Schwab, David S. Pottruck and
Christopher V. Dodds, his true and lawful attorney-in-fact and agent, each with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign and execute on behalf of the
undersigned any and all amendments (including post-effective amendments) to this
Registration Statement (and to any Registration Statement filed pursuant to Rule
462(b) under the Securities Act), and to file the same, with all exhibits
thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection with any such amendments, as fully to all
intents and purposes as he might or could do in person, and hereby does ratify
and confirm all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this report has
been signed below by the following persons in the capacities indicated, on March
8, 2000.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE
------------------ -----
<S> <C>
/s/ CHARLES R. SCHWAB Chairman, Co-Chief Executive Officer and
- -------------------------------------------- Director (principal executive officer)
Charles R. Schwab
/s/ DAVID S. POTTRUCK Chief Executive Officer, President and
- -------------------------------------------- Director (principal executive officer)
David S. Pottruck
/s/ CHRISTOPHER V. DODDS Executive Vice President and Chief Financial
- -------------------------------------------- Officer (principal financial and accounting
Christopher V. Dodds officer)
/s/ NANCY H. BECHTLE Director
- --------------------------------------------
Nancy H. Bechtle
/s/ C. PRESTON BUTCHER Director
- --------------------------------------------
C. Preston Butcher
/s/ DONALD G. FISHER Director
- --------------------------------------------
Donald G. Fisher
/s/ ANTHONY M. FRANK Director
- --------------------------------------------
Anthony M. Frank
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE
------------------ -----
<S> <C>
/s/ FRANK C. HERRINGER Director
- --------------------------------------------
Frank C. Herringer
/s/ STEPHEN T. MCLIN Director
- --------------------------------------------
Stephen T. McLin
/s/ CONDOLEEZA RICE Director
- --------------------------------------------
Condoleeza Rice
/s/ ARUN SARIN Director
- --------------------------------------------
Arun Sarin
/s/ GEORGE P. SCHULTZ Director
- --------------------------------------------
George P. Schultz
/s/ ROGER O. WALTHER Director
- --------------------------------------------
Roger O. Walther
</TABLE>
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<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.1 Fourth Restated Certificate of Incorporation, effective July
30, 1999, of the Registrant, which includes amendments
through May 20, 1999, filed as Exhibit 3.10 to the
Registrant's Current Report on Form 8-K filed on July 6,
1999 and incorporated herein by reference.
4.2 Registration Rights Agreement, dated as of March 1, 2000, by
and among the Registrant and the Selling Shareholders.
5.1* Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation.
23.1 Consent of Deloitte & Touche LLP, independent auditors.
23.2* Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
A Professional Corporation (contained in its opinion filed
as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney (included on signature page).
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, is made and entered into as of March 1,
2000, by and among The Charles Schwab Corporation, a corporation organized under
the laws of the State of Delaware ("Purchaser"), and the individuals and
entities set forth on Exhibit A hereto (the "Shareholders").
R E C I T A L S
WHEREAS, Purchaser and C2 Acquisition Corp., a corporation organized under
the laws of the State of Texas ("Newco"), have entered into an Agreement and
Plan of Merger, dated as of February 1, 2000 (the "Merger Agreement";
capitalized terms used herein and not defined shall have the meanings ascribed
thereto in the Merger Agreement), with CyBerCorp, Inc., a corporation organized
under the laws of the State of Texas (the "Company"), which provides, upon the
terms and subject to the conditions set forth therein, for the merger of Newco
with and into the Company (the "Merger"); and
WHEREAS, in the Merger, the Shareholders will receive shares (the "Merger
Shares") of common stock, par value $.01 per share, of Purchaser (the "Purchaser
Common Stock");
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties and conditions set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions.
For purposes of this Agreement, in addition to the definitions set forth
above and elsewhere herein, the following terms shall have the following
respective meanings:
"Affiliate" of a Holder shall mean a person who controls, is
controlled by or is under common control with such Holder or, the spouse or
children (or a trust exclusively for the benefit of a spouse and/or
children) of such Holder or, in the case of a Holder which is a
partnership, its partners.
"Commission" shall mean the United States Securities and Exchange
Commission and any successor agency.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Holder" shall mean each Shareholder or any transferee or assignee
thereof to whom the rights under this Agreement are assigned in accordance
with the provisions of Section 9 hereof.
"Person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement or document.
"Registrable Stock" shall mean (a) the Merger Shares, (b) any shares
of Purchaser Common Stock issued as a dividend or other distribution with
respect to, or in exchange for, or in replacement of, any of the Merger
Shares, and (c) any shares of Purchaser Common Stock issued by way of a
stock split of the Merger Shares referred to in clauses (a) or (b) above.
For purposes of this Agreement, any Registrable Stock shall cease to be
Registrable Stock when (i) a registration statement covering such
Registrable Stock has been declared effective and such Registrable Stock
has been disposed of pursuant to such effective registration statement,
(ii) such Registrable Stock is sold by a person in a transaction in which
the rights under the provisions of this Agreement are not assigned, or
(iii) such Registrable Stock may be
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<PAGE> 2
sold pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144(A) under the Securities Act without registration under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
2. Restrictive Legend.
Each certificate representing Merger Shares shall, except as otherwise
provided in this Section 2, be stamped or otherwise imprinted with a legend
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"). SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN EXEMPTION UNDER
THE SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO
PURCHASER THAT SUCH REGISTRATION IS NOT REQUIRED."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to Purchaser (it being agreed that Shearman & Sterling or Jenkins &
Gilchrist shall be satisfactory) or Purchaser shall determine that, the
securities being sold thereby may be publicly sold without registration under
the Securities Act or the transfer of such securities is permitted under the
provisions of Rule 144 or Rule 144A (or any rule permitting public sale without
registration under the Securities Act).
3. Registration. As soon as reasonably practicable after the Effective Time
(but in no event later than ten (10) business days after the date of this
Agreement), Purchaser shall prepare and file with the Commission a registration
statement on Form S-3 or any successor thereto, signed, pursuant to Section 6
(a) of the Securities Act, by the officers and directors of Purchaser, with
respect to the Merger Shares. Purchaser shall use its reasonable best efforts to
register under the Securities Act, for public sale, such Registrable Stock. In
connection therewith, Purchaser shall, as expeditiously and as reasonably
possible:
(a) use its reasonable best efforts to cause such registration
statement to become effective as soon as possible after the filing thereof
and to remain effective through and including the first year anniversary of
the Closing Date;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement, signed, pursuant to Section 6
(a) of the Securities Act, by the officers and directors of Purchaser, and
the prospectus used in connection therewith as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all Registrable Stock covered by such registration statement;
(c) furnish to the Holders such numbers of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto) in conformity with
the requirements of the Securities Act and such other documents and
information as they may reasonably request;
(d) use its reasonable best efforts to register or qualify the
Registrable Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United States
and Puerto Rico as required by law for the distribution of the Registrable
Stock covered by the registration statement; provided, however, that
Purchaser shall not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to
service of process in any jurisdiction wherein it would not but for the
requirements of this paragraph (d) be obligated to do so; and provided,
further, that Purchaser shall not be required to qualify such Registrable
Stock in any jurisdiction in which the securities regulatory authority
requires that any Holder submit any shares of its Registrable Stock to the
terms, provisions and restrictions of any escrow, lockup or similar
agreement(s) for consent to sell Registrable Stock in such jurisdiction
unless such Holder agrees to do so;
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<PAGE> 3
(e) promptly notify each Holder for whom such Registrable Stock is
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, and at
the request of any such Holder promptly prepare and furnish to such Holder
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
(f) enter into customary agreements and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of
the Registrable Stock to be so included in the registration statement;
(g) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission;
(h) use its reasonable best efforts to list the Registrable Stock
covered by such registration statement with any securities exchange on
which the Purchaser Common Stock is then listed; and
(i) after the effectiveness of the registration statement, cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing the Registrable Stock to be sold, which
Certificates shall not bear any restrictive legends other than restrictive
legends still required to be imposed by any of the Transaction Agreements
(as defined in the Merger Agreement).
4. Suspension of Trading. Notwithstanding any other provision of this
Agreement, Purchaser shall have the right at any time to require that all
Holders suspend further open market offers and sales of Registrable Stock
whenever, and for so long as, in the reasonable judgment of Purchaser in good
faith based upon the advice of counsel satisfactory to the Holders of a majority
of the Registrable Stock (it being agreed that Howard, Rice, Nemerovski, Canady,
Falk & Rabkin, a Professional Corporation shall be satisfactory), there is in
existence material undisclosed information or events with respect to Purchaser
(the "Suspension Right") such that the registration statement would contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made. In the event Purchaser
exercises the Suspension Right, such suspension will continue for such period of
time reasonably necessary for disclosure to occur at a time that is not
materially detrimental to Purchaser or until such time as the registration
statement does not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, each as determined in good faith by Purchaser. Purchaser will
promptly give the Holders notice, in a writing signed by an executive officer of
Purchaser, of any exercise of the Suspension Right. Purchaser agrees to notify
the Holders promptly upon termination of the Suspension Right. Notwithstanding
the foregoing, under no circumstances shall the Purchaser be entitled to
exercise the Suspension Right for more than ninety calendar days in any twelve
month period. The period during which Purchaser is required to keep the
registration statement effective shall be extended by a period equal in length
to any and all periods during which the Suspension Right is in effect.
5. Furnish Information. It shall be a condition precedent to the
obligations of Purchaser to take any action pursuant to this Agreement that the
Holders shall furnish to Purchaser such information regarding themselves, the
Registrable Stock held by them, and the intended method of disposition of such
securities as Purchaser shall reasonably request and as shall be required in
connection with the action to be taken by Purchaser.
6. Expenses of Registration. All expenses incurred in connection with the
registration pursuant to this Agreement, including without limitation all
registration, filing and qualification fees, word processing,
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<PAGE> 4
duplicating, printers' and accounting fees (including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state securities or blue sky laws, reasonable fees
and disbursements of counsel for Purchaser, and the fees and disbursements of
one counsel for the Holders (which counsel shall be selected by the Holders
holding a majority of the Registrable Stock and shall be satisfactory to the
Purchaser (it being agreed that Shearman & Sterling or Jenkins & Gilchrist shall
be satisfactory)), shall be paid by Purchaser. The parties agree that all
underwriting discounts and commissions shall be the responsibility of the
Holders.
7. Indemnification. (a) To the extent permitted by applicable law,
Purchaser shall indemnify and hold harmless each Holder, such Holder's directors
and officers, any underwriter (as defined in the Securities Act), and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or any other
applicable state or federal law, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in such
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 under the Securities Act or any amendments or supplements
thereto) or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each such Holder,
such Holder's directors and officers, such underwriter or controlling person for
any legal or other expenses reasonably incurred by them (but not in excess of
expenses incurred in respect of one counsel and one local counsel for all of
them unless, in the reasonable judgment of an indemnified party there is
potential conflict of interest between any indemnified parties, which
indemnified parties may be represented by separate counsel and local counsel) in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of Purchaser (which consent shall not be unreasonably withheld);
provided, further, that Purchaser shall not be liable to any Holder, such
Holder's directors and officers, underwriter or controlling person in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder, such
Holder's directors and officers, underwriter or controlling person. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any such Holder, such Holder's directors and officers,
underwriter or controlling person, and shall survive the transfer of such
securities by such Holder.
(b) To the extent permitted by applicable law, each Holder shall indemnify
and hold harmless Purchaser, each of its directors and officers, each person, if
any, who controls Purchaser within the meaning of the Securities Act, and any
underwriter (within the meaning of the Securities Act) for Purchaser against any
losses, claims, damages or liabilities, joint or several, to which Purchaser or
any such director, officer, controlling person or underwriter may become
subject, under the Securities Act or any other applicable state or federal law,
insofar as such losses, claims, damages or liabilities (or proceedings in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement
on the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement in reliance upon and in
conformity with written information furnished expressly by or on behalf of such
Holder for use in connection with such registration; and each such Holder shall
reimburse any legal or other expenses reasonably incurred by Purchaser or any
such director, officer, controlling person, agent or underwriter (but not in
excess of expenses incurred in respect of one counsel and one local counsel for
all of them unless, in the reasonable judgment to of an indemnified party, there
is a conflict of interest between any indemnified parties,
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<PAGE> 5
which indemnified parties may be represented by separate counsel and local
counsel) in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 7(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld), and provided, further, that the liability of each Holder hereunder
shall be limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the net proceeds from the sale of
the shares sold by such Holder under such registration statement bears to the
total net proceeds from the sale of all securities sold thereunder, but not in
any event to exceed the net proceeds received by such Holder from the sale of
Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and assume the
defense thereof with counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party; provided, however, that the exercise of
the foregoing right shall be conditioned upon the written acknowledgement of the
indemnifying party to the indemnified party of the indemnifying party's
obligation hereunder to indemnify the indemnified party for any losses arising
from such action; and provided further, that in such event, the indemnified
party shall have the right to retain its own counsel and local counsel, with all
fees and expenses thereof to be paid by such indemnified party, and to be
apprised of all progress in any proceeding the defense of which has been assumed
by the indemnifying party. The failure to notify an indemnifying party promptly
of the commencement of any such action shall only release the indemnifying party
from any of its obligations under this Section 7(c) if, and only to the extent
that, such indemnifying party is materially prejudiced by such failure, but the
omission to so notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages or liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The parties agree that
to the extent any of the provisions of this Section 7 conflict with the
provisions of Article X of the Merger Agreement, the provisions of this Section
7 shall supersede such conflicting provisions.
8. Transfer of Registration Rights. The rights of any Holder under this
Agreement with respect to any Registrable Stock may be transferred to any
transferee of such Registrable Stock; provided, however, that (i) the
transferring Holder shall give Purchaser written notice at or prior to the time
of such transfer stating the name and address of the transferee and identifying
the securities with respect to which the rights under this Agreement are being
transferred; (ii) such transferee shall agree in writing, in form and substance
reasonably satisfactory to Purchaser, to be bound as a Holder by the provisions
of this Agreement; and
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<PAGE> 6
(iii) immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act. Except as
set forth in this Section 8, no transfer of Registrable Stock shall cause such
Registrable Stock to lose such status.
9. Successors and Assigns. Except as otherwise expressly provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto. Except
as expressly provided in this Agreement, nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10. Counterparts; Titles. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together shall constitute one and the
same agreement. The titles of the Sections of this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
11. Notices. Any notice required or permitted under this Agreement shall be
in writing and shall be delivered in person or mailed by certified or registered
mail, return receipt requested, overnight courier or facsimile, directed to (a)
Purchaser at The Charles Schwab Corporation, 101 Montgomery Street, San
Francisco, CA 94104, attention: Christopher V. Dodds, facsimile 415/636-5877,
with a copy to Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation at Three Embarcadero Center, Seventh Floor, San Francisco, CA 94111,
attention: Lawrence B. Rabkin, facsimile 415/217-5910; or (b) to the Holders at
their addresses set forth after their respective names in Exhibit A hereto with
copies to CyBerCorp, Inc. at 1601 Rio Grande, Suite 525, Austin, TX 78701,
attention: Philip R. Berber, facsimile 512/682-7776 and to Shearman & Sterling,
599 Lexington Avenue, New York, NY 10022, attention: Creighton O'M. Condon,
facsimile: 212/848-7179, or, in any such case, at such other address or
addresses as shall have been furnished in writing by such party to the others.
The giving of any notice required hereunder may be waived in writing by the
parties hereto. Every notice or other communication hereunder shall be deemed to
have been duly given or served on the date on which personally delivered, or on
the date actually received.
12. Amendments and Waivers. Any provision of this Agreement may be amended
and the observance of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Purchaser and the Holders of at
least two-thirds of the Registrable Stock. Any amendment or waiver effected in
accordance with this Section 12 shall be binding upon each Holder of any
securities subject to this Agreement at the time outstanding (including
securities into which such securities are convertible), each future Holder and
all such securities, and Purchaser. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or parties exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
13. Severability; Entire Agreement. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms. All prior agreements of the parties concerning the
subject matter of this Agreement are expressly superseded by this Agreement.
This Agreement contains the entire Agreement of the parties concerning the
subject matter hereof. Any oral representations or modifications of this
Agreement shall be of no effect.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to conflicts
of law principles.
15. Forum; Waiver of Jury Trial. (a) All actions and proceedings arising
out of or relating to this Agreement shall be heard and determined in any
California state or federal court sitting in the City and County of San
Francisco. The parties hereto hereby (i) submit to the exclusive jurisdiction of
any California state or federal court sitting in the City and County of San
Francisco for the purpose of any action or proceeding arising out of or relating
to this Agreement brought by any party hereto, and (ii) waive, and agree
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<PAGE> 7
not to assert by way of motion, defense, or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the action or proceeding is brought in an inconvenient forum, that the venue of
the action or proceeding is improper, or that this Agreement may not be enforced
in or by any of the above-named courts.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY ACTIONS OR PROCEEDINGS DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE CHARLES SCHWAB CORPORATION
By: /s/ CHRISTOPHER V. DODDS
------------------------------------
Name: Christopher V. Dodds
Title: Executive Vice President and
Chief Financial Officer
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
A-8
<PAGE> 9
SHAREHOLDERS:
Milestone International, Ltd.
Tim Brosnan
McCormick/Mix Wyoming Trust No. 2
Bradley J. Swearingen
Leslie M. Moor
Aurora Holdings, SA
Philip R. Berber
Gregory Ferris
Vernon H. Jones
Dilton Investments, Inc.
Austin Technology Ventures Trust
David W. Drapela
McCormick Master Statutory Trust
Gregory Scott Mogonye
Richard Munoz, Jr.
Service Lloyd's Insurance Company
Service Life and Casualty Insurance
Co.
Timothy J. Decker
WH Investments Partnership
Jonathan White
Vernon S. Holt
Edward M. Obuchowski
Robin Strickland
Annie T. Moor
Cristin T. Moor
Joseph Hsieh
Ralph Medina
Donald D. Moore, Jr.
Iris Klein
Rose Abeyta
Janet C. Jones
William Padgett
Greenland Investments, Inc.
MFC & Associates
By: /s/ PHILIP BERBER
------------------------------------
Name: Philip Berber
Title: Shareholders Representative
Attorney-in-Fact
A-9
<PAGE> 10
EXHIBIT A
SHAREHOLDERS:
Milestone International, Ltd.
Tim Brosnan
McCormick/Mix Wyoming Trust No. 2
Bradley J. Swearingen
Leslie M. Moor
Aurora Holdings, SA
Philip R. Berber
Gregory Ferris
Vernon H. Jones
Dilton Investments, Inc.
Austin Technology Ventures Trust
David W. Drapela
McCormick Master Statutory Trust
Gregory Scott Mogonye
Richard Munoz, Jr.
Service Lloyd's Insurance Company
Service Life and Casualty Insurance
Co.
Timothy J. Decker
WH Investments Partnership
Jonathan White
Vernon S. Holt
Edward M. Obuchowski
Robin Strickland
Annie T. Moor
Cristin T. Moor
Joseph Hsieh
Ralph Medina
Donald D. Moore, Jr.
Iris Klein
Rose Abeyta
Janet C. Jones
William Padgett
Greenland Investments, Inc.
MFC & Associates
A-10
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The Charles Schwab Corporation on Form S-3 of our report dated February 16,
2000 (which report expresses an unqualified opinion and includes an explanatory
paragraph related to an accounting change to conform with Statement of Position
98-1), appearing in the Current Report on Form 8-K of The Charles Schwab
Corporation dated February 22, 2000 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
San Francisco, California
March 9, 2000
