Exhibit 10.177
THE CHARLES SCHWAB CORPORATION
1987 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of ____________________
between THE CHARLES SCHWAB CORPORATION, a Delaware corporation (the "Company"),
and _________ (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Board has adopted and the stockholders of the
Company have approved The Charles Schwab Corporation 1987 Stock Option Plan, as
amended (the "Plan") in order to provide selected Key Employees with an
opportunity to acquire Common Shares; and
WHEREAS, the Committee has determined that the Optionee is a
Key Employee and that it would be in the best interests of the Company and its
stockholders to grant the stock option described in this Agreement (the
"Option") to the Optionee as an inducement to enter into or remain in the
service of the Company or its subsidiaries and as an incentive for extraordinary
efforts during such service;
NOW, THEREFORE, the Optionee and the Company agree to the
provisions set forth in this Agreement. The Optionee signifies agreement with
all of the terms and conditions of this Agreement by failing to provide written
objection to the Company to any of the terms hereunder within 30 days of receipt
of this Agreement, and in any event by exercising an Option granted hereunder.
SECTION 1. GRANT OF OPTION.
(a) Option. On the terms and conditions stated below, the
Company hereby grants to the Optionee the option to purchase _____ Common Shares
for the amount of $24.625 per Common Share (the "Exercise Price"), which is
agreed to be 100% of the Fair Market Value thereof on the Date of Grant. The
number of Common Shares subject to this Option and the Exercise Price shall be
subject to adjustment under certain limited circumstances as provided in Article
10 of the Plan.
(b) 1987 Stock Option Plan. This Option is granted pursuant to
the Plan, the provisions of which are incorporated into this Agreement by
reference, and a copy of which is available upon request at no charge to the
Optionee from the Company. In the event of any inconsistency between the
provisions of the Plan and the provisions of this Agreement, the provisions of
the Plan shall prevail.
(c) Tax Treatment. This Option is intended to qualify as an
incentive stock option described in Section 422(b) of the Code.
(d) Expiration Date. Notwithstanding any other provision
contained herein, this Option shall expire not later than the date immediately
preceding the tenth anniversary of the Date of Grant.
SECTION 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement or as permitted
by the Plan, this Option, and any interest therein, shall not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process.
SECTION 3. RIGHT TO EXERCISE OPTION.
(a) Vesting. This Option shall become exercisable by the
Optionee with respect to the total number of Common Shares subject to this
Option as set forth under Section 1(a) above (the "Total Award Common Shares"),
subject to the continued employment of the Optionee by the Company or its
subsidiaries on each date either set forth below, and subject to the provisions
of Section 3(e) hereof, in annual increments of the Total Award Common Shares
beginning on the first anniversary of the Date of Grant, such that (i) no
portion of this Option will be exercisable prior to such first anniversary of
the Date of Grant; (ii) upon and after such first anniversary of the Date of
Grant, the Optionee may purchase up to twenty-five percent (25%) of the Total
Award Common Shares, provided the optionee has been continually employed by the
Company or its subsidiaries since the date of grant; (iii) upon and after the
second, third and fourth anniversaries of the Date of Grant, respectively, the
Optionee may purchase an additional twenty-five percent (25%) of the Total Award
Common Shares, provided in each case that the Optionee has been continually
employed by the Company or its subsidiaries since the Date of Grant.
(b) Minimum Number of Shares. This Option shall be exercisable
for at least 100 Common Shares (without regard to adjustments to the number of
Common Shares subject to this Option pursuant to Article 10 of the Plan) or, if
less, (i) the number of shares with respect to which this Option has become
vested under Section 3(a) above, or (ii) all of the remaining Common Shares
subject to this Option.
(c) Full Vesting on Change in Control. Notwithstanding
subparagraph (a) hereof, this Option shall become fully exercisable as to the
Total Award Common Shares immediately preceding any Change in Control with
respect to the Company. In the event that the Committee determines that a Change
in Control is likely to occur, the Company shall so advise the Optionee, and the
provisions of this subparagraph (c) shall take effect as of the date ten (10)
days prior to the anticipated date of such Change in Control.
(d) Accelerated Vesting on Retirement in Certain Cases.
Notwithstanding subparagraph (a) hereof, if the Optionee terminates employment
with the Company and its subsidiaries on account of Retirement, all options
granted hereunder shall become fully exerciseable, but only if such retirement
occurs at least two (2) years after the date of grant.
(e) Vesting Contingent on Satisfactory Performance.
Notwithstanding subparagraph (a) hereof, the continued accrual of vesting
pursuant to subparagraph (a) is contingent upon the Optionee's satisfactory job
performance, and the Company may, in its sole discretion, upon notice to the
Optionee suspend or delay the vesting of Options hereunder for any period of
time in the event that the Company determines, within its sole discretion, that
the Optionee's performance is unsatisfactory.
SECTION 4. EXERCISE OF OPTION.
(a) Notice of Exercise. The Optionee or the Optionee's
representative may exercise this Option by giving written notice to the Company
(or its designee) pursuant to Section 9(d). The notice shall specify the
election to exercise this Option, the date of exercise, the number of Common
Shares for which it is being exercised and the form of payment. The notice shall
be signed by the person or persons exercising this Option. In the event that
this Option is being exercised by the representative of the Optionee, the notice
shall be accompanied by proof satisfactory to the Company of the
representative's right to exercise this Option. The Purchase Price for Common
Shares shall be paid in a form that conforms to Sections 6.1 through 6.3 of the
Plan at the time such notice is given.
(b) Issuance of Shares. After receiving a proper notice of
exercise, the Company shall cause to be issued a certificate or certificates for
the Common Shares so purchased, registered in the name of the person exercising
this Option. The Company shall cause such certificate or certificates to be
delivered to or upon the order of the person exercising this Option.
SECTION 5. TERM.
(a) Basic Term. This Option shall in any event expire on the
date specified in Section 1(d).
(b) Termination of Employment. Subject only to the provisions
of Section 3(d), upon the Optionee's termination of employment with the Company
and its subsidiaries for any reason, whether as a result of death, Permanent
Disability or any other involuntary or voluntary event of termination of
employment (including a termination of employment as may be provided for or
determined under an employment contract, if any, entered into between the
Company or its subsidiary and the Optionee) (each, a "Termination Event"), no
unvested portion of the Total Award Common Shares thereafter shall vest or
become exercisable. With respect to the vested or exercisable portion of the
Total Award Common Shares as of the date of such a Termination Event, this
Option shall expire on the earlier of (i) the expiration date specified in
Section 1(d) or (ii) whichever of the following is applicable: (A) in the case
of a Termination Event resulting from death or Permanent Disability, the date
one year following such Termination Event; or (B) in all other cases, the date
three (3) months following such Termination Event.
(c) Divestment of Options. Notwithstanding anything to the
contrary contained herein, this Option shall immediately become forfeited and
expire in the event that the Company terminates the Optionee's employment on
account of conduct inimical to the best interests of the Company, including,
without limitation, conduct constituting a violation of law or Company policy,
fraud, theft, conflict of interest, dishonesty or harassment. The determination
whether the Optionee's employment has been terminated on account of conduct
inimical to the best interests of the Company shall be made by the Company in
its sole discretion.
SECTION 6. LEGALITY OF INITIAL ISSUANCE.
No Common Shares shall be issued upon the exercise of this
Option unless and until the Company has determined that:
(a) A registration statement for the Common
Shares is effective under the Securities Act or an exemption
from the registration requirements thereof has been perfected;
(b) Any applicable listing requirement of
any stock exchange on which Common Shares are listed has been
satisfied; and
(c) Any other applicable provisions of state
or federal law have been satisfied.
SECTION 7. NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or
qualify the Common Shares for resale or other disposition by the Optionee under
the Securities Act or any other applicable law.
SECTION 8. RESTRICTIONS ON TRANSFER OF SHARES.
(a) Restrictions. Regardless of whether the offering and sale
of Common Shares under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge or other transfer of such
Common Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provisions of the Securities Act, the securities laws of any state or any other
law.
(b) Investment Intent at Exercise. If the Common Shares under
the Plan are not registered under the Securities Act but an exemption is
available which requires an investment representation or other representation,
the Optionee shall represent and agree at the time of exercise that the Common
Shares being acquired upon exercising this Option are being acquired for
investment, and not with a view to the sale or distribution thereof, and shall
make such other representations as are deemed necessary or appropriate by the
Company and its counsel.
(c) Administration. Any determination by the Company and its
counsel in connection with any of the matters set forth in this Section 8 shall
be conclusive and binding on the Optionee and all other persons.
SECTION 9. MISCELLANEOUS PROVISIONS.
(a) Withholding Taxes. To the extent required by applicable
federal, state, local or foreign law the Optionee shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise by reason of the exercise of an Option hereunder and no
Option may be exercised unless such obligation is satisfied.
(b) Rights as a Stockholder. Neither the Optionee nor the
Optionee's representative shall have any rights as a stockholder with respect to
any Common Shares subject to this Option until certificates for such Common
Shares have been issued in the name of the Optionee or the Optionee's
representative.
(c) No Employment Rights. Nothing in this Agreement shall be
construed as giving the Optionee the right to be retained as an employee of the
Company or its subsidiaries. The Company reserves the right to terminate the
Optionee's employment at any time for any reason, subject only to the terms of
any written employment contract entered into between the Company and the
Optionee.
(d) Notice. Any notice required by the terms of this Agreement
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit with the appropriate postal service, by registered or certified
mail with postage and fees prepaid and addressed to the party entitled to such
notice at the address shown below such party's signature on this Agreement, or
at such other address as such party may designate by ten (10) days advance
written notice to the other party to this Agreement. Notwithstanding the
foregoing, no notice of exercise, as required by Section 4(a), shall be
effective until actual receipt thereof by the Company or its designee.
(e) Entire Agreement. This Agreement and the Plan constitute
the entire agreement between the parties hereto with regard to the subject
matter hereof; provided, however, that in the event of any inconsistency or
conflict between any provision hereof and the terms of the Plan, the terms of
the Plan shall control.
(f) Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State.
SECTION 10. DEFINITIONS.
(a) Capitalized terms defined in the Plan shall have the same
meaning when used in this Agreement.
(b) "Change in Control" shall mean the occurrence of any of
the following events after the effective date of the Plan as set out in Section
14.1 of the Plan:
(1) A change in control required to be
reported pursuant to Item 6(e) of Schedule 14A of Regulation
14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(2) A change in the composition of the
Company's Board of Directors (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;
(3) Any "person" (as such term is used in
Sections 13(d) and 14(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 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.
(c) "Common Share" shall mean one share of the common stock of
the Company.
(d) "Date of Grant" shall mean the date of this Agreement,
which is the date first written above.
(e) "Fair Market Value" shall mean the market price of a
Common Share, determined by the Committee as follows:
(1) 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;
(2) 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;
(3) 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
(4) 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.
(f) "Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which has lasted, or can be expected
to last, for a continuous period of not less than twelve (12) months or which
can be expected to result in death.
(g) "Purchase Price" shall mean the Exercise Price multiplied
by the number of Common Shares with respect to which this Option is being
exercised.
(h) "Retirement" shall mean a termination of employment of the
Optionee occurring at any time after the Optionee (i) has attained fifty (50)
years of age, and (ii) completed seven (7) years of service, as determined
pursuant to the terms of the Charles Schwab Profit Sharing and Employee Stock
Ownership Plan.
(i) "Securities Act" shall mean the Securities Act of 1933, as
amended.