Exhibit 10.268
THE CHARLES SCHWAB CORPORATION
2004 STOCK INCENTIVE PLAN
NOTICE OF 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: ________________________________
Total Number of Shares Granted: ________________________________
Exercise Price Per Share: $_____________
Grant Date: __________ ___, _________
Expiration Date: __________ ___, _________
Vesting Schedule: So long as you continue as a non-employee
director or an employee of Schwab or its
subsidiaries and subject to the terms of
the 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.
Percentage of the Total Number of Shares
Vesting Date Granted under this Option That Will Vest
-----------------------------------------------------------------------
1st Anniversary of Grant Date 25%
2nd Anniversary of Grant Date 25%
3rd Anniversary of Grant Date 50%
You and Schwab agree that this option is granted under and governed by the
terms and conditions of the Plan and the Stock Option Agreement, both of which
are made a part of this notice. Please review the Stock Option Agreement
carefully, as it explains 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. Unless you provide written objection to
Schwab within 30 days of your receipt of this notice, you agree to all of the
terms and conditions of this notice, the stock option agreement and the Plan.
THE CHARLES SCHWAB CORPORATION
2004 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
Tax Treatment This option is a non-qualified stock option and is not
intended to qualify as an incentive stock option under
federal tax laws.
Vesting This option becomes vested in installments as described in
the Notice of Stock Option Grant. If you become a common-law
employee of Schwab or its subsidiaries, then this option
will continue to vest as described in the Notice of Stock
Option Grant so long as you continue as either a
non-employee director or an employee of Schwab or its
subsidiaries.
Accelerated This option will become fully exercisable if your service as
Vesting a non-employee director terminates on account of your death,
disability or retirement. 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
the 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.
Definition of For all purposes of this Agreement, "disability" means that
Disability you are unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment which has lasted, or can be expected to last, for
a continuous period of not less than 12 months or which can
be expected to result in death.
Definition of For all purposes of this Agreement, "retirement" means your
Retirement resignation or removal from the Board at any time after you
have attained age 70 or completed 5 years of service as a
non-employee director.
Exercise You or your representative may exercise this option by
Procedures 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:
o Cash, your personal check, a cashier's check or a
money order.
o 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.
o 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 10th anniversary of
the Grant Date but may expire earlier upon your termination
of service, as described below.
Termination of This option will expire on the date three months following
Service as a the date of your termination of service as a non-employee
Non-Employee director if such service terminates for any reason other
Director than on account of becoming a common-law employee of Schwab
or its subsidiaries, death, disability or retirement. The
terms "disability" and "retirement" are defined above.
If you become an employee of Schwab or its subsidiaries,
this option will expire on the date three months following
the date you cease to be an employee of Schwab and its
subsidiaries (other than by reason of disability, death or
retirement). If you cease to be a non-employee director or
an employee of Schwab and its subsidiaries 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 you cease to be a non-employee director by reason of your
retirement, then this option will expire on the second
anniversary of the date of your retirement.
Restrictions on You cannot exercise this option and no shares of Schwab
Exercise and stock may be issued under this option if the issuance of
Issuance or shares at that time would violate any applicable law,
Transfer of regulation or rule. Schwab may impose restrictions upon the
Shares 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 You, or your estate or heirs, have no rights as a
Rights stockholder of Schwab until you have exercised this option
by giving the required notice to the Company 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 Nothing in this Agreement will be construed as giving you
Remain Director the right to be retained as a director or an employee of
or Employee Schwab and its subsidiaries.
Transfer of In general, only you may exercise this option prior to your
Option 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 (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 If a payment from the Plan would constitute an excess
Payments parachute payment or if there have been certain securities
law violations, then your award may be reduced or forfeited
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 Internal Revenue Code of 1986, as amended
(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 You may file a claim for benefits under the Plan by
Procedure 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. The Plan Administrator has discretionary
authority to construe the terms of the Plan and this
Agreement and its determinations are conclusive and binding
on all persons.
Adjustments In the event of a stock split, a stock dividend or a similar
change in Schwab stock, the Compensation Committee, in its
discretion, may 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 The text of the Plan is incorporated in this Agreement by
Other Agreements 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, 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.
BY ACCEPTING THIS OPTION GRANT,
YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.