EXHIBIT 10.158
CREDIT AGREEMENT
dated as of
June 28, 1996
THE CHARLES SCHWAB CORPORATION
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("this Agreement") is entered into as of June 28,
1996, between The Charles Schwab Corporation, a Delaware corporation (the
"Borrower"), and the Bank named on the signature page hereto (the "Bank").
WHEREAS, the Bank is willing to make revolving credit loans to the
Borrower from time to time through June 27, 1997 on the terms and subject to
the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS
Assessment Rate: For any Interest Period for any Advance for
which the CD Rate has been selected, the
assessment rate per annum (adjusted upward,
if necessary, to the nearest 1/100 of 1%)
determined by the Confirming Bank on the
first day of such Interest Period for
determining the then current annual
assessment payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor
thereto) for such Corporation's (or successor's)
insuring U.S. dollar time deposits of the Bank
in the United States. The CD Rate shall be
adjusted automatically on and as of the
effective date of any change in the Assessment
Rate.
Banking Day: Any Monday, Tuesday, Wednesday, Thursday or
Friday, other than a day on which banks are
authorized or required to be closed in
California or New York.
Borrowing Advice: A written request made by the Borrower with
respect to an Advance specifying the
information required in Paragraph 2.2 hereof
and executed by the Borrower from time to time.
Borrowing Agreement: Any of those separate credit agreements (so
long as the Credit (as defined herein)
thereunder has not been terminated) between
the Borrower and any of the Banks referred to in
Schedule I hereto (other than the Bank) and
having terms substantially similar to those
contained in this Agreement. Such Schedule I
may from time to time be amended by the
Borrower by Borrower's delivery to each
Bank (including the Bank) of a new Schedule
I, and each such new Schedule I delivered by
the Borrower to each Bank (including the
Bank) shall replace and supersede the then-
existing Schedule I and shall be the Schedule
I referred to in this Agreement; provided,
however, that no such newly delivered
Schedule I shall amend or otherwise change
the name, address, or amount of Credit
applicable to the Bank on the initial
Schedule I hereto without the prior written
consent of the Bank or as otherwise permitted
in accordance with the terms of this
Agreement. Each such newly delivered
Schedule I shall include all of the then-
existing credit agreements between the
Borrower and any Bank having terms substantially
similar to those contained in this Agreement
so long as the Credit (as defined herein)
thereunder has not been terminated.
Broker Subsidiary: Charles Schwab & Co., Inc., a California
corporation, and its successors and assigns.
CD Banking Day: Any Banking Day on which dealings in bank
certificates of deposit are conducted by New
York City certificate of deposit dealers.
CD Rate: For any Interest Period for any Advance for
which the CD Rate has been selected or is
applicable, the sum of:
(a) the Assessment Rate for the Interest
Period, plus
(b) the rate per annum obtained by dividing
(i) the rate of interest per annum
determined by the Confirming Bank to
be (aa) the average (adjusted upward,
if necessary, to the nearest 1/16 of
1%) rate per annum at which bids are
received by the CD Reference Banks
for their certificates of deposit as
at 11:00 a.m. New York City time (or
as soon as practicable thereafter),
on the first day of an Interest
Period from two or more New York City
certificate of deposit dealers of
recognized standing selected by the
Confirming Bank for the purchase at
face value of such certificates of
deposit in an amount comparable to
the Advance for which the CD Rate has
been selected and having a maturity
comparable to such Interest Period or
(bb) in the event the Confirming Bank
cannot, without undue effort, obtain
rates from such CD Reference Banks,
the certificate of deposit rate as
reported for the date of the Borrowing
Advice in "Federal Reserve
Statistical Release--Selected
Interest Rates-- H.15(519),"
published by the Board of Governors
of the Federal Reserve System, or
any successor publication, under the
caption "CDs (Secondary Market)"
having a maturity most closely
approximating the conclusion of such
Interest Period, by (ii) a percentage
(expressed as a decimal) equal to
1.00 minus the CD Rate Reserve
Percentage.
CD Rate Reserve
Percentage: For any Interest Period for any Advance for
which the CD Rate has been selected or is
applicable, the percentage (expressed as a
decimal) as calculated by the Confirming Bank
that is in effect on the first day of such
Interest Period, as prescribed by the Board
of Governors of the Federal Reserve System
(or any successor), for determining the
maximum reserve requirements (including,
without limitation, basic, supplemental,
marginal and emergency reserves) for a bank
with deposits exceeding five billion dollars
that is a member of the Federal Reserve
System, in respect of new non-personal time
deposits in U.S. dollars in the United States
having a maturity comparable to the
applicable Interest Period for said Advance
for which the CD Rate has been selected
(such bank's reserve ratio on such time
deposits in effect on June , 1996 was 0%).
The CD Rate shall be adjusted automatically
on and as of the effective date of any change
in the CD Rate Reserve Percentage.
CD Reference Banks: Bank of America Illinois
Citibank, N.A.
Change in Law
Affecting Cost: The occurrence of any one of the following
events:
(a) the imposition, modification or
application of any reserve, capital
adequacy requirement, special
deposit or similar requirement
against assets held by, or deposits in
or for the account of, or
commitments, advances or loans by, or
any other acquisition of funds by,
the Bank (other than such
requirements described in the
Eurodollar Rate Reserve Percentage
section hereof), or the imposition
upon the Bank of any other condition
with respect to the London interbank
market or to this Agreement or any
borrowing hereunder,
(b) a change in the basis of taxation of
payments to the Bank of principal,
interest or any other amount payable
hereunder (except for changes in
Federal, state or local income tax
rates and their equivalents), or
(c) the adoption or enactment of any
applicable law, treaty, regulation or
directive, or any change therein or
in the interpretation or application
thereof, or compliance by the Bank with
any request (whether or not having the
force of law) of any relevant
government or corporation entity.
Closing Date: June 28, 1996
Confirming Bank: Bank of America Illinois
Confirming Bank
Agreement: The Confirming Bank Agreement between the
Borrower and Bank of America Illinois dated
June 28, 1996, in substantially the form
attached as Exhibit B to the Credit Agreement,
as the same may be amended from time to time.
Controlled Subsidiary: Any corporation 80% of whose voting stock
(except for any qualifying shares) is owned
directly or indirectly by the Borrower.
Federal Funds
Effective Rate: For any day, an interest rate per annum equal
to the weighted average of the rates on
overnight Federal funds transactions with
members of the Federal Reserve System arranged
by Federal funds brokers, as published for
such day (or, if such day is not a Banking
Day, for the next preceding Banking Day) by
the Federal Reserve Bank of New York; or, if
such rate is not published for any day which
is a Banking Day, an interest rate per annum
equal to the arithmetic mean of the rates on
overnight Federal funds transactions with
members of the Federal Reserve System
arranged by Federal funds brokers on such
day, received by each Reference Rate Reference
Bank from three Federal funds brokers of
recognized standing selected by each
Reference Rate Reference Bank in its sole
discretion.
Interest Period: Any period specified in accordance with
Paragraph 2.3 hereof.
Intermediate Parent: Schwab Holdings, Inc. and its successors and
assigns.
Eurodollar Banking Day: Any Banking Day on which dealings in dollar
deposits are conducted by and among banks in
the London Eurodollar Market, or such other
Eurodollar Market as may from time to time be
selected by the Bank with the approval of the
Borrower.
Eurodollar Rate: The rate obtained by dividing (i) the average
rate per annum at which deposits of U.S.
dollars for the selected Interest Period and
in the amount of the Advance for which the
Eurodollar Rate has been selected are offered
(a) if at least two such offered rates appear
on the Reuters Screen LIBO Page as at 11:00
a.m. (London time) two Eurodollar Banking
Days prior to the commencement of the
relevant Interest Period, the arithmetic mean
(adjusted upward, if necessary, to the nearest
1/16 of 1%), of such offered rates as
determined in accordance with the provisions
of the Confirming Bank Agreement or (b) if
fewer than two offered rates appear, in
immediately available funds to the Eurodollar
Rate Reference Banks in the London interbank
market (adjusted upward, if necessary, to the
nearest 1/16 of 1%) as at 11:00 a.m. (London
time) two Eurodollar Banking Days prior to
the commencement of the relevant Interest
Period, determined in accordance with the
provisions of the Confirming Bank Agreement, by
(ii) a percentage (expressed as a decimal)
equal to 1.00 minus the Eurodollar Rate
Reserve Percentage.
Eurodollar Rate Reserve
Percentage: For any Interest Period for any Advance for
which the Eurodollar Rate has been selected
or is applicable, the percentage (expressed
as a decimal) as calculated by the Confirming
Bank that is in effect on the first day of
such Interest Period, as prescribed by the
Board of Governors of the U.S. Federal
Reserve System (or any successor), for
determining reserve requirements to be
maintained by the Bank under Regulation D (or
any successor regulation thereof) as amended
to the date hereof (including such reserve
requirements as become applicable to the Bank
pursuant to phase-in or other similar
requirements of Regulation D at any time
subsequent to the date hereof) in respect of
"Eurocurrency liabilities" (as defined in
Regulation D). The Eurodollar Rate shall be
adjusted automatically on and as of the
effective date of any change in the
Eurodollar Rate Reserve Percentage.
Eurodollar Rate
Reference Banks: Bank of Tokyo Trust Company
The Bank of New York
Minimum Stockholder's
Equity: As of the last day of September 1996, and the
last day of each fiscal quarter thereafter,
the greater of:
(a) $350 million, or
(b) $350 million plus 40% of the sum of
cumulative Net Earnings of the Borrower
and its Subsidiaries beginning with
July 1, 1996.
MSI: Mayer & Schweitzer, Inc., a New Jersey
corporation, and its successors and assigns.
Net Capital Ratio: As of the date of determination, that
percentage of net capital to aggregate debit
items of any entity subject to the Net
Capital Rule 15c3-1 promulgated by the
Securities Exchange Commission pursuant to
the Securities Exchange Act of 1934 and any
successor or replacement rule or regulation
therefor.
Net Earnings: With respect to any fiscal period, the
consolidated net income of the Borrower and
its Subsidiaries, after taking into account all
extraordinary items, taxes and other proper
charges and reserves for the applicable
period, determined in accordance with U.S.
generally accepted accounting principles,
consistently applied.
Reference Rate: For any Interest Period for any Advance for
which the Reference Rate has been selected
(or for any post-Interest Period period
covered by clause (ii) of Paragraph 2.6 hereof),
the average daily per annum rate of interest
calculated by the Confirming Bank during such
Interest Period or period, with the rate on
each day being equal to the higher of (i) the
highest per annum rate of interest (adjusted
upward, if necessary, to the nearest 1/16 of
1%) publicly announced by any of the Reference
Rate Reference Banks on such day as its "prime
rate," "prime commercial lending rate,"
"reference rate," or "base rate," as the case
may be, and (ii) the highest per annum Federal
Funds Effective Rate available to any
Reference Rate Reference Bank, plus 1/2 of 1%.
Reference Rate
Reference Banks: The First National Bank of Chicago
Chemical Bank
Stockholder's Equity: As of any date of determination,
Stockholders' Equity of Borrower and its
Subsidiaries as of that date determined in
accordance with U.S. generally accepted
accounting principles, consistently applied.
Subsidiary: Any corporation or other entity of which a
sufficient number of voting securities or
other interests having power to elect a
majority of the board of directors or other
persons performing similar functions are at
the time directly or indirectly owned by the
Borrower.
2. THE REVOLVING CREDIT FACILITY
The Bank agrees that consistent with the terms and conditions set
forth in this Article 2, it will lend to the Borrower sums which, in the
aggregate principal amount outstanding at any one time, shall not exceed the
dollar amount of the Bank's commitment as specified in Schedule I hereto.
Such amount, as it may from time to time be reduced pursuant to Paragraph
2.10 hereof, shall be referred to as the "Credit."
2.1 The Advances. The Credit shall be a revolving credit, such
that from time to time commencing on June 28, 1996 and ending on June 27,
1997, the Borrower may borrow, repay at the end of any Interest Period (or
otherwise as permitted by Paragraph 3.2 hereof) and reborrow amounts during
the continuation of the Credit, as the Borrower may see fit, subject to
the applicable provisions of this Agreement. Each such revolving credit
loan made hereunder (an "Advance") shall be in the amount of $1,000,000 or
integral multiples thereof and shall become due and payable on the last day
of the Interest Period for such Advance.
The obligation of the Borrower to repay the aggregate unpaid
principal amount of the Advances shall be evidenced by a promissory note of
the Borrower (the "Revolving Note") in substantially the form attached
hereto as Exhibit A, with the blanks appropriately completed, payable to the
order of the Bank, bearing interest as hereinafter specified. The Revolving
Note shall be dated, and shall be delivered to the Bank, on the date of the
execution and delivery of this Agreement by the Borrower. The Bank shall,
and is hereby authorized by the Borrower to, endorse on the schedule
contained on the Revolving Note, or on a continuation of such schedule
attached thereto and made a part thereof, appropriate notations regarding
the Advances evidenced by the Revolving Note as specifically provided
therein; provided, however, that the failure to make, or error in making,
any such notation shall not limit or otherwise affect the obligations of the
Borrower hereunder or under the Revolving Note.
2.2 Making of Advances; Notice. Whenever the Borrower desires
the Bank to make an Advance, it shall give the Bank at least one Banking Day's
prior irrevocable notice for Reference Rate Advances, one CD Banking Day's
prior irrevocable notice for CD Rate Advances, or three Eurodollar Banking
Days' prior irrevocable notice for Eurodollar Rate Advances (each such
notice to be in the form of a Borrowing Advice in substantially the form
attached hereto as Exhibit C) setting forth the following information:
(a) The date, which shall be either a Banking Day, a CD Banking
day, or a Eurodollar Banking Day, on which such Advance is to be
made;
(b) The Interest Period selected in accordance with Paragraph 2.3
hereof;
(c) The interest rate option selected in accordance with
Paragraph 2.4 hereof; and
(d) The aggregate principal amount of the Advance to which such
Interest Period and interest rate shall apply.
Notice of each Borrowing Advice indicating the selection of an Interest
Period and whether the interest calculation is to be based on the Eurodollar
Rate, the CD Rate or the Reference Rate shall simultaneously be given to the
Confirming Bank by the Borrower. Any notice required pursuant to this
Paragraph 2.2 shall be given no later than 12:00 noon (New York City time)
on the date such notice is required to be given.
With respect to any Advance having an Interest Period ending on or
before June 27, 1997, if prior to the last day of the Interest Period for such
Advance the Borrower fails timely to provide a new Borrowing Advice in
accordance with this Paragraph 2.2, such Advance shall, on the last day of
the then-existing Interest Period for such Advance, automatically convert
into a new Reference Rate Advance with an Interest Period of thirty (30) days
(or, in the event that there are fewer than thirty (30) days remaining to
June 27, 1997, an Interest Period of the number of days remaining to June 27,
1997). In the event of any such automatic conversion, the Borrower on the
date of such conversion shall be deemed to make a representation and
warranty to the Bank that, to the best of the Borrower's knowledge,
(i) neither the Broker Subsidiary nor MSI is in violation of minimum net
capital requirements as described in Paragraph 7.1, (ii) the Borrower's
Stockholders' Equity is not below the Minimum Stockholders' Equity as
described in Paragraph 7.2, and (iii) no amount owing with respect to any
Commitment Fee, any outstanding Advance, or any interest thereon, or any
other amount hereunder, is due and unpaid.
Each Advance to the Borrower under this Agreement shall be made by
12:00 noon (New York City time) on the date the Advance is to be made, and
shall be in immediately available funds credited to the account of Borrower
with the Bank or wired to the Borrower's account at Citibank, N.A. (Account
4055-4016) or such other account as may be designated by the Borrower.
The Bank, by notice to the Borrower (to be given not later than two
Banking Days prior to the initial Advance hereunder) may request that Advances
made hereunder for which the interest calculation is to be based on the
Eurodollar Rate be evidenced by separate Revolving Notes substantially in the
form of Exhibit A hereto, payable to the order of such Bank for the account
of its office, branch or affiliate it may designate as its Eurodollar
lending office. Each reference to the Bank in Paragraph 2.5(b) and 3.5
shall include the Bank's designated Eurodollar lending office; all notices
given to the Bank in accordance with this Agreement shall be deemed to have
been given to such Eurodollar lending office.
2.3 Interest Periods. The Borrower may select the Interest
Period (as defined in the next sentence) for each Advance, it being
understood that the Borrower may request multiple Advances on the same day and
may select a different Interest Period for each such Advance; provided,
however, that each such Advance shall be in the amount of $1,000,000 or an
integral multiple thereof. With respect to any Advance, an Interest Period
shall be each period, as selected by the Borrower in accordance with the
terms of this Agreement, beginning on the day such Advance is made under
this Agreement, and ending on the day specified by the Borrower:
(a) Not more than 180 days thereafter, in the case of any Interest
Period for which the interest is to be based on the Reference
Rate, provided that if the last day of an Interest Period would
be a day that is not a Banking Day, such Interest Period shall
be extended to the next succeeding Banking Day;
(b) either 30, 60, 90 or 180 days thereafter, in the case of any
Interest Period for which the interest is to be based on the CD
Rate, provided that if the last day of an Interest Period would
be a day that is not a CD Banking Day, such Interest Period
shall be extended to the next succeeding CD Banking Day; or
(c) not less than 7 nor more than 180 days thereafter, in the case
of any Interest Period that is to be based on the Eurodollar
Rate, provided that if the last day of an Interest Period would
be a day that is not a Eurodollar Banking Day, such Interest
Period shall be extended to the next succeeding Eurodollar
Banking Day, unless such next succeeding Eurodollar Banking
Day is in a different calendar month, in which case such
interest period shall end on the next preceding Eurodollar
Banking Day; provided, however, that no Interest Period
applicable to any Advance shall extend beyond September 25,
1997.
2.4 Interest Rates. Each Advance, while outstanding, shall bear
interest, payable on the last day of each Interest Period applicable thereto
(provided that (i) if any Advance is based on the Reference Rate, interest
attributable thereto also shall be payable on the last day of each calendar
quarter that occurs before the last day of the applicable Interest Period,
or (ii) if the Interest Period is longer than 90 days, interest with respect
thereto also shall be payable on the Banking Day following the 90th day from
the commencement of the Interest Period) at a rate per annum (based on a 360-
day year and actual days elapsed for Eurodollar Rate and CD Rate Advances,
and a 365-day year and actual days elapsed for Reference Rate Advances,
counting the first day but not the last day of any Interest Period) that
shall be equal to one of the following as selected by the Borrower:
(a) Eurodollar Rate, plus 3/8 of 1% per annum,
(b) CD Rate, plus 1/2 of 1% per annum, or
(c) Reference Rate.
2.5 Substitute Rates. If upon receipt by the Bank of a Borrowing
Advice relating to an Advance:
(a) the Confirming Bank shall determine in accordance with the
provisions of the Confirming Bank Agreement that by reason of
changes affecting the New York City certificate of deposit
market and/or the London interbank market, adequate and
reasonable means do not exist for ascertaining the applicable
CD Rate and/or Eurodollar Rate, respectively, with respect to
any Interest Period; or
(b) the Bank shall determine that by reason of any change since
the date hereof in any applicable law or governmental regulation
(other than any such change in the regulations described in the
definition of Eurodollar Rate Reserve Percentage in Article I
hereof), guideline or order (or any interpretation thereof),
the adoption or enactment of any new law or governmental
regulation or order or any other circumstance affecting the
Bank or the New York City certificate of deposit market and/or
the London interbank market, the CD Rate and/or Eurodollar Rate,
determined in accordance with the Confirming Bank Agreement
shall no longer represent the effective cost to the Bank of
certificates of deposit and/or of U.S. dollar deposits,
respectively, in the relevant amount and for the relevant
period; or
(c) the Confirming Bank or the Bank shall determine that, as a
result of any change since the date hereof in any applicable law
or governmental regulation or as a result of the adoption of any
new applicable law or governmental regulation, the applicable
CD Rate and/or Eurodollar Rate, would be unlawful;
then, and in any such event, the Bank and the Borrower shall agree upon a
rate of interest applicable to the Advance that is reasonably judged by them to
be the nearest equivalent of the selected rate; provided, however, that if
no such rate is judged by them to be equivalent to the selected rate, the
basis for determining the rate of interest and the Interest Period shall be
the Reference Rate for an Interest Period of 30 days.
2.6 Interest Upon Default. After the principal amount of any
Advance, accrued interest upon such Advance, Commitment Fee, or any other
amount hereunder shall have become due and payable by acceleration, or
otherwise, it shall thereafter (until paid) bear interest, payable on
demand, (i) until the end of the Interest Period with respect to such
Advance at a rate per annum equal to 1% per annum in excess of the rate or
rates in effect with respect to such Advance and (ii) thereafter, at a rate
per annum equal to 1% per annum in excess of the Reference Rate.
2.7 Commitment Fee. Through June 27, 1997, the Borrower will pay
to the Bank a credit commitment fee (the "Commitment Fee") for each calendar
quarter at a rate per annum (based on a 360 day year and actual days
elapsed) of 100/1000 of 1% of the average daily unused principal amount of
the Credit in effect during such quarter payable on the first Banking Day
after the end of such quarter (or portion of such quarter, if applicable),
and upon termination of the Credit; provided, however, that any such payment
upon termination of the Credit during any calendar quarter shall be in lieu
of (and not in addition to) the payment otherwise due for such portion of such
quarter on the first Banking Day after the end of such quarter.
2.8 Facility Fee. On June 28, 1996, Borrower shall pay a facility
fee to the Bank in an amount equal to 50/1000 of 1% of the Bank's commitment as
specified in Schedule I.
2.9 Confirming Bank Fee. On June 28, 1996, the Borrower shall
pay to the Confirming Bank a fee of $10,000.
2.10 Reduction of Credit. The Borrower, from time to time, upon
at least three Banking Days' written notice to the Bank, may permanently
reduce any then-unutilized portion of the Credit in units of $1,000,000
without penalty or premium; thereafter, during the continuation of the
Credit, the computation of the Commitment Fee and the Bank's obligations for
Advances shall be based upon such reduced Credit. The Borrower, from time
to time, upon at least three Banking Days' written notice to the Bank, may
permanently reduce all or any part of the then-utilized portion of the
Credit by making payment to the Bank on such utilized portion pursuant to
Paragraph 2.1 or Paragraph 3.2 hereof, and thereafter, during the
continuation of the Credit, the computation of the Commitment Fee and the
Bank's obligations for Advances shall be based upon such reduced Credit;
provided, however, that in order for a payment to result in a permanent
reduction of the Credit under this paragraph, the written notice required under
this paragraph must expressly provide that the payment is being tendered
pursuant to this paragraph and is intended to result in a permanent reduction
of the Credit. Any written notice delivered pursuant to either of the
foregoing two sentences shall be irrevocable unless the Bank consents in
writing to its revocation. In the event the Credit shall be reduced to zero
pursuant to this paragraph, the Credit shall be deemed terminated, and any
Commitment Fee or any other amount payable hereunder then accrued shall
become immediately payable. Such termination of the Credit shall terminate
the Borrower's obligations with respect to the Commitment Fee to the extent
not theretofore accrued and shall terminate the Bank's obligations to make
any further Advances under this Agreement.
3. PAYMENT
3.1 Method of Payment. All payments hereunder and under the
Revolving Note shall be payable in lawful money of the United States of America
and in immediately available funds not later than 12:00 noon (New York City
time) on the date when due at the principal office of the Bank or at such
other place as the Bank may, from time to time, designate in writing to the
Borrower.
3.2 Optional Prepayment. The Borrower shall be entitled to prepay
the Revolving Note in whole or in part (such part being in integral multiples
of $1,000,000) without premium or penalty. In the case of each such
prepayment (i) the Borrower shall give to the Bank at least three Banking
Days' prior irrevocable notice of the aggregate principal amount of any such
prepayment, (ii) at the time of prepayment, the Borrower shall pay all
unpaid interest accrued on the amount prepaid, and (iii) the Borrower shall
pay the Bank any amount payable to the Bank in accordance with Paragraph 3.4
hereof as a result of such prepayment.
3.3 Net Payments. All payments by Borrower hereunder and under
the Revolving Note shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments, after deduction
or withholding for or on account of any present or future taxes, levies,
imposts, duties or other charges of whatsoever nature imposed by any
government or any political subdivision or taxing authority thereof
(collectively, "Taxes"), shall not be less than the amounts otherwise
specified to be paid under this Agreement. Notwithstanding the foregoing,
the Borrower shall not be liable for the payment of any tax on or measured
by the net income of the Bank pursuant to the laws of the jurisdiction
where an office of the Bank making any loan hereunder is located or does
business. The Borrower shall pay all Taxes when due and shall promptly send
to the Bank original tax receipts or copies thereof certified by the
relevant taxing authority together with such other documentary evidence with
respect to such payments as may be required from time to time by the Bank.
If the Borrower fails to pay any Taxes to the appropriate taxing authorities
when due or fails to remit to the Bank any such original tax receipts or
certified copies thereof as aforesaid or other required documentary
evidence, the Borrower shall indemnify the Bank for any taxes, interest or
penalties that may become payable by the Bank as a result of such failure.
3.4 Indemnity for Losses. The Borrower shall indemnify the Bank
for any loss or expense (including, without limitation, any interest paid by
the Bank to lenders of funds borrowed by it to make or maintain any Advance
and any loss incurred by the Bank in connection with the reemployment of
funds obtained by the Bank for the purpose of making or maintaining any
Advance hereunder) which the Bank may sustain as a result of (i) any payment
or prepayment of any Advance on a date other than the last day of any Interest
Period, (ii) any failure of the Borrower to borrow on a date specified in a
Borrowing Advice furnished hereunder or (iii) any failure by the Borrower to
prepay any amount on the date and in the amount specified in a notice
furnished by the Borrower in accordance with the terms hereof. A certificate
as to any amounts payable pursuant to the foregoing submitted by the Bank to
the Borrower shall, in the absence of manifest error, be conclusive.
3.5 Change in Law. In the event that the Bank shall become
subject to any increased cost (including, but not limited to, taxes, increases
in reserves and reductions in amounts receivable by the Bank) with respect
to this Agreement or making or maintaining any borrowing hereunder as a
result of any Change in Law Affecting Cost, then as soon as practicable
thereafter, the Bank shall give the Borrower notice of such Change in Law
Affecting Cost and a certificate containing the amount and basis of demand, and
the Borrower shall pay to the Bank additional amounts that will compensate
the Bank for such increased cost or reduced amount receivable and, at the
option of the Borrower on notice to the Bank, the Borrower may either elect
to (i) change the basis for determining interest on outstanding indebtedness
for the remainder of the applicable Interest Period in accordance with
Paragraph 2.4 hereof, or (ii) prepay the principal amount outstanding with
accrued interest thereon to the date of prepayment. If such change or
prepayment is made on a day that is not the last day of an Interest Period,
the Borrower shall pay the Bank, upon request, such amount or amounts as
will compensate the Bank for any loss or expense incurred by the Bank in
the redeployment of funds obtained by the Bank for the purpose of making or
maintaining the Advances provided for herein. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
the Bank to the Borrower shall, in the absence of manifest error, be conclusive.
4. CONDITIONS
4.1 Conditions Precedent to the Effectiveness of this Agreement.
The Borrower shall deliver to the Bank the following documents concurrently
with the execution of this Agreement:
(a) A written opinion, dated the date hereof, of counsel for the
Borrower, in the form of Exhibit D.
(b) A copy of a resolution or resolutions adopted by the Board of
Directors or Executive Committee of the Borrower, certified by
the Secretary or an Assistant Secretary of the Borrower as being
in full force and effect on the date hereof, authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, and a
copy of the Certificate of Incorporation and the By-Laws of
the Borrower, similarly certified.
(c) A certificate, signed by the Secretary or an Assistant
Secretary of the Borrower and dated the date hereof, as to the
incumbency of the person or persons authorized to execute and
deliver this Agreement.
(d) A certificate signed by the Chief Financial Officer of the
Borrower that, as of the date hereof, there has been no material
adverse change in its consolidated financial condition since
December 31, 1995 not reflected on its Quarterly Reports on
Form 10-Q filed with the SEC for the period ending March 31,
1996.
(e) A certificate, signed by the Secretary or an Assistant
Secretary of the Borrower and dated the date hereof, as to the
persons authorized to execute and deliver a Borrowing Advice and
the Revolving Note. The Bank may rely on such certificate with
respect to the Advances hereunder unless and until it shall
have received an up-dated certificate and, after receipt of
such up-dated certificate, similarly may rely thereon.
4.2 Conditions Precedent to Advances. The Bank shall not be
required to make any Advance pursuant to Article 2 hereof:
(a) when the Credit has been terminated; or
(b) when any of the representations or warranties of the Borrower
set forth in Article 5 hereof shall prove to have been untrue
in any material respect when made, or when any Event of
Default or any event that, upon lapse of time or notice or both,
would become an Event of Default as defined in Article 8, has
occurred; or
(c) when the Broker Subsidiary or MSI is in violation of minimum
net capital requirements as described in Paragraph 7.1; or
(d) when the Borrower's Stockholder's Equity is below the Minimum
Stockholders' Equity as described in Paragraph 7.2.; or
(e) when any amount owing with respect to any Commitment Fee or
any outstanding Advance or any interest thereon or any other
amount payable hereunder is due and unpaid.
Each Borrowing Advice given by the Borrower shall be deemed to be a
representation and warranty by the Borrower to the Bank, effective on and as of
the date of the Advance covered thereby, that (i) the representations and
warranties set forth in Article 5 hereof are true and correct as of such
date, and (ii) no Event of Default, and no event which with the lapse of
time or notice or both would become an Event of Default, has occurred and is
continuing.
5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants, as of the date of delivery of
this Agreement and as of the date of any Advance, as follows:
5.1 The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and
has full power, authority and legal right and has all governmental licenses,
authorizations, qualifications and approvals required to own its property
and assets and to transact the business in which it is engaged; and all of
the outstanding shares of capital stock of Borrower have been duly
authorized and validly issued, are fully paid and non-assessable.
5.2 The Borrower has full power, authority and legal right to
execute and deliver, and to perform its obligations under, this Agreement, and
to borrow hereunder, and has taken all necessary corporate and legal action
to authorize the borrowings hereunder on the terms and conditions of this
Agreement and to authorize the execution and delivery of this Agreement,
and the performance of the terms thereof.
5.3 This Agreement has been duly authorized and executed by the
Borrower, and when delivered to the Bank will be a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance
with its terms, except, in each case, as enforcement thereof may be limited by
bankruptcy, insolvency or other laws relating to or affecting enforcement of
creditors' rights or by general equity principles.
5.4 The execution and delivery of this Agreement by the Borrower
and the performance of the terms hereof will not violate any provision of any
law or regulation or any judgment, order or determination of any court or
governmental authority or of the charter or by-laws of, or any securities
issued by, the Borrower or any provision of any mortgage, indenture, loan or
security agreement, or other instrument, to which the Borrower is a party or
which purports to be binding upon it or any of its assets in any respect
that reasonably could be expected to have a material adverse effect on the
Borrower and its Subsidiaries taken as a whole on a consolidated basis; nor
will the execution and the delivery of this Agreement by the Borrower and
the performance of the terms hereof result in the creation of any lien or
security interest on any assets of the Borrower pursuant to the provisions
of any of the foregoing.
5.5 Except as disclosed in writing by Borrower, no consents of
others (including, without limitation, stockholders and creditors of the
Borrower) nor any consents or authorizations of, exemptions by, or
registrations, filings or declarations with, any governmental authority are
required to be obtained by the Borrower in connection with this Agreement.
5.6 The consolidated financial statements of the Borrower
contained in the documents previously delivered to the Bank have been
prepared in accordance with U.S. generally accepted accounting principles and
present fairly the consolidated financial position of the Borrower.
5.7 The Broker Subsidiary possesses all material licenses, permits
and approvals necessary for the conduct of its business as now conducted and as
presently proposed to be conducted as required by law or the applicable rules
of the SEC and the National Association of Securities Dealers, Inc.
5.8 The Broker Subsidiary is registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended.
5.9 The Broker Subsidiary is not in arrears with respect to any
assessment made upon it by the Securities Investor Protection Corporation,
except for any assessment being contested by Broker Subsidiary in good faith
by appropriate proceedings and with respect to which adequate reserves or
other provisions are being maintained to the extent required by U.S.
generally accepted accounting principles.
5.10 The Borrower has paid and discharged or caused to be paid and
discharged all taxes, assessments, and governmental charges prior to the
date on which the same would have become delinquent, except to the extent
that such taxes, assessments or charges are being contested in good faith
and by appropriate proceedings by or on behalf of the Borrower and with
respect to which adequate reserves or other provisions are being maintained to
the extent required by U.S. generally accepted accounting principles.
5.11 The Borrower is in compliance with the provisions of and
regulations under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Internal Revenue Code of 1986, as amended,
applicable to any pension or other employee benefit plan established or
maintained by the Borrower or to which contributions are made by the Borrower
(the "Plans"). The Borrower has met all of the funding standards applicable
to each of its Plans, and there exists no event or condition that would permit
the institution of proceedings to terminate any of the Plans under Section
4042 of ERISA. The estimated current value of the benefits vested under
each of the Plans does not, and upon termination of any of the Plans will
not, exceed the estimated current value of any such Plan's assets. The
Borrower has not, with respect to any of the Plans, engaged in a prohibited
transaction set forth in Section 406 of ERISA or Section 4975(c) of the
Internal Revenue Code of 1986.
5.12 The Borrower will not use any amounts advanced to it under
this Agreement to remedy a default under any mortgage, indenture, agreement
or instrument under which there may be issued any indebtedness of the
Borrower to any bank or bank holding company, or their respective assignees,
for borrowed money. Further, the Borrower will not use any amounts advanced
to it under this Agreement for the immediate purpose of acquiring a company
where the Board of Directors or other governing body of the entity being
acquired has made (and not rescinded) a public statement opposing such
acquisition.
5.13 This Agreement contains terms no less favorable to the Bank than
the terms of any Borrowing Agreement.
5.14 The Borrower will not use the proceeds of any loan provided
hereby in such a manner as to result in a violation of Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System.
5.15 The persons named for such purpose in the certificates
delivered pursuant to Paragraph 4.1(e) hereof are authorized to execute
Borrowing Advices.
5.16 Borrower is not in default in the performance or observance
of any material obligation, agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan agreement, note or lease
to which the Borrower is a party or by which it may be bound.
5.17 There is no action, suit or proceeding pending against, or
to the knowledge of the Borrower, threatened against or affecting, the
Borrower or any of its Subsidiaries before any court, arbitrator,
governmental body, agency or official in which there is a significant
probability of an adverse decision which could materially adversely affect
the business or the financial position of the Borrower.
5.18 The Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
6. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as the Credit shall
continue or any Advance by the Bank remains outstanding and until full payment
of all amounts due to the Bank hereunder, it will, unless and to the extent
the Bank waives compliance in writing:
6.1 Give prompt notice to the Bank, no later than three Banking
Days after becoming aware thereof, of any Event of Default or any event that,
upon lapse of time or notice or both, would become an Event of Default.
6.2 Deliver to the Bank, within ten Banking Days of the filing
thereof with the SEC, a copy of each registration statement filed under the
Securities Act of 1933, a copy of each filing (including exhibits) made by
the Borrower with the SEC under the Securities Exchange Act of 1934, as
amended (but, in the event the Borrower requests an extension of any such
filing from the SEC, promptly (but not later than the second Banking Day
following the filing of such request) deliver a copy of such request to the
Bank).
6.3 Maintain and keep in force in adequate amounts such insurance
as is usual in the business carried on by the Borrower.
6.4 Maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with U.S. generally
accepted accounting principles and practices and in compliance with the
regulations of any governmental regulatory body having jurisdiction thereof.
6.5 Advise the Bank, in a timely manner, of material changes to
the nature of business of the Borrower or its Broker Subsidiary as at present
conducted. The Broker Subsidiary is at present engaged in the business of
providing financial services, primarily to individual investors and/or their
advisors.
6.6 With respect to each and any Advance requested by the Borrower
under this Agreement (a "primary Advance"), the Borrower will concurrently
request an Advance under each of the Borrowing Agreements (each such other
Advance under each of the Borrowing Agreements being hereinafter
individually referred to as an "other Advance" and collectively referred to as
the "other Advances"), with each such other Advance being requested in an
amount equal to the same percentage of the Credit under the applicable
Borrowing Agreement as the primary Advance constitutes as a percentage of
the Credit under this Agreement. As an illustration of the application of this
Section 6.6 and by way of example only, if the Borrower requests an Advance
under this Agreement that is in an amount equal to 10% of the Credit under this
Agreement, the Borrower shall simultaneously seek an other Advance under
each of the Borrowing Agreements, each of which other Advances shall be
requested in an amount equal to 10% of the Credit under the applicable
Borrowing Agreement.
7. NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as the Credit shall
continue or any Advance by the Bank remains outstanding and until full payment
of all amounts due to the Bank hereunder, unless and to the extent the Bank
waives compliance in writing:
7.1 The Borrower will not permit the Broker Subsidiary to allow
(i) the average of two consecutive month-end Net Capital Ratios to be less than
7%, or (ii) any month-end Net Capital Ratio to be less than 5%. The Borrower
similarly will not permit MSI to allow (i) the average of two consecutive
month-end Net Capital Ratios to be less than 7%, or (ii) any month-end Net
Capital Ratio to be less than 5%.
7.2 The Borrower will not allow Stockholder's Equity to fall
below the Minimum Stockholders' Equity.
7.3 The Borrower will not (i) permit either Broker Subsidiary or
Intermediate Parent to (a) merge or consolidate, unless the surviving company
is a Controlled Subsidiary, or (b) convey or transfer its properties and
assets substantially as an entirety except to one or more Controlled
Subsidiaries; or, (ii) except as permitted by (i) immediately preceding,
sell, transfer or otherwise dispose of any voting stock of Broker Subsidiary or
Intermediate Parent, or permit either Broker Subsidiary or Intermediate Parent
to issue, sell or otherwise dispose of any of its voting stock, unless, after
giving effect to any such transaction, Broker Subsidiary or Intermediate
Parent, as the case may be, remains a Controlled Subsidiary.
7.4 The Borrower will not permit the Broker Subsidiary to create,
incur or assume any indebtedness other than:
(a) indebtedness incurred in the ordinary course of business,
including but not necessarily limited to, (i) indebtedness to
customers, other brokers or dealers, clearing houses and like
institutions, (ii) "broker call" credit, (iii) stock loans,
(iv) obligations to banks for disbursement accounts, (v) trade
and other accounts payable, (vi) indebtedness incurred for
the purchase of tangible property on a non-recourse basis or
for the leasing of tangible property under a capitalized
lease; and (vii) indebtedness incurred for the purchase,
installation or servicing of computer equipment and software;
(b) intercompany indebtedness; and
(c) other indebtedness in the aggregate not exceeding $50,000,000.
7.5 The Borrower will not, and will not permit any Subsidiary at
any time directly or indirectly to create, assume, incur or permit to exist
any indebtedness secured by a pledge, lien or other encumbrance (hereinafter
referred to as a "lien") on the voting stock of any Subsidiary without making
effective provision whereby the Revolving Note shall be secured equally and
ratably with such secured indebtedness so long as other indebtedness shall be
so secured; provided, however, that the foregoing covenant shall not be
applicable to Permitted Liens (as defined in Paragraph 7.6 below).
7.6 The Borrower will not create, incur, assume or suffer to
exist any lien or encumbrance upon or with respect to any of its properties,
whether now owned or hereafter acquired, except the following (the
"Permitted Liens"):
(a) liens securing taxes, assessments or governmental charges or
levies, or in connection with workers' compensation,
unemployment insurance or social security obligations, or the
claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons not yet
delinquent or which are being contested in good faith by
appropriate proceedings with respect to which adequate
reserves or other provisions are being maintained to the
extent required by U.S. generally accepted accounting
principles;
(b) liens not for borrowed money incidental to the conduct of its
business or the ownership of property that do not materially
detract from the value of any item of property;
(c) attachment, judgment or other similar liens arising in the
connection with court proceedings that do not, in the aggregate,
materially detract from the value of its property, materially
impair the use thereof in the operation of its businesses and
(i) that are discharged or stayed within sixty (60) days of
attachment or levy, or (ii) payment of which is covered in
full (subject to customary and reasonable deductibles) by
insurance or surety bonds; and
(d) liens existing at Closing Date provided that the obligations
secured thereby are not increased.
8. EVENT OF DEFAULT
8.1 The occurrence of any of the following events shall constitute
an "Event of Default":
(a) The Borrower shall fail to pay any interest with respect to
the Revolving Note or any Commitment Fee in accordance with the
terms hereof within 10 days after such payment is due.
(b) The Borrower shall fail to pay any principal with respect to
the Revolving Note in accordance with the terms thereof on the
date when due or shall fail to pay when due (after expiration of
any applicable grace periods) any principal or interest with
respect to any advance or other loan under any of the
Borrowing Agreements.
(c) Any representation or warranty made by the Borrower herein or
hereunder or in any certificate or other document furnished by
the Borrower hereunder shall prove to have been incorrect when
made (or deemed made) in any respect that is materially
adverse to the interests of the Bank or its rights and
remedies hereunder.
(d) Except as specified in (a) and (b) above, the Borrower shall
default in the performance of, or breach, any covenant of the
Borrower with respect to this Agreement, and such default or
breach shall continue for a period of thirty days after there
has been given, by registered or certified mail, to the
Borrower by the Bank a written notice specifying such default
or breach and requiring it to be remedied.
(e) An event of default as defined under any Borrowing Agreement,
or an event of default as defined in any mortgage, indenture,
agreement or instrument under which there may be issued, or by
which there may be secured or evidenced, any indebtedness for
borrowed money of the Borrower in a principal amount not less
than $30 million, shall have occurred and shall result in such
indebtedness becoming or being declared due and payable prior
to the date on which it otherwise would become due and payable;
provided, however, that if such event of default shall be
remedied or cured by the Borrower, or waived by the holders of
such indebtedness, within twenty days after the Borrower has
received written notice of such event of default and
acceleration, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have thereupon been remedied,
cured or waived without further action upon the part of either
the Borrower or the Bank.
(f) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Borrower or the Broker
Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the
Borrower or Broker Subsidiary or for any substantial part of its
respective properties, or ordering the winding-up or
liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive
days.
(g) The Borrower or the Broker Subsidiary shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of
an order for relief in an involuntary case under such law, or
shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Borrower or Broker
Subsidiary or for any substantial part of its respective
properties, or shall make any general assignment for the
benefit of creditors, or shall fail generally to pay its
respective debts as they become due or shall take any corporate
action in furtherance of any of the foregoing.
(h) A final judgment or judgments for the payment of money in
excess of $25,000,000 in the aggregate shall be entered against
the Borrower by a court or courts of competent jurisdiction, and
the same shall not be discharged (or provisions shall not be
made for such discharge), or a stay of execution thereof shall
not be procured, within 30 days from the date of entry thereof
and the Borrower shall not, within said period of 30 days, or
such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal.
8.2 If an Event of Default occurs and is continuing, then and in
every such case the Bank at its option may terminate the Credit and all
obligations of the Bank to make any further Advances, and declare the
principal, any accrued and unpaid interest, any accrued and unpaid Commitment
Fees, or any other amounts payable under the outstanding Revolving Note, to
be due and payable immediately, by a notice in writing to the Borrower, and
upon such declaration such principal, interest, Commitment Fees, or other
amounts payable hereunder accrued thereon shall become immediately due and
payable, together with any funding losses that may result as a consequence
of such declaration, without presentment, demand, protest or other notice of
any kind, all of which are expressly waived by the Borrower; provided,
however, that in the case of any of the Events of Default specified in
subparagraph (f) or (g) of Paragraph 8.1, automatically without any notice to
the Borrower or any other act by the Bank, the Credit and the Bank's
obligations to make any further Advances shall thereupon terminate and the
outstanding principal of the Revolving Note, any accrued and unpaid
interest, any accrued and unpaid Commitment Fees or any other amounts payable
hereunder shall become immediately due and payable, together with any
funding losses that may result as a consequence thereof, without presentment,
demand, protest or other notice of any kind, all of which are expressly waived
by the Borrower.
9. MISCELLANEOUS
9.1 Notices. Any communications between the parties hereto or
notices provided herein shall be effective upon receipt and shall be, unless
otherwise specified, in writing (which may include telex or telecopy
transmission) and shall be given to the Bank at the address specified in
Schedule I hereto and to the Borrower at The Charles Schwab Corporation,
Attn: Treasury Department, 101 Montgomery Street, San Francisco, California
94104, fax number (415) 974-7570, or to such other address as either party
shall hereafter have indicated to the other party in writing. In the event
the Borrower consents to any assignment by the Bank with respect to this
Agreement, upon receiving written notice from the Bank that such assignment
has been effected, the Borrower thereafter shall give all notices required to
be given under this Agreement to the assignee at the address specified for
such assignee by the Bank or such assignee. Notwithstanding the granting of
any participation by the Bank with respect to this Agreement as permitted
by Paragraph 9.4, all notices required to be given under this Agreement may
continue to be given by the Borrower only to the Bank and shall be effective
upon delivery to the Bank as though no such participation had been granted.
9.2 Waivers. No delay or omission to exercise any right, power
or remedy accruing to the Bank upon any breach or default of the Borrower under
this Agreement shall impair any such right, power or remedy of the Bank,
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of
any other breach or default theretofore or thereafter occurring. Any
amendment, modification, waiver, permit, consent or approval of any kind or
character on the part of the Bank of any breach or default under this
Agreement, or any waiver on the part of the Bank of any provision or condition
of this Agreement, must be in writing signed by the Bank and shall be effective
only to the extent specifically set forth in writing. All remedies, either
under this Agreement or by law or otherwise afforded to the Bank, shall be
cumulative and not alternative.
9.3 Expenses. The Borrower agrees to pay all reasonable out-of-
pocket expenses of the Bank (including the reasonable fees and expenses of its
counsel) in connection with the negotiation, preparation, execution and
delivery of this Agreement, any amendments or modifications of or supplements
to any of the foregoing and any and all other documents furnished in
connection herewith, as well as, after the occurrence of any event that upon
a lapse of time or notice or both, would become an Event of Default, all
costs and expenses (including reasonable fees and expenses of counsel who may
be employees of Bank) in connection with the enforcement or administration
(including, without limitation, actions taken by the Bank in connection with
litigation or regulatory proceedings as to which this Agreement becomes
relevant) of, or legal advice in respect to the rights and responsibilities
or the exercise of any right or remedy under, any provision of this Agreement,
the Revolving Note, and any amendments or modifications of or supplements to
any of the foregoing.
9.4 Assignment. Except as hereinafter set forth in this
Paragraph 9.4, no rights of the Bank hereunder may be assigned, transferred,
sold, assigned, pledged or otherwise disposed of, and no lien, charge or other
encumbrance may be created or permitted to be created thereon without the
prior written consent of the Borrower.
(a) Transfers to Affiliated Entities and Federal Reserve Banks. The
Bank shall have the right at any time and from time to time, to
transfer any loan hereunder to any Federal Reserve Bank or to
any parent, subsidiary, affiliate, branch or other related
office of the Bank which is not engaged in the securities
brokerage business or the investment advisory business, and
to grant participations hereunder to any such Federal Reserve
Bank, parent, subsidiary, affiliate, branch or other related
office of the Bank. In no event shall any such transferee or
participant be considered a party to the Agreement, and Bank
shall continue to service any loan transferred pursuant to
this Paragraph 9.4(a) and shall remain liable for the
performance of all of its obligations under this Agreement.
Notwithstanding any such transfer or grant of a participation,
Borrower shall continue to make payments required under this
Agreement to Bank unless and until otherwise notified in writing
by Bank, and Bank agrees to indemnify and hold Borrower harmless
from and against any claims by any transferee or participant
arising out of any payment made to Bank in accordance with
this Paragraph 9.4(a).
(b) Transfers to Unrelated Entities. Subject to the provisions of
this subsection 9.4(b), the Bank may at any time sell to one
or more unrelated financial institutions not engaged in the
securities brokerage business or the investment advisory
business (each a "Participant") participating interests in any
Advance, the Revolving Note, the Bank's Credit hereunder or
any other interest of the Bank hereunder. In the event of
any such sale by the Bank to a Participant, the Bank's
obligations under this Agreement shall remain unchanged, the
Bank shall remain solely responsible for the performance
hereof, the Bank shall remain the holder of the Revolving Note
for all purposes under this Agreement, and the Borrower shall
continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this
Agreement. Any agreement pursuant to which Bank may grant a
participation shall provide that the Bank shall retain the
sole right and responsibility to enforce the obligations of
the Borrower hereunder including, without limitation, the
right to declare an acceleration or default hereunder and the
right to approve any amendment, modification or waiver of any
provision of this Agreement.
The Borrower may not assign this Agreement or any of its rights
hereunder without the prior written consent of the Bank.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the Bank and the Borrower and their respective successors and
assigns, and the term "Borrower" as used in this Agreement shall include the
Borrower and all such successors and assigns.
9.5 Confidentiality. Bank agrees to hold any confidential
information that it may receive from Borrower pursuant to this Agreement in
confidence, except for disclosure: (a) to legal counsel and accountants for
Borrower or Bank; (b) to other professional advisors to Borrower or Bank,
provided that the recipient has delivered to the Bank a written
confidentiality agreement substantially similar to this Section 9.5; (c) to
regulatory officials having jurisdiction over Bank; (d) as required by
applicable law or legal process or in connection with any legal proceeding
in which Bank and Borrower are adverse parties; and (e) to another financial
institution in connection with a disposition or proposed disposition to that
financial institution of all or part of Bank's interests hereunder or a
participation interest in the Revolving Note, each in accordance with
Section 9.4 hereof, provided that the recipient has delivered to Bank a
written confidentiality agreement substantially similar to this Section 9.5.
Bank further agrees that it will not use such confidential information in any
activity or for any purpose other than the administration of credit
facilities extended to Borrower and its Subsidiaries and, without limitation,
will take such steps as are reasonably appropriate to preclude access to any
such confidential information to be obtained by any person employed by Bank, or
by an affiliate of Bank, who is not involved in the administration of credit
facilities extended to Borrower and its Subsidiaries. For purposes of the
foregoing, "confidential information" shall mean any information respecting
Borrower or its Subsidiaries reasonably specified by Borrower as confidential,
other than (i) information filed with any governmental agency and available
to the public, (ii) information published in any public medium from a source
other than, directly or indirectly, Bank, and (iii) information disclosed by
Borrower to any person not associated with Borrower without a written
confidentiality agreement substantially similar to this Section 9.5.
Certain of the confidential information pursuant to this Agreement is or may be
valuable proprietary information that constitutes a trade secret of Borrower
or its Subsidiaries; neither the provision of such confidential information to
Bank or the limited disclosures thereof permitted by this Section 9.5 shall
affect the status of any such confidential information as a trade secret of
Borrower and its Subsidiaries. Bank, and each other person who agrees to be
bound by this Section 9.5, acknowledges that any breach of the agreements
contained in this Section 9.5 would result in losses that could not be
reasonably or adequately compensated by money damages. Accordingly, if Bank
or any such other person breaches its obligations hereunder, Bank or such other
person recognizes and consents to the right of Borrower, Intermediate Parent,
and/or Broker Subsidiary to seek injunctive relief to compel such Bank or
other Person to abide by the terms of this Section 9.5.
9.6 Waiver of Jury Trial. The Borrower waives any right it may
have to trial by jury in any action or proceeding to enforce or defend any
rights or remedies arising under this Agreement and the Revolving Note.
9.7 Entire Agreement. This instrument and the exhibits hereto
embody the entire agreement with respect to the subject matter hereof between
the Borrower and the Bank.
9.8 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one and the same instrument.
9.9 Governing Law. This Agreement and the Revolving Note shall
be deemed to be contracts under, and for all purposes shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
California.
9.10 Notice of Modification of Borrowing Agreements. The Borrower
shall give prior notice to the Bank of any proposed modification in the terms
of any of the Borrowing Agreements and hereby agrees, should the Bank so
request, to make identical modifications in the terms of this Agreement.
9.11 No Priority. Nothing in this Agreement is intended, or shall
be interpreted, to create any priority of any of the banks listed on Schedule I
over any other of such banks with respect to their rights under the
Borrowing Agreements.
9.12 Headings. All headings in this Agreement are for convenience
of reference only and shall not be construed to limit or interpret the
provisions they introduce.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by their duly authorized officers as of the date first above written.
Bank: Borrower
[NAME OF BANK] THE CHARLES SCHWAB
CORPORATION
By By /s/ Christopher V. Dodds
Its Christopher V. Dodds
Senior Vice President and Treasurer
Bank of America Illinois
By /s/ Steven W. Kastenholz
Steven W. Kastenholz
Its Vice President
Bank of New York
By /s/Lee Stephens III
Lee Stephens III
Its Vice President
Bank of Tokyo-Mitsubishi Trust Company
By /s/ Thomas Caruso
Thomas Caruso
Its Vice President
Chemical Bank
By /s/ Richard Cassa
Richard Cassa
Its Vice President
Citicorp USA, Inc.
By /s/ Michael Mauerstein
Michael Mauerstein
The First National Bank of Chicago
By /s/ James Murray
James Murray
Its Vice President
First Tennessee Bank National Association
By /s/ Victor Notaro
Victor Notaro
Its Vice President
Norwest Bank Minnesota, N.A.
By /s/ Janet Klein
Janet Klein
Its Assistant Vice President
PNC Bank
By /s/ Brenda Peck
Brenda Peck
Its Vice President
SCHEDULE I
to Credit Agreement dated as of June 28, 1996 between
The Charles Schwab Corporation and the Banks listed below
(Dollars in Millions)
Amount
Bank of America Illinois 40
Attn: Steven W. Kastenholz, Vice President
231 South LaSalle Street
Chicago, IL 60697
Bank of New York 35
Attn: Lee Stephens III, Vice President
One Wall Street
New York, NY 10286
Bank of Tokyo-Mitsubishi Trust Company 20
Attn: Thomas Caruso, Vice President
100 Broadway, Main Floor
New York, NY 10005
Chemical Bank 20
Attn: Richard Cassa, Vice President
1 Chase Manhattan Plaza, 21st Floor
New York, NY 10081
Citicorp USA, Inc. 40
Attn: Michael Mauerstein
399 Park Avenue, 12th Floor, Zone 11
New York, NY 10043
The First National Bank of Chicago 20
Attn: James Murray, Vice President
One First National Plaza
Mail Suite 0157
Chicago, IL 60670-0157
First Tennessee Bank National Association 20
Attn: Victor Notaro, Vice President
165 Madison Ave.
Memphis, TN 38103
Norwest Bank Minnesota, N.A. 20
Attn: Janet Klein, Assistant Vice President
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0085
PNC Bank 35
Attn: Brenda Peck, Vice President
Land Title Building
Broad & Chestnut Streets
Philadelphia, PA 19101
EXHIBIT A
REVOLVING NOTE
Date:
$____________________
For value received, the undersigned The Charles Schwab Corporation
("Schwab") hereby promises to pay to the order of ________________ (the "Bank")
at ______________, the principal amount of each Advance made by the Bank to
Schwab under the terms of a Credit Agreement between Schwab and the Bank,
dated as of June 28, 1996, as amended from time to time (the "Credit
Agreement"), as shown in the schedule attached hereto and any continuation
thereof, on the last day of the Interest Period (as defined in the Credit
Agreement) for such Advance. The undersigned also promises to pay interest on
the unpaid principal amount of each Advance from the date of such Advance
until such principal amount is paid, at the rates per annum, and payable at
such times, as are specified in the Credit Agreement. This Note shall be
subject to the Credit Agreement, and all principal and interest payable
hereunder shall be due and payable in accordance with the terms of the
Credit Agreement. Terms defined in the Credit Agreement are used herein
with the same meanings.
Principal and interest payments shall be in money of the United
States of America, lawful at such times for the satisfaction of public and
private debts, and shall be in immediately available funds.
Schwab promises to pay costs of collection, including reasonable
attorney's fees, if default is made in the payment of this Note.
The terms and provisions of this Note shall be governed by the
applicable laws of the State of California.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed by its officers or employees thereunto duly authorized and directed
by appropriate corporate authority.
The Charles Schwab Corporation
By:
Christopher V. Dodds
Senior Vice President and Treasurer
EXHIBIT B
CONFIRMING BANK AGREEMENT
This Agreement is entered into as of June 28, 1996 between The
Charles Schwab Corporation (the "Borrower") and Bank of America Illinois (the
"Confirming Bank").
WHEREAS, under the terms of separate substantially similar Credit
Agreements (the "Credit Agreements") between the Borrower and each of the
banks (the "Banks") set forth on Schedule I hereto, the Banks have severally
agreed to lend certain amounts to the Borrower on a revolving credit loan
basis through June 27, 1997 and maturing no later than September 25, 1997;
WHEREAS, the Borrower desires the Confirming Bank to calculate the
basis for the rates of interest to be borne by certain of the loans which may
be made by the Banks to the Borrower under the Credit Agreements:
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
10. Terms defined in the Credit Agreements shall bear the same
meanings herein unless the context otherwise requires.
11. Upon the terms and subject to the conditions hereinafter
mentioned, the Confirming Bank shall determine the CD Rate (including the
Assessment Rate and the CD Rate Reserve Percentage), the Eurodollar Rate
(including the Eurodollar Rate Reserve Percentage) or the Reference Rate which
is to serve as the basis for the interest rate of certain loans made under
any of the Credit Agreements.
12. Simultaneously with the giving of a Borrowing Advice to
any of the Banks, the Borrower shall give to the Confirming Bank notice of such
Borrowing Advice (such notice being hereinafter referred to as a "Rate
Request") which shall specify the Bank to which such Borrowing Advice was
given and the principal amount, the Interest Period, and the basis for
interest calculation referred to therein.
13. (a) Upon receipt by the Confirming Bank of a Rate Request
relating to an Interest Period for which the interest calculation is to be
based on the Eurodollar Rate, the Confirming Bank, as soon as practicable,
shall (i) calculate the Eurodollar Rate Reserve Percentage for such Interest
Period, which shall be the percentage (expressed as a decimal) that is in
effect on the first day of such Interest Period, as prescribed by the Board of
Governors of the U.S. Federal Reserve System (or any successor), for
determining the reserve requirements to be maintained by the Bank under
Regulation D (or any successor regulation thereof) as amended to the date
hereof (including such reserve requirements as become applicable to the Bank
pursuant to phase-in or other similar requirements of Regulation D at any time
subsequent to the date hereof) in respect of "Eurocurrency liabilities" (as
defined in Regulation D), (ii) (aa) if there appear on the Reuters Screen
LIBO Page as at 11:00 A.M. (London time) two Eurodollar Banking Days prior to
the commencement of the relevant Interest Period at least two rates at which
deposits of U.S. dollars for the selected Interest Period are offered,
identify such offered rates and calculate the Eurodollar Rate to be the
arithmetic mean (adjusted upward, if necessary, to the nearest 1/16 of 1%) of
such offered rates or (bb) if fewer than two offered rates appear, obtain
from each of the Eurodollar Rate Reference Banks information with respect to
the average rate per annum (adjusted upward, if necessary, to the nearest 1/16
of 1%) at which deposits of U.S. dollars for the selected Interest Period
and in the amount specified in the Rate Request are offered in immediately
available funds to such Eurodollar Rate Reference Bank (without giving
effect to reserve requirements described in the Eurodollar Rate Reserve
Percentage section of the Credit Agreement) in the London interbank market as
at 11:00 a.m. (London time) two Banking Days prior to the commencement of
the relevant Interest Period and shall determine the Eurodollar Rate for the
relevant Interest Period to be the average of the rates so obtained,
adjusted upward, if necessary, to the nearest 1/16 of 1%, and (iii) determine
the Eurodollar Rate for the relevant Interest Period to be (aa) the
applicable rate obtained pursuant to paragraph 4(a)(ii)(aa) or (bb) hereof,
divided by a percentage (expressed as a decimal) equal to 1.00 minus the
Eurodollar Rate Reserve Percentage. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurodollar
Rate Reserve Percentage.
In the event that (x) fewer than two offered rates appear on the
Reuters Screen LIBO Page as described above and fewer than two Eurodollar Rate
Reference Banks shall have provided information with respect to such offered
rates to the Confirming Bank, or (y) the Confirming Bank shall have determined
(which determination shall be conclusive and binding upon the Borrower and
the Banks) that by reason of changes affecting the London interbank market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for the relevant Interest Period, the Confirming Bank shall notify the
Borrower and the Bank specified in the Rate Request of such fact as soon as
possible (and provide information concerning the basis for any such
determination described in (y) above).
1 As soon as possible after the determination of the
Eurodollar Rate, the Confirming Bank shall forthwith notify the Borrower and
the Bank specified in the Rate Request of such determination by telephone,
confirmed by written or telegraphic communication. The Confirming Bank shall
simultaneously notify the Borrower and the Bank as to which of the Eurodollar
Rate Reference Banks supplied information used in determining the Eurodollar
Rate and the information supplied by each such bank.
14. (a) Upon receipt by the Confirming Bank of a Rate Request
relating to an Interest Period for which the interest calculation is to be
based on the CD Rate, the Confirming Bank, as soon as practicable, shall:
(i) estimate the Assessment Rate for such Interest
Period, which shall be the assessment rate per annum (adjusted upward, if
necessary, to the nearest 1/100 of 1%) on the first day of such Interest
Period for determining the then current annual assessment payable by the Bank
specified in the Rate Request to the Federal Deposit Insurance Corporation
(or any successor thereto) for such Corporation's (or such successor's)
insuring U.S. dollar deposits of the Bank specified in the Rate Request in
the United States;
(b) calculate the CD Rate Reserve Percentage for such
Interest Period, which shall be the percentage (expressed as a decimal) that is
in effect on the first day of such Interest Period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirements (including, without limitation,
supplemental, marginal and emergency reserves) for a bank with deposits
exceeding five billion dollars that is a member of the Federal Reserve
System, in respect of new non-personal time deposits in U.S. dollars in the
United States in the amount specified in the Rate Request having a maturity
comparable to such Interest Period (such bank's reserve ratio on such time
deposits in effect on June __, 1996 was 0%);
(c) obtain (aa) from each of the CD Reference Banks
information with respect to the average rate per annum (adjusted upward, if
necessary, to the nearest 1/16 of 1%) at which bids are received by each
such CD Reference Bank for its certificates of deposit for the selected
Interest Period and in the amount specified in the Rate Request as at
11:00 a.m., New York City time (or as soon as practicable thereafter), on the
first day of the relevant Interest Period from two or more New York City
certificate of deposit dealers of recognized standing selected by the
Confirming Bank for the purchase at face value of such certificates of
deposit, and calculate the applicable rate to be the arithmetic mean
(adjusted upward, if necessary, to the nearest 1/16 of 1%) of the average
rates per annum of the CD Reference Banks, or (bb) in the event the
Confirming Bank cannot, without undue effort, obtain rates from such CD
Reference Banks the certificate of deposit rate as reported for the date of
the Borrowing Advice, in "Federal Reserve Statistical Release--Selected
Interest Rates--H.15 (519)" published by the Board of Governors of the
Federal Reserve System, or any successor publication, under the caption "CDs
(Secondary Market)" having a maturity most closely approximating the
conclusion of the Interest Period; and
(d) determine the CD Rate for the relevant Interest Period to
be the sum of (aa) the Assessment Rate for such Interest Period, plus (bb)
the applicable rate obtained pursuant to paragraph 5(a) (iii)(aa) or (bb)
hereof (adjusted upward, if necessary, to the nearest 1/16 of 1%) divided by a
percentage (expressed as a decimal) equal to 1.00 minus the CD Rate Reserve
Percentage. The CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate and the CD Rate Reserve
Percentage.
In the event that (x) fewer than two CD Reference Banks shall have
provided information with respect to such offered rates to the Confirming Bank,
or (y) the Confirming Bank shall have determined (which determination shall
be conclusive and binding upon the Borrower and the Banks) that by reason of
changes affecting the New York City certificate of deposit market, adequate
and reasonable means do not exist for ascertaining the CD Rate for the
relevant Interest Period, the Confirming Bank shall notify the Borrower and
the Bank specified in the Rate Request of such fact as soon as possible (and
provide information concerning the basis for any such determination described
in (y) above).
2 As soon as possible after the determination of the CD Rate
or any adjustment of the CD Rate, the Confirming Bank shall forthwith notify
the Borrower and the Bank specified in the Rate Request of such
determination by telephone, confirmed by written or telegraphic communication.
The Confirming Bank shall simultaneously notify the Borrower and the Bank as to
which of the CD Reference Banks supplied information used in determining the
CD Rate and the information supplied by each such Bank.
15. (a) Upon receipt by the Confirming Bank of a Rate Request
relating to an Interest Period for which the interest calculation is to be
based on the Reference Rate, the Confirming Bank shall:
(a) determine, on a daily basis during such Interest
Period, the higher of (a) the highest per annum rate of interest (adjusted
upward, if necessary, to the nearest 1/16 of 1%) publicly announced by any
Reference Rate Reference Bank as its "prime rate," "prime commercial lending
rate," "reference rate," or "base rate," as the case may be, and (b) the
highest per annum Federal Funds Effective Rate available to any Reference
Rate Reference Bank, plus 1/2 of 1%;
(b) on the last day of each month falling within such
Interest Period, determine the Reference Rate for the applicable portion of
each month then ending, which shall be equal to the arithmetic mean of
the daily rates of interest with the rate on each day being equal to the
rate determined under (i) above.
2 At 10:00 a.m. on the first day of the month following each
month for which the Reference Rate has been determined, the Confirming Bank
shall notify the Borrower and the Bank specified in the Rate Request of
such determination by telephone, confirmed by written or telegraphic
communication. The Confirming Bank shall immediately notify the Borrower and
the Bank as to which of the Reference Rate Reference Banks supplied
information used in determining the Reference Rate and the information
supplied by each such bank.
16. The determination of the Eurodollar Rate, the CD Rate or
the Reference Rate by the Confirming Bank shall be final and binding in the
absence of manifest error.
17. The Confirming Bank accepts its obligations herein set
forth, upon the terms and conditions hereof, including the following, to all
of which the Borrower agrees:
1 The Confirming Bank shall be entitled to the compensation
to be agreed upon with the Borrower for all services rendered by the Confirming
Bank, and the Borrower agrees promptly to pay such compensation and to
reimburse the Confirming Bank for the reasonable out-of-pocket expenses
(including reasonable counsel fees) incurred by it in connection with the
services rendered by it hereunder. The Borrower also agrees to indemnify the
Confirming Bank for, and to hold it harmless against, any loss, liability or
expense (including the costs and expenses of defending against any claim of
liability) incurred without gross negligence or willful misconduct, arising
out of or in connection with its acting as Confirming Bank hereunder.
2 In acting under this Agreement, the Confirming Bank does
not assume any obligation or relationship of agency or trust for or with any of
the Banks.
3 The Confirming Bank shall be protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or
anything suffered by it in reliance upon any notice (including any Rate
Request), direction, certificate, affidavit, statement or other paper or
document reasonably believed by such Confirming Bank to be genuine and to
have been passed or signed by the proper parties. Under all circumstances, the
Confirming Bank's maximum liability for any error or omission in the
performance of its rate determination and notification obligations under
this Agreement shall be the difference between (1) any erroneous rate it
determined and/or provided notification of in response to a Rate Request from
the Borrower, and (2) the corresponding actual rate it should have determined
and/or provided notification of pursuant to the provisions of this Agreement.
4 The Confirming Bank, its officers, directors and employees
may engage or be interested in any financial or other transaction with the
Borrower (including the lending of moneys to the Borrower under one of the
Borrowing Agreements), and may act on, or as depositary, trustee or agent for,
any committee or body of holders of notes or other obligations of the
Borrower, as freely as if it were not the Confirming Bank.
5 The Confirming Bank shall be obligated to perform such
duties and only such duties as are herein specifically set forth, and no
implied duties or obligations shall be read into this Agreement against
the Confirming Bank.
6 The Confirming Bank may consult with counsel satisfactory
to it and the opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, omitted to be taken or
suffered by it hereunder in good faith and in accordance with the opinion of
such counsel.
7 Any written order, certificate, notice (including any Rate
Request), request, direction, or other communication, from the Borrower made or
given under any provision of this Agreement shall be sufficient if signed by
a person authorized to execute and deliver a Borrowing Advice.
18. (a) The Confirming Bank may at any time resign as such
Confirming Bank by giving written notice to the Borrower and the Banks of such
intention on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that no such resignation shall
become effective until a successor Confirming Bank is selected by the
Borrower. The Confirming Bank may be removed at any time by the filing with it
of an instrument in writing signed on behalf of the Borrower and specifying
such removal and the date when it is intended to become effective. Such
resignation or removal shall take effect upon the date of the appointment by
the Borrower, as hereinafter provided, of a successor Confirming Bank (which
shall be acceptable to the Banks) and the acceptance of such appointment by
such successor Confirming Bank. Upon its resignation or removal, the
Confirming Bank shall be entitled to the payment by the Borrower of its
compensation for the services rendered hereunder and to the reimbursement
of all out-of-pocket expenses, including reasonable fees of counsel,
incurred in connection with the services rendered hereunder by the Confirming
Bank.
1 In case at any time the Confirming Bank shall resign, or
shall be removed, or shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or shall file a voluntary petition in bankruptcy or
make an assignment for the benefit of its creditors or consent to the
appointment of a conservator, liquidator or receiver of all or any
substantial part of its property, or shall admit in writing its inability to
pay or meet its debts as they mature or shall suspend payment thereof, or if
an order of any court shall be entered approving any petition filed by or
against the Confirming Bank under the provisions of any applicable
bankruptcy or insolvency law, or if a liquidator or receiver of it or of all
or any substantial part of its property shall be appointed, or if any public
officer shall take charge or control of it or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, a successor
Confirming Bank (which shall be acceptable to the Banks) may be appointed
by the Borrower by an instrument in writing, filed with the successor
Confirming Bank. Upon the appointment as aforesaid of a successor Confirming
Bank and acceptance by it of such appointment, the Confirming Bank so
superseded shall cease, if not previously disqualified by operation of law, to
be such Confirming Bank hereunder.
2 Any successor Confirming Bank appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Borrower (which
shall deliver a copy of same to the Banks) an instrument accepting such
appointment hereunder, and thereupon such successor Confirming Bank, without
any further act, deed or conveyance, shall become vested with all the
authority, rights, powers, trusts, immunities, duties and obligations of
such predecessor with like effect as if originally named as such Confirming
Bank hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obliged to transfer and
deliver, and such successor Confirming Bank shall be entitled to receive,
copies of any relevant information maintained by such predecessor Confirming
Bank.
3 Any corporation or bank into which the Confirming Bank may
be merged or converted, or any corporation or bank with which the Confirming
Bank may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Confirming Bank shall be a party,
or any corporation or bank to which the Confirming Bank shall sell or
otherwise transfer all or substantially all the assets and business of such
Confirming Bank, shall, to the extent permitted by applicable law and
provided that it shall be qualified as aforesaid, be the successor Confirming
Bank under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto. Notice of any such
merger, conversion, consolidation or sale shall forthwith be given to the
Borrower and to each of the Banks.
19. The Borrower undertakes that, so long as any Revolving
Note is outstanding under any of the Credit Agreements, there shall at all
times be two Eurodollar Rate Reference Banks, two CD Reference Banks, and two
Reference Rate Reference Banks. The initial Eurodollar Rate Reference
Banks, CD Reference Banks and Reference Rate Reference Banks shall be those
stated in the Credit Agreements.
If any Reference Bank (i.e., any Eurodollar Rate Reference Bank, any
CD Reference Bank or any Reference Rate Reference Bank) or office thereof is
later unable or unwilling to act as such, the Borrower will appoint another
leading bank or office thereof (independent of the Borrower and acceptable to
the Banks) engaged in business in the appropriate market for determination
of applicable rates to replace such Reference Bank in such capacity. The
Borrower shall notify the Confirming Bank and each of the Banks forthwith upon
any change in the identity of any of the Reference Banks. Pending receipt of
any such notification the Confirming Bank shall be entitled to assume that the
Reference Banks are those named in the Credit Agreement as modified by
changes of which notification has already been received by the Confirming
Bank.
20. Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt request, or by
prepaid Telex, TWX or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered to the
intended recipient thereof in accordance with the provisions of this
paragraph. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this paragraph, notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties hereto at their respective addresses (or to their
respective Telex, TWX or telecopier numbers) indicated below, and, in the
case of telephonic instructions or notices, by calling the telephone number or
numbers indicated for such party below:
If to the Borrower: The Charles Schwab Corporation
101 Montgomery Street
San Francisco, CA 94104
Attn: Treasury
Telephone: (415) 974-7579
FAX: (415) 974-7570
If to the Confirming Bank: Bank of America Illinois
Attn: Steven W. Kastenholz, Vice President
231 South LaSalle Street
Chicago, IL 60697
Telephone: (312) 828-6904
FAX: (312) 828-3359
If to any of the Banks: To the respective address, telephone
number or telex number set forth opposite
the name of such Bank on Schedule I hereto.
21. Schedule I hereto may be amended from time to time by the
Borrower by the Borrower's delivery to the Confirming Bank of a new Schedule
I. Each such new Schedule I delivered by the Borrower to the Confirming
Bank shall replace and supersede the then-existing Schedule I, and any such
newly delivered Schedule I shall be the Schedule I referred to in this
Agreement. Each such newly delivered Schedule I shall include all of the
then-existing Credit Agreements between the Borrower and any Bank having
substantially similar terms to the Credit Agreements listed on the original
Schedule I hereto.
22. This Agreement shall be deemed to be a contract under, and
for all purposes shall be governed by and construed and interpreted in
accordance with, the laws of the State of California.
23. This Agreement may be executed in as many counterparts as
may be deemed necessary or convenient, and by the parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by their duly authorized officers as of the date first above written.
BANK OF AMERICA ILLINOIS THE CHARLES SCHWAB CORPORATION
By:_______________________ By:
Christopher V. Dodds
Its:______________________ Senior Vice President and Treasurer
SCHEDULE I
to Confirming Bank Agreement dated as of June 28, 1996 between
The Charles Schwab Corporation and Bank of America Illinois
(Dollars in Millions)
Amount
Bank of America Illinois 40
Attn: Steven W. Kastenholz, Vice President
231 South LaSalle Street
Chicago, IL 60697
Bank of New York 35
Attn: Lee Stephens III, Vice President
One Wall Street
New York, NY 10286
Bank of Tokyo-Mitsubishi Trust Company 20
Attn: Thomas Caruso, Vice President
100 Broadway, Main Floor
New York, NY 10005
Chemical Bank 20
Attn: Richard Cassa, Vice President
1 Chase Manhattan Plaza, 21st Floor
New York, NY 10081
Citicorp USA, Inc. 40
Attn: Michael Mauerstein
399 Park Avenue, 12th Floor, Zone 11
New York, NY 10043
The First National Bank of Chicago 20
Attn: James Murray, Vice President
One First National Plaza
Mail Suite 0157
Chicago, IL 60670-0157
First Tennessee Bank National Association 20
Attn: Victor Notaro, Vice President
165 Madison Ave.
Memphis, TN 38103
Norwest Bank Minnesota, N.A. 20
Attn: Janet Klein, Assistant Vice President
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0085
PNC Bank 35
Attn: Brenda Peck, Vice President
Land Title Building
Broad & Chestnut Streets
Philadelphia, PA 19101
EXHIBIT C
BORROWING ADVICE
(a) This Borrowing Advice is executed and delivered by The
Charles Schwab Corporation ("Borrower") to [Bank] pursuant to that certain
Credit Agreement dated as of June 28, 1996, entered into by Borrower and
[Bank] (the "Credit Agreement"). Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.
(b) Borrower hereby requests that [Bank] make an Advance for
the account of Borrower (at _______________, Account No. ________________)
pursuant to Paragraph 2.2 of the Credit Agreement as follows:
(a) Amount of Advance:_________________
(b) Date of Advance: _________________
(c) Type of Advance (check one only):
________ Reference Rate with ____-day Interest Period
________ CD Rate with _________-day Interest Period
________ Eurodollar Rate with ________-day Interest Period
(c) Following this request for Advance, the aggregate amount of
all Advances under the Revolving Note will not exceed the Credit amount.
(d) This Borrowing Advice is executed on ______________ by the
Borrower.
BORROWER:
THE CHARLES SCHWAB CORPORATION
a Delaware Corporation
By______________________________
[Printed Name and Title]
EXHIBIT D
[Howard, Rice Letterhead]
[Date]
[Bank]
Re: Credit Agreement Between
The Charles Schwab Corporation and [Bank]
Ladies and Gentlemen:
This opinion is delivered at the request of The Charles Schwab
Corporation to you in your capacity as the Bank under the Credit Agreement
dated as of June 28, 1996 (the "Credit Agreement") between you and The
Charles Schwab Corporation, a Delaware corporation ("Borrower"). This opinion
letter speaks as of close of business on June 28, 1996 (hereafter the
"operative date").
We have acted as special counsel to Borrower in connection with the
Credit Agreement. In such capacity we have examined originals, or copies
represented to us by Borrower to be true copies, of the Credit Agreement and
the Confirming Bank Agreement dated as of June 28, 1996 between Borrower and
Bank of America Illinois (the "Confirming Bank Agreement"); and we have
obtained such certificates of such responsible officials of Borrower and of
public officials as we have deemed necessary for purposes of this opinion.
We have assumed without investigation the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as photostatic copies of originals, and the accuracy and completeness of
all corporate records certified to us by the Borrower to be accurate and
complete. We have further assumed that the Credit Agreement is binding upon
and enforceable against the Bank, and that the Confirming Bank Agreement is
binding upon and enforceable against Bank of America Illinois. As to
factual matters, we have relied upon the representations and warranties
contained in and made pursuant to the Credit Agreement.
Capitalized terms not otherwise defined herein have the meanings
given for such terms in the Credit Agreement. For the purpose of this opinion,
"Loan Documents" as used herein means the Credit Agreement and the Confirming
Bank Agreement.
Based upon the foregoing and in reliance thereon, and subject to
the exceptions and qualifications set forth herein, we are of the opinion that:
(e) Borrower is a corporation duly formed, validly existing,
and in good standing under the laws of Delaware.
(f) Borrower has all requisite corporate power and authority
to execute, deliver and perform all of its obligations under the Loan
Documents.
(g) Each of the two Loan Documents has been duly authorized,
executed and delivered by Borrower. Each of the two Loan Documents constitutes
the legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except as such validity, binding nature
or enforceability may be limited by:
(a) the effect of applicable federal or state
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
other similar laws and court decisions relating to or affecting creditors'
rights generally;
(b) the effect of legal and equitable principles upon
the availability of creditors' remedies, regardless of whether considered in a
proceeding in equity or at law;
(c) the effect of California judicial decisions
involving statutes or principles of equity which have held that certain
covenants or other provisions of agreements, including without limitation
those providing for the acceleration of indebtedness due under debt
instruments upon the occurrence of events therein described, are unenforceable
under circumstances where it cannot be demonstrated that the enforcement of
such provisions is reasonably necessary for the protection of the lender, has
been undertaken in good faith under the circumstances then existing, and is
commercially reasonable;
(d) the effect of Section 1670.5 of the California
Civil Code, which provides that a court may refuse to enforce a contract or may
limit the application thereof or any clause thereof which the court finds as
a matter of law to have been unconscionable at the time it was made;
(e) the unenforceability, under certain circumstances,
of provisions purporting to require the award of attorneys' fees, expenses, or
costs, where such provisions do not satisfy the requirements of California
Civil Code Section 1717 et seq., or in any action where the lender is not the
prevailing party;
(f) the unenforceability, under certain circumstances,
of provisions waiving stated rights or unknown future rights and waiving
defenses to obligations, where such waivers are contrary to applicable law or
against public policy;
(g) the unenforceability, under certain circumstances,
of provisions which provide for penalties, late charges, additional interest in
the event of a default by the borrower or fees or costs related to such
charges;
(h) the unenforceability, under certain circumstances,
of provisions to the effect that rights or remedies are not exclusive, that
every right or remedy is cumulative and may be exercised in addition to or
with any other right or remedy, or that the election of some particular
remedy or remedies does not preclude recourse to one or another remedy;
(i) the unenforceability of provisions prohibiting
waivers of provisions of either of the Loan Documents otherwise than in writing
to the extent that Section 1698 of the California Civil Code permits oral
modifications that have been executed;
(j) limitations on the enforceability of release,
contribution, exculpatory, or nonliability provisions, under federal or state
securities laws, Sections 1542 and 1543 of the California Civil Code, and
any other applicable statute or court decisions; and
(k) limitations on the enforceability of any indemnity
obligations imposed upon or undertaken by the borrower to the extent that such
obligations do not satisfy the requirements of Sections 2772 et seq. of the
California Civil Code and any judicial decisions thereunder.
The foregoing opinions are subject to the following exceptions and
qualifications:
b. We have not been requested to verify and have not
verified the validity, accuracy, or reasonableness of any of the factual
representations contained in either or both of the Loan Documents, and we
express no opinion with respect to any of such matters.
c. We are members of the bar of the State of California
and are not admitted to practice in any other jurisdiction. Accordingly, we
are opining herein only concerning matters governed by the Federal laws of
the United States of America, the laws of the State of California, and the
General Corporation Law of the State of Delaware, and only with respect to
Borrower. We express no opinion concerning the applicability to either or
both of the Loan Documents, or the effect thereon, of the laws of any other
jurisdiction. Furthermore, we express no opinion with respect to choice of law
or conflicts of law, and none of the opinions stated herein shall be deemed to
include or refer to choice of law or conflict of law.
d. We express no opinion on any Federal or state
securities laws as they may relate to either or both of the Loan Documents.
e. We express no opinion as to compliance with the
usury laws of any jurisdiction.
The opinions set forth herein are given as of the operative date.
We disclaim any obligation to notify you or any other person or entity after
the operative date if any change in fact and/or law should change our
opinion with respect to any matters set forth herein. This opinion letter is
rendered to you in your capacity as the Bank under the Credit Agreement
and may not be relied upon, circulated or quoted, in whole or in part, by
any other person or entity (other than a person or entity who becomes an
assignee or successor in interest of the Bank or acquires a participation
from the Bank consistent with the terms of the Loan Documents) and shall not be
referred to in any report or document furnished to any other person or
entity without our prior written consent; provided, however, that the foregoing
shall not preclude the Bank from describing or otherwise disclosing the
existence or contents of this letter to (i) any bank regulatory authority
having jurisdiction over the Bank, as required by such authority, (ii) a person
or entity who, in good-faith discussions between the Bank and such person or
entity, is proposed to become an assignee or successor in interest of the Bank
or to acquire a participation from the Bank consistent with the terms of the
Loan Documents, and (iii) counsel to the Bank.
Very truly yours,
HOWARD, RICE, NEMEROVSKI,
CANADY, FALK & RABKIN
A Professional Corporation
By________________________________
JLS/eas