Amendment No. 12 to Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OB6kgFPf4agtzblNQUe6FrVcUBsISZnIyYvmc6xJI22MRb4sv7Q3R/6V8EZHs1AM DyFLdVTBfmc/aMDILjpNRg== 0001193125-07-152540.txt : 20070710 0001193125-07-152540.hdr.sgml : 20070710 20070710145029 ACCESSION NUMBER: 0001193125-07-152540 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070710 DATE AS OF CHANGE: 20070710 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES CORP CENTRAL INDEX KEY: 0000316709 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [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: 07971847 BUSINESS ADDRESS: STREET 1: 120 KEARNY STREET 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: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 41562770000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 SC 13D/A 1 dsc13da.htm AMENDMENT NO. 12 TO SCHEDULE 13D Amendment No. 12 to Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE

13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

(Amendment No. 12)*

The Charles Schwab Corporation

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

808513-10-5

(CUSIP Number)

Lawrence B. Rabkin, Esq.

Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation

Three Embarcadero Center

San Francisco, California 94111

(415) 434-1600

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

July 2, 2007

(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(c), 13d-1(f) or 13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(Page 1 of 7 Pages)


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 2 of 7


1		Name of Reporting Person IRS Identification No. of Above Person (Entities Only) Charles R. Schwab
2		Check the Appropriate Box if a member of a Group (a) ¨ (b) ¨
3		SEC USE ONLY
4		Source of Funds
5		Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) ¨
6		Citizenship or Place of Organization United States of America


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 Sole Voting Power 14,372,495
		8 Shared Voting Power 213,411,093
		9 Sole Dispositive Power 14,372,495
		10 Shared Dispositive Power 213,411,093


11		Aggregate Amount Beneficially Owned by Each Reporting Person 227,783,588
12		Check Box if the Aggregate Amount in Row 11 Excludes Certain Shares ¨
13		Percent of Class Represented by Amount in Row 11 18.1%
14		Type of Reporting Person IN


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 3 of 7

Item 1.

Security and Issuer.

This Amendment No. 12 to Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.01 per share (“Common Stock”), of The Charles Schwab Corporation (the “Issuer”).

The address of the principal executive office of the Issuer is:

The Charles Schwab Corporation

120 Kearny Street

San Francisco, California 94108

Item 2.

Identity and Background.

(a)	Mr. Charles R. Schwab

(b)	The Charles Schwab Corporation

120 Kearny Street

San Francisco, California 94108

(c)	Chairman, Chief Executive Officer and Director

The Charles Schwab Corporation

120 Kearny Street

San Francisco, California 94108

(d)	Inapplicable

(e)	Inapplicable

(f)	United States of America

Item 3.

Source and Amount of Funds or Other Consideration.

Inapplicable

Item 4.

Purpose of Transaction.

The shares of Common Stock are held for personal investment, except as noted in Item 5 below.

On July 2, 2007, the Issuer announced plans to repurchase up to an aggregate of 84,000,000 shares of its outstanding Common Stock in a modified “Dutch Auction” tender offer (the “Tender Offer”). The number of shares proposed to be purchased represents approximately 7% of the Issuer’s currently outstanding Common Stock.

Effective July 2, 2007, Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware, 188 Partners LP, a limited partnership organized and existing under the laws of the State of California, and the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation (each, a “Seller” and collectively, the “Sellers”), and the Issuer entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which, among other things, the Sellers agreed not to participate in the Tender Offer, and instead, have agreed to sell, and the Issuer has agreed to purchase,


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 4 of 7

18,000,000 shares (which will be proportionately increased or decreased if the number of shares purchased in the Tender Offer is higher or lower than the number of shares the Issuer is currently offering to purchase). The shares to be purchased from the Sellers pursuant to the Purchase Agreement will be purchased at the same price per share as is determined and paid in the Tender Offer. The purchase from the Sellers will take effect on the 11th business day following the expiration of the Tender Offer. Upon consummation of the Tender Offer and the other transactions referred to above, Mr. Schwab’s percentage ownership interest in the Issuer (for purposes of this Schedule 13D) is expected to remain substantially unchanged.

Item 5.

Interest in Securities of the Issuer.

(a)	227,783,588 shares of Common Stock (including 5,850,000 shares which may be acquired within 60 days upon exercise of options) representing (for the purposes of this Schedule 13D) approximately 18.1% of the Common Stock outstanding.

(b)

The 227,783,588 shares of Common Stock referred to in Item 5(a) above consist of: (i) 14,372,495 shares of Common Stock (including 5,850,000 shares which may be acquired within 60 days upon exercise of options) as to which Mr. Schwab has sole voting and dispositive power; and (ii) 213,411,093 shares of Common Stock as to which Mr. Schwab has shared voting power and shared dispositive power (including 149,572,858 shares held by Mr. and Mrs. Schwab as trustees of The Charles & Helen Schwab Living Trust; 42,853,958 shares held by HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware as to which Mr. and Mrs. Schwab are two of three members with shared voting and dispositive power; 7,841,450 shares held by Mrs. Schwab; 1,725,642 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; 11,411,185 shares held by the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation as to which Mr. and Mrs. Schwab, as two of four directors, have shared voting and dispositive power but disclaim beneficial ownership; and 6,000 shares held in the Kevin P. O’Neill Children’s Trust for which Mr. Schwab acts as trustee).

(c)	The following transactions in Common Stock were effected by Mr. Schwab in the sixty days prior to the filing of this Schedule 13D:

Date of

Transaction

Amount of
Securities Involved

Nature of
Transaction

Price

Per Share

Where and How

Effected

June 5, 2007

405,000

Distribution

N/A

Distribution

(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 & Helen Schwab Foundation and HOS Family Partners LLC, as noted in Item 5(b) above.

(e)	Inapplicable

These shares were distributed by a family limited partnership over which Mr. Schwab has control to Mr. Schwab’s daughter and represent a portion of Mr. Schwab’s daughter’s pro rata interest in the shares of Common Stock owned by the family limited partnership. The shares were initially distributed to a trust for the benefit of Mr. Schwab’s daughter over which Mr. Schwab serves as trustee, and the trust distributed the shares to a separate account for Mr. Schwab’s daughter.


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 5 of 7

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987 between Mr. Schwab and CL Acquisition Corporation (now named The Charles Schwab Corporation), which Agreement 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.	Non-Qualified Stock Option Agreement, dated as of September 16, 1992 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 1992 Stock Incentive Plan.

3.	Non-Qualified Stock Option Agreement dated as of April 19, 2004 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2001 Stock Incentive Plan.

4.	Premium-Priced Stock Option Agreement dated as of October 20, 2005 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2004 Stock Incentive Plan.

5.	Premium-Priced Stock Option Agreement dated as of October 30, 2006 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2004 Stock Incentive Plan.

Stock Purchase Agreement, dated as of July 2, 2007 among Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware, 188 Partners LP, a limited partnership organized and existing under the laws of the State of California, and the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation, and The Charles Schwab Corporation, a Delaware corporation.

Also, the responses to Items 4 and 5 of this Schedule 13D are incorporated herein by reference.


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 6 of 7

Item 7.

Material to Be Filed as Exhibits.


Exhibit No.		Description
1.		Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between Charles R. Schwab and CL Acquisition Corporation (now named The Charles Schwab Corporation).*

2.		Non-Qualified Stock Option Agreement, dated as of September 16, 1992 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 1992 Stock Incentive Plan.**

3.		Non-Qualified Stock Option Agreement dated as of April 19, 2004 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2001 Stock Incentive Plan. ***

4.		Premium-Priced Stock Option Agreement dated as of October 20, 2005 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2004 Stock Incentive Plan. ****

5.		Premium-Priced Stock Option Agreement dated as of October 30, 2006 between The Charles Schwab Corporation and Mr. Schwab pursuant to the 2004 Stock Incentive Plan.

6.		Stock Purchase Agreement, dated as of July 2, 2007 among Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware, 188 Partners LP, a limited partnership organized and existing under the laws of the State of California, and the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation, and The Charles Schwab Corporation, a Delaware corporation.

*	Incorporated by reference to Exhibit 1 to Amendment No. 8 to Mr. Schwab’s Schedule 13D dated July 31, 1995.

**	Incorporated by reference to Exhibit 4 to Amendment No. 5 to Mr. Schwab’s Schedule 13D dated May 6, 1994.

***	Incorporated by reference to Exhibit 3 to Amendment No. 11 to Mr. Schwab’s Schedule 13D dated March 9, 2006.

****	Incorporated by reference to Exhibit 4 to Amendment No. 11 to Mr. Schwab’s Schedule 13D dated March 9, 2006.


CUSIP No. 808513-10-5		SCHEDULE 13D		Page 7 of 7

Signature

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.

Dated: July 10, 2007

/s/ Charles R. Schwab

Charles R. Schwab

EX-99.5 2 dex995.htm PREMIUM-PRICED STOCK OPTION AGREEMENT PURSUANT TO THE 2004 STOCK INCENTIVE PLAN Premium-Priced Stock Option Agreement pursuant to the 2004 Stock Incentive Plan

Exhibit 5

THE CHARLES SCHWAB CORPORATION

2004 STOCK INCENTIVE PLAN

NOTICE OF PREMIUM-PRICED STOCK OPTION GRANT

You have been granted the following option to purchase Common Stock of The Charles Schwab Corporation (“Schwab”) under the Charles Schwab Corporation 2004 Stock Incentive Plan (the “Plan”):


Name of Grantee:		Charles R Schwab

Total Number of Shares Granted:		540541

Exercise Price Per Share:		$19.186

Grant Date:		Oct 30, 2006

Expiration Date:		Oct 30, 2013

Vesting Schedule:		So long as you remain in service in good standing and subject to the terms of the Premium-Priced Stock Option Agreement, you will acquire the right to exercise this option (become “vested” in this option) on the following dates and in the following amounts:



Number of Shares on Vesting Date

135135 on 10/30/2007		135135 on 10/30/2008
135135 on 10/30/2009		135136 on 10/30/2010

You and Schwab agree that this option is granted under and governed by the terms and conditions of the Plan and the Premium-Priced Stock Option Agreement, both of which are made a part of this notice. Please review the Premium-Priced Stock Option Agreement and the Plan carefully, as they explain the terms and conditions of this option. You agree that Schwab may deliver electronically all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that Schwab is required to deliver to its stockholders. By accepting this award, you agree to all of the terms and conditions described above, in the Premium-Priced Stock Option Agreement and in the Plan, and you have no right whatsoever to change or negotiate such terms and conditions.

THE CHARLES SCHWAB CORPORATION

2004 STOCK INCENTIVE PLAN

PREMIUM-PRICED STOCK OPTION AGREEMENT


Tax Treatment		This option is a nonqualified stock option and is not intended to qualify as an incentive stock option under federal tax laws.

Vesting		Subject to the provisions of this Agreement, this option becomes vested as provided in the Notice of Premium-Priced Stock Option Grant, of which this Premium-Priced Stock Option Agreement is a part. In no event will additional shares under this option vest after your service terminates for any reason. For all purposes of this Agreement, “service” means continuous employment as a common-law employee of Schwab or a parent company or subsidiary of Schwab, and “subsidiary” means a subsidiary corporation as defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

Accelerated Vesting		This option will become fully exercisable if your service terminates on account of your death or disability. This option also will become fully exercisable if your service terminates on account of your retirement provided that your retirement occurs at least two years after the Grant Date indicated in the Notice of Premium-Priced Stock Option Grant. If, prior to the date your service terminates, Schwab is subject to a “change in control” (as defined in the Plan document), this option will become fully exercisable immediately preceding the change in control. If Schwab’s Compensation Committee (or its delegate) (the “Compensation Committee” ) determines that a change in control is likely to occur, Schwab will advise you and this option will become fully exercisable as of the date 10 days prior to the anticipated date of the change in control.


		If you are entitled to severance benefits under The Charles Schwab Severance Pay Plan (or any successor plan), then all or a portion of your option may be eligible for accelerated vesting under the terms of that plan.

Definition of Disability		For all purposes of this Agreement, “disability” means that you have a disability such that you have been determined to be eligible for benefits under Schwab’s long-term disability plan.

Definition of Retirement		If you are an employee of Schwab and its subsidiaries (other than U.S. Trust Corporation and its subsidiaries (“U.S. Trust”)), “retirement” means termination of service for any reason other than death at any time after you attain age 50, but only if, at the time of your termination, you have been credited with at least 7 years of service. If you are an employee of U.S. Trust, “retirement” means any termination of service for any reason other than death at any time after (1) you attain age 65, or (2) the sum of your age and credited years of service, at the time of your termination, is equal to or greater than 80, or (3) you attain age 60, but only if, at the time of your termination, you have been credited with at least 10 years of service. The phrase “years of service” above has the same meaning given to it under the SchwabPlan Retirement Savings and Investment Plan (or any successor plan). If your employment is transferred to U.S. Trust and if you met the requirements for retirement at the time of transfer, then you will be deemed to have met the requirements of retirement at all times thereafter.

Exercise Procedures		You or your representative may exercise this option by following the procedures prescribed by Schwab. If this option is being exercised by your representative, your representative must furnish proof satisfactory to Schwab of your representative’s right to exercise this option. After completing the prescribed procedures, Schwab will cause to be issued the shares purchased, which will be registered in the name of the person exercising this option.

Forms of Payment		When you submit your notice of exercise, you must include payment of the option exercise price for the shares you are purchasing. Payment may be made in one of the following forms: • Cash, your personal check, a cashier’s check or a money order. • Shares of Schwab stock that are surrendered to Schwab. These shares will be valued at their fair market value on the date when the new shares are purchased.


		• By delivery (in a manner prescribed by Schwab) of an irrevocable direction to Charles Schwab & Co., Inc. to sell shares of Schwab stock (including shares to be issued upon exercise of this option) and to deliver all or part of the sale proceeds to Schwab in payment of all or part of the exercise price.

Term		This option expires no later than the Expiration Date specified in the Notice of Premium-Priced Stock Option Grant but may expire earlier upon your termination of service, as described below.

Termination of Service		This option will expire on the date three months following the date of your termination of service for any reason other than on account of death, disability or retirement. The terms “service,” “disability” and “retirement” are defined above. If your service terminates by reason of your disability or death, then this option will expire on the first anniversary of the date of your death or disability. If your service terminates by reason of your retirement, then this option will expire on the second anniversary of the date of your retirement.

Cancellation of Options		To the fullest extent permitted by applicable laws, this option will immediately be cancelled and expire in the event that Schwab terminates your employment on account of conduct contrary to the best interests of Schwab, including, without limitation, conduct constituting a violation of law or Schwab policy, fraud, theft, conflict of interest, dishonesty or harassment. The determination whether your employment has been terminated on account of conduct contrary to the best interests of Schwab shall be made by Schwab in its sole discretion.

Withholding Taxes and Stock Withholding		You will not be allowed to exercise this option unless you make arrangements acceptable to Schwab to pay any applicable withholding of income and employment taxes that may be due as a result of the option exercise. With Schwab’s consent, these arrangements may include without limitation withholding shares of Schwab stock that otherwise would be issued to you when you exercise this option.

Restrictions on Exercise and Issuance or Transfer of Shares		You cannot exercise this option and no shares of Schwab stock may be issued under this option if the issuance of shares at that time would violate any applicable law, regulation or rule. Schwab may impose restrictions upon the sale, pledge or other transfer of shares (including the placement of appropriate legends on stock certificates) if, in the judgment of Schwab and its counsel, such restrictions are necessary or desirable to comply with applicable law, regulations or rules.


Stockholder Rights		You, or your estate or heirs, have no rights as a stockholder of Schwab until you have exercised this option by giving the required notice to Schwab and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan.

No Right to Employment		Nothing in this Agreement will be construed as giving you the right to be retained as an employee, consultant or director of Schwab and its subsidiaries for any specific duration or at all.

Transfer of Option		In general, only you may exercise this option prior to your death. You may not transfer or assign this option, except as provided below. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or in a beneficiary designation. You may transfer this option as a gift to one or more family members. For this purpose, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father- in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household, e.g., a domestic partner, other than a tenant or employee, a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest. Schwab may, in its sole discretion, allow you to transfer this option under a domestic relations order in settlement of marital or domestic property rights. In order to transfer this option, you and the transferee(s) must execute the forms prescribed by Schwab, which include the consent of the transferee(s) to be bound by this Agreement.

Limitation on Payments

If a payment from the Plan would constitute an excess parachute payment or if there have been certain securities law violations, then your award may be reduced or cancelled and you may be required to disgorge any profit that you have realized from your award.

If a disqualified individual receives a payment or transfer under the Plan that would constitute an excess parachute payment under the Code, such payment will be reduced, as described below. Generally, someone is a “disqualified individual” if he or she is (a) an officer of Schwab, (b) a member of the group consisting of the highest paid 1% of the employees of Schwab or, if less, the highest paid 250 employees of Schwab, or (c) a 1% stockholder of Schwab. For purposes of the section on “Limitation on Payments,” the term “Schwab” will include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of the Code.

In the event that the independent auditors most recently selected by the Schwab Board of Directors (the “Auditors”) determine that any payment or transfer in the nature of compensation to or for your benefit, whether paid or payable (or transferred or transferable) pursuant to the terms of the Plan or otherwise (a “Payment”), would be nondeductible for federal income tax purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments will be reduced (but not below zero) to the Reduced Amount; provided, however, that the Compensation Committee may specify in writing that the award will not be so reduced and will not be subject to reduction under this section.

For this purpose, the “Reduced Amount” will be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by Schwab because of section 280G of the Code.

If the Auditors determine that any Payment would be nondeductible because of section 280G of the Code, then Schwab will promptly give you notice to that effect and a copy of the detailed calculation and of the Reduced Amount. You may then elect, in your discretion, which and how much of the Payments will be eliminated or reduced (as long as after such election, the aggregate present value of the Payments equals the Reduced Amount). You will advise Schwab in writing of your election within 10 days of receipt of the notice. If you do not make such an election within the 10-day period, then Schwab may elect which and how much of the Payments will be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount). Schwab will notify you promptly of its election. Present value will be determined in accordance with section 280G(d)(4) of the Code. The Auditors’ determinations will be binding upon you and Schwab and will be made within 60 days of the date when a Payment becomes payable or transferable.


		As promptly as practicable following these determination and elections, Schwab will pay or transfer to or for your benefit such amounts as are then due to you under the Plan, and will promptly pay or transfer to or for your benefit in the future such amounts as become due to you under the Plan. As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors, it is possible that Payments will have been made by Schwab which should not have been made (an “Overpayment”) or that additional Payments which will not have been made by Schwab could have been made (an “Underpayment”), consistent in each case with the calculation of the Reduced Amount. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against you or Schwab which the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment will be treated for all purposes as a loan to you which you will repay to Schwab on demand, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code. However, no amount will be payable by you to Schwab if and to the extent that such payment would not reduce the amount which is subject to taxation under section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment will promptly be paid or transferred by Schwab to or for your benefit, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.

Claims Procedure		You may file a claim for benefits under the Plan by following the procedures prescribed by Schwab. If your claim is denied, generally you will receive written or electronic notification of the denial within 90 days of the date on which you filed the claim. If special circumstances require more time to make a decision about your claim, you will receive notification of when you may expect a decision. You may appeal the denial by submitting to the Plan Administrator a written request for review within 30 days of receiving notification of the denial. Your request should include all facts upon which your appeal is based. Generally, the Plan Administrator will provide you with written or electronic notification of its decision within 90 days after receiving the review request. If special circumstances require more time to make a decision about your request, you will receive notification of when you may expect a decision.


Plan Administration		The Plan Administrator has discretionary authority to make all determinations related to this option and to construe the terms of the Plan, the Notice of Premium- Priced Stock Option Grant and this Agreement. The Plan Administrator’s determinations are conclusive and binding on all persons.

Right to Replace Option with SARs		The Compensation Committee shall have the right to replace this option (or any portion of this option) to the extent outstanding with a Stock Appreciation Right subject to substantially the same terms and conditions contained in this Agreement to be settled in shares of Schwab stock on a one-to-one basis; provided, that this provision shall not become effective if it would cause Schwab to recognize compensation expense.

Adjustments		In the event of a stock split, a stock dividend or a similar change in Schwab stock, the Compensation Committee shall adjust the number of shares covered by this option and the exercise price per share.

Severability		In the event that any provision of this Agreement is held invalid or unenforceable, the provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.

Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of California (without regard to their choice-of-law provisions), as such laws are applied to contracts entered into and performed in California.

The Plan and Other Agreements		The text of the Plan is incorporated in this Agreement by reference. This Agreement and the Plan constitute the entire understanding between you and Schwab regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement approved by the Compensation Committee and signed by both parties. If there is any inconsistency or conflict between any provision of this Agreement and the Plan, the terms of the Plan will control. Nothing in this Agreement gives you the ability to negotiate or change the key terms and conditions described above, in the Notice of Premium-Priced Stock Option Grant and in the Plan.

EX-99.6 3 dex996.htm STOCK PURCHASE AGREEMENT DATED JULY 2, 2007 Stock Purchase Agreement dated July 2, 2007

Exhibit 6

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of July 2, 2007, by and among Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware, 188 Partners, LP, a limited partnership organized and existing under the laws of the State of California, and the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation (each, a “Seller” and collectively, the “Sellers”), and The Charles Schwab Corporation, a Delaware corporation (the “Purchaser”).

RECITALS

WHEREAS, each of the Sellers owns of record the number of shares of the Purchaser’s common stock, par value $0.01 (the “Common Stock”), set forth opposite such Seller’s name on Schedule I hereto and collectively own of record 221,927,588 shares of the Purchaser’s Common Stock, which constitute approximately 18% of the total issued and outstanding shares of Common Stock as of the date hereof;

WHEREAS, the Purchaser intends, but has not made any public announcement of such intention, to conduct a public, modified “Dutch Auction” tender offer (the “Tender Offer”) commencing on or about July 3, 2007 for up to 84,000,000 shares of its outstanding Common Stock at a purchase price not greater than $22.50 nor less than $19.50 per share pursuant to the terms and conditions set forth in the Offer to Purchase, to be dated July 3, 2007, substantially in the form attached hereto as Annex A, as the same may be revised, amended, modified or supplemented from time to time after the date hereof (the “Offer to Purchase”);

WHEREAS, the Sellers have agreed that they will not exercise their right to tender any of their shares of Common Stock in the Tender Offer pursuant to the Offer to Purchase; and

WHEREAS, subsequent to the date of expiration of the Tender Offer (such date, as determined pursuant to the Offer to Purchase, the “Expiration Date”), the Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers, a portion of the Sellers’ shares of Common Stock based on the total number of shares tendered and accepted for purchase in the Tender Offer in a manner more specifically described below.

NOW, THEREFORE, in consideration of the premises, the representations, warranties and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

AGREEMENT

1. Agreement Not to Participate in the Tender Offer. In consideration of the Purchaser’s willingness to purchase the Pro Rata Shares (as defined below) in accordance with the provisions of Section 2 hereof, the Sellers hereby agree that from the date of commencement of the Tender Offer through the Expiration Date (the “Lock-up Period”), the Sellers will not directly or indirectly, including by guaranteed delivery, participate in the Tender Offer pursuant to the Offer to Purchase, or otherwise sell, pledge, hypothecate or dispose of any shares of Common Stock owned by the Sellers (including without limitation, any shares of Common Stock which may be deemed to be beneficially owned by any Seller in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), and any shares of Common Stock which may be issued upon the vesting and/or exercise of any stock options, restricted stock or warrants, or upon conversion or exchange of any convertible or exchangeable securities or any rights, warrants, options or other securities that are convertible into, or exercisable or exchangeable for Common Stock).

2. Purchase and Sale of the Pro Rata Shares.

2.1 Purchase and Sale of the Pro Rata Shares.

(a) Subject to the completion of the Tender Offer as set forth below and pursuant to the terms and conditions of this Agreement, the Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase from the Sellers, an aggregate of 18,000,000 shares of Common Stock; provided, however, that if the number of shares purchased in the Tender Offer pursuant to the Offer of Purchase is higher or lower than 84,000,000 (any such change in the amount purchased, a “TO Share Adjustment”), the aggregate number of shares of Common Stock to be sold by the Sellers to the Purchaser and to be purchased by the Purchaser from the Sellers shall be increased or decreased, as appropriate, by an amount equal to the TO Share Adjustment multiplied by a fraction, the numerator of which is 221,933,588 and the denominator of which is 1,030,521,037 (representing the number of outstanding shares of Common Stock beneficially owned by Mr. Schwab (excluding outstanding options to acquire stock) divided by the total number of outstanding shares of Common Stock held of record by all stockholders of the Purchaser other than those beneficially owned by Mr. Schwab (excluding outstanding options to acquire stock), each as of June 29, 2007) (the amount of shares of Common Stock sold by the Sellers and purchased by the Purchaser, inclusive of any adjustment, if applicable, the “Pro Rata Shares”). As a result, upon the Closing (as defined below), the aggregate percentage ownership interest of the Sellers in the Purchaser’s outstanding shares of Common Stock will remain substantially the same as immediately prior to the Closing Date (as defined below).

(b) The Pro Rata Shares to be sold by the Sellers pursuant to this Section 2 shall be allocated among the Sellers as the Sellers may agree; provided, however, that the Sellers must notify the Purchaser of such allocation at least one business day prior to the Closing Date.

2.2 Purchase Price.

(a) The purchase price per share to be paid by the Purchaser for the Pro Rata Shares shall be an amount equal to the per share purchase price paid by the Purchaser for the shares of Common Stock properly tendered and accepted for purchase by the Purchaser in the Tender Offer (the “Per Share Purchase Price”).

(b) The aggregate purchase price for the Pro Rata Shares (the “Aggregate Purchase Price”) shall be an amount equal to the Per Share Purchase Price, multiplied by the total number of Pro Rata Shares purchased from the Sellers.

3. Closing. Subject to the terms and conditions hereof, the purchase and sale of the Pro Rata Shares contemplated by this Agreement (the “Closing”) will take place at the offices of Howard Rice Nemerovski Canady Falk & Rabkin, a Professional Corporation, Three Embarcadero Center, 7th Floor, San Francisco, California 94111 at 10:00 a.m. San Francisco time on the eleventh business day following the Expiration Date, or at such other later date or place as the parties shall mutually agree (the “Closing Date”). At the Closing, (a) the Sellers will deliver to the Purchaser the Pro Rata Shares to be purchased by the Purchaser and (b) the Purchaser shall deliver the Aggregate Purchase Price to the Sellers by wire transfer of immediately available funds to one or more accounts specified by the Sellers at least one business day prior to the Closing Date.

4. Representations and Warranties of the Sellers. In order to induce the Purchaser to enter into this Agreement, the Sellers hereby jointly represent and warrant to the Purchaser as follows:

4.1 Organization and Corporate Power; Authorization. Each of the Sellers has the requisite power and authority to execute, deliver and perform this Agreement and to sell the Pro Rata Shares. This Agreement is the legal, valid and, assuming due execution by the other parties hereto, binding obligation of each of the Sellers, enforceable against each of the Sellers in accordance with its terms except to the extent that the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) rules of law governing the availability of equitable remedies.

4.2 Ownership of Pro Rata Shares. The Sellers collectively own of record the number of issued and outstanding shares of Common Stock set forth in the Recitals to this Agreement. The Pro Rata Shares to be sold to the Purchaser by such Sellers when delivered to the Purchaser shall be free and clear of any liens, claims or encumbrances, including rights of first refusal and similar claims except for restrictions of applicable state and federal securities laws. There are no restrictions imposed on the transfer of such Pro Rata Shares by any stockholder or similar agreement or any law, regulation or order, other than applicable state and federal securities laws.

4.3 No Violation; No Consent. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (a) will not constitute a breach or violation of or default under any judgment, decree or order or any agreement or instrument of any Seller or to which any Seller is subject, (b) will not result in the creation or imposition of any lien upon the Pro Rata Shares to be sold by any Seller, and (c) will not require the consent of or notice to any governmental entity or any party to any contract, agreement or arrangement with any Seller.

4.4 Brokerage. There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of such Sellers.

4.5. Tax Advisors. Each of the Sellers acknowledges that the Purchaser has made no representations and provided no advice regarding the tax consequences of the sale of the Pro Rata Shares. Each of the Sellers has been advised to consult such Seller’s own tax advisors regarding such tax consequences.

5. Representations and Warranties of the Purchaser. In order to induce the Sellers to enter into this Agreement, the Purchaser hereby represents and warrants as follows:

5.1 Organization and Corporate Power; Authorization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Purchaser has the requisite power and authority to execute, deliver and perform this Agreement and to acquire the Pro Rata Shares. The execution, delivery and performance of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby have been approved by the Purchaser. This Agreement has been duly executed and delivered by the Purchaser and is the legal, valid and, assuming due execution by the other parties hereto, binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms except to the extent that the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) rules of law governing the availability of equitable remedies.

5.2 No Violation; No Consent. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (a) will not constitute a breach or violation of or default under any judgment, decree or order or any agreement or instrument of the Purchaser or to which the Purchaser is subject, and (b) will not require the consent of or notice to any governmental entity or any party to any contract, agreement or arrangement with the Purchaser.

5.3 Brokerage. There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Purchaser.

6. Conditions to the Purchaser’s Obligations. The obligations of the Purchaser under Section 2 of this Agreement to purchase the Pro Rata Shares at the Closing from each Seller are subject to the fulfillment as of the Closing of each of the following conditions unless waived by the Purchaser in accordance with Section 10.4:

6.1 Representations and Warranties. The representations and warranties of such Seller contained in Section 4 shall be true and correct on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

6.2 Performance. Such Seller shall have performed and complied in all material respects with all agreements, obligations, and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date.

6.3 Delivery of Pro Rata Shares. Such Seller shall have delivered the Pro Rata Shares to be sold by it at the Closing, free and clear of any liens, claims or encumbrances, along with all stock powers, assignments or any other documents, instruments or certificates necessary for a valid transfer.

6.4 No Violation. No governmental authority shall have advised or notified the Purchaser that the consummation of the transactions contemplated hereunder would constitute a material violation of any applicable laws or regulations, which notification or advice shall not have been withdrawn after the exhaustion of the Purchaser’s good faith efforts to cause such withdrawal.

6.5 Successful Completion of Tender Offer. The Purchaser shall have purchased shares of its Common Stock in the Tender Offer in accordance with the Offer to Purchase.

7. Conditions to Each Seller’s Obligations. The obligations of each Seller under Section 2 of this Agreement to sell the Pro Rata Shares at the Closing are subject to the fulfillment as of the Closing of each of the following conditions unless waived by such Seller in accordance with Section 10.4:

7.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Section 5 shall be true and correct as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

7.2 Performance. The Purchaser shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date.

7.3 Payment of Purchase Price. The Purchaser shall have delivered the Aggregate Purchase Price to be paid by the Purchaser to the Sellers.

7.4 No Violation. No governmental authority shall have advised or notified the Sellers that the consummation of the transactions contemplated hereunder would constitute a material violation of any applicable laws or regulations, which notification or advice shall not have been withdrawn after the exhaustion of the Sellers’ good faith efforts to cause such withdrawal.

7.5 Successful Completion of Tender Offer. The Purchaser shall have purchased shares of its Common Stock in the Tender Offer in accordance with the Offer to Purchase.

8. Covenants.

8.1 No Purchase of Common Stock. From the date hereof until eleven business days following the Expiration Date of the Tender Offer, each Seller agrees that it will not, directly or indirectly, purchase or agree to purchase any shares of Common Stock or any securities convertible into, or exchangeable or exercisable for, shares of Common Stock.

8.2 No Sale of Common Stock. Except as contemplated hereunder, from the date hereof until the Closing or the termination of this Agreement, each Seller agrees that it will not, directly or indirectly, sell any shares of Common Stock or any securities convertible into, or exchangeable or exercisable for, shares of Common Stock.

8.3 Closing Conditions. The Sellers and the Purchaser shall use their commercially reasonable efforts to ensure that each of the conditions to Closing are satisfied.

9. Survival of Representations and Warranties; Limitation on Liability.

9.1 Survival of Representations and Warranties. All representations and warranties hereunder shall survive the Closing.

9.2 Limitation on Liability. Notwithstanding anything to the contrary contained in this Agreement or any other agreements, instruments or other documents related to the Tender Offer or the Offer to Purchase, in no event shall any Seller’s liability for breach of the representations, warranties and covenants exceed the portion of the Aggregate Purchase Price received by such Seller.

10. Miscellaneous.

10.1 Adjustments. Whenever a particular number is specified herein, including, without limitation, number of shares or price per share, such number shall be adjusted to reflect any stock dividends, stock-splits, reverse stock-splits, combinations or other reclassifications of stock or any similar transactions and appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the Purchaser and each of the Sellers under this Agreement.

10.2 Parties in Interest; Assignment. All covenants, agreements, representations, warranties and undertakings in this Agreement made by and on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. This Agreement and the rights and obligations contemplated hereby may not be assigned, in part or in whole, by the Purchaser or by any Seller without the written consent of the other party.

10.3 Third Party Beneficiaries. The parties hereto intend that this Agreement shall not benefit or create any right or cause of action in, or on behalf of, any person, other than the parties hereto and no person, other than the parties hereto, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceedings, hearing or other form.

10.4 Amendments and Waivers. Except as set forth in this Agreement, changes in or additions to this Agreement may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively) only by a writing executed by each of the parties hereto.

10.5 Cooperation. The Purchaser and each of the Sellers shall, from and after the date hereof, cooperate in a reasonable manner to effect the purposes of this Agreement.

10.6 Governing Law; Jurisdiction; Venue. This Agreement shall be governed in all respects by the internal laws of the State of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to principles of conflicts of law. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in San Francisco County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Northern District of California).

10.7 Notices. All notices, demands, requests, consents or approvals (collectively, “Notices”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally delivered or mailed, registered or certified, return receipt requested, postage prepaid (or by a substantially similar method), or delivered by a reputable overnight courier service with charges prepaid, or transmitted by hand delivery, addressed as set forth below, or such other address (and with such other copy) as such party shall have specified most recently by written notice. Notice shall be deemed given or delivered on the date of service or transmission if personally served. Notice otherwise sent as provided herein shall be deemed given or delivered on the third business day following the date mailed or on the next business day following delivery of such notice to a reputable overnight courier service.

To the Purchaser:

The Charles Schwab Corporation

101 Montgomery Street

San Francisco, California 94104

Attention: Chief Financial Officer

with a copy to:

Howard Rice Nemerovski Canady Falk & Rabkin,

A Professional Corporation

Three Embarcadero Center, 7th Floor

San Francisco, California 94111

Attention: Lawrence B. Rabkin, Esq.

To the Sellers:

Charles R. Schwab

The Charles Schwab Corporation

101 Montgomery Street

San Francisco, California 94104

10.8 Effect of Headings and Other Matters. The section and paragraph headings herein are for convenience only and shall not affect the construction hereof.

10.9 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes all prior written or oral understandings or agreements among or between the parties hereto. Each Seller hereby agrees that, to the extent the terms of this Agreement conflict with, or are in any way inconsistent with, any agreement relating to the rights of each such Seller as a holder of shares of Common Stock, this Agreement supersedes and controls over such agreement or agreements.

10.10 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

10.11 Counterparts. This Agreement may be executed in separate counterparts, including by facsimile or similar transmission, each of which shall be an original and all of which taken together shall constitute one and the same agreement.

10.12 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successor and permitted assigns of the parties hereto.

10.13 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any 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. It is further agreed that any waiver, permit, consent or approval of any kind or character of any breach or default under this Agreement, or any waiver of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing, and that all remedies, either under this Agreement, by law or otherwise, shall be cumulative and not alternative.

10.14 Termination. Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall terminate if (a) the Tender Offer is terminated or (b) the Closing does not occur by August 22, 2007 (unless the Purchaser has extended the Tender Offer beyond July 31, 2007, in which case this Agreement shall terminate on the 16th business day after the last extension thereof). In addition, the Agreement may be terminated at any time prior to the Closing by the mutual written consent of the Purchaser and the Sellers.

[signature page follows]

IN WITNESS WHEREOF, the undersigned parties have duly executed and delivered this Agreement as of the date first written above.


“PURCHASER”		“SELLERS”

The Charles Schwab Corporation

		/s/ Charles R. Schwab
		Charles R. Schwab

By:	/s/ Joseph Martinetto
Name:	Joseph Martinetto
Title:	Chief Financial Officer	/s/ Helen O. Schwab
		Helen O. Schwab

		The Charles & Helen Schwab Living Trust

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Trustee

		By:	/s/ Helen O. Schwab
		Name:	Helen O. Schwab
		Title:	Trustee

		HOS Family Partners, LLC

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Member

		188 Partners, LP

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Partner

		Charles and Helen Schwab Foundation

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Chairman

[Signature Page to Stock Purchase Agreement]

ANNEX A

Offer to Purchase

SCHEDULE I

Stock Ownership of Sellers


Seller		Number of Shares
Charles R. Schwab		7,683,137
Helen O. Schwab		7,841,450
Charles & Helen Schwab Living Trust		149,572,858
HOS Family Partners LLC		42,853,958
188 Partners, LP		2,565,000
Charles and Helen Schwab Foundation		11,411,185

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