<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO. 333-
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE CHARLES SCHWAB CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-3025021
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
------------
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 627-7000
(Address of principal executive offices)
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THE CHARLES SCHWAB CORPORATION EMPLOYEE STOCK INCENTIVE PLAN
(Full title of the plan)
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THE CHARLES SCHWAB CORPORATION
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 627-7000
(Name, address and telephone number, including area code, of agent for service)
------------
COPIES TO:
SCOTT P. SPECTOR, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED
AMOUNT PROPOSED MAXIMUM MAXIMUM
TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01(2) 1,700,000 $39.40625 $66,990,625 $19,762.23
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457, on the basis of the average of the high and low
prices at which the common stock was sold on March 12, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996, filed pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act");
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997, filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
3. The Company's Current Report on Form 8-K dated December 24, 1997,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act; and
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
September 22, 1987 under Section 12 of the Exchange Act, including any
amendment or description filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Registration Statement,
and prior to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the
date of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Restated Certificate of Incorporation provides that no
director of the Registrant shall be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent provided by applicable law, (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) in respect to certain
unlawful dividend payments or stock redemptions or repurchases, or (iv) for
any transaction from which the director derives an improper personal benefit.
The effect of the provision in the Restated Certificate of Incorporation is
to eliminate the rights of the Registrant and its stockholders (through
stockholders' derivative suits on behalf of the Registrant) to recover
monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) - (iv) above.
Section 145 of the Delaware General Corporation Law provides for
indemnification of officers and directors for actions taken in good faith and
in a manner reasonably believed to be in the best interests of the
corporation, which provision is sufficiently broad to indemnify officers and
directors of the Registrant under certain circumstances from liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act of 1933, as amended (the "Act"). Article VII of the Registrant's Amended
and Restated Bylaws contains provisions for the indemnification of officers
and directors within the limitations permitted by such section of Delaware
law. The Registrant has obtained directors and officers liability and
corporation reimbursement insurance which covers all officers and directors
of the Registrant and its subsidiaries, and provides for the reimbursement of
amounts paid by the Registrant or its subsidiaries to directors and officers
pursuant to indemnification arrangements, subject to certain deductibles and
coinsurance provisions.
II-1
<PAGE>
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
Exhibit No. Description
- ----------- -----------
4.01 The Charles Schwab Corporation Employee Stock Incentive Plan
4.02 The Company's Third Restated Certificate of Incorporation,
filed as Exhibit 3.7 to Form 10-Q, for the period ending
September 30, 1996 and incorporated herein by reference
4.03 The Company's Second Restated Bylaws, filed as Exhibit 3.8 to
Form 10-Q for the period ending September 30, 1996 and
incorporated herein by reference
5.01 Opinion of Fenwick & West LLP
23.1 Consent of Counsel (included in Exhibit 5.01)
23.2 Consent of Deloitte and Touche LLP
24.1 Power of Attorney (See page II-5)
Item 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not
set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to provide
such interim financial information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, The Charles Schwab Corporation, certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in San Francisco,
State of California, on February 23, 1998.
THE CHARLES SCHWAB CORPORATION
By: /s/ CHARLES R. SCHWAB
------------------------------------
Charles R. Schwab
Chairman and Co-Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Charles Schwab
Corporation, and each of us do hereby constitute and appoint Charles R.
Schwab, David S. Pottruck and Steven L. Scheid, or any of them, our true and
lawful attorneys and agents, each with power of substitution, to do any and
all acts and things in our name and behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in
the capacities indicated below, which said attorneys and agents, or any of
them, may deem necessary or advisable to enable The Charles Schwab
Corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations, and requirements of the Securities and Exchange
Commission, in connection with this Registration Statement, including
specifically but without limitation, power and authority to sign for us or
any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that the said attorneys and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 23, 1998.
Signature Title
- --------- -----
/s/ Charles R. Schwab Chairman, Co-Chief Executive Officer and
- -------------------------- Director (principal executive officer)
Charles R. Schwab
/s/ David S. Pottruck President, Co-Chief Executive Officer,
- -------------------------- Chief Operating Officer and Director
David S. Pottruck
/s/ Lawrence J. Stupski Vice Chairman and Director
- --------------------------
Lawrence J. Stupski
/s/ Steven L. Scheid Executive Vice President and Chief Financial
- -------------------------- Officer (principal financial and accounting
Steven L. Scheid officer)
/s/ Nancy H. Bechtle Director
- --------------------------
Nancy H. Bechtle
/s/ C. Preston Butcher Director
- --------------------------
C. Preston Butcher
/s/ Donald G. Fisher Director
- --------------------------
Donald G. Fisher
/s/ Anthony M. Frank Director
- --------------------------
Anthony M. Frank
II-5
<PAGE>
/s/ Frank C. Herringer Director
- --------------------------
Frank C. Herringer
/s/ Stephen T. McLin Director
- --------------------------
Stephen T. McLin
/s/ George P. Shultz Director
- --------------------------
George P. Shultz
/s/ Roger O. Walther Director
- --------------------------
Roger O. Walther
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
4.01 The Charles Schwab Corporation Employee Stock Incentive Plan
4.02 The Company's Third Restated Certificate of Incorporation,
filed as Exhibit 3.7 to Form 10-Q, for the period ending
September 30, 1996 and incorporated herein by reference
4.03 The Company's Second Restated Bylaws, filed as Exhibit 3.8 to
Form 10-Q for the period ending September 30, 1996 and
incorporated herein by reference
5.01 Opinion of Fenwick & West LLP
23.1 Consent of Counsel (included in Exhibit 5.01)
23.2 Consent of Deloitte and Touche LLP
24.1 Power of Attorney (See page II-5)
II-7
<PAGE>
EXHIBIT 4.01
THE CHARLES SCHWAB CORPORATION
EMPLOYEE STOCK INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board of Directors on October 22, 1997.
The purpose of the Plan is to promote the long-term success of the Company
and the creation of incremental stockholder value by (a) encouraging
Employees to focus on long-range objectives, (b) encouraging the attraction
and retention of Employees with exceptional qualifications and (c) linking
Employees directly to stockholder interests. The Plan seeks to achieve this
purpose by providing for Awards in the form of Restricted Shares or Options.
The Plan shall be governed by, and construed in accordance with, the laws of
the State of Delaware.
ARTICLE 2. ADMINISTRATION.
2.1 THE COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall consist of two or more non-employee Directors, who shall
be appointed by the Board.
2.2 COMMITTEE RESPONSIBILITIES. The Committee shall select the
Employees who are to receive Awards under the Plan, determine the amount,
vesting requirements and other conditions of such Awards, may interpret the
Plan, and make all other decisions relating to the operation of the Plan.
The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan, and may, in its discretion, delegate any of its
responsibilities to such parties as it deems proper. The Committee's
determinations under the Plan shall be final and binding on all persons.
ARTICLE 3. LIMITATION ON AWARDS.
The aggregate number of Restricted Shares and Options awarded under the
Plan shall be determined by the Board from time to time. If any Restricted
Shares or Options are forfeited, or if any Options terminate for any other
reason before being exercised, then such Restricted Shares or Options shall
again become available for Awards under the Plan. The limitation of this
Article 3 shall be subject to adjustment pursuant to Article 10. Any Common
Shares issued pursuant to the Plan may be authorized but unissued shares or
treasury shares.
ARTICLE 4. ELIGIBILITY.
GENERAL RULE. The Committee shall make all determinations concerning
the Employees who shall be eligible to participate in the Plan, and the
awards to each Participant.
ARTICLE 5. OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan,
and may be subject to any other terms and
<PAGE>
conditions which are not inconsistent with the Plan and which the Committee
deems appropriate for inclusion in a Stock Option Agreement. The provisions
of the various Stock Option Agreements entered into under the Plan need not
be identical. In the case of an Employee who is subject to the tax laws of a
foreign jurisdiction, the Committee may designate all or any part of an
Option as an option qualifying for favorable tax treatment under the laws of
such foreign jurisdiction.
5.2 OPTIONS NONTRANSFERABILITY. No Option granted under the Plan shall
be transferable by the Optionee other than by will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by him or her. No Option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his or her lifetime,
whether by operation of law or otherwise, or be made subject to execution,
attachment or similar process.
5.3 NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10.
5.4 EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price under an Option shall not be less than
100 percent of the Fair Market Value of a Common Share on the date of grant.
Subject to the preceding sentence, the Exercise Price under any Option shall
be determined by the Committee. The Exercise Price shall be payable in
accordance with Article 6.
5.5 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable.
The Stock Option Agreement shall also specify the term of the Option.
Subject to the preceding sentence, the Committee shall determine when all or
any part of an Option is to become exercisable and when such Option is to
expire; provided that, in appropriate cases, the Company shall have the
discretion to extend the term of an Option or the time within which,
following termination of employment, an Option may be exercised, or to
accelerate the exercisability of an Option. A Stock Option Agreement may
provide for expiration prior to the end of its term in the event of the
termination of the Optionee's employment and may provide for the suspension
of vesting when an employee is on a leave of absence for a period in excess
of six months in appropriate cases; provided that the exercisability of
Options shall be accelerated in the event of the Participant's death or
Disability and, in the case of Retirement, the exercisability of all
outstanding Options shall be accelerated, other than any Options that had
been granted within two years of the date of the Optionee's Retirement.
Options may also be awarded in combination with Restricted Shares, and such
an Award may provide that the Options will not be exercisable unless the
related Restricted Shares are forfeited. In addition, Options granted under
this Section 5 may be granted subject to forfeiture provisions which provide
for forfeiture of the Option upon the exercise of tandem awards, the terms of
which are established in other programs of the Company.
5.6 EFFECT OF CHANGE IN CONTROL. The Committee (in its sole
discretion) may determine, at the time of granting an Option, that such
Option shall become fully exercisable as to all Common Shares subject to such
Option immediately preceding any Change in Control with respect to the
Company.
2
<PAGE>
5.7 RESTRICTIONS ON TRANSFER OF COMMON SHARES. Any Common Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions shall be set
forth in the applicable Stock Option Agreement and shall apply in addition to
any general restrictions that may apply to all holders of Common Shares.
5.8 AUTHORIZATION OF REPLACEMENT OPTIONS. Concurrently with the grant
of any Option to a Participant, the Committee may authorize the grant of
Replacement Options. If Replacement Options have been authorized by the
Committee with respect to a particular award of Options (the "Underlying
Options"), the Option Agreement with respect to the Underlying Options shall
so state, and the terms and conditions of the Replacement Options shall be
provided therein. The grant of any Replacement Options shall be effective
only upon the exercise of the Underlying Options through the use of Common
Shares pursuant to Section 6.2 or Section 6.3. The number of Replacement
Options shall equal the number of Common Shares used to exercise the
Underlying Options, and, if the Option Agreement so provides, the number of
Common Shares used to satisfy any tax withholding requirements incident to
the exercise of the Underlying Options in accordance with Section 13.2. Upon
the exercise of the Underlying Options, the Replacement Options shall be
evidenced by an amendment to the Underlying Option Agreement. The Exercise
Price of a Replacement Option shall be no less than the Fair Market Value of
a Common Share on the date the grant of the Replacement Option becomes
effective. The term of each Replacement Option shall be equal to the
remaining term of the Underlying Option. No Replacement Options shall be
granted to Optionees when Underlying Options are exercised pursuant to the
terms of the Plan and the Underlying Option Agreement following termination
of the Optionee's employment. The Committee, in its sole discretion, may
establish such other terms and conditions for Replacement Options as it deems
appropriate.
5.9 OPTIONS GRANTED TO NON-UNITED STATES EMPLOYEES. In the case of
Employees who are subject to the tax laws of a foreign jurisdiction, the
Company may issue Options to such Employees that contain terms required to
conform with any requirements for favorable tax treatment imposed by the laws
of such foreign jurisdiction, or as otherwise may be required by the laws of
such foreign jurisdiction. The terms of any such Options shall be governed
by the Plan, subject to the terms of any Addendum to the Plan specifically
applicable to such Options.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash at the time when such
Common Shares are purchased, except that the Committee may at any time accept
payment pursuant to Section 6.2 or 6.3.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made
with Common Shares which are surrendered to the Company. Such Common Shares
shall be valued at their Fair Market Value on the date when the new Common
Shares are purchased under the Plan. In the event that the Common Shares
being surrendered are Restricted Shares that have not yet become vested, the
same restrictions shall be imposed upon the new Common Shares being purchased.
3
<PAGE>
6.3 EXERCISE/SALE. To the extent this Section 6.3 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of
an irrevocable direction to Charles Schwab & Co., Inc. to sell Common Shares
(including the Common Shares to be issued upon exercise of the Options) and
to deliver all or part of the sales proceeds to the Company in payment of all
or part of the Exercise Price and any withholding taxes.
ARTICLE 7. RESTRICTED SHARES.
7.1 TIME, AMOUNT AND FORM OF AWARDS. The Committee may grant
Restricted Shares with respect to an Award Year during such Award Year or at
any time thereafter. Each such Award shall be evidenced by a Stock Award
Agreement between the Award recipient and the Company. The amount of each
Award of Restricted Shares shall be determined by the Committee. Restricted
Shares may also be awarded in combination with Options, and such an Award may
provide that the Restricted Shares will be forfeited in the event that the
related Options are exercised.
7.2 PAYMENT FOR RESTRICTED SHARE AWARDS. To the extent that an Award
is granted in the form of Restricted Shares, the Award recipient, as a
condition to the grant of such Award, shall be required to pay the Company in
cash an amount equal to the par value of such Restricted Shares.
7.3 VESTING OR ISSUANCE CONDITIONS. Each Award of Restricted Shares
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. The Committee shall
select the vesting conditions in the case of Restricted Shares which may be
based upon the Participant's service, the Participant's performance, the
Company's performance or such other criteria as the Committee may adopt;
provided that, in the case of an Award of Restricted Shares where vesting is
based entirely on the Participant's service, (i) vesting shall be accelerated
in the event of the Participant's death or Disability; (ii) in the case of
Retirement, vesting shall be accelerated for all Restricted Shares that had
been granted more than two years prior to the date of the Participant's
Retirement; and (iii) vesting shall be suspended when an employee is on a
leave of absence for a period in excess of six months in appropriate cases,
as determined by the Company. The Committee, in its sole discretion, may
determine, at the time of making an Award of Restricted Shares, that such
Award shall become fully vested in the event that a Change in Control occurs
with respect to the Company.
ARTICLE 8. CLAIMS PROCEDURES.
Claims for benefits under the Plan shall be filed in writing with the
Committee on forms supplied by the Committee. Written notice of the disposition
of a claim shall be furnished to the claimant within 90 days after the claim is
filed. If the claim is denied, the notice of disposition shall set forth the
specific reasons for the denial, citations to the pertinent provisions of the
Plan, and, where appropriate, an explanation as to how the claimant can perfect
the claim. If the claimant wishes further consideration of his or her claim,
the claimant may appeal a denied claim to the Committee (or to a person
designated by the Committee) for further review. Such appeal shall be filed in
writing with the Committee on a form supplied by the Committee, together with a
written statement of the claimant's position, no later than 90 days following
receipt by the claimant of written notice of the denial of his or her claim. If
the claimant so requests, the Committee shall schedule a hearing. A decision on
review shall be made after a full and fair review of the claim and
4
<PAGE>
shall be delivered in writing to the claimant no later than 60 days after the
Committee's receipt of the notice of appeal, unless special circumstances
(including the need to hold a hearing) require an extension of time for
processing the appeal, in which case a written decision on review shall be
delivered to the claimant as soon as possible but not later than 120 days
after the Committee's receipt of the appeal notice. The claimant shall be
notified in writing of any such extension of time. The written decision on
review shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and shall specifically refer to
the pertinent Plan provisions on which it is based. All determinations of
the Committee shall be final and binding on Participants and their
beneficiaries.
ARTICLE 9. VOTING RIGHTS AND DIVIDENDS.
All holders of Restricted Shares shall have the same voting, dividend,
and other rights as the Company's other stockholders.
ARTICLE 10. PROTECTION AGAINST DILUTION; ADJUSTMENT OF AWARDS.
10.1 GENERAL. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration
of a dividend payable in a form other than Common Shares, a combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a
spinoff or a similar occurrence, the Committee shall make appropriate
adjustments in one or more of (a) the number of Options and Restricted Shares
available for future Awards under Article 3, (b) the number of Common Shares
covered by each outstanding Option or (c) the Exercise Price under each
outstanding Option.
10.2 REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Options and Restricted Shares
shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by
the Company (if the Company is a surviving corporation), for accelerated
vesting or for settlement in cash.
10.3 RESERVATION OF RIGHTS. Except as provided in this Article 10, a
Participant shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class. Any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or Exercise Price of Common Shares subject to an Option. The grant of an
Award pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.
ARTICLE 11. LIMITATION OF RIGHTS.
11.1 EMPLOYMENT RIGHTS. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain employed by
the Company or any Subsidiary.
5
<PAGE>
The Company and its Subsidiaries reserve the right to terminate the
employment of any employee at any time, with or without cause, subject only
to a written employment agreement (if any).
11.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the issuance of such Common Shares,
whether by issuance of a certificate, book entry or other procedure. No
adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date when such certificate is issued, except as
expressly provided in Articles 7, 9 and 10.
11.3 GOVERNMENT REGULATIONS. Any other provision of the Plan
notwithstanding, the obligations of the Company with respect to Common Shares
to be issued pursuant to the Plan shall be subject to all applicable laws,
rules and regulations, and such approvals by any governmental agencies as may
be required. The Company reserves the right to restrict, in whole or in
part, the delivery of Common Shares pursuant to any Award until such time as:
(a) Any legal requirements or regulations have been met relating to the
issuance of such Common Shares or to their registration, qualification or
exemption from registration or qualification under the Securities Act of
1933, as amended, or any applicable state securities laws; and
(b) Satisfactory assurances have been received that such Common Shares,
when issued, will be duly listed on the New York Stock Exchange or any other
securities exchange on which Common Shares are then listed.
ARTICLE 12. WITHHOLDING TAXES.
12.1 GENERAL. 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.
12.2 WITHHOLDING ON OPTIONS OR RESTRICTED SHARES. The Committee may
permit an Optionee who exercises Options, or who receives Awards of
Restricted Shares, to satisfy all or part of his or her withholding tax
obligations by having the Company withhold a portion of the Common Shares
that otherwise would be issued to him or her under such Awards. Such Common
Shares shall be valued at their Fair Market Value on the date when taxes
otherwise would be withheld in cash. The payment of withholding taxes by
surrendering Common Shares to the Company, if permitted by the Committee,
shall be subject to such restrictions as the Committee may impose, including
any restrictions required by rules of the Securities and Exchange Commission.
ARTICLE 13. ASSIGNMENT OR TRANSFER OF AWARD.
Any Award granted under the Plan shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any creditor's
process, whether voluntarily, involuntarily or by operation of law. However,
this Article 13 shall not preclude (i) a Participant from designating a
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beneficiary to succeed, after the Participant's death, to those of the
Participant's Awards (including without limitation, the right to exercise any
unexercised Options) as may be determined by the Company from time to time in
its sole discretion, or (ii) a transfer of any Award hereunder by will or the
laws of descent or distribution.
ARTICLE 14. FUTURE OF PLANS.
14.1 TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on October 22, 1997. The Plan shall remain in effect until it is
terminated under Section 14.2.
14.2 AMENDMENT OR TERMINATION. The Committee may, at any time and for
any reason, amend or terminate the Plan.
14.3 EFFECT OF AMENDMENT OR TERMINATION. No Award shall be made under
the Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not adversely affect the rights of any holder of any
Option or Restricted Shares previously granted under the Plan.
ARTICLE 15. DEFINITIONS.
15.1 "Award" means any award of an Option or a Restricted Share under
the Plan.
15.2 "Award Year" means a fiscal year beginning January 1 and ending
December 31 with respect to which an Award may be granted.
15.3 "Board" means the Company's Board of Directors, as constituted
from time to time.
15.4 "Change in Control" means the occurrence of any of the following
events after the effective date of the Plan as set out in Section 14.1:
(a) A change in control required to be reported pursuant to Item 6(e)
of Schedule 14A of Regulation 14A under the Exchange Act;
(b) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who either (i)
had been directors of the Company 24 months prior to such change or (ii) were
elected, or nominated for election, to the Board with the affirmative votes
of at least a majority of the directors who had been directors of the Company
24 months prior to such change and who were still in office at the time of
the election or nomination;
(c) Any "person" (as such term is used in sections 12(d) and 13(d) of
the Exchange Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20 percent or more of the combined
voting power of the Company's then outstanding securities ordinarily (and
apart from rights accruing under special circumstances) having the right to
vote at elections of directors (the "Base Capital Stock"); provided, however,
that any change in the relative beneficial ownership of securities of any
person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter in such
person's
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ownership of securities, shall be disregarded until such person increases in
any manner, directly or indirectly, such person's beneficial ownership of any
securities of the Company.
15.5 "Code" means the Internal Revenue Code of 1986, as amended.
15.6 "Committee" means the Compensation Committee of the Board, as
constituted from time to time.
15.7 "Common Share" means one share of the common stock of the Company.
15.8 "Company" means The Charles Schwab Corporation, a Delaware
corporation.
15.9 "Disability" means the inability to engage in any substantial
gainful activity considering the Participant's age, education and work
experience by reason of any medically determined physical or mental
impairment that has continued without interruption for a period of at least
six months and that can be expected to be of long, continued and indefinite
duration. All determinations as to whether a Participant has incurred a
Disability shall be made by the Committee, the findings of which shall be
final, binding and conclusive.
15.10 "Employee" means a common-law employee, other than an officer of
the Company or any Subsidiary, as determined by the Committee.
15.11 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
15.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
15.13 "Exercise Price" means the amount for which one Common Share may
be purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
15.14 "Fair Market Value" means the market price of a Common Share,
determined by the committee as follows:
(a) If the Common Share was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite-transactions report for such date;
(b) If the Common Share was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair Market
Value shall be equal to the last transaction price quoted by the NASDAQ
system for such date;
(c) If the Common Share was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair
Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for such
date; and
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(d) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such basis
as it deems appropriate.
15.15 "Option" means an employee stock option, other than an option
described in sections 422 through 424 of the Code, including a Replacement
Option, granted under the Plan and entitling the holder to purchase one
Common Share.
15.16 "Optionee" means an individual, or his or her estate, legatee or
heirs at law that holds an Option.
15.17 "Participant" means an Employee who has received an Award.
15.18 "Plan" means this Charles Schwab Employee Stock Incentive Plan,
as it may be amended from time to time.
15.19 "Replacement Option" means an Option that is granted when a
Participant uses a Common Share held or to be acquired by the Participant to
exercise an Option and/or to satisfy tax withholding requirements incident to
the exercise of an Option.
15.20 "Restricted Share" means a Common Share awarded to a Participant
under the Plan.
15.21. "Retirement" shall mean any termination of employment of an
Optionee for any reason other than death at any time after the Optionee has
attained fifty (50), but only if, at the time of such termination, the
Participant has been credited with at least seven (7) Years of Service under
the Charles Schwab Profit Sharing and Employee Stock Ownership Plan. The
foregoing definition shall apply to all Stock Option Agreements entered into
pursuant to the Plan, irrespective of any definition to the contrary
contained in any such Stock Option Agreement.
15.22 "Stock Award Agreement" means the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions
and restrictions pertaining to such Restricted Share.
15.23 "Stock Option Agreement" means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her option.
15.24 "Subsidiary" means any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
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EXHIBIT 5.01
[FENWICK & WEST LLP LETTERHEAD]
March 16, 1998
The Charles Schwab Corporation
101 Montgomery Street
San Francisco, California 94104
Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
to be filed by you with the Securities and Exchange Commission (the
"COMMISSION") on or about March 16, 1998 (the "REGISTRATION STATEMENT") in
connection with the registration under the Securities Act of 1933, as
amended, of an aggregate of up to 1,700,000 shares of your Common Stock (the
"STOCK"), reserved for issuance upon the exercise of options to be granted by
you pursuant to your Employee Stock Incentive Plan.
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the exhibits filed as a
part thereof;
(2) the prospectus prepared in connection with the Registration
Statement;
(3) the Plan and related form of Stock Option Agreement and Exercise
Agreement;
(4) the minutes of the meeting of the Board of Directors held on
October 22, 1997 relating to the Plan that you have provided to us;
(5) the Company's Third Restated Certificate of Incorporation filed as
Exhibit 3.7 to Form 10-Q for the period ending September 30, 1996;
(6) the Company's Second Restated Bylaws filed as Exhibit 3.8 to Form
10-Q for the period ending September 30, 1996;
(7) letter from Norwest Bank dated March 12, 1998 indicating total
number of shares outstanding as of March 10, 1998;
(8) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual
representations; and
(9) your registration statement on Form 8-A filed with the Commission
on September 22, 1987.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies, the lack of any undisclosed terminations, modifications, waivers or
amendments to any documents reviewed by us and the due execution and delivery
of all documents where due execution and delivery are prerequisites to the
effectiveness thereof. We have confirmed the continued effectiveness of the
Company's registration under the
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The Charles Schwab Corporation
March 16, 1998
Page 2
Securities Exchange Act of 1934 as amended by a telephone call to the offices
of the Securities and Exchange Commission and have confirmed your eligibility
to use Form S-8.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information included in the
documents referred to above. We have made no independent investigation or
other attempt to verify the accuracy of any of such information or to
determine the existence or non-existence of any other factual matters;
HOWEVER, we are not aware of any facts that would lead us to believe that the
opinion expressed herein is not accurate.
We are admitted to practice law in the State of California, and we
express no opinion herein with respect to the application or effect of the
laws of any jurisdiction other than the existing laws of the United States of
America and the State of California and (without reference to case law or
secondary sources) the existing Delaware General Corporation Law.
Based upon the foregoing, it is our opinion that the up to 1,700,000
shares of the Stock that are reserved for issuance upon the exercise of
options granted by you pursuant to your Employee Stock Incentive Plan, when
issued and sold in the manner referred to in the Plan and the Prospectus,
will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be
relied upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
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EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Charles Schwab Corporation on Form S-8 of our reports dated
February 21, 1997, appearing in and incorporated by reference in the Annual
Report on Form 10-K of The Charles Schwab Corporation for the year ended
December 31, 1996.
DELOITTE & TOUCHE LLP
San Francisco, California
March 16, 1998
