Schedule TO

Investment

Dividend Impact

Tender Offer

Impact

How to Participate in Tender Offer

Stock owned outright

Dividend will be paid as ordinary dividend payments and will not be reinvested if held in a Schwab brokerage account.

Any stock owned outright is eligible for the tender offer.

Reps can tender shares via Schwab.com, or by contacting the Schwab Employee Services branch.

SCHW shares through the units held in the 401(k) and/or ESOP Equity Unit Funds in the Plan

If you are a 401(k) and/or Equity Unit Fund holder through the SchwabPlan Retirement Savings & Investment Plan on July 24, 2007, the dividend will be paid as ordinary dividend payments.

Shares held as part of the units in the equity unit funds are eligible for the tender offer.

You can tender the shares allocated to units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund by logging onto to the Tabulator’s website at https://www.tabulationsplus.com/schw-401k for the shares allocated to the units you hold in the 401(k) Equity Unit Fund or at https://www.tabulationsplus.com/schwesop

for the shares allocated to the units you hold in the ESOP Equity Unit Fund.

You can also mail in the forms included in your tender offer document. For full instructions, see [link to TO doc]

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PCd/0GGW9LXrF7AbZBLK6O0z34IbHr3UIlYFzwoiwPz3i4LGVcYCuRY85hiXhnx+ 0XpaavrSJySWlYkCbJtrRw== 0001193125-07-148732.txt : 20070703 0001193125-07-148732.hdr.sgml : 20070703 20070703063043 ACCESSION NUMBER: 0001193125-07-148732 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 20070703 DATE AS OF CHANGE: 20070703 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES CORP CENTRAL INDEX KEY: 0000316709 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 943025021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-38764 FILM NUMBER: 07957365 BUSINESS ADDRESS: STREET 1: 120 KEARNY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES CORP CENTRAL INDEX KEY: 0000316709 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 943025021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 120 KEARNY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 SC TO-I 1 dsctoi.htm SCHEDULE TO Schedule TO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

THE CHARLES SCHWAB CORPORATION

(Name of Subject Company (Issuer))

THE CHARLES SCHWAB CORPORATION (ISSUER)

(Names of Filing Persons (Issuer and Offeror))

Common Stock, par value $0.01 per share

(Title of Class of Securities)

808513-10-5

(CUSIP Number of Class of Securities)

Joseph R. Martinetto

Executive Vice President and Chief Financial Officer

The Charles Schwab Corporation

120 Kearny Street

San Francisco, California 94108

(415) 636-7000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)

with a copy to:

Lawrence B. Rabkin, Esq.

Teresa L. Johnson, Esq.

Edward A. Deibert, Esq.

Howard Rice Nemerovski Canady Falk & Rabkin,

A Professional Corporation

Three Embarcadero Center, 7th Floor

San Francisco, California 94111

(415) 434-1600

CALCULATION OF FILING FEE


TRANSACTION VALUATION⁽¹⁾		AMOUNT OF FILING FEE⁽²⁾
$1,890,000,000.00		$58,023.00

(1)	Estimated solely for purposes of calculating the filing fee, based on the purchase of 84,000,000 shares of common stock at the maximum tender offer price of $22.50 per share.

(2)	The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals $30.70 per million dollars of the value of the transaction.

¨	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.


Amount Previously Paid:	N/A	Filing Party:	N/A
Form or Registration No.:	N/A	Date Filed:	N/A

¨	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes to designate any transactions to which the statement relates:

third-party tender offer subject to Rule 14d-1.

issuer tender offer subject to Rule 13e-4.

going-private transaction subject to Rule 13e-3.

amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: ¨

INTRODUCTION

This Tender Offer Statement on Schedule TO relates to the offer by The Charles Schwab Corporation, a Delaware corporation (the “Company”), to purchase up to 84 million shares of its common stock, par value $0.01 per share, at a purchase price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest. The Company’s offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2007 (the “Offer to Purchase”), a copy of which is attached hereto as Exhibit (a)(1)(A), and in the related Letter of Transmittal (the “Letter of Transmittal”), a copy of which is attached hereto as Exhibit (a)(1)(B) (the Offer to Purchase together with the Letter of Transmittal, as they may be amended and supplemented from time to time, constitute the “Offer”). This Tender Offer Statement on Schedule TO is intended to satisfy the reporting requirements of Rule 13e-4(c)(2) of the Securities Exchange Act of 1934, as amended. The information contained in the Offer to Purchase and the related Letter of Transmittal is incorporated herein by reference in response to all of the items of this Schedule TO, as more particularly described below.

Item 1. Summary Term Sheet.

The information set forth under “Summary Term Sheet” in the Offer to Purchase is incorporated herein by reference.

Item 2. Subject Company Information.

(a) Name and address.

The name of the issuer is The Charles Schwab Corporation, a Delaware corporation, and the address of its principal executive office is 120 Kearny Street, San Francisco, California 94108. The telephone number of its principal executive offices is (415) 636-7000.

(b) Securities.

The information set forth under “Introduction” in the Offer to Purchase is incorporated herein by reference.

(c) Trading market and price.

The information set forth in the Offer to Purchase under Section 8 (“Price Range of the Shares”) is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

(a) Name and Address.

The Company is the filing person. The Company’s address and telephone number are set forth in Item 2 above. The information set forth in the Offer to Purchase under Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

Item 4. Terms of the Transaction.

(a) Material Terms.

The following sections of the Offer to Purchase contain a description of the material terms of the transaction and are incorporated herein by reference:

•

“Summary Term Sheet”;

•

“Introduction”;

•

Section 1 (“Number of Shares; Expiration Time; Proration; Priority of Purchases”);

•

Section 2 (“Purpose of the Tender Offer; Certain Effects of the Tender Offer; Other Plans”);

•

Section 3 (“Procedures for Tendering Shares”);

•

Section 4 (“Withdrawal Rights”);

•

Section 5 (“Purchase of Shares and Payment of Purchase Price”);

•

Section 6 (“Conditional Tender of Shares”);

•

Section 7 (“Conditions of the Tender Offer”);

•

Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”);

•

Section 14 (“Material U.S. Federal Income Tax Consequences”); and

•

Section 15 (“Extension of the Tender Offer; Termination; Amendment”).

(b) Purchases.

The information set forth in the “Introduction” to the Offer to Purchase and in Section 11 of the Offer to Purchase (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

(e) Agreements Involving the Subject Company’s Securities.

The information set forth in the Offer to Purchase under Section 11 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

Item 6. Purposes of the Transaction and Plans or Proposals.

(a) Purposes.

The information set forth in the Offer to Purchase under Section 2 (“Purpose of the Tender Offer; Certain Effects of the Tender Offer; Other Plans”) is incorporated herein by reference.

(b) Use of Securities Acquired.

The information set forth in the Offer to Purchase under Section 2 (“Purpose of the Tender Offer; Certain Effects of the Tender Offer; Other Plans”) is incorporated herein by reference.

(c) Plans.

The information set forth in the Offer to Purchase under Section 2 (“Purpose of the Tender Offer; Certain Effects of the Tender Offer; Other Plans”) is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

(a) Source of Funds.

The information set forth in the Offer to Purchase under Section 9 (“Source and Amount of Funds”) is incorporated herein by reference.

(b) Conditions.

Not applicable.

(d) Borrowed Funds.

Not applicable.

Item 8. Interest in Securities of the Subject Company.

(a) Security Ownership.

The information set forth in the Offer to Purchase under Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

(b) Securities Transactions.

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

(a) Solicitations or Recommendations.

The information set forth in the Offer to Purchase under Section 16 (“Fees and Expenses”) is incorporated herein by reference.

Item 10. Financial Statements.

(a) Financial Information.

Not applicable.

(b) Pro Forma Information.

Not applicable. Notwithstanding that pro forma information is not required pursuant to Instruction 2 to Item 10, the Company has provided selected pro forma information reflecting, among other things, the impact of the Offer on the Company’s financial results for the three months ended March 31, 2007 and the fiscal year ended December 31, 2006 in Section 10 (“Certain Information Concerning the Company”) of the Offer to Purchase.

Item 11. Additional Information.

(a) Agreements, Regulatory Requirements and Legal Proceedings.

The information set forth in the Offer to Purchase under Section 10 (“Certain Information Concerning the Company”), Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares”), Section 12 (“Effects of the Tender Offer on the Market for Shares; Registration under the Exchange Act”), and Section 13 (“Legal Matters; Regulatory Approvals”) is incorporated herein by reference. To the knowledge of the Company, no material legal proceedings relating to the Offer are pending.

(b) Other Material Information.

The information set forth in the Offer to Purchase and the related Letter of Transmittal, copies of which are filed as Exhibits (a)(1)(A) and (a)(1)(B) hereto, respectively, as each may be amended or supplemented from time to time, is incorporated herein by reference.


Item 12.		Exhibits.

(a)(1)(A)*		Offer to Purchase dated July 3, 2007.
(a)(1)(B)*		Form of Letter of Transmittal.
(a)(1)(C)*		Form of Notice of Guaranteed Delivery.
(a)(1)(D)*		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)*		Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(F)		Press Release dated July 2, 2007, incorporated by reference to the Company’s Statement on Schedule TO filed July 2, 2007.
(a)(1)(G)*		Summary Advertisement published in The Wall Street Journal on July 3, 2007.
(a)(1)(H)*		Form of Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund.
(a)(1)(I)*		Form of Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund.
(a)(1)(J)*		Form of Memo to Equity Plan Participants.
(a)(1)(K)*		Form of Letter to Clients of Charles Schwab.
(a)(1)(L)*		Participants in The SchwabPlan Retirement Savings and Investment Plan – Questions and Answers.
(a)(1)(M)*		Charles Schwab Stock Tender Offer – General Employee Questions and Answers.
(a)(1)(N)*		Charles Schwab Stock Tender Offer – Internal Use Questions and Answers.
(a)(1)(O)*		Voice Response and Website Announcement for The SchwabPlan Retirement Savings and Investment Plan.
(a)(2)-(5)		Not applicable.
(b)		Not applicable.
(d)(1)		Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between the Company and the holders of the Common Stock, filed as Exhibit 4.23 to the Company’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
(d)(2)		Restatement of Assignment and License, as amended January 25, 1988, among Charles Schwab & Co., Inc., Charles R. Schwab and the Company, filed as Exhibit 10.72 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(3)		Trust Agreement under the Charles Schwab Profit Sharing and Employee Stock Ownership Plan, effective November 1, 1990, dated October 25, 1990, filed as Exhibit 10.87 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(4)		First Amendment to the Trust Agreement under the Charles Schwab Profit Sharing and Employee Stock Ownership Plan, effective January 1, 1992, dated December 20, 1991, filed as Exhibit 10.101 to the Company’s Form 10-K for the year ended December 31, 2006 and incorporated herein by reference.
(d)(5)		Second Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective July 1, 1992, dated June 30, 1992, filed as Exhibit 10.116 to the Company’s Form 10-Q for the quarter ended June 30, 2002 and incorporated herein by reference.
(d)(6)		Third Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective January 1, 1996, dated May 8, 1996 filed as Exhibit 10.169 to the Company’s Form 10-Q for the quarter ended June 30, 2002 and incorporated herein by reference.
(d)(7)		Fourth Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective January 1, 1998, filed as Exhibit 10.202 to the Company’s Form 10-K for the year ended December 31, 2003 and incorporated herein by reference.
(d)(8)		The Charles Schwab Corporation Employee Stock Incentive Plan, restated and amended as of September 20, 2001 (supersedes Exhibit 10.190), filed as Exhibit 10.226 to the Company’s Form 10-K for the year ended December 30, 2006 and incorporated herein by reference.


(d)(9)		The Charles Schwab Corporation 1987 Stock Option Plan, amended and restated as of September 25, 2002, with form of Non-Qualified Stock Option Agreement attached (supersedes Exhibit 10.222), filed as Exhibit 10.242 to the Company’s Form 10-K for the quarter ended September 30, 2002 and incorporated herein by reference.
(d)(10)		The Charles Schwab Corporation 1987 Executive Officer Stock Option Plan, amended and restated as of September 25, 2002, with form of Non-Qualified Stock Option Agreement attached (supersedes Exhibit 10.223), filed as Exhibit 10.243 to the Company’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.
(d)(11)		The Charles Schwab Corporation 1992 Stock Incentive Plan, amended and restated as of September 25, 2002 (supersedes Exhibit 10.224), filed as Exhibit 10.244 to the Company’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.
(d)(12)		The Charles Schwab Corporation 2001 Stock Incentive Plan, restated to include amendments through May 2003 (supersedes Exhibit 10.248), filed as Exhibit 10.251 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(13)		The Charles Schwab Corporation Long-Term Incentive Plan, filed as Exhibit 10.252 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(14)		Employment Agreement dated as of March 31, 2003 between the Company and Charles R. Schwab (supersedes Exhibit 10.149), filed as Exhibit 10.253 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(15)		The Charles Schwab Corporation Deferred Compensation Plan II, effective December 9, 2004, filed as Exhibit 10.264 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(16)		The Charles Schwab Corporation Directors’ Deferred Compensation Plan II, effective December 9, 2004, filed as Exhibit 10.265 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(17)		Form of Notice and Restricted Stock Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.266 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(18)		Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.267 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(19)		Form of Notice and Stock Option Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.268 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(20)		Form of Notice and Non-Qualified Stock Option Agreement Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.269 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(21)		Form of Notice and Restricted Stock Agreement Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.270 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(22)		The Charles Schwab Corporation Directors’ Deferred Compensation Plan, as amended through December 8, 2004 (supersedes Exhibit 10.215), filed as Exhibit 10.271 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(23)		The Charles Schwab Corporation Deferred Compensation Plan, as amended through December 8, 2004 (supersedes Exhibit 10.257), filed as Exhibit 10.272 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(24)		The Charles Schwab Corporation Corporate Executive Bonus Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 19, 2005 (supersedes Exhibit 10.240), filed as Exhibit 10.277 to the Company’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference.


(d)(25)		The Charles Schwab Corporation 2004 Stock Incentive Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 19, 2005 (supersedes Exhibit 10.259), filed as Exhibit 10.278 to the Company’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference.
(d)(26)		Form of Notice and Premium-Priced Stock Option Agreement under The Charles Schwab Corporation 2004 Stock Incentive plan, filed as Exhibit 10.282 to the Company’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference.
(d)(27)		The Charles Schwab Severance Pay Plan, as Amended and Restated Effective January 1, 2006, including Amendment Numbers 1 and 2 (supersedes Exhibit 10.260), filed as Exhibit 10.284 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(28)		Amendment to The Charles Schwab Corporation Long Term Incentive Plan, filed as Exhibit 10.285 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(29)		Form of Notice and Restricted Stock Agreement for Walter W. Bettinger under The Charles Schwab Corporation 2004 Stock Incentive Plan dated February 20, 2007, filed as Exhibit 10.289 to the Company’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
(d)(30)		Summary of Non-Employee Director Compensation (supersedes Exhibit 10.274), filed as Exhibit 10.290 to the Company’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
(d)(31)*		Stock Purchase Agreement by and among the Company, Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, 188 Partners LP, and the Charles & Helen Schwab Foundation, dated as of July 2, 2007.
(d)(32)		The Charles Schwab Corporation Employee Stock Purchase Plan filed as Exhibit 99.1 to the Company’s Registration Statement No. 33-144303 on Form S-8 and incorporated herein by reference.
(g)		Not applicable.
(h)		Not applicable.

*	Filed herewith.

Item 13. Information Required by Schedule 13E-3.

Not applicable.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


Date: July 3, 2007	THE CHARLES SCHWAB CORPORATION

	By:	/s/ Joseph R. Martinetto
		Joseph R. Martinetto
		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX


(a)(1)(A)*		Offer to Purchase dated July 3, 2007.
(a)(1)(B)*		Form of Letter of Transmittal.
(a)(1)(C)*		Form of Notice of Guaranteed Delivery.
(a)(1)(D)*		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)*		Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(F)		Press Release dated July 2, 2007, incorporated by reference to the Company’s Statement on Schedule TO filed July 2, 2007.
(a)(1)(G)*		Summary Advertisement published in The Wall Street Journal on July 3, 2007.
(a)(1)(H)*		Form of Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund.
(a)(1)(I)*		Form of Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund.
(a)(1)(J)*		Form of Memo to Equity Plan Participants.
(a)(1)(K)*		Form of Letter to Clients of Charles Schwab.
(a)(1)(L)*		Participants in The SchwabPlan Retirement Savings and Investment Plan – Questions and Answers.
(a)(1)(M)*		Charles Schwab Stock Tender Offer – General Employee Questions and Answers.
(a)(1)(N)*		Charles Schwab Stock Tender Offer – Internal Use Questions and Answers.
(a)(1)(O)*		Voice Response and Website Announcement for The SchwabPlan Retirement Savings and Investment Plan.
(a)(2)-(5)		Not applicable.
(b)		Not applicable.
(d)(1)		Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between the Company and the holders of the Common Stock, filed as Exhibit 4.23 to the Company’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
(d)(2)		Restatement of Assignment and License, as amended January 25, 1988, among Charles Schwab & Co., Inc., Charles R. Schwab and the Company, filed as Exhibit 10.72 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(3)		Trust Agreement under the Charles Schwab Profit Sharing and Employee Stock Ownership Plan, effective November 1, 1990, dated October 25, 1990, filed as Exhibit 10.87 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(4)		First Amendment to the Trust Agreement under the Charles Schwab Profit Sharing and Employee Stock Ownership Plan, effective January 1, 1992, dated December 20, 1991, filed as Exhibit 10.101 to the Company’s Form 10-K for the year ended December 31, 2006 and incorporated herein by reference.
(d)(5)		Second Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective July 1, 1992, dated June 30, 1992, filed as Exhibit 10.116 to the Company’s Form 10-Q for the quarter ended June 30, 2002 and incorporated herein by reference.
(d)(6)		Third Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective January 1, 1996, dated May 8, 1996 filed as Exhibit 10.169 to the Company’s Form 10-Q for the quarter ended June 30, 2002 and incorporated herein by reference.
(d)(7)		Fourth Amendment to the Trust Agreement for the Charles Schwab Profit Sharing and Employee Stock Ownership Plan effective January 1, 1998, filed as Exhibit 10.202 to the Company’s Form 10-K for the year ended December 31, 2003 and incorporated herein by reference.
(d)(8)		The Charles Schwab Corporation Employee Stock Incentive Plan, restated and amended as of September 20, 2001 (supersedes Exhibit 10.190), filed as Exhibit 10.226 to the Company’s Form 10-K for the year ended December 30, 2006 and incorporated herein by reference.
(d)(9)		The Charles Schwab Corporation 1987 Stock Option Plan, amended and restated as of September 25, 2002, with form of Non-Qualified Stock Option Agreement attached (supersedes Exhibit 10.222), filed as Exhibit 10.242 to the Company’s Form 10-K for the quarter ended September 30, 2002 and incorporated herein by reference.


(d)(10)		The Charles Schwab Corporation 1987 Executive Officer Stock Option Plan, amended and restated as of September 25, 2002, with form of Non-Qualified Stock Option Agreement attached (supersedes Exhibit 10.223), filed as Exhibit 10.243 to the Company’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.
(d)(11)		The Charles Schwab Corporation 1992 Stock Incentive Plan, amended and restated as of September 25, 2002 (supersedes Exhibit 10.224), filed as Exhibit 10.244 to the Company’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.
(d)(12)		The Charles Schwab Corporation 2001 Stock Incentive Plan, restated to include amendments through May 2003 (supersedes Exhibit 10.248), filed as Exhibit 10.251 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(13)		The Charles Schwab Corporation Long-Term Incentive Plan, filed as Exhibit 10.252 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(14)		Employment Agreement dated as of March 31, 2003 between the Company and Charles R. Schwab (supersedes Exhibit 10.149), filed as Exhibit 10.253 to the Company’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.
(d)(15)		The Charles Schwab Corporation Deferred Compensation Plan II, effective December 9, 2004, filed as Exhibit 10.264 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(16)		The Charles Schwab Corporation Directors’ Deferred Compensation Plan II, effective December 9, 2004, filed as Exhibit 10.265 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(17)		Form of Notice and Restricted Stock Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.266 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(18)		Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.267 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(19)		Form of Notice and Stock Option Agreement for Non-Employee Directors Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.268 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(20)		Form of Notice and Non-Qualified Stock Option Agreement Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.269 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(21)		Form of Notice and Restricted Stock Agreement Under The Charles Schwab Corporation 2004 Stock Incentive Plan, filed as Exhibit 10.270 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(22)		The Charles Schwab Corporation Directors’ Deferred Compensation Plan, as amended through December 8, 2004 (supersedes Exhibit 10.215), filed as Exhibit 10.271 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(23)		The Charles Schwab Corporation Deferred Compensation Plan, as amended through December 8, 2004 (supersedes Exhibit 10.257), filed as Exhibit 10.272 to the Company’s Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
(d)(24)		The Charles Schwab Corporation Corporate Executive Bonus Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 19, 2005 (supersedes Exhibit 10.240), filed as Exhibit 10.277 to the Company’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference.
(d)(25)		The Charles Schwab Corporation 2004 Stock Incentive Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 19, 2005 (supersedes Exhibit 10.259), filed as Exhibit 10.278 to the Company’s Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference.


(d)(26)		Form of Notice and Premium-Priced Stock Option Agreement under The Charles Schwab Corporation 2004 Stock Incentive plan, filed as Exhibit 10.282 to the Company’s Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference.
(d)(27)		The Charles Schwab Severance Pay Plan, as Amended and Restated Effective January 1, 2006, including Amendment Numbers 1 and 2 (supersedes Exhibit 10.260), filed as Exhibit 10.284 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(28)		Amendment to The Charles Schwab Corporation Long Term Incentive Plan, filed as Exhibit 10.285 to the Company’s Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
(d)(29)		Form of Notice and Restricted Stock Agreement for Walter W. Bettinger under The Charles Schwab Corporation 2004 Stock Incentive Plan dated February 20, 2007, filed as Exhibit 10.289 to the Company’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
(d)(30)		Summary of Non-Employee Director Compensation (supersedes Exhibit 10.274), filed as Exhibit 10.290 to the Company’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
(d)(31)*		Stock Purchase Agreement by and among the Company, Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, 188 Partners LP, and the Charles & Helen Schwab Foundation, dated as of July 2, 2007.
(d)(32)		The Charles Schwab Corporation Employee Stock Purchase Plan filed as Exhibit 99.1 to the Company’s Registration Statement No. 33-144303 on Form S-8 and incorporated herein by reference.
(g)		Not applicable.
(h)		Not applicable.

*	Filed herewith.

EX-99.(A)(1)(A) 2 dex99a1a.htm OFFER TO PURCHASE DATED JULY 3, 2007 Offer to Purchase dated July 3, 2007

Exhibit (a)(1)(A)

LOGO

THE CHARLES SCHWAB CORPORATION

Offer to Purchase for Cash by The Charles Schwab Corporation of Up to 84 million Shares of its Common Stock at a Purchase Price Not Greater Than $22.50 nor Less Than $19.50 Per Share.

The Offer, Proration Period and Withdrawal Rights Will Expire at 12:00 Midnight, Eastern Time, on Tuesday, July 31, 2007 Unless The Offer is Extended.

The Charles Schwab Corporation, a Delaware corporation (the “Company”, “we”, or “us”), is offering to purchase up to 84 million shares of its common stock, $0.01 par value per share (the “Common Stock”), at a purchase price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions of this Offer to Purchase and the related Letter of Transmittal (which together, as they may be amended and supplemented from time to time, constitute the “Offer”). Unless the context otherwise requires, all references to the shares shall refer to the Common Stock of the Company.

On the terms and subject to the conditions of the Offer, we will determine a single per share price that we will pay for shares properly tendered and not properly withdrawn from the Offer, taking into account the total number of shares tendered and the prices specified by tendering stockholders. After the Offer expires, we will select the lowest purchase price (in $0.10 increments) within the price range specified above that will allow us to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. All shares we acquire in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price.

Only shares properly tendered at prices at or below the purchase price selected by us, and not properly withdrawn, will be purchased. However, because of the “odd lot” priority, proration and conditional tender provisions described in this Offer to Purchase, we may not purchase all of the shares tendered at prices at or below the purchase price selected by us if more than the number of shares we seek are properly tendered and not properly withdrawn. We will return shares not purchased in the Offer to the tendering stockholders at our expense approximately five Business Days following the Expiration Time (as defined below). See Section 1.

We reserve the right, in our sole discretion, to purchase additional shares not to exceed 2% of our outstanding shares (or approximately 25 million shares), without amending or extending the Offer, subject to certain limitations and legal requirements. See Section 1.

The Offer is not conditioned upon any minimum number of shares being tendered, but is subject to certain conditions. See Section 7.

Our Common Stock is listed and traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SCHW.” On June 29, 2007, the last full trading day before the announcement of the Offer, the last reported sales price of our Common Stock on NASDAQ was $20.52 per share. Stockholders are urged to obtain current market quotations for the shares before deciding whether and at which price or prices to tender their shares. See Section 8.

Our Board of Directors has approved the Offer. However, neither we nor our Board of Directors, the Dealer Manager, the Information Agent or the Depositary makes any recommendation to you as to whether to tender or refrain from tendering your shares or as to the price or prices at which you may choose to tender your shares. We have not authorized any person to make any such recommendation. You must make your own decisions as to these matters. In doing so, you should read and evaluate carefully the information in this Offer to Purchase and in the related Letter of Transmittal, including our reasons for making the Offer, and should discuss whether to participate in the Offer with your financial or tax advisor. See Section 2.

The purchase of shares pursuant to the Offer is part of the plan we announced on July 2, 2007 to return up to approximately $3.5 billion of capital to our stockholders. In addition to the approval of the purchase of approximately $1.9 billion of shares in the Offer and $400 million of shares under the Stock Purchase Agreement, our Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. If you are a stockholder of record of the Company as of the close of business on July 24, 2007, you will have the right to receive the special dividend (as well as the regular quarterly cash dividend declared on July 2, 2007) even if you choose to tender your shares in the Offer and regardless of whether you tender them before or after July 24, 2007.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved this transaction or passed upon the merits or fairness of the transaction or passed upon the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offense.

The Dealer Manager for the Offer is:

UBS Investment Bank

July 3, 2007

Important

If you want to tender all or part of your shares, you must do one of the following before 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, or any later time and date to which the Offer may be extended (the “Expiration Time”):

If your shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact the nominee and request that the nominee tender your shares for you.

If you hold certificates in your own name, you must complete and sign a Letter of Transmittal according to its instructions, and deliver it, together with any required signature guarantees, the certificates for your shares and any other documents required by the Letter of Transmittal, to Wells Fargo Bank, N.A., the Depositary for the Offer.

If you are an institution participating in the Book-Entry Transfer Facility (as defined below), you must tender your shares according to the procedure for book-entry transfer described in Section 3.

If you are a participant in the SchwabPlan Retirement Savings and Investment Plan, which we refer to herein as our “Retirement Plan”, follow the tender instructions sent separately to each eligible participant in our Retirement Plan. Note that participants in our Retirement Plan have an earlier deadline of 4:00 pm, Eastern Time, on Friday, July 27, 2007 to tender the shares allocated to units they hold in the equity unit funds under the plan, unless we extend the Offer, in which case participants may tender their shares until 4:00 pm, Eastern Time, on the day which is two Business Days prior to the expiration of the Offer, as extended.

If you desire to tender shares and your certificates for those shares are not immediately available or the procedure for book-entry transfer cannot be completed on a timely basis, or time will not permit all required documents to reach the Depositary prior to the Expiration Time, you can still tender your shares by following the procedure for guaranteed delivery described in Section 3.

To properly tender shares, you must validly complete the Letter of Transmittal, including the section relating to the price or prices at which you are tendering shares.

If you wish to maximize the chance that your shares will be purchased in the Offer, you should check the box in the Letter of Transmittal captioned “Shares Tendered at Price Determined in the Tender Offer” indicating that you will accept the purchase price we determine. If you agree to accept the purchase price determined in the Offer, your shares will be deemed to be tendered at the minimum price of $19.50 per share. You should understand that this election may lower the purchase price paid for all purchased shares in the Offer and could result in your shares being purchased at the minimum price of $19.50 per share.

Questions and requests for assistance may be directed to D.F. King & Co., Inc., the Information Agent for the Offer, or to UBS Securities LLC, the Dealer Manager for the Offer, at their addresses and telephone numbers set forth on the back cover page of this document. Requests for additional copies of this document, the related Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent.

We are not making the Offer to, and will not accept any tendered shares from, stockholders in any jurisdiction where it would be illegal to do so. However, we may, at our discretion, take any actions necessary for us to make this Offer to stockholders in any such jurisdiction.

TABLE OF CONTENTS


Summary term sheet		i
Forward looking statements		x
Introduction		1
The tender offer		4
1.	NUMBER OF SHARES; EXPIRATION TIME; PRORATION; PRIORITY OF PURCHASES	4
2.	PURPOSE OF THE TENDER OFFER; CERTAIN EFFECTS OF THE TENDER OFFER; OTHER PLANS.	7
3.	PROCEDURES FOR TENDERING SHARES	10
4.	WITHDRAWAL RIGHTS	16
5.	PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE	17
6.	CONDITIONAL TENDER OF SHARES	19
7.	CONDITIONS OF THE TENDER OFFER	20
8.	PRICE RANGE OF THE SHARES	22
9.	SOURCE AND AMOUNT OF FUNDS	22


10.	CERTAIN INFORMATION CONCERNING THE COMPANY	23
11.	INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES	28
12.	EFFECTS OF THE TENDER OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT	34
13.	LEGAL MATTERS; REGULATORY APPROVALS	34
14.	MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	34
15.	EXTENSION OF THE TENDER OFFER; TERMINATION; AMENDMENT	40
16.	FEES AND EXPENSES	41
17.	MISCELLANEOUS	42

Summary term sheet

We are providing this summary term sheet for your convenience. The Charles Schwab Corporation is at times referred to as “the Company”, “we”, “our” or “us.” We refer to the shares of our Common Stock as the “shares.” This summary term sheet highlights certain material information in the remainder of this Offer to Purchase, but you should realize that it does not describe all of the details of the tender offer to the same extent described elsewhere in this Offer to Purchase and the related Letter of Transmittal. We urge you to read the entire Offer to Purchase and the Letter of Transmittal because they contain the full details of the Offer. We have included references to the sections of this document where you will find a more complete discussion.

WHO IS OFFERING TO PURCHASE MY SHARES?

The Charles Schwab Corporation is offering to purchase shares of its Common Stock, $0.01 par value per share, subject to the terms and conditions of the Offer.

HOW MANY SHARES WILL THE COMPANY PURCHASE IN THE OFFER?

We are offering to purchase up to 84 million shares of our Common Stock. Assuming that 84 million shares are purchased in the Offer at a maximum purchase price of $22.50 per share, the aggregate purchase price will be approximately $1.9 billion. The 84 million shares represent approximately 7% of our issued and outstanding shares of Common Stock as of June 29, 2007. See Section 1. If a lesser number of shares are properly tendered, we will purchase all shares that are properly tendered and not properly withdrawn. If more than 84 million shares are properly tendered and not properly withdrawn, we will purchase all shares tendered at prices at or below the purchase price selected by us on a pro rata basis, except for “odd lots” (lots held by owners of fewer than 100 shares), which we will purchase on a priority basis, and except for each conditional tender whose condition was not met (except as described in Section 6). The Offer is not conditioned on any minimum number of shares being tendered, but is subject to certain conditions. See Section 7.

We also expressly reserve the right to purchase additional shares not to exceed 2% of our outstanding shares (or approximately 25 million shares), without amending or extending the Offer, subject to certain limitations and legal requirements. See Section 1.

WHAT WILL BE THE PURCHASE PRICE FOR THE SHARES?

We are conducting the Offer through a procedure commonly called a modified “Dutch Auction.” This procedure allows you to select the price per share (in $0.10 increments), within a price range specified by us, at which you are willing to sell your shares. The price range for the Offer is $19.50 to $22.50 per share. After the Offer expires, we will select the lowest purchase price within the price range specified above that will allow us to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. See Sections 1 and 5.

All shares we purchase will be purchased at the same price, even if you have selected a lower price, but we will not purchase any shares above the purchase price determined in the Offer.

A stockholder who wishes to tender shares at more than one price must complete a separate Letter of Transmittal for each price at which shares are being tendered. The same shares cannot be tendered (unless previously properly withdrawn in accordance with the terms of the Offer) at more than one price.

Summary term sheet

Stockholders who tender at multiple prices pursuant to multiple Letters of Transmittal must comply with the procedures described in Section 4 to withdraw the multiple tenders.

WHAT WILL BE THE FORM OF PAYMENT FOR THE TENDERED SHARES?

If your shares are purchased in the Offer, we will pay you the purchase price determined in the Offer, in cash, less any applicable withholding taxes and without interest, approximately five Business Days after the Expiration Time. Under no circumstances will we pay interest on the purchase price, even if there is a delay in making payment. See Sections 1 and 5.

WHEN WILL THE COMPANY PAY FOR THE SHARES I TENDER?

We will pay the purchase price determined in the Offer, net to the seller in cash, less any applicable withholding taxes and without interest, for the shares we purchase promptly after the expiration of the Offer and the acceptance of the shares for payment. We do not expect, however, to announce the results of proration and begin paying for tendered shares until approximately five Business Days after the expiration of the Offer. See Section 5.

WHAT IS THE PURPOSE OF THE OFFER?

Our management and Board of Directors have reviewed alternatives for using the after-tax proceeds realized from the sale of U.S. Trust Corporation and our other available liquid financial resources. They have also evaluated our capital structure, financial position, dividend policy, operations, strategic plan, the anticipated cost and availability of financing, the recent market prices of our Common Stock and our expectations for the future and believe that the Offer, the purchase of shares pursuant to the Stock Purchase Agreement and the special cash dividend are prudent uses of our financial resources and an efficient means to return capital to our stockholders. After we complete the Offer, purchase the shares pursuant to the Stock Purchase Agreement and pay the special cash dividend, we currently anticipate that our cash balances, anticipated cash flows from operations and borrowing capacity will allow us to service our debt, fund future dividends and the capital requirements for improving our operations, and provide appropriate financial flexibility for general corporate purposes. However, actual experience may differ significantly from our expectations. See “Forward Looking Statements.”

We believe that the modified “Dutch Auction” tender offer described herein represents a mechanism to provide all of our stockholders with the opportunity to tender all or a portion of their shares and thereby receive a return of some or all of their investment. The Offer also provides stockholders with an opportunity to obtain liquidity with respect to all or a portion of their shares, without potential disruption to the share price and without the usual transaction costs associated with market sales, although stockholders who own their shares through a bank, broker, dealer, trust company or other nominee that tenders shares on the stockholder’s behalf may be charged a fee. Stockholders who hold their shares in a brokerage account at Charles Schwab will not be charged any fees in connection with

Summary term sheet

the tender of such shares. Furthermore, Odd Lot Holders (as defined below) who hold shares registered in their names and tender their shares directly to the Depositary and whose shares are purchased pursuant to the Offer will avoid any odd lot discounts that might apply to sales of the shares. In addition, if we complete the Offer, stockholders who do not participate in the Offer will automatically increase their relative percentage ownership interests in the Company and its future operations. See Sections 1 and 2.

DO THE DIRECTORS OR EXECUTIVE OFFICERS OF THE COMPANY INTEND TO TENDER THEIR SHARES IN THE OFFER?

On July 2, 2007, we entered into the Stock Purchase Agreement with Charles R. Schwab, our Chairman and Chief Executive Officer and our largest stockholder, and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and we have agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that we are currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding Common Stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be the same price per share as is determined and paid in the Offer and will be paid on the 11th Business Day following the Expiration Time. In addition, because Mr. Schwab and the other stockholders who are parties to the agreement will not be participating in the Offer, they will not be making bids in the Offer that could influence the determination of the purchase price for the shares. See Section 11.

None of our other directors and executive officers intends to tender any of their shares in the Offer, except for Stephen T. McLin, a director, who intends to tender 25,000 shares. As a result, the Offer will increase the proportional holdings of our directors and executive officers, other than Mr. Schwab and Mr. McLin. Our directors and executive officers may, in compliance with applicable law, sell their shares in open market transactions at prices that may or may not be more favorable than the purchase price to be paid to our stockholders in the Offer.

WILL SHARES PURCHASED PURSUANT TO THE STOCK PURCHASE AGREEMENT AFFECT THE NUMBER OF SHARES PURCHASED IN THE OFFER?

No. The shares purchased pursuant to the Stock Purchase Agreement will not affect the number of shares purchased in the Offer.

HOW WILL THE COMPANY PAY FOR THE SHARES?

Assuming that 84 million shares are purchased in the Offer at a maximum purchase price of $22.50 per share, the aggregate purchase price will be approximately $1.9 billion. We anticipate that we will pay for the shares tendered in the Offer, the shares purchased pursuant to the Stock Purchase Agreement, and all expenses applicable to the Offer from the approximately $2.7 billion of after-tax proceeds realized from the sale of our subsidiary, U.S. Trust Corporation, which closed on July 1, 2007. See Section 9.

iii

Summary term sheet

WHAT IS THE SPECIAL CASH DIVIDEND AND WILL I RECEIVE IT WITH RESPECT TO TENDERED SHARES?

WILL THE SPECIAL CASH DIVIDEND AFFECT THE EXERCISE PRICE AND NUMBER OF SHARES SUBJECT TO MY STOCK OPTIONS?

We will adjust the exercise price and the number of shares subject to all of the outstanding stock options (vested and unvested) held by our employees and directors to reflect the change in the value of our Common Stock after the special cash dividend is paid and to maintain essentially the same value for the stock options pre- and post-dividend.

HOW LONG DO I HAVE TO TENDER MY SHARES; CAN THE OFFER BE EXTENDED, AMENDED OR TERMINATED?

You may tender your shares until the Offer expires. The Offer will expire on Tuesday, July 31, 2007, at 12:00 midnight, Eastern Time, unless we extend it. See Section 1. If a broker, dealer, commercial bank, trust company or other nominee holds your shares, it is likely that they will have an earlier administrative deadline for you to instruct them to accept the Offer on your behalf. We urge you to contact your broker, dealer, commercial bank, trust company or other nominee to find out their deadline. If you are a participant in our Retirement Plan, you have an earlier deadline of 4:00 pm, Eastern Time, on Friday, July 27, 2007 to tender shares allocated to units you hold in the equity unit funds under the plan, unless we extend the Offer, in which case you may tender shares until 4:00 pm, Eastern Time, on the day which is two Business Days prior to the expiration of the Offer, as extended. See the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in the SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” sent separately to each eligible participant in the plan. See Sections 1, 3 and 5.

We may choose to extend or amend the Offer in our sole discretion, subject to applicable laws. See Section 15. If we extend the Offer, we will delay the acceptance of any shares that have been tendered. We can also terminate the Offer under certain circumstances. See Section 7 and Section 15.

HOW WILL I BE NOTIFIED IF THE COMPANY EXTENDS THE OFFER OR AMENDS THE TERMS OF THE OFFER?

If we extend the Offer, we will issue a press release announcing the extension and the new Expiration Time by 9:00 am, Eastern Time, on the first Business Day after the previously scheduled Expiration Time. We will announce any amendment to the Offer by making a public announcement of the amendment. See Section 15.

Summary term sheet

WHAT ARE THE SIGNIFICANT CONDITIONS TO THE OFFER?

Our obligation to accept and pay for your tendered shares depends upon a number of conditions that must be satisfied or waived prior to the Expiration Time, including, but not limited to:

No general suspension of, or general limitation on prices for, or trading in, securities on any national securities exchange in the United States or in the over-the-counter market shall have occurred.

No significant changes in the general political, market, economic or financial conditions in the United States or abroad that are reasonably likely to adversely affect our business or the trading in the shares shall have occurred.

No legal action shall have been taken, and we shall not have received notice of any threatened legal action, that could reasonably be expected to adversely affect the Offer.

No one shall have proposed, announced or made a tender or exchange offer (other than this Offer), merger, business combination or other similar transaction involving us.

No one (including a group) after the date of this Offer to Purchase shall have acquired or proposed to acquire beneficial ownership of more than 5% of our shares.

No one shall have filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or made a public announcement reflecting an intent to acquire us or any of our subsidiaries.

No material adverse change in our business, financial condition, assets, income, operations, or stock ownership shall have occurred.

We shall not have determined that the consummation of the Offer and the purchase of shares pursuant to the Offer will cause our Common Stock to be delisted from NASDAQ or to be eligible for deregistration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

No decrease of more than 10% in the market price for the shares of our Common Stock or in the Dow Jones Industrial Average, the NASDAQ Composite Index or the S&P 500 Composite Index shall have occurred during the Offer.

The Offer is subject to a number of other conditions described in greater detail in Section 7.

FOLLOWING THE OFFER, WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?

Yes. After the completion of the Offer our shares will continue to be listed on NASDAQ and we will continue to be subject to the reporting requirements of the Exchange Act. See Section 7.

HOW DO I TENDER MY SHARES (OTHER THAN SHARES ALLOCATED TO UNITS HELD IN EQUITY UNIT FUNDS UNDER OUR RETIREMENT PLAN)?

If you want to tender all or part of your shares, other than shares allocated to units held in equity unit funds under our Retirement Plan, you must do one of the following before 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, or any later time and date to which the Offer may be extended:

If your shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact the nominee and request that the nominee tender your shares for you.

If you hold certificates in your own name, you must complete and sign a Letter of Transmittal, according to its instructions, and deliver it, together with any required signature guarantees, the certificates for your shares and any other documents required by the Letter of Transmittal, to Wells Fargo Bank, N.A., the Depositary for the Offer.

Summary term sheet

If you are an institution participating in the Book-Entry Transfer Facility, you must tender your shares according to the procedure for book-entry transfer described in Section 3.

If you are unable to deliver the certificates for the shares or the other required documents to the Depositary or you cannot comply with the procedure for book-entry transfer within the required time, you must comply with the guaranteed delivery procedure outlined in Section 3.

You may contact the Information Agent or the Dealer Manager for assistance. The contact information for the Information Agent and the Dealer Manager appears on the back cover page of this Offer to Purchase. See Section 3 and the Instructions to the Letter of Transmittal.

HOW DO PARTICIPANTS IN OUR RETIREMENT PLAN WHOSE SHARES ARE HELD BY A PLAN TRUSTEE PARTICIPATE IN THE OFFER?

Participants in our Retirement Plan whose shares are held by a trustee may not use the Letter of Transmittal to direct the tender of shares allocated to units they hold in the equity unit funds under the plan, but instead must follow the instructions in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” sent separately to each eligible participant in the plan. These instructions require that a plan participant who wishes to tender shares under the plan complete the Direction Form as directed in the letter. For administrative reasons, the deadline for submitting Direction Forms will be 4:00 pm, Eastern Time, on Friday, July 27, 2007, unless we extend the Offer, in which case you may submit your Direction Form until 4:00 pm, Eastern Time, on the day which is two Business Days prior to the expiration of the Offer, as extended. See Section 3. Participants in our Retirement Plan should be aware that the plan is prohibited from selling shares to us for a price less than the prevailing market price. Accordingly, if you elect to tender shares allocated to units you hold in the equity unit funds under this plan, and the last-sale-eligible-trade price of our Common Stock on NASDAQ on July 27, 2007 is more than the price at which you tendered shares, your shares will not be eligible for the Offer, and your tender of plan shares automatically will be withdrawn.

HOW DO HOLDERS OF VESTED STOCK OPTIONS PARTICIPATE IN THE OFFER?

If you are a holder of vested stock options, you may exercise your vested stock options and tender any of the shares issued upon exercise. If you wish to participate in the Offer, you must exercise your stock options sufficiently in advance of the Expiration Time to receive and tender your shares. An exercise of a stock option cannot be revoked even if shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer for any reason. See Section 3.

WHAT HAPPENS IF MORE THAN 84 MILLION SHARES ARE TENDERED?

If more than 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law) are properly tendered at prices at or below the purchase price selected by us and not properly withdrawn prior to the Expiration Time, we will purchase shares:

first, from all holders of “odd lots” of less than 100 shares who:

tender all of their shares at prices at or below the purchase price selected by us (tenders of fewer than all of the shares owned by such holder will not qualify for this preference); and

complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery;

Summary term sheet

second, subject to the conditional tender provisions described in Section 6, from all other stockholders who tender shares at prices at or below the purchase price selected by us, on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares, as described in Section 1; and

third, only if necessary to permit us to purchase 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law) from holders who have conditionally tendered shares at prices at or below the purchase price selected by us (and the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

Because of the “odd lot” priority, proration and conditional tender provisions described above, we may not purchase all of the shares that you tender even if you tender them at prices at or below the purchase price selected by us. In addition, if a tender is conditioned upon the purchase of a specified number of shares, it is possible that none of those shares will be purchased even if they are tendered at prices at or below the purchase price selected by us. See Section 1.

IF I OWN FEWER THAN 100 SHARES AND I TENDER ALL OF MY SHARES, WILL I BE SUBJECT TO PRORATION?

If you beneficially own of record fewer than 100 shares in the aggregate, you properly tender all of those shares before the Offer expires at a price at or below the purchase price selected by us and you complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, we will purchase all of your shares without subjecting them to the proration procedure. However, you will not be entitled to the odd lot preference with respect to shares tendered under our Retirement Plan. See Section 1.

ONCE I HAVE TENDERED SHARES IN THE OFFER, CAN I WITHDRAW MY TENDER?

Yes. You may withdraw any shares you have tendered (except shares under our Retirement Plan) at any time before 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless we extend the Offer, in which case you can withdraw your shares until the expiration of the Offer, as extended. For administrative reasons, the deadline for Retirement Plan participants to withdraw the shares they have tendered will be 4:00 pm, Eastern Time, on Friday, July 27, 2007, unless we extend the Offer, in which case participants may withdraw the shares they have tendered until 4:00 pm, Eastern Time, on the day which is two Business Days prior to the expiration of the Offer, as extended. If we have not accepted for payment the shares you have tendered to us, you may also withdraw your shares at any time after 12:00 midnight, Eastern Time, on Tuesday, August 28, 2007. See Section 4.

HOW DO I WITHDRAW SHARES I PREVIOUSLY TENDERED?

To withdraw shares, you must deliver a written notice of withdrawal with the required information to the Depositary prior to the Expiration Time. Your notice of withdrawal must specify your name, the number of shares to be withdrawn and the name of the Registered Holder (as defined below) of such shares. Some additional requirements apply if the share certificates to be withdrawn have been delivered to the Depositary or if your shares have been tendered under the procedure for book-entry transfer described in Section 3. See Section 4. If you have tendered your shares by giving instructions to a bank, broker, dealer, trust company or other nominee, you must instruct that person to arrange for the withdrawal of your shares. Participants in our Retirement Plan who wish to withdraw the shares they have tendered must follow the instructions found in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” sent separately to each eligible participant in the plan.

vii

Summary term sheet

HAS THE COMPANY OR ITS BOARD OF DIRECTORS ADOPTED A POSITION ON THE OFFER?

Our Board of Directors has approved the Offer. However, neither we nor our Board of Directors, the Dealer Manager, the Information Agent or the Depositary makes any recommendation to you as to whether you should tender or refrain from tendering your shares or as to the price or prices at which you may choose to tender your shares. You must make your own decision as to these matters. In so doing, you should read and evaluate carefully the information in this Offer to Purchase and in the related Letter of Transmittal, including our reasons for making the Offer. See Section 2 and Section 11.

IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?

Stockholders who choose not to tender their shares will own a higher percentage interest in our outstanding Common Stock following the consummation of the Offer. All stockholders of record as of the close of business on July 24, 2007 will receive the special dividend whether or not they choose to tender shares in the Offer. See Section 2.

WHAT IS THE RECENT MARKET PRICE OF MY SHARES?

On June 29, 2007, the last full trading day before the announcement of the Offer, the last reported sales price of our Common Stock on NASDAQ was $20.52 per share. A portion of the price range for the Offer is below the closing price on June 29, 2007. You are urged to obtain current market quotations for the shares before deciding whether and at what price or prices to tender your shares. See Section 8.

WILL I HAVE TO PAY BROKERAGE COMMISSIONS IF I TENDER MY SHARES?

If you are the record owner of your shares and you tender your shares directly to the Depositary, you will not have to pay brokerage fees or similar expenses. If you own your shares through a bank, broker, dealer, trust company or other nominee and that person tenders your shares on your behalf, you may be charged a fee. You should consult your bank, broker, dealer, trust company or other nominee to determine whether any charges will apply. If you hold shares in a brokerage account at Charles Schwab, you will not be charged any fees in connection with the tender of such shares. In addition, participants in our Retirement Plan whose shares are held by the plan trustee will not incur any fees or expenses in connection with the tender of shares allocated to units they hold in the equity unit funds in their participant accounts. See Section 3.

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES IF I TENDER MY SHARES?

Generally, you will be subject to U.S. federal income taxation when you receive cash from us in exchange for the shares you tender in the Offer. The tender of shares for cash could be treated as (i) a sale or exchange of the tendered shares or (ii) a distribution which, to the extent of available earnings and profits, is taxable as a dividend without any reduction in income for your basis in your shares. See Section 14.

Along with your Letter of Transmittal, you are asked to submit a Substitute Form W-9. Any tendering stockholder or other payee who fails to complete, sign and return to the Depositary the Substitute Form W-9 included with the Letter of Transmittal (or such other Internal Revenue Service form as may be applicable) may be subject to United States backup withholding at a rate equal to 28% of the gross proceeds paid to the stockholder or other payee pursuant to the Offer, unless such stockholder establishes that such stockholder is within the class of persons that is exempt from backup withholding.

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Summary term sheet

See Section 3. Non-U.S. Holders, to establish their exemption from backup withholding, should submit an IRS Form W-8BEN. However, Non-U.S. Holders may be subject to 30% withholding regardless of whether the transfer is treated as a sale or exchange or as a distribution. See Section 14. We recommend that you consult your own tax advisor with respect to your particular situation.

Note that special tax rules will apply with respect to shares tendered through our Retirement Plan. Retirement Plan participants should refer to the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund.” Please consult your personal tax advisor to determine how this will apply to you.

DOES THE COMPANY INTEND TO REPURCHASE ANY SHARES OTHER THAN PURSUANT TO THE OFFER?

In addition to the purchase of shares pursuant to the Stock Purchase Agreement, we may in the future purchase additional shares in the open market, through private transactions, tender offers or otherwise. In particular, our Board of Directors has previously approved a stock repurchase program, under which during the period from January 1, 2005 to June 29, 2007, we repurchased 142 million shares of our Common Stock for approximately $2.188 billion. As of June 29, 2007, we had the remaining authority to repurchase $446 million of shares of our Common Stock. Continued purchases under this program may be on the same terms as, or on terms more or less favorable to stockholders than, the terms of the Offer. However, Rule 13e-4 under the Exchange Act generally prohibits us and our affiliates from purchasing any shares, other than through the Offer, until at least ten Business Days after the expiration or termination of the Offer. Any possible future purchases by us will depend on many factors, including the market price of the shares, the results of the Offer, our business and financial position and general economic and market conditions. See Section 2.

WILL I HAVE TO PAY ANY STOCK TRANSFER TAX IF I TENDER MY SHARES?

We will pay all stock transfer taxes unless payment is made to, or if shares not tendered or accepted for payment are to be registered in the name of, someone other than the Registered Holder, or tendered certificates are registered in the name of someone other than the person signing the Letter of Transmittal. See Section 5.

WHO CAN I TALK TO IF I HAVE QUESTIONS?

If you have any questions regarding the Offer, please contact D.F. King & Co., Inc., the Information Agent for the Offer or UBS Securities LLC, the Dealer Manager for the Offer. Their contact information is set forth on the back cover page of this Offer to Purchase. If a Retirement Plan participant has any questions relating to the Offer or the number of shares allocated to units they hold in the equity unit funds held in his or her plan account, the participant should contact the party set forth in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or “Letter to Participants in the SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” sent separately to each eligible participant in the plan.

Forward looking statements

This Offer to Purchase, including the documents incorporated by reference, contains not only historical information but also forward-looking statements. Forward-looking statements are identified by words such as “believe”, “anticipate”, “expect”, “intend”, “plan”, “will”, “may”, “estimate”, “aim”, “target”, and other similar expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect management’s beliefs, objectives, and expectations as of the date hereof, or in the case of any documents incorporated by reference, as of the date of those documents, are necessarily estimates based on the best judgment of our senior management. These statements relate to, among other things:

our ability to service our debt, fund future dividends and capital requirements and have appropriate financial flexibility for general corporate purposes from our cash balances, anticipated cash flows from operations and borrowing capacity;

our offering of debt securities in connection with our capital restructuring, including the amount, timing and terms of such issuances;

the continuation of our stock repurchase program subsequent to the termination of the Offer;

our ability to pursue our business strategy;

the impact of changes in unrecognized tax benefits on our results of operations;

the impact of changes in the likelihood of indemnification payment obligations on our results of operations;

the impact of changes in estimated costs related to past restructuring initiatives on our results of operations;

the impact of legal proceedings and regulatory matters;

the impact of changes in the income tax benefit related to the sale of U.S. Trust Corporation;

sources of liquidity, capital and level of dividends;

the timing and amount of capital expenditures;

target capital ratios; and

the other risks and uncertainties described in this Offer to Purchase.

Achievement of the expressed beliefs, objectives and expectations described in these statements is subject to certain risks and uncertainties that could cause actual results to differ materially from the expressed beliefs, objectives, and expectations. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Offer to Purchase or, in the case of documents incorporated by reference, as of the date of those documents.

Important factors that may cause actual results to differ include, but are not limited to:

unanticipated changes in the amounts of our cash balances, cash flows from our operations and/or borrowing capacity;

market conditions, including the demand for new corporate debt issues;

Forward looking statements

changes in general economic and financial market conditions;

changes in interest rates;

the level of our stock repurchase activity;

changes in the competitive environment, including price competition and continued consolidation in the financial services industry;

unanticipated adverse developments in litigation or regulatory matters;

our ability to sublease certain properties;

the amount of loans to our banking and brokerage clients;

the timing and impact of changes in our level of investments in technology;

changes in our level of personnel;

potential breaches of contractual terms for which we have indemnification obligations;

changes in the income tax benefit based on the results of a tax survey related to the sale of U.S. Trust Corporation;

the timing and impact of the settlement of tax audits;

changes in legislation or rules and regulations which affect our business; and

the timing and impact of strategic transactions.

Certain of these factors, as well as general risk factors affecting us, are discussed in greater detail in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, including “Item 1A – Risk Factors.”

Introduction

To the Holders of our Common Stock:

We invite our stockholders to tender shares of our Common Stock, $0.01 par value per share (the “Common Stock”), for purchase by us. Upon the terms and subject to the conditions of this Offer to Purchase and the related Letter of Transmittal (which together, as they may be amended and supplemented from time to time, constitute the “Offer”), we are offering to purchase up to 84 million shares at a purchase price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest.

The Offer will expire at 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless extended (such date and time, as they may be extended, the “Expiration Time”).

After the Offer expires, we will select the lowest purchase price (in $0.10 increments) within the price range specified above that will allow us to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. All shares we acquire in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price.

We will purchase only those shares properly tendered at prices at or below the purchase price selected by us and not properly withdrawn prior to the Expiration Time. However, because of the “odd lot” priority, proration and conditional tender provisions described in this Offer to Purchase, we may not purchase all of the shares tendered at prices at or below the purchase price selected by us if more than the number of shares we seek are properly tendered and not properly withdrawn. We will return shares tendered at prices in excess of the purchase price that we determine and shares that we do not purchase because of proration or conditional tender provisions to the tendering stockholders at our expense approximately five Business Days following the Expiration Time. See Section 1.

We reserve the right to purchase additional shares not to exceed 2% of our outstanding shares (or approximately 25 million shares), without amending or extending the Offer, subject to certain limitations and legal requirements. See Sections 1 and 15.

Tendering stockholders whose shares are registered in their own names and who tender directly to Wells Fargo Bank, N.A., the Depositary for the Offer, will not be obligated to pay brokerage fees or commissions or, except as described in Instruction 9 to the Letter of Transmittal, stock transfer taxes on the purchase of shares by us under the Offer. Stockholders who own their shares through a bank, broker, dealer, trust company or other nominee that tenders shares on the stockholder’s behalf may be charged a fee, and should consult their banks, brokers, dealers, trust companies or other nominees to determine whether any charges will apply. Stockholders who hold their shares in a brokerage account at Charles Schwab will not be charged any fees in connection with the tender of such shares. Participants in the SchwabPlan Retirement Savings and Investment Plan, which we refer to herein as our “Retirement Plan”, whose shares are held by a trustee will not incur any fees or expenses in connection with the tender of shares allocated to units they hold in the equity unit funds in their participant accounts.

Participants in our Retirement Plan whose shares are held by a trustee may not use the Letter of Transmittal to direct the tender of the shares but instead must follow the separate instructions in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” to tender some or all of the shares allocated to units they hold in the equity unit funds in their participant accounts. If a participant’s instructions are not received by 4:00 pm, Eastern Time, on Friday, July 27, 2007, or if we extend the

Introduction

Offer, before 4:00 pm, Eastern Time, on the day which is two Business Days (as defined below) prior to the expiration of the Offer, as extended, the trustee will not tender shares allocated to the participant’s account. See Section 3.

In addition, holders of vested stock options may exercise their stock options and tender some or all of the shares received upon such exercise, but must exercise the stock options sufficiently in advance of the Expiration Time to receive their shares in order to participate in the Offer.

The Offer is not conditioned upon any minimum number of shares being tendered, but is subject to certain conditions. See Section 7.

Our Board of Directors has approved the Offer. However, neither we nor our Board of Directors, the Dealer Manager, the Information Agent or the Depositary is making any recommendation to you as to whether you should tender or refrain from tendering your shares. We have not authorized any person to make any such recommendation. You must make your own decision as to these matters. In so doing, you should read and evaluate carefully the information in this Offer to Purchase and in the related Letter of Transmittal, including our reasons for making the Offer, and should discuss whether to participate in the Offer with your financial or tax advisor. See Section 2.

On July 2, 2007, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Charles R. Schwab, our Chairman and Chief Executive Officer and our largest stockholder, and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and we have agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that we are currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding Common Stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be the same price per share as is determined and paid in the Offer and will be paid on the 11th Business Day following the Expiration Time. In addition, because Mr. Schwab and the other stockholders who are parties to the agreement will not be participating in the Offer, they will not be making bids in the Offer that could influence the determination of the purchase price for the shares. See Section 11.

Any tendering stockholder or other payee who fails to complete, sign and return to the Depositary the Substitute Form W-9 included with the Letter of Transmittal (or such other Internal Revenue Service form as may be applicable) may be subject to United States backup withholding at a rate equal to 28% of the gross proceeds paid to the stockholder or other payee pursuant to the Offer, unless such stockholder establishes that such stockholder is within the class of persons that is exempt from backup withholding (including certain foreign individuals). See Section 3. See also Section 14 of this Offer to Purchase regarding material U.S. federal income tax consequences of a sale of shares under the Offer.

Introduction

We will pay the fees and expenses of UBS Securities LLC, the Dealer Manager, D.F. King & Co., Inc., the Information Agent, and Wells Fargo Bank, N.A., the Depositary, incurred in connection with this Offer. See Section 16.

The purchase of shares pursuant to the Offer is part of the plan we announced on July 2, 2007 to return up to approximately $3.5 billion of capital to our stockholders. As part of the plan, our Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. If you are a stockholder of record of the Company as of the close of business on July 24, 2007, you will have the right to receive the special dividend even if you choose to tender your shares in the Offer and regardless of whether you tender them before or after July 24, 2007. In addition to paying the special cash dividend, we will adjust the exercise price and the number of shares subject to all of the outstanding stock options (vested and unvested) held by our employees and directors to reflect the change in the value of our Common Stock after the dividend is paid and to maintain essentially the same value for the stock options pre- and post-dividend. See Section 2. Our Board of Directors also declared on July 2, 2007, our regular quarterly cash dividend of $0.05 per share, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007.

As of June 29, 2007, there were 1,252,454,625 shares of our Common Stock issued and outstanding. The 84 million shares that we are offering to purchase in the Offer and the 18 million shares to be purchased under the Stock Purchase Agreement represent in the aggregate approximately 8% of the total number of outstanding shares of our Common Stock as of June 29, 2007. Our Common Stock is listed and traded on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “SCHW.” On June 29, 2007, the last full trading day before the announcement of the Offer, the last reported sales price of our Common Stock on NASDAQ was $20.52 per share. You are urged to obtain current market quotations for the shares before deciding whether and at what price or prices to tender your shares. See Section 8.

This Offer to Purchase and the related Letter of Transmittal contain important information that you should read and evaluate carefully before you make any decision regarding the Offer.

The tender offer

NUMBER OF SHARES; EXPIRATION TIME; PRORATION; PRIORITY OF PURCHASES

General. Upon the terms and subject to the conditions of the Offer, we will purchase up to 84 million shares of our Common Stock, or if a lesser number of shares are properly tendered, all shares that are properly tendered and not properly withdrawn in accordance with Section 4, at a purchase price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest.

The term “Expiration Time” means 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless we, in our sole discretion, shall have extended the period of time during which the Offer will remain open, in which event the term “Expiration Time” shall refer to the latest time and date at which the Offer, as so extended by us, shall expire. See Section 15 for a description of our right to extend, delay, terminate or amend the Offer. In accordance with the rules of the Securities and Exchange Commission (the “Commission” or the “SEC”), we may purchase additional shares not to exceed 2% of our outstanding shares (or approximately 25 million shares), without amending or extending the Offer, subject to certain limitations and legal requirements. See Section 15.

In the event of an over-subscription of the Offer as described below, shares tendered at prices at or below the purchase price selected by us will be subject to proration, except for “odd lots” and shares conditionally tendered as to which the tender condition was not satisfied. The proration period and, except as described herein, withdrawal rights expire at the Expiration Time.

If we:

make any change to the price range at which we are offering to purchase shares in the Offer;

increase the number of shares being sought in the Offer and such increase in the number of shares being sought exceeds 2% of our outstanding shares (or approximately 25 million shares); or

decrease the number of shares being sought in the Offer; and

the Expiration Time is less than ten Business Days from, and including, the date on which notice of any such increase or decrease is first published, sent or given in the manner specified in Section 15, then the Offer will be extended as necessary so that there are ten Business Days until the Expiration Time. For the purposes of the Offer, a “Business Day” means any day other than a Saturday, Sunday or U.S. federal holiday and consists of the time period from 12:01 am through 12:00 midnight, Eastern Time.

The Offer is not conditioned on any minimum number of shares being tendered, but is subject to other conditions. See Section 7.

In accordance with Instruction 5 of the Letter of Transmittal, stockholders desiring to tender shares must specify the price or prices (in $0.10 increments), not higher than $22.50 nor less than $19.50 per share, at which they are willing to sell their shares to us under the Offer. Alternatively, stockholders desiring to tender shares can choose not to specify a price, and, instead, elect to tender their shares at the purchase price ultimately paid for shares properly tendered and not properly withdrawn from the Offer, which could result in the tendering stockholder receiving the minimum price of $19.50 per share. A portion of the price range for the Offer is below the closing price of $20.52 per share on June 29, 2007, the last full trading day before we announced our intention to make the Offer. See Section 8 for recent market prices for the shares.

The tender offer

Promptly following the Expiration Time, we will select the lowest purchase price (in $0.10 increments) within the price range specified above that will allow us to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. Once the purchase price has been determined, we intend to disclose the price promptly in a manner calculated to inform stockholders of this information, including by issuing a press release through PR Newswire or a comparable service and filing an amendment to our statement on Schedule TO reporting such information.

All shares we acquire in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price. We will purchase only shares properly tendered at prices at or below the purchase price selected by us and not properly withdrawn. However, because of the “odd lot” priority, proration and conditional tender provision described in this Offer to Purchase, we may not purchase all of the shares tendered even if stockholders tendered at prices at or below the purchase price selected by us if more than the number of shares we seek are properly tendered and not properly withdrawn. We will return shares tendered or, in the case of shares delivered by book-entry transfer, credited to the account at the Book-Entry Transfer Facility (as defined below) from which the transfer had previously been made, at prices in excess of the purchase price that we determine and shares that we do not purchase because of proration or conditional tenders to the tendering stockholders at our expense approximately five Business Days following the Expiration Time. Stockholders can specify one minimum price for a specified portion of their shares and a different minimum price for other specified shares, but a separate Letter of Transmittal must be submitted for shares tendered at each price. See Instruction 5 to the Letter of Transmittal. Stockholders can also specify the order in which we will purchase the specified portions in the event that, as a result of the proration provisions or otherwise, we purchase some but not all of the tendered shares pursuant to the Offer. In the event a stockholder does not designate the order and fewer than all shares are purchased due to proration, the Depositary will select the order of shares purchased.

If the number of shares properly tendered and not properly withdrawn prior to the Expiration Time is less than or equal to 84 million shares, or such greater number of shares as we may elect to purchase, subject to applicable law, we will, upon the terms and subject to the conditions of the Offer, purchase all shares so tendered at the purchase price selected by us.

Priority of Purchases. Upon the terms and subject to the conditions of the Offer, if more than 84 million shares, or such greater number of shares as we may elect to purchase, subject to applicable law, have been properly tendered at prices at or below the purchase price selected by us and not properly withdrawn prior to the Expiration Time, we will purchase properly tendered shares on the basis described below:

First, we will purchase all shares tendered by any Odd Lot Holder (as defined below) who:

tenders all shares owned beneficially of record by the Odd Lot Holder at prices at or below the purchase price selected by us (tenders of fewer than all of the shares owned by the Odd Lot Holder will not qualify for this preference); and

completes the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.

Second, subject to the conditional tender provisions described in Section 6, we will purchase all other shares tendered at prices at or below the purchase price selected by us, on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares, as described below.

Third, if necessary to permit us to purchase 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law), shares conditionally tendered (as to which the

The tender offer

condition was not initially satisfied) at prices at or below the purchase price selected by us, will, to the extent feasible, be selected for purchase by random lot. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

As a result of the foregoing priorities applicable to the purchase of shares tendered, it is possible that all of the shares that a stockholder tenders in the Offer may not be purchased even if they are tendered at prices at or below the purchase price selected by us. In addition, if a tender is conditioned upon the purchase of a specified number of shares, it is possible that none of those shares will be purchased even if they are tendered at prices at or below the purchase price selected by us.

Odd Lots. The term “odd lots” means all shares properly tendered prior to the Expiration Time and not properly withdrawn by any person (an “Odd Lot Holder”) who owned beneficially or of record fewer than 100 shares as so certified in the appropriate place on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. To qualify for the priority preference for odd lot shares, an Odd Lot Holder must tender all shares owned by the Odd Lot Holder in accordance with the procedures described in Section 3, at a price at or below the purchase price selected by us. Odd lots will be accepted for payment before any proration of the purchase of other tendered shares. This preference is not available to partial tenders or to beneficial or record holders of an aggregate of 100 or more shares, even if these holders have separate accounts or certificates representing fewer than 100 shares. This preference is also not available to participants who hold fewer than 100 shares in our Retirement Plan with respect to the shares allocated to units they hold in the equity unit funds in their plan accounts. By tendering shares in the Offer, an Odd Lot Holder who holds shares in his or her name and tenders his or her shares directly to the Depositary would not only avoid the payment of brokerage commissions, but also would avoid any applicable odd lot discounts that otherwise might be incurred in a sale of the holder’s shares. Any Odd Lot Holder wishing to tender all of the holder’s shares pursuant to the Offer should complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.

Proration. If proration of tendered shares is required, we will determine the proration factor promptly following the Expiration Time. Subject to adjustment to avoid the purchase of fractional shares and subject to the provisions governing conditional tenders described in Section 6, proration for each stockholder tendering shares, other than Odd Lot Holders and shares conditionally tendered for which the condition was not met, will be based on the ratio of the number of shares properly tendered and not properly withdrawn by the stockholder to the total number of shares properly tendered and not properly withdrawn by all stockholders, other than Odd Lot Holders and shares conditionally tendered for which the condition was not met, at prices at or below the purchase price selected by us. Because of the difficulty in determining the number of shares properly tendered and not properly withdrawn, and because of the odd lot procedure described above and the conditional tender procedure described in Section 6, we expect that we will not be able to announce the final proration factor or commence payment for any shares purchased pursuant to the Offer until approximately five Business Days after the Expiration Time. The preliminary results of any proration will be announced by press release promptly after the Expiration Time. After the Expiration Time, stockholders may obtain preliminary proration information from the Information Agent and also may be able to obtain the information from their brokers.

As described in Section 14, the number of shares that we will purchase from a stockholder under the Offer may affect the U.S. federal income tax consequences to that stockholder and therefore may be relevant to a stockholder’s decision whether or not to tender shares and whether to condition any tender upon our purchase of a stated number of shares held by such stockholder.

The tender offer

This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of shares and will be furnished to brokers, dealers, commercial banks and trust companies whose names, or the names of whose nominees, appear on our stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of shares.

If you are a participant in our Retirement Plan, you should be aware that the plan is prohibited from selling shares to us for a price less than the prevailing market price. Accordingly, if you elect to tender under this plan, and the last-sale-eligible-trade price of our Common Stock on NASDAQ on July 27, 2007 is more than the price at which you tendered shares, your shares will not be eligible for the Offer, and your tender of plan shares automatically will be withdrawn.

PURPOSE OF THE TENDER OFFER; CERTAIN EFFECTS OF THE TENDER OFFER; OTHER PLANS.

Purpose of the Tender Offer. The purchase of shares pursuant to the Offer is part of the plan we announced on July 2, 2007 to return up to approximately $3.5 billion of capital to our stockholders. As a part of our plan, our Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007.

Assuming that 84 million shares are purchased in the Offer and 18 million shares are purchased pursuant to the Stock Purchase Agreement, all at the maximum purchase price of $22.50 per share, the aggregate purchase price will be approximately $1.9 billion and $400 million, respectively. We anticipate that we will pay for the shares tendered in the Offer, the shares purchased pursuant to the Stock Purchase Agreement and all expenses applicable to the Offer from the approximately $2.7 billion of after-tax proceeds realized from the sale of our subsidiary, U.S. Trust Corporation, which closed on July 1, 2007.

Our management and Board of Directors have reviewed alternatives for using the after-tax proceeds realized from the sale of U.S. Trust Corporation and our other available liquid financial resources. They have also evaluated our capital structure, financial position, dividend policy, operations, strategic plan, the anticipated cost and availability of financing, the recent market prices of our Common Stock and our expectations for the future and believe that the Offer, the purchase of shares pursuant to the Stock Purchase Agreement and the special cash dividend are prudent uses of our financial resources and efficient means to return capital to our stockholders. After we complete the Offer, purchase the shares pursuant to the Stock Purchase Agreement and pay the special cash dividend, we anticipate that our cash balances, anticipated cash flows from operations and borrowing capacity will allow us to service our debt, fund future dividends and the capital requirements for improving our operations, and provide appropriate financial flexibility for general corporate purposes. However, actual experience may differ significantly from our expectations. See “Forward Looking Statements.”

We believe that the Offer described herein represents a mechanism to provide all of our stockholders with the opportunity to tender all or a portion of their shares and thereby receive a return of some or all of their investment. If we complete the Offer, stockholders who do not participate in the Offer will automatically increase their relative percentage ownership interests in us and in our future operations. The Offer also provides stockholders with an opportunity to obtain liquidity with respect to all or a portion of their shares, without potential disruption to the share price and without the usual transaction costs associated with market sales, although stockholders who own shares through a bank, broker, dealer, trust company or other nominee that tenders shares on the stockholder’s behalf may be charged a fee. Stockholders who hold their shares in a brokerage account at Charles Schwab will not be charged

The tender offer

any fees in connection with the tender of such shares. In addition, Odd Lot Holders who hold shares registered in their names and tender their shares directly to the Depositary and whose shares are purchased pursuant to the Offer will avoid any odd lot discounts that might apply to sales of the shares.

The Offer and special dividend are consistent with our history of returning capital to our stockholders. We regularly pay Common Stock cash dividends to our stockholders. Since our initial dividend in 1989, we have paid 73 consecutive quarterly dividends. On July 2, 2007, our Board of Directors declared our regular quarterly cash dividend of $0.05 per share, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. We also have a history of repurchasing shares from time to time as a means of increasing stockholder value. During the period from January 1, 2005 to June 29, 2007, we repurchased 142 million shares of our Common Stock for approximately $2.188 billion. As of June 29, 2007, we had the remaining authority to repurchase $446 million of shares of our Common Stock. Our stock repurchase program does not include any shares purchased pursuant to the Offer.

Depending on the results of, and prospects for, our business, prevailing economic and market conditions and the market price of our shares, we currently intend to continue our stock repurchase program subsequent to the termination of the Offer, regardless of the number of shares we purchase in the Offer. These purchases may be made at management’s discretion, and on the same terms or on terms and prices that are more or less favorable to stockholders than the Offer. In accordance with Rule 13e-4(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), no such purchases will be made by us during the pendency of the Offer and for at least 10 Business Days following termination of the Offer.

Our Board of Directors has approved the Offer. However, neither we nor any member of our Board of Directors, the Dealer Manager, the Information Agent or the Depositary makes any recommendation to any stockholder as to whether to tender or refrain from tendering any shares or as to the price or prices at which stockholders may choose to tender their shares. We have not authorized any person to make any such recommendation. Stockholders should carefully evaluate all information in the Offer. Stockholders are also urged to consult their tax advisors to determine the consequences to them of participating or not participating in the Offer, and should make their own decisions as to these matters. In doing so, you should read and evaluate carefully the information in this Offer to Purchase and in the related Letter of Transmittal.

Certain Effects of the Offer. Stockholders who do not tender their shares pursuant to the Offer and stockholders who otherwise retain an equity interest in the Company as a result of a partial tender of shares or proration may realize a proportionate increase in their relative equity interest in the Company and will bear the attendant risks associated with owning our Common Stock, including risks resulting from our purchase of shares in the Offer. We can give no assurance, however, that we will not issue additional shares or equity interests in the future. For example, we expect to issue additional shares and equity interests pursuant to our equity incentive plans, long-term incentive plan and employee stock purchase plans. Stockholders may be able to sell non-tendered shares in the future on NASDAQ or otherwise, at a net price significantly higher or lower than the purchase price paid by us in the Offer. We can give no assurance, however, as to the price at which a stockholder may be able to sell his or her shares in the future, which may be higher or lower than the purchase price paid by us in the Offer.

Shares we acquire pursuant to the Offer will be held as treasury stock and will be available for us to issue without further stockholder action (except as required by applicable law or the rules of NASDAQ) for purposes including, without limitation, acquisitions, raising additional capital and the satisfaction of obligations under existing or future employee benefit or compensation programs or stock plans or compensation programs for directors.

The tender offer

The Offer may reduce our “public float” (the number of shares owned by non-affiliate stockholders and available for trading in the securities markets), and may reduce the number of our stockholders.

On July 2, 2007, we entered into the Stock Purchase Agreement with Charles R. Schwab and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and we have agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that we are currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding Common Stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be the same price per share as is determined and paid in the Offer and will be paid on the 11th Business Day following the Expiration Time. In addition, because Mr. Schwab and the other stockholders who are parties to the agreement will not be participating in the Offer, they will not be making bids in the Offer that could influence the determination of the purchase price for the shares. See Section 11.

None of our other directors and executive officers intends to tender any of their shares in the Offer, except for Stephen T. McLin who intends to tender 25,000 shares. As a result, the Offer will increase the proportional holdings of our directors and executive officers, other than Mr. Schwab and Mr. McLin. Our directors and executive officers may, in compliance with applicable law, sell their shares in open market transactions at prices that may or may not be more favorable than the purchase price to be paid to our stockholders in the Offer.

Other Plans. Except as otherwise disclosed in this Offer to Purchase or the documents incorporated by reference herein, we currently have no plans, proposals or negotiations underway that relate to or would result in:

any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries;

any purchase, sale or transfer of an amount of our assets or any of our subsidiaries’ assets which is material to us and our subsidiaries, taken as a whole;

any material change in our present dividend rate or policy, our indebtedness or capitalization, our corporate structure or our business;

any change in our present Board of Directors or management or any plans or proposals to change the number or the term of directors or to fill any vacancies on the Board of Directors (except that we may fill vacancies arising on the Board of Directors in the future) or to change any material term of the employment contract of any executive officer;

any class of our equity securities ceasing to be authorized to be quoted on NASDAQ;

any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Exchange Act;

the suspension of our obligation to file reports under the Exchange Act;

the acquisition or disposition by any person of our securities; or

any changes in our charter or by-laws that could impede the acquisition of control of us.

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Notwithstanding the foregoing, as part of our long-term corporate goal of increasing stockholder value, we regularly consider alternatives to enhance stockholder value, including open market repurchases of our shares, strategic acquisitions and business combinations, and we intend to continue to consider alternatives to enhance stockholder value. We have a history of repurchasing shares from time to time as a means of increasing stockholder value. We currently intend to continue our current stock repurchase program subsequent to the consummation of the Offer. We also regularly pay Common Stock cash dividends to our stockholders. Other alternatives to enhance stockholder value that we have considered or may consider in the future include strategic acquisitions and business combinations. Except as otherwise disclosed in this Offer to Purchase, as of the date hereof, no agreements, understandings or decisions in respect of any such alternatives have been reached and there can be no assurance that we will decide to undertake any such alternatives.

PROCEDURES FOR TENDERING SHARES

Proper Tender of Shares. For a stockholder to make a proper tender of shares under the Offer, the Depositary must receive, at one of its addresses set forth on the back cover page of this Offer to Purchase and prior to the Expiration Time:

a Letter of Transmittal, properly completed and duly executed, together with any required signature guarantees, or, in the case of a book-entry transfer, an “agent’s message” (see “—Book-Entry Transfer” below), and any other required documents; and

either certificates representing the tendered shares or, in the case of tendered shares delivered in accordance with the procedures for book-entry transfer described below, a book-entry confirmation of that delivery (see “—Book-Entry Transfer” below).

In the alternative, the tendering stockholder must, before the Expiration Time, comply with the guaranteed delivery procedures described below.

If a broker, dealer, commercial bank, trust company or other nominee holds your shares, it is likely they have an earlier deadline for you to instruct them to accept the Offer on your behalf. We urge you to contact your broker, dealer, commercial bank, trust company or other nominee to find out the applicable deadline.

Our Retirement Plan is prohibited by law from selling shares to us for a price that is less than the prevailing market price of our Common Stock. Accordingly, if you elect to tender shares allocated to your account under this plan, and the last-sale-eligible-trade price of our Common Stock on NASDAQ on July 27, 2007 is more than the price at which you tendered shares allocated to units you hold in the equity unit funds, your shares will not be eligible for the Offer, and your tender of plan shares automatically will be withdrawn.

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The proceeds received by our Retirement Plan from any tender of plan shares will remain in the Retirement Plan and may be withdrawn only in accordance with the terms of the plan.

All documents furnished to stockholders generally in connection with the Offer will be made available to our Retirement Plan participants. Our Retirement Plan participants are urged to read the separate “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in the SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” and related materials carefully. This letter and Section 14 of this Offer to Purchase contain additional information regarding the tax rules that will apply with respect to shares tendered from a participant’s plan account.

Holders of vested stock options may exercise their stock options in accordance with the terms of the equity plan under which they were granted and may tender all or some of the shares received upon such exercise in accordance with the Offer. Holders of vested stock options must exercise them sufficiently in advance of the Expiration Time to receive the shares in order to participate in the Offer. An exercise of a stock option cannot be revoked even if shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer for any reason.

The proper tender of shares by you pursuant to one of the procedures described in this Section 3 will constitute a binding agreement between you and us on the terms of, and subject to the conditions to, the Offer.

In accordance with Instruction 5 of the Letter of Transmittal, each stockholder desiring to tender shares pursuant to the Offer must either (i) check the box in the section of the Letter of Transmittal captioned “Shares Tendered at Price Determined in the Tender Offer”, in which case you will be deemed to have tendered your shares at the minimum price of $19.50 per share (YOU SHOULD UNDERSTAND THAT THIS ELECTION MAY LOWER THE PURCHASE PRICE AND COULD RESULT IN THE TENDERED SHARES BEING PURCHASED AT THE MINIMUM PRICE OF $19.50 PER SHARE) or (ii) check one of the boxes corresponding to the price at which shares are being tendered in the section of the Letter of Transmittal captioned “Shares Tendered at Price Determined by Stockholder” A tender of shares will be proper only if one of these boxes is checked on the Letter of Transmittal.

If tendering stockholders wish to maximize the chance that their shares will be purchased in the Offer, they should check the box in the Letter of Transmittal captioned “Shares Tendered at Price Determined in the Tender Offer.” For purposes of determining the purchase price, those shares that are tendered by stockholders agreeing to accept the purchase price determined in the Offer will be deemed to be tendered at the minimum price of $19.50 per share. You should understand that this election may lower the purchase price paid for all purchased shares in the Offer and could result in your shares being purchased at the minimum price of $19.50 per share. A portion of the price range for the Offer is below the closing price of $20.52 per share on June 29, 2007, the last full day of trading before we announced our intention to make the Offer. See Section 8 for recent market prices for the shares.

If tendering stockholders wish to indicate a specific price (in $0.10 increments) at which their shares are being tendered, they must check the applicable price box in the section of the Letter of Transmittal captioned “Shares Tendered at Price Determined by Stockholder.” Tendering stockholders should be aware that this election will mean that none of their shares will be purchased if the price selected by the stockholder is higher than the purchase price we eventually select after the Expiration Time.

A stockholder who wishes to tender shares at more than one price must complete a separate Letter of Transmittal for each price at which shares are being tendered. The same shares cannot be tendered

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(unless previously properly withdrawn in accordance with the terms of the Offer) at more than one price. Stockholders who tendered at multiple prices pursuant to multiple Letters of Transmittal must comply with the procedures described in Section 4 to withdraw their multiple tenders.

Stockholders may tender shares subject to the condition that all, or a specified minimum number of shares, be purchased. Any stockholder desiring to make such a conditional tender should so indicate in the box entitled “Conditional Tender” in the Letter of Transmittal. It is the tendering stockholder’s responsibility to determine the minimum number of shares to be purchased. Stockholders should consult their own financial and tax advisors with respect to the effect of proration of the Offer and the advisability of making a conditional tender. See Section 6.

We urge stockholders who hold shares through brokers or banks to consult their brokers or banks to determine whether transaction costs are applicable if they tender shares through their brokers or banks and not directly to the Depositary. Stockholders who hold their shares in a brokerage account at Charles Schwab will not be charged any fees in connection with the tender of such shares. Odd Lot Holders who tender all their shares must also complete the section captioned “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, to qualify for the preferential treatment available to Odd Lot Holders as described in Section 1.

Book-Entry Transfer. For purposes of the Offer, the Depositary will establish an account for the shares at The Depository Trust Company (the “Book-Entry Transfer Facility”) within two Business Days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility’s system may make book-entry delivery of shares by causing the Book-Entry Transfer Facility to transfer those shares into the Depositary’s account in accordance with the Book-Entry Transfer Facility’s procedures for that transfer. Although delivery of shares may be effected through book-entry transfer into the Depositary’s account at the Book-Entry Transfer Facility, the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, or an agent’s message, and any other required documents must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase prior to the Expiration Time, or the tendering stockholder must comply with the guaranteed delivery procedures described below.

The confirmation of a book-entry transfer of shares into the Depositary’s account at the Book-Entry Transfer Facility as described above is referred to herein as a “book-entry confirmation.” Delivery of documents to the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility’s procedures will not constitute delivery to the Depositary.

The term “agent’s message” means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation, stating that the Book-Entry Transfer Facility has received an express acknowledgment from the participant tendering shares through the Book-Entry Transfer Facility that the participant has received and agrees to be bound by the terms of the Letter of Transmittal and that we may enforce that agreement against that participant.

Method of Delivery. The method of delivery of shares, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the election and risk of the tendering stockholder. Shares will be deemed delivered only when actually received by the Depositary (including, in the case of a book-entry transfer, by book-entry confirmation). If you plan to make delivery by mail, we recommend that you deliver by registered mail with return receipt requested and obtain proper insurance. In all cases, sufficient time should be allowed to ensure timely delivery.

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Signature Guarantees. No signature guarantee will be required on a Letter of Transmittal for shares tendered thereby if:

the “Registered Holder(s)” (as defined below) of those shares signs the Letter of Transmittal and has not completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” in the Letter of Transmittal; or

those shares are tendered for the account of an “Eligible Institution” (as defined below).

For purposes hereof, a “Registered Holder” of tendered shares will include any participant in the Book-Entry Transfer Facility’s system whose name appears on a security position listing as the owner of those shares, and an “Eligible Institution” is a “financial institution”, which term includes most commercial banks, savings and loan associations and brokerage houses, that is a participant in any of the following: (i) the Securities Transfer Agents Medallion Program; (ii) the New York Stock Exchange, Inc. Medallion Signature Program; or (iii) the Stock Exchange Medallion Program.

Except as described above, all signatures on any Letter of Transmittal for shares tendered thereby must be guaranteed by an Eligible Institution. See Instructions 1, 8 and 11 to the Letter of Transmittal. If the certificates for shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for shares not tendered or not accepted for payment are to be returned to a person other than the Registered Holder of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the Registered Holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution. See Instructions 1, 8 and 11 to the Letter of Transmittal.

Guaranteed Delivery. If you wish to tender shares under the Offer and your certificates for shares are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Time, you can still tender your shares if all the following conditions are met:

your tender is made by or through an Eligible Institution;

a properly completed and duly executed Notice of Guaranteed Delivery in the form we have provided is received by the Depositary, as provided below, prior to the Expiration Time; and

the Depositary receives, at one of its addresses set forth on the back cover page of this Offer to Purchase and within the period of three trading days after the date of execution of that Notice of Guaranteed Delivery, either: (i) the certificates representing the shares being tendered, in the proper form for transfer, together with a Letter of Transmittal, which has been properly completed and duly executed and includes all signature guarantees required thereon and all other required documents; or (ii) confirmation of book-entry transfer of the shares into the Depositary’s account at the Book-Entry Transfer Facility, together with either a Letter of Transmittal, which has been properly completed and duly executed and includes all signature guarantees required thereon or an agent’s message, and all other required documents.

For these purposes, a “trading day” is any day on which NASDAQ is open for business.

A Notice of Guaranteed Delivery must be delivered to the Depositary by hand, overnight courier, facsimile transmission or mail before the Expiration Time and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery.

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Return of Unpurchased Shares. The Depositary will return certificates for unpurchased shares approximately five Business Days after the expiration or termination of the Offer or the proper withdrawal of the shares, as applicable, or, in the case of shares tendered by book-entry transfer at the Book-Entry Transfer Facility, the Depositary will credit the shares to the appropriate account maintained by the tendering stockholder at the Book-Entry Transfer Facility, in each case without expense to the stockholder.

Tendering Stockholder’s Representation and Warranty; Our Acceptance Constitutes an Agreement. It is a violation of Rule 14e-4 under the Exchange Act for a person acting alone or in concert with others, directly or indirectly, to tender shares for such person’s own account unless at the time of tender and at the Expiration Time such person has a “net long position” in (i) the shares that is equal to or greater than the amount tendered and will deliver or cause to be delivered such shares for the purpose of tendering to us within the period specified in the Offer or (ii) other securities immediately convertible into, exercisable for or exchangeable into shares (“Equivalent Securities”) that is equal to or greater than the amount tendered and, upon the acceptance of such tender, will acquire such shares by conversion, exchange or exercise of such Equivalent Securities to the extent required by the terms of the Offer and will deliver or cause to be delivered such shares so acquired for the purpose of tendering to us within the period specified in the Offer. Rule 14e-4 also provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. A tender of shares made pursuant to any method of delivery described herein will constitute the tendering stockholder’s acceptance of the terms and conditions of the Offer, as well as the tendering stockholder’s representation and warranty to us that (i) such stockholder has a “net long position” in shares or Equivalent Securities at least equal to the shares being tendered within the meaning of Rule 14e-4, and (ii) such tender of shares complies with Rule 14e-4. Our acceptance for payment of shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and us upon the terms and subject to the conditions of the Offer.

Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the number of shares to be accepted, the price to be paid for shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of shares will be determined by us, in our sole discretion, and our determination will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. We reserve the absolute right prior to the Expiration Time to reject any or all tenders we determine not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right, subject to applicable law, to waive any conditions of the Offer with respect to all stockholders or any defect or irregularity in any tender with respect to any particular shares or any particular stockholder whether or not we waive similar defects or irregularities in the case of other stockholders. No tender of shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of us, the Dealer Manager, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Our interpretation of the terms of and conditions to the Offer, including the Letter of Transmittal and the instructions thereto, will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. By tendering shares to us, you agree to accept all decisions we make concerning these matters and waive any right you might otherwise have to challenge those decisions.

U.S. Federal Backup Withholding Tax. Under the U.S. federal backup withholding tax rules, 28% of the gross proceeds payable to a stockholder or other payee in the Offer must be withheld and remitted to the Internal Revenue Service (“IRS”) unless the stockholder or other payee provides such person’s taxpayer identification number (employer identification number or social security number) to the Depositary or

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other payor and certifies under penalties of perjury that this number is correct or otherwise establishes an exemption. If the Depositary or other payor is not provided with the correct taxpayer identification number or another adequate basis for exemption, the stockholder may be subject to certain penalties imposed by the IRS. Therefore, each tendering stockholder that is a U.S. Holder (as defined in Section 14) should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal in order to provide the information and certification necessary to avoid the backup withholding tax, unless the stockholder otherwise establishes to the satisfaction of the Depositary that the stockholder is not subject to backup withholding. If backup withholding results in the overpayment of taxes, a refund may be obtained from the IRS in accordance with its refund procedures.

Certain stockholders (including, among others, all corporations and certain Non-U.S. Holders (as defined in Section 14)) are not subject to these backup withholding rules. In order for a Non-U.S. Holder to qualify as an exempt recipient, that stockholder must submit an IRS Form W-8BEN (or a suitable substitute form), signed under penalties of perjury, attesting to that stockholder’s non-U.S. status. The applicable form can be obtained from the Depositary at the address and telephone number set forth in the back cover page of this Offer to Purchase. See Instructions 14 and 15 of the Letter of Transmittal.

Stockholders are urged to consult their own tax advisors regarding possible qualifications for exemption from backup withholding tax and the procedure for obtaining any applicable exemption.

For a discussion of U.S. federal income tax consequences to tendering stockholders, see Section 14.

Withholding For Non-U.S. Holders. A payment made to a Non-U.S. Holder pursuant to the Offer will be subject to U.S. federal income and withholding tax unless the Non-U.S. Holder clearly meets the “complete termination”, “substantially disproportionate”, or “not essentially equivalent to a dividend” test described in Section 14. If a Non-U.S. Holder tenders shares held in a U.S. brokerage account or otherwise through a U.S. broker, dealer, commercial bank, trust company, or other nominee, such U.S. broker or other nominee will generally be the withholding agent for the payment made to the Non-U.S. Holder pursuant to the Offer. Such U.S. broker or other nominee may withhold or require certifications in this regard. Non-U.S. Holders tendering shares held through a U.S. broker or other nominee should consult such U.S. broker or other nominee and their own tax advisors to determine the particular withholding procedures that will apply to them. Notwithstanding the foregoing, even if a Non-U.S. Holder tenders shares held in its own name as a holder of record and delivers to the Depositary a properly completed IRS Form W-8BEN (or other applicable form) before any payment is made, the Depositary has advised us that it will withhold 30% of the gross proceeds unless the Depositary determines that a reduced rate under an applicable income tax treaty or exemption from withholding is applicable, regardless of whether the payment is properly exempt from U.S. federal gross income tax under the “complete termination”, “substantially disproportionate”, or “not essentially equivalent to a dividend” test. To obtain a reduced rate of withholding under a tax treaty, a Non-U.S. Holder must deliver to the Depositary a properly completed IRS Form W-8BEN (or other applicable form) before the payment is made. To obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a Non-U.S. Holder must deliver to the Depositary a properly completed IRS Form W-8ECI (or successor form). A Non-U.S. Holder that qualifies for an exemption from withholding on these grounds generally will be required to file a U.S. federal income tax return and generally will be subject to U.S. federal income tax on income derived from the sale of shares pursuant to the Offer in the manner and to the extent described in Section 14 as if it were a U.S. Holder, and in the case of a foreign corporation, an additional branch profits tax may be imposed at a rate of 30% (or a lower rate specified in an applicable income tax treaty), with respect to such income.

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A Non-U.S. Holder may be eligible to obtain a refund of all or a portion of any tax withheld if the Non-U.S. Holder (i) meets the “complete termination”, “substantially disproportionate” or “not essentially equivalent to a dividend” tests described in Section 14 that would characterize the exchange as a sale (as opposed to a dividend) with respect to which the Non-U.S. Holder is not subject to U.S. federal income tax or (ii) is otherwise able to establish that no tax or a reduced amount of tax is due.

Non-U.S. Holders are urged to consult their tax advisors regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the applicable refund procedures.

Tax Withholding for Participants in our Retirement Plan. No withholding tax will be applied with respect to shares tendered through our Retirement Plan. Please refer to the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” for a discussion of the tax rules applicable to plan participants.

Lost Certificates. If the share certificates which a Registered Holder wants to surrender have been lost, destroyed or stolen, the stockholder should promptly notify the Depositary’s Lost Securities Department at (800) 468-9716. The Depositary will instruct the stockholder as to the steps that must be taken in order to replace the certificates.

WITHDRAWAL RIGHTS

Except as otherwise provided in this Section 4, tenders of shares are irrevocable. You may withdraw shares that you have previously tendered under the Offer according to the procedures described below at any time prior to the Expiration Time for all shares except those subject to our Retirement Plan, as more particularly described below. You may also withdraw your previously tendered shares at any time after 12:00 midnight, Eastern Time, on Tuesday, August 28, 2007, unless such shares have been accepted for payment as provided in the Offer.

For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must:

be received in a timely manner by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase or for eligible institutions only, at the Depositary’s facsimile number at (651) 450-2452 (to confirm receipt contact the Depositary at (800) 468-9716); and

specify the name of the person having tendered the shares to be withdrawn, the number of shares to be withdrawn and the name of the Registered Holder of the shares to be withdrawn, if different from the name of the person who tendered the shares.

If certificates for shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the release of those certificates, the tendering stockholder must also submit the serial numbers shown on those certificates to the Depositary and, unless an Eligible Institution has tendered those shares, an Eligible Institution must guarantee the signatures on the notice of withdrawal.

If a stockholder has used more than one Letter of Transmittal or has otherwise tendered shares in more than one group of shares, the stockholder may withdraw shares using either separate notices of withdrawal or a combined notice of withdrawal, so long as the information specified above is included.

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If shares have been delivered in accordance with the procedures for book-entry transfer described in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn shares and otherwise comply with the Book-Entry Transfer Facility’s procedures.

Withdrawals of tendered shares may not be rescinded, and any shares properly withdrawn will thereafter be deemed not properly tendered for purposes of the Offer. Withdrawn shares may be retendered at any time prior to the Expiration Time by again following one of the procedures described in Section 3.

We will decide, in our sole discretion, all questions as to the form and validity, including time of receipt, of notices of withdrawal, and each such decision will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. We also reserve the absolute right to waive any defect or irregularity in the withdrawal of shares by any stockholder, whether or not we waive similar defects or irregularities in the case of any other stockholder. None of us, the Dealer Manager, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

If we extend the Offer, are delayed in our purchase of shares, or are unable to purchase shares under the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, subject to applicable law, retain tendered shares on our behalf, and such shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in this Section 4. Our reservation of the right to delay payment for shares which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the consideration offered or return the shares tendered promptly after termination or withdrawal of a tender offer.

Participants in our Retirement Plan who wish to withdraw their shares must follow the instructions found in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in the SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” sent separately to each eligible participant in the plan. For administrative reasons, the deadline for our Retirement Plan participants to withdraw their shares allocated to units they hold in the equity unit funds under the plan will be 4:00 pm, Eastern Time, on Friday, July 27, 2007, unless we extend the Offer, in which case participants may withdraw the tender of shares until 4:00 pm, Eastern Time, on the day which is two Business Days prior to the expiration of the Offer, as extended.

PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE

Upon the terms and subject to the conditions of the Offer, promptly following the Expiration Time, we will determine a single per share purchase price we will pay for the shares properly tendered and not properly withdrawn before the Expiration Time, taking into account the number of shares tendered and the prices specified by tendering stockholders, and subject to certain limitations and legal requirements, accept for payment and pay the purchase price for (and thereby purchase) up to 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law) properly tendered at prices at or below the purchase price selected by us, and not properly withdrawn before the Expiration Time.

For purposes of the Offer, we will be deemed to have accepted for payment (and therefore purchased), subject to the “odd lot” priority, proration and conditional tender provisions of this Offer, shares that are properly tendered at prices at or below the purchase price selected by us and not properly withdrawn only when, as and if we give oral or written notice to the Depositary of our acceptance of the shares for payment pursuant to the Offer.

The tender offer

Upon the terms and subject to the conditions of the Offer, we will accept for payment and pay the per share purchase price determined in the Offer for all of the shares accepted for payment pursuant to the Offer approximately five Business Days after the Expiration Time, subject to possible delay in the event of proration, but only after timely receipt by the Depositary of:

certificates for shares, or a timely book-entry confirmation of the deposit of shares into the Depositary’s account at the Book-Entry Transfer Facility,

a properly completed and duly executed Letter of Transmittal, or, in the case of a book-entry transfer, an agent’s message, and

any other required documents.

We will pay for shares purchased pursuant to the Offer by depositing the aggregate purchase price for the shares with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from us and transmitting payment to the tendering stockholders.

In the event of proration, we will determine the proration factor and pay for those tendered shares accepted for payment promptly after the Expiration Time. However, we expect that we will not be able to announce the final results of any proration or commence payment for any shares purchased pursuant to the Offer until approximately five Business Days after the Expiration Time. Certificates for all shares tendered and not purchased, including shares tendered at prices in excess of the purchase price selected by us and shares not purchased due to proration or conditional tender will be returned or, in the case of shares tendered by book-entry transfer, will be credited to the account maintained with the Book-Entry Transfer Facility by the participant who delivered the shares, to the tendering stockholder at our expense approximately five Business Days after the Expiration Time or termination of the Offer.

If you are a participant in our Retirement Plan, you should be aware that the plan is prohibited from selling shares to us for a price less than the prevailing market price of our Common Stock. Accordingly, if you elect to tender the shares allocated to units you hold in the equity unit funds under this plan, and the last-sale-eligible-trade price of our Common Stock on NASDAQ on July 27, 2007 is more than the price at which you tendered shares allocated to your account, your shares will not be eligible for the Offer, and your tender of plan shares automatically will be withdrawn.

Under no circumstances will we pay interest on the purchase price, including but not limited to, by reason of any delay in making payment. In addition, if certain events occur, we may not be obligated to purchase any shares pursuant to the Offer. See Section 7.

We will pay all stock transfer taxes, if any, payable on the transfer to us of shares purchased pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted by the Offer) if unpurchased shares are to be registered in the name of, any person other than the Registered Holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the Registered Holder or the other person), payable on account of the transfer to the person will be deducted from the purchase price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption from payment of the stock transfer taxes, is submitted. See Instruction 9 of the Letter of Transmittal.

Any tendering stockholder or other payee who fails to complete fully, sign and return to the Depositary (or other payor) the Substitute Form W-9 included with the Letter of Transmittal or, in the case of a

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Non-U.S. Holder (as defined in Section 14), an IRS Form W-8BEN (or other applicable IRS Form or suitable substitute forms), may be subject to required U.S. federal backup withholding tax of 28% of the gross proceeds paid to the stockholder or other payee pursuant to the Offer. See Section 3. Also see Section 14 regarding U.S. federal income tax consequences for non-U.S. stockholders.

CONDITIONAL TENDER OF SHARES

Subject to the exception for Odd Lot Holders, in the event of an over-subscription of the Offer, shares properly tendered at prices at or below the purchase price selected by us and not properly withdrawn prior to the Expiration Time will be subject to proration. See Section 1. As discussed in Section 14, the number of shares to be purchased from a particular stockholder may affect the U.S. federal income tax treatment of the purchase to the stockholder and the stockholder’s decision whether to tender. The conditional tender alternative is made available for stockholders seeking to take steps to have shares that are sold pursuant to the Offer treated as a sale or exchange of such shares by the stockholder, rather than a distribution to the stockholder, for U.S. federal income tax purposes. Accordingly, a stockholder may tender shares subject to the condition that a specified minimum number of the stockholder’s shares tendered pursuant to a Letter of Transmittal must be purchased if any such shares so tendered are purchased. Any stockholder desiring to make a conditional tender must so indicate in the box entitled “Conditional Tender” in the Letter of Transmittal, and, if applicable, in the Notice of Guaranteed Delivery. It is the tendering stockholder’s responsibility to calculate the minimum number of shares that must be purchased from the stockholder in order for the stockholder to qualify for sale or exchange (rather than distribution) treatment for U.S. federal income tax purposes. Stockholders are urged to consult their own tax advisors. No assurances can be provided that a conditional tender will achieve the intended U.S. federal income tax result in all cases. Notwithstanding the general discussion contained in this Section 6, conditional tenders are not permissible with respect to the tender of shares under our Retirement Plan.

Any tendering stockholder wishing to make a conditional tender must appropriately indicate the minimum number of shares that must be purchased if any such shares are to be purchased. After the Offer expires, if more than 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law) are properly tendered and not properly withdrawn, so that we must prorate our acceptance of and payment for tendered shares, we will calculate a preliminary proration percentage based upon all shares properly tendered, conditionally or unconditionally. If the effect of this preliminary proration would be to reduce the number of shares to be purchased from any stockholder that has made a conditional tender below the minimum number specified, the tender of that stockholder will automatically be regarded as withdrawn (except as provided in the next paragraph). All shares tendered by a stockholder subject to a conditional tender and regarded as withdrawn as a result of proration will be returned at our expense approximately five Business Days after the Expiration Time.

After giving effect to these withdrawals, we will accept the remaining shares properly tendered, conditionally or unconditionally, and not properly withdrawn, on a pro rata basis, if necessary. If conditional tenders would otherwise be regarded as withdrawn and would cause the total number of shares to be purchased to fall below 84 million (or such greater number of shares as we may elect to purchase, subject to applicable law) then, to the extent feasible, we will select enough of the conditional tenders that would otherwise have been withdrawn to permit us to purchase 84 million shares (or such greater number of shares as we may elect to purchase, subject to applicable law). In selecting among the conditional tenders, we will select by random lot, treating all tenders by a particular stockholder as a single lot, and will limit our purchase in each case to the designated minimum number of shares to be purchased. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

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CONDITIONS OF THE TENDER OFFER

Notwithstanding any other provision of the Offer (but subject to the provisions of Section 15), we will not be required to accept for payment, purchase or pay for any shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or the purchase of and the payment for shares tendered, subject to Rule 13e-4(f) under the Exchange Act (which requires that the issuer making the tender offer either pay the consideration offered or return tendered securities promptly after the termination or withdrawal of the tender offer), if at any time on or after July 3, 2007 and prior to the Expiration Time (whether any shares have theretofore been accepted for payment) any of the following events has occurred (or shall have been reasonably determined by us to have occurred) that, in our reasonable judgment and regardless of the circumstances giving rise to the event or events (other than conditions that are proximately caused by our action or failure to act), make it inadvisable to proceed with the Offer or with acceptance for payment:

there has occurred:

any general suspension of, or general limitation on prices for, or trading in, securities on any national securities exchange in the United States or in the over-the-counter market;

a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation (whether or not mandatory) by any governmental agency or authority on, or any other event that, in our reasonable judgment, could reasonably be expected to adversely affect, the extension of credit by banks or other financial institutions in the United States;

a material change in United States or any other currency exchange rates or a suspension of or limitation on the markets therefor;

the commencement or escalation of a war, armed hostilities or other similar national or international calamity directly or indirectly involving the United States;

a decrease of more than 10% in the market price for the shares of our Common Stock or in the Dow Jones Industrial Average, the NASDAQ Composite Index or the S&P 500 Composite Index since the commencement of the Offer;

any change in the general political, market, economic or financial conditions, domestically or internationally, that is reasonably likely to materially and adversely affect our business or the trading in our shares;

in the case of any of the foregoing existing at the time of the commencement of the Offer, in our reasonable judgment, a material acceleration or worsening thereof;

any change (or condition, event or development involving a prospective change) has occurred in the business, properties, assets, liabilities, capitalization, stockholders’ equity, financial condition, operations, licenses, or results of operations of us or any of our subsidiaries or affiliates, taken as a whole, that, in our reasonable judgment, has or is reasonably likely to have a material adverse effect on us or any of our subsidiaries or affiliates, taken as a whole, or has or is reasonably likely to have a material adverse effect on the value of the shares; or

legislation amending the Internal Revenue Code of 1986, as amended (the “Code”), has been passed by either the U.S. House of Representatives or the Senate or becomes pending before the U.S. House of Representatives or the Senate or any committee thereof, the effect of which would be to change the U.S. federal income tax consequences of the consummation of the Offer in any manner that would adversely affect us or any of our affiliates;

there has been threatened in writing, instituted, or pending any action, proceeding, application or counterclaim by or before any court or governmental, administrative or regulatory agency or authority, domestic or foreign, or any other person or tribunal, domestic or foreign, which:

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challenges or seeks to challenge, restrain, prohibit or delay the making of the Offer, the acquisition by us of the shares in the Offer, or any other matter relating to the Offer, or seeks to obtain any material damages or otherwise relating to the Offer;

seeks to make the purchase of, or payment for, some or all of the shares pursuant to the Offer illegal or results in a delay in our ability to accept for payment or pay for some or all of the shares; or

in our reasonable judgment, could materially and adversely affect the business, financial condition, income, operations of us or any of our subsidiaries or affiliates, taken as a whole, or otherwise materially impair our ability to purchase some or all of the shares pursuant to the Offer;

any action has been taken or any statute, rule, regulation, judgment, decree, injunction or order (preliminary, permanent or otherwise) has been proposed, sought, enacted, entered, promulgated, enforced or deemed to be applicable to the Offer or us or any of our subsidiaries or affiliates by any court, government or governmental agency or other regulatory or administrative authority, domestic or foreign, which, in our reasonable judgment:

indicates that any approval or other action of any such court, agency or authority may be required in connection with the Offer or the purchase of shares thereunder;

could reasonably be expected to prohibit, restrict or delay consummation of the Offer; or

otherwise could reasonably be expected to materially and adversely affect the business, properties, assets, liabilities, capitalization, stockholders’ equity, financial condition, operations, licenses or results of operations of us or any of our subsidiaries or affiliates, taken as a whole;

a tender or exchange offer for any or all of our outstanding shares (other than this Offer), or any merger, acquisition, business combination or other similar transaction with or involving us or any subsidiary, has been proposed, announced or made by any person or entity or has been publicly disclosed;

we learn that:

any entity, “group” (as that term is used in Section 13(d)(3) of the Exchange Act) or person has acquired or proposes to acquire beneficial ownership of more than 5% of our outstanding shares, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than as and to the extent disclosed in a Schedule 13D or Schedule 13G filed with the SEC on or before July 3, 2007); or

any entity, “group” (as that term is used in Section 13(d)(3) of the Exchange Act) or person who has filed a Schedule 13D or Schedule 13G with the SEC on or before July 3, 2007 has acquired or proposes to acquire, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise, beneficial ownership of an additional 1% or more of our outstanding shares;

any person, entity or group has filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire us or any of our shares, or has made a public announcement reflecting an intent to acquire us or any of our subsidiaries or any of our or their respective assets or securities;

any approval, permit, authorization, favorable review or consent of any governmental entity required to be obtained in connection with the Offer, and of which we have been notified after the date of the Offer, has not been obtained on terms satisfactory to us in our reasonable discretion; or

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we determine that the consummation of the Offer and the purchase of the shares are reasonably likely to:

cause the shares of our Common Stock to be held of record by less than 300 persons; or

cause the shares to be delisted from NASDAQ or to be eligible for deregistration under the Exchange Act.

The conditions referred to above are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to any of these conditions (other than conditions that are proximately caused by our action or failure to act), and may be waived by us, in whole or in part, at any time and from time to time in our reasonable discretion before the Expiration Time. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time prior to the Expiration Time. Any determination by us concerning the events described above will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters.

PRICE RANGE OF THE SHARES

The shares are traded on the NASDAQ Global Select Market under the symbol “SCHW.” The following table sets forth, for each of the periods indicated, the high and low sales prices per share as reported by NASDAQ based on published financial sources.


	High		Low
Year Ended December 31, 2005:
First Quarter	$	11.66	$	10.01
Second Quarter	$	11.83	$	9.87
Third Quarter	$	14.50	$	11.33
Fourth Quarter	$	16.00	$	13.04
Year Ended December 31, 2006:
First Quarter	$	18.13	$	14.43
Second Quarter	$	18.45	$	14.55
Third Quarter	$	17.91	$	14.26
Fourth Quarter	$	19.36	$	16.64
Year Ending December 31, 2007:
First Quarter	$	20.86	$	17.52
Second Quarter	$	23.02	$	18.22

On June 29, 2007, the last full trading day before we announced our intention to make the Offer, the last reported sales price of the shares reported by NASDAQ was $20.52 per share. We urge stockholders to obtain current market quotations for the shares before deciding whether and at which price or prices to tender their shares.

SOURCE AND AMOUNT OF FUNDS

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10.

CERTAIN INFORMATION CONCERNING THE COMPANY

General Corporate Overview. We were incorporated in 1986 and are headquartered in San Francisco, California. We engage, through our subsidiaries (primarily located in San Francisco except as indicated below), in securities brokerage, banking, and related financial services. At May 31, 2007, the Company had approximately $1.4 trillion in client assets, 6.9 million active brokerage accounts, 1.1 million retirement plan participants, and 165,000 banking accounts. Our subsidiaries include: Charles Schwab & Co., Inc. (Schwab), which was incorporated in 1971, is a securities broker-dealer with more than 300 domestic branch offices in 45 states and a branch in each of the Commonwealth of Puerto Rico and London, U.K., and serves clients in Hong Kong through one of our other subsidiaries; Charles Schwab Bank, N.A., which commenced operations in 2003, is a retail bank located in Reno, Nevada; Charles Schwab Investment Management, Inc. is the investment advisor for Schwab’s proprietary mutual funds, which are referred to as the Schwab Funds^®; CyberTrader, Inc., which was acquired in 2000, is located in Austin, Texas, and is an electronic trading technology and brokerage firm providing services to highly active, online traders; and The Charles Schwab Trust Company, which serves as trustee or custodian for employee benefit plans, primarily 401(k) plans.

On July 1, 2007, we sold to Bank of America Corporation all of the outstanding stock of our wealth management subsidiary, U.S. Trust Corporation, for approximately $3.3 billion in cash. The after-tax cash proceeds from this sale were approximately $2.7 billion.

On March 31, 2007, we completed our acquisition of The 401(k) Companies, Inc., which offers defined contribution plan services, for $115 million in cash.

As of March 31, 2007, we had full-time, part-time and temporary employees, and persons employed on a contract basis that represented the equivalent of approximately 13,000 full-time employees.

Capital Restructuring. On July 2, 2007, we announced our plan to return up to approximately $3.5 billion of capital to our stockholders. In addition to the approval of the purchase of approximately $1.9 billion of shares in the Offer and $400 million of shares under the Stock Purchase Agreement, our Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. We also announced plans for a public offering of up to $750 million of securities, expected to consist of a combination of medium-term notes and enhanced trust preferred securities on the terms described below.

Medium-Term Notes. The medium-term notes will be issued under an Indenture between us and The Bank of New York, as Trustee. The maturity date of the medium-term notes will be determined prior to their issuance. They will be senior unsecured obligations and will rank senior in right of payment to all of our existing and future indebtedness that is subordinated to the senior unsecured notes and will rank pari passu in right of payment with all of our other existing and future senior unsecured indebtedness, subject to statutory exceptions in the event of liquidation upon insolvency. The medium-term notes will bear interest at a rate to be determined prior to the issuance of the medium-term notes based on the market rates for comparable securities of similar maturities at that time.

Enhanced Trust Preferred Securities. The enhanced trust preferred securities are expected to be issued in an underwritten public offering by Schwab Capital Trust I, a Delaware statutory business trust. All of the common securities of the trust will be owned by us. The proceeds from the sale of the enhanced trust preferred securities will be used by the trust to purchase a series of junior subordinated notes issued by us, which will be the only assets of the trust. Cash payments received by the trust on the junior subordinated notes will be distributed to the holders of the preferred and common securities of

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the trust and will be the sole source of payment on the enhanced trust preferred securities. We will guarantee the payment of distributions and other amounts payable on the enhanced trust preferred securities, but only to the extent that the trust has funds available to make those payments. The junior subordinated notes will be unsecured and will be subordinated to all debt other than trade debt and debt that by its terms ranks pari passu with or junior to the junior subordinated notes. The maturity and interest rate of the junior subordinated notes will be determined prior to issuance.

This is not an offer to sell or a solicitation of an offer to buy the enhanced trust preferred securities or the medium-term notes. The proposed offer and sale of the enhanced trust preferred securities and the medium-term notes may be made only pursuant to supplements to prospectuses contained in shelf registration statements declared effective by the SEC. The foregoing summary of the proposed terms of the enhanced trust preferred securities and the medium-term notes does not contain all information about them that may be important to you and is subject to the preparation, negotiation and completion of definitive documents. Moreover, the timing and amount of the Offering may be affected by market conditions, including the demand for new corporate debt issues. The specific terms of the enhanced trust preferred securities and the medium-term notes will be described in one or more prospectus supplements or pricing supplements to be filed with the SEC. Copies of the registration statements may be obtained from us or from the SEC free of charge in the same manner as described below.

Selected Unaudited Historical and Pro Forma Financial Information. Set forth below is condensed consolidated historical financial information of the Company and its subsidiaries. The historical financial information for the year ended December 31, 2006 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (the “ Company’s 2006 Annual Report”), and other information contained in the Company’s 2006 Annual Report. The historical financial information as of and for the three months ended March 31, 2007 was derived from the unaudited consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2007 (the “Company’s First Quarter 2007 Quarterly Report”). The selected historical financial data and the pro forma financial information should be read in conjunction with our historical financial statements included in the Company’s 2006 Annual Report and the Company’s First Quarter 2007 Quarterly Report, which have been filed with the SEC (copies of which may be obtained as set forth below under “Where You Can Find More Information”) and are incorporated by reference into this Offer to Purchase.

The unaudited pro forma balance sheet assumes the following as of March 31, 2007: (i) the purchase of 84 million shares in the Offer and 18 million shares under the Stock Purchase Agreement at the maximum purchase price of $22.50 per share for an aggregate purchase price of approximately $2.3 billion, (ii) the payment of a special one-time cash dividend of approximately $1.2 billion, (iii) the approximately $2.7 billion of after-tax proceeds and related after-tax gain of approximately $1.2 billion realized from the sale of U.S. Trust Corporation, (iv) the issuance of up to $750 million of securities, consisting of a combination of medium-term notes and enhanced trust preferred securities, and (v) related fees and income tax liabilities.

The unaudited pro forma statement of income reflects the assumed increase in interest expense and related income tax benefit assuming the issuance of $750 million of medium-term notes and enhanced trust preferred securities and the reduction in outstanding shares as a result of the purchase of 84 million shares in the Offer and 18 million shares from Mr. Schwab under the Stock Purchase Agreement as if the transactions had occurred on January 1, 2006.

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The unaudited pro forma financial information is intended for information purposes only and does not purport to represent what our results of operations and financial condition would have been had the transactions described above actually occurred as of the dates indicated, nor does it project our results of operations for any future period or our financial condition at any future date. Such information has been prepared based upon currently available information and assumptions we believe are reasonable. Such currently available information and assumptions may prove to be inaccurate over time.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited)
	Year Ended December 31, 2006									Three-months Ended March 31, 2007
	As Reported			Adjustments			Pro forma			As Reported			Adjustments			Pro forma

Net Revenues
Asset management and administration fees	$	1,945					$	1,945		$	534					$	534
Interest revenue		2,113						2,113			551						551
Interest expense		(679	)	(52	)	a		(731	)		(167	)	(13	)	a		(180)

Net interest revenue		1,434		(52	)			1,382			384		(13	)			371
Trading revenue		785						785			202						202
Other		145						145			33						33

Total net revenues		4,309		(52	)			4,257			1,153		(13	)			1,140

Expenses Excluding Interest
Compensation and benefits		1,619						1,619			430						430
Professional services		285						285			74						74
Occupancy and equipment		260						260			68						68
Advertising and market development		189						189			66						66
Communications		180						180			49						49
Depreciation and amortization		157						157			39						39
Other		143						143			36						36

Total expenses excluding interest		2,833						2,833			762						762

Income from continuing operations before taxes on income		1,476		(52	)			1,424			391		(13	)			378
Taxes on income		(585	)	21		b		(564	)		(155	)	5		b		(150)

Income from continuing operations		891		(31	)			860			236		(8	)			228

Weighted-Average Common Shares Outstanding — Basic		1,270		(102	)	c		1,168			1,251		(102	)	c		1,149
Weighted-Average Common Shares Outstanding — Diluted		1,286		(102	)	c		1,184			1,266		(102	)	c		1,164

Earnings Per Share — Basic
Income from continuing operations	$	.70					$	.74		$	.19					$	.20
Earnings Per Share — Diluted
Income from continuing operations	$	.69					$	.73		$	.19					$	.20

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CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) (Unaudited)
	March 31, 2007
	As Reported			Adjustments				Pro forma

Assets
Cash and cash equivalents	$	3,257		$	736		d	$	3,993
Cash and investments segregated and on deposit for federal or other regulatory purposes		10,542							10,542
Securities owned		6,812							6,812
Receivables from brokers, dealers, and clearing organizations		694							694
Receivables from brokerage clients — net		10,800							10,800
Loans to banking clients — net		2,437							2,437
Loans held for sale		44							44
Equipment, office facilities, and property — net		606							606
Goodwill		523							523
Deferred tax assets		377			(205	)	e		172
Other assets		522							522
Assets retained from discontinued operations		747							747
Assets of discontinued operations		9,917			(9,917	)	f		-

Total	$	47,278		$	(9,386	)		$	37,892


Liabilities and Stockholders’ Equity
Deposits from banking clients	$	11,443						$	11,443
Drafts payable		303							303
Payables to brokers, dealers, and clearing organizations		1,745							1,745
Payables to brokerage clients		19,085							19,085
Accrued expenses and other liabilities		1,025		$	583		g		1,608
Long-term debt		387			750		h		1,137
Liabilities of discontinued operations		8,355			(8,355	)	f		-

Total liabilities		42,343			(7,022	)			35,321


Stockholders’ equity:
Preferred stock		-							-
Common stock		14							14
Additional paid-in capital		1,925							1,925
Retained earnings		5,078			(57	)			5,021
Treasury stock — 139 shares as reported and 241 shares pro forma, at cost		(2,053	)		(2,307	)			(4,360)
Accumulated other comprehensive loss		(29	)		0				(29)

Total stockholders’ equity		4,935			(2,364	)	i		2,571

Total	$	47,278		$	(9,386	)		$	37,892

Shares outstanding at end of period		1,253			(102	)			1,151
Book value per share outstanding	$	3.94						$	2.23

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Notes to Consolidated Financial Statements.

(a)

Reflects the adjustment to interest expense for the issuance of $750 million in medium-term notes and enhanced trust preferred securities at the assumed annual rate of 6.91%. A 1/8 % variance in interest rates would have an approximate $1 million effect on annual interest expense.

(b)

Reflects the adjustment for income taxes for interest expense described in (a) above.

(c)

Assumes the purchase of 84 million shares in the Offer and 18 million shares under the Stock Purchase Agreement at the maximum purchase price of $22.50 per share.

(d)

Reflects approximately (i) $3.3 billion in cash proceeds from the sale of U.S. Trust Corporation, (ii) the presumed settlement of intercompany receivable balances of approximately $200 million and payment of dividends by U.S. Trust Corporation of $40 million as of the balance sheet date, (iii) $750 million in proceeds from the issuance of medium-term notes and enhanced trust preferred securities, (iv) approximately $2.3 billion in cash used to fund the Offer and the purchase of shares under the Stock Purchase Agreement, and (v) approximately $1.2 billion in cash used for the special dividend of $1.00 per share.

(e)

Reflects the reclassification of deferred tax assets related to the sale of U.S. Trust Corporation.

(f)

Reflects the sale of U.S. Trust Corporation.

(g)

Reflects the anticipated transaction costs and the net income tax liability related to the sale of U.S. Trust Corporation.

(h)

Reflects an increase in long-term borrowings of $750 million.

(i)

Reflects a net reduction in stockholders’ equity consisting of (i) approximately $2.3 billion for the purchase of 84 million shares in the Offer and 18 million shares under the Stock Purchase Agreement and (ii) approximately $1.2 billion for the special cash dividend, partially offset by (iii) the after-tax gain realized from the sale of U.S. Trust Corporation of approximately $1.2 billion.

Where You Can Find More Information. We are subject to the informational filing requirements of the Exchange Act, and, accordingly, are obligated to file reports, statements and other information with the SEC relating to our business, financial condition and other matters. Information, as of particular dates, concerning our directors and officers, their remuneration, options granted to them, the principal holders of our securities and any material interest of these persons in transactions with us is required to be disclosed in proxy statements distributed to our stockholders and filed with the SEC. We also have filed an Issuer Tender Offer Statement on Schedule TO (defined below) with the SEC that includes additional information relating to the Offer.

These reports, statements and other information can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of this material may also be obtained by mail, upon payment of the SEC’s customary charges, from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a website on the Internet at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. These reports, proxy statements and other information concerning us also can be inspected at the offices of the National Association of Securities Dealers, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.

The tender offer

Incorporation by Reference. The rules of the SEC allow us to “incorporate by reference” information into this Offer to Purchase, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The Offer incorporates by reference the documents listed blow, including the financial statements and the notes related thereto contained in those documents that have been previously filed with the SEC. These documents contain important information about us.


SEC Filing (File No. 001-09700)		Period or Date Filed
Annual Report on Form 10-K		Fiscal year ended December 31, 2006, filed February 26, 2007.

Quarterly Report on Form 10-Q		Fiscal quarter ended March 31, 2007, filed May 8, 2007.

Current Reports on Form 8-K		Filed January 17, 2007, January 26, 2007, February 23, 2007, April 10, 2007, April 17, 2007, April 27, 2007 and May 21, 2007.

Definitive Proxy Statement on Schedule 14A		Filed March 30, 2007.

Any statement contained in this Offer to Purchase or in a document incorporated herein by reference into this Offer to Purchase shall be deemed to be modified or superseded to the extent such statement is made in any subsequently filed document which is also filed as an amendment to the Schedule TO. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offer to Purchase.

You can obtain any of the documents incorporated by reference in this Offer to Purchase from us or from the SEC’s website at the address described above. Documents incorporated by reference are available from us without charge, excluding any exhibits to those documents. You may request a copy of these filings at no cost, by writing to: The Charles Schwab Corporation, Attention: Investor Relations, 120 Kearny Street, San Francisco, California 94108, or telephoning us at (415) 636-7000. Please be sure to include your complete name and address in your request. If you request any incorporated documents, we will mail them to you by first class mail, or another equally prompt means, within one Business Day after we receive your request. You can find additional information by visiting our website at www.schwab.com. Information contained on our website is not part of, and is not incorporated into, this Offer.

11.

INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES

Securities Ownership. As of June 15, 2007, there were 1,254,788,807 shares of our Common Stock issued and outstanding. The 84 million shares we are offering to purchase under the Offer represent approximately 7% of the total number of outstanding shares as of June 29, 2007. In addition, the 18 million shares that we will purchase from Charles R. Schwab (and certain other stockholders whose shares Mr. Schwab is deemed to beneficially own) pursuant to the Stock Purchase Agreement following the Expiration Time represent approximately 1% of the total number of outstanding shares as of June 15, 2007.

As of June 15, 2007, our directors and executive officers as a group (19 persons) beneficially owned an aggregate of 239,560,403 shares, representing approximately 19% of the total number of outstanding shares.

The tender offer

The following table sets forth as of June 15, 2007, the aggregate number and percentage of shares of our Common Stock that were beneficially owned by our current directors, current executive officers and each person who beneficially owns 5% or more of our outstanding shares of Common Stock, based on filings with the SEC. Assuming we purchase (i) 18 million shares pursuant to the Stock Purchase Agreement following the Expiration Time (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that we are currently offering to purchase), and (ii) 84 million shares in the Offer and no other director or executive officer, except for Stephen T. McLin, a director, who intends to tender 25,000 shares, tenders any shares in the Offer, the percentage beneficial ownership of each director, executive officer and person who owns 5% or more of our outstanding shares after the Offer will be approximately as set forth in the table below.

Unless otherwise indicated, the address of each person listed is c/o The Charles Schwab Corporation, 120 Kearny Street, San Francisco, California 94108.


	Amount and Nature of Beneficial Ownership Prior to the Offer					After the Offer
Name of Beneficial Owner	Number of Shares Owned⁽¹⁾		Options Exercisable Within 60 Days⁽²⁾	Total Beneficial Ownership⁽³⁾	Percentage Owned	Percentage Owned
Directors and Executive Officers
Charles R. Schwab	221,933,588	⁽⁴⁾	5,850,000	227,783,588	18.07	18.11
William F. Aldinger III	12,179		11,250	23,429	*	*
Nancy H. Bechtle	211,482		91,743	303,225	*	*
C. Preston Butcher	1,179,368	⁽⁵⁾	189,956	1,369,324	*	*
Donald G. Fisher	3,945,823	⁽⁶⁾	53,710	3,999,533	*	*
Frank C. Herringer	117,935	⁽⁷⁾	89,180	207,115	*	*
Marjorie Magner	6,679		11,250	17,929	*	*
Stephen T. McLin	140,044	⁽⁸⁾	85,763	225,807	*	*
Paula A. Sneed	31,445		36,056	67,501	*	*
Roger O. Walther	209,310	⁽⁹⁾	85,135	294,445	*	*
Robert N. Wilson	98,641		41,555	140,196	*	*
Walter W. Bettinger II	438,521	⁽¹⁰⁾	949,988	1,388,509	*	*
Benjamin Brigeman	38,664		212,500	251,164	*	*
Carrie E. Dwyer	333,679		1,044,383	1,378,062	*	*
Charles G. Goldman	15,364		439,248	454,612	*	*
Jan Hier-King	112,665		630,593	743,258	*	*
Joseph R. Martinetto	48,747		201,747	250,494	*	*
James D. McCool	77,903		151,348	229,251	*	*
Rebecca Saeger	44,164		388,796	432,960	*	*
All Directors and Executive Officers as a Group (19 Persons)	228,996,201		10,564,201	239,560,402	18.93	19.04

Less than 1%

(1)

This column includes:

•

Shares for which the named person has sole voting and investment power, has shared voting and investment power with his or her spouse, or holds in an account under The Schwab Plan Retirement Savings and Investment Plan, and

•

Restricted stock or shares subject to a vesting schedule, performance conditions, forfeiture risk and other restrictions.

The tender offer

This column excludes restricted stock units held by directors under the Directors Deferred Compensation Plans, which do not have voting rights. The restricted stock units are converted into shares of Common Stock and paid in a lump sum by the end of February in the year following a director’s termination of board service. As of June 15, 2007, there are no restricted stock units under the Directors Deferred Compensation Plans that are convertible within 60 days.

(2)

Shares that can be acquired through stock option exercises through August 14, 2007.

(3)

This column includes the total number of shares beneficially owned, including shares owned and the number of shares underlying stock options exercisable within 60 days of June 15, 2007.

(4)

Includes 7,841,450 shares held by Mr. Schwab’s spouse, 42,853,958 shares held by a limited liability company, and the following shares for which Mr. Schwab disclaims beneficial ownership: 11,411,185 shares held by a nonprofit public benefit corporation established by Mr. Schwab, and 6,000 shares held in a trust for which Mr. Schwab acts as trustee.

(5)

Includes 1,129,111 shares that are pledged as security, and 30,375 shares that are held by Mr. Butcher’s spouse.

(6)

Includes shares held by a nonprofit public benefit corporation for which Mr. Fisher has shared voting and investment power and for which he disclaims beneficial ownership.

(7)

Includes 50,775 shares held by Mr. Herringer’s spouse.

(8)

Includes shares held by a nonprofit public benefit corporation established by Mr. McLin, for which he disclaims beneficial ownership.

(9)

Includes 27,748 shares held by Mr. Walther’s spouse.

(10)

Includes 2,028 shares held by Mr. Bettinger’s spouse.

Our directors and executive officers, other than Mr. Schwab, are entitled to participate in the Offer on the same basis as other stockholders. None of our directors and executive officers intends to tender any of their shares in the Offer, except for Mr. McLin who intends to tender 25,000 shares. As a result, the Offer will increase the proportional holdings of our directors and executive officers, other than Mr. Schwab and Mr. McLin.

In addition, our directors and executive officers may, in compliance with applicable law, sell their shares in open market transactions at prices that may or may not be more favorable than the purchase price to be paid to our stockholders in the Offer.

Securities Transactions. Except as described below, and except for customary and ongoing purchases of shares under our qualified retirement and employee stock purchase plans, based on our records and on information provided to us by our directors, executive officers, affiliates and subsidiaries, neither we nor our directors, executive officers, affiliates or subsidiaries have effected any transactions involving shares of our Common Stock during the 60 days prior to the date hereof:

On June 5, 2007, a family limited partnership over which Mr. Schwab has control, distributed 405,000 shares of our stock to Mr. Schwab’s daughter. The distributed shares represent a portion of the daughter’s pro rata interest in shares of our stock owned by the partnership.

On May 21, 2007, each of our non-employee directors received his or her annual equity grant for serving on our board of directors which consisted of 7,459 stock options and 2,967 shares of restricted stock. The stock options and restricted stock vest over the three-year period following the date of grant, with 25% vesting on each of the first and second anniversaries of the grant date and the remaining 50% on the third anniversary of the grant date. Our non-employee directors are as follows: Mr. Aldinger, Ms. Bechtle, Mr. Butcher, Mr. Fisher, Mr. Herringer, Ms. Magner, Mr. McLin, Ms. Sneed, Mr. Walther and Mr. Wilson. In connection with serving on the board of U.S. Trust Corporation, Mr. Wilson received an additional grant of 1,250 stock options and 712 shares of restricted stock, which have the same vesting schedule.

The tender offer

On May 18, 2007, Joseph Martinetto received a grant of 9,941 shares of restricted stock and 33,342 stock options in connection with his appointment as our Chief Financial Officer. The restricted stock vests over a four-year period following the date of grant, with 25% vesting on each of the second and third anniversaries of the grant date and the remaining 50% on the fourth anniversary of the grant date. The stock options vest 25% on each of the first, second, third and fourth anniversaries of the grant date.

We have repurchased shares of our common stock in accordance with our previously announced share repurchase program, in the following amounts:

on May 15, 2007, Schwab repurchased 750,000 shares of common stock on the open market at a price of $19.7038 per share;

on May 16, 2007, Schwab repurchased 567,100 shares of common stock on the open market at a price of $19.7414 per share;

on June 21, 2007, Schwab repurchased 282,553 shares of common stock on the open market at a price of $20.9167 per share;

on June 22, 2007, Schwab repurchased 750,000 shares of common stock on the open market at a price of $20.8185 per share;

on June 25, 2007, Schwab repurchased 750,000 shares of common stock on the open market at a price of $20.6681 per share;

on June 26, 2007, Schwab repurchased 750,000 shares of common stock on the open market at a price of $20.5842 per share;

on June 27, 2007, Schwab repurchased 720,000 shares of common stock on the open market at a price of $20.3888 per share; and

on June 28, 2007, Schwab repurchased 135,000 shares of common stock on the open market at a price of $20.6252 per share.

Stock Purchase Agreement. On July 2, 2007, we entered into the Stock Purchase Agreement with Charles R. Schwab, our Chairman and Chief Executive Officer and our largest stockholder, and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and we have agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that we are currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding Common Stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be the same price per share as is determined and paid in the Offer and will be paid on the 11th Business Day following the Expiration Time.

The number of shares that we will purchase pursuant to the Stock Purchase Agreement will be equal to the aggregate number of shares purchased in the Offer multiplied by a fraction, the numerator of which is 221,933,588 and the denominator of which is 1,030,521,037 (representing the number of outstanding shares beneficially owned by Mr. Schwab (excluding outstanding options to acquire stock) divided by the number of outstanding shares held of record by all stockholders of the Company other than those shares beneficially owned by Mr. Schwab, each as of June 29, 2007).

The tender offer

In addition, because Mr. Schwab and the other stockholders who are parties to the agreement will not be participating in the Offer, they will not be making bids in the Offer that could influence the determination of the purchase price for the shares. The preceding summary of the Stock Purchase Agreement only highlights certain material information. We encourage you to read the terms of the actual Stock Purchase Agreement in its entirety, which is attached as Exhibit (d)(31) to the Schedule TO filed with the SEC in connection with the Offer.

Equity Incentive Plans. We sponsor The Charles Schwab Corporation 2004 Stock Incentive Plan (the “Stock Plan”). Under the Stock Plan we grant nonqualified stock options, restricted stock awards, restricted stock unit awards and performance stock to our employees (including officers), non-employee directors and consultants. No more than 45 million shares of our Common Stock may be issued under the Stock Plan, provided that this share reserve may be increased by the number of shares available for issuance under our prior stock incentive plans, which were the predecessors to the Stock Plan.

Under the Stock Plan, we primarily grant stock options and restricted stock awards. Stock options are granted for the purchase of our shares of Common Stock at an exercise price not less than market value on the date of grant, and expire within seven or ten years from the date of grant. Stock options generally vest annually over a three- to four-year period from the date of grant. Certain stock options are granted at an exercise price above the market value of Common Stock on the date of grant (i.e., premium-priced options). Restricted stock awards are restricted from transfer or sale until vested and generally vest annually over a four-year period, but some vest based upon our, or one of our subsidiaries, achieving certain financial or other measures.

The Stock Plan is administered by the compensation committee of our Board of Directors. The compensation committee can amend or terminate the Stock Plan at any time; provided, however, that certain amendments may require participant or stockholder approval.

We also sponsor The Charles Schwab Corporation Employee Stock Incentive Plan, The Charles Schwab Corporation 1987 Stock Option Plan, The Charles Schwab 1987 Executive Officer Stock Option Plan, The Charles Schwab Corporation 1992 Stock Incentive Plan and The Charles Schwab Corporation 2001 Stock Incentive Plan. No new grants may be made under these plans.

Long-Term Incentive Plan. Eligible officers may receive LTIP units under our long-term incentive plan. These awards are restricted with respect to transfer or sale and generally vest annually over a three- to four-year performance period.

Employee Stock Purchase Plans. We sponsor an employee stock purchase plan pursuant to which eligible employees may purchase shares of our Common Stock using amounts withheld through payroll deductions. The employees purchase the shares at fair market value as determined on the date of purchase and the plan is not intended to be a tax-qualified plan under Code Section 423.

Effective August 1, 2007, under our new tax-qualified employee stock purchase plan, eligible employees may purchase shares of our Common Stock through payroll deductions. An eligible employee may purchase during an offering period up to the lesser of 1,250 shares of our Common Stock or 10% of the employee’s eligible compensation. The purchase price for each share of stock is 85% of the fair market value of the shares on the last trading day of the offering period. Purchases occur each January 31 and July 31. The first purchase under the plan will be January 31, 2008. The compensation committee of our Board of Directors administers the plan. No more than 50 million shares of our Common Stock may be purchased under the employee stock purchase plan.

The tender offer

Retirement Plan. Our Retirement Plan is intended to be a tax-qualified retirement savings plan. Under our Retirement Plan participating employees may contribute up to 50% of regular earnings on a before-tax basis, up to the limit of $15,500, into their 401(k) plan accounts. In addition, under the Retirement Plan, we can make matching contributions and qualified nonelective contributions and we used to make ESOP contributions. Retirement benefits held in the Retirement Plan accounts may not be withdrawn prior to the employee’s termination of employment, or such earlier time as the employee reaches the age of 59 1/2, subject to certain exceptions set forth in the regulations of the IRS.

Equity Grants to Non-Employee Directors. In addition to an annual cash retainer, each of our non-employee directors is entitled to receive an annual equity grant with an aggregate value of $125,000 under the Stock Plan. These directors receive the equity grant as a combination of 50% stock options and 50% restricted shares. In the event a new non-employee director is elected to our Board of Directors, he or she will receive a pro-rata retainer amount in a combination of cash and equity awards, with 60% in equity awards and 40% in cash. Our non-employee directors are also subject to our stock ownership guidelines. Under our guidelines, each non-employee director should own shares with a fair market value equal to or exceeding $200,000. A new director should reach this target level upon completing five years of service. Once this target level is reached, the director is deemed to meet this target so long as he or she continues to hold an equivalent number of shares as on the date the target level was met. In addition, each non-employee director is expected to hold for at least one year 50% of the net after-tax value of our shares acquired through the exercise of a stock option or the vesting of restricted shares.

Directors’ Deferred Compensation Plan and Directors’ Deferred Compensation Plan II. Pursuant to our directors’ deferred compensation plans, non-employee directors are able to elect to receive annual retainer payments and/or meeting fees in the form of nonqualified stock options or restricted stock units. The nonqualified stock options and restricted stock units are granted under the Stock Plan subject to the terms and conditions of that plan. Restricted stock units granted to non-employee directors pursuant to their deferral election are held in a rabbi trust until they are paid out in shares of our Common Stock. The directors’ deferred compensation plans are administered by the compensation committee of our Board of Directors.

The foregoing description of our equity incentive plans, long-term incentive plan, employee stock purchase plans, Retirement Plan, and directors’ deferred compensation plans only highlights certain material information. We encourage you to read the actual plans carefully and in their entirety.

Registration Rights and Stock Restriction Agreement. We entered into a registration rights and stock restriction agreement with certain of our stockholders on March 31, 1987. Pursuant to this agreement, in the event we decide to register any of our equity securities, either for our own account or for the account of any security holder, stockholders party to the agreement may, subject to certain limitations and exceptions, require us to include in such registration shares of our Common Stock held by such stockholders. We are required to effect three registrations under this agreement for all stockholders as a group. In addition, any transfers of shares of our Common Stock by these stockholders are subject to certain restrictions.

Employment Agreement for Mr. Schwab. We entered into an amended employment agreement with Mr. Schwab effective March 31, 2003. Pursuant to the amended employment agreement, Mr. Schwab is entitled to receive certain cash compensation for his services and to participate in all compensation and fringe benefit programs available to our other executive officers, including our stock-based incentive plans. In addition, the amended employment agreement provides that all of Mr. Schwab’s outstanding and unvested awards under our stock incentive plans will fully vest upon his involuntary termination which is not due to death, disability or cause.

The tender offer

Except as otherwise described or incorporated by reference herein, neither we nor, to the best of our knowledge, any of our directors, executive officers, or controlling persons, is a party to any contract, agreement, arrangement, understanding or relationship with any other person with respect to any of our securities.

12.

EFFECTS OF THE TENDER OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT

The purchase by us of shares under the Offer will reduce the number of shares that might otherwise be traded publicly and is likely to reduce the number of stockholders. However, we believe that there will be a sufficient number of shares outstanding and publicly traded following completion of the Offer to ensure a continued trading market for the shares. Based upon published guidelines of NASDAQ, we do not believe that our purchase of shares under the Offer will cause the remaining outstanding shares to be delisted from NASDAQ. The Offer is conditioned upon there not being any reasonable likelihood, in our reasonable judgment, that the consummation of the Offer and the purchase of shares will cause the shares to be delisted from NASDAQ. See Section 7.

The shares are currently “margin securities” under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit to their customers using such shares as collateral. We believe that, following the purchase of shares under the Offer, the shares will continue to be “margin securities” for purposes of the Federal Reserve Board’s margin rules and regulations.

The shares are registered under the Exchange Act, which requires, among other things, that we furnish certain information to our stockholders and the Commission and comply with the Commission’s proxy rules in connection with meetings of our stockholders. We believe that our purchase of shares under the Offer pursuant to the terms of the Offer will not result in the shares becoming eligible for deregistration under the Exchange Act.

13.

LEGAL MATTERS; REGULATORY APPROVALS

We are not aware of any license or regulatory permit that is material to our business that might be adversely affected by our acquisition of shares as contemplated by the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the acquisition or ownership of shares by us as contemplated by the Offer. Should any such approval or other action be required, we presently contemplate that we will seek that approval or other action if practicable within the time period contemplated by the Offer. We are unable to predict whether we will be required to delay the acceptance for payment of, or payment for, shares tendered under the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial cost or conditions or that the failure to obtain the approval or other action might not result in adverse consequences to our business and financial condition. Our obligations under the Offer to accept for payment and pay for shares are subject to certain conditions. See Section 7.

14.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

General. The following discussion is a summary of the material U.S. federal income tax consequences to stockholders with respect to a sale of shares for cash pursuant to the Offer. The discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury regulations promulgated thereunder (the “Regulations”), administrative pronouncements of the Internal

The tender offer

Revenue Service (“IRS”) and judicial decisions, all in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect, or differing interpretations. The discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular stockholder in light of the stockholder’s particular circumstances or to certain types of stockholders subject to special treatment under the U.S. federal income tax laws, such as financial institutions, tax-exempt organizations, real estate investment trusts, regulated investment companies, U.S. expatriates, insurance companies, dealers in securities or currencies, employee benefit plans, U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar, partnerships or other entities treated as partnerships for U.S. federal income tax purposes (“Partnerships”), stockholders holding the shares as part of a conversion transaction, as part of a hedge or hedging transaction, or as a position in a straddle for U.S. federal income tax purposes, or persons who received their shares through exercise of employee stock options or otherwise as compensation. In addition, the discussion below does not consider the effect of any alternative minimum taxes, state or local or non-U.S. taxes or any U.S. federal tax laws other than those pertaining to income taxation. The discussion assumes that the shares are held as “capital assets” within the meaning of Section 1221 of the Code. We have neither requested nor obtained a written opinion of counsel or a ruling from the IRS with respect to the tax matters discussed below.

As used herein, a “U.S. Holder” means a beneficial owner of shares that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for these purposes) that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if (x) a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) it has a valid election in effect under applicable Regulations to be treated as a U.S. person. As used herein, a “Non-U.S. Holder” means a beneficial owner of shares that is neither a U.S. Holder nor a Partnership. If a Partnership holds shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the Partnership. A Partnership holding shares and partners in such Partnership should consult their tax advisors about the U.S. federal income tax consequences of a sale of shares for cash pursuant to the Offer.

Each stockholder should consult its own tax advisor as to the particular U.S. federal income tax consequences to such stockholder of tendering shares pursuant to the Offer and the applicability and effect of any state, local or non-U.S. tax laws and other tax consequences with respect to the Offer.

Non-Participation in the Tender Offer

Stockholders that do not tender any of their shares pursuant to the Offer will not incur any tax liability as a result of the consummation of the Offer.

U.S. Federal Income Tax Treatment of U.S. Holders That Tender Shares

Characterization of Sale of Shares Pursuant to the Offer. The sale of shares by a stockholder for cash pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes. The U.S. federal income tax consequences to a U.S. Holder may vary depending upon the U.S. Holder’s particular facts and circumstances. Under Section 302 of the Code, the sale of shares by a stockholder for cash pursuant to the Offer will be treated as a “sale or exchange” of shares for U.S. federal income tax purposes, if any one of the three tests (the “Section 302 Tests”) described below is satisfied. If none of the Section 302 Tests is satisfied, the sale of shares will be treated as a cash distribution with respect to the shares held by the tendering U.S. Holder.

The tender offer

Section 302 Tests. In order to satisfy one of the Section 302 Tests, the sale of shares must (i) result in a “complete termination” of the U.S. Holder’s equity interest in us under Section 302(b)(3) of the Code, (ii) constitute a “substantially disproportionate” redemption with respect to the U.S. Holder under Section 302(b)(2) of the Code, or (iii) “not [be] essentially equivalent to a dividend” with respect to the U.S. Holder under Section 302(b)(1) of the Code, each as described below.

Special “constructive ownership” rules apply in determining whether any of the Section 302 Tests has been satisfied. A U.S. Holder must take into account not only the shares that are actually owned by the U.S. Holder, but also shares that are constructively owned by the U.S. Holder within the meaning of Section 318 of the Code. Very generally, a U.S. Holder may constructively own shares actually owned, and in some cases constructively owned, by certain members of the U.S. Holder’s family and certain entities (such as corporations, partnerships, trusts and estates) in which the U.S. Holder has an equity interest, as well as shares the U.S. Holder has the right to acquire by exercise of an option or by conversion or exchange of a security.

Complete Termination. The receipt of cash by a U.S. Holder pursuant to the Offer will be a “complete termination” if either (i) the U.S. Holder actively and constructively owns none of our shares immediately after the shares are sold pursuant to the Offer, or (ii) the U.S. Holder actually owns none of our shares immediately after the sale of shares pursuant to the Offer and, with respect to shares constructively owned by the U.S. Holder immediately after the Offer, the U.S. Holder is eligible to waive, and effectively waives, constructive ownership of all such shares under procedures described in Section 302(c) of the Code.

Substantially Disproportionate. The receipt of cash by a U.S. Holder pursuant to the Offer will be a “substantially disproportionate” redemption if the percentage of our outstanding shares actually and constructively owned by the U.S. Holder immediately following the sale of shares pursuant to the Offer is less than 80% of the percentage of the outstanding shares actually and constructively owned by the U.S. Holder immediately before the sale.

Not Essentially Equivalent to a Dividend. Even if the receipt of cash by a U.S. Holder fails to satisfy the “complete termination” test and the “substantially disproportionate” test, a U.S. Holder may nevertheless satisfy the “not essentially equivalent to a dividend” test if the U.S. Holder’s sale of shares pursuant to the Offer results in a “meaningful reduction” in the U.S. Holder’s interest in us. Whether the receipt of cash by a U.S. Holder upon the sale of shares will “not [be] essentially equivalent to a dividend” will depend upon the U.S. Holder’s particular facts and circumstances. The IRS has indicated in published rulings that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute a “meaningful reduction”, and thus satisfy this test. However, it is not clear to what extent the existence of our ongoing stock repurchase program (which is expected to be active again shortly after consummation of this offering) should be taken into account in determining whether a meaningful reduction has occurred with respect to this particular redemption.

It should be noted that contemporaneous dispositions or acquisitions of shares by a U.S. Holder or related individuals or entities may also be deemed to be part of a single integrated transaction, in which case they will be taken into account in determining whether the Section 302 Tests have been satisfied. Each U.S. Holder should also be aware that, because proration may occur in the Offer, even if all the shares actually and constructively owned by a stockholder are tendered pursuant to the Offer, fewer than all of these shares may be purchased by us. Thus, proration may affect whether the surrender of shares by a stockholder pursuant to the Offer will meet any of the Section 302 Tests. (See Section 6 for information regarding an option to make a conditional tender of a minimum number of shares.)

The tender offer

U.S. Holders are urged to consult their own tax advisors regarding the application of the three Section 302 Tests to their particular circumstances, including the effect of the constructive ownership rules on their sale of shares pursuant to the Offer, whether to make a conditional tender of a minimum number of shares and the appropriate calculation thereof, and the potential effect of our ongoing stock repurchase program on whether a meaningful reduction has occurred under the “not essentially equivalent to a dividend” test.

Sale or Exchange Treatment. If any of the above three Section 302 Tests is satisfied, and the sale of the shares is therefore treated as a “sale or exchange” for U.S. federal income tax purposes, the tendering U.S. Holder will recognize gain or loss equal to the difference between the amount of cash received by the U.S. Holder for, and such U.S. Holder’s adjusted tax basis in, the shares sold pursuant to the Offer. Generally, a U.S. Holder’s adjusted tax basis in the shares will equal the amount the U.S. Holder paid to acquire the shares in a taxable transaction. Any gain or loss will be capital gain or loss, and generally will be long-term capital gain or loss if the U.S. Holder held the shares for more than one year prior to their sale. Certain U.S. Holders (including individuals) are eligible for reduced rates of U.S. federal income tax on long-term capital gain (maximum rate of 15%). A U.S. Holder’s ability to deduct capital losses is subject to limitations under the Code.

A U.S. Holder must calculate gain or loss separately for each block of shares (generally, shares acquired at the same cost in a single transaction) that we purchase from the U.S. Holder pursuant to the Offer. A U.S. Holder may be able to designate, generally through its broker, which blocks of shares it wishes to tender under the Offer if less than all of its shares are tendered under the Offer, and the order in which different blocks will be purchased by us in the event of proration under the Offer. U.S. Holders should consult their own tax advisors concerning the mechanics and desirability of such a designation with respect to their particular situation.

Distribution Treatment. If none of the Section 302 Tests is satisfied, the tendering U.S. Holder will be treated as having received a cash distribution by us with respect to the U.S. Holder’s shares in an amount equal to the cash received by such U.S. Holder pursuant to the Offer. The distribution would be treated as a dividend to the extent of the U.S. Holder’s pro rata share of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such a dividend would be taxed in its entirety without a reduction for the U.S. Holder’s adjusted tax basis in the shares that were surrendered and the adjusted tax basis of the surrendered shares would be added to the adjusted tax basis of the U.S. Holder’s remaining shares. Provided that minimum holding period requirements are met, non-corporate U.S. Holders (including individuals) generally will be subject to U.S. federal income taxation at a maximum rate of 15% on the amount of the distribution that is treated as a dividend. The amount of any distribution in excess of the U.S. Holder’s share of our current or accumulated earnings and profits would be treated as a return of the U.S. Holder’s adjusted tax basis in the surrendered shares (with a corresponding reduction in such U.S. Holder’s adjusted tax basis in those shares until reduced to zero). If the distribution exceeds both the U.S. Holder’s share of earnings and profits and the U.S. Holder’s basis in the surrendered shares, the excess will be treated as gain from the sale or exchange of the shares.

If a sale of shares by a corporate U.S. Holder is treated as a dividend, the corporate U.S. Holder may be eligible for a dividends received deduction (subject to applicable exceptions and limitations). If a dividends received deduction is allowed, the corporate U.S. Holder will be subject to basis reduction with respect to its remaining shares (and capital gain to the extent, if any, that the deduction exceeds basis) under the “extraordinary dividend” provisions of Section 1059 of the Code. Corporate U.S. Holders should consult their own tax advisors regarding (i) whether a dividend-received deduction will be

The tender offer

available to them, and (ii) the application of Section 1059 of the Code to the ownership and disposition of their shares.

Based on our estimates, we expect to have current earnings and profits at the time of the repurchase in excess of the total cash being distributed pursuant to the Offer. However, the determination of whether a corporation has current or accumulated earnings or profits is complex and the legal standards to be applied are subject to uncertainties and ambiguities. Additionally, whether a corporation has current earnings and profits for these purposes can be determined only at the end of the taxable year. Accordingly, the extent to which a U.S. Holder will be treated as receiving a dividend if the repurchase of its shares pursuant to the Offer is not entitled to sale or exchange treatment under Section 302 of the Code is not entirely clear.

U.S. Federal Income Tax Treatment of Non-U.S. Holders That Tender Shares

Sale or Exchange Treatment. Gain realized by a Non-U.S. Holder on a sale of shares for cash pursuant to the Offer generally will not be subject to U.S. federal income tax if the sale is treated as a “sale or exchange” pursuant to the Section 302 Tests described above under “U.S. Federal Income Tax Treatment of U.S. Holders That Tender Shares” and (i) such gain is not effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States (or, if an income tax treaty applies, the gain is generally not attributable to a U.S. permanent establishment maintained by such Non-U.S. Holder), and (ii) in the case of gain realized by a Non-U.S. Holder that is an individual, such Non-U.S. Holder is present in the United States for less than 183 days in the taxable year of the sale. But see “Withholding”, below. Additionally, if the shares were to constitute a U.S. real property interest and the Non-U.S. Holder held, actually or constructively, at any time during the five-year period preceding the date of sale, more than 5% of our shares, then the gain would be subject to U.S. federal income tax. Our shares would constitute a U.S. real property interest with respect to a Non-U.S. Holder if we were a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of (i) the period during which the Non-U.S. Holder held shares or (ii) the five-year period ending on the date the Non-U.S. Holder sells shares pursuant to the Offer. We believe that we are not and have not been a United States real property holding corporation at any time during the last five years.

Distribution Treatment. If the Non-U.S. Holder does not satisfy any of the Section 302 Tests discussed above under “U.S. Federal Income Tax Treatment of U.S. Holders That Tender Shares”, the full amount received by the Non-U.S. Holder with respect to the sale of shares pursuant to the Offer will be treated as a cash distribution to the Non-U.S. Holder with respect to the Non-U.S. Holder’s shares. The treatment for U.S. federal income tax purposes of such distribution as a dividend, tax-free return of capital or as capital gain from the sale of shares will be determined in the manner described above under “U.S. Federal Income Tax Treatment of U.S. Holders That Tender Shares.” The dividend portion generally will be subject to withholding tax at a 30% rate (or lower applicable treaty rate).

Withholding. If a Non-U.S. Holder tenders shares held in a U.S. brokerage account or otherwise through a U.S. broker, dealer, commercial bank, trust company, or other nominee, such U.S. broker or other nominee will generally be the withholding agent for the payment made to the Non-U.S. Holder pursuant to the Offer. Such U.S. broker or other nominee may withhold or require certifications in this regard. Non-U.S. Holders tendering shares held through a U.S. broker or other nominee should consult such U.S. broker or other nominee and their own tax advisors to determine the particular withholding procedures that will apply to them. Notwithstanding the foregoing, even if a Non-U.S. Holder tenders shares held in its own name as a holder of record and delivers to the Depositary a properly completed IRS Form

The tender offer

W-8BEN (or other applicable form) before any payment is made, the Depositary has advised us that it will withhold 30% of the gross proceeds unless the Depositary determines that a reduced rate under an applicable income tax treaty or exemption from withholding is applicable, regardless of whether the payment is properly exempt from U.S. federal gross income tax under any of the Section 302 Tests (“complete termination”, “substantially disproportionate” or “not essentially equivalent to a dividend”). To obtain a reduced rate of withholding under a tax treaty, a Non-U.S. Holder must deliver to the Depositary a properly completed IRS Form W-8BEN (or other applicable form) before the payment is made. To obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a Non-U.S. Holder must deliver to the Depositary a properly completed IRS Form W-8ECI (or successor form). A Non-U.S. Holder that qualifies for an exemption from withholding on these grounds generally will be required to file a U.S. federal income tax return and generally will be subject to U.S. federal income tax on income derived from the sale of shares pursuant to the Offer as if it were a U.S. Holder, and in the case of a foreign corporation, an additional branch profits tax may be imposed at a rate of 30% (or a lower rate specified in an applicable income tax treaty) with respect to such income. See Section 3 with respect to the application of U.S. federal income tax withholding to payments made to Non-U.S. Holders pursuant to the Offer.

A Non-U.S. Holder may be eligible to obtain a refund of all or a portion of any tax withheld if the Non-U.S. Holder (i) meets any of the three Section 302 Tests described above under “U.S. Federal Income Tax Treatment of U.S. Holders That Tender Shares”, or (ii) is otherwise able to establish that no tax or reduced amount of tax is due.

Non-U.S. Holders are urged to consult their own tax advisors regarding the application of U.S. federal withholding tax to the sale of shares pursuant to the Offer, including the eligibility for withholding tax reductions or exemptions and refund procedures.

Tax Considerations for Participants in our Retirement Plan

Special tax rules will apply with respect to shares tendered through our Retirement Plan. Please refer to the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund” for a discussion of the tax rules applicable to shares allocated pursuant to our Retirement Plan.

Tax Considerations for Holders of Vested Stock Options

Holders of vested stock options should consult their own tax advisors as to the special tax rules that may be applicable upon the exercise of any such options and the tender of any shares acquired through such option exercise pursuant to the Offer.

Backup Withholding

See Section 3 with respect to the application of the U.S. federal backup withholding tax.

The tender offer

15.

EXTENSION OF THE TENDER OFFER; TERMINATION; AMENDMENT

We expressly reserve the right, in our sole discretion, at any time and from time to time, and regardless of whether or not any of the events specified in Section 7 shall have occurred or be deemed by us to have occurred, to extend the period of time during which the Offer is open and delay acceptance for payment of, and payment for, any shares by giving oral or written notice of such extension to the Depositary and making a public announcement of such extension. During any such extension, all shares previously tendered and not properly withdrawn will remain subject to the Offer and to the rights of a tendering stockholder to withdraw such stockholder’s shares.

We also expressly reserve the right, in our sole discretion, not to accept for payment and not to pay for any shares not previously accepted for payment or paid for, and subject to applicable law, to postpone payment for shares or terminate the Offer upon the occurrence of any of the events specified in Section 7 by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement of such termination or postponement. Our reservation of the right to delay payment for shares which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we pay the consideration offered or return the shares tendered promptly after termination or withdrawal of a tender offer.

Subject to compliance with applicable law, we further reserve the right, in our sole discretion, and regardless of whether any of the events described in Section 7 shall have occurred or shall be deemed by us to have occurred, to amend the Offer in any respect, including, without limitation, by decreasing or increasing the consideration offered in the Offer to holders of shares or by decreasing or increasing the number of shares being sought in the Offer. Amendments to the Offer may be made at any time and from time to time effected by public announcement, such announcement, in the case of an extension, to be issued no later than 9:00 am, Eastern Time, on the next Business Day after the last previously scheduled or announced Expiration Time. Any public announcement made under the Offer will be disseminated promptly to stockholders in a manner reasonably designed to inform stockholders of such change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law, we shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release through PR Newswire or another comparable service. In addition, we would file such press release as an exhibit to the Schedule TO.

If we materially change the terms of the Offer or the information concerning the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) under the Exchange Act. These rules and certain related releases and interpretations of the Commission provide that the minimum period during which a tender offer must remain open following material changes in the terms of the Offer or information concerning the Offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information; however, in no event will the Offer remain open for fewer than five Business Days following such a material change in the terms of, or information concerning, the Offer. If we (i) make any change to the price range at which we are offering to purchase shares in the Offer, decrease the number of shares being sought in the Offer, or increase the number of shares being sought in the Offer by more than 2% of our outstanding shares and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth Business Day from, and including, the date on which such notice of an increase or decrease is first published, sent or given to security holders in the manner specified in this Section 15, the Offer will be extended until the expiration of such period of ten Business Days.

The tender offer

16.

FEES AND EXPENSES

We have retained UBS Securities LLC to act as Dealer Manager in connection with the Offer and to provide financial advisory services in connection with the Offer. The Dealer Manager will receive reasonable and customary compensation for its services. We have also agreed to reimburse the Dealer Manager for reasonable out-of-pocket expenses incurred by it in connection with the Offer, including reasonable fees and expenses of counsel, and to indemnify the Dealer Manager against certain liabilities in connection with the Offer, including liabilities under federal securities laws. UBS Securities LLC has rendered various investment banking and other services to us in the past and may render such services in the future, for which it has received and may in the future receive customary compensation from us. In the ordinary course of business, including in its trading and brokerage activities, UBS Securities LLC and its affiliates may hold positions, both long and short, for their own accounts or those of their customers, in our securities and may tender shares of our Common Stock in the Offer for its own account.

We have retained D.F. King & Co., Inc. to act as Information Agent and Wells Fargo Bank, N.A. to act as Depositary in connection with the Offer. The Information Agent may contact holders of shares by mail, facsimile and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary will each receive reasonable and customary compensation for their respective services, will be reimbursed by us for reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws.

We will not pay any fees or commissions to brokers, dealers or other persons (other than fees to the Dealer Manager and the Information Agent as described above) for soliciting tenders of shares pursuant to the Offer. We will, however, upon request, reimburse brokers, dealers and commercial banks for customary mailing and handling expenses incurred by them in forwarding the Offer and related materials to the beneficial owners of shares held by them as a nominee or in a fiduciary capacity. Stockholders holding shares through brokers or banks are urged to consult their brokers or banks to determine whether transaction costs may apply if stockholders tender shares through their brokers or banks and not directly to the Depositary. Stockholders who hold their shares in a brokerage account at Charles Schwab will not be charged any fees in connection with the tender of such shares. No broker, dealer, commercial bank or trust company has been authorized to act as our agent or the agent of the Dealer Manager, the Information Agent or the Depositary for purposes of the Offer. We will pay or cause to be paid all stock transfer taxes, if any, on our purchase of shares, except as otherwise provided in Instruction 9 in the Letter of Transmittal.

The tender offer

17.

MISCELLANEOUS

We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the Offer or the acceptance of shares pursuant thereto is not in compliance with applicable law, we will make a good faith effort to comply with the applicable law. If, after such good faith effort, we cannot comply with the applicable law, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the holders of shares in such jurisdiction. In any jurisdiction where the securities or “blue sky” or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on our behalf by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction.

Pursuant to Rule 13e-4(c)(2) under the Exchange Act, we have filed with the Commission an Issuer Tender Offer Statement on Schedule TO, which contains additional information with respect to the Offer (the “Schedule TO”). The Schedule TO, including the exhibits and any amendments and supplements thereto, may be examined, and copies may be obtained, at the same places and in the same manner as described in Section 10 with respect to information concerning us.

You should only rely on the information contained in this document or to which we have referred you. We have not authorized any person to make any recommendation to you on our behalf as to whether you should tender or refrain from tendering your shares in the Offer. We have not authorized any person to give any information or to make any representation in connection with the Offer other than those contained in this document or in the related Letter of Transmittal. If given or made, any recommendation or any such information or representation must not be relied upon as having been authorized by us, the Dealer Manager, the Information Agent or the Depositary.

The Charles Schwab Corporation

July 3, 2007

THE CHARLES SCHWAB CORPORATION

July 3, 2007

The Letter of Transmittal, certificates for shares and any other required documents should be sent or delivered by each stockholder of the Company or his or her bank, broker, dealer, trust company or other nominee to the Depositary as follows:

The Depositary for the Offer is:

Wells Fargo Bank, N.A.


By Mail:		By Hand or Overnight Courier:

Wells Fargo Bank, N.A. Shareowner Services Voluntary Corporate Actions P.O. Box 64854 St. Paul, Minnesota 55164-0854		Wells Fargo Bank, N.A. Shareowner Services Voluntary Corporate Actions 161 North Concord Exchange South St. Paul, Minnesota 55075

DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.

Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below. You may also contact your bank, broker, dealer, trust company or other nominee for assistance concerning the Offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street

New York, New York 10005

Stockholders Call Toll-Free: (800) 659-6590

Banks and Brokers Call Collect: (212) 269-5550

The Dealer Manager for the Offer is:

UBS Investment Bank

299 Park Avenue

New York, New York 10171

Toll-Free: (877) 827-4180

Collect: (212) 821-4180

EX-99.(A)(1)(B) 3 dex99a1b.htm FORM OF LETTER OF TRANSMITTAL Form of Letter of Transmittal

Exhibit (a)(1)(B)

LETTER OF TRANSMITTAL

To Tender Shares of Common Stock

THE CHARLES SCHWAB CORPORATION

Pursuant to its Offer to Purchase

Dated July 3, 2007

CUSIP No. 808513-10-5

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:

WELLS FARGO BANK, N.A.


By Mail:		By Hand or Overnight Courier:

Wells Fargo Bank, N.A.		Wells Fargo Bank, N.A.
Shareowner Services		Shareowner Services
Voluntary Corporate Actions		Voluntary Corporate Actions
P.O. Box 64854		161 North Concord Exchange
St. Paul, Minnesota 55164-0854		South St. Paul, Minnesota 55075

Delivery of this Letter of Transmittal and all other documents to an address other than as set forth above will not constitute proper delivery to the depositary. Deliveries to The Charles Schwab Corporation, the dealer manager or the information agent will not be forwarded to the depositary and therefore will not constitute proper delivery. For this Letter of Transmittal to be properly delivered, it must be received by the depositary at one of the above addresses before the Offer expires. You must sign this Letter of Transmittal in the appropriate space provided below, with signature guarantee if required, and are encouraged to return a completed Substitute Form W-9, or another appropriate IRS Form, with this Letter of Transmittal.

The Offer (as defined below) is not being made to (nor will tender of shares be accepted from or on behalf of) holders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction.

Please be sure to read this Letter of Transmittal and the accompanying instructions carefully before you complete this Letter of Transmittal.


DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S))	CERTIFICATES TENDERED (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
	CERTIFICATE NUMBER(S)(1)	TOTAL NUMBER OF SHARES REPRESENTED BY CERTIFICATE(S)(1)	NUMBER OF SHARES TENDERED(2)





	TOTAL SHARES TENDERED

(1)	Need not be completed if shares are tendered by book-entry transfer.

(2)	If you wish to tender fewer than all shares represented by any certificate listed above, please indicate in this column the number of shares you wish to tender. Otherwise, all shares represented by such certificate will be deemed to have been tendered. See Instruction 4.

List above the certificate numbers and number of shares to which this Letter of Transmittal relates. If the space provided above is inadequate, list the certificate numbers tendered on a separately executed and signed list and attach the list to this Letter of Transmittal. The names and addresses of the holders should be printed exactly as they appear on the certificates representing the shares tendered hereby. The shares that the undersigned wishes to tender should be indicated in the appropriate boxes.

Indicate below the order (by certificate number) in which shares are to be purchased in the event of proration (attach additional signed list if necessary). If you do not designate an order, if less than all shares tendered are purchased due to proration, shares will be selected for purchase by the depositary. See Instruction 10.


1st:		2nd:		3rd:		4th:		5th:

This Letter of Transmittal is to be used only if (a) certificates for shares are to be forwarded herewith, or (b) a tender of shares is being made concurrently by book-entry transfer to the account maintained by the depositary at The Depository Trust Company (the “Book-Entry Transfer Facility”) in accordance with Section 3 of the Offer to Purchase. See Instruction 2.

If you wish to tender shares in the Offer, but you cannot deliver the certificates for the shares and all other required documents to the depositary by the Expiration Time (as defined in the Offer to Purchase), or cannot comply with the procedures for book-entry transfer on a timely basis, then you may tender your shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.

Your attention is directed in particular to the following:

1. If you want to retain your shares, you do not need to take any action.

2. If you want to participate in the Offer and wish to maximize the chance of having the Company accept for payment all of the shares you are tendering hereby, you should check the box in the section entitled “Shares Tendered at Price Determined in the Tender Offer” in the section captioned “Price (in Dollars) Per Share at Which Shares are Being Tendered” below and complete the other portions of this Letter of Transmittal as appropriate. If you agree to accept the purchase price determined by the Company in the Offer, your shares will be deemed to be tendered at the minimum price. You should understand that this election may lower the purchase price and could result in the tendered shares being purchased at the minimum price of $19.50 per share.

3. If you wish to select a specific price at which you will be tendering your shares, you should select one of the boxes in the section captioned “Shares Tendered at Price Determined by Stockholder” in the box entitled “Price (in Dollars) Per Share at Which Shares are Being Tendered” below and complete the other portions of this Letter of Transmittal as appropriate.

Your bank or broker can assist you in completing this form. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance may be directed to the information agent or dealer manager and requests for additional copies of the Offer to Purchase and this Letter of Transmittal may be directed to the information agent, whose respective addresses and telephone numbers appear at the end of this Letter of Transmittal. See Instruction 13.

To Wells Fargo Bank, N.A.:

The undersigned hereby tenders to The Charles Schwab Corporation (the “Company”) the above-described shares of the Company’s common stock, par value $ 0.01 per share, at the price per share indicated in this Letter of Transmittal, net to the seller in cash, less any applicable withholding taxes and without interest, on the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2007, receipt of which is hereby acknowledged, and in this Letter of Transmittal, which, as amended or supplemented from time to time, together constitute the “Offer.” Unless the context otherwise requires, all references in this document to shares shall refer to the common stock of the Company.

Subject to and effective on acceptance for payment of the shares tendered hereby in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in and to all shares tendered hereby and orders the registration of all such shares if tendered by book-entry transfer that are purchased pursuant to the Offer to or upon the order of the Company and hereby irrevocably constitutes and appoints the depositary as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the depositary also acts as the agent of the Company with respect to such shares), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to:

(a) deliver certificate(s) representing such shares or transfer ownership of such shares on the account books maintained by the Book-Entry Transfer Facility, together, in either such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Company upon receipt by the depositary, as the undersigned’s agent, of the aggregate purchase price with respect to such shares;

(b) present certificates for such shares for cancellation and transfer on the Company’s books; and

(c) receive all benefits and otherwise exercise all rights of beneficial ownership of such shares, subject to the next paragraph, all in accordance with the terms and subject to the conditions of the Offer.

The undersigned hereby covenants, represents and warrants to the Company that:

(a) the undersigned has a net long position within the meaning of Rule 14e-4 under the Securities Exchange of 1934, as amended (the “Exchange Act”), in (i) the shares that is equal to or greater than the amount tendered, or (ii) other securities immediately convertible into, exercisable for or exchangeable into shares that is equal to or greater than the amount tendered, and such tender of shares complies with Rule 14e-4 under the Exchange Act;

(b) the undersigned has full power and authority to tender, sell, assign and transfer the shares tendered hereby and that when and to the extent the Company accepts the shares for purchase, the Company will acquire good, marketable and unencumbered title to the tendered shares, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim;

(c) on request, the undersigned will execute and deliver any additional documents deemed by the depositary or the Company to be necessary or desirable to complete the assignment, transfer and purchase of the shares tendered hereby, all in accordance with the terms and subject to the conditions of the Offer; and

(d) the undersigned agrees to all of the terms of the Offer.

The undersigned understands that the proper tender of shares under any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions in this Letter of Transmittal will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer.

The undersigned understands that the Company will, on the terms and subject to the conditions of the Offer, determine a single per share purchase price, not greater than $22.50 nor less than $19.50 per share,

that it will pay for shares properly tendered and not properly withdrawn prior to the Expiration Time, taking into account the number of shares so tendered and the prices specified by tendering stockholders. The undersigned understands that the Company will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow it to purchase 84 million shares, or such lesser number of shares as are properly tendered and not properly withdrawn, subject to its right to increase the total number of shares purchased to the extent permitted by law. The undersigned understands that all shares properly tendered at prices at or below the purchase price and not properly withdrawn will be purchased at the purchase price, net to the seller in cash, less any applicable withholding taxes and without interest, on the terms and subject to the conditions of the Offer, including its “odd lot,” proration and conditional tender provisions, and that the Company will return at its expense all other shares, including shares tendered at prices greater than the purchase price and not properly withdrawn and shares not purchased because of proration or conditional tender provisions, approximately five business days following the Expiration Time.

The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Company may terminate or amend the Offer or may postpone the acceptance for payment of, or the payment for, shares tendered or may accept for payment fewer than all of the shares tendered hereby. In such event, the undersigned understands that certificate(s) for any shares delivered herewith but not tendered or not purchased will be returned to the undersigned at the address indicated above.

The name(s) and address(es) of the registered holder(s) are printed, if they are not already printed above, exactly as they appear on the certificates representing shares tendered hereby. The certificate numbers, the number of shares represented by such certificates and the number of shares that the undersigned wishes to tender are set forth in the appropriate boxes above. The price at which the shares are being tendered is indicated in the appropriate box below.

Unless otherwise indicated under “Special Payment Instructions,” please issue the check for the purchase price of any shares purchased (less the amount of any federal income or backup withholding tax required to be withheld), and return any shares not tendered or not purchased, in the name(s) of the undersigned or, in the case of shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above. Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail certificates for shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned’s signature(s). In the event that both “Special Payment Instructions” and “Special Delivery Instructions” are completed, please issue the check for the purchase price of any shares purchased (less the amount of any federal income or backup withholding tax required to be withheld) and return any shares not tendered or not purchased in the name(s) of, and mail said check and any certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the “Special Payment Instructions” to transfer any shares from the name of the registered holder(s) thereof if the Company does not accept for payment any of the shares so tendered.

The undersigned understands that acceptance of shares by the Company for payment will constitute a binding agreement between the undersigned and the Company on the terms and subject to the conditions of the Offer. The undersigned acknowledges that under no circumstances will the Company pay interest on the purchase price of the shares, including but not limited to, by reason of any delay in making payment.

All authority conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned, and any obligation or duties of the undersigned under this Letter of Transmittal shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY.

METHOD OF DELIVERY

[ ]

Check here if certificates for tendered shares are enclosed herewith.

[ ]

Check here if tendered shares are being delivered by book-entry transfer to an account maintained by the depositary with the Book-Entry Transfer Facility and complete the following:

Name of Tendering Institution

Account No.

Transaction Code No.

[ ]

Check here if certificates for tendered shares are being delivered pursuant to Notice of Guaranteed Delivery previously sent to the depositary and complete the following:

Name of Tendering Stockholder(s):

Date of Execution of Notice of Guaranteed Delivery:

Name of Institution that Guaranteed Delivery:

LOST OR DESTROYED CERTIFICATE(S)

If any certificate representing shares has been lost, destroyed or stolen, the stockholder should promptly notify the depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing any lost or destroyed certificate have been followed. Stockholders are requested to contact the depositary immediately in order to permit timely processing of this documentation. See Instruction 16.

ODD LOTS

(SEE INSTRUCTION 6)

To be completed only if shares are being tendered by or on behalf of a person owning, beneficially or of record, as of the Expiration Time, an aggregate of fewer than 100 shares. The undersigned either (check one box):

[ ]

is the beneficial or record owner of an aggregate of fewer than 100 shares (not including any shares held as part of the undersigned’s holdings in the 401(k) Equity Unit Fund or Employee Stock Ownership Plan Equity Unit Fund in the Company’s SchwabPlan Retirement Savings and Investment Plan (the “Retirement Plan”)), all of which are being tendered; or

[ ]

is a broker, dealer, commercial bank, trust company, or other nominee that (a) is tendering for the beneficial owner(s), shares with respect to which it is the record holder and (b) believes, based upon representations made to it by the beneficial owner(s), that each such person is the beneficial owner of an aggregate of fewer than 100 shares and is tendering all of those shares.

In addition, the undersigned is tendering shares either (check one box):

[ ]	at the purchase price, as the same shall be determined by the Company in accordance with the terms of the Offer (persons checking this box need not indicate the price per share below); or

[ ]	at the price per share indicated under the caption “Shares Tendered at Price Determined by Stockholder” in the box entitled “Price (in Dollars) Per Share at Which Shares are Being Tendered” below in this Letter of Transmittal.

CONDITIONAL TENDER

(SEE INSTRUCTION 7)

A stockholder may tender shares subject to the condition that a specified minimum number of the stockholder’s shares tendered pursuant to this Letter of Transmittal must be purchased if any such shares so tendered are purchased, as described in Section 6 of the Offer to Purchase. Unless the Company purchases the minimum number of shares indicated below in the Offer, it will not purchase any of the shares tendered by such stockholder. It is the responsibility of the tendering stockholder to calculate that minimum number of shares that must be purchased if any such shares are to be purchased, and each stockholder is urged to consult his or her own tax advisor before completing this section. Unless the box below has been checked and a minimum number of shares is specified, the tender will be deemed unconditional.

[ ]	The minimum number of shares that must be purchased, if any are purchased, is: shares.

If, because of proration, the minimum number of shares designated will not be purchased, the Company may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, the tendering stockholder must have properly tendered all of his or her shares and checked the box below.

[ ]	The tendered shares represent all shares held by the undersigned.

PRICE (IN DOLLARS) PER SHARE

AT WHICH SHARES ARE BEING TENDERED

(SEE INSTRUCTION 5)

Check only one box under (1) or (2) below. If more than one box or if no box is checked, there is no proper tender of shares.

1.	Shares Tendered at Price Determined in the Tender Offer

[ ]

The undersigned wants to maximize the chance of having the Company accept for purchase all of the shares that the undersigned is tendering (subject to the possibility of proration). Accordingly, BY CHECKING THIS BOX INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders shares at, and is willing to accept, the purchase price determined by the Company in accordance with the terms of the Offer. This action may have the effect of lowering the purchase price and could result in the tendered shares being purchased at the minimum price of $19.50 per share.

2.	Shares Tendered at Price Determined by Stockholder

[ ]

By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER “Shares Tendered at Price Determined in the Tender Offer,” the undersigned hereby tenders shares at the purchase price checked. This action could result in none of the shares being purchased if the purchase price determined by the Company is less than the price checked below. If the purchase price determined by the Company is equal to or greater than the price checked below, then the shares purchased by the Company will be purchased at the purchase price. A stockholder who desires to tender shares at more than one purchase price must complete a separate Letter of Transmittal for each price at which shares are tendered. The same shares cannot be tendered, unless previously properly withdrawn as provided in Section 4 of the Offer to Purchase, at more than one price.


[ ] $19.50	[ ] $20.10	[ ] $20.70	[ ] $21.30	[ ] $21.90	[ ] $22.50
[ ] $19.60	[ ] $20.20	[ ] $20.80	[ ] $21.40	[ ] $22.00
[ ] $19.70	[ ] $20.30	[ ] $20.90	[ ] $21.50	[ ] $22.10
[ ] $19.80	[ ] $20.40	[ ] $21.00	[ ] $21.60	[ ] $22.20
[ ] $19.90	[ ] $20.50	[ ] $21.10	[ ] $21.70	[ ] $22.30
[ ] $20.00	[ ] $20.60	[ ] $21.20	[ ] $21.80	[ ] $22.40

SPECIAL PAYMENT INSTRUCTIONS

(SEE INSTRUCTIONS 1, 4, 8, 9 AND 11)

To be completed ONLY if certificate(s) for shares not tendered or not accepted for payment, and any check for the purchase price, are to be issued in the name of someone other than the undersigned, or if shares tendered hereby and delivered by book-entry transfer which are not accepted for payment are to be returned by credit to an account at the Book-Entry Transfer Facility other than the account designated above.


Name:
		(PLEASE PRINT)
Address:




		(INCLUDE ZIP CODE)

		(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)

		(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)

[ ]	Credit shares delivered by book-entry and not accepted for payment to the Book-Entry Transfer Facility account set forth below:

(ACCOUNT NUMBER)

SPECIAL DELIVERY INSTRUCTIONS

(SEE INSTRUCTIONS 1, 4, 8, 9 AND 11)

To be completed ONLY if certificate(s) for shares not tendered or not accepted for payment, and any check for the purchase price, are to be mailed or sent to someone other than the undersigned or to the undersigned at an address other than that designated above.


Name:
		(PLEASE PRINT)
Address:




		(INCLUDE ZIP CODE)

IMPORTANT

STOCKHOLDERS MUST SIGN HERE

AND

COMPLETE SUBSTITUTE FORM W-9,

FORM W-8BEN OR FORM W-8ECI, AS APPLICABLE

(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, administrator, guardian, attorney-in-fact, agent, officer of a corporation, or other person acting in a fiduciary or representative capacity, please state full title and see Instruction 8.)

SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY

Dated: , 2007

Name(s):

(PLEASE PRINT)

Capacity (full title):

Address:

(INCLUDING ZIP CODE)

Daytime Area Code and Telephone No.:

Taxpayer Identification or Social Security No.:

APPLY MEDALLION GUARANTEE STAMP BELOW

(See Instructions 1 and 8)

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal if either:

(a) this Letter of Transmittal is signed by the registered holder of the shares (which term, for these purposes, includes any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of the shares) exactly as the name of the registered holder appears on the certificate(s) for the shares tendered with this Letter of Transmittal, and payment and delivery are to be made directly to such registered holder and such registered holder has not completed either the box entitled “Special Payment Instructions” or the box entitled “Special Delivery Instructions” above; or

(b) such shares are tendered for the account of a member in good standing of the Securities Transfer Agents Medallion Program or an entity which is an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Exchange Act, each of the foregoing entities referred to herein as an “Eligible Institution.”

In all other cases, an Eligible Institution must guarantee all signatures on this Letter of Transmittal. Stockholders may also need to have any certificates they deliver endorsed or accompanied by a stock power, and the signatures on these documents also may need to be guaranteed. See Instruction 8.

2. Delivery of Letter of Transmittal and Certificates. You should use this Letter of Transmittal only if you are forwarding certificates for shares with it to the depositary (or the certificates will be delivered pursuant to a Notice of Guaranteed Delivery previously sent to the depositary) or causing the shares to be delivered by book-entry transfer pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Certificates for all physically tendered shares must be delivered or mailed, or confirmation of a book-entry transfer into the depositary’s account at the Book-Entry Transfer Facility of shares tendered electronically must be received or a proper tender through the Book-Entry Transfer Facility’s Automated Tender Offer Program must be made, and in each case a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, an Agent’s Message in the case of a book-entry transfer or a specific acknowledgment in the case of a tender through the Automated Tender Offer Program of the Book-Entry Transfer Facility, and any other documents required by this Letter of Transmittal, should be mailed or delivered to the depositary at the appropriate address set forth herein and must be delivered to the depositary on or before the Expiration Time.

Agent’s Message. The term “Agent’s Message” means a message transmitted by the Book-Entry Transfer Facility to, and received by, the depositary, which states that the Book-Entry Transfer Facility has received an acknowledgment from the participant in the Book-Entry Transfer Facility tendering the shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and the Company may enforce such agreement against the participant.

Guaranteed Delivery. If you cannot deliver your share certificates and all other required documents to the depositary by the Expiration Time or the procedure for book-entry transfer cannot be completed on a timely basis, you may tender your shares pursuant to the guaranteed delivery procedure outlined in Section 3 of the Offer to Purchase. Pursuant to such procedure:

(a) the tender must be made by or through an Eligible Institution;

(b) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided to you by the Company must be received by the depositary by the Expiration Time, specifying the price at which shares are being tendered, including (where required) a signature guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery; and

(c) the certificates for all physically delivered shares, or a confirmation of a book-entry transfer of all shares delivered electronically into the depositary’s account at the Book-Entry Transfer Facility, together with a properly completed and duly executed Letter of Transmittal with any required signature guarantees, an Agent’s Message in the case of a book-entry transfer or a specific acknowledgment in the case of a tender through the Automated Tender Offer Program of the Book-Entry Transfer Facility and any other documents required by this Letter of Transmittal, must be received by the depositary within three trading days after the receipt by the depositary of the Notice of Guaranteed Delivery. A “trading day” is any day on which The NASDAQ Global Select Market is open for business.

The method of delivery of shares, including delivery through the Book-Entry Transfer Facility, this Letter of Transmittal and all other required documents, is at the sole election and risk of the tendering stockholder. Shares will be deemed delivered only when actually received by the depositary (including, in the case of book-entry transfer, by book-entry confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

Except as specifically permitted by Section 6 of the Offer to Purchase, the Company will not accept any alternative, conditional or contingent tenders, nor will it purchase any fractional shares. By executing this Letter of Transmittal, you waive any right to receive any notice of the acceptance for payment of the shares.

3. Inadequate Space. If the space provided in the box entitled “Description of Shares Tendered” above is inadequate, the certificate numbers and/or the number of shares should be listed on a separate signed list and attached to this Letter of Transmittal.

4. Partial Tenders and Unpurchased Shares (not applicable to stockholders who tender by book-entry transfer). If fewer than all of the shares evidenced by any certificate are to be tendered, fill in the number of shares that are to be tendered in the column entitled “Number of Shares Tendered” in the box entitled “Description of Shares Tendered” above. In that case, if any tendered shares are purchased, a new certificate for the remainder of the shares (including any shares not purchased) evidenced by the old certificate(s) will be issued and sent to the registered holder(s), unless otherwise specified in either the box entitled “Special Payment Instructions” or the box entitled “Special Delivery Instructions” above, approximately five business days after the Expiration Time. Unless otherwise indicated, all shares represented by the certificate(s) set forth above and delivered to the depositary will be deemed to have been tendered. In each case, shares will be returned or credited without expense to the stockholder.

5. Indication of Price at Which Shares are Being Tendered. In order to properly tender by this Letter of Transmittal, you must complete the box entitled “Price (in Dollars) Per Share at Which Shares are Being Tendered” by either (1) checking the box in the section captioned “Shares Tendered at Price Determined in the Tender Offer” or (2) checking one of the boxes in the section captioned “Shares Tendered at Price Determined by Stockholder” indicating the price per share at which you are tendering shares. Selecting option (1) may lower the purchase price and could result in the tendered shares being purchased at the minimum price of $19.50 per share. Selecting option (2) could result in none of the shares you tender being purchased if the purchase price for the shares turns out to be less than the price you selected.

You may only check one box. If you check more than one box or no boxes, then you will not be deemed to have properly tendered your shares. If you wish to tender a portion(s) of your shares at different prices, you must complete a separate Letter of Transmittal for each price at which you wish to tender each such portion of your shares. To obtain additional copies of this Letter of Transmittal, contact the information agent at the telephone number and address included on the back cover of this Letter of Transmittal. You cannot tender the same shares more than once, unless you properly withdraw those shares, as provided in Section 4 of the Offer to Purchase.

6. Odd Lots. As described in Section 1 of the Offer to Purchase, if more than 84 million shares, or such greater number of shares as the Company may elect to purchase, subject to applicable law, have been properly tendered at prices at or below the purchase price determined by the Company and not properly withdrawn prior to the Expiration Time, the shares purchased first will consist of all shares tendered by any stockholder who owns, beneficially or of record, an aggregate of fewer than 100 shares (not including any shares held as part of the undersigned’s holdings in the 401(k) Equity Unit Fund or Employee Stock Ownership Plan Equity Unit Fund in the Retirement Plan), and who properly tenders all of those shares at or below the purchase price determined by the Company. Even if you otherwise qualify for the “odd lot” priority preference, you will not receive this preference unless you complete the box captioned “Odd Lots” in this Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.

7. Conditional Tenders. As described in Section 1 and Section 6 of the Offer to Purchase, you may condition your tender on all or a minimum number of your tendered shares being purchased. To make a conditional tender, you must indicate this in the box captioned “Conditional Tender” in this Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery and must indicate the minimum number of shares that must be purchased from you if any such shares are to be purchased from you. Odd lot shares, which will not be subject to proration, cannot be conditionally tendered.

As discussed in Section 1 and Section 6 of the Offer to Purchase, proration may affect whether the Company accepts conditional tenders and may result in shares tendered conditionally at or below the purchase price determined by the Company not being purchased if the required minimum number of shares would not be purchased. If, because of proration, the minimum number of shares designated will not be purchased, the Company may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, you must have properly tendered all your shares and checked the box so indicating. Upon the selection by lot, if any, the Company will limit the purchase in each case to the designated minimum number of shares.

All tendered shares will be deemed unconditionally tendered unless the “Conditional Tender” box is checked and appropriately completed.

The conditional tender alternative is made available for stockholders seeking to take steps to have shares that are sold pursuant to the Offer treated as a sale or exchange of such shares by the stockholder, rather than a distribution to the stockholder, for U.S. federal income tax purposes. It is the tendering stockholder’s responsibility to calculate the minimum number of shares of common stock that must be purchased from the stockholder in order for the stockholder to qualify for sale or exchange (rather than distribution) treatment for U.S. federal income tax purposes. No assurances can be provided that a conditional tender will achieve the intended U.S. federal income tax results in all cases. Each stockholder is urged to consult his or her own tax advisor when deciding whether to tender shares conditionally. See Section 14 of the Offer to Purchase.

8. Signatures on Letter of Transmittal; Stock Powers and Endorsements.

(a) If this Letter of Transmittal is signed by the registered holder(s) of the shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without any change whatsoever.

(b) If the shares tendered hereby are registered in the names of two or more joint holders, each such holder must sign this Letter of Transmittal.

(c) If any tendered shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates.

(d) When this Letter of Transmittal is signed by the registered holder(s) of the shares tendered hereby, no endorsement (s) of certificate(s) representing such shares or separate stock power(s) are required unless payment is to be made or the certificate(s) for shares not tendered or not purchased are to be issued to a person other than the registered holder(s) thereof. Signature(s) on such certificate(s) must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, or if payment is to be made or certificate(s) for shares not tendered or not purchased are to be issued to a person other than the registered holder(s) thereof, such certificate(s) must be properly endorsed or accompanied by appropriate stock power(s), in either case signed exactly as the name(s) of the registered holder(s) appears on the certificate(s), and the signature(s) on such certificate(s) or stock power(s) must be guaranteed by an Eligible Institution. See Instruction 1.

(e) If this Letter of Transmittal or any certificate(s) or stock power(s) are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or any other person acting in a fiduciary or representative capacity, such person should so indicate when signing this Letter of Transmittal and must submit proper evidence satisfactory to the Company of such person’s authority so to act.

9. Stock Transfer Taxes. Except as provided in this Instruction 9, no stock transfer tax stamps or funds to cover such stamps need accompany this Letter of Transmittal. The Company will pay any stock transfer taxes payable on the transfer to it of shares purchased in the Offer. If, however, either:

(a) payment of the purchase price for shares tendered hereby and accepted for purchase is to be made to any person other than the registered holder(s); or

(b) shares not tendered or not accepted for purchase are to be registered in the name(s) of any person(s) other than the registered holder(s); or

(c) certificate(s) representing tendered shares are registered in the name(s) of any person(s) other than the person(s) signing this Letter of Transmittal;

then the depositary will deduct from such purchase price the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person(s) or otherwise) payable on account of the transfer to such person, unless satisfactory evidence of the payment of such taxes or any exemption from them is submitted.

10. Order of Purchase in Event of Proration. As described in Section 1 of the Offer to Purchase, stockholders may designate the order in which their shares are to be purchased in the event of proration. The order of purchase may have an effect on the federal income tax classification of any gain or loss on the shares purchased. See Section 1 and Section 14 of the Offer to Purchase.

11. Special Payment and Delivery Instructions. If certificate(s) for shares not tendered or not purchased and/or check(s) are to be issued in the name of a person other than the signer of this Letter of Transmittal or if such certificates and/or checks are to be sent to someone other than the person signing this Letter of Transmittal or to the signer at a different address, the box entitled “Special Payment Instructions” and/or the box entitled “Special Delivery Instructions” on this Letter of Transmittal should be completed as applicable and signatures must be guaranteed as described in Instructions 1 and 8.

12. Irregularities. All questions as to the number of shares to be accepted, the price to be paid therefor and the validity, form, eligibility, including time of receipt, and acceptance for payment of any tender of shares will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. The Company reserves the absolute right to reject any or all tenders of shares it determines not to be in proper form or the acceptance of which or payment for which may, in the Company’s opinion, be unlawful. The Company also reserves the right to waive any defect or irregularity in the tender of any particular shares, and the Company’s interpretation of the terms of the Offer, including these Instructions, will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. No tender of shares will be deemed to be properly made until all defects and irregularities have been cured by the tendering stockholder or waived by the Company. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. None of the Company, the dealer manager, the depositary, the information agent or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice.

13. Questions and Requests for Assistance and Additional Copies. Questions and requests for assistance should be directed to, or additional copies of the Offer to Purchase, this Letter of Transmittal, and other related materials may be obtained from, the information agent at the telephone number and address set forth on the back cover page of this Letter of Transmittal. You may also contact the dealer manager at its address and telephone number included on the back cover page of this Letter of Transmittal or your broker, dealer, commercial bank or trust company for assistance concerning the Offer.

14. U.S. Federal Backup Withholding Tax. Under the U.S. federal backup withholding tax rules, 28% of the gross proceeds payable to a stockholder or other payee in the Offer must be withheld and remitted to the Internal Revenue Service, or IRS, unless the stockholder or other payee provides such person’s taxpayer identification number (“TIN”) (employer identification number or social security number) to the depositary or other payor and certifies under penalties of perjury that this number is correct or otherwise establishes an exemption. If the depositary or other payor is not provided with the correct taxpayer identification number or another adequate basis for exemption, the stockholder may be subject to certain penalties imposed by the IRS. Therefore, each tendering stockholder that is a U.S. Holder (as defined in Section 14 of the Offer to Purchase) should complete and sign the Substitute Form W-9 included as a part of the Letter of Transmittal in order to provide the information and certification necessary to avoid the backup withholding tax, unless the stockholder otherwise establishes to the satisfaction of the depositary that the stockholder is not subject to backup withholding. If backup withholding results in the overpayment of taxes, a refund may be obtained from the IRS in accordance with its refund procedures. The box in Part 3 of the form should be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the depositary is not provided with a TIN prior to payment, the depositary will withhold 28% on all such payments. Certain stockholders (including, among others, all corporations and certain Non-U.S. Holders (as defined in Section 14 of the Offer to Purchase)) are not subject to these backup withholding rules. In order for a Non-U.S.

Holder to qualify as an exempt recipient, that stockholder must submit an IRS Form W-8BEN (or a suitable substitute form), signed under penalties of perjury, attesting to that stockholder’s non-U.S. status. The applicable form can be obtained from the depositary.

Stockholders are urged to consult with their own tax advisors regarding possible qualifications for exemption from backup withholding tax and the procedure for obtaining any applicable exemption.

15. Withholding for Non-U.S. Holders. A payment made to a Non-U.S. Holder pursuant to the Offer will be subject to U.S. federal income and withholding tax unless the Non-U.S. Holder meets the “complete termination,” “substantially disproportionate,” or “not essentially equivalent to a dividend” test described in Section 14 of the Offer to Purchase. If a Non-U.S. Holder tenders shares held in a U.S. brokerage account or otherwise through a U.S. broker, dealer, commercial bank, trust company, or other nominee, such U.S. broker or other nominee will generally be the withholding agent for the payment made to the Non-U.S. Holder pursuant to the Offer. Such U.S. brokers or other nominees may withhold or require certifications in this regard. Non-U.S. Holders tendering shares held through a U.S. broker or other nominee should consult such U.S. broker or other nominee and their own tax advisors to determine the particular withholding procedures that will be applicable to them. Notwithstanding the foregoing, even if a Non-U.S. Holder tenders shares held in its own name as a holder of record and delivers to the depositary a properly completed IRS Form W-8BEN (or other applicable form) before any payment is made, the depositary has advised the Company that it will withhold 30% of the gross proceeds unless the depositary determines that a reduced rate under an applicable income tax treaty or exemption from withholding is applicable, regardless of whether the payment is properly exempt from U.S. federal gross income tax under the “complete termination,” “substantially disproportionate,” or “not essentially equivalent to a dividend” test. To obtain a reduced rate of withholding under a tax treaty, a Non-U.S. Holder must deliver to the depositary a properly completed IRS Form W-8BEN (or other applicable form) before the payment is made. To obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a Non-U.S. Holder must deliver to the depositary a properly completed IRS Form W-8ECI (or successor form). A Non-U.S. Holder that qualifies for an exemption from withholding on these grounds generally will be required to file a U.S. federal income tax return and generally will be subject to U.S. federal income tax on income derived from the sale of shares pursuant to the Offer in the manner and to the extent described in Section 14 of the Offer to Purchase as if it were a U.S. Holder, and in the case of a foreign corporation, an additional branch profits tax may be imposed at a rate of 30% (or a lower rate specified in an applicable income tax treaty), with respect to such income.

A Non-U.S. Holder may be eligible to obtain a refund of all or a portion of any tax withheld if the Non-U.S. Holder (1) meets the “complete termination,” “substantially disproportionate” or “not essentially equivalent to a dividend” tests described in Section 14 of the Offer to Purchase that would characterize the exchange as a sale (as opposed to a dividend) with respect to which the Non-U.S. Holder is not subject to U.S. federal income tax or (2) is otherwise able to establish that no tax or a reduced amount of tax is due.

Non-U.S. Holders are urged to consult their own tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

16. Lost, Stolen, Destroyed or Mutilated Certificates. If your certificate(s) for part or all of your shares has been lost, stolen, destroyed or mutilated, you should promptly call the depositary at (800) 468-9716 regarding the requirements for replacement of the certificate. You may be asked to post a bond to secure against the risk that the certificate may be subsequently recirculated. There may be a fee and additional documents may be required to replace lost certificates. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, stolen, destroyed or mutilated certificates have been followed. You are urged to contact the depositary immediately to ensure timely processing of documentation.

17. Tender by Participants in the Company’s Retirement Plan. Participants in the Company’s Retirement Plan whose shares are held by a trustee may not use this Letter of Transmittal to direct the tender of shares allocated to their accounts under the plan, but instead must follow the instructions in the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund,” sent separately to each eligible participant of the plan. These instructions require that a

Retirement Plan participant who wishes to tender shares allocated to his or her account under the plan complete the Direction Form as directed in the letter. Participants in the Retirement Plan are urged to read and evaluate carefully the “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the 401(k) Equity Unit Fund” and/or “Letter to Participants in The SchwabPlan Retirement Savings and Investment Plan Holding Units of the ESOP Equity Unit Fund.”

IMPORTANT:

THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH CERTIFICATES REPRESENTING SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED PRIOR TO 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007. STOCKHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9, OR ANOTHER APPROPRIATE IRS FORM, WITH THIS LETTER OF TRANSMITTAL.

IMPORTANT TAX INFORMATION

Under the U.S. federal income tax law, a stockholder whose tendered shares are accepted for payment is required by law to provide the depositary (as payor) with such stockholder’s correct TIN on Substitute Form W-9 below or otherwise establish an exemption from back-up withholding. If such stockholder is an individual, the TIN is such stockholder’s social security number. If the depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service, or IRS, and payments that are made to such stockholder with respect to shares purchased pursuant to the Offer may be subject to backup withholding of 28%.

Certain stockholders including, among others, certain corporations and certain Non-U.S. Holders, are not subject to these backup withholding requirements. In order for a Non-U.S. Holder to qualify as an exempt recipient, such Non-U.S. Holder must submit an IRS Form W-8BEN (or other applicable IRS Form or substitute forms), signed under penalties of perjury, attesting to such stockholder’s exempt status. An IRS Form W-8BEN (or other applicable IRS Form) can be obtained from the depositary. However, as discussed in Section 14 of the Offer to Purchase, Non-U.S. Holders may be subject to 30% withholding. Exempt stockholders (other than Non-U.S. Holders) should furnish their TIN, write “Exempt” on the face of the Substitute Form W-9, and sign, date and return the Substitute Form W-9 to the depositary. See the accompanying Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. Stockholders should consult their tax advisors as to qualification for exemption from backup withholding and the procedures for obtaining such exemption. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in the overpayment of taxes, a refund may be obtained from the IRS in accordance with its refund procedures.

Purpose of Substitute Form W-9

To prevent backup withholding on payments that are made to a stockholder with respect to shares purchased pursuant to the Offer, the stockholder is required to notify the depositary of such stockholder’s correct TIN by completing the form below certifying that (1) the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and (2) that (i) such stockholder has not been notified by the IRS that such stockholder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the IRS has notified such stockholder that such stockholder is no longer subject to backup withholding.

What Number to Give the Depositary

The stockholder is required to give the depositary the social security number or employer identification number of the record holder of the shares tendered hereby. If the shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the stockholder should write “Applied For” in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If “Applied For” is written in Part I and the depositary is not provided with a TIN by the time for payment, the depositary will withhold 28% of all payments of the purchase price to such stockholder until a TIN is provided.

PAYOR’S NAME:

WELLS FARGO BANK, N.A.


SUBSTITUTE FORM W-9	Part I – PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. If awaiting a TIN, write “Applied for” and complete the Certificate of Awaiting Taxpayer Identification Number.	Social Security Number OR Employee Identification
Department of the Treasury Internal Revenue Service	Name (as shown on your income tax return):
Payor’s Request For Taxpayer Identification Number (“TIN”) and Certification	Business Name	For Payees exempt from back-up withholding, check the Exempt box below.
	Please check appropriate box
	¨ Individual/Sole Proprietor	¨ Exempt
	¨ Corporation
	¨ Partnership ¨ Other


	Address

	City, State, Zip Code


	Part 2 – Certification	Part 3 – AWAITING TIN¨
	Under penalties of perjury, I certify that:	Please complete the Certificate of Awaiting Taxpayer Identification Number below.
	(1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me);

	(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

	(3) I am a U.S. person (including a U.S. resident alien).

	Certification Instructions – You must cross out item (2) of Part 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of a failure to report all interest and dividends on your tax return. However, if after you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see enclosed guidelines.)

	Signature:	Date:

NOTE:

FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. IN ADDITION, FAILURE TO PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY IMPOSED BY THE IRS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED PART 3 OF THE SUBSTITUTE FORM W-9 AND ARE AWAITING YOUR TIN.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalty of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 28% of all payments to be made to me thereafter will be withheld until I provide a number.


Signature:		Date: , 2007

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payor. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payor.


	For this type of account:	Give the name and SOCIAL SECURITY NUMBER of:
1.	An individual’s account	The individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor (2)
4.	a. The usual revocable savings trust (grantor is also trustee) b. So-called trust account that is not a legal or valid trust under state law	The grantor-trustee (1) The actual owner (1)
5.	Sole proprietorship or single-owner LLC	The owner (3)
	For this type of account:	Give the name and EMPLOYER IDENTIFICATION NUMBER of:
6.	Sole proprietorship or single-owner LLC	The owner (3)
7.	A valid trust, estate, or pension trust	The legal entity (4)
8.	Corporation or LLC electing corporate status on IRS Form 8832	The corporation
9.	Association, club, religious, charitable, educational or other tax-exempt organization	The organization
10.	Partnership or multi-member LLC	The partnership or LLC
11.	A broker or registered nominee	The broker or nominee
12.	Account with the department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person’s number must be furnished.

(2)	Circle the minor’s name and furnish the minor’s social security number.

(3)	Owner must show his individual name or business name, as the case may be, but may also enter his “doing business as” or “DBA” name. Owner may use either owner’s social security number or owner’s employer identification number.

(4)	List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE:

If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Resident alien individuals:

If you are a resident alien individual and you do not have, and are not eligible to get, a Social Security number, your taxpayer identification number is your individual taxpayer identification number (“ITIN”) as issued by the Internal Revenue Service. Enter it on the portion of the Substitute Form W-9 where the Social Security number would otherwise be entered. If you do not have an ITIN, see “Obtaining a Number” below.

Name:

If you are an individual, generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name and both the last name shown on your social security card and your new last name.

Obtaining a Number:

If you do not have a taxpayer identification number, obtain IRS Form SS-5, Application for a Social Security Card (for individuals), or IRS Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the IRS and apply for a number. Resident alien individuals who are not eligible to get a Social Security number and need an ITIN should obtain IRS Form W-7, Application for IRS Individual Taxpayer Identification Number, from the IRS.

Payees and Payments Exempt from Backup Withholding:

The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except the payee in item (9). For broker transactions, payees listed in items (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. For barter exchange transactions and patronage dividends, payees listed in (1) through (5) are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7). Unless otherwise indicated, all “section” references are to sections of the Internal Revenue Code of 1986, as amended (the “Code”).

(1)	An organization exempt from tax under section 50I(a), or an IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2).

(2)	The United States or any of its agencies or instrumentalities.

(3)	A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities.

(4)	A foreign government or any of its political subdivisions, agencies or instrumentalities.

(5)	An international organization or any of its agencies or instrumentalities.

(6)	A corporation.

(7)	A foreign central bank of issue.

(8)	A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States.

(9)	A futures commission merchant registered with the Commodity Futures Trading Commission.

(10)	A real estate investment trust.

(11)	An entity registered at all times during the tax year under the Investment Company Act of 1940.

(12)	A common trust fund operated by a bank under section 584(a).

(13)	A financial institution.

(14)	A middleman known in the investment community as a nominee or custodian.

(15)	A trust exempt from tax under section 664 or described in section 4947.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:

(1)	Payments to non-resident aliens subject to withholding under section 1441.

(2)	Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one non-resident partner.

(3)	Payments of patronage dividends where the amount received is not paid in money.

(4)	Payments made by certain foreign organizations.

(5)	Section 404(k) distributions made by an ESOP.

Payments of interest not generally subject to backup withholding include the following:

(1)	Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of your trade or business and you have not provided your correct taxpayer identification number to the payor.

(2)	Payments of tax-exempt interest (including exempt-interest dividends under section 852).

(3)	Payments described in section 6049(b)(5) to non-resident aliens.

(4)	Payments on tax-free covenant bonds under section 1451.

(5)	Payments made by certain foreign organizations.

(6)	Payments of mortgage or student loan interest to you.

Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYOR; FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER; INDICATE THAT YOU ARE EXEMPT ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYOR. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR THE APPROPRIATE COMPLETED INTERNAL REVENUE SERVICE FORM W-8 (OR SUCCESSOR FORM).

Certain payments other than interest, dividends and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see Sections 6041, 604IA, 6042, 6044, 6045, 6049, 6050A and 6050N of the Code and the Treasury regulations promulgated thereunder.

Privacy Act Notice - Section 6109 requires most recipients of dividend, interest, or other payments to give their correct taxpayer identification numbers to payors who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to verify the accuracy of tax returns. The IRS also may provide this information to the Department of Justice for civil and criminal litigation and to cities, states, and the District of Columbia to carry out their tax laws. The IRS may also disclose this information to other countries under a tax treaty, or to Federal and state agencies to enforce Federal non-tax criminal laws and to combat terrorism. Payors must be given the numbers whether or not recipients are required to file tax returns. Payors must generally withhold tax from payments of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payor. The current rate of such withholding tax is 28%. Certain penalties may also apply.

Penalties

(1) Penalty for failure to furnish taxpayer identification number - If you fail to furnish your correct taxpayer identification number to a payor, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for false information with respect to withholding - If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for falsifying information - Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX

CONSULTANT OR THE INTERNAL REVENUE SERVICE.

THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR SUCH STOCKHOLDER’S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE COVER PAGE OF THIS LETTER OF TRANSMITTAL.

DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL OTHER DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ON THE COVER PAGE OF THIS LETTER OF TRANSMITTAL WILL NOT CONSTITUTE PROPER DELIVERY TO THE DEPOSITARY.

Questions and requests for assistance may be directed to the information agent or the dealer manager at the telephone numbers and addresses listed below and requests for additional copies of the Offer to Purchase, the Letter of Transmittal and other related documents may be directed to the information agent at its telephone number and address listed below, and will be furnished promptly at the Company’s expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street

New York, New York 10005

Stockholders Call Toll-Free: (800) 659-6590

Banks and Brokers Call Collect: (212) 269-5550

The Dealer Manager for the Offer is:

UBS Securities LLC

299 Park Avenue

New York, New York 10171

Toll-Free: (877) 827-4180

Collect: (212) 821-4180

EX-99.(A)(1)(C) 4 dex99a1c.htm FORM OF NOTICE OF GUARANTEED DELIVERY Form of Notice of Guaranteed Delivery

Exhibit (a)(1)(C)

NOTICE OF GUARANTEED DELIVERY

(Not to be used for Signature Guarantee)

For Tender of Shares of Common Stock

THE CHARLES SCHWAB CORPORATION

Pursuant to its Offer to Purchase

Dated July 3, 2007 CUSIP No. 808513-10-5

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007, UNLESS THE OFFER IS EXTENDED.

As set forth in Section 3 of the Offer to Purchase (as defined below), this Notice of Guaranteed Delivery must be used to accept the Offer (as defined below) if (1) certificates representing your shares of common stock, par value $0.01 per share, of The Charles Schwab Corporation, a Delaware corporation, are not immediately available or cannot be delivered to the depositary prior to the Expiration Time (as defined in the Offer to Purchase), (2) the procedures for book-entry transfer cannot be completed before the Expiration Time or (3) time will not permit all required documents to reach the depositary prior to the Expiration Time. This Notice of Guaranteed Delivery, properly completed and duly executed, may be delivered by hand or transmitted by facsimile transmission or mailed to the depositary. See Section 3 of the Offer to Purchase. Unless the context otherwise requires, all references to the shares shall refer to the common stock of the Company.

The Depositary for the Offer is:

WELLS FARGO BANK, N.A.


By Mail:	By Facsimile Transmission: (For Eligible Institutions Only)	By Hand or Overnight Courier:

Wells Fargo Bank, N.A.	Wells Fargo Bank, N.A.	Wells Fargo Bank, N.A.
Shareowner Services	Shareowner Services	Shareowner Services
Voluntary Corporate Actions		Voluntary Corporate Actions
P.O. Box 64854	Facsimile: (651) 450-2452	161 North Concord Exchange
St. Paul, Minnesota 55164-0854	To Confirm: (800) 468-9716	South St. Paul, Minnesota 55075

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION OF THIS NOTICE TO A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE PROPER DELIVERY TO THE DEPOSITARY. DELIVERIES TO THE CHARLES SCHWAB CORPORATION, THE DEALER MANAGER OR THE INFORMATION AGENT WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE PROPER DELIVERY. FOR THIS NOTICE TO BE PROPERLY DELIVERED, IT MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF THE ABOVE ADDRESSES OR FACSIMILE NUMBER BEFORE THE OFFER EXPIRES.

The method of delivery of this Notice of Guaranteed Delivery is at the sole election and risk of the tendering stockholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

This Notice is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an eligible institution (as defined in the Offer to Purchase) under the instructions in the Letter of Transmittal, the signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal.

Ladies and Gentlemen:

The undersigned hereby tenders to The Charles Schwab Corporation, a Delaware corporation (the “Company”), at the price per share indicated in this Notice of Guaranteed Delivery, net to seller in cash, less any applicable withholding taxes and without interest, on the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2007 (the “Offer to Purchase”), and the related Letter of Transmittal (which as amended or supplemented from time to time, together constitute the “Offer”), receipt of which is hereby acknowledged, the number of shares as set forth below, all pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.

Number of shares to be tendered: shares*

*	Unless otherwise indicated, it will be assumed that all Company shares held by the undersigned are to be tendered.

PRICE (IN DOLLARS) PER SHARE

AT WHICH SHARES ARE BEING TENDERED

(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)

Check only one box under (1) or (2) below. If more than one box or if no box is checked, there is no proper tender of shares.

1.	Shares Tendered at Price Determined in the Tender Offer

[ ]

2.	Shares Tendered at Price Determined by Stockholder

[ ]

By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER “Shares Tendered at Price Determined in the Tender Offer,” the undersigned hereby tenders shares at the purchase price checked. This action could result in none of the shares being purchased if the purchase price determined by the Company is less than the price checked below. If the purchase price determined by the Company is equal to or greater than the price checked below, then the shares purchased by the Company will be purchased at the purchase price. A stockholder who desires to tender shares at more than one purchase price must complete a separate Notice of Guaranteed Delivery and Letter of Transmittal for each price at which shares are tendered. The same shares cannot be tendered, unless previously properly withdrawn as provided in Section 4 of the Offer to Purchase, at more than one price.


[ ] $19.50	[ ] $20.10	[ ] $20.70	[ ] $21.30	[ ] $21.90	[ ] $22.50
[ ] $19.60	[ ] $20.20	[ ] $20.80	[ ] $21.40	[ ] $22.00
[ ] $19.70	[ ] $20.30	[ ] $20.90	[ ] $21.50	[ ] $22.10
[ ] $19.80	[ ] $20.40	[ ] $21.00	[ ] $21.60	[ ] $22.20
[ ] $19.90	[ ] $20.50	[ ] $21.10	[ ] $21.70	[ ] $22.30
[ ] $20.00	[ ] $20.60	[ ] $21.20	[ ] $21.80	[ ] $22.40

ODD LOTS

(See Instruction 6 of the Letter of Transmittal)

[ ]

In addition, the undersigned is tendering shares either (check one box):

[ ]	at the purchase price, as the same shall be determined by the Company in accordance with the terms of the Offer (persons checking this box need not indicate the price per share above); or

[ ]	at the price per share indicated under the caption “Shares Tendered at Price Determined by Stockholder” in the box entitled “Price (in Dollars) Per Share at Which Shares are Being Tendered” above in this Notice.

CONDITIONAL TENDER

(See Instruction 7 of the Letter of Transmittal)

A stockholder may tender shares subject to the condition that a specified minimum number of the stockholder’s shares tendered must be purchased if any such shares so tendered are purchased, as described in Section 6 of the Offer to Purchase. Unless the Company purchases the minimum number of shares indicated below in the Offer, it will not purchase any of the shares tendered by such stockholder. It is the responsibility of the tendering stockholder to calculate that minimum number of shares that must be purchased if any such shares are to be purchased, and each stockholder is urged to consult his or her own tax advisor before completing this section. Unless the box below has been checked and a minimum number of shares is specified, the tender will be deemed unconditional.

[ ]	The minimum number of shares that must be purchased, if any are purchased, is:

shares.

[ ]	The tendered shares represent all shares held by the undersigned.

Certificate Nos. (if available):

Name(s) of Record Holder(s):

(PLEASE PRINT)

Address(es):

(INCLUDING ZIP CODE)

Daytime Area Code and Telephone Number:

Signature(s):

Dated: , 2007

If shares will be tendered by book-entry transfer, check this box ¨ and provide the following information:

Name of Tendering Institution:

Account Number at Book-Entry Transfer Facility:

THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED.

GUARANTEE

(Not to be Used for Signature Guarantee)

The undersigned, a firm that is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association, Inc., including the Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program or the Stock Exchange Medallion Program, or is otherwise an “eligible guarantor institution,” as that term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), hereby guarantees (1) that the above named person(s) “own(s)” the shares tendered hereby within the meaning of Rule 14e-4 under the Exchange Act, (2) that such tender of shares complies with Rule 14e-4 under the Exchange Act and (3) to deliver to the depositary either the certificates representing the shares tendered hereby, in proper form for transfer, or a book-entry confirmation (as defined in the Offer to Purchase) with respect to such shares, in any such case together with a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an agent’s message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, within three trading days (as defined in the Offer to Purchase) after the date hereof.

The eligible institution that completes this form must communicate the guarantee to the depositary and must deliver the Letter of Transmittal and certificates for shares to the depositary within the time period shown herein. Failure to do so could result in financial loss to such eligible institution.

Name of Firm:

Authorized Signature:

Name:

(PLEASE PRINT)

Title:

Address:

(INCLUDING ZIP CODE)

Zip Code:

Area Code and Telephone Number:

Dated: , 2007

Note: Do not send certificates for shares with this Notice.

Certificates for shares should be sent with your Letter of Transmittal.

EX-99.(A)(1)(D) 5 dex99a1d.htm FORM OF LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other

Exhibit(a)(1)(D)

Offer to Purchase for Cash

THE CHARLES SCHWAB CORPORATION

Up to 84 million Shares of its Common Stock

at a Purchase Price Not Greater Than $22.50 nor Less Than $19.50 Per Share

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007, UNLESS THE OFFER IS EXTENDED.

July 3, 2007

To Brokers, Dealers, Commercial Banks,

Trust Companies and Other Nominees:

We have been appointed by The Charles Schwab Corporation, a Delaware corporation (the “Company”), to act as dealer manager in connection with the Company’s offer to purchase for cash up to 84 million shares of the Company’s common stock, $0.01 par value per share, at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2007 (the “Offer to Purchase”) and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the “Offer”). Please furnish copies of the enclosed materials to those of your clients for whom you hold shares registered in your name or in the name of your nominee. Unless the context otherwise requires, all references to the shares shall refer to the common stock of the Company.

Enclosed with this letter are copies of the following documents:

1. Offer to Purchase dated July 3, 2007;

2. Letter of Transmittal, for the information of your clients and your use in accepting the Offer and tendering shares of your clients;

3. A form of letter that may be sent to your clients for whose account you hold shares registered in your name or in the name of a nominee, with an Instruction Form provided for obtaining such client’s instructions with regard to the Offer;

4. Notice of Guaranteed Delivery with respect to shares, to be used to accept the Offer in the event you are unable to deliver the share certificates, together with all other required documents, to the depositary before the Expiration Time (as defined in the Offer to Purchase), or if the procedure for book-entry transfer cannot be completed before the Expiration Time; and

5. Return envelope addressed to Wells Fargo Bank, N.A. as the depositary.

Certain conditions to the Offer are described in Section 7 of the Offer to Purchase.

We urge you to contact your clients as promptly as possible. Please note that the Offer, proration period and withdrawal rights will expire at 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless the Offer is extended.

Under no circumstances will the Company pay any interest on the purchase price of the shares, including but not limited to, by reason of any delay in making payment.

The Company will not pay any fees or commissions to any broker or dealer or other person (other than the dealer manager, the information agent and the depositary, as described in the Offer to Purchase) in connection with the solicitation of tenders of shares pursuant to the Offer. However, the Company will, on request, reimburse you for customary mailing and handling expenses incurred by you in forwarding copies of the enclosed Offer materials to your clients. The Company will pay or cause to be paid any stock transfer taxes applicable to its purchase of shares pursuant to the Offer, except as otherwise provided in the Offer to Purchase and Letter of Transmittal (see Instruction 9 of the Letter of Transmittal).

Any questions and requests for assistance may be directed to us or the information agent at the addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. Any requests for additional copies of the enclosed material may be directed to the information agent.

Very truly yours,

UBS Securities LLC

Nothing contained in this letter or in the enclosed documents shall render you or any other person the agent of the Company, the dealer manager, the depositary, the information agent or any affiliate of any of them or authorize you or any other person to give any information or use any document or make any statement on behalf of any of them with respect to the Offer other than the enclosed documents and the statements contained therein.

EX-99.(A)(1)(E) 6 dex99a1e.htm FORM OF LETTER TO CLIENTS Form of Letter to Clients

Exhibit(a)(1)(E)

Offer to Purchase for Cash

THE CHARLES SCHWAB CORPORATION

Up to 84 million Shares of its Common Stock

at a Purchase Price Not Greater Than $22.50 nor Less Than $19.50 Per Share

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007, UNLESS THE OFFER IS EXTENDED.

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated July 3, 2007 (the “Offer to Purchase”), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”), in connection with the offer by The Charles Schwab Corporation, a Delaware corporation (the “Company”), to purchase for cash up to 84 million shares of its common stock, $0.01 par value per share, at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions of the Offer. Unless the context otherwise requires, all references to the shares shall refer to the common stock of the Company.

On the terms and subject to the conditions of the Offer, the Company will determine a single per share price that it will pay for shares properly tendered and not properly withdrawn from the Offer, taking into account the total number of shares tendered and the prices specified by tendering stockholders. After the Offer expires, the Company will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow it to purchase 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. The Company will purchase all shares properly tendered before the Expiration Time (as defined in the Offer to Purchase) at prices at or below the purchase price selected by the Company and not properly withdrawn, on the terms and subject to the conditions of the Offer, including its “odd lot,” proration and conditional tender provisions. Under no circumstances will the Company pay interest on the purchase price, even if there is a delay in making payment. All shares acquired in the Offer will be acquired at the same purchase price. The Company reserves the right, in its sole discretion, to purchase more than 84 million shares in the Offer, not to exceed 2% of the Company’s outstanding shares (or approximately 25 million shares), without amending or extending the Offer, subject to certain limitations and legal requirements. The Company will return shares tendered at prices greater than the purchase price and shares not purchased because of proration or conditional tender provisions to the tendering stockholders at the Company’s expense approximately five business days after the Offer expires. See Sections 1 and 3 of the Offer to Purchase.

If the number of shares properly tendered and not properly withdrawn prior to the Expiration Time is less than or equal to 84 million shares (or such greater number of shares as the Company may elect to purchase pursuant to the Offer, subject to applicable law), the Company will, on the terms and subject to the conditions of the Offer, purchase all shares so tendered at the purchase price determined by the Company.

On the terms and subject to the conditions of the Offer, if at the Expiration Time more than 84 million shares (or such greater number of shares as the Company may elect to purchase, subject to applicable law) are properly tendered at prices at or below the purchase price selected by the Company and not properly withdrawn prior to the Expiration Time, the Company will buy shares first, from all

stockholders who own beneficially of record, an aggregate of fewer than 100 shares (an “Odd Lot Holder”) who properly tender all their shares at prices at or below the purchase price selected by the Company (tenders of fewer than all of the shares owned by such holder will not qualify for this preference) and completes the section entitled, “Odd Lots” in the Letter of Transmittal, second, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase, from all other stockholders who properly tender shares at prices at or below the purchase price selected by the Company on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares, as described in Section 1 of the Offer to Purchase, and third, if necessary to permit the Company to purchase 84 million shares (or such greater number of shares as the Company may elect to purchase, subject to applicable law), from holders who have conditionally tendered shares at prices at or below the purchase price selected by the Company (and the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares. See Sections 1, 3 and 6 of the Offer to Purchase.

We are the owner of record of shares held for your account. As such, we are the only ones who can tender your shares, and then only pursuant to your instructions. We are sending you the Letter of Transmittal for your information only; you cannot use it to tender shares we hold for your account.

Please instruct us as to whether you wish us to tender any or all of the shares we hold for your account on the terms and subject to the conditions of the Offer.

Please note the following:

1. You may tender your shares at prices not greater than $22.50 nor less than $19.50 per share, as indicated in the attached Instruction Form, net to you in cash, less any applicable withholding taxes and without interest.

2. You should consult with your financial or tax advisor on the possibility of designating the priority in which your shares will be purchased in the event of proration.

3. The Offer is not conditioned upon any minimum number of shares being tendered, but is subject to certain conditions. See Section 7 of the Offer to Purchase.

4. The Offer, withdrawal rights and proration period will expire at 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless the Company extends the Offer.

5. The Offer is for up to 84 million shares, constituting approximately 7% of the total number of issued and outstanding shares of the Company’s common stock as of June 29, 2007.

6. Tendering stockholders who are registered stockholders or who tender their shares directly to Wells Fargo Bank, N.A., the depositary for the Offer, will not be obligated to pay any brokerage commissions or fees to the Company or the dealer manager, solicitation fees, or, except as set forth in the Offer to Purchase and the Letter of Transmittal, stock transfer taxes on the Company’s purchase of shares under the Offer.

7. If you wish to tender portions of your shares at different prices, you must complete a separate Instruction Form for each price at which you wish to tender each such portion of your shares. We must submit separate Letters of Transmittal on your behalf for each price you will accept for each portion tendered.

8. If you are an Odd Lot Holder and you instruct us to tender on your behalf all of the shares that you own at prices at or below the purchase price selected by the Company before the Expiration Time and check the box captioned “Odd Lots” on the attached Instruction Form, the Company, on the terms and subject to the conditions of the Offer, will accept all such shares for purchase before proration, if any, of the purchase of other shares properly tendered at prices at or below the purchase price and not properly withdrawn.

9. If you wish to condition your tender upon the purchase of all shares tendered or upon the Company’s purchase of a specified minimum number of the shares which you tender, you may elect to do so and thereby avoid possible proration of your tender. The Company’s purchase of shares from all tenders which are so conditioned, to the extent necessary, will be determined by random lot. To elect such a condition, complete the section captioned “Conditional Tender” in the attached Instruction Form.

If you wish to have us tender any or all of your shares, please so instruct us by completing, executing, detaching and returning to us the attached Instruction Form. If you authorize us to tender your shares, we will tender all your shares unless you specify otherwise on the attached Instruction Form.

Your prompt action is requested. Your Instruction Form should be forwarded to us in ample time to permit us to submit a tender on your behalf before the Expiration Time of the Offer. Please note that the Offer, proration period and withdrawal rights will expire at 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless the Offer is extended.

The Offer is being made solely under the Offer to Purchase and the related Letter of Transmittal and is being made to all record holders of shares of the Company’s common stock. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of shares residing in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

The Company’s board of directors has approved the Offer. However, neither the Company nor any member of its board of directors, the dealer manager, the information agent or the depositary makes any recommendation to you as to whether you should tender or refrain from tendering your shares or as to the price or prices at which you may choose to tender your shares. The Company has not authorized any person to make any such recommendation. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender and the price or prices at which your shares should be tendered. In doing so, you should read carefully the information in the Offer to Purchase and in the related Letter of Transmittal, including the Company’s reasons for making the Offer. See Section 2 of the Offer to Purchase. You should discuss whether to participate in the Offer with your financial or tax advisor.

that the Company is currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding common stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be at the same price per share as is determined and paid in the Offer and will be paid on the 11th business day following the Expiration Time. None of the Company’s other directors and executive officers intends to tender any of their shares in the Offer, except for Stephen T. McLin, a director, who intends to tender 25,000 shares. See Section 11 of the Offer to Purchase.

Instruction Form with Respect to

Offer to Purchase for Cash

THE CHARLES SCHWAB CORPORATION

Up to 84 Million Shares of its Common Stock

at a Purchase Price Not Greater Than $22.50 nor Less Than $19.50 Per Share

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated July 3, 2007 (the “Offer to Purchase”), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”), in connection with the offer by The Charles Schwab Corporation, a Delaware corporation (the “Company”), to purchase for cash up to 84 million shares of its common stock, $0.01 par value per share, at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions of the Offer. Unless the context otherwise requires, all references to the shares shall refer to the common stock of the Company.

The undersigned hereby instruct(s) you to tender to the Company the number of shares indicated below or, if no number is indicated, all shares you hold for the account of the undersigned, at the price per share indicated below, on the terms and subject to the conditions of the Offer.

Number of shares to be tendered by you for the account of the undersigned: shares*

* Unless otherwise indicated, it will be assumed that all Company shares held by us for your account are to be tendered.

PRICE (IN DOLLARS) PER SHARE

AT WHICH SHARES ARE BEING TENDERED

(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)

Check only one box under (1) or (2) below. If more than one box or if no box is checked, there is no proper tender of shares.

1.	Shares Tendered at Price Determined in the Tender Offer

[ ]

2.	Shares Tendered at Price Determined by Stockholder

[ ]

price must complete a separate Instruction Form for each price at which shares are tendered. The same shares cannot be tendered, unless previously properly withdrawn as provided in Section 4 of the Offer to Purchase, at more than one price.



[ ] $19.50	[ ] $20.10	[ ] $20.70	[ ] $21.30	[ ] $21.90	[ ] $22.50

[ ] $19.60	[ ] $20.20	[ ] $20.80	[ ] $21.40	[ ] $22.00

[ ] $19.70	[ ] $20.30	[ ] $20.90	[ ] $21.50	[ ] $22.10

[ ] $19.80	[ ] $20.40	[ ] $21.00	[ ] $21.60	[ ] $22.20

[ ] $19.90	[ ] $20.50	[ ] $21.10	[ ] $21.70	[ ] $22.30

[ ] $20.00	[ ] $20.60	[ ] $21.20	[ ] $21.80	[ ] $22.40

ODD LOTS

(See Instruction 6 of the Letter of Transmittal)

[ ]

In addition, the undersigned is tendering shares either (check one box):

[ ]	at the purchase price, as the same shall be determined by the Company in accordance with the terms of the Offer (persons checking this box need not indicate the price per share above); or

[ ]	at the price per share indicated under the caption “Shares Tendered at Price Determined by Stockholder” in the box entitled “Price (in Dollars) Per Share at Which Shares are Being Tendered” set forth above in this Instruction Form.

CONDITIONAL TENDER

(See Instruction 7 of the Letter of Transmittal)

[ ]	The minimum number of shares that must be purchased, if any are purchased, is: shares.

[ ]	The tendered shares represent all shares held by the undersigned.

Signature(s):

Name(s):

(PLEASE PRINT)

Taxpayer Identification or Social Security Number:

Address(es):

(INCLUDING ZIP CODE)

Daytime Area Code and Telephone Number:

Dated: , 2007

The method of delivery of this Instruction Form is at the sole election and risk of the tendering stockholder. If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

EX-99.(A)(1)(G) 7 dex99a1g.htm SUMMARY ADVERTISEMENT PUBLISHED IN THE WALL STREET JOURNAL ON JULY 3, 2007 Summary Advertisement published in The Wall Street Journal on July 3, 2007

Exhibit (a)(1)(G)

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares. The Offer (as defined below) is made solely by the Offer to Purchase, dated July 3, 2007, and the related Letter of Transmittal, and any amendments or supplements thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of shares of common stock in any jurisdiction in which the making or acceptance of offers to sell shares would not be in compliance with the laws of that jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of The Charles Schwab Corporation by UBS Securities LLC, the dealer manager for the Offer, or by one or more registered brokers or dealers registered under the laws of that jurisdiction.

Notice of Offer to Purchase for Cash

THE CHARLES SCHWAB CORPORATION

Up to 84 million shares of its Common Stock

at a Purchase Price Not Greater Than $22.50 nor Less Than $19.50 Per share

The Charles Schwab Corporation, a Delaware corporation (the “Company”), is offering to purchase for cash up to 84 million shares (or such lesser number of shares as are properly tendered and not properly withdrawn) of its common stock, par value $0.01 per share, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 3, 2007, and in the related Letter of Transmittal (which together, as they may be amended and supplemented from time to time, constitute the “Offer”). The Company is inviting its stockholders to tender their shares at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions of the Offer. Unless the context otherwise requires, all references to the shares shall refer to the common stock of the Company.

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, JULY 31, 2007, UNLESS THE OFFER IS EXTENDED.

The Offer is not conditioned upon any minimum number of shares being tendered, but is subject to certain conditions as described in the Offer to Purchase.

The Company’s board of directors has approved the Offer. However, neither the Company nor any member of its board of directors, the dealer manager, the information agent or the depositary makes any recommendation to the Company’s stockholders as to whether to tender or refrain from tendering their shares or as to the price or prices at which stockholders may choose to tender their shares. The Company has not authorized any person to make any such recommendation. Stockholders must make their own decisions as to whether to tender their shares and, if so, how many shares to tender and the price or prices at which their shares should be tendered. In doing so, stockholders should read carefully the information in the Offer to Purchase and in the related Letter of Transmittal, including the Company’s reasons for making the Offer, and should discuss whether to participate in the Offer with their financial or tax advisors.

In accordance with Instruction 5 of the Letter of Transmittal, stockholders desiring to tender shares must either (1) specify that they are willing to sell their shares to the Company at the purchase price determined in the Offer, which will be deemed to be tendered at the minimum price of $19.50 per share (stockholders should understand that this election may lower the purchase price and could result in shares being purchased at the minimum price of $19.50 per share in the Offer) or (2) specify the price, not greater than $22.50 nor less than $19.50 per share, at which they are willing to sell their shares to the Company in the Offer. Stockholders must follow the procedures set forth in Section 3 of the Offer to Purchase and in the Letter of Transmittal.

On the terms and subject to the conditions of the Offer, through a modified “Dutch Auction” process, the Company will determine a single per share price, not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, that it will pay for shares properly tendered and not properly withdrawn from the Offer, taking into account the total number of shares tendered and the prices specified by tendering stockholders. The Company will look at the prices chosen by stockholders for all of the shares properly tendered and will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow the Company to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn prior to the Expiration Time. All shares the Company acquires in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price. The Company will purchase only shares properly tendered at prices at or below the purchase price the Company determines and not properly withdrawn. Under no circumstances will the Company pay interest on the purchase price for the shares, including but not limited to, by reason of any delay in making payment. Because of the “odd lot” priority, proration and conditional tender provisions described in the Offer to Purchase, the Company may not purchase all of the shares tendered at prices at or below the purchase price selected by the Company if more than the number of shares the Company seeks are properly tendered and not properly withdrawn. Subject to certain limitations and legal requirements, the Company reserves the right to accept for payment, according to the terms and conditions of this Offer, up to an additional 2% of its outstanding shares (or approximately 25 million shares), without amending or extending the Offer.

The term “Expiration Time” means 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, unless the Company, in its sole discretion, shall have extended the period of time during which the Offer will remain open, in which event the term “Expiration Time” shall refer to the latest time and date at which the Offer, as so extended by the Company, shall expire. Participants in the Company’s SchwabPlan Retirement Savings and Investment Plan (the “Retirement Plan”) have an earlier deadline of 4:00 p.m. Eastern Time, on Friday, July 27, 2007, to tender the shares allocated to their accounts, unless the Company extends the Offer, in which case participants may tender their shares until 4:00 p.m., Eastern Time, on the day which is two business days prior to the expiration of the Offer, as extended. Participants should read carefully the separate instructions provided to each eligible participant of the Retirement Plan.

For purposes of the Offer, the Company will be deemed to have accepted for payment (and therefore purchased), subject to the “odd lot,” proration and conditional tender provisions of the Offer, shares that are properly tendered at prices at or below the purchase price selected by the Company and not properly withdrawn, only when, as and if the Company gives oral or written notice to Wells Fargo Bank, N.A., the depositary for the Offer, of its acceptance of such shares for payment under the Offer. The Company will make payment for shares tendered and accepted for payment under the Offer only after timely receipt by the depositary of certificates for such shares or of timely confirmation of a book-entry transfer of such shares into the depositary’s account at the “book-entry transfer facility” (as defined in the Offer to Purchase), a properly completed and duly executed Letter of Transmittal or, in the case of a book-entry transfer, an “agent’s message” (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal.

Upon the terms and subject to the conditions of the Offer, if more than 84 million shares (or such greater number of shares as the Company may elect to purchase, subject to applicable law) have been properly tendered at prices at or below the purchase price selected by the Company and not properly

withdrawn prior to the Expiration Time, the Company will purchase properly tendered shares on the following basis:

•

first, from all holders of “odd lots” of less than 100 shares who: tender all of their shares at prices at or below the purchase price selected by the Company (tenders of fewer than all of the shares owned by such holder will not qualify for this preference); and complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery;

•

second, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase, from all other stockholders who tender shares at prices at or below the purchase price selected by the Company, on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares, as described in Section 1 of the Offer to Purchase; and

•

third, only if necessary to permit the Company to purchase 84 million shares (or such greater number of shares as the Company may elect to purchase, subject to applicable law) from holders who have conditionally tendered shares at prices at or below the purchase price selected by the Company (and the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

The Company will return all tendered shares that it has not purchased in the Offer to the tendering stockholders or, in the case of shares delivered by book-entry transfer, will credit the account at the book-entry facility from which the transfer has been previously made at the Company’s expense approximately five business days after the Expiration Time.

The Company expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any shares by giving oral or written notice of such extension to the depositary and making a public announcement thereof no later than 9:00 a.m., Eastern Time, on the next business day after the last previously scheduled or announced Expiration Time. During any such extension, all shares previously tendered and not properly withdrawn will remain subject to the Offer and to the right of a tendering stockholder to withdraw such stockholder’s shares. The Company also expressly reserves the right to terminate the Offer, as described in the Offer to Purchase. The Company further reserves the right, regardless of whether any of the circumstances described in the Offer to Purchase shall have occurred or shall be deemed by the Company to have occurred, to amend the Offer in any respect, including without limitation by increasing or decreasing the consideration offered. The Company will announce any such termination or amendment to the Offer by making a public announcement of the termination or amendment in accordance with applicable law.

Tenders of shares under the Offer are irrevocable, except that such shares may be withdrawn at any time prior to the Expiration Time, and, unless previously accepted for payment by the Company under the Offer, may also be withdrawn at any time after 12:00 midnight, Eastern Time, on Tuesday, August 28, 2007. For such withdrawal to be effective, the depositary must timely receive a written, telegraphic or facsimile transmission notice of withdrawal at one of its addresses or its facsimile number as set forth in the Offer to Purchase. Any such notice of withdrawal must specify the name of the tendering stockholder, the number of shares to be withdrawn and the name of the registered holder of such shares, if different from the name of the person who tendered the shares. If the certificates for shares

to be withdrawn have been delivered or otherwise identified to the depositary, then, prior to the release of such certificates, the tendering stockholder must submit the serial numbers shown on such certificates to the depositary and the signature(s) on the notice of withdrawal must be guaranteed by an “eligible institution” (as defined in the Offer to Purchase), unless an eligible institution has tendered those shares. If more than one Letter of Transmittal has been used or shares have been otherwise tendered by a stockholder in more than one group of shares, the stockholder may withdraw shares using either separate notices of withdrawal or a combined notice of withdrawal, so long as the information specified above is included. If shares have been tendered pursuant to the procedure for book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal must also specify the name and the number of the account at the book-entry transfer facility to be credited with the withdrawn shares and must otherwise comply with such book-entry transfer facility’s procedures.

The Company will determine, in its sole discretion, all questions as to the form and validity of any notice of withdrawal, including the time of receipt, and such determination will be final and binding, subject to a court of law having jurisdiction regarding such matters. None of the Company, UBS Securities LLC, as the dealer manager, D.F. King & Co., Inc., as the information agent, Wells Fargo Bank, N.A., as the depositary, or any other person will be under any duty to give notification of any defects or irregularities in any tender or notice of withdrawal or incur any liability for failure to give any such notification. The information required to be disclosed by Rule 13e-4(d)(1) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference.

Generally, a stockholder will be subject to U.S. federal income taxation when the stockholder receives cash from the Company in exchange for the shares that the stockholder tenders. A non-U.S. stockholder may be subject to withholding at a rate of 30% on payments received pursuant to the Offer. Stockholders are strongly encouraged to read the Offer to Purchase for additional information regarding the U.S. federal income tax consequences of participating in the Offer and to consult their tax advisors.

The Company has entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Charles R. Schwab, the Company’s Chairman and Chief Executive Officer and its largest stockholder, and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and the Company has agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that the Company is currently offering to purchase). The number of shares to be repurchased is calculated to result in Mr. Schwab maintaining the same beneficial ownership interest in the Company’s outstanding common stock that he currently has (approximately 18%) and does not take into consideration Mr. Schwab’s outstanding options to acquire stock. The purchase price under the Stock Purchase Agreement will be at the same price per share as is determined and paid in the Offer and will be paid on the 11th business day following the Expiration Time (as defined below). None of the Company’s other directors and executive officers intends to tender any of their shares in the Offer, except for Stephen T. McLin, a director, who intends to tender 25,000 shares.

The purchase of shares pursuant to the Offer is part of the plan announced by the Company on July 2, 2007 to return up to approximately $3.5 billion of capital to its stockholders. In addition to the approval of the purchase of approximately $1.9 billion of shares in the Offer and $400 million of shares under the Stock Purchase Agreement, the Company’s board of directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007.

Stockholders of record of the Company as of the close of business on July 24, 2007, will have the right to receive the special dividend even if they choose to tender their shares in the Offer and regardless of whether they tender their shares before or after July 24, 2007.

The Company’s management and board of directors have reviewed alternatives for using the after-tax proceeds realized from the sale of U.S. Trust Corporation and the Company’s other available liquid financial resources. They have also evaluated the Company’s capital structure, financial position, dividend policy, operations, strategic plan, the anticipated cost and availability of financing, the recent market prices of the Company’s common stock as well as the Company’s expectations for the future and believe that the Offer, the purchase of shares pursuant to the Stock Purchase Agreement, and the special cash dividend are prudent uses of the Company’s financial resources and an efficient means to return capital to its stockholders.

The Offer to Purchase and the related Letter of Transmittal contain important information that stockholders should read carefully before they make any decision with respect to the Offer. Copies of the Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of shares whose names appear on the Company’s stockholder list and will be furnished to brokers, dealers, commercial banks, trust companies (including the trustee of the Retirement Plan) and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of shares. Persons who hold vested stock options will be provided a copy of the Offer to Purchase and the related Letter of Transmittal upon request to the information agent at the telephone numbers and address set forth below. Such persons should read the Offer to Purchase for further information regarding how they can participate in the Offer.

Please direct any questions or requests for assistance to the information agent or the dealer manager at their respective telephone numbers and addresses set forth below. Please direct requests for additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery to the information agent at the telephone numbers and address set forth below. The information agent will promptly furnish to stockholders additional copies of these materials at the Company’s expense. Stockholders may also contact their broker, dealer, commercial bank, trust company or nominee for assistance concerning the Offer.

The Depositary for the Offer is:

Wells Fargo Bank, N.A.


By Mail:		By Hand or Overnight Courier:

Wells Fargo Bank, N.A. Shareowner Services Voluntary Corporate Actions P.O. Box 64854 St. Paul, Minnesota 55164-0854		Wells Fargo Bank, N.A. Shareowner Services Voluntary Corporate Actions 161 North Concord Exchange South St. Paul, Minnesota 55075

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street

New York, New York 10005

Stockholders Call Toll-Free: (800) 659-6590

Banks and Brokers Call Collect: (212) 269-5550

The Dealer Manager for the Offer is:

UBS Investment Bank

299 Park Avenue

New York, New York 10171

Toll-Free: (877) 827-4180

Collect: (212) 821-4180

July 3, 2007

EX-99.(A)(1)(H) 8 dex99a1h.htm FORM OF LETTER TO PARTICIPANTS 401(K) EQUITY UNIT FUND Form of Letter to Participants 401(k) Equity Unit Fund

Exhibit (a)(1)(H)

IMMEDIATE ATTENTION REQUIRED

July 3, 2007

Dear Plan Participant holding units in the 401(k) Equity Unit Fund of the SchwabPlan Retirement Savings and Investment Plan:

The enclosed tender offer materials and Direction Form require your immediate attention.

The tender offer materials describe an offer by The Charles Schwab Corporation (the “Company”), to purchase up to 84 million shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, and without interest (the “Offer”).

The Offer applies not only to shares you may hold directly, but also to shares (both vested and unvested) of Common Stock you may hold as a participant in the SchwabPlan Retirement Savings and Investment Plan (the “Plan”), which are held as part of your holdings in the 401(k) Equity Unit Fund, a unitized stock fund offered in the Plan.

If you also hold units of the ESOP Equity Unit Fund in the Plan, you will receive separate tender offer materials and Direction Forms. If you wish to tender shares of Common Stock from either of the Equity Unit Funds or both, you must complete the separate tender offer materials for the applicable Fund(s), or complete the tender offer materials online as described in the following paragraph.

As described below, you have the right to direct the Plan’s sub-custodian and purchasing agent, Investors Bank & Trust Company, (the “Purchasing Agent”), to tender shares of the Common Stock that are part of the units you hold in the 401(k) Equity Unit Fund as a participant in the Plan. If you choose to tender shares of Common Stock that are part of the units you hold in the 401(k) Equity Unit Fund, you must submit your tender direction to https://www.tabulationsplus.com/schw-401k (the “Internet Direction Form”) or you must complete the enclosed Direction Form and return it to Ellen Philip Associates (the “Tabulator”) in the enclosed return envelope. The Tabulator will provide your directions to the Purchasing Agent on your behalf. NO MATTER HOW SUBMITTED, IF YOUR PROPERLY COMPLETED DIRECTION IS NOT RECEIVED BY THE TABULATOR BY 4:00 P.M., EASTERN TIME, ON FRIDAY, JULY 27, 2007, UNLESS THE TENDER OFFER IS EXTENDED, THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE 401(K) EQUITY UNIT FUND WILL NOT BE TENDERED IN ACCORDANCE WITH THE TENDER OFFER. If the Offer is extended, the deadline for receipt of your direction will be, to the extent feasible, at 4:00 p.m., Eastern Time, two business days prior to the expiration date of the Offer. If you do not submit the Internet Direction Form on a timely basis or do not complete the enclosed Direction Form and return it to the Tabulator on a timely basis, you will be deemed to have elected not to participate in the Offer and no shares allocable to the units you hold in the 401(k) Equity Unit Fund will be tendered.

You are not eligible to participate in the Offer using the Internet Direction Form or the enclosed Direction Form unless you are a participant in the Plan and you hold units of the 401(k) Equity Unit Fund as of 4:00 p.m., Eastern Time, on Friday, July 27, 2007.

The remainder of this letter describes the 401(k) Equity Unit Fund and summarizes the Offer, your rights under the Plan and the procedures for completing and submitting the Internet Direction Form or the enclosed Direction Form. You should also review the more detailed information provided in the Offer to Purchase, dated July 3, 2007 (the “Offer to Purchase”), enclosed with this letter.

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401(k)

About The Charles Schwab Corporation Common Stock Investments in the Plan

As a Plan participant, you have the opportunity to direct that contributions made to your account in the Plan be invested in the Plan’s 401(k) Equity Unit Fund. The 401(k) Equity Unit Fund is what is known as a “unitized” stock fund. A unitized stock fund consists primarily of shares of Common Stock plus an amount of cash (or cash equivalents) intended to provide for liquidity within the Fund. If you direct that a portion of your Plan account be invested in the 401(k) Equity Unit Fund, your Plan account is credited with units that represent your interest in the 401(k) Equity Unit Fund, and not in actual shares of Common Stock.

Each unit of the 401(k) Equity Unit Fund is comprised of a certain number of shares of Common Stock and a small amount of cash or cash equivalents. The Tabulator, together with the Plan’s recordkeeper (the “Recordkeeper”) as authorized by the trustee for the Plan (the “Plan Trustee”), will determine the actual number of shares to tender based on instructions received from Plan participants and by calculating the number of shares allocable to the units of the 401(k) Equity Unit Fund held by Plan participants as of 4:00 p.m., Eastern Time on July 27, 2007 for which instructions to tender have been received. The Purchasing Agent may not tender shares for which no directions are received, nor may the Plan Administrator instruct the Plan Trustee to direct the Purchasing Agent to tender those shares. On or about July 31, 2007, the Purchasing Agent will transfer the tendered shares to Wells Fargo, the designated depositary for the Offer.

To obtain information on the number of units in the 401(k) Equity Unit Fund you hold under the Plan, information on the number of shares of Common Stock that are currently allocable to your units of the 401(k) Equity Unit Fund, or other general information about your 401(k) Equity Unit Fund holdings in the Plan, please call the Schwab Retirement Plan Services Hotline at 1-800-724-7526 or visit schwabplan.com. Login as a participant, select the “Account” tab, and then select “Positions”, and you will be able to view the number and market value of the units of the 401(k) Equity Unit Fund you currently hold. To calculate the approximate number of shares of Common Stock that are allocated to you based on the number of the units of the 401(k) Equity Unit Fund you currently hold in the Plan, multiply the current market value of your units in the 401(k) Equity Unit Fund by 99.25% (this is less than 100% to account approximately for the cash or cash equivalents held in the fund) and then divide that result by the current market price of Schwab Common Stock.

About the Offer

The Company has made an Offer to its stockholders to purchase up to 84 million shares of its common stock, $0.01 par value per share, at a price not greater than $22.50 nor less than $19.50 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions set forth in the enclosed Offer to Purchase. The Company will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow it to purchase 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn, subject to its right to increase the total number of shares purchased to the extent permitted by law. All shares acquired in the Offer will be acquired at the same purchase price (such purchase price, the “Final Purchase Price”) regardless of whether the stockholder tendered at a lower price.

The enclosed Offer to Purchase sets forth the objectives, terms and conditions of the Offer and is being provided to all of the Company’s stockholders, including participants in the Plan. To understand the Offer fully and for a more complete description of the terms and conditions of the Offer, including its proration provisions, you should carefully read the entire Offer to Purchase. All of the terms and conditions of the Offer apply to Plan participants, except as specifically set forth in this letter.

The Offer includes shares held by Plan participants as part of their holdings in the 401(k) Equity Unit Fund. As of June 28, 2007, the Plan held approximately 18,650,882 shares of Common Stock in the 401(k) Equity Unit Fund. Only the Purchasing Agent can tender these shares in the Offer.

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Nonetheless, as a participant under the Plan, you have the right to direct the Purchasing Agent whether or not to tender some or all of the shares attributable to your holdings in the 401(k) Equity Unit Fund, and at what price or prices, and the Plan Trustee will deliver your instructions received from the Tabulator to the Purchasing Agent. Absent specific instructions to the contrary from the Plan Administrator as may be required by applicable law, the Purchasing Agent will tender shares attributable to the Plan in accordance with your instructions and the applicable direction by the Plan Trustee, and the Purchasing Agent will not tender shares attributable to the Plan for which it does not receive timely instructions. If you do not submit the Internet Direction Form on a timely basis or do not complete the enclosed Direction Form and return it to the Tabulator on a timely basis, you will be deemed to have elected not to participate in the Offer and no shares of Common Stock held as part of the units you hold in the 401(k) Equity Unit Fund will be tendered.

For information related to the tender offer, please contact the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590 between 8:00 a.m. and 10:00 p.m., Eastern Time, Monday through Friday and 11:00 a.m. and 6:00 p.m., Eastern Time, on Saturday.

It Is Your Decision Whether to Tender

The Board of Directors of the Company has approved the Offer. However, none of the Company, its Board of Directors, the Plan Administrator, the Plan Trustee, the Purchasing Agent, the Tabulator, the Recordkeeper, UBS Securities LLC (the “Dealer Manager” for the Offer), Wells Fargo Bank, N.A. (the “Depositary” for the Offer), or D.F. King & Co., Inc. (the “Information Agent” for the Offer) makes any recommendation to you as to whether you should tender or refrain from tendering the shares allocable to the units you hold in the 401(k) Equity Unit Fund or as to the purchase price or prices at which you may choose to tender the shares allocable to the units you hold in the 401(k) Equity Unit Fund. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE 401(K) EQUITY UNIT FUND AND, IF SO, WHAT PERCENTAGE OF THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE 401(K) EQUITY UNIT FUND TO TENDER AND THE PRICE OR PRICES AT WHICH TO TENDER. In doing so, you should read and evaluate carefully the information in the Offer, including the Company’s reasons for making the Offer, and should discuss whether to tender your shares with your financial or tax advisor.

On July 2, 2007, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Charles R. Schwab, our Chairman and Chief Executive Officer and our largest stockholder, and with certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. Under the Stock Purchase Agreement, Mr. Schwab and the other stockholders who are parties to the agreement have agreed not to participate in the Offer, and instead, have agreed to sell, and the Company has agreed to purchase, 18 million shares (which will be proportionately increased or decreased if the number of shares purchased in the Offer is higher or lower than the number of shares that the Company is currently offering to purchase). None of our other directors and executive officers intends to tender any of their shares in the Offer, except for Stephen T. McLin, a director, who intends to tender 25,000 shares.

Tax Consequences

While Plan participants will not recognize any immediate tax gain or loss as a result of the Offer, the tax treatment of future withdrawals or distributions from the Plan may be adversely impacted by a tender and sale of shares of Common Stock that are part of the units you hold in the 401(k) Equity Unit Fund. Specifically, under current federal income tax rules, if you receive from the Plan a lump sum distribution that includes Schwab shares that have increased in value while they were held by the Plan, you may have, under certain circumstances, the option of deferring the payment of taxes on this increase in value until you sell the shares. This increase in value is referred to as “net unrealized appreciation.” When the shares are sold, any gain up to the amount of the untaxed net unrealized appreciation will be taxed as long-term capital gain. If shares credited to your individual

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401(k) Equity Unit Fund are purchased by the Company in the Offer, you will no longer be able to take advantage of this tax benefit on these shares. Please log on to www.schwabplan.com and click on “Plan Services” – “Withdrawals” – “Distribution Center” – “Distribution Decision Making Guide” – “What to do with Your Company Stock” for more information regarding the tax issues related to the shares of Common Stock held in the 401(k) Equity Unit Fund. In addition, you should discuss whether to tender your shares with your financial or tax advisor.

Effect of Tender on Your Account: Investment Proceeds, the Restricted Period

For any shares allocable to the units you hold in the 401(k) Equity Unit Fund in the Plan that are tendered and purchased by the Company, the Company will pay cash to the Plan. INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT RECEIVE ANY CASH TENDER PROCEEDS DIRECTLY. ALL SUCH PROCEEDS WILL BE INVESTED IN YOUR ACCOUNT IN THE PLAN. DISTRIBUTIONS TO INDIVIDUAL PLAN PARTICIPANTS OUTSIDE OF THE PLAN CAN ONLY BE MADE IN ACCORDANCE WITH THE TERMS OF THE PLAN.

Pursuant to the terms of the Plan, the Plan Trustee will receive the cash proceeds with respect to the shares allocable to the units you hold in the 401(k) Equity Unit Fund and will process sales of a proportionate number of units of the 401(k) Equity Unit Fund whose number is calculated based on the underlying allocated number of shares tendered. The cash proceeds resulting from the sale of units you hold in the 401(k) Equity Unit Fund will be invested within your Plan account in accordance with the investment elections you have on file at the time proceeds are received. If you do not have investment elections on file, the proceeds will be invested on your behalf in the SchwabPlan Stable Value Fund. With respect to Plan participants whose employment at Schwab was terminated previously, your proceeds will be invested pursuant to your investment elections on file, which may have been adjusted based on changes made to the investment options available under the Plan. If you would like more information regarding your investment elections on file or if you want to change your investment elections as they apply to the tender offer proceeds, log on to schwabplan.com and change your investment elections for future contributions or call the Schwab Retirement Plan Hotline at 1-800-724-7526. Such investment will occur as soon as administratively possible after receipt of proceeds. Once the proceeds have been received and have been invested, you may transfer them to other available investment funds within the Plan.

The period from 4:00 p.m., Eastern Time, on Friday, July 27, 2007, or such later date if the Offer is extended, until such time as the processing of participant accounts is completed is referred to as the “Restricted Period.” Please note that during the Restricted Period, shares of Common Stock that are in the “tendered position” and your units in the 401(k) Equity Unit Fund representing such shares will not be available for other transactions through the Plan. This includes any rebalancing, transfers, loans, and withdrawals. If you request any transaction through the Plan’s website that would involve shares of Common Stock in a tendered position, the transaction will be blocked.

In addition, due to technical limitations of schwabplan.com, if you tender any shares of Common Stock allocable to the units you hold in the 401(k) Equity Unit Fund, during the Restricted Period, you also will not be able to conduct transactions through the schwabplan.com automated system that involve any units in the 401(k) Equity Unit Fund representing the non-tendered shares of Common Stock. However, you may conduct transactions that involve units in the 401(k) Equity Unit Fund representing the non-tendered shares of Common Stock by calling the Schwab Retirement Plan Hotline at 1-800-724-7526.

Notwithstanding the foregoing, please be advised that any pending distribution requests from the Plan by terminated employees who elect to participate in the Offer that are not processed before July 27, 2007 will be delayed until after the tender offer proceeds have been received by the Plan. In the event that the Offer is extended, the Restricted Period, if feasible, will be temporarily lifted and/or delayed until two business days prior to the new completion date of the Offer, as extended, at which time the Restricted Period will (re)commence. You may call the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590 to obtain updated information on

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expiration dates, deadlines, the Restricted Period and restrictions on units representing tendered shares. You also may call UBS Securities LLC, the Dealer Manager for the Offer at 1-877-827-4180 for more information regarding the tender offer.

Confidentiality

To assure the confidentiality of your decision, the Tabulator will tabulate the Internet Direction Forms and Direction Forms, and return aggregate results to the Plan Trustee and participant-level results to the Plan’s Recordkeeper, and the Plan Trustee will provide aggregate results to the Purchasing Agent. Neither the Tabulator or Purchasing Agent, nor their respective affiliates or agents, will make your individual direction available to the Company. The Plan Trustee will not have access to the participant-level results. The Plan’s Recordkeeper, a wholly owned subsidiary of the Company, will have access to the participant-level results in order to perform calculations of the allocable shares of Common Stock available for tender by Plan participants and the final shares of Common Stock to be tendered, but will not communicate participant-level results to the Company.

Procedure To Submit Your Tender Direction

You may submit your tender direction on the Internet Direction Form at https://www.tabulationsplus.com/schw-401k or by completing the enclosed Direction Form and returning it to the Tabulator. For purposes of the final tabulation, the Tabulator will apply your instructions to the number of shares allocable to the units you hold in the 401(k) Equity Unit Fund as of 4:00 p.m., Eastern Time, on July 27, 2007, or as of the applicable later date if the Offer is extended and will provide the aggregate number of shares tendered on behalf of the Plan to the Plan Trustee for delivery to the Purchasing Agent.

If you do not properly complete and submit the Internet Direction Form by the deadline specified or do not properly complete and return the Direction Form by the deadline specified, the shares of Common Stock allocable to the units you hold in the 401(k) Equity Unit Fund will be considered NOT TENDERED. Note that you only need to submit either the Internet Direction Form or the enclosed Direction Form — submission of both forms is neither required nor encouraged.

You have the following options with respect to the tender offer:

•

You may elect to accept the Final Purchase Price (marked on the election form as TBD) with respect to some or all of the shares allocable to the units you hold in the 401(k) Equity Unit Fund, in which case the shares allocable to the units you hold in the 401(k) Equity Unit Fund will be deemed tendered at the minimum price of $19.50 unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. You should understand that this election may effectively lower the Final Purchase Price and could result in the shares allocable to the units you hold in the 401(k) Equity Unit Fund being purchased at the minimum price of $19.50 per share. However, by electing to accept the Final Purchase Price you can maximize the chance of all of the shares allocable to the units you hold in the 401(k) Equity Unit Fund being accepted for tender.

•

You may direct the tender of shares allocable to the units you hold in the 401(k) Equity Unit Fund at different prices. To do so, you must state the percentage (in whole numbers) of shares allocable to the units you hold in the 401(k) Equity Unit Fund to be sold at each price by filling in the percentage on the line immediately before the price.

•

If you do not want to tender shares allocable to the units you hold in the 401(k) Equity Unit Fund at a certain price, then leave the applicable line blank. The total of the percentages you provide on the Direction Form may not exceed 100%, but it may be less than 100%. If this amount is less than 100%, you will be deemed to have instructed the Purchasing Agent NOT to tender the entire balance of the shares allocable to the units you hold in the 401(k) Equity Unit Fund.

To complete the Internet Direction Form, go to https://www.tabulationsplus.com/schw-401k, and follow the directions provided therein. To complete the Internet Direction Form, you will need the 401(k) Equity Unit Fund

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Voting Control Number, which is listed at the top of the enclosed Direction Form. If you are unable to determine your 401(k) Equity Unit Fund Voting Control Number please contact the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590. You will have the opportunity to receive confirmation by electronic mail of the receipt of your Internet Direction Form.

If you choose not to submit your directions using the Internet Direction Form and wish to participate in the Offer, you must properly complete the enclosed Direction Form by doing the following:

1. If you wish to tender the shares allocable to the units you hold in the 401(k) Equity Unit Fund, CHECK BOX 1 and complete the table immediately below BOX 1, as follows.

•

Enter a percentage (in whole numbers) next to TBD if you wish to maximize the chance that this TBD percentage of shares allocable to the units you hold in the 401(k) Equity Unit Fund will be purchased in the Offer, as this will indicate that you will accept the purchase price that the Company determines.

•

You may also specify the percentage (in whole numbers) of the shares allocable to the units you hold in the 401(k) Equity Unit Fund that you want to tender at each price indicated.

•

The combination of shares tendered at a TBD and/or at a specified purchase price should equal not more than 100%.

•

If you agree to accept the purchase price determined in the Offer, by electing TBD, the shares allocable to the units you hold in the 401(k) Equity Unit Fund will be deemed to be tendered at the minimum price of $19.50 per share unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. You should understand that this election may lower the purchase price paid for all purchased shares in the Offer and could result in the shares allocable to the units you hold in the 401(k) Equity Unit Fund being purchased at the minimum price of $19.50 per share. You may elect to tender up to 100% of the shares allocable to the units you hold in the 401(k) Equity Unit Fund using TBD.

2. If you do not want to tender any shares allocable to the units you hold in the 401(k) Equity Unit Fund or if you want to revoke your previous election, CHECK BOX 2.

3. Date and sign the Direction Form in the space provided.

4. Return the Direction Form in the enclosed return envelope so that it is received by the Tabulator at the address on the return envelope (P.O. Box 1997, New York, NY 10117-0024) not later than 4:00 p.m., Eastern Time, on Friday, July 27, 2007, unless the Offer is extended, in which case, to the extent feasible, the deadline will be two business days prior to the expiration date of the Offer. If you wish to return the form by overnight courier, please send it to the Tabulator at Ellen Philip Associates, 134 West 26th Street, 5^th Floor, New York, NY 10001. Directions via facsimile will not be accepted.

If you tender your shares using the Internet Direction Form, you will be able to request an email confirmation of your tender. If you tender your shares using the enclosed Direction Form, you will not receive any notification regarding confirmation or acceptance of your tender until the proceeds are deposited in your Plan account.

Note: If you do nothing, that is if you do not complete this Direction Form and you do not complete the Internet Direction Form, then you will be deemed to have elected not to participate in the tender offer and none of the shares allocable to the units you hold in the 401(k) Equity Unit Fund will be tendered.

to waive any defect or irregularity in the tender of any particular shares, and the Company’s interpretation of the terms of the Offer, including the instructions to the Direction form, will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. None of the Company, the Tabulator, the Plan Recordkeeper, the Plan Trustee or the Purchasing Agent is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give such notice.

Your direction will be deemed irrevocable unless revoked by 4:00 p.m., Eastern Time, on Friday, July 27, 2007, unless the Offer is extended by the Company. In order to make an effective revocation, you must submit a new Internet Direction Form or new Direction Form which may be obtained by calling the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590 and requesting an additional Direction Form. Upon receipt of a new properly completed Internet Direction Form or Direction Form by 4:00 p.m. Eastern Time, on Friday July 27, 2007, your previous direction will be deemed canceled. You may direct the re-tendering of any shares allocable to the units you hold in the 401(k) Equity Unit Fund by submitting an additional Internet Direction Form or Direction Form and repeating the previous instructions for directing your tender as set forth in this letter.

After the deadline for returning the Direction Form to the Tabulator, the Tabulator will complete the tabulation of all directions. At the direction of the Plan Trustee, the Purchasing Agent will tender the appropriate number of shares based on information received from the Tabulator on behalf of the Plan, absent specific instructions to the contrary from the Plan Administrator as may be required by applicable law.

After the Offer expires, the Company will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow it to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. All shares acquired in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price. The Company will purchase only those shares properly tendered at prices at or below the purchase price selected by the Company and not properly withdrawn prior to the expiration of the Offer. However, because of the “odd lot” priority, proration and conditional tender provisions described in this Offer to Purchase, the Company may not purchase all of the shares tendered at prices at or below the purchase price selected by the Company if more than the number of shares the Company seeks are properly tendered and not properly withdrawn. Any shares allocable to the units you hold in the 401(k) Equity Unit Fund that are not purchased in the Offer will remain in the 401(k) Equity Unit Fund under the Plan.

The preferential treatment of holders of fewer than 100 shares, as described in the Offer to Purchase, will not apply to participants in the Plan, regardless of the number of shares allocable to the individual units you hold in the 401(k) Equity Unit Fund. Likewise, the conditional tender of shares, as described in the Offer to Purchase, will not apply to participants in the Plan.

Limitations on Following Your Direction

The Internet Direction Form and the enclosed Direction Form allow you to specify the percentage of the shares of Common Stock allocable to the units you hold in the 401(k) Equity Unit Fund that you wish to tender and the price or prices at which you want to tender shares allocable to the units you hold in the 401(k) Equity Unit Fund. As detailed below, when the Purchasing Agent tenders shares on behalf of the Plan, it may be required to tender shares on terms different from those set forth on your Internet Direction Form or Direction Form.

The Employee Retirement Income Security Act of 1974, as amended (“ERISA”) prohibits the sale of shares to the Company for less than “adequate consideration,” which is defined by ERISA for a publicly traded security as the prevailing market price on a national securities exchange. The Plan Administrator will determine “adequate consideration,” based on the prevailing or closing market price of the shares defined as the last-sale-eligible-trade reported to the NASDAQ exchange prior to 4:00:02 p.m. Eastern Time, on July 27, 2007 (the “prevailing market price”). Accordingly, depending on the prevailing market price of the shares on such date, the

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Purchasing Agent, at the direction of the Plan Administrator, may be unable to follow participant directions to tender shares to the Company at certain prices within the offered range. The Purchasing Agent will tender or not tender shares allocable to units you hold in the 401(k) Equity Unit Fund as follows:

•

If the prevailing market price on July 27, 2007 is greater than the maximum tender price offered by the Company in the Offer ($22.50 per share), notwithstanding your direction to tender shares allocable to units you hold in the 401(k) Equity Unit Fund, no shares in the Plan will be tendered and therefore the shares allocable to units you hold in the 401(k) Equity Unit Fund will not be tendered.

•

If the prevailing market price is lower than the price at which you direct shares allocable to the units you hold in the 401(k) Equity Unit Fund to be tendered, the Purchasing Agent will follow your direction, both as to percentage of shares allocable to the units you hold in the 401(k) Equity Unit Fund to be tendered and as to the price at which such shares allocable to the units you hold in the 401(k) Equity Unit Fund are tendered.

•

If the prevailing market price is within the range of $19.50 to $22.50, the Purchasing Agent will follow your direction regarding the percentage of shares allocable to the units you hold in the 401(k) Equity Unit Fund to be tendered, but only with respect to the shares allocable to the units you hold in the 401(k) Equity Unit Fund which were tendered at a price equal to or greater than the prevailing market price.

Shares Held Outside of the Plan

If you also hold shares of Common Stock outside of the Plan (for example, shares you received when you exercised a stock option or shares that you bought on the open market), you will receive a separate mailing of Offer materials to be used to tender those shares. Those Offer materials may not be used to direct the Purchasing Agent to tender or not tender the shares allocable to the units you hold in the 401(k) Equity Unit Fund. Likewise, the tender of shares allocable to the units you hold in the 401(k) Equity Unit Fund under the Plan will not be effective with respect to shares you hold outside of the Plan. The direction to tender or not to tender shares allocable to the units you hold in the 401(k) Equity Unit Fund under the Plan may be made only in accordance with the procedures in this letter. Similarly, the Internet Direction Form and the enclosed Direction Form may not be used to tender shares of Common Stock held outside of the Plan.

Special and Regular Quarterly Dividend Information

The purchase of shares pursuant to the Offer is part of the plan the Company announced on July 2, 2007 to return up to approximately $3.5 billion of capital to the Company’s stockholders. As part of the plan, the Company’s Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. The Company’s Board of Directors also declared on July 2, 2007, the regular quarterly cash dividend of $0.05 per share, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. The regular and special dividends apply to shares (both vested and unvested) of Common Stock you may hold as a participant in the Plan, as part of the units you hold in the 401(k) Equity Unit Fund as of the close of business on July 24, 2007.

If the units you hold in the 401(k) Equity Unit Fund are configured for dividend pass-through, the proceeds of the special and regular dividends will be passed-though to you; otherwise such proceeds will be reinvested in the 401(k) Equity Unit Fund just like all other dividend payments. Such reinvestment will occur as soon as administratively possible after receipt of the dividend. If you want to change your dividend election, either to receive the special dividend in cash or to have the dividend reinvested in the 401(k) Equity Unit Fund, please contact Schwab Retirement Plan Services at 1-800-724-7526 or log on to schwabplan.com.

If, as a participant in the Plan, you hold shares (both vested and unvested) of Common Stock as part of the units you hold in the 401(k) Equity Unit Fund as of the close of business on July 24, 2007, you will have the right

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to receive the special and regular quarterly dividends even if you choose to direct the tender of your shares in the Offer, regardless of whether you direct the tender of your shares before or after July 24, 2007.

Further Information

If you require additional information concerning the procedure to tender shares allocable to the units you hold in the 401(k) Equity Unit Fund under the Plan, or if you require additional information concerning the terms and conditions of the Offer, please call D.F. King & Co., Inc., the Information Agent for the Offer, at 1-800-659-6590. You may also call UBS Securities LLC, the Dealer Manager for the Offer at 1-877-827-4180 for more information regarding the tender offer.

Sincerely,

The Charles Schwab Trust Company

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The quickest way to submit your tender direction is to use the Internet Direction Form. To complete the Internet Direction Form, go to the Internet website https://www.tabulationsplus.com/schw-401k and follow the directions provided thereon. To complete the Internet Direction Form, you will need the 401(k) Equity Unit Fund Voting Control Number below. You will have the opportunity to receive confirmation by electronic mail of the receipt of your Internet Direction Form.

NO MATTER HOW SUBMITTED, IF YOUR PROPERLY COMPLETED DIRECTION IS NOT RECEIVED BY THE TABULATOR BY 4:00 P.M., EASTERN TIME ON FRIDAY, JULY 27, 2007, UNLESS THE TENDER OFFER IS EXTENDED, THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE 401(k) EQUITY UNIT FUND WILL NOT BE TENDERED IN ACCORDANCE WITH THE TENDER OFFER.

CONTROL NUMBER:

Make sure to retain a copy of your control number in case you need it at a future time to change or revoke your tender direction.

DIRECTION FORM FOR UNITS OF THE 401(K) EQUITY UNIT FUND IN THE

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

THE CHARLES SCHWAB CORPORATION TENDER OFFER

BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS

The Plan Administrator, Recordkeeper, Plan Trustee and Purchasing Agent make no recommendation to any participant in the SchwabPlan Retirement Savings and Investment Plan (the “Plan”) as to whether to tender or not, or at which prices. Your direction to the Purchasing Agent will be kept confidential and only disclosed as necessary to the Recordkeeper.

This Direction Form, if properly signed, completed and received by the Tabulator in a timely manner, will supersede any previous Direction Form with regard to the units you hold in the 401(k) Equity Unit Fund. If this Direction Form is dated as of the same date as an Internet Direction Form from the participant, the Internet Direction Form will control.

The Company reserves the right to determine, in its sole discretion, all questions as to the number of shares to be accepted in the Offer, the price to be paid for the shares and the validity, form, eligibility, including the time of receipt, and acceptance for payment of any tender of shares. The Company reserves the absolute right to reject any or all tenders of shares it determines not to be in the proper form. The Company also reserves the right to waive any defect or irregularity in the tender of any particular shares, and the Company’s interpretation of the terms of the Offer, including the instructions to the Direction form, will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. None of the Company, the Tabulator, the Recordkeeper, the Plan Trustee or the Purchasing Agent is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give such notice.

To obtain information on the number of units you hold in the 401(k) Equity Unit Fund under the Plan or for other general information about the Fund, please call the Schwab Retirement Plan Hotline at 1-800-724-7526 or visit schwabplan.com

Unless you chose to submit the Internet Direction Form, please complete, sign and date the form on the reverse side, and mail it promptly to the Tabulator in the enclosed pre-paid envelope.

In connection with the Offer to Purchase made by The Charles Schwab Corporation, dated July 3, 2007, I hereby direct the Purchasing Agent to tender the shares allocable to the units I hold in the 401(k) Equity Unit Fund under the Plan as of July 27, 2007, unless a later deadline is announced, as follows:


¨ 1.		Please TENDER shares allocable to the units I hold in the 401(k) Equity Unit Fund under the Plan in the percentage (in whole numbers) indicated below for each of the prices provided. A blank space before a given price will be taken to mean that no shares allocable to the units I hold in the 401(k) Equity Unit Fund under the Plan are to be tendered at that price. I understand that certain transactions involving shares that are in the “tendered position” as part of my holdings in the 401(k) Equity Unit Fund under the Plan, and the units representing such shares will not be available for other transactions through the Plan including any rebalancing, transfers, loans, and withdrawals. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX #1.

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401(k)

Percentage (in whole numbers) of shares allocable to the units I hold in the 401(k) Equity Unit Fund under the Plan to be Tendered. (The total of all percentages must be less than or equal to 100%. If the total is less than 100%, you will be deemed to have directed the Purchasing Agent NOT to tender the remaining percentage of units in the 401(k) Equity Unit Fund.)


% at $TBD*	% at $20.00	% at $20.60	% at $21.20	% at $21.80	% at $22.40

% at $19.50	% at $20.10	% at $20.70	% at $21.30	% at $21.90	% at $22.50

% at $19.60	% at $20.20	% at $20.80	% at $21.40	% at $22.00

% at $19.70	% at $20.30	% at $20.90	% at $21.50	% at $22.10

% at $19.80	% at $20.40	% at $21.00	% at $21.60	% at $22.20

% at $19.90	% at $20.50	% at $21.10	% at $21.70	% at $22.30

*By entering a percentage on the % line at TBD, the undersigned understands that this action will result in this TBD percentage of the undersigned’s shares allocable to the units he or she holds in the 401(k) Equity Unit Fund being deemed to be tendered at the minimum price of $19.50 per share for purposes of determining the Final Purchase Price, unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. This may effectively lower the Final Purchase Price and could result in the undersigned receiving a per share price as low as $19.50. However, by electing to accept the Final Purchase Price you can maximize the chance of all of the shares allocable to the units you hold in the 401(k) Equity Unit Fund being accepted for tender.


¨ 2.		Please DO NOT TENDER shares allocable to the units I hold in the 401(k) Equity Unit Fund under the Plan.

		If you do nothing, that is if you do not complete this Direction Form or you do not complete the Internet Direction Form, then you will be deemed to have elected not to participate in the tender offer and none of the units you hold in the 401(k) Equity Unit Fund will be tendered.


		, 2007
Signature		Date
(Please sign exactly as your name appears hereon)

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EX-99.(A)(1)(I) 9 dex99a1i.htm FORM OF LETTER TO PARTICIPANTS ESOP Form of Letter to Participants ESOP

Exhibit (a)(1)(I)

IMMEDIATE ATTENTION REQUIRED

July 3, 2007

Dear Plan Participant holding units in the Employee Stock Ownership Plan (“ESOP”) Equity Unit Fund of the SchwabPlan Retirement Savings and Investment Plan:

The enclosed tender offer materials and Direction Form require your immediate attention.

The Offer applies not only to shares you may hold directly, but also to shares (both vested and unvested) of Common Stock you may hold as a participant in the SchwabPlan Retirement Savings and Investment Plan (the “Plan”), which are held as part of your holdings in the ESOP Equity Unit Fund, a unitized stock fund offered in the Plan.

If you also hold units of the 401(k) Equity Unit Fund in the Plan, you will receive separate tender offer materials and Direction Forms. If you wish to tender shares of Common Stock from either of the Equity Unit Funds or both, you must complete the separate tender offer materials for the applicable Fund(s), or complete the tender offer materials online as described in the following paragraph.

As described below, you have the right to direct the Plan’s sub-custodian and purchasing agent, Investors Bank & Trust Company, (the “Purchasing Agent”), to tender shares of the Common Stock that are part of the units you hold in the ESOP Equity Unit Fund as a participant in the Plan. If you choose to tender shares of Common Stock that are part of the units you hold in the ESOP Equity Unit Fund, you must submit your tender direction to https://www.tabulationsplus.com/schw-esop (the “Internet Direction Form”) or you must complete the enclosed Direction Form and return it to Ellen Philip Associates (the “Tabulator”) in the enclosed return envelope. The Tabulator will provide your directions to the Purchasing Agent on your behalf. NO MATTER HOW SUBMITTED, IF YOUR PROPERLY COMPLETED DIRECTION IS NOT RECEIVED BY THE TABULATOR BY 4:00 P.M., EASTERN TIME, ON FRIDAY, JULY 27, 2007, UNLESS THE TENDER OFFER IS EXTENDED, THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE ESOP EQUITY UNIT FUND WILL NOT BE TENDERED IN ACCORDANCE WITH THE TENDER OFFER. If the Offer is extended, the deadline for receipt of your direction will be, to the extent feasible, at 4:00 p.m., Eastern Time, two business days prior to the expiration date of the Offer. If you do not submit the Internet Direction Form on a timely basis or do not complete the enclosed Direction Form and return it to the Tabulator on a timely basis, you will be deemed to have elected not to participate in the Offer and no shares allocable to the units you hold in the ESOP Equity Unit Fund will be tendered.

You are not eligible to participate in the Offer using the Internet Direction Form or the enclosed Direction Form unless you are a participant in the Plan and you hold units of the ESOP Equity Unit Fund as of 4:00 p.m., Eastern Time, on Friday, July 27, 2007.

The remainder of this letter describes the ESOP Equity Unit Fund and summarizes the Offer, your rights under the Plan and the procedures for completing and submitting the Internet Direction Form or the enclosed Direction Form. You should also review the more detailed information provided in the Offer to Purchase, dated July 3, 2007 (the “Offer to Purchase”), enclosed with this letter.

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ESOP

About The Charles Schwab Corporation Common Stock Investments in the Plan

As a Plan participant, you had contributions made to the Plan on your behalf that were invested, prior to 2001, in the Plan’s ESOP Equity Unit Fund. The ESOP Equity Unit Fund is what is known as a “unitized” stock fund. A unitized stock fund consists primarily of shares of Common Stock plus an amount of cash (or cash equivalents) intended to provide for liquidity within the Fund. If a portion of your Plan account is invested in the ESOP Equity Unit Fund, your Plan account is credited with units that represent your interest in the ESOP Equity Unit Fund, and not in actual shares of Common Stock.

Each unit of the ESOP Equity Unit Fund is comprised of a certain number of shares of Common Stock and a small amount of cash or cash equivalents. The Tabulator, together with the Plan’s recordkeeper (the “Recordkeeper”) as authorized by the trustee for the Plan (the “Plan Trustee”), will determine the actual number of shares to tender based on instructions received from Plan participants and by calculating the number of shares allocable to the units of the ESOP Equity Unit Fund held by Plan participants as of 4:00 p.m., Eastern Time on July 27, 2007 for which instructions to tender have been received. The Purchasing Agent may not tender shares for which no directions are received, nor may the Plan Administrator instruct the Plan Trustee to direct the Purchasing Agent to tender those shares. On or about July 31, 2007, the Purchasing Agent will transfer the tendered shares to Wells Fargo, the designated depositary for the Offer.

To obtain information on the number of units in the ESOP Equity Unit Fund you hold under the Plan, information on the number of shares of Common Stock that are currently allocable to your units of the ESOP Equity Unit Fund, or other general information about your ESOP Equity Unit Fund holdings in the Plan, please call the Schwab Retirement Plan Services Hotline at 1-800-724-7526 or visit schwabplan.com. Login as a participant, select the “Account” tab, and then select “Positions”, and you will be able to view the number and market value of the units of the ESOP Equity Unit Fund you currently hold. To calculate the approximate number of shares of Common Stock that are allocated to you based on the number of the units of the ESOP Equity Unit Fund you currently hold in the Plan, multiply the current market value of your units in the ESOP Equity Unit Fund by 99.25% (this is less than 100% to account approximately for the cash or cash equivalents held in the fund) and then divide that result by the current market price of Schwab Common Stock.

About the Offer

The Offer includes shares held by Plan participants as part of their holdings in the ESOP Equity Unit Fund. As of June 28, 2007, the Plan held approximately 19,497,901 shares of Common Stock in the ESOP Equity Unit Fund. Only the Purchasing Agent can tender these shares in the Offer.

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Nonetheless, as a participant under the Plan, you have the right to direct the Purchasing Agent whether or not to tender some or all of the shares attributable to your holdings in the ESOP Equity Unit Fund, and at what price or prices, and the Plan Trustee will deliver your instructions received from the Tabulator to the Purchasing Agent. Absent specific instructions to the contrary from the Plan Administrator as may be required by applicable law, the Purchasing Agent will tender shares attributable to the Plan in accordance with your instructions and the applicable direction by the Plan Trustee, and the Purchasing Agent will not tender shares attributable to the Plan for which it does not receive timely instructions. If you do not submit the Internet Direction Form on a timely basis or do not complete the enclosed Direction Form and return it to the Tabulator on a timely basis, you will be deemed to have elected not to participate in the Offer and no shares of Common Stock held as part of the units you hold in the ESOP Equity Unit Fund will be tendered.

It Is Your Decision Whether to Tender

The Board of Directors of the Company has approved the Offer. However, none of the Company, its Board of Directors, the Plan Administrator, the Plan Trustee, the Purchasing Agent, the Tabulator, the Recordkeeper, UBS Securities LLC (the “Dealer Manager” for the Offer), Wells Fargo Bank, N.A. (the “Depositary” for the Offer), or D.F. King & Co., Inc. (the “Information Agent” for the Offer) makes any recommendation to you as to whether you should tender or refrain from tendering the shares allocable to the units you hold in the ESOP Equity Unit Fund or as to the purchase price or prices at which you may choose to tender the shares allocable to the units you hold in the ESOP Equity Unit Fund. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE ESOP EQUITY UNIT FUND AND, IF SO, WHAT PERCENTAGE OF THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE ESOP EQUITY UNIT FUND TO TENDER AND THE PRICE OR PRICES AT WHICH TO TENDER. In doing so, you should read and evaluate carefully the information in the Offer, including the Company’s reasons for making the Offer, and should discuss whether to tender your shares with your financial or tax advisor.

Tax Consequences

While Plan participants will not recognize any immediate tax gain or loss as a result of the Offer, the tax treatment of future withdrawals or distributions from the Plan may be adversely impacted by a tender and sale of shares of Common Stock that are part of the units you hold in the ESOP Equity Unit Fund. Specifically, under current federal income tax rules, if you receive from the Plan a lump sum distribution that includes Schwab shares that have increased in value while they were held by the Plan, you may have, under certain circumstances, the option of deferring the payment of taxes on this increase in value until you sell the shares. This increase in value is referred to as “net unrealized appreciation.” When the shares are sold, any gain up to the amount of the untaxed net unrealized appreciation will be taxed as long-term capital gain. If shares credited to your individual ESOP Equity Unit Fund are purchased by the Company in the Offer, you will no longer be able to take advantage

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of this tax benefit on these shares. Please log on to www.schwabplan.com and click on “Plan Services” – “Withdrawals” – “Distribution Center” – “Distribution Decision Making Guide” – “What to do with Your Company Stock” for more information regarding the tax issues related to the shares of Common Stock held in the ESOP Equity Unit Fund. In addition, you should discuss whether to tender your shares with your financial or tax advisor.

Effect of Tender on Your Account: Investment Proceeds, the Restricted Period

For any shares allocable to the units you hold in the ESOP Equity Unit Fund in the Plan that are tendered and purchased by the Company, the Company will pay cash to the Plan. INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT RECEIVE ANY CASH TENDER PROCEEDS DIRECTLY. ALL SUCH PROCEEDS WILL BE INVESTED IN YOUR ACCOUNT IN THE PLAN. DISTRIBUTIONS TO INDIVIDUAL PLAN PARTICIPANTS OUTSIDE OF THE PLAN CAN ONLY BE MADE IN ACCORDANCE WITH THE TERMS OF THE PLAN.

Pursuant to the terms of the Plan, the Plan Trustee will receive the cash proceeds with respect to the shares allocable to the units you hold in the ESOP Equity Unit Fund and will process sales of a proportionate number of units of the ESOP Equity Unit Fund whose number is calculated based on the underlying allocated number of shares tendered. The cash proceeds resulting from the sale of units you hold in the ESOP Equity Unit Fund will be invested within your Plan account in accordance with the investment elections you have on file at the time proceeds are received. If you do not have investment elections on file, the proceeds will be invested on your behalf in the SchwabPlan Stable Value Fund. With respect to Plan participants whose employment at Schwab was terminated previously, your proceeds will be invested pursuant to your investment elections on file, which may have been adjusted based on changes made to the investment options available under the Plan. If you would like more information regarding your investment elections on file or if you want to change your investment elections as they apply to the tender offer proceeds, log on to schwabplan.com and change your investment elections for future contributions or call the Schwab Retirement Plan Hotline at 1-800-724-7526. Such investment will occur as soon as administratively possible after receipt of proceeds. Once the proceeds have been received and have been invested, you may transfer them to other available investment funds within the Plan.

The period from 4:00 p.m., Eastern Time, on Friday, July 27, 2007, or such later date if the Offer is extended, until such time as the processing of participant accounts is completed is referred to as the “Restricted Period.” Please note that during the Restricted Period, shares of Common Stock that are in the “tendered position” and your units in the ESOP Equity Unit Fund representing such shares will not be available for other transactions through the Plan. This includes any rebalancing, transfers, loans, and withdrawals. If you request any transaction through the Plan’s website that would involve shares of Common Stock in a tendered position, the transaction will be blocked.

In addition, due to technical limitations of schwabplan.com, if you tender any shares of Common Stock allocable to the units you hold in the ESOP Equity Unit Fund, during the Restricted Period, you also will not be able to conduct transactions through the schwabplan.com automated system that involve any units in the ESOP Equity Unit Fund representing the non-tendered shares of Common Stock. However, you may conduct transactions that involve units in the ESOP Equity Unit Fund representing the non-tendered shares of Common Stock by calling the Schwab Retirement Plan Hotline at 1-800-724-7526.

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Confidentiality

Procedure To Submit Your Tender Direction

You may submit your tender direction on the Internet Direction Form at https://www.tabulationsplus.com/schw-esop or by completing the enclosed Direction Form and returning it to the Tabulator. For purposes of the final tabulation, the Tabulator will apply your instructions to the number of shares allocable to the units you hold in the ESOP Equity Unit Fund as of 4:00 p.m., Eastern Time, on July 27, 2007, or as of the applicable later date if the Offer is extended and will provide the aggregate number of shares tendered on behalf of the Plan to the Plan Trustee for delivery to the Purchasing Agent.

If you do not properly complete and submit the Internet Direction Form by the deadline specified or do not properly complete and return the Direction Form by the deadline specified, the shares of Common Stock allocable to the units you hold in the ESOP Equity Unit Fund will be considered NOT TENDERED. Note that you only need to submit either the Internet Direction Form or the enclosed Direction Form — submission of both forms is neither required nor encouraged.

You have the following options with respect to the tender offer:

•

You may elect to accept the Final Purchase Price (marked on the election form as TBD) with respect to some or all of the shares allocable to the units you hold in the ESOP Equity Unit Fund, in which case the shares allocable to the units you hold in the ESOP Equity Unit Fund will be deemed tendered at the minimum price of $19.50 unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. You should understand that this election may effectively lower the Final Purchase Price and could result in the shares allocable to the units you hold in the ESOP Equity Unit Fund being purchased at the minimum price of $19.50 per share. However, by electing to accept the Final Purchase Price you can maximize the chance of all of the shares allocable to the units you hold in the ESOP Equity Unit Fund being accepted for tender.

•

You may direct the tender of shares allocable to the units you hold in the ESOP Equity Unit Fund at different prices. To do so, you must state the percentage (in whole numbers) of shares allocable to the units you hold in the ESOP Equity Unit Fund to be sold at each price by filling in the percentage on the line immediately before the price.

•

If you do not want to tender shares allocable to the units you hold in the ESOP Equity Unit Fund at a certain price, then leave the applicable line blank. The total of the percentages you provide on the Direction Form may not exceed 100%, but it may be less than 100%. If this amount is less than 100%, you will be deemed to have instructed the Purchasing Agent NOT to tender the entire balance of the shares allocable to the units you hold in the ESOP Equity Unit Fund.

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To complete the Internet Direction Form, go to https://www.tabulationsplus.com/schw-esop, and follow the directions provided therein. To complete the Internet Direction Form, you will need the ESOP Equity Unit Fund Voting Control Number, which is listed at the top of the enclosed Direction Form. If you are unable to determine your ESOP Equity Unit Fund Voting Control Number please contact the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590. You will have the opportunity to receive confirmation by electronic mail of the receipt of your Internet Direction Form.

If you choose not to submit your directions using the Internet Direction Form and wish to participate in the Offer, you must properly complete the enclosed Direction Form by doing the following:

1. If you wish to tender the shares allocable to the units you hold in the ESOP Equity Unit Fund, CHECK BOX 1 and complete the table immediately below BOX 1, as follows.

•

Enter a percentage (in whole numbers) next to TBD if you wish to maximize the chance that this TBD percentage of shares allocable to the units you hold in the ESOP Equity Unit Fund will be purchased in the Offer, as this will indicate that you will accept the purchase price that the Company determines.

•

You may also specify the percentage (in whole numbers) of the shares allocable to the units you hold in the ESOP Equity Unit Fund that you want to tender at each price indicated.

•

The combination of shares tendered at TBD and/or at a specified purchase price should equal not more than 100%.

•

If you agree to accept the purchase price determined in the Offer, by electing TBD, the shares allocable to the units you hold in the ESOP Equity Unit Fund will be deemed to be tendered at the minimum price of $19.50 per share unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. You should understand that this election may lower the purchase price paid for all purchased shares in the Offer and could result in the shares allocable to the units you hold in the ESOP Equity Unit Fund being purchased at the minimum price of $19.50 per share. You may elect to tender up to 100% of the Shares allocable to the units you hold in the ESOP Equity Unit Fund using TBD.

2. If you do not want to tender any shares allocable to the units you hold in the ESOP Equity Unit Fund or if you want to revoke your previous election, CHECK BOX 2.

3. Date and sign the Direction Form in the space provided.

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The Company reserves the right to determine, in its sole discretion, all questions as to the number of shares to be accepted in the Offer, the price to be paid for the shares and the validity, form, eligibility, including the time of receipt, and acceptance for payment of any tender of shares. The Company reserves the absolute right to reject any or all tenders of shares it determines not to be in the proper form. The Company also reserves the right to waive any defect or irregularity in the tender of any particular shares, and the Company’s interpretation of the terms of the Offer, including the instructions to the Direction form, will be final and binding on all parties, subject to a court of law having jurisdiction regarding such matters. None of the Company, the Tabulator, the Plan Recordkeeper, the Plan Trustee or the Purchasing Agent is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give such notice.

Your direction will be deemed irrevocable unless revoked by 4:00 p.m., Eastern Time, on Friday, July 27, 2007, unless the Offer is extended by the Company. In order to make an effective revocation, you must submit a new Internet Direction Form or new Direction Form which may be obtained by calling the Information Agent (D.F. King & Co., Inc.) at 1-800-659-6590 and requesting an additional Direction Form. Upon receipt of a new properly completed Internet Direction Form or Direction Form, by 4:00 p.m., Eastern Time, on Friday, July 27, 2007, your previous direction will be deemed canceled. You may direct the re-tendering of any shares allocable to the units you hold in the ESOP Equity Unit Fund by submitting an additional Internet Direction Form or Direction Form and repeating the previous instructions for directing your tender as set forth in this letter.

After the Offer expires, the Company will select the lowest purchase price (in increments of $0.10) within the price range specified above that will allow it to buy 84 million shares or such lesser number of shares as are properly tendered and not properly withdrawn. All shares acquired in the Offer will be acquired at the same purchase price regardless of whether the stockholder tendered at a lower price. The Company will purchase only those shares properly tendered at prices at or below the purchase price selected by the Company and not properly withdrawn prior to the expiration of the Offer. However, because of the “odd lot” priority, proration and conditional tender provisions described in this Offer to Purchase, the Company may not purchase all of the shares tendered at prices at or below the purchase price selected by the Company if more than the number of shares the Company seeks are properly tendered and not properly withdrawn. Any shares allocable to the units you hold in the ESOP Equity Unit Fund that are not purchased in the Offer will remain in the ESOP Equity Unit Fund under the Plan.

The preferential treatment of holders of fewer than 100 shares, as described in the Offer to Purchase, will not apply to participants in the Plan, regardless of the number of shares allocable to the individual units you hold in the ESOP Equity Unit Fund. Likewise, the conditional tender of shares, as described in the Offer to Purchase, will not apply to participants in the Plan.

Limitations on Following Your Direction

The Internet Direction Form and the enclosed Direction Form allow you to specify the percentage of the shares of Common Stock allocable to the units you hold in the ESOP Equity Unit Fund that you wish to tender and the price or prices at which you want to tender shares allocable to the units you hold in the ESOP Equity Unit Fund. As detailed below, when the Purchasing Agent tenders shares on behalf of the Plan, it may be required to tender shares on terms different from those set forth on your Internet Direction Form or Direction Form.

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consideration,” based on the prevailing or closing market price of the shares defined as the last-sale-eligible-trade reported to the NASDAQ exchange prior to 4:00:02 p.m. Eastern Time, on July 27, 2007 (the “prevailing market price”). Accordingly, depending on the prevailing market price of the shares on such date, the Purchasing Agent, at the direction of the Plan Administrator, may be unable to follow participant directions to tender shares to the Company at certain prices within the offered range. The Purchasing Agent will tender or not tender shares allocable to units you hold in the ESOP Equity Unit Fund as follows:

•

If the prevailing market price on July 27, 2007 is greater than the maximum tender price offered by the Company in the Offer ($22.50 per share), notwithstanding your direction to tender shares allocable to units you hold in the ESOP Equity Unit Fund, no shares in the Plan will be tendered and therefore the shares allocable to units you hold in the ESOP Equity Unit Fund will not be tendered.

•

If the prevailing market price is lower than the price at which you direct shares allocable to the units you hold in the ESOP Equity Unit Fund to be tendered, the Purchasing Agent will follow your direction both as to percentage of shares allocable to the units you hold in the ESOP Equity Unit Fund to be tendered and as to the price at which such shares allocable to the units you hold in the ESOP Equity Unit Fund are tendered.

•

If the prevailing market price is within the range of $19.50 to $22.50, the Purchasing Agent will follow your direction regarding the percentage of shares allocable to the units you hold in the ESOP Equity Unit Fund to be tendered, but only with respect to the shares allocable to the units you hold in the ESOP Equity Unit Fund which were tendered at a price equal to or greater than the prevailing market price.

Shares Held Outside of the Plan

If you also hold shares of Common Stock outside of the Plan (for example, shares you received when you exercised a stock option or shares that you bought on the open market), you will receive a separate mailing of Offer materials to be used to tender those shares. Those Offer materials may not be used to direct the Purchasing Agent to tender or not tender the shares allocable to the units you hold in the ESOP Equity Unit Fund. Likewise, the tender of shares allocable to the units you hold in the ESOP Equity Unit Fund under the Plan will not be effective with respect to shares you hold outside of the Plan. The direction to tender or not to tender shares allocable to the units you hold in the ESOP Equity Unit Fund under the Plan may be made only in accordance with the procedures in this letter. Similarly, the Internet Direction Form and the enclosed Direction Form may not be used to tender shares of Common Stock held outside of the Plan.

Special and Regular Quarterly Dividend Information

The purchase of shares pursuant to the Offer is part of the plan the Company announced on July 2, 2007 to return up to approximately $3.5 billion of capital to the Company’s stockholders. As part of the plan, the Company’s Board of Directors declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. The Company’s Board of Directors also declared on July 2, 2007, the regular quarterly cash dividend of $0.05 per share, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. The regular and special dividends apply to shares (both vested and unvested) of Common Stock you may hold as a participant in the Plan, as part of the units you hold in the ESOP Equity Unit Fund as of the close of business on July 24, 2007.

If the units you hold in the ESOP Equity Unit Fund are configured for dividend pass-through, the proceeds of the special and regular dividends will be passed-though to you; otherwise such proceeds will be reinvested in the ESOP Equity Unit Fund just like all other dividend payments. Such reinvestment will occur as soon as administratively possible after receipt of the dividend. If you want to change your dividend election, either to receive the special dividend in cash or to have the dividend reinvested in the ESOP Equity Unit Fund, please contact Schwab Retirement Plan Services at 1-800-724-7526 or log on to schwabplan.com.

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If, as a participant in the Plan, you hold shares (both vested and unvested) of Common Stock as part of the units you hold in the ESOP Equity Unit Fund as of the close of business on July 24, 2007, you will have the right to receive the special and regular quarterly dividends even if you choose to direct the tender of your shares in the Offer, regardless of whether you direct the tender of your shares before or after July 24, 2007.

Further Information

If you require additional information concerning the procedure to tender shares allocable to the units you hold in the ESOP Equity Unit Fund under the Plan, or if you require additional information concerning the terms and conditions of the Offer, please call D.F. King & Co., Inc., the Information Agent for the Offer, at 1-800-659-6590. You also may call UBS Securities LLC, the Dealer Manager for the Offer at 1-877-827-4180 for more information regarding the tender offer.

Sincerely,

The Charles Schwab Trust Company

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The quickest way to submit your tender direction is to use the Internet Direction Form. To complete the Internet Direction Form, go to the Internet website https://www.tabulationsplus.com/schw-esop, and follow the directions provided thereon. To complete the Internet Direction Form, you will need the ESOP Equity Unit Fund Voting Control Number below. You will have the opportunity to receive confirmation by electronic mail of the receipt of your Internet Direction Form.

NO MATTER HOW SUBMITTED, IF YOUR PROPERLY COMPLETED DIRECTION IS NOT RECEIVED BY THE TABULATOR BY 4:00 P.M., EASTERN TIME ON FRIDAY, JULY 27, 2007, UNLESS THE TENDER OFFER IS EXTENDED, THE SHARES ALLOCABLE TO THE UNITS YOU HOLD IN THE ESOP EQUITY UNIT FUND WILL NOT BE TENDERED IN ACCORDANCE WITH THE TENDER OFFER.

CONTROL NUMBER:

Make sure to retain a copy of your control number in case you need it at a future time to change or revoke your tender direction.

DIRECTION FORM FOR UNITS OF THE ESOP EQUITY UNIT FUND IN THE SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

THE CHARLES SCHWAB CORPORATION TENDER OFFER

BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS

This Direction Form, if properly signed, completed and received by the Tabulator in a timely manner, will supersede any previous Direction Form with regard to the units you hold in the ESOP Equity Unit Fund. If this Direction Form is dated as of the same date as an Internet Direction Form from the participant, the Internet Direction Form will control.

To obtain information on the number of units you hold in the ESOP Equity Unit Fund under the Plan or for other general information about the Fund, please call the Schwab Retirement Plan Hotline at 1-800-724-7526 or visit schwabplan.com

Unless you choose to submit the Internet Direction Form, please complete, sign and date the form on the reverse side, and mail it promptly to the Tabulator in the enclosed pre-paid envelope.

In connection with the Offer to Purchase made by The Charles Schwab Corporation, dated July 3, 2007, I hereby direct the Purchasing Agent to tender the shares allocable to the units I hold in the ESOP Equity Unit Fund under the Plan as of July 27, 2007, unless a later deadline is announced, as follows:


¨ 1.		Please TENDER shares allocable to the units I hold in the ESOP Equity Unit Fund under the Plan in the percentage (in whole numbers) indicated below for each of the prices provided. A blank space before a given price will be taken to mean that no shares allocable to the units I hold in the ESOP Equity Unit Fund under the Plan are to be tendered at that price. I understand that certain transactions involving shares that are in the “tendered position” as part of my holdings in the ESOP Equity Unit Fund under the Plan, and the units representing such shares will not be available for other transactions through the Plan including any rebalancing, transfers, loans, and withdrawals. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX #1.

-10-

ESOP

Percentage (in whole numbers) of shares allocable to the units I hold in the ESOP Equity Unit Fund under the Plan to be Tendered. (The total of all percentages must be less than or equal to 100%. If the total is less than 100%, you will be deemed to have directed the Purchasing Agent NOT to tender the remaining percentage of units in the ESOP Equity Unit Fund.)


% at $TBD*	% at $20.00	% at $20.60	% at $21.20	% at $21.80	% at $22.40

% at $19.50	% at $20.10	% at $20.70	% at $21.30	% at $21.90	% at $22.50

% at $19.60	% at $20.20	% at $20.80	% at $21.40	% at $22.00

% at $19.70	% at $20.30	% at $20.90	% at $21.50	% at $22.10

% at $19.80	% at $20.40	% at $21.00	% at $21.60	% at $22.20

% at $19.90	% at $20.50	% at $21.10	% at $21.70	% at $22.30

*By entering a percentage on the % line at TBD, the undersigned understands that this action will result in this TBD percentage of the undersigned’s shares allocable to the units he or she holds in the ESOP Equity Unit Fund being deemed to be tendered at the minimum price of $19.50 per share for purposes of determining the Final Purchase Price unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment. This may effectively lower the Final Purchase Price and could result in the undersigned receiving a per share price as low as $19.50. However, by electing to accept the Final Purchase Price you can maximize the chance of all of the shares allocable to the units you hold in the ESOP Equity Unit Fund being accepted for tender.

¨ 2.

Please DO NOT TENDER shares allocable to the units I hold in the ESOP Equity Unit Fund under the Plan.

If you do nothing, that is if you do not complete this Direction Form or you do not complete the Internet Direction Form, then you will be deemed to have elected not to participate in the tender offer and none of the units you hold in the ESOP Equity Unit Fund will be tendered.


		, 2007
Signature		Date

(Please sign exactly as your name appears hereon)

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EX-99.(A)(1)(J) 10 dex99a1j.htm FORM OF MEMO TO EQUITY PLAN PARTICIPANTS. Form of Memo to Equity Plan Participants.

Exhibit (a)(1)(J)

LOGO

To Equity Plan Participant:

The purpose of this document is to describe the impact that The Charles Schwab Corporation’s (“Schwab” or the “Company”) recently announced capital restructuring will have on Schwab equity being held as part of one or more of the Company’s compensation programs.

As announced on July 2, 2007, the Company’s Board of Directors approved the return of up to approximately $3.5 billion of capital to stockholders. This capital restructuring includes a tender offer for up to approximately $1.9 billion of shares and the purchase of up to approximately $400 million of shares under a separate Stock Purchase Agreement with Charles R. Schwab, our Chairman and Chief Executive and our largest stockholder, and certain additional stockholders whose shares Mr. Schwab is deemed to beneficially own. In addition, the Board declared a special cash dividend of $1.00 per share, or approximately $1.2 billion in the aggregate, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. If you are a stockholder of record of the Company as of the close of business on July 24, 2007, you will have the right to receive the special dividend (as well as the regular quarterly cash dividend declared on July 2, 2007) even if you choose to tender your shares in the Offer regardless of whether you tender them before or after July 24, 2007.

In general, holders of restricted shares within the Company’s compensation programs will be eligible to receive the special dividend but not to participate in the tender offer. Holders of employee stock options, both vested and unvested, will have both the exercise price and the number of shares subject to options adjusted to account for the impact of the special dividend.

401(k) / ESOP Plan

If you are a participant in The SchwabPlan Retirement Savings and Investment Plan, commonly referred to as the 401(k) plan, follow the tender instructions sent separately to each eligible participant.

Deferred Compensation Plans and Employee Stock Purchase Plan

Neither of Schwab’s Deferred Compensation Plans (I & II) hold Schwab equity so the tender offer and the special dividend will have no impact on these plans.

The enrollment time for the first offering period of the newly introduced Employee Stock Purchase Plan is July 5-23, 2007. As such, no Schwab shares are currently outstanding under the plan and the tender offer and the special dividend will have no impact on this plan.

Restricted stock (governed by the 2004 Stock Incentive Plan)

The special dividend will be paid to all holders of outstanding restricted shares as of July 24, 2007 and will be paid and taxed in the same manner as ordinary dividends. Restricted shares are not eligible for the tender offer unless the restrictions lapse and the shares are settled in your Schwab account by July 26, 2007.

Employee Stock Options (governed by the 2004 Stock Incentive Plan)

If you hold employee stock options – vested or unvested – the exercise price and the number of shares subject to the option will be adjusted to account for the special dividend. These adjustments will be made pursuant to the 2004 Stock Incentive Plan based on Schwab’s share price as of the close of trading on July 19, 2007 and will take effect on July 20, 2007. These adjustments are designed to ensure that you are not negatively impacted as a result of the special dividend and are being made in compliance with applicable tax and legal regulations. All other terms and conditions of the Plan will continue to apply to your outstanding stock options.

LOGO

Special note for holders of vested stock options:

You may exercise your vested stock options and be eligible to receive the special dividend and/or tender all or some of the shares received upon such exercise. In order to receive the special dividend, you must exercise your options by no later than July 19, 2007. In order to participate in the tender, you must exercise your options sufficiently in advance of the Expiration Time, but no later than July 23, 2007, to receive the shares in your account by July 26, 2007 in order to participate in the Offer. While the “Expiration Time” in the Offer means 12:00 midnight, Eastern Time, on Tuesday, July 31, 2007, if your shares are held at Schwab, you must tender your shares by 7:00 pm, Eastern Time, on July 26, 2007. An exercise of a stock option cannot be revoked even if shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer for any reason.

Option Adjustment Example (using hypothetical figures):

Before payment of the special dividend, a shareholder owns one share worth $22. According to financial theory (and disregarding other events that may affect share prices), after the special dividend is paid the shareholder will own one share worth $21, plus cash in hand of $1. Net, the shareholder’s pre-dividend value of $22 has not changed ($21 + $1 = $22).

In order to preserve the approximate pre-dividend value of employee stock options, the exercise price of outstanding options will be adjusted downward, and the number of options will be adjusted upward. The additional options will be vested and unvested in proportion to the vesting status of the existing options. Unvested options resulting from the adjustment will vest over the remaining vesting period. If the stock option grant is fully vested at the time of the adjustment, the additional options will also be fully vested.

Example #1 – “In-the-money” options (options where exercise price is currently BELOW the market price)

In this example, 100 options with a $17 exercise price are adjusted to 104 options with a $16.23 exercise price.


Starting Assumptions

Stock price immediately prior to ex-dividend date	$22	[a]
Special one-time dividend	$1	[b]
Options outstanding	100	[c]
Exercise price	$17	[d]

*In-the-money value prior to dividend*	*$500*	**(a – d)c***	*($22 minus $17 times 100)*

Step 1: Adjust Exercise Price

Initial ratio of exercise price to market value	77.27%	[e] = d/a	($17 divided by $22)
Post dividend stock price	$21	[f] = (a – b)	($22 minus $1)
New exercise price	$16.2273	*[g] = ef**	(77.27% of $21, rounded up)
In-the-money value based on adjustment	$477.27	[X] = (f – g)*c	($21 minus $16.23 times 100)

Step 2: Increase in Options Subject to Grant

Pre- / post-dividend market value ratio	1.048	[h] = a/f	($22 divided by $21)
Grant adjustment increase	4	[i] = (h – 1)*c	(100 times 4.8%, rounded down)
In-the-money value of increased options	$19.09	[Y] = (f – g)*i	(4 times $4.77 [$21 minus $16.23])

*Approximate in-the-money value post ex-dividend*	*$496.36*	*[Z] = (X + Y)*	*($477.27 plus $19.09)*

*Total number of options post dividend*	*104*	*[W] = (c + i)*	*(100 plus 4)*

LOGO

Example #2 – “Out-of-the-money” options (options where exercise price is currently ABOVE the market price)

In this example, 100 options with a $25 exercise price are adjusted to 104 options with a $23.86 exercise price.


Starting Assumptions

Stock price immediately prior to ex-dividend date	$22	[a]
Special one-time dividend	$1	[b]
Options outstanding	100	[c]
Exercise price	$25	[d]

*Out-of-the-money value prior to dividend*	*–$300*	**(a – d)c***	*($22 minus $25 times 100)*

Step 1: Adjust Exercise Price

Initial ratio of exercise price to market value	113.64%	[e] = d/a	($25 divided by $22)
Post dividend stock price	$21	[f] = (a – b)	($22 minus $1)
New exercise price	$23.8637	*[g] = ef**	(113.64% of $21, rounded up)
Out-of-the-money value based on adjustment	–$286.37	[X] = (f – g)*c	($21 minus $23.86 times 100)

Step 2: Increase in Options Subject to Grant

Pre- / post-dividend market value ratio	1.048	[h] = a/f	($22 divided by $21)
Grant adjustment increase	4	[i] = (h – 1)*c	(100 times 4.8%, rounded down)
Out-of-the-money value of increased options	–$11.45	[Y] = (f – g)*i	(4 times –$2.86 [$21 minus $23.86])

*Approximate out-of-the-money value post ex-dividend*	*–$297.82*	*[Z] = (X + Y)*	*(–$286.37 plus –$11.45)*

*Total number of options post dividend*	*104*	*[W] = (c + i)*	*(100 plus 4)*

Frequently Asked Questions

Why doesn’t the adjustment include the $0.05 per share regular dividend also declared on July 2, 2007?

Estimated dividends are factored into the valuation of employee stock options and, therefore, adjustments are not required for the payment of ordinary dividends. Special dividends, however, are not typically included in option valuations and, as a result, have an unintended negative impact on option holders.

When will I be able to view my adjusted options? When can I exercise vested options?

You will be able to view and exercise adjusted vested options on July 20, 2007.

Can I do a “same day sale” or “exersale” and still be eligible for the tender offer or the special or regular dividend?

No. To receive the special and regular dividend, you must exercise and hold the shares on the dates specified. Shares sold pursuant to “same day sale” or “exersale” would not be available for tender.

Does the option adjustment trigger any taxes?

No, these adjustments will be made in accordance with all relevant tax regulations and will have no adverse tax consequences on option holders.

LOGO

Is the new Employee Stock Purchase Plan impacted by the capital restructuring?

The purchase price for the first offering period will be based on Schwab’s closing price as of January 31, 2008. Given the numerous factors that can impact Schwab’s daily stock price, we cannot predict the impact this capital restructuring will have on the future stock price.

Who do I contact if I have questions?

For general questions, please contact D.F. King & Co., Inc., the Company’s information agent for the tender offer, by directing a request to 48 Wall Street, New York, NY 10005 or calling toll-free at (800) 659-6590; Monday–Friday 5:00 am to 7:00 pm, Pacific Time, and Saturday 8:00 am to 3:00 pm, Pacific Time, or contact UBS Securities, LLC, the Company’s dealer manager for the tender offer, by calling toll-free at (877) 827-4180.

To view or exercise vested options, contact Schwab Stock Plan Services using the contact info below:

Phone: 1 (800) 654-2593; Monday – Friday 6:00 am to 6:00 pm Pacific Time

Web: eac.schwab.com

EX-99.(A)(1)(K) 11 dex99a1k.htm FORM OF LETTER TO CLIENTS OF CHARLES SCHWAB Form of Letter to Clients of Charles Schwab

Exhibit (a)(1)(K)

Notice of Tender Offer - The Charles Schwab Corporation

If you choose to participate, we must receive your response by July 26, 2007, 7:00 p.m., Eastern Time.

What has occurred

Our records show that you hold XXX shares of The Charles Schwab Corporation common stock in your account.

Pursuant to an Offer to Purchase mailed to you under separate cover, The Charles Schwab Corporation is offering to purchase up to 84 million shares (representing approximately 7% of the outstanding shares) of its common stock at prices to be specified by stockholders through a modified Dutch Auction process.

Under the modified Dutch Auction procedure, stockholders can offer a specific price not greater than $22.50 nor less than $19.50 per share, in increments of $0.10, at which they would sell their shares to the company. The company will then determine from the various offers submitted, the lowest single price (the Purchase Price) specified that will allow it to purchase 84 million shares or such lesser number as are submitted. However, because of the odd lot priority, proration and conditional tender provisions described in the Offer to Purchase, all of the shares offered at prices at or below the Purchase Price may not be purchased if more than 84 million shares are offered.

All holders whose offers are at or below the Purchase Price and whose shares are accepted for purchase will receive the same price even if their specific offer price is lower than the price determined by the company. Holders who wish to maximize the chances that their shares are purchased, may elect to tender at the price determined by the company. Please note, however, this could result in the purchase of your shares at a price as low as $19.50 per share.

Holders may specify the minimum amount of shares to be purchased by the company in the event the tender offer is prorated (conditional tender). If the effect of accepting tendered shares on a prorated basis is less than the minimum number of shares specified by you, your tender will automatically be regarded as withdrawn (except as provided below) and all of your shares will be returned to your account approximately five business days after the expiration of the tender offer.

If more than 84 million shares are properly tendered at prices at or below the Purchase Price and not properly withdrawn prior to the expiration of the tender offer, the company will purchase shares:

first, from holders of less than 100 shares who tender all their shares at or below the Purchase Price;

second, subject to the conditional tender provisions, from all other stockholders who tender shares at prices at or below the Purchase Price, on a pro rata basis with appropriate adjustments to avoid fractional shares; and

third, only if necessary to permit the company to purchase 84 million shares, (or such greater number of shares as the company elects to purchase, subject to applicable law) from holders who have conditionally tendered shares at prices at or below the Purchase Price (and the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

The tender offer is not conditioned upon any minimum number of shares being tendered. The tender offer is, however, subject to certain conditions as described in the Offer to Purchase.

The OFFER TO PURCHASE, mailed separately, contains important information which should be read carefully before any decision is made with respect to the tender offer.

Please note that if you wish to participate, you must deliver your response to Schwab. If you have any questions regarding the tender offer, please contact D.F. King & Co., Inc. (the Information Agent) directly at 1-800-659-6590.

Your Choices:

Tender: You may tender all or a portion of your shares at a price not greater than $22.50 nor less than $19.50 per share, in increments of $0.10. You can specify the minimum amount of shares to be purchased by the company in the event the tender offer is prorated.

Tender at Company Price: You may tender all or a portion of your shares at the price determined by the company. You can specify the minimum amount of shares to be purchased by the company in the event the tender offer is prorated.

Decline/Take No Action: If you do not wish to participate in the tender offer, no further action is required and your shares will remain in your account.

Special Notes:

The board of directors declared a special cash dividend of $1.00 per share, payable on August 24, 2007, subject to applicable legal requirements, to all stockholders of record as of the close of business on July 24, 2007. Such holders will have the right to receive the special dividend even if they choose to tender their shares in the tender offer, regardless of whether the shares are tendered before or after the record date. Please note that special dividends are not eligible for dividend reinvestment.

Time to Respond

The tender offer is scheduled to expire on July 31, 2007. In order for us to meet the expiration date deadline, we must receive your instructions by July 26, 2007, 7:00 p.m. Eastern Time.

Fees

The Charles Schwab Corporation will not charge you any fees if you decide to participate.

Next Steps

If you choose to take no action, please disregard this notice.

If you wish to participate:

It is your responsibility to ensure we receive your response by July 26, 2007, 7:00 p.m., Eastern Time.

Electronic - To access the tender offer terms and submit your instructions online follow these steps:

- Go to [ ]

- Log into your account

- Select the Customer Service link located above the navigation bar.

- Scroll down to the Status section and click the Corporate Action Status link. Status information will be posted in the display box at the bottom of the new page.

This automated service is available 24 hours a day 7 days a week. When you utilize this service, you will be issued a reference number. Please retain this number for your records.

Phone - You may contact Schwab at [ ].

Thank you for allowing us to serve your investment needs.

EX-99.(A)(1)(L) 12 dex99a1l.htm PARTICIPANTS IN THE SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN - Q&A Participants in The SchwabPlan Retirement Savings and Investment Plan - Q&A

Exhibit (a)(1)(L)

Frequently Asked Questions and Answers related to the SchwabPlan Retirement

Savings and Investment Plan

The Tender Offer

What is a modified “Dutch Auction” tender offer?

The tender offer for Schwab common stock (“Common Stock”) is being conducted through a procedure commonly called a modified “Dutch Auction.” This procedure allows the company stockholders (including participants in the SchwabPlan Retirement Savings and Investment Plan (the “Plan”) who hold units of the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, both of which funds hold shares of Common Stock, as well as cash or cash equivalents) to select the price per share (in increments of $0.10), within a price range specified by the company at which they are willing to sell their shares of Common Stock. After the tender offer expires, the company will select the lowest purchase price within the predetermined price range that will allow the company to buy a specified number of shares. All shares purchased in the tender offer will be purchased at the same price, even if you have selected a lower price, but the company will not purchase any shares above the purchase price determined through the modified “Dutch Auction” process.

Why is The Charles Schwab Corporation offering this tender offer?

The company and its board of directors have reviewed alternatives for using the after-tax proceeds realized from the sale of U.S. Trust Corporation and the company’s other available liquid financial resources. They have evaluated the company’s capital structure, financial position, dividend policy, operations and strategic plan; the anticipated cost and availability of financing; the recent market prices of the company’s common stock and the company’s expectations for the future; and they believe that the tender offer and related transactions and the special cash dividend are prudent uses of the company’s financial resources and an efficient means to return capital to the company’s stockholders. After the company completes the tender offer and related transactions and pays the special cash dividend, the company currently anticipates that its cash balances, anticipated cash flows from operations, and borrowing capacity will allow it to service its debt, fund future dividends and the capital requirements for improving its operations, and provide appropriate financial flexibility for general corporate purposes. However, actual experience may differ significantly from our expectations. See “Forward Looking Statements” section of the Offer to Purchase.

Do I have to do anything if I do not want to tender any of my shares?

No. You do not have to respond if you do not want to tender any of your shares.

Is it okay to tender only some of my shares?

Yes. You are not required to participate in the tender offer, and if you elect to participate in the tender offer, you are not required to tender all of the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund.

How do I tender my shares?

You can tender the shares allocated to units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund by logging onto to the Tabulator’s website at https://www.tabulationsplus.com/schw-401k for the shares allocated to the units you hold in the 401(k) Equity Unit Fund or at https://www.tabulationsplus.com/schw-esop for the shares allocated to the units you hold in the ESOP Equity Unit Fund. Once you have logged on to the applicable website, follow the instructions for tendering shares.

Alternatively, you can use the paper forms included in your tender offer packet(s). There are two forms, one for the 401(k) Equity Unit Fund and one for the ESOP Equity Unit Fund. (If you have investments in only one of the equity unit funds, then you will receive only one packet and only one form.) If you use the paper form, complete the entire form pursuant to the directions and mail the form to the Tabulator (in the envelope provided) at P.O. Box 1997, New York, NY 10117-0024). If you wish to return the form by overnight courier, please send it to the Tabulator at Ellen Philip Associates, 134 West 26th Street, 5th Floor, New York, NY 10001. Directions via facsimile will not be accepted.

What is the deadline to tender my shares?

The Tabulator must receive your election to tender the shares allocated to units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund by 4:00 p.m., Eastern Time, on July 27, 2007 (or later if the offer is extended).

Why is the tender offer deadline different for Plan participants compared to other stockholders?

The tender offer deadline for Plan participants is determined in conjunction with the Tabulator and reflects the fact that the Tabulator for the Plan (Ellen Philip Associates) must follow different procedures from the other tabulators working on the tender offer.

If I tender some or all of my shares, when / how will I know that my tender instruction has been received?

If you tender your shares using the Tabulator’s website as described above, you will be able to request an email confirmation of your tender. If you tender your shares by mail, you will not receive any notification regarding confirmation or acceptance of your tender until the proceeds are deposited in your Plan account. If you tender your shares by mail, be sure to keep a copy of your control number, which can be used for tracking purposes.

Will all the shares that I tender be accepted in the tender offer?

Not necessarily. There are three events that could result in fewer shares being accepted in the tender offer and purchased by the Company compared to the number of shares that you direct to tender.

First, if the prevailing market price of the Common Stock, defined as the last-sale-eligible-trade reported to the NASDAQ exchange prior to 4:00:02 p.m. Eastern Time on July 27, 2007 (or later if the offer is extended) is higher than the price at which you direct to tender your shares, the Purchasing Agent will not tender the shares regardless of your direction. ERISA (the Employee Retirement Income Security Act of 1974, as amended) prohibits the Company from purchasing shares under the Plan if the purchase price is less than the prevailing market price of the stock. Therefore, shares that are directed for tender at below the prevailing market price on July 27, 2007 (or later if the offer is extended) will not be tendered by the Purchasing Agent.


Illustrative Example:

Instructions submitted by Participant Prices:	$	19.50		20%
	$	20.50		20%
	$	21.50		20%
	$	22.50		20%
		TBD		20%

Total shares tendered:				100%

Prevailing market price on July 27, 2007			$	20.45

Trustee would submit:
Prices:	$	19.50		—
	$	20.50		20%
	$	21.50		20%
	$	22.50		20%
*TBD at	$	20.50		20%

Total shares tendered:				80%

If you elect TBD, your shares will be deemed tendered at the minimum price of $19.50 unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment (i.e. $20.50 in the above example). Assuming that the final purchase price is established at $19.50, participants electing TBD will not have any shares purchased in this example.

For more information on this issue, see the Participant Letter included with these FAQs.

Second, the Company has only agreed to purchase a certain number of shares in the tender offer. If more shares are tendered (if the tender offer is oversubscribed), the Company may purchase shares on a pro rata basis. If the Company prorates, then fewer shares than you directed for tender will be purchased by the Company.

Third, if you tender any shares at a price higher than the final purchase price determined by the Company, then shares you directed for tender at a higher price will not be purchased by the Company.

Any shares that you direct for tender that are not purchased will be credited back to your Plan account as units in the applicable Equity Unit Fund.

What if I want to revoke my election to tender shares?

You may log on to the Tabulator’s website(s) or you may contact the Information Agent as detailed below to request and mail in the paper form(s). In each case, indicate that you do not want to tender the shares allocated to the units in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, or you can use the website (or paper form) to fill in different percentages and prices at which you want to tender the shares allocated to the units in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund. By submitting a new election, you are revoking any prior election.

The last communication that the Tabulator receives from you before the deadline will be your final and irrevocable election. For example, if you mail in the paper form and it is received by the Tabulator but then you later log on to the website and change your election (or revoke your tender), the Tabulator will count your website election (the last election received by the Tabulator) as your final election.

If I tender shares by mailing in the completed form and later decide to revoke or change my election, can I do that on the electronic system?

Yes. The fastest way to revoke or change any election is to submit a new internet election, thereby avoiding the possibility of postal delays. You also can use the paper election form or the internet election form to make an election to participate, to revoke an election to participate, and to change an election to participate.

How many times can I change my election?

You can change your election as many times as you want prior to 4:00 p.m., Eastern Time, on July 27, 2007 (or later if the offer is extended). However, the election that is on file with the Tabulator at 4:00 p.m., Eastern Time, on July 27, 2007 (or later if the offer is extended) will be final and irrevocable.

I lost my “control #” to make elections online. Who can give me my control # to go on the site and make my tender election?

Please contact D. F. King & Co., Inc., the information agent for the tender offer, at 1-800-659-6590 between 8:00 a.m. and 10:00 p.m., Eastern Time, Monday through Friday and 11:00 a.m. and 6:00 p.m., Eastern Time, on Saturday.

Whom do I call to obtain another package and election form?

You may contact D. F. King & Co., Inc., the information agent for the tender offer, at 1-800-659-6590 between 8:00 a.m. and 10:00 p.m., Eastern Time, Monday through Friday and 11:00 a.m. and 6:00 p.m., Eastern, Time on Saturday.

Whom do I call to ask questions about the tender offer?

For information related to the tender offer, please contact D. F. King & Co., Inc., the information agent for the tender offer, at 1-800-659-6590 between 8:00 a.m. and 10:00 p.m.,

Eastern Time, Monday through Friday and 11:00 a.m. and 6:00 p.m., Eastern Time, on Saturday. You also may call UBS Securities LLC, the Dealer Manager for the Offer at 1-877-827-4180 for more information regarding the tender offer.

General Issues Related to the Plan

Why did I receive two separate packets for the SchwabPlan Retirement Savings and Investment Plan?

There is a separate packet for each of the two equity unit funds in the Plan, the 401(k) Equity Unit Fund and the ESOP Equity Unit Fund. If you received both packets it is because you were invested in both of the funds at the time the packets were created. Because of certain tax consequences of tendering shares allocated to the funds, you are permitted to make a separate election to tender the shares allocated to the units you hold in each of the two funds. Each packet that you received contains information on how to make the election to tender the shares allocated to units in each fund.

How do I calculate the approximate number of equivalent shares allocated to the units I hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund?

To calculate a current estimate of the number of shares allocated to units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, take the current value of your holdings in each fund, multiply it by 99.25% (less than 100% to account for the cash or cash equivalents in the fund) and then divide the result by the current market price of Schwab common stock. You may also contact Schwab Retirement Plan Services at 1-800-724-7526 or log on to schwabplan.com.

If I tender shares and my tender is accepted, when will the shares actually leave my account(s)?

The deadline for tendering shares is 4:00 p.m., Eastern Time, on July 27, 2007 (or later if the offer is extended). After this time, you will not be permitted to sell or make any transaction with respect to the shares allocated to the units you hold in either the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund that you have elected to tender. However, even though you will not be able to make any transactions with respect to the tendered shares, the tendered shares allocated to units in those funds will not actually be transferred from your account until on or about August 8, 2007. During the period between July 27, 2007 (or later if the offer is extended) and about August 8, 2007, you will be able to make transactions with respect to that portion, if any, of your 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund holdings with respect to shares allocated to the units you hold in the equity unit funds that have not been tendered. In order to make these transactions, you will have to contact Schwab Retirement Plan Services at 1-800-724-7526 and work with the call center representative.

If I tender shares and my shares are accepted, when will I see the proceeds in my Plan account?

On or about August 8, 2007, we expect that you will see the proceeds in your Plan account. However, this date could fluctuate based on the administration of the tender offer. Remember

that the proceeds from the tender offer will be reinvested in your Plan account based on the investment elections that you have on file with Schwab Retirement Plan Services or, if you do not have investment elections on file, the proceeds will be deposited in the SchwabPlan Stable Value Fund.

How will the proceeds that are returned to the Plan for shares that I tender, which are accepted, be invested in my Plan account?

The proceeds from the tender offer will be reinvested in your Plan account based on the investment elections that you have on file with Schwab Retirement Plan Services or, if you do not have investment elections on file, the proceeds will be deposited in the SchwabPlan Stable Value Fund.

If you want to change your investment elections so that the tender offer proceeds are reinvested in a different manner than your salary contributions, please contact Schwab Retirement Plan Services at 1-800-724-7526 or log on to schwabplan.com. Please note that your salary deferrals to the Plan for the July 31st pay period and, if applicable, any quarterly bonus payment will be deposited in your Plan account in the days just prior to the time the tender offer proceeds are deposited in your Plan account and may be affected by any change to your investment elections as well as any subsequent deferral or bonus deposits to your account.

If you are a participant who has terminated employment with Schwab, you may want to confirm whether or not you have investment elections on file; we may have old investment elections on file, which may have been adjusted based on changes made to the investment options available under the Plan and which will be used to reinvest your tender offer proceeds.

Once the proceeds from my tendered shares have been credited to my account in accordance with my investment elections, can I transfer my fund balances immediately to other investments?

Yes. However, you must keep in mind that the normal contingent redemption fees and/or mutual fund trading restrictions may apply. Please call the SchwabPlan Retirement Plan Services Hotline at 1-800-724-7526 for more information.

Can I receive the proceeds from the tender offer outside of the SchwabPlan Retirement Savings and Investment Plan?

No. All tender offer proceeds must be deposited back into the Plan in order to maintain the tax-qualified status of the Plan. You may only take a distribution from the Plan in accordance with the terms of the Plan.

If I participate in the tender offer, will this be a taxable event?

Your participation in the tender offer does not have any immediate tax consequence. However, participation in the tender offer with respect to the shares allocated to the units you

hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund may have a negative tax consequence to you when you take a distribution from the Plan.

Specifically, under current federal income tax rules, if you receive from the Plan a lump sum distribution that includes Schwab shares that have increased in value while they were held by the Plan you may have, under certain circumstances, the option of deferring payment of taxes on this increase in value, until you sell the shares. This increase in value is referred to as “net unrealized appreciation.” When the shares are sold, any gain up to the amount of the untaxed net unrealized appreciation is taxed as long-term capital gain. If shares that are part of your holdings in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund are purchased by the company in the tender offer, you will no longer be able to take advantage of this tax benefit with respect to these particular shares. The shares allocated to the units you hold in the ESOP Equity Unit Fund may be more significantly impacted by your decision to tender them because the tax basis of these shares is generally lower than the tax basis of the shares allocated to the units you may hold in the 401(k) Equity Unit Fund. Please log on to www.schwabplan.com and click on “Plan Services” – “Withdrawals” – “Distribution Center” – “Distribution Decision Making Guide” – “What to do with Your Company Stock” for more information regarding the tax issues related to the funds. In addition, you should discuss whether to tender your shares with your financial or tax advisor.

Can I still take a loan or in-service withdrawal if I tender shares?

You will be able to take a loan from the Plan if you tender shares allocated to the units you hold in the equity unit funds through the normal application process; however once the Plan’s tender offer window closes on July 27, 2007 (or later if the offer is extended), you may not take a loan with respect to your tendered shares until the completion of the transaction on or about August 8, 2007. If you apply for a loan during this window and wish to borrow against your non-tendered shares, please contact Schwab Retirement Plan Services at 1-800-724-7526.

With respect to in-service withdrawals, you may take in-service withdrawals from the Plan for which you are eligible under the Plan rules during the tender offer even if you have tendered the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund. However, you may not make any withdrawal with respect to the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund that you tendered after 4:00 p.m., Eastern Time, on July 27, 2007 (or later if the offer is extended), until the completion of the tender offer on or about August 8, 2007.

Can I still transfer my account balances among funds in the Plan if I tender shares?

Generally, you can still transfer your account balance among different funds in the Plan during the tender offer period. However, if you elect to tender the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, you may not make any transaction with respect to the shares allocated to units in those funds that you have tendered after 4:00 p.m., Eastern Time, on July 27, 2007, until the completion of the transaction on or about August 8, 2007.

Can I still make transactions in the equity unit funds during the tender offer period and following the tender offer period?

Yes. You can still direct investments into the 401(k) Equity Unit Fund during the tender offer period and following the tender offer period. You can sell your investments in the equity unit funds with respect to any of the units you hold in the equity unit funds through 4:00 p.m., Eastern Time, on July 27, 2007. After 4:00 p.m., Eastern Time, on July 27, 2007, you can only sell your investments in the equity unit funds with respect to shares allocated to the units you hold in the equity unit funds that have not been tendered.

If I am a terminated employee and want to tender shares, may I take a total distribution of the rest of my Plan account?

If you elect a distribution which can be processed prior to July 27, 2007, your distribution election will be deemed a revocation of your election to tender the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund. If you elect a distribution which cannot be processed until after July 27, 2007 and you have elected to tender the shares allocated to units in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, your distribution will be delayed until after the proceeds from the tender offer have been deposited in your Plan account.

The Special and Regular Quarterly Cash Dividend

Will Schwab still pay the regular quarterly dividend?

Yes. Schwab will still pay the regular quarterly dividend of $0.05 per share on August 24, 2007. The quarterly dividend will be added to the special dividend and allocated to your account on the same day.

Will I receive the “special cash dividend” and the regular quarterly cash dividend if I tender shares?

Yes. If you are a stockholder of record of the Company as of the close of business on July 24, 2007, including for this purpose having shares allocated to your units in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, you will be eligible to receive the special and regular quarterly cash dividends even if you chose to tender the shares allocated to the units you hold in those funds.

As of which date must I hold shares in my Plan account to be eligible for the special and regular quarterly cash dividends?

You must be a stockholder (including having shares allocated to units in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund) on July 24, 2007 in order to be eligible to receive the special and regular quarterly cash dividends.

When will I receive my special and regular quarterly cash dividends?

The special and regular quarterly cash dividends will be paid on August 24, 2007. The special and regular quarterly cash dividends will be reinvested in your Plan account unless you have elected Pass Thru Dividends.

Will I be taxed on my special and regular quarterly cash dividends?

It depends. You will not be taxed on your special and regular quarterly cash dividends because your dividends will be reinvested in your Plan account unless you have elected Pass Thru Dividends, in which case the dividends will be paid to you in cash and you will be taxed on the dividends.

If I have elected Pass Thru Dividends (receiving dividend payments in cash), how can I change my election so that I do not receive my special and regular quarterly dividends in cash?

If you want to change your dividend election, either to receive the special and regular quarterly cash dividends in cash or to have the dividends reinvested in the applicable fund, please contact Schwab Retirement Plan Services at 1-800-724-7526 or log on to schwabplan.com before 4:00 p.m. Eastern Time on August 23, 2007.

EX-99.(A)(1)(M) 13 dex99a1m.htm CHARLES SCHWAB STOCK TENDER OFFER - GENERAL EMPLOYEE QUESTIONS AND ANSWERS Charles Schwab Stock Tender Offer - General Employee Questions and Answers

Exhibit (a)(1)(M)


General Employee FAQs		3
1.	Why is Schwab doing this capital restructuring?	3
2.	What are the components of Schwab’s capital restructuring plan?	3
3.	What impact will these transactions have on the financial health of the firm?	3
4.	Will Chuck participate in the tender offer? If not, will he maintain his percentage ownership in the company?	3
5.	Does the Company intend to repurchase any shares other than pursuant to the tender offer and the agreement with Chuck?	4
6.	Following the tender offer, will the Company continue as a public company?	4
7.	What are the details of the tender offer & special cash dividend?	4
8.	What is the debt portion of the capital restructuring plan, and why are we doing it?	4
9.	How are stockholders being notified?	5
10.	Should I participate in the tender offer?	5
11.	How do the tender offer and dividend impact me, and how do I participate?	5
12.	Is it okay to tender only some of my shares?	6
13.	Can I tender at different prices?	6
14.	Will I receive the special cash dividend if I tender my shares?	7
15.	Will I have to pay brokerage commissions or a reorganization fee if I tender my shares?	7
16.	Do I have to do anything if I do not want to tender any of my shares?	7
17.	If I decide not to tender, how will the Offer affect my shares?	7
18.	Who can I talk with if I have questions about the tender offer or special dividend?	7

Employee FAQs Specific to Shares Held in Bank or Brokerage Accounts		8
19.	How do I tender shares I have in my bank or brokerage account?	8
20.	How do I know what price I’ll receive?	8
21.	What are the tax consequences if I tender my shares?	8
22.	If I own fewer than 100 shares and I tender all of my shares, will I be subject to proration?	9
23.	How many times can I change my election?	9
24.	How and when will I know how many of the shares I’ve offered up for tender are accepted?	9
25.	When I tender the shares before the deadline, are they still in my account?	9
26.	I tendered my shares, but now I want to withdraw. How do I do that?	9
27.	How do I get another tender offer package or election form?	9
28.	My account is set up for dividend reinvestment. Will the special cash dividend be reinvested?	9
29.	What are the tax consequences of the special dividend?	10

Employee FAQs Specific to Shares in the SchwabPlan Retirement Savings and Investment Plan (401(k)/ESOP)		11
30.	How do I tender my shares?	11
31.	What is the deadline to tender my shares?	11
32.	Why is the tender offer deadline different for Plan participants compared to other stockholders?	11
33.	If I tender some or all of my shares, when / how will I know that my tender instruction has been received?	11
34.	Will all the shares that I tender be accepted in the tender offer?	11
35.	What if I want to revoke my election to tender shares?	12
36.	If I tender shares by mailing in the completed form and later decide to revoke or change my election, can I do that on the electronic system?	12
37.	How many times can I change my election?	13
38.	I lost my “control #” to make elections online. Who can give me my control # to go on the site and make my tender election?	13
39.	Who do I call to obtain another package and election form?	13
40.	Who do I call to ask questions about the tender offer?	13
41.	Why did I receive two separate packets for the SchwabPlan Retirement Savings and Investment Plan?	13
42.	How do I calculate the approximate number of equivalent shares allocated to the units I hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund?	13
43.	If I tender shares and my tender is accepted, when will the shares actually leave my account(s)?	13


				Page 1 of 18


44.	If I tender shares and my shares are accepted, when will I see the proceeds in my Plan account?	14
45.	How will the proceeds that are returned to the Plan for shares that I tender, which are accepted, be invested in my Plan account?	14
46.	Once the proceeds from my tendered shares have been credited to my account in accordance with my investment elections, can I transfer my fund balances immediately to other investments?	14
47.	Can I receive the proceeds from the tender offer outside of the SchwabPlan Retirement Savings and Investment Plan?	14
48.	If I participate in the tender offer, will this be a taxable event?	14
49.	Can I still take a loan or in-service withdrawal if I tender shares?	15
50.	Can I still transfer my account balances among funds in the Plan if I tender shares?	15
51.	Can I still make transactions in the equity unit funds during the tender offer period and following the tender offer period?	15
52.	If I am a terminated employee and want to tender shares, may I take a total distribution of the rest of my Plan account?	15
53.	Will Schwab still pay the regular quarterly dividend?	16
54.	Will I receive the “special cash dividend” and the regular quarterly cash dividend if I tender shares?	16
55.	As of which date must I hold shares in my Plan account to be eligible for the special and regular quarterly cash dividends?	16
56.	When will I receive my special and regular quarterly cash dividends?	16
57.	Will I be taxed on my special and regular quarterly cash dividends?	16
58.	If I have elected Pass Thru Dividends (receiving dividend payments in cash), how can I change my election so that I do not receive my special and regular quarterly cash dividends in cash?	16

Employee FAQs Specific to Stock Option/Restricted Share Holders		17
59.	Are employee stock options or other “Schwab shares” from our equity compensation plans being adjusted for the dividend?	17
60.	If I want to exercise vested options to receive the dividend, what’s the deadline for exercising them?	17
61.	If I want to exercise vested options so I can tender them, what’s the deadline for exercising them?	17
62.	Why doesn’t the adjustment include the $0.05 per share regular dividend also declared on July 2, 2007?	17
63.	When will I be able to view my adjusted options? When can I exercise vested options?	18
64.	Can I do a “same day sale” or “exersale” and still be eligible for the special dividend or tender offer?	18
65.	Does the option adjustment trigger any taxes?	18
66.	Is the new Employee Stock Purchase Plan impacted by the capital restructuring?	18
67.	Who do I contact if I have questions?	18


				Page 2 of 18

General Employee FAQs

1. Why is Schwab doing this capital restructuring?

•

Our management and the board of directors reviewed alternatives for using the after-tax proceeds from the sale of U.S. Trust Corporation. They believe that the capital restructuring plan, including a special cash dividend, tender offer and debt issuance, is an effective way of returning excess capital to stockholders while creating a more efficient capital structure. The firm remains focused on sustaining a strong balance sheet that provides the company with ample flexibility to fund current and future growth opportunities.

2. What are the components of Schwab’s capital restructuring plan?

•

We announced a plan to return approximately $3.5 billion in capital to stockholders and create a more efficient and cost-effective capital structure. This plan follows the completion, on July 1, 2007, of the sale of U.S. Trust Corporation, which generated $2.7 billion of after-tax proceeds. The plan includes the following components:

A special cash dividend of $1.00 per common share, which will return approximately $1.2 billion to stockholders. The special dividend is payable on August 24, 2007, to stockholders of record at the close of business on July 24, 2007.

A $2.3 billion share repurchase through a modified Dutch Auction Tender Offer and a separate Stock Purchase Agreement with Chairman and CEO Charles R. Schwab, the company’s largest stockholder. The Stock Purchase Agreement will maintain Mr. Schwab’s beneficial ownership of the company at its current level of approximately 18 percent.

Debt offerings of up to $750 million consisting of a combination of senior notes and hybrid capital securities.

•

The terms of these securities are subject to the preparation, negotiation and completion of definitive documents, and the timing and amount of these offerings may be affected by market conditions, including the demand for new corporate debt issues. The specific terms of the debt securities will be described in one or more prospectus supplements or pricing supplements to be filed with the Securities and Exchange Commission and may be obtained free of charge from the SEC’s website at www.sec.gov.

3. What impact will these transactions have on the financial health of the firm?

•

Schwab will continue to have a strong balance sheet that provides the company with ample flexibility to fund current and future growth opportunities. This doesn’t preclude us from future acquisitions or investment in our core businesses, given our strong continuing cash flow and conservative balance sheet. We are well positioned to take advantage of opportunities to enhance our capabilities and further our growth.

•

We expect capital and cash flow generation to remain strong, post-capital restructuring.

•

All three rating agencies, Moody’s, S&P, and Fitch, have reviewed the impact of this capital restructuring and have reaffirmed our corporate credit ratings.

4. Will Chuck participate in the tender offer? If not, will he maintain his percentage ownership in the company?

•

Chuck will not participate directly in the tender offer. He has entered into a separate agreement with the company to sell shares.

•

Chuck will sell shares in an amount that will maintain his pre-tender ownership interest.


				Page 3 of 18

^¡

Chuck’s beneficial ownership is spread across several stockholders which may participate in the sale of stock to the company along with Chuck directly.

5. Does the Company intend to repurchase any shares other than pursuant to the tender offer and the agreement with Chuck?

•

After the close of the tender, we may decide to purchase additional shares in the open market, through a private transaction, tender offers or otherwise. In particular, our Board of Directors has previously approved a stock repurchase program, under which during the period from January 1, 2007 to June 29, 2007, we repurchased approximately 33 million shares of our common stock for approximately $642 million. As of June 29, 2007, we had the remaining authority to repurchase approximately $446 million of shares of our common stock.

6. Following the tender offer, will the Company continue as a public company?

•

Yes. After the completion of the tender offer our shares will continue to be listed on NASDAQ and we will continue to be subject to the reporting requirements of the Exchange Act.

7. What are the details of the tender offer & special cash dividend?


Tender Offer		Special Cash Dividend

• Schwab is offering to purchase $1.9 billion or 84 million shares of SCHW stock in a modified “Dutch Auction” tender. • The maximum price in the offer is $22.50. The minimum price in the offer is $19.50. • The offer commences on July 3, 2007 and closes at midnight ET on July 31, 2007 (unless the offer is extended). ^¡ If you hold your shares at Schwab, you must submit your instructions by 7 pm ET on July 26, 2007. ^¡ If you hold shares in the Schwab 401(k) and/or ESOP Equity Unit Funds in the Retirement Savings & Investment Plan, you must submit your instructions by 4:00 pm ET July 27, 2007. Schwab will not charge any fees to participate for clients holding their shares in a Schwab or Cybertrader account.		• Schwab will be paying a special $1.00 per share cash dividend to all stockholders of record as of the close on 7/24/2007. • The ex-dividend date is July 20, 2007. The record date is July 24, 2007. The payable date is August 24, 2007. • The eligible shares are: • Clients: ^¡ SCHW common stock • Employees: ^¡ SCHW common stock ^¡ Stock units (held through the 401(k) and/or ESOP Equity Unit Funds in the Retirement Savings & Investment Plan) ^¡ Restricted Stock ^¡ Shares held in old ESPP account (Schwab’s Dividend Reinvestment & Stock Purchase Plan)

8. What is the debt portion of the capital restructuring plan, and why are we doing it?

^¡

The debt offering is part of an overall capital restructuring plan to return capital to stockholders while creating a more efficient capital structure. The firm is focused on sustaining a strong balance sheet that provides the company with ample flexibility to fund current and future growth opportunities.

^¡

The debt offering of up to $750 million is expected to consist of senior notes and hybrid capital securities. The terms of these securities are subject to the preparation, negotiation and completion of definitive documents, and the timing and amount of these offerings may be affected by market conditions, including the demand for new corporate debt issues.


				Page 4 of 18

^¡

The specific terms of the debt securities will be described in one or more prospectus supplements or pricing supplements to be filed with the Securities and Exchange Commission and may be obtained free of charge from the SEC’s website at www.sec.gov.

9. How are stockholders being notified?

•

Stockholders will be notified of the tender offer, by mail, through the “Offer To Purchase”.

•

Stockholders who hold shares in the name of a broker, dealer, commercial bank, trust company, or other nominee will be notified by their nominee. This includes stockholders who hold their shares in a Schwab account. The tender offer document may be accompanied by a cover letter. Schwab will send a letter to its clients.

•

If stockholders hold certificates in their own name, they will be notified by our Depositary, Wells Fargo Shareholder Services.

•

Participants in the SchwabPlan Retirement Savings & Investment Plan who are invested in the 401(k) and/or ESOP Equity Unit Funds will be notified by mail from the plan Tabulator, Ellen Philip Associates.

•

Questions and requests for assistance for all stockholders may be directed to the Information Agent, DF King (800-659-6590), or the Dealer Manager, UBS Securities LLC (877-827-4180).

Additional information about the Information Agent and Dealer Manager is located on the back page of the “Offer To Purchase”.

10. Should I participate in the tender offer?

•

Our board of directors has approved the offer. However, neither we nor the board of directors, the dealer manager, the information agent or the depositary makes any recommendation to you as to whether you should tender or refrain from tendering your shares or as to the price or prices at which you may choose to tender your shares. You must make your own decision as to these matters. In so doing, you should read and evaluate carefully the information in the Offer to Purchase and in the related Letter of Transmittal, including our reasons for making the Offer.

11. How do the tender offer and dividend impact me, and how do I participate?


				Page 5 of 18



Restricted Stock or stock units	The special dividend will be paid to all holders of outstanding restricted shares as of July 24, 2007. These special dividends will be paid and taxed in the same manner as ordinary dividends. Restricted shares are not eligible for the tender offer unless the restrictions lapse and the shares are settled in your Schwab account by July 26, 2007.	Not eligible	n/a

Stock options, vested and unvested	Employee stock options are not eligible to receive a dividend. However, the exercise price and the number of shares will be adjusted to reflect the $1.00 dividend. If you decide to exercise vested options before July 19, 2007, the resulting shares will receive the dividend.	Vested options: You may exercise your stock options no later than July 23, 2007, and tender all or some of the shares received upon exercise, in accordance with the Offer. Unvested options: Not eligible.	You must exercise options sufficiently in advance of the Expiration Time, but no later than July 23, 2007, to receive the shares in your account by July 26, 2007 in order to participate in the Offer. You must tender your shares by 7 pm ET on July 26, 2007.

Former ESPP program	Dividend will be paid as ordinary dividend payments.	Stock owned is eligible for the tender offer.	Complete and submit the Letter of Transmittal in advance of the expiration date.

New 2007 ESPP	The new ESPP being launched in 2007 isn’t eligible because it won’t be in operation during the tender offer period or by the dividend record date.

12. Is it okay to tender only some of my shares?

•

Yes. You are not required to participate in the tender offer, and if you elect to participate in the tender offer, you are not required to tender all of your shares.

13. Can I tender at different prices?

•

Yes, you can select different prices ranging from $19.50 to $22.50; however, the same shares can’t be tendered at more than one price.


				Page 6 of 18

14. Will I receive the special cash dividend if I tender my shares?

•

Yes. If you are a stockholder of record of the Company as of the close of business on July 24, 2007, you will have the right to receive the special dividend, even if you choose to tender your shares in the Offer. This holds true regardless of whether you tender them before or after July 24, 2007.

15. Will I have to pay brokerage commissions or a reorganization fee if I tender my shares?

•

Not for accounts held at Schwab. We are waiving the voluntary reorganization fee. If any shares are held in a non-Schwab brokerage account, you must check with that broker or firm.

16. Do I have to do anything if I do not want to tender any of my shares?

•

No. You do not have to respond if you do not want to tender any of your shares.

17. If I decide not to tender, how will the Offer affect my shares?

•

Stockholders who choose not to tender their shares will own a higher percentage interest in our outstanding common stock following the completion of the tender offer.

18. Who can I talk with if I have questions about the tender offer or special dividend?

•

Schwab Plan Retirement Savings & Investment Plan Participants (participants who are both active and former employees): Contact D.F. King & Co., Inc., the information agent for the Offer at 1-800-659-6590, or UBS Securities LLC, the dealer manager for the Offer at 1 -877-827-4180. Identify yourself as a Schwab 401(k) plan participant.

•

Vested Options (if you decide to exercise): Contact Stock Plan Services.

•

Stock held in Schwab Account (brokerage or bank): Contact D.F. King & Co., Inc., the information agent for the Offer at 1-800-659-6590, or UBS Securities LLC, the dealer manager for the Offer (877-827-4180).


				Page 7 of 18

Employee FAQs Specific to Shares Held in Bank or Brokerage Accounts

19. How do I tender shares I have in my bank or brokerage account?

•

Employees can use schwab.com, or contact the Schwab Employee Services branch.

•

Employees with certificates in their own name should send their Letters of Transmittal, together with any required signature guarantees, the certificates for their shares, and any other documents required by the Letter of Transmittal to the depositary, Wells Fargo Bank, N.A., at the address indicated in the Offer to Purchase and Letter of Transmittal.

20. How do I know what price I’ll receive?

•

In a modified “Dutch Auction”, stockholders are allowed to select the price per share (within the price range of the offer) at which they’re willing to sell, or they can choose to accept the purchase price that Schwab determines at the close of the offer (1).

•

After the offer closes (on July 31^st), the prices listed by stockholders are reviewed, and we will select the lowest price range that allows us to purchase approximately 84 million shares.

•

This means that if you indicate a price, you will not receive less than your price (2). One of three things will occur:

^¡

You will receive your price for your shares.

^¡

You will receive a higher price for your shares.

^¡

Your shares will not sell, because we could purchase enough shares at a lower price than you indicated.

(1)

Opting to select the purchase price determined in the tender offer maximizes a client’s chance of participating. However, you should understand that choosing to accept the purchase price determined in the offer (i.e., not indicating a tender price of their own) may lower the purchase price paid for all purchased shares in the Offer and could result in your shares being purchased at the minimum price of $19.50 per share.

(2)

You should also understand that not all your shares may be purchased even if their price qualifies. For example, if more than the 84 million shares are offered, qualifying share amounts will be proportionally reduced (i.e., prorated).

21. What are the tax consequences if I tender my shares?

^¡

Note that special tax rules will apply with respect to shares tendered through our 401(k) Plan and may apply with respect to a tender of shares acquired through the exercise of stock options. Please consult your personal tax advisor to determine how this will apply to you.

^¡


				Page 8 of 18

withholding, should submit an IRS Form W-8BEN. However, Non-U.S. Holders may be subject to 30% withholding regardless of whether the transfer is treated as a sale or exchange or as a distribution. See Section 14 of the Offer to Purchase. We recommend that you consult your own tax advisor with respect to your particular situation.

22. If I own fewer than 100 shares and I tender all of my shares, will I be subject to proration?

•

Odd lot holders (i.e., you own less than 100 shares): No, you are not subject to proration. If your tender offer is accepted, all your shares will be tendered.

•

Round lot holders (i.e., you own more than 100 shares): Yes, you are subject to proration. Not all of your shares may be accepted if there are more than 84 million shares offered.

23. How many times can I change my election?

As often as you want, up until the cutoff times (if shares held at Schwab, 7 pm ET on July 26th). However, whatever election is on file with the depositary at the Expiration Time will be final and irrevocable.

24. How and when will I know how many of the shares I’ve offered up for tender are accepted?

•

Once the tender period has closed, the offers are reviewed and the final price determined.

•

If your shares are accepted in the tender offer, they will be sold and your account will be credited.

•

If your shares are not accepted in the tender offer, they will return to their normal (non-tendered) status.

•

It can take up to 10 business days after the tender offer period has closed to settle your account.

25. When I tender the shares before the deadline, are they still in my account?

•

Once you tender your shares, you will see the shares still in your account but they will be marked as having been tendered. This will prevent the shares from being transferred or sold until the tender process is complete, unless you withdraw your shares from the offer.

26. I tendered my shares, but now I want to withdraw. How do I do that?

•

If you hold shares in your regular Schwab account, you can withdraw by using Schwab.com or speaking with a representative in the Schwab Employee Services Branch.

27. How do I get another tender offer package or election form?

You may contact D.F. King & Co, Inc., the information agent for the tender offer, at 800-659-6590.

28. My account is set up for dividend reinvestment. Will the special cash dividend be reinvested?

•

No. Several years ago we made a decision to not offer dividend reinvestment for special dividends from all stocks. All Schwab clients were notified of this change and it appears in the account agreement.

•

The rationale for this decision is that these distributions can be very large, causing us to send a large purchase order to the market on the payable date, which may disrupt the market.


				Page 9 of 18

29. What are the tax consequences of the special dividend?

•

The special dividend will constitute ordinary income for federal and state income tax purposes and is reportable as such on a Form 1099-DIV. For individuals who have owned the stock as to which the special dividend is paid for a requisite time period, the special dividend should also be “qualified dividend income” eligible for a maximum federal income tax rate of 15%. You should consult your personal tax advisor, as exceptions can apply for federal income tax purposes and state and local tax jurisdictions may not follow the federal rules and rates.


				Page 10 of 18

Employee FAQs Specific to Shares in the SchwabPlan Retirement Savings and Investment Plan (401(k)/ESOP)

30. How do I tender my shares?

•

31. What is the deadline to tender my shares?

•

32. Why is the tender offer deadline different for Plan participants compared to other stockholders?

•

33. If I tender some or all of my shares, when / how will I know that my tender instruction has been received?

•

34. Will all the shares that I tender be accepted in the tender offer?

•

Not necessarily. There are three events that could result in fewer shares being accepted in the tender offer and purchased by the Company compared to the number of shares that you direct to tender.

•

First, if the prevailing market price of the Common Stock, defined as the last-sale-eligible-trade reported to the NASDAQ exchange prior to 4:00:02 p.m. Eastern Time on July 27, 2007 (or later if the offer is extended), is higher than the price at which you direct to tender your shares, the Purchasing Agent will not tender the shares regardless of your direction. ERISA (the Employee Retirement Income Security Act of 1974, as amended) prohibits the Company from purchasing shares under the Plan if the purchase price is less than the prevailing market price of the stock. Therefore, shares that are directed for tender at below the prevailing market price on July 27, 2007 (or later if the offer is extended) will not be tendered by the Purchasing Agent.


				Page 11 of 18

Illustrative Example:


Instructions submitted by Participant
Prices:	$	19.50	20	%
	$	20.50	20	%
	$	21.50	20	%
	$	22.50	20	%
		TBD	20	%

Total shares tendered:			100	%

Prevailing market price on July 27, 2007	$	20.45
Trustee would submit:
Prices:	$	19.50	—
	$	20.50	20	%
	$	21.50	20	%
	$	22.50	20	%
TBD at	$	20.50	20	%

Total shares tendered:			80	%

* If you elect TBD, your shares will be deemed tendered at the minimum price of $19.50 unless the prevailing market price on July 27, 2007 is higher than the minimum price, in which case, your shares will be tendered at the prevailing market price rounded up to the next highest $0.10 increment (i.e. $20.50 in the above example). Assuming that the final purchase price is established at $19.50, participants electing TBD will not have any shares purchased in this example.

•

For more information on this issue, see the Participant Letter.

•

Third, if you tender any shares at a price higher than the final purchase price determined by the Company, then shares you directed for tender at a higher price will not be purchased by the Company.

•

Any shares that you direct for tender that are not purchased will be credited back to your Plan account as units in the applicable Equity Unit Fund.

35. What if I want to revoke my election to tender shares?

•

36. If I tender shares by mailing in the completed form and later decide to revoke or change my election, can I do that on the electronic system?

•


				Page 12 of 18

37. How many times can I change my election?

•

38. I lost my “control #” to make elections online. Who can give me my control # to go on the site and make my tender election?

•

39. Who do I call to obtain another package and election form?

•

40. Who do I call to ask questions about the tender offer?

•

For information related to the tender offer, please contact D. F. King & Co., Inc., the information agent for the tender offer, at 1-800-659-6590 between 8:00 a.m. and 10:00 p.m., Eastern Time, Monday through Friday and 11:00 a.m. and 6:00 p.m., Eastern Time, on Saturday. You also may call UBS Securities LLC, the Dealer Manager for the Offer at 1-877-827-4180 for more information regarding the tender offer.

41. Why did I receive two separate packets for the SchwabPlan Retirement Savings and Investment Plan?

•

42. How do I calculate the approximate number of equivalent shares allocated to the units I hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund?

•

43. If I tender shares and my tender is accepted, when will the shares actually leave my account(s)?

•

The deadline for tendering shares is 4:00 p.m., Eastern time, on July 27, 2007 (or later if the offer is extended). After this time, you will not be permitted to sell or make any transaction with respect to the shares allocated to the units you hold in either the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund that you have elected to tender. However, even though you will not be able to make any transactions with respect to the tendered shares, the tendered shares allocated to units in those funds will not actually be transferred from your account until on or about August 8, 2007. During the period


		Page 13 of 18

between July 27, 2007 (or later if the offer is extended) and about August 8, 2007, you will be able to make transactions with respect to that portion, if any, of your 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund holdings with respect to shares allocated to the units you hold in the equity unit funds that have not been tendered. In order to make these transactions, you will have to contact Schwab Retirement Plan Services at 1-800-724-7526 and work with the call center representative.

44. If I tender shares and my shares are accepted, when will I see the proceeds in my Plan account?

•

On or about August 8, 2007, we expect that you will see the proceeds in your Plan account. However, this date could fluctuate based on the administration of the tender offer. Remember that the proceeds from the tender offer will be reinvested in your Plan account based on the investment elections that you have on file with Schwab Retirement Plan Services or, if you do not have investment elections on file, the proceeds will be deposited in the SchwabPlan Stable Value Fund.

45. How will the proceeds that are returned to the Plan for shares that I tender, which are accepted, be invested in my Plan account?

•

46. Once the proceeds from my tendered shares have been credited to my account in accordance with my investment elections, can I transfer my fund balances immediately to other investments?

•

47. Can I receive the proceeds from the tender offer outside of the SchwabPlan Retirement Savings and Investment Plan?

•

48. If I participate in the tender offer, will this be a taxable event?

•

Your participation in the tender offer does not have any immediate tax consequence. However, participation in the tender offer with respect to the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund may have a negative tax consequence to you when you take a distribution from the Plan.

•

Page 14 of 18

ESOP Equity Unit Fund are purchased by the company in the tender offer, you will no longer be able to take advantage of this tax benefit with respect to these particular shares. The shares allocated to the units you hold in the ESOP Equity Unit Fund may be more significantly impacted by your decision to tender them because the tax basis of these shares is generally lower than the tax basis of the shares allocated to the units you may hold in the 401(k) Equity Unit Fund. Please log on to www.schwabplan.com and click on “Plan Services” – “Withdrawals” – “Distribution Center” – “Distribution Decision Making Guide” – “What to do with Your Company Stock” for more information regarding the tax issues related to the funds. In addition, you should discuss whether to tender your shares with your financial or tax advisor.

49. Can I still take a loan or in-service withdrawal if I tender shares?

•

With respect to in-service withdrawals, you may take in-service withdrawals from the Plan for which you are eligible under the Plan rules during the tender offer even if you have tendered the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund. However, you may not make any withdrawal with respect to the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund that you tendered after 4:00 p.m., Eastern time, on July 27, 2007 (or later if the offer is extended), until the completion of the tender offer on or about August 8, 2007.

50. Can I still transfer my account balances among funds in the Plan if I tender shares?

•

Generally, you can still transfer your account balance among different funds in the Plan during the tender offer period. However, if you elect to tender the shares allocated to the units you hold in the 401(k) Equity Unit Fund and/or the ESOP Equity Unit Fund, you may not make any transaction with respect to the shares allocated to units in those funds that you have tendered after 4:00 p.m., Eastern time, on July 27, 2007, until the completion of the transaction on or about August 8, 2007.

51. Can I still make transactions in the equity unit funds during the tender offer period and following the tender offer period?

•

Yes. You can still direct investments into the 401(k) Equity Unit Fund during the tender offer period and following the tender offer period. You can sell your investments in the equity unit funds with respect to any of the units you hold in the equity unit funds through 4:00 p.m., Eastern time, on July 27, 2007. After 4:00 p.m., Eastern time, on July 27, 2007, you can only sell your investments in the equity unit funds with respect to shares allocated to the units you hold in the equity unit funds that have not been tendered.

52. If I am a terminated employee and want to tender shares, may I take a total distribution of the rest of my Plan account?

•

Page 15 of 18

53. Will Schwab still pay the regular quarterly dividend?

•

54. Will I receive the “special cash dividend” and the regular quarterly cash dividend if I tender shares?

•

55. As of which date must I hold shares in my Plan account to be eligible for the special and regular quarterly cash dividends?

•

56. When will I receive my special and regular quarterly cash dividends?

•

57. Will I be taxed on my special and regular quarterly cash dividends?

•

58. If I have elected Pass Thru Dividends (receiving dividend payments in cash), how can I change my election so that I do not receive my special and regular quarterly cash dividends in cash?

•

Page 16 of 18

Employee FAQs Specific to Stock Option / Restricted Share Holders

59. Are employee stock options or other Schwab shares from our equity compensation plans being adjusted for the dividend?

•

Employee stock options: Yes. We will adjust the exercise price and the number of shares subject to all of the outstanding stock options (vested and unvested) held by our employees, directors and consultants to reflect the change in the value of our common stock after the special cash dividend is paid and to maintain essentially the same value for the stock options, pre- and post-dividend.

For example, if you currently have 100 options at a $17 exercise price, you will have 104 options at a $16.23 exercise price, after the adjustment. (To see some full calculation examples, click here [link to Patrick’s “options examples”].)

•

Restricted stock or stock units: No. Stock or stock unit awards granted under the 2004 Stock Incentive Plan are eligible for the special dividend; no additional adjustments will be made.

•

Employee Stock Purchase Plans: No.

^¡

Shares in Schwab’s old ESPP (Schwab’s Dividend Reinvestment & Stock Purchase) plan are eligible for the special dividend and tender offer; no additional adjustments will be made.

^¡

60. If I want to exercise vested options to receive the dividend, what’s the deadline for exercising them?

•

You need to exercise your vested options by no later than July 19, 2007. You will receive the dividend in the form of cash, payable on August 24, 2007.

•

If you exercise on or after July 20, 2007, you will exercise your adjusted shares and will not receive the dividend.

61. If I want to exercise vested options so I can tender them, what’s the deadline for exercising them?

•

In order to participate in the tender, you must exercise your options sufficiently in advance of the Expiration Time, but no later than July 23, 2007, to receive the shares in your account by July 26, 2007 in order to participate in the Offer.

•

While the “Expiration Time” in the Offer means 12:00 midnight Eastern Time on Tuesday, July 31, 2007, if your shares are held at Schwab, you must tender your shares by 7:00 pm Eastern time on July 26, 2007.

•

An exercise of a stock option cannot be revoked even if shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer for any reason.

62. Why doesn’t the adjustment include the $0.05 per share regular dividend also declared on July 2, 2007?

•


				Page 17 of 18

63. When will I be able to view my adjusted options? When can I exercise vested options?

•

You will be able to view and exercise adjusted vested options on July 20, 2007.

64. Can I do a “same day sale” or “exersale” and still be eligible for the special dividend or tender offer?

•

65. Does the option adjustment trigger any taxes?

•

No, these adjustments will be made in accordance with all relevant tax regulations and will have no adverse tax consequences on option holders.

66. Is the new Employee Stock Purchase Plan impacted by the capital restructuring?

•

67. Who do I contact if I have questions?

•

^¡

Phone: 1-800-654-2593; Monday–Friday 6:00 am to 6:00 pm Pacific Time

^¡

Web: eac.schwab.com


				Page 18 of 18

EX-99.(A)(1)(N) 14 dex99a1n.htm CHARLES SCHWAB STOCK TENDER OFFER - INTERNAL USE QUESTIONS AND ANSWERS Charles Schwab Stock Tender Offer - Internal Use Questions and Answers

Exhibit (a)(1)(N)

Project Titanium: FAQs (Internal Use, Client-Contact Employees)


FAQs: What is Schwab Doing, and Why?		2
1.	Why is Schwab doing this capital restructuring?	2
2.	What are the components of Schwab’s capital restructuring plan?	2
3.	What impact will these transactions have on the financial health of the firm?	2
4.	Will Chuck participate in the tender offer? If not, will he maintain his percentage ownership in the company?	2
5.	Does the Company intend to repurchase any shares other than pursuant to the tender offer and the agreement with Chuck?	3
6.	Following the tender offer, will the Company continue as a public company?	3
7.	What is the debt portion of the capital restructuring plan, and why are we doing it?	3

FAQs: Tender Offer and Cash Dividend		4
8.	What are the details of the tender offer & special cash dividend?	4
9.	How are stockholders being notified?	4
10.	How do I participate in the tender offer?	4
11.	Should I participate in the tender offer?	4
12.	What are the tax consequences if I tender my shares?	5
13.	Can I tender at different prices?	5
14.	How do I know what price I’ll receive?	5
15.	Will I have to pay brokerage commissions or a reorganization fee if I tender my shares?	6
16.	Is it okay to tender only some of my shares?	6
17.	If I own fewer than 100 shares and I tender all of my shares, will I be subject to proration?	6
18.	How and when will I know how many of the shares I’ve offered up for tender are accepted?	6
19.	How many times can I change my election?	6
20.	When I tender the shares before the deadline, are they still in my account?	6
21.	I tendered my shares, but now I want to withdraw. How do I do that?	6
22.	Do I have to do anything if I do not want to tender any of my shares?	7
23.	If I decide not to tender, how will the Offer affect my shares?	7
24.	How do I get another package or election form?	7
25.	Will I receive the special cash dividend if I tender my shares?	7
26.	My account is set up for dividend reinvestment. Will the special cash dividend be reinvested?	7
27.	What are the tax consequences of the special dividend?	7
28.	Who can I talk with if I have questions?	7

FAQs for Schwab Institutional Clients (Advisors)		8
29.	How can I get copies of notifications going to stockholders so that I may answer my clients questions?	8
30.	Can I assist my eligible clients with participation in the tender offer? Or must they handle these requests directly with Schwab? If so, where do they call?	8


				Page 1 of 8

FAQs: What is Schwab Doing, and Why?

1. Why is Schwab doing this capital restructuring?

•

2. What are the components of Schwab’s capital restructuring plan?

•

Debt offerings of up to $750 million consisting of a combination of senior notes and hybrid capital securities.

•

3. What impact will these transactions have on the financial health of the firm?

•

We expect capital and cash flow generation to remain strong, post-capital restructuring.

•

All three rating agencies, Moody’s, S&P, and Fitch, have reviewed the impact of this capital restructuring and have reaffirmed our corporate credit ratings.

4. Will Chuck participate in the tender offer? If not, will he maintain his percentage ownership in the company?

•

Chuck will not participate directly in the tender offer. He has entered into a separate agreement with the company to sell shares.

•

Chuck will sell shares in an amount that will maintain his pre-tender ownership interest.


		Page 2 of 8

•

Chuck’s beneficial ownership is spread across several stockholders which may participate in the sale of stock to the company along with Chuck directly.

5. Does the Company intend to repurchase any shares other than pursuant to the tender offer and the agreement with Chuck?

•

After the close of the tender, we may decide to purchase additional shares in the open market, through a private transaction, tender offers or otherwise. In particular, our Board of Directors has previously approved a stock repurchase program, under which during the period from January 1, 2007 to June 28, 2007, we repurchased approximately 33 million shares of our common stock for approximately $642 million. As of June 29, 2007, we had the remaining authority to repurchase approximately $446 million of shares of our common stock.

6. Following the tender offer, will the Company continue as a public company?

•

Yes. After the completion of the tender offer our shares will continue to be listed on NASDAQ and we will continue to be subject to the reporting requirements of the Exchange Act.

7. What is the debt portion of the capital restructuring plan, and why are we doing it?

•


				Page 3 of 8

FAQs: Tender Offer and Cash Dividend


Note:		These FAQs apply to anyone holding SCHW outside the SchwabPlan Retirement Savings & Investment Plan through the 401(k) and/or ESOP Equity Unit Funds. For information specific to those investments, stock options and any other special shares, see [link to HR site]. In some cases, the information and process differs significantly.

8. What are the details of the tender offer & special cash dividend?

Tender Offer

Special Cash Dividend

• Schwab is offering to purchase $1.9 billion or 84 million shares of SCHW stock in a modified “Dutch Auction” tender.

• The maximum price in the offer is $22.50. The minimum price in the offer is $19.50.

• The offer commences on July 3, 2007 and closes at midnight ET on July 31, 2007 (unless the offer is extended).

^¡ If you hold your shares at Schwab, you must submit your instructions by 7 pm ET on July 26, 2007.

Schwab will not charge any fees to participate for clients holding their shares in a Schwab or Cybertrader account.

• Schwab will be paying a special $1.00 per share cash dividend to all SCHW stockholders of record as of the close on 7/24/2007.

• The ex-dividend date is July 20, 2007. The record date is July 24, 2007. The payable date is August 24, 2007.

9. How are stockholders being notified?

•

Stockholders will be notified of the tender offer, by mail, through the “Offer To Purchase”.

•

Stockholders who hold shares in the name of a broker, dealer, commercial bank, trust company, or other nominee will be notified by their nominee. This includes stockholders who hold their shares in a Schwab account. The tender offer document may be accompanied by a cover letter. Schwab will send a letter to its clients.

•

If stockholders hold certificates in their own name, they will be notified by our Depositary, Wells Fargo Shareholder Services.

•

Questions and requests for assistance for all stockholders may be directed to the Information Agent, DF King (800-659-6590), or the Dealer Manager, UBS Securities LLC (877-827-4180).

10. How do I participate in the tender offer?

•

Clients with holdings at a bank or broker should contact them directly to determine how to submit their shares for tender.

•

Schwab clients can submit their instructions via schwab.com or by contacting a Schwab representative. Schwab representatives should enter client elections using the VOLY system by 7 pm ET on July 26th.

•

Clients with certificates in their own name should send their Letters of Transmittal, together with any required signature guarantees, the certificates for their shares, and any other documents required by the Letter of Transmittal to the depositary, Wells Fargo Bank, N.A., at the address indicated in the Offer to Purchase and Letter of Transmittal.

11. Should I participate in the tender offer?

From the Tender Offer document: Our board of directors has approved the offer. However, neither we nor the board of directors, the dealer manager, the information agent or the depositary makes any recommendation to you as to whether you should tender or refrain from tendering your shares or as to the price or prices at which you may choose to tender your shares. You must make your own decision as to these matters. In so doing, you should read and evaluate carefully the information in the Offer to Purchase and in the related Letter of Transmittal, including our reasons for making the Offer.


				Page 4 of 8

•

Caution! Schwab employees must be very careful not to provide any advice or guidance if asked by clients as to whether they should or shouldn’t participate in the tender offer. Regulations require that we remain absolutely neutral on this matter.

•

If asked, you can respond:

“Because this is our parent company’s stock, I can’t give you any recommendations or advice on what to do. You may wish to consult with your tax and/or financial advisor since there may be tax consequences if you decide to tender your shares.”

•

You may also read the statement from the tender offer to clients if you wish (included above), but remember not to provide any interpretation of this statement.

12. What are the tax consequences if I tender my shares?

•

Along with your Letter of Transmittal, you are asked to submit a Substitute Form W-9. Any tendering stockholder or other payee who fails to complete, sign and return to the depositary the Substitute Form W-9 included with the Letter of Transmittal (or such other Internal Revenue Service form as may be applicable) may be subject to United States backup withholding at a rate equal to 28% of the gross proceeds paid to the stockholder or other payee pursuant to the Offer, unless such stockholder establishes that such stockholder is within the class of persons that is exempt from backup withholding. See Section 3 of the Offer to Purchase. Non-U.S. Holders, to establish their exemption from backup withholding, should submit an IRS Form W-8BEN. However, Non-U.S. Holders may be subject to 30% withholding regardless of whether the transfer is treated as a sale or exchange or as a distribution. See Section 14 of the Offer to Purchase. We recommend that you consult your own tax advisor with respect to your particular situation.

13. Can I tender at different prices?

•

Yes, you can select different prices between the minimum of $19.50 and the maximum of $22.50; however, the same shares can’t be tendered at more than one price.

14. How do I know what price I’ll receive?

•

In a modified “Dutch Auction,” stockholders are allowed to select the price per share (within the price range of the offer) at which they’re willing to sell, or they can choose to accept the purchase price that Schwab determines at the close of the offer (1).

•

After the offer closes (on July 31^st), the prices listed by stockholders are reviewed, and we will select the lowest price range that allows us to purchase approximately 84 million shares.

•

This means that if you indicate a price, you will not receive less than your price (2). One of three things will occur:

•

You will receive your price for your shares.


				Page 5 of 8

•

You will receive a higher price for your shares.

•

Your shares will not sell, because we could purchase enough shares at a lower price than you indicated.

(1)

Opting to select the purchase price determined in the tender offer maximizes a client’s chance of participating. However, clients should understand that choosing to accept the purchase price determined in the offer (i.e., not indicating a tender price of their own) may lower the purchase price paid for all purchased shares in the Offer and could result in their shares being purchased at the minimum price of $19.50 per share.

(2)

Clients should also understand that not all their shares may be purchased even if their price qualifies. For example, if more than the 84 million shares are offered, qualifying share amounts will be proportionally reduced (i.e., prorated).

15. Will I have to pay brokerage commissions or a reorganization fee if I tender my shares?

•

Not for accounts held at Schwab. We are waiving the voluntary reorganization fee. If any shares are held in a non-Schwab brokerage account, you must check with that broker or firm.

16. Is it okay to tender only some of my shares?

•

Yes. You are not required to participate in the tender offer, and if you elect to participate in the tender offer, you are not required to tender all of your shares.

17. If I own fewer than 100 shares and I tender all of my shares, will I be subject to proration?

•

Odd lot holders (i.e., you own less than 100 shares): No, you are not subject to proration. If your tender offer is accepted, all your shares will be tendered.

•

Round lot holders (i.e., you own more than 100 shares): Yes, you are subject to proration. Not all of your shares may be accepted if there are more than 84 million shares offered.

18. How and when will I know how many of the shares I’ve offered up for tender are accepted?

•

Once the tender period has closed, the offers are reviewed and the final price determined.

^¡

If your shares are accepted in the tender offer, they will be sold and your account will be credited.

^¡

If your shares are not accepted in the tender offer, they will return to their normal (non-tendered) status.

•

It can take up to 10 business days after the tender offer period has closed to settle your account.

19. How many times can I change my election?

•

20. When I tender the shares before the deadline, are they still in my account?

•

21. I tendered my shares, but now I want to withdraw. How do I do that?

•

If you tendered your shares by giving instructions to a bank, broker, dealer, trust company or other nominee, you must instruct them to arrange for the withdrawal of your shares.


				Page 6 of 8

•

If you hold shares at Schwab, you can withdraw by using Schwab.com or speaking with a representative.

•

If you hold certificates in your name, you must deliver a written notice of withdrawal with the required information to the depositary, Wells Fargo Bank, N.A., to be received prior to the Expiration Time (12 midnight Eastern Time, July 31). The notice must include your name, number of shares to be withdrawn and name of the registered holder.

22. Do I have to do anything if I do not want to tender any of my shares?

•

No. You do not have to respond if you do not want to tender any of your shares.

23. If I decide not to tender, how will the Offer affect my shares?

•

Stockholders who choose not to tender their shares will own a higher percentage interest in our outstanding common stock following the completion of the tender offer.

24. How do I get another package or election form?

You may contact D.F. King & Co, Inc., the information agent for the tender offer, at 800-659-6590.

25. Will I receive the special cash dividend if I tender my shares?

•

26. My account is set up for dividend reinvestment. Will the special cash dividend be reinvested?

•

The rationale for this decision is that these distributions can be very large, causing us to send a large purchase order to the market on the payable date, which may disrupt the market.

27. What are the tax consequences of the special dividend?

•

28. Who can I talk with if I have questions?

•

Clients: Contact D.F. King & Co., Inc., the information agent for the Offer at 1-800-659-6590, or UBS Securities LLC, the dealer manager for the Offer (877-827-4180).

•

Employees:

^¡

Schwab Plan Retirement Savings & Investment Plan Participants (participants who are both active and former employees): Contact D.F. King & Co., Inc., the information agent for the Offer at 1-800-659-6590, or UBS Securities LLC, the dealer manager for the Offer (877-827-4180). Identify yourself as a Schwab 401(k) plan participant.


				Page 7 of 8

^¡

Vested Options (if you decide to exercise): Contact Stock Plan Services.

^¡

FAQs for Schwab Institutional Clients (Advisors)

29. How can I get copies of notifications going to stockholders so that I may answer my clients questions?

Investment Advisors are usually set up to receive these notices. The client preferences (viewable on Client Central) determine who receives the notices and whether the IA has authority to act on behalf of their clients.

30. Can I assist my eligible clients with participation in the tender offer? Or must they handle these requests directly with Schwab? If so, where do they call?

The client’s settings determine if the Investment Advisor has the authority to act on their behalf. That fact is also included in the IA version of the letter.


				Page 8 of 8

EX-99.(A)(1)(O) 15 dex99a1o.htm VOICE RESPONSE AND WEBSITE ANNOUNCEMENT FOR SCHWABPLAN Voice Response and Website Announcement for SchwabPlan

Exhibit (a)(1)(O)

Voice Response and Website Announcement for the SchwabPlan Retirement Savings and Investment Plan:

The Charles Schwab Corporation has announced a tender offer to Schwab stockholders. A letter has been mailed to participants in the SchwabPlan Retirement Savings and Investment Plan who are Schwab stockholders based on the shares allocated to the units they hold in the 401(k) Equity Unit Fund and/or ESOP Equity Unit Fund. The letter to participants will provide important details about the tender offer including elections that a participant can make in connection with the tender offer.

EX-99.(D)(31) 16 dex99d31.htm THE CHARLES SCHWAB CORPORATION EMPLOYEE STOCK PURCHASE PLAN The Charles Schwab Corporation Employee Stock Purchase Plan

Exhibit (d)(31)

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of July 2, 2007, by and among Charles R. Schwab, Helen O. Schwab, The Charles & Helen Schwab Living Trust, HOS Family Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware, 188 Partners, LP, a limited partnership organized and existing under the laws of the State of California, and the Charles & Helen Schwab Foundation, a nonprofit public benefit corporation (each, a “Seller” and collectively, the “Sellers”), and The Charles Schwab Corporation, a Delaware corporation (the “Purchaser”).

RECITALS

WHEREAS, each of the Sellers owns of record the number of shares of the Purchaser’s common stock, par value $0.01 (the “Common Stock”), set forth opposite such Seller’s name on Schedule I hereto and collectively own of record 221,927,588 shares of the Purchaser’s Common Stock, which constitute approximately 18% of the total issued and outstanding shares of Common Stock as of the date hereof;

WHEREAS, the Purchaser intends, but has not made any public announcement of such intention, to conduct a public, modified “Dutch Auction” tender offer (the “Tender Offer”) commencing on or about July 3, 2007 for up to 84,000,000 shares of its outstanding Common Stock at a purchase price not greater than $22.50 nor less than $19.50 per share pursuant to the terms and conditions set forth in the Offer to Purchase, to be dated July 3, 2007, substantially in the form attached hereto as Annex A, as the same may be revised, amended, modified or supplemented from time to time after the date hereof (the “Offer to Purchase”);

WHEREAS, the Sellers have agreed that they will not exercise their right to tender any of their shares of Common Stock in the Tender Offer pursuant to the Offer to Purchase; and

WHEREAS, subsequent to the date of expiration of the Tender Offer (such date, as determined pursuant to the Offer to Purchase, the “Expiration Date”), the Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers, a portion of the Sellers’ shares of Common Stock based on the total number of shares tendered and accepted for purchase in the Tender Offer in a manner more specifically described below.

NOW, THEREFORE, in consideration of the premises, the representations, warranties and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

AGREEMENT

1. Agreement Not to Participate in the Tender Offer. In consideration of the Purchaser’s willingness to purchase the Pro Rata Shares (as defined below) in accordance with the provisions of Section 2 hereof, the Sellers hereby agree that from the date of commencement of the Tender Offer through the Expiration Date (the “Lock-up Period”), the Sellers will not directly or indirectly, including by guaranteed delivery, participate in the Tender Offer pursuant to the Offer to Purchase, or otherwise sell, pledge, hypothecate or dispose of any shares of Common Stock owned by the Sellers (including without limitation, any shares of Common Stock which may be deemed to be beneficially owned by any Seller in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), and any shares of Common Stock which may be issued upon the vesting and/or exercise of any stock options, restricted stock or warrants, or upon conversion or exchange of any convertible or exchangeable securities or any rights, warrants, options or other securities that are convertible into, or exercisable or exchangeable for Common Stock).

2. Purchase and Sale of the Pro Rata Shares.

2.1 Purchase and Sale of the Pro Rata Shares.

(a) Subject to the completion of the Tender Offer as set forth below and pursuant to the terms and conditions of this Agreement, the Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase from the Sellers, an aggregate of 18,000,000 shares of Common Stock; provided, however, that if the number of shares purchased in the Tender Offer pursuant to the Offer of Purchase is higher or lower than 84,000,000 (any such change in the amount purchased, a “TO Share Adjustment”), the aggregate number of shares of Common Stock to be sold by the Sellers to the Purchaser and to be purchased by the Purchaser from the Sellers shall be increased or decreased, as appropriate, by an amount equal to the TO Share Adjustment multiplied by a fraction, the numerator of which is 221,933,588 and the denominator of which is 1,030,521,037 (representing the number of outstanding shares of Common Stock beneficially owned by Mr. Schwab (excluding outstanding options to acquire stock) divided by the total number of outstanding shares of Common Stock held of record by all stockholders of the Purchaser other than those beneficially owned by Mr. Schwab (excluding outstanding options to acquire stock), each as of June 29, 2007) (the amount of shares of Common Stock sold by the Sellers and purchased by the Purchaser, inclusive of any adjustment, if applicable, the “Pro Rata Shares”). As a result, upon the Closing (as defined below), the aggregate percentage ownership interest of the Sellers in the Purchaser’s outstanding shares of Common Stock will remain substantially the same as immediately prior to the Closing Date (as defined below).

(b) The Pro Rata Shares to be sold by the Sellers pursuant to this Section 2 shall be allocated among the Sellers as the Sellers may agree; provided, however, that the Sellers must notify the Purchaser of such allocation at least one business day prior to the Closing Date.

2.2 Purchase Price.

(a) The purchase price per share to be paid by the Purchaser for the Pro Rata Shares shall be an amount equal to the per share purchase price paid by the Purchaser for the shares of Common Stock properly tendered and accepted for purchase by the Purchaser in the Tender Offer (the “Per Share Purchase Price”).

(b) The aggregate purchase price for the Pro Rata Shares (the “Aggregate Purchase Price”) shall be an amount equal to the Per Share Purchase Price, multiplied by the total number of Pro Rata Shares purchased from the Sellers.

3. Closing. Subject to the terms and conditions hereof, the purchase and sale of the Pro Rata Shares contemplated by this Agreement (the “Closing”) will take place at the offices of Howard Rice Nemerovski Canady Falk & Rabkin, a Professional Corporation, Three Embarcadero Center, 7th Floor, San Francisco, California 94111 at 10:00 a.m. San Francisco time on the eleventh business day following the Expiration Date, or at such other later date or place as the parties shall mutually agree (the “Closing Date”). At the Closing, (a) the Sellers will deliver to the Purchaser the Pro Rata Shares to be purchased by the Purchaser and (b) the Purchaser shall deliver the Aggregate Purchase Price to the Sellers by wire transfer of immediately available funds to one or more accounts specified by the Sellers at least one business day prior to the Closing Date.

4. Representations and Warranties of the Sellers. In order to induce the Purchaser to enter into this Agreement, the Sellers hereby jointly represent and warrant to the Purchaser as follows:

4.1 Organization and Corporate Power; Authorization. Each of the Sellers has the requisite power and authority to execute, deliver and perform this Agreement and to sell the Pro Rata Shares. This Agreement is the legal, valid and, assuming due execution by the other parties hereto, binding obligation of each of the Sellers, enforceable against each of the Sellers in accordance with its terms except to the extent that the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) rules of law governing the availability of equitable remedies.

4.2 Ownership of Pro Rata Shares. The Sellers collectively own of record the number of issued and outstanding shares of Common Stock set forth in the Recitals to this Agreement. The Pro Rata Shares to be sold to the Purchaser by such Sellers when delivered to the Purchaser shall be free and clear of any liens, claims or encumbrances, including rights of first refusal and similar claims except for restrictions of applicable state and federal securities laws. There are no restrictions imposed on the transfer of such Pro Rata Shares by any stockholder or similar agreement or any law, regulation or order, other than applicable state and federal securities laws.

4.3 No Violation; No Consent. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (a) will not constitute a breach or violation of or default under any judgment, decree or order or any agreement or instrument of any Seller or to which any Seller is subject, (b) will not result in the creation or imposition of any lien upon the Pro Rata Shares to be sold by any Seller, and (c) will not require the consent of or notice to any governmental entity or any party to any contract, agreement or arrangement with any Seller.

4.4 Brokerage. There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of such Sellers.

4.5. Tax Advisors. Each of the Sellers acknowledges that the Purchaser has made no representations and provided no advice regarding the tax consequences of the sale of the Pro Rata Shares. Each of the Sellers has been advised to consult such Seller’s own tax advisors regarding such tax consequences.

5. Representations and Warranties of the Purchaser. In order to induce the Sellers to enter into this Agreement, the Purchaser hereby represents and warrants as follows:

5.1 Organization and Corporate Power; Authorization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Purchaser has the requisite power and authority to execute, deliver and perform this Agreement and to acquire the Pro Rata Shares. The execution, delivery and performance of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby have been approved by the Purchaser. This Agreement has been duly executed and delivered by the Purchaser and is the legal, valid and, assuming due execution by the other parties hereto, binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms except to the extent that the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) rules of law governing the availability of equitable remedies.

5.2 No Violation; No Consent. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (a) will not constitute a breach or violation of or default under any judgment, decree or order or any agreement or instrument of the Purchaser or to which the Purchaser is subject, and (b) will not require the consent of or notice to any governmental entity or any party to any contract, agreement or arrangement with the Purchaser.

5.3 Brokerage. There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Purchaser.

6. Conditions to the Purchaser’s Obligations. The obligations of the Purchaser under Section 2 of this Agreement to purchase the Pro Rata Shares at the Closing from each Seller are subject to the fulfillment as of the Closing of each of the following conditions unless waived by the Purchaser in accordance with Section 10.4:

6.1 Representations and Warranties. The representations and warranties of such Seller contained in Section 4 shall be true and correct on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

6.2 Performance. Such Seller shall have performed and complied in all material respects with all agreements, obligations, and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date.

6.3 Delivery of Pro Rata Shares. Such Seller shall have delivered the Pro Rata Shares to be sold by it at the Closing, free and clear of any liens, claims or encumbrances, along with all stock powers, assignments or any other documents, instruments or certificates necessary for a valid transfer.

6.4 No Violation. No governmental authority shall have advised or notified the Purchaser that the consummation of the transactions contemplated hereunder would constitute a material violation of any applicable laws or regulations, which notification or advice shall not have been withdrawn after the exhaustion of the Purchaser’s good faith efforts to cause such withdrawal.

6.5 Successful Completion of Tender Offer. The Purchaser shall have purchased shares of its Common Stock in the Tender Offer in accordance with the Offer to Purchase.

7. Conditions to Each Seller’s Obligations. The obligations of each Seller under Section 2 of this Agreement to sell the Pro Rata Shares at the Closing are subject to the fulfillment as of the Closing of each of the following conditions unless waived by such Seller in accordance with Section 10.4:

7.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Section 5 shall be true and correct as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

7.2 Performance. The Purchaser shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date.

7.3 Payment of Purchase Price. The Purchaser shall have delivered the Aggregate Purchase Price to be paid by the Purchaser to the Sellers.

7.4 No Violation. No governmental authority shall have advised or notified the Sellers that the consummation of the transactions contemplated hereunder would constitute a material violation of any applicable laws or regulations, which notification or advice shall not have been withdrawn after the exhaustion of the Sellers’ good faith efforts to cause such withdrawal.

7.5 Successful Completion of Tender Offer. The Purchaser shall have purchased shares of its Common Stock in the Tender Offer in accordance with the Offer to Purchase.

8. Covenants.

8.1 No Purchase of Common Stock. From the date hereof until eleven business days following the Expiration Date of the Tender Offer, each Seller agrees that it will not, directly or indirectly, purchase or agree to purchase any shares of Common Stock or any securities convertible into, or exchangeable or exercisable for, shares of Common Stock.

8.2 No Sale of Common Stock. Except as contemplated hereunder, from the date hereof until the Closing or the termination of this Agreement, each Seller agrees that it will not, directly or indirectly, sell any shares of Common Stock or any securities convertible into, or exchangeable or exercisable for, shares of Common Stock.

8.3 Closing Conditions. The Sellers and the Purchaser shall use their commercially reasonable efforts to ensure that each of the conditions to Closing are satisfied.

9. Survival of Representations and Warranties; Limitation on Liability.

9.1 Survival of Representations and Warranties. All representations and warranties hereunder shall survive the Closing.

9.2 Limitation on Liability. Notwithstanding anything to the contrary contained in this Agreement or any other agreements, instruments or other documents related to the Tender Offer or the Offer to Purchase, in no event shall any Seller’s liability for breach of the representations, warranties and covenants exceed the portion of the Aggregate Purchase Price received by such Seller.

10. Miscellaneous.

10.1 Adjustments. Whenever a particular number is specified herein, including, without limitation, number of shares or price per share, such number shall be adjusted to reflect any stock dividends, stock-splits, reverse stock-splits, combinations or other reclassifications of stock or any similar transactions and appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the Purchaser and each of the Sellers under this Agreement.

10.2 Parties in Interest; Assignment. All covenants, agreements, representations, warranties and undertakings in this Agreement made by and on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. This Agreement and the rights and obligations contemplated hereby may not be assigned, in part or in whole, by the Purchaser or by any Seller without the written consent of the other party.

10.3 Third Party Beneficiaries. The parties hereto intend that this Agreement shall not benefit or create any right or cause of action in, or on behalf of, any person, other than the parties hereto and no person, other than the parties hereto, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceedings, hearing or other form.

10.4 Amendments and Waivers. Except as set forth in this Agreement, changes in or additions to this Agreement may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively) only by a writing executed by each of the parties hereto.

10.5 Cooperation. The Purchaser and each of the Sellers shall, from and after the date hereof, cooperate in a reasonable manner to effect the purposes of this Agreement.

10.6 Governing Law; Jurisdiction; Venue. This Agreement shall be governed in all respects by the internal laws of the State of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to principles of conflicts of law. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in San Francisco County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Northern District of California).

10.7 Notices. All notices, demands, requests, consents or approvals (collectively, “Notices”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally delivered or mailed, registered or certified, return receipt requested, postage prepaid (or by a substantially similar method), or delivered by a reputable overnight courier service with charges prepaid, or transmitted by hand delivery, addressed as set forth below, or such other address (and with such other copy) as such party shall have specified most recently by written notice. Notice shall be deemed given or delivered on the date of service or transmission if personally served. Notice otherwise sent as provided herein shall be deemed given or delivered on the third business day following the date mailed or on the next business day following delivery of such notice to a reputable overnight courier service.

To the Purchaser:

The Charles Schwab Corporation

101 Montgomery Street

San Francisco, California 94104

Attention: Chief Financial Officer

with a copy to:

Howard Rice Nemerovski Canady Falk & Rabkin,

A Professional Corporation

Three Embarcadero Center, 7th Floor

San Francisco, California 94111

Attention: Lawrence B. Rabkin, Esq.

To the Sellers:

Charles R. Schwab

The Charles Schwab Corporation

101 Montgomery Street

San Francisco, California 94104

10.8 Effect of Headings and Other Matters. The section and paragraph headings herein are for convenience only and shall not affect the construction hereof.

10.9 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes all prior written or oral understandings or agreements among or between the parties hereto. Each Seller hereby agrees that, to the extent the terms of this Agreement conflict with, or are in any way inconsistent with, any agreement relating to the rights of each such Seller as a holder of shares of Common Stock, this Agreement supersedes and controls over such agreement or agreements.

10.10 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

10.11 Counterparts. This Agreement may be executed in separate counterparts, including by facsimile or similar transmission, each of which shall be an original and all of which taken together shall constitute one and the same agreement.

10.12 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successor and permitted assigns of the parties hereto.

10.13 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character of any breach or default under this Agreement, or any waiver of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing, and that all remedies, either under this Agreement, by law or otherwise, shall be cumulative and not alternative.

10.14 Termination. Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall terminate if (a) the Tender Offer is terminated or (b) the Closing does not occur by August 22, 2007 (unless the Purchaser has extended the Tender Offer beyond July 31, 2007, in which case this Agreement shall terminate on the 16th business day after the last extension thereof). In addition, the Agreement may be terminated at any time prior to the Closing by the mutual written consent of the Purchaser and the Sellers.

[signature page follows]

IN WITNESS WHEREOF, the undersigned parties have duly executed and delivered this Agreement as of the date first written above.


“PURCHASER”		“SELLERS”

The Charles Schwab Corporation

		/s/ Charles R. Schwab
		Charles R. Schwab

By:	/s/ Joseph Martinetto
Name:	Joseph Martinetto
Title:	Chief Financial Officer	/s/ Helen O. Schwab
		Helen O. Schwab

		The Charles & Helen Schwab Living Trust

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Trustee

		By:	/s/ Helen O. Schwab
		Name:	Helen O. Schwab
		Title:	Trustee

		HOS Family Partners, LLC

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Member

		188 Partners, LP

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Partner

		Charles and Helen Schwab Foundation

		By:	/s/ Charles R. Schwab
		Name:	Charles R. Schwab
		Title:	Chairman

[Signature Page to Stock Purchase Agreement]

ANNEX A

Offer to Purchase

SCHEDULE I

Stock Ownership of Sellers


Seller		Number of Shares
Charles R. Schwab		7,683,137
Helen O. Schwab		7,841,450
Charles & Helen Schwab Living Trust		149,572,858
HOS Family Partners LLC		42,853,958
188 Partners, LP		2,565,000
Charles and Helen Schwab Foundation		11,411,185

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