EXHIBIT 10.188
THE CHARLES SCHWAB CORPORATION
1987 EXECUTIVE OFFICER STOCK OPTION PLAN
(RESTATED TO INCLUDE AMENDMENTS THROUGH OCTOBER 22, 1997)
ARTICLE 1. INTRODUCTION.
The purpose of the 1987 Executive Stock Option Plan, as Amended and
Restated (the "Plan") is to enable The Charles Schwab Corporation and its
subsidiaries to attract and retain directors, officers, and other key employees
and to provide such persons with additional incentive to advance the interests
of the Company. The Plan was initially adopted on March 24, 1987, and was
amended on September 17, 1996 and October 22, 1997. The Plan is hereby restated
and amended as of October 22, 1997, and the terms of this Restatement shall
apply to all awards granted under the Plan on or after such date. The Plan
shall terminate not more than ten (10) years from the date the Plan initially
was adopted. The Plan will provide Awards in the form of Restricted Shares,
Performance Share Awards 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 Key
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. 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, Performance Share Awards and
Options awarded under the Plan shall not exceed 1,284,000 (including those
shares awarded prior to the amendment of the Plan). If any Restricted Shares,
Performance Share Awards or Options are forfeited, or if any Performance Share
Awards terminate for any other reason without the associated Common Shares being
issued, or if any Options terminate for any other reason before being exercised,
then such Restricted Shares, Performance Share Awards 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.
4.1 GENERAL RULE. Key Employees shall be eligible for designation as
Participants by the Committee.
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 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.
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 shall 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, as determined by the
Company; 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
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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.
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 12.2. 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.
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
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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.
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 AND PERFORMANCE SHARE AWARDS.
7.1 TIME, AMOUNT AND FORM OF AWARDS. The Committee may grant Restricted
Shares or Performance Share Awards 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 or Performance Share Awards shall be determined
by the Committee. Awards under the Plan may be granted in the form of Restricted
Shares or Performance Share Awards or in any combination thereof, as the
Committee shall determine at its sole discretion at the time of the grant.
Restricted Shares or Performance Share Awards may also be awarded in combination
with Options, and such an Award may provide that the Restricted Shares or
Performance Share Awards 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. Common Shares shall be issued pursuant
to Performance Share Awards in full or in installments upon satisfaction of the
issuance conditions specified in the Stock Award Agreement. The Committee shall
select the vesting conditions in the case of Restricted Shares, or issuance
conditions in the case of Performance Share Awards, 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,
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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. The Committee, in its sole discretion, may
determine, at the time of making a Performance Share Award, that the issuance
conditions set forth in such Award shall be waived in the event that a Change
in Control occurs with respect to the Company.
7.4 FORM OF SETTLEMENT OF PERFORMANCE SHARE AWARDS. Settlement of
Performance Share Awards shall only be made in the form of Common Shares. Until
a Performance Share Award is settled, the number of Performance Share Awards
shall be subject to adjustment pursuant to Article 10.
7.5 DEATH OF RECIPIENT. Any Common Shares that are to be issued pursuant
to a Performance Share Award after the recipient's death shall be delivered or
distributed to the recipient's beneficiary or beneficiaries. Each recipient of a
Performance Share Award under the Plan shall designate one or more beneficiaries
for this purpose by filing the prescribed form with the Company. A beneficiary
designation may be changed by filing the prescribed form with the Company at any
time before the Award recipient's death. If no beneficiary was designated or if
no designated beneficiary survives the Award recipient, then any Common Shares
that are to be issued pursuant to a Performance Share Award after the
recipient's death shall be delivered or distributed to the recipient's estate.
The Committee, in its sole discretion, shall determine the form and time of any
distribution(s) to a recipient's beneficiary or estate.
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 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.
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ARTICLE 9. VOTING RIGHTS AND DIVIDENDS.
9.1 RESTRICTED SHARES.
(a) All holders of Restricted Shares who are not Named Executive Officers
shall have the same voting, dividend, and other rights as the Company's
other stockholders.
(b) During the period of restriction, Named Executive Officers holding
Restricted Shares granted hereunder shall be credited with all regular cash
dividends paid with respect to all Restricted Shares while they are so
held. If a dividend is paid in the form of cash, such cash dividend shall
be credited to Named Executive Officers subject to the same restrictions on
transferability and forfeitability as the Restricted Shares with respect to
which they were paid. If any dividends or distributions are paid in shares
of Common Stock, the shares of Common Stock shall be subject to the same
restrictions on transferability and forfeitability as the Restricted Shares
with respect to which they were paid. Subject to the succeeding paragraph,
and to the restrictions on vesting and the forfeiture provisions, all
dividends credited to a Named Executive Officer shall be paid to the Named
Executive Officer within forty-five (45) days following the full vesting of
the Restricted Shares with respect to which such dividends were earned.
In the event that any dividend constitutes a "derivative security" or
an "equity security" pursuant to Rule 16(a) under the Exchange Act, such
dividend shall be subject to a vesting period equal to the longer of: (i)
the remaining vesting period of the Restricted Shares with respect to which
the dividend is paid; or (ii) six (6) months. The Committee shall establish
procedures for the application of this provision.
Named Executive Officers holding Restricted Shares shall have the same
voting rights as the Company's other stockholders.
9.2 PERFORMANCE SHARE AWARDS. The holders of Performance Share Awards
shall have no voting or dividend rights until such time as any Common Shares are
issued pursuant thereto, at which time they 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, Restricted Shares and Performance Share
Awards available for future Awards under Article 3, (b) the number of
Performance Share Awards included in any prior Award which has not yet been
settled, (c) the number of Common
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Shares covered by each outstanding Option or (d) 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, Restricted Shares and Performance
Share Awards 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. 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 rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the issuance of a stock certificate for
such Common Shares. 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 CREDITORS' RIGHTS. A holder of Performance Share Awards shall have no
rights other than those of a general creditor of the Company. Performance Share
Awards represent unfunded and unsecured obligations of the Company, subject to
the terms and conditions of the applicable Stock Award Agreement.
11.4 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:
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(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 NONSTATUTORY OPTIONS, RESTRICTED SHARES OR PERFORMANCE SHARE AWARDS.
The Committee may permit an Optionee who exercises Options, or who receives
Awards of Restricted Shares, or who receives Common Shares pursuant to the terms
of a Performance Share Award, 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.
13.1 GENERAL RULE. 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, except to the extent specifically permitted by Section 13.2.
13.2 EXCEPTIONS TO GENERAL RULE. Notwithstanding Section 13.1, this Plan
shall not preclude (i) a Participant from designating a 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, (ii) a
transfer of any Award hereunder by will or the laws of descent or distribution,
or (iii) a voluntary transfer of an Award to a trust or partnership for the
exclusive benefit of one or more members of the Participant's family, but only
if the Participant has sole investment control over such trust or partnership.
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ARTICLE 14. FUTURE OF PLANS.
14.1 TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on February 26, 1997. The Plan shall remain in effect until it is
terminated under Section 14.2, except that no Awards shall be granted after
March 24, 1997.
14.2 AMENDMENT OR TERMINATION. The Board may at any time terminate this
Plan, and the Board or the Committee make such modifications of the Plan as it
shall deem advisable; provided, however, that any amendment of the Plan shall be
subject to the approval of the Company's stockholders to the extent required by
applicable laws, regulations or rules.
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 affect any Option, Restricted Share or Performance
Share Award previously granted under the Plan.
ARTICLE 15. DEFINITIONS.
15.1 "Award" means any award of an Option, a Restricted Share or a
Performance Share Award 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 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
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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.
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 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
15.10 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
15.11 "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.
15.12 "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
(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.
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15.13 "Key Employee" means a key common-law employee of the Company or
any Subsidiary, as determined by the Committee.
15.14 "Named Executive Officer" means a Participant who, as of the
date of vesting of an Award is one of a group of "covered employees," as
defined in the Regulations promulgated under Code Section 162(m), or any
successor statute.
15.15 "Non-Employee Director" means a member of the Board who is not a
common-law employee.
15.16 "Option" means an employee stock option not 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.
15.17 "Optionee" means an individual, or his or her estate, legatee or
heirs at law that holds an Option.
15.18 "Participant" means a Non-Employee Director or Key Employee who
has received an Award.
15.19 "Performance Share Award" means the conditional right to receive
in the future one Common Share, awarded to a Participant under the Plan.
15.20 "Plan" means this 1987 Executive Stock Option Plan of The Charles
Schwab Corporation, as it may be amended from time to time.
15.21 "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.
15.22 "Restricted Share" means a Common Share awarded to a Participant
under the Plan.
15.23 "Stock Award Agreement" means the agreement between the Company
and the recipient of a Restricted Share or Performance Share Award which
contains the terms, conditions and restrictions pertaining to such Restricted
Share or Performance Share Award.
15.24 "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.
15.25 "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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15.26. "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.
15.27 "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 Employee Benefits Administration Committee of the Company, the
findings of which shall be final, binding and conclusive.
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NON-QUALIFIED STOCK OPTION AGREEMENT
(Executive Officer Stock Option Plan (1987))
THIS AGREEMENT made as of this ____ day of _________, 19____, by and
between The Charles Schwab Corporation, a Delaware corporation ("Company") and
______________________________ ("Optionee").
WITNESSETH:
WHEREAS, there has been granted to Optionee, effective as of __________,
19___, a non-qualified stock option under the Executive Officer Stock Option
Plan (1987) of the Company ("Option Plan");
NOW THEREFORE, it is mutually agreed as follows:
1. The Optionee shall have a non-qualified stock option to acquire
________ shares of common stock of the company (the "Shares"), at a price of
$_______ per share.
2. Except as provided in paragraphs 3 and 4 below, the other terms of
this option shall be the same as all of those provided for in the Option
Plan, which include, without limitation, vesting of Shares, limitations on
exercise and transfer, and other restrictions. The Option Plan is attached
hereto as Exhibit A and is incorporated herein by this reference. Optionee
has read the Option Plan and, other than as provided in paragraphs 3 and 4
below, agrees to be bound by its terms. Without limitation, Optionee
specifically acknowledges the representations, warranties and agreements
contained in paragraph 6(e) of the Option Plan.
3. Notwithstanding paragraph 6(b) of the Option Plan, in the event
Optionee's employment or service as a director with or for the Company and
its subsidiaries terminates by reason of Optionee's death or permanent
disability, all Shares then not deemed to be Vested thereupon will be deemed
immediately Vested. For this purpose, "permanent disability" will mean the
reasonable determination by a qualified physician acceptable to the company
that the Optionee has an illness or incapacity that has disabled, or will
disable, the Optionee from rendering his or her 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.
4. Upon exercise of this Option, the Company will extend to the
Optionee rights under that certain Registration Rights and Stock Restriction
Agreement dated as of March 31, 1987, as amended, subject to the Optionee's
agreement to be bound by the terms thereof.
5. Any notice to be given by the Optionee under the terms of the Option
Plan shall be deemed to have been duly given, and effective upon the receipt,
if sent by Certified Mail, postage and certification prepaid, to The Charles
Schwab Corporation, 101 Montgomery, San Francisco, California 94104,
Attention: Corporate Secretary, except as superseded by a different address
noticed to Optionee.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year referred to above.
THE CHARLES SCHWAB CORPORATION ("Company")
By:
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"Optionee"
Attachment (1) Spousal Consent
(2) Exhibit A: 1987 Stock Option Plan
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