808513-10-5 SCHEDULE 13D Page 1 of 6 pages
United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
The Charles Schwab Corporation
(Name of Issuer)
Common Stock ($.01 par value)
(Title of Class of Securities)
808513-10-5
(CUSIP Number)
Pamela E. Herlich, Assistant Secretary
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, CA 94104
415/627-7533
(Name, Address and Telephone Number of
Person Authorized to Receive
Notices and Communications)
January 30, 1991
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [ ].
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808513-10-5 SCHEDULE 13D Page 2 of 6 pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charles R. Schwab
###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a [ ]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
NUMBER OF 1,243,389
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 6,336,343
PERSON WITH
WITH 9 SOLE DISPOSITIVE POWER
1,243,389
10 SHARED DISPOSITIVE POWER
6,336,343
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
7,579,732
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31%
14 TYPE OF REPORTING PERSON
IN
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808513-10-5 SCHEDULE 13D Page 3 of 6 pages
Item 1. Security and Issuer
Security: Common Stock ($.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
The personal funds of Mr. Schwab were used to finance the
purchases of Common Stock. The aggregate purchase price for
the shares was $899,691.80.
Item 4. Purpose of Transaction
The shares of Common Stock were acquired for personal
investment.
Item 5. Interest in Securities of Issuer
a) 7,579,732 shares of Common Stock, representing 31% of
the Common Stock outstanding.
b) The 7,579,732 shares of Common Stock referred to in
Item 5(a) above consist of (i) 1,243,389 shares of
Common Stock as to which Mr. Schwab has sole voting
power and sole dispositive power (including shares held
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808513-10-5 SCHEDULE 13D Page 4 of 6 pages
by the Trustee of the Charles Schwab Profit Sharing and
Employee Stock Ownership Plan and allocated to
Mr. Schwab's individual ESOP account; and 100 shares
held by Mr. Schwab as custodian for his children) and
(ii) 6,336,343 shares of Common Stock as to which
Mr. Schwab has shared voting power and shared
dispositive power (including 270,000 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;
5,744,000 shares held by Mr. and Mrs. Schwab as
community property; 141,487 shares held by Mr. and
Mrs. Schwab as joint tenants; and 180,856 shares held by
Mrs. Schwab).
c) The following transactions in Common Stock were effected
by Mr. Schwab since the initial filing of his
Schedule 13D dated September 22, 1987:
Date of # of Shares Nature of Price Per Where and
Transaction of Common Stock Transaction Per Share How Effected
2/4/88 500 Purchase $6.875 Open Market
12/30/88 105,000 Sale $5.00 Private
Transaction
11/30/89 14,000 Sale Open Market
11/30/89 1,000 Sale Open Market
12/1/89 110,000 Sale Open Market
12/29/89 10,000 Disposition N/A Gift
11/27/90 56,000 Disposition N/A Gift
1/30/91 451,309 Exercise of $1.42 Pursuant to
Warrants Registration
Statement
1/30/91 179,856 Exercise of $1.42 Pursuant to
Warrants Registration
Statement
In addition, during the period September 22, 1987
through December 31, 1990, a total of 14,143 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
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808513-10-5 SCHEDULE 13D Page 5 of 6 pages
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. Secured Demand Promissory Note, dated March 27, 1987 by
Charles Schwab and Helen O. Schwab in the principal,
amount of $4,000,000 secured by the stock acquired by
Mr. Schwab. The pledge arrangement was modified by
Letter Agreement, dated July 28, 1987, whereby the
Lender agreed to release a certain amount of the pledged
stock.
3. 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 per 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.
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. Secured Demand Promissory Note, dated March 27, 1987 by
Charles R. Schwab and Helen O. Schwab for $4,000,000.*
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808513-10-5 SCHEDULE 13D Page 6 of 6 pages
3. Letter Agreement, dated July 28, 1987 between Charles R.
Schwab and Helen O. Schwab and the Lender relating to
the release of certain pledged shares.*
4. Stock Option Agreement dated April 1989 between
Charles R. Schwab and David S. Pottruck.
*Incorporated by reference to Exhibits 1, 3 and 4,
respectively, of Mr. Schwab's Schedule 13D dated
September 22, 1987.
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
<PAGE>
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. Secured Demand Promissory Note, dated March 27, 1987 by
Charles R. Schwab and Helen O. Schwab for $4,000,000.*
3. Letter Agreement, dated July 28, 1987 between Charles R.
Schwab and Helen O. Schwab and the Lender relating to
the release of certain pledged shares.*
4. Stock Option Agreement dated April 1989 between
Charles R. Schwab and David S. Pottruck.
*Incorporated by reference to Exhibits 1, 3 and 4,
respectively, of Mr. Schwab's Schedule 13D dated
September 22, 1987.
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into as of
this ___ day of April, 1989 between Charles R. Schwab
("Seller") and David S. Pottruck ("Holder").
1. Purchase and Sale of Option. On the terms and
subject to the conditions set forth in this Agreement, Seller
agrees to sell to Holder and Holder agrees to purchase from
Seller, for the sum of $15.00 and other good and valuable
consideration, receipt of which is acknowledged hereby, an
irrevocable option (the "Option") to purchase 100,000 shares
(the "Shares") of common stock, $0.01 par value (the "Common
Stock"), of The Charles Schwab Corporation (the "Company")
together with the registration rights (the "Registration
Rights") relating to the Shares pursuant to that certain
Registration Rights and Stock Restriction Agreement dated as
of March 31, 1987 between Seller and the Company (the
"Registration Rights Agreement"), to the extent that the
transfer of such rights is permitted pursuant to Section 8
thereof. The aggregate purchase price for the Shares and the
Registration Rights shall be $1,000,000, the price per share
being $10.00 (the "Purchase Price"). Notwithstanding the
foregoing, it is a condition to the obligations of the Seller
under this Agreement that the Company's consent to the
transfer of the Shares pursuant to Section 2 of the
Registration Rights Agreement has been obtained at or before
the Closing.
2. Vested and Unvested Shares. As of the date
hereof, all Shares underlying the Option are deemed to be
"Unvested." Shares underlying the Option will be or become
"Vested" according to the following schedule: on April 1 of
each year after the date of grant of the Option, one fourth
(1/4) of the Shares underlying the Option will be deemed
"Vested." Notwithstanding the foregoing, prior to April 1,
1993, Seller may terminate the vesting process by delivering
a written notice of such termination to Holder no less than
30 days prior to any anniversary date on which shares shall
become Vested pursuant to this paragraph. The vesting
process also will be terminated in the event of Seller's
death or permanent disability. For this purpose, "permanent
disability" will mean the reasonable determination by
Seller's physician that he has an illness or incapacity that
has disabled, or will disable, him from rendering his normal
services to the Company and its subsidiaries for a period of
more than six (6) consecutive months in any consecutive
twelve (12) month period. In the event that the vesting
process is terminated, all Unvested Shares will remain
Unvested Shares and no further Shares will become Vested,
provided however that if the vesting process is terminated by
Seller's death or permanent disability, the Shares that would
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have become Vested on the next anniversary date will be
deemed immediately Vested.
3. Exercise of Stock Option.
(a) Term. The Option may be exercised to
purchase Vested Shares, subject to the other terms and
conditions of this Agreement, during the period beginning on
April 1, 1993 and ending on March 31, 1998 (the "Exercise
Period"), provided that the Option will not be exercisable
for a period of seven (7) months following the date of any
written notice from Seller to Holder that Seller intends to
purchase shares of the Company's common stock, and provided
further that the Seller may place such restrictions on
exercise, resale or otherwise as he deems appropriate in
order to satisfy applicable securities laws. In no event may
the Option be exercised to purchase Unvested Shares.
Notwithstanding the foregoing, beginning on
April 1, 1994 and continuing with April 1 of each year during
the Exercise Period, if the fair market value (as defined
below) of a share of Common Stock exceeds the Purchase Price
per Share for a period of at least twenty (20) consecutive
business days during the preceding year and the Option was
otherwise exercisable during such period, the Option, if not
exercised, will lapse and cease to be exercisable as to one
fifth (1/5) of the total number of Shares deemed Vested at
the beginning of the Exercise Period. In no event may the
Option be exercised after April 1, 1998.
(b) Notice of Exercise. Provided that the
Option is exercisable hereunder, the Option may be exercised
by delivering to Seller a written notice of exercise in the
form attached hereto as Exhibit A (the "Exercise Notice").
(c) Closing. The purchase and sale of the
Shares upon exercise of the Option will take place
concurrently with the execution and delivery of the Exercise
Notice, or at such other time as is agreed upon and confirmed
in writing by the Seller and Holder, provided that each of
the following conditions has been satisfied:
(a) the representations and warranties
made by the Holder in the Exercise Notice shall be true and
correct in all material respects when made and as of the
Closing;
(b) the Holder shall have delivered to
the Company an executed Registration Rights and Stock
Restriction Agreement in the form attached hereto as
Exhibit B relating to the Shares, and all such other
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documents as the Company has requested as a condition to its
consent to the transfer of the Shares;
(c) the Company shall have consented to
the transfer of the Shares pursuant to Section 2 of the
Registration Rights Agreement; and
(d) the Company shall have consented to
the transfer of the Registration Rights, if required pursuant
to Section 8 of the Registration Rights Agreement.
At the Closing, the Holder will deliver to the Seller the
Purchase Price, in cash, and the Seller will deliver to
Holder an executed Assignment of the Registration Rights in
the form attached hereto as Exhibit C. Concurrently, the
Seller will deliver to the transfer agent for the Common
Stock all such documents or instruments, including stock
powers, as are required to effect a transfer to Holder of the
Shares purchased.
4. Investment Representation. Seller may require
Holder or his legal representative, heir, legatee or
distributee, as a condition of exercising the Option, to give
written assurance satisfactory to Seller to the effect that
such person is acquiring the Shares for his or her own
account for investment and not with any present intention of
selling or otherwise distributing the same, and that such
person is an "accredited investor" within the meaning of
Regulation D. Unless a Registration Statement under the
Securities Act of 1933, as amended, is in effect with respect
to the Shares issuable upon exercise of the Option, the
exercise of the Option shall be conditioned upon the
determination by Seller, in his sole discretion, that the
exercise is in compliance with all applicable federal and
state securities laws.
5. No Rights as Shareholder. Neither the Holder
nor his legal representative, heir, legatee or distributee,
shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any Shares subject to the
Option unless and until such person has exercised the Option
pursuant to the terms hereof.
6. No Transfer. The Option shall be transferable
only by will or by the laws of descent and distribution.
During the lifetime of the Holder, only the Holder may
exercise the Option.
7. No Exercise after Expiration. In no event may
the Option be exercised by anyone after the expiration of the
term of the Option established pursuant to paragraph 3(a)
hereof.
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8. Restrictions on Transfer. By accepting the
Options and/or Shares under this Agreement, Holder
represents, warrants and agrees as follows:
(a) Commissioner of Corporations. Holder
understands that transfer of the Shares may be restricted in
accordance with Section 260.141.11 of the rules of the
California Commissioner of Corporations (to the extent
applicable), a copy of which is attached hereto.
(b) Securities Act of 1933. Holder further
understands that the Option and Shares have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and that the Option and Shares, when and if obtained,
are not freely tradeable and must be held indefinitely unless
registered under the Act or an exemption from such
registration is available. Holder understands that neither
Seller or the Company is under any obligation to register the
Option or Shares. Holder further understands that although
an exemption from registration may be available pursuant to
Rule 144 promulgated under the Act by the Securities and
Exchange Commission, satisfaction of a number of conditions
is required to make a sale under that exemption, and that,
even if Rule 144 is applicable in whole or in part, in no
event may Holder sell the Shares to the public under such
Rule prior to the expiration of a two-year period after
purchase, that any such sales must be limited in amount and
that sales can only be made in full compliance with the
provisions of the Rule. Holder understands that Rule 144
contains specific requirements that there be available to the
public certain information with respect to the Company's
business and financial affairs, and that the Company may not
be in compliance with the information requirements of the
Rule at any given time. Holder acknowledges that there is no
assurance that the requirements will be met at the time
Holder may want to make sales pursuant to the Rule.
Holder represents that, upon exercise of the
Option, Holder will be purchasing the Shares for Holder's own
account and not with a view to distribution within the
meaning of the Act, other than as may be effected in
compliance with the Act and rules and regulations promulgated
thereunder. No one else has any beneficial interest in the
Shares. Holder has no present intention of disposing of the
Shares at any particular time or for any particular price and
is not aware of any particular occasion, event or
circumstance upon the occurrence of which Holder intends to
dispose of the Shares. Holder understands that the Seller
will rely upon the truth and accuracy of these
representations in transferring the Shares without first
registering them under the Act.
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9. Compliance with Law. Despite anything to the
contrary herein, Shares may be sold pursuant to this
Agreement or by Holder only after there has been compliance
with all applicable federal and state securities laws, and
all offers will be subject to this overriding condition. The
Seller will not be required to register or qualify Shares
with the Securities and Exchange Commission or any State
agency.
10. Fair Market Value. If the Common Stock of the
Company is not publicly traded as of a particular date, fair
market value may be computed by any method the Seller
believes in good faith will reflect the fair market value of
the Common Stock on such day. During such time as the Common
Stock is publicly traded but not listed upon an established
stock exchange, the fair market value per share of Common
Stock shall be the last sale price on the relevant date as
reported on the National Market System, or, if such shares
are not reported on the National Market System but quotations
are reported on the National Association of Securities
Dealers Automated Quotations System, the average of the bid
and asked prices on the relevant date, in either event as
such price quotes are listed in The Wall Street Journal,
Western Edition (or if not so reported in The Wall Street
Journal any other listing service or publication known to the
Seller). If the Common Stock is listed on an established
stock exchange or exchanges, such fair market value shall be
deemed to be the closing price of the Common Stock on the
largest such stock exchange upon which such shares are listed
on the relevant date.
11. Adjustments Upon Changes in the Common Stock.
(a) In the event that (i) the Common Stock is
changed by a stock split, reverse stock split,
recapitalization or other change in the capital structure of
the Company, (ii) the outstanding number of shares of stock
of the Company is increased through payment of a stock
dividend, or (iii) prior to the exercise of the Option,
Seller, as the owner of the Shares underlying the Option
becomes entitled to new, additional or different securities
as a result of an exchange for other securities in the
Company or in another corporation by reclassification,
reorganization, merger, consolidation, recapitalization or
otherwise, proportionate adjustments will be made to the
number of Shares underlying the Option and the Purchase
Price.
(b) In the event of a dissolution or
liquidation of the Company, Seller shall have the discretion
and power to shorten the time over which the Option may be
exercised or the time over which Shares are deemed "Vested"
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under paragraph 2 of this Agreement, notwithstanding the
provisions of this Agreement.
(c) In the event of a merger or consolidation
or other reorganization as a result of which Seller is not a
controlling person of the surviving corporation, the Option
shall be exercisable only prior to such merger, consolidation
or other reorganization.
12. Shares Available. Seller shall at all times
during the term of this Agreement keep available and free
from encumbrance, lien or other hypothecation the number of
Shares subject to purchase upon exercise of the option
contained herein.
13. Notices. Any notice or other communication to
be given hereunder by any party to another shall be in
writing and delivered personally or sent by certified mail,
postage prepaid, as follows:
SELLER:
Charles R. Schwab
[Address deleted]
BUYER:
David S. Pottruck
[Address deleted]
or to such other persons or addresses as may be designated
from time to time in writing by the parties.
14. Miscellaneous.
(a) This Agreement will be governed by and
construed in accordance with the laws of the State of
California, as applied to agreements made and wholly
performed within the State of California.
(b) This Agreement constitutes the entire
agreement of the parties concerning the subject matter hereof
and supersedes all prior agreements with respect thereto.
This Agreement may be modified, amended or supplemented only
by a writing executed by the parties hereto.
(c) This Agreement will survive the death or
disability of the Seller or Holder and will be binding upon
and inure to the benefit of their respective heirs,
executors, administrators and assigns.
(d) The representations and warranties
contained in this Agreement will survive the execution and
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delivery of this Agreement and delivery of the Shares and
payment therefor.
(e) In the event of any litigation between
Seller and Holder concerning this Agreement or the rights,
duties, or obligations of either Seller or Holder in relation
thereto, the prevailing party shall be entitled, in addition
to such other relief as may be granted, to a reasonable sum
for attorneys' fees in that litigation. This sum shall be
fixed by the court as part of the costs of the litigation or
in a separate action brought for that purpose.
(f) The invalidity or unenforceability of any
provision or portion of this Agreement shall not affect the
validity or enforceability of the other provisions or
portions hereof.
(g) Any party hereto may, by written notice
to the other, (i) waive any of the conditions to its
obligations hereunder or extend the time for the performance
of any of the obligations or actions of the other, (ii) waive
any inaccuracies in the representations of the other
contained in this Agreement or in any documents delivered
pursuant to this Agreement, (iii) waive compliance with any
of the covenants of the other contained in this Agreement,
and (iv) waive or modify performance of any of the
obligations of the other. No action taken pursuant to this
Agreement, including without limitation any investigation by
or on behalf of any party, will be deemed to constitute a
waiver by the party taking such action of compliance with any
representation, warranty, condition or agreement contained
herein. Waiver of the breach of any one or more provisions
of this Agreement will not be deemed or construed to be a
waiver of other breaches or subsequent breaches of the same
provisions.
(h) Each party hereto will, whenever and as
often as requested to do so by another party hereto, do,
execute, acknowledge, and deliver, or cause to be done,
executed, acknowledged, delivered, filed, or recorded, all
such further acts, deeds, assignments, transfers,
conveyances, powers of attorney, instruments, and assurances
as such other party may reasonably request in order to carry
out fully the terms and provisions of this Agreement.
(i) This Agreement may be executed in one or
more counterparts, each of which will be deemed an original,
but all of which will constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of the date first above written.
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SELLER:
Charles R. Schwab
HOLDER:
David S. Pottruck
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Exhibit A
NOTICE OF EXERCISE OF OPTION
TO: Charles R. Schwab
I, ____________________, the holder of the Option
granted pursuant to that certain Stock Option Agreement dated
as of April __, 1989 between Charles R. Schwab and David S.
Pottruck (the "Option Agreement"), hereby irrevocably elect
to exercise the purchase rights represented by such Option,
and to purchase thereunder ________________________ shares
(the "Shares") of the common stock of The Charles Schwab
Corporation (the "Company") and agree to deliver to you
payment therefor, in cash, at a Closing to take place
concurrently with the execution and delivery of this notice
or at such other time as is agreed upon and confirmed in
writing by us.
I further represent, warrant and agree as follows:
(a) The representations, warranties and
acknowledgements contained in paragraph 8(b) of the Option
Agreement are incorporated herein by this reference and are
made by me for your benefit as if fully set forth herein.
(b) I have such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Shares and of
making an informed investment decision. I and my
professional advisors, if any, have been given the
opportunity to ask questions of, and receive answers from,
you and the Company's officers concerning the Company, and to
obtain any additional information, to the extent such
officers possess such information or can acquire it without
unreasonable effort or expense, necessary to evaluate the
merits and risks of an investment in the Shares.
(c) I have been advised to consult with my her own
professional advisors, including tax or legal advisors,
regarding investment in the Shares.
Dated:_____________
(Signature)
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Instructions for Issuance of Share Certificate:
Name (please print): __________________________________
Mailing Address: __________________________________
__________________________________
__________________________________
Taxpayer ID or Social
Security Number: __________________________________
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