-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EhPwaf30k2oPUJwye52v0P3yEe/MGS0NHK05kTqJ7Z8DOq3I3FRvDEzloTA9klAC 98ZZL+bxdLtxfz9lBdSEqg== 0000906344-94-000005.txt : 19940526 0000906344-94-000005.hdr.sgml : 19940526 ACCESSION NUMBER: 0000906344-94-000005 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19940525 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES CORP CENTRAL INDEX KEY: 0000316709 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 943025021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-38764 FILM NUMBER: 94530174 BUSINESS ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES R CENTRAL INDEX KEY: 0000923738 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 101 MONTGOMERY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 41562770000 SC 13D/A 1 SCHEDULE 13D (AMENDMENT NO. 5) United States Securities and Exchange Commission Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 5) The Charles Schwab Corporation (Name of Issuer) Common Stock ($.01 par value) (Title of Class of Securities) 808513-10-5 (CUSIP Number) Pamela E. Herlich, Assistant Secretary The Charles Schwab Corporation 101 Montgomery Street San Francisco, CA 94104 415/627-7533 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 6, 1993 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. 808513-10-5 Schedule 13D Page 2 of 7 pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Charles R. Schwab ###-##-#### 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a [ ] b [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS N/A 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED TO ITEMS 2(d) OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America 7 SOLE VOTING POWER 2,400,683 8 SHARED VOTING POWER NUMBER OF SHARES BENEFICIALLY 12,447,771 OWNED BY EACH REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH 2,400,683 10 SHARED DISPOSITIVE POWER 12,447,771 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 14,848,454 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 25.8% 14 TYPE OF REPORTING PERSON IN 808513-10-5 Schedule 13D Page 3 of 7 pages All share figures in this Schedule 13D have been adjusted to reflect the three-for-two stock split effected in the form of a 50% stock dividend declared March 25, 1993 to stockholders of record on May 3, 1993 and distributed on June 1, 1993. Item 1. Security and Issuer Security: Common Stock ($.01 par value) Issuer: The Charles Schwab Corporation 101 Montgomery Street San Francisco, CA 94104 Item 2. Identity and Background a) Charles R. Schwab b) The Charles Schwab Corporation 101 Montgomery Street San Francisco, CA 94104 c) Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation 101 Montgomery Street San Francisco, CA 94104 d) Inapplicable e) Inapplicable f) United States of America Item 3. Source and Amount of Funds Inapplicable. Item 4. Purpose of Transaction The shares of Common Stock are held for personal investment, except as noted in Item 5 below. Item 5. Interest in Securities of Issuer a) 14,848,454 shares of Common Stock representing 25.8% of the Common Stock outstanding. b) The 14,848,454 shares of Common Stock referred to in Item 5(a) above consist of (i) 2,400,683 shares of 808513-10-5 Schedule 13D Page 4 of 7 pages Common Stock as to which Mr. Schwab has sole voting power and sole dispositive power (including shares held by the Trustee of the Charles Schwab Profit Sharing and Employee Stock Ownership Plan and allocated to Mr. Schwab's individual ESOP account; 224 shares held by Mr. Schwab as custodian for his children; and 1,350 shares held by Mr. Schwab as trustee of the Schwab Inter-Vivos Trust to which he disclaims beneficial ownership); and (ii) 12,447,771 shares of Common Stock as to which Mr. Schwab has shared voting power and shared dispositive power (including 556,500 shares held by The Charles and Helen Schwab Foundation, a nonprofit public benefit corporation, as to which Mr. and Mrs. Schwab, as two of three directors, have shared voting and dispositive power but disclaim beneficial ownership; 1,500,000 shares held by Mr. and Mrs. Schwab as trustees of The Charles and Helen Schwab Living Trust; 9,651,100 shares held by Mr. and Mrs. Schwab as community property; 318,345 shares held by Mr. and Mrs. Schwab as joint tenants; and 406,926 shares held by Mrs. Schwab). c) The following transactions in Common Stock were effected by Mr. Schwab since the filing of Amendment No. 4 to his Schedule 13D dated February 18, 1992: Date of # of Shares Nature of Price Per Where and Transaction of Common Stock Transaction Per Share How Effected 8/11/92 30,000 Disposition N/A Gift 8/11/92 30,000 Disposition N/A Gift 8/11/92 15,000 Disposition N/A Gift 11/20/92 135,000 Sale $15.50 Open Market 11/20/92 10,200 Sale $15.75 Open Market 11/20/92 4,800 Sale $15.883 Open Market 11/23/92 28,950 Sale $15.167 Open Market 11/23/92 3,900 Sale $15.25 Open Market 11/23/92 15,000 Sale $15.417 Open Market 11/24/92 79,650 Sale $15.167 Open Market 11/24/92 22,500 Sale $15.25 Open Market 11/24/92 120,000 Sale $15.33 Open Market 11/24/92 15,600 Sale $15.417 Open Market 11/24/92 14,400 Sale Open Market 12/23/92 30,000 Disposition N/A Gift 12/29/92 225,000 Sale $4.447 Exercise of private call option 5/6/93 28,500 Disposition N/A Gift 808513-10-5 Schedule 13D Page 5 of 7 pages In addition, during the period July 2, 1991 through December 31, 1992, a total of 1,557 shares of Common Stock were allocated by the Trustee of the Charles Schwab Profit Sharing and Employee Stock Ownership Plan (the "Plan") to the Plan account of Mr. Schwab. d) No other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock beneficially owned by Mr. Schwab, except for The Charles and Helen Schwab Foundation, as noted in Item 5(b) above. e) Inapplicable. Item 6. Contracts Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer 1. Registration Rights and Stock Restriction Agreement, date as of March 31, 1987 between Charles Schwab and CL Acquisition Corporation, requires that share transfers be made in accordance with state and Federal securities laws and subject to protection of the issuer's rights and further provides for registration rights in certain circumstances. 2. In April 1989, Charles R. Schwab granted to David S. Pottruck an option to purchase from Mr. Schwab 100,000 shares of Common Stock at a price of $10 pre share, vesting at the rate of 25% as of April 1, 1990 and of April 1 each year thereafter until fully vested and exercisable during the period from April 1, 1993 through March 31, 1998, pursuant to a Stock Option Agreement dated April 1989 (the "Call Option"). On December 23, 1992, Mr. Schwab and Mr. Pottruck entered into a First Amendment to Stock Option Agreement, pursuant to which the Call Option became fully vested and exercisable as of December 23, 1992. On December 29, 1992, the Call Option was exercised in full by Mr. Pottruck. 3. Secured Demand Promissory Note, dated January 10, 1992, by Charles R. Schwab and Helen O. Schwab in the 808513-10-5 Schedule 13D Page 6 of 7 pages principal amount of $650,000 secured by 60,000 shares of Common Stock. 4. Non-Qualified Stock Option Agreement, dated as of September 16, 1992 between The Charles Schwab Corporation and Charles R. Schwab pursuant to the 1992 Stock Option and Award Plan. 5. Secured Demand Promissory Note, dated December 8, 1992, by Charles R. Schwab and Helen O. Schwab in the principal amount of $4,000,000 secured by 500,000 shares of Common Stock. 6. On February 25, 1993, Charles R. Schwab and Helen O. Schwab, grantors of The Charles and Helen Schwab Living Trust (the "Living Trust"), transferred 1,000,000 shares of Common Stock into the Living Trust. Section 8.2.1 of the Living Trust provides that if neither Mr. nor Mrs. Schwab is serving as Trustee, three designated individuals will receive a general proxy to vote all shares of Common Stock held pursuant to the Living Trust. Item 7. Exhibits 1. Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between Charles R. Schwab and CL Acquisition Corporation.* 2. Stock Option Agreement dated April 1989 between Charles R. Schwab and David S. Pottruck.** 3. Secured Demand Promissory Note, dated January 10, 1992, by Charles R. Schwab and Helen O. Schwab for $650,000.*** 4. Form of Non-Qualified Stock Option Agreement, dated as of September 16, 1992, between The Charles Schwab Corporation and Charles R. Schwab. 5. Secured Demand Promissory Note, dated December 8, 1992, by Charles R. Schwab and Helen O. Schwab for $4,000,000. 6. First Amendment to Stock Option Agreement dated April 1989, dated December 23, 1992. 7. Section 8.2.1 of The Charles and Helen Schwab Living Trust. 808513-10-5 Schedule 13D Page 7 of 7 pages * Incorporated by reference to Exhibit 1 to Mr. Schwab's Schedule 13D dated September 22, 1987. ** Incorporated by reference to Exhibit 4 to Amendment No. 1 to Mr. Schwab's Schedule 13D dated January 20, 1991. *** Incorporated by reference to Exhibit No. 5 to Amendment No. 4 to Mr. Schwab's Schedule 13D dated February 18, 1992. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. May __, 1994 Date ___________________________ Charles R. Schwab EXHIBIT INDEX Item 7. Exhibits 1. Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between Charles R. Schwab and CL Acquisition Corporation.* 2. Stock Option Agreement dated April 1989 between Charles R. Schwab and David S. Pottruck.** 3. Secured Demand Promissory Note, dated January 10, 1992, by Charles R. Schwab and Helen O. Schwab for $650,000.*** 4. Form of Non-Qualified Stock Option Agreement, dated as of September 16, 1992, between The Charles Schwab Corporation and Charles R. Schwab. 5. Secured Demand Promissory Note, dated December 8, 1992, by Charles R. Schwab and Helen O. Schwab for $4,000,000. 6. First Amendment to Stock Option Agreement dated April 1989, dated December 23, 1992. 7. Section 8.2.1 of The Charles and Helen Schwab Living Trust. * Incorporated by reference to Exhibit 1 to Mr. Schwab's Schedule 13D dated September 22, 1987. ** Incorporated by reference to Exhibit 4 to Amendment No. 1 to Mr. Schwab's Schedule 13D dated January 20, 1991. *** Incorporated by reference to Exhibit No. 5 to Amendment No. 4 to Mr. Schwab's Schedule 13D dated February 18, 1992. EX-99 2 FORM OF NON-QUAL.STOCK EX.4 TO SCH.13D (AMEND.#5) THE CHARLES SCHWAB CORPORATION 1992 STOCK INCENTIVE PLAN NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT, entered into as of September 16, 1992 between THE CHARLES SCHWAB CORPORATION, a Delaware corporation (the "Company"), and Charles Schwab (the "Optionee"). W I T N E S S E T H: WHEREAS, the Board has adopted and the stockholders of the Company have approved The Charles Schwab Corporation 1992 Stock Incentive Plan (the "Plan") in order to provide selected Key Employees and Non-Employee Directors with an opportunity to acquire Common Shares; and WHEREAS, the Committee has determined that the Optionee is a Key Employee and that it would be in the best interests of the Company and its stockholders to grant the stock option described in this Agreement (the "Option") to the Optionee as an inducement to enter into or remain in the service of the Company or its subsidiaries and as an incentive for extraordinary efforts during such service: NOW, THEREFORE, it is agreed as follows: SECTION 1. GRANT OF OPTION. (a) Option. On the terms and conditions stated below, the Company hereby grants to the Optionee the option to purchase 225,000 Common Shares for the sum of $19.625 per Common Share (the "Exercise price"), which is agreed to be 100% of the Fair Market Value thereof on the Date of Grant. The number of Common Shares subject to this Option and the Exercise Price shall be subject to adjustment under certain limited circumstances as provided in Article 10 of the Plan. (b) 1992 Stock Incentive Plan. This Option is granted pursuant to the Plan, the provisions of which are incorporated into this Agreement by reference, and a copy of which is available upon request at no charge to the Optionee from the Office of the Corporate Secretary of the Company. In the event of any inconsistency between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall prevail. -1- (c) Tax Treatment. This Option is not intended to qualify as an incentive stock option described in Section 422(b) of the Code. (d) Expiration Date. Notwithstanding any other provision contained herein, this Option shall expire not later than September 15, 2000. SECTION 2. NO TRANSFER OR ASSIGNMENT OF OPTION. Except as otherwise provided in this Agreement or as permitted by the Plan, this Option, and any interest therein, shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. SECTION 3. RIGHT TO EXERCISE OPTION. (a) Vesting. This Option shall become exercisable by the Optionee with respect to the total number of Common Shares subject to this Option as set forth under Section 1(a) above (the "Total Award Common Shares") on the following vesting schedule (check only one box), subject to the continued employment of the Optionee by the Company or its subsidiaries on each date either set forth below or determined with reference to the Date of Grant: [ ] 100% of the Total Award Common Shares immediately as of the Date of Grant. [ ] On the schedule attached hereto as Exhibit A. [X] In annual increments of twenty-five percent (25%) of the Total Award Common Shares beginning on the first anniversary of the Date of Grant, such that (i) no portion of this Option will be exercisable prior to such first anniversary of the Date of Grant; (ii) upon and after such first anniversary of the Date of Grant, the Optionee may purchase up to twenty-five percent (25%) of the Total Award Common Shares; (iii) upon the second, third and fourth anniversaries of the Date of Grant, respectively, the Optionee may purchase an additional twenty-five percent (25%) of the Total Award Common Shares, so that this Option shall become fully exercisable, subject to the Optionee's continued employment with the Company or its subsidiaries, on the fourth anniversary of the Date of Grant. -2- (b) Minimum Number of Shares. This Option shall be exercisable for at least 100 Common Shares (without regard to adjustments to the number of Common Shares subject to this Option pursuant to Article 10 of the Plan) or, if less, all of the remaining Common Shares subject to this Option. SECTION 4. EXERCISE OF OPTION. (a) Notice of Exercise. The Optionee or the Optionee's representative may exercise this Option by giving written notice to the Office of the Corporate Secretary of the Company pursuant to Section 9(d). The notice shall specify the election to exercise this Option, the date of exercise, the number of Common Shares for which it is being exercised and the form of payment. The notice shall be signed by the person or persons exercising this Option. In the event that this Option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof satisfactory to the Company of the representative's right to exercise this Option. The Purchase Price shall be paid in a form that conforms to Sections 6.1 through 6.3 of the Plan at the time such notice is given. (b) Issuance of Shares. After receiving a proper notice of exercise, the Company shall cause to be issued a certificate or certificates for the Common Shares as to which this Option has been exercised, registered in the name of the person exercising this Option. The Company shall cause such certificate or certificates to be delivered to or upon the order of the person exercising this Option. SECTION 5. TERM. (a) Basic Term. This Option shall in any event expire on the date specified in Section 1(d). (b) Termination of Employment. Upon the Optionee's termination of employment with the Company and its subsidiaries for any reason, whether as a result of death, Permanent Disability or any other involuntary or voluntary event of termination (including a termination as may be provided for or determined under an employment contract, if any, entered into between the Company or its subsidiary and the Optionee) (each, a "Termination Event"), no unvested portion of the Total Award Common Shares thereafter shall vest or become exercisable. With respect to the vested or exercisable portion of the Total Award Common Shares as of the date of such a Termination Event, this Option shall expire on the earlier of the expiration date specified in Section 1(d) or the first (1st) anniversary of the date of -3- such a Termination Event, provided that if as of the date of such a Termination Event the Optionee has been continuously employed by the Company or any of its subsidiaries for at least seven (7) years, then this Option shall expire on the earlier of the expiration date specified in Section 1(d) or the second (2nd) anniversary of the date of such a Termination Event. SECTION 6. LEGALITY OF INITIAL ISSUANCE. No Common Shares shall be issued upon the exercise of this Option unless and until the Company has determined that: (a) A registration statement for the Common Shares is effective under the Securities Act or an exemption from the registration requirements thereof has been perfected; (b) Any applicable listing requirement of any stock exchange on which Common Shares are listed has been satisfied; and (c) Any other applicable provisions of state or federal law have been satisfied. SECTION 7. NO REGISTRATION RIGHTS. The Company may, but shall not be obligated to, register or qualify the Common Shares for resale or other disposition by the Optionee under the Securities Act or any other applicable law. SECTION 8. RESTRICTIONS ON TRANSFER OF SHARES. (a) Restrictions. Regardless of whether the offering and sale of Common Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company may impose restrictions upon the sale, pledge or other transfer of such Common Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary or desirable in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state or any other law. (b) Investment Intent at Exercise. If the Common Shares under the Plan are not registered under the Securities Act but an exemption is available which requires an -4- investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Common Shares being acquired upon exercising this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. (c) Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 8 shall be conclusive and binding on the Optionee and all other persons. SECTION 9. MISCELLANEOUS PROVISIONS. (a) Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, the recipient of any payment or distribution under the Plan shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of such payment or distribution. The Company shall not be required to make such payment or distribution until such obligations are satisfied. (b) Rights as a Stockholder. Neither the Optionee nor the Optionee's representative shall have any rights as a stockholder with respect to any Common Shares subject to this Option until certificates for such Common Shares have been issued in the name of the Optionee or the Optionee's representative. (c) No Employment Rights. Nothing in this Agreement shall be construed as giving the Optionee the right to be retained as an employee of the Company or its subsidiaries. The Company reserves the right to terminate the Optionee's employment at any time for any reason, subject to the Optionee's employment contract, if any. (d) Notice. Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery or upon deposit with the appropriate postal service, by registered or certified mail with postage and fees prepaid and addressed to the party entitled to such notice at the address shown below such party's signature on this Agreement, or at such other address as such party may designate by ten (10) days' advance written notice to the other party to this Agreement. Notwithstanding the foregoing, no notice of exercise, as required by Section 4(a), shall be effective until actual receipt thereof by the Office of the Corporate Secretary of the Company. -5- (e) Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties hereto with regard to the subject matter hereof. (f) Choice of Plan. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, as such laws are applied to contracts entered into and performed in such State. SECTION 10. DEFINITIONS. (a) Capitalized terms defined in the Plan shall have the same meaning when used in this Agreement. (b) "Date of Grant" shall mean the date of this Agreement, which is the date first written above. (c) "Permanent Disability" shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months or which can be expected to result in death. (d) "Purchase Price" shall mean the Exercise Price multiplied by the number of Common Shares with respect to which this Option is being exercised. (e) "Securities Act" shall mean the Securities Act of 1933, as amended. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its officer duly authorized to act on behalf of the Committee, and the Optionee has personally executed this Agreement. THE CHARLES SCHWAB CORPORATION By: Its: Company's Address: 101 Montgomery Street San Francisco, California 94104 -6- OPTIONEE Charles Schwab Optionee's Address: [deleted] Optionee's Social Security Number: [deleted] 052394/f-420931:/W1/144806 -7- SPOUSAL CONSENT The undersigned ("Consenting Spouse") is the spouse of the Optionee, referred to in the attached Stock Option Agreement, and has read and understood the 1992 Stock Incentive Plan. The Consenting Spouse hereby consents to the Agreement and to the sale of the Shares, and agrees to cooperate in enabling his or her spouse to meet all obligations provided in the Stock Option Agreement. The Consenting Spouse is aware that by the provision of the Agreement, Optionee agrees to sell all of his or her Shares, including any community interest of the Consenting Spouse in the Shares, on the occurrence of certain events. The Consenting Spouse understands that the Company is relying upon this consent in entering into this Agreement and is not taking further steps to protect its interests. _____________________ DATE Spouse -8- EX-99 3 SECURED PROM.NOTE EX.#3 TO SCH. 13D (AMEND. #5) SECURED DEMAND PROMISSORY NOTE $4,000,000.00 New York, New York December 8, 1992 ON DEMAND, the undersigned (the "Borrower") hereby promises to pay to the order of Morgan Guaranty Trust Company of New York (the "Bank") the principal amount of Four Million Dollars ($4,000,000) and to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until paid in full. (Check one) ___ at the rate of ___________% per annum X at a fluctuating rate per annum equal to 6% above the Prime Rate (which presently is _____%) in effect from time to time, but subject to any limitations on the rate of interest imposed by applicable law. The term "Prime Rate", as used herein, shall mean the rate of interest publicly announced by the Bank in New York City form time to time as its Prime Rate. Interest on the principal amount hereof outstanding during each calendar month shall be payable monthly in arrears on the 1st day of each month, and upon payment in full. Principal and interest shall be payable in lawful money of the United States of America at the office of the Bank at 23 Wall Street, New York, New York 10015. To secure payment of this Note, and of any other liability or liabilities of the Borrower to the holder hereof, due or to become due, or that may hereafter be contracted or existing, howsoever acquired by the holder, the Borrower has transferred, pledged, given a security interest in and delivered to the Bank the following property: 500,000 shares of the Charles Schwab Corporation Stock and any deposit or other sums at any time credited by or due from the holder to the Borrower and any securities or other property of the Borrower in the possession of the holder hereafter called "Collateral." In case of a decline in the market value of the Collateral or any part thereof, the holder may demand that additional Collateral of quality and value satisfactory to it be delivered, pledged, and transferred to it, and that the -1- Borrower create a security interest in the additionally delivered Collateral in favor of the holder. Upon the nonpayment of principal or interest when due hereunder, or upon nonpayment of any other liability of the Borrower to the holder when due, or if the holder deems the Collateral to be insufficient by reason of the decline in the market value of any of the Collateral, the holder shall have the rights and remedies provided in the Uniform Commercial Code in force in New York at the date of execution of this Note and in addition to, in substitution for, in modification of, or in conjunction with those rights and remedies provided in the Uniform Commercial Code in force in New York at the date of execution of this Note and in addition to, in substitution for, in modification of, or in conjunction with those rights and remedies, the holder or its agents may, in its discretion, _______, assign and deliver all or any part of the Collateral at any broker's board or at public or private sale ______out notice or advertisement, and __________ become purchasers at any public sale or at any broker's board, and, if notice to the Borrower is required by law, give written notice to the Borrower five days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made by mailing such notice to the address designated by the Borrower with his signature below; and, if the Collateral includes insurance policies with a cash surrender value, securities, instruments, or documents which will be redeemed by the issuer upon surrender, the holder may realize upon such Collateral without notice to the Borrower. The Borrower agrees that the proceeds of the disposition of the Collateral may be applied by the holder to the satisfaction of the liabilities of the Borrower to the holder in any order of preference which the holder, in its sole discretion, chooses, and that the excess, if any, shall be returned to the Borrower, who shall continue liable to the holder for any deficiency remaining with interest thereon. The waiver of any default, or the remedying of any default in a reasonable manner, shall not operate as a waiver of the default remedies or any other prior or subsequent default. The holder shall have no duty with reference to the Collateral except to use reasonable care in its custody and preservation, which shall not include any steps necessary to preserve rights against prior parties nor the duty to send notices, perform services, or take any action in connection with the management of the Collateral. The holder may at any time transfer the Collateral to its own name or the name of one of its nominees and may at any time demand, sue for, collect or make any compromise or settlement with reference to the Collateral as the holder in its sole discretion chooses. The holder may remove the Collateral or any part of -2- it from the state or country in which it may at any time be held to any other state or country, and may there deal with it as provided in this Note. If any of the Collateral is released to the Borrower, the Borrower agrees to execute whatever financing or other statements and security agreements or trust receipts are required to continue the holder's security interest in the Collateral. If this Note is not paid in full upon demand, the Borrower agrees to pay all costs and expenses of collection, including reasonable attorneys' fees. Each and every party to this Note, either as maker, endorser, guarantor, accommodation party, or otherwise, hereby waives presentment, notice of dishonor and protest with respect to this Note, and assents to any extension or postponement of the time of payment or other indulgence and to any substitution, exchange or release of Collateral granted or permitted by the holder. Should the Bank negotiate or assign this Note, it may deliver the property held as Collateral or any part of it to the transferee, who shall thereupon become the holder and the Bank shall thereafter be fully discharged from any responsibility with respect to that Collateral. The undersigned, if more than one, shall be jointly and severally liable hereunder and the term "Borrower" shall mean the undersigned or any one or more of them and their heirs, executors, administrators, successors, or assigns. The Borrower shall have the right, at any time or from time to time, without penalty or premium, to repay all or part of the unpaid balance of this Note. This Note shall be governed by and construed in accordance with the laws of the State of New York. Signature Charles R. Schwab Helen O. Schwab Address [deleted] -3- GUARANTY The undersigned (jointly and severally if more than one) guarantee(s) the payment of this Note and consent(s) and agree(s) to the terms and conditions of the Note. As security for the performance of this Guaranty, the holder is given a security interest in any and all deposits or property of the undersigned now or at time hereafter directly or indirectly in the possession or under the control of the holder. This Guaranty shall be governed by and construed in accordance with the laws of the State of New York. Charles R. Schwab Helen O. Schwab -4- EX-99 4 1ST AMEND TO STOCK OPT. EX.#6 TO SCH.13D (AMEND.5) FIRST AMENDMENT TO STOCK OPTION AGREEMENT THIS FIRST AMENDMENT to that certain Stock Option Agreement dated April 1989 (the "Option Agreement") by and between Charles R. Schwab ("Seller") and David S. Pottruck ("Holder"), is entered into on December 23, 1992, with reference to the following: A. The Option Agreement relates to the purchase by Holder from Seller of 150,000 (post-split) shares of the common stock (the "Shares") of The Charles Schwab Corporation (the "Company") at a price (post-split) of $6.67 per Share, pursuant to an option granted by Seller to Holder (the "Option"); and B. Seller and Holder mutually desire to amend the Option Agreement on the terms and conditions set forth below. NOW THEREFORE, in consideration of the mutual premises and covenants contained herein, and other good and valuable consideration which the parties hereby acknowledge, the parties hereto agree as follows: 1. Paragraph 2 of the Option Agreement is hereby amended to provide that all of the Shares subject to the Option will become fully vested as of the date of this Amendment. 2. Paragraph 3(a) of the Option Agreement is hereby amended to provide that the Exercise Period will begin on the date of this Amendment (rather than April 1, 1993) and will end on March 31, 1998, subject to the other limitations set forth in said paragraph 3(a). 3. Seller hereby represents and warrants, for the benefit of both Holder and the Company, that Seller acquired the Shares pursuant to a registration statement under the Securities Act of 1933, as amended (the "Act") and that the Shares are not subject to that certain Registration Rights and Stock Restriction Agreement entered into by and between Seller and the Company (under its former name "CL Acquisition Corporation") on March 31, 1987. 4. In light of paragraph 3 above, Seller hereby waives any requirement that Holder deliver to the Company an executed Registration Rights and Stock Restriction Agreement relating to the Shares, and Holder hereby acknowledges that he will not have any rights to have the Shares registered by -1- the Company for resale, pursuant to the Registration Rights and Stock Restriction Agreement or otherwise. 5. Paragraph 8(b) of the Option Agreement is hereby amended to add the following provision: Holder is an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Act, and Holder is able to bear the economic risk of his investment in the Shares and is able to afford the complete loss of such investment. 6. Holder hereby represents and warrants, to and for the benefit of both Seller and the Company, that the representations, warranties and acknowledgements contained in paragraph 8(b) of the Option Agreement (as amended herein) are true and correct as of the date of this Amendment. 7. Seller and Holder acknowledge and agree that counsel to the Company may rely on the respective representations, warranties and acknowledgements of Seller and Holder set forth in the Notice of Exercise that Holder will execute and deliver to Seller in connection with the exercise of the Option and in the Option Agreement (as amended herein) in rendering an opinion to the transfer agent of the Company with respect to certain matters in connection with the transfer of the Shares from Seller to Holder upon such exercise. 8. Except as specifically modified by this Amendment, all of the terms, covenants, conditions, rights and obligations set forth in the Option Agreement are hereby ratified and affirmed and will remain in full force and effect. Words and phrases defined in the Option Agreement will have the same meaning when used in this Amendment. 9. This Amendment may be executed in counterparts, each of which will be deemed an original, and taken together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the day and date first set forth above. "SELLER" "HOLDER" _________________________ ___________________________ Charles R. Schwab David S. Pottruck -2- EX-99 5 SECTION 8.2.1 EX. #7 TO SCH. 13D (AMEND. #5) Section 8.2.1 of The Charles and Helen Schwab Living Trust 8.2.1 Special Trustees: Charles Schwab Corporation. Notwithstanding the foregoing provisions, if neither grantor is serving as a Trustee, the Trustee of each trust hereunder serving from time to time is directed to grant a general proxy to vote all shares of stock of Charles Schwab Corporation, or successor entity, to those living from time to time, and able to serve, of the following three individuals: C. PRESTON BUTCHER, GEORGE R. ROBERTS and LARRY STUPSKI. Said individuals, or those or the one of them living and able to serve from time to time, shall in effect be Special Trustees of the trusts hereunder, for the purposes of voting said stock for benefit of such trusts. While three of them are so serving, they shall act by majority vote. If only two of them are so serving, they shall act by unanimous vote. 051094/1-420931:___/44/144092 -----END PRIVACY-ENHANCED MESSAGE-----