Beverly Gordon - Page 14

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          tained at least through 1993.  Sometime after February 26, 1987,            
          but prior to December 31, 1987, she submitted an application to             
          Charles Schwab to add options trading to her Charles Schwab                 
          brokerage account.  In that application, Ms. Gordon indicated,              
          inter alia, (1) that she had 10 years of investment experience              
          that consisted of engaging during each such year in 10 stock                
          transactions ranging from $5,000 to $15,000 and (2) that she had            
          "Good", rather than "Limited" or "Extensive", investment knowl-             
          edge.  Charles Schwab approved that application and provided to             
          Ms. Gordon two form disclosure documents entitled "What You                 
          Should Know About Option Trading at Schwab" and "Characteristics            
          and Risks of Standardized Options".  During all relevant periods,           
          Charles Schwab issued monthly statements to Ms. Gordon reflecting           
          her account activity.                                                       
               During all relevant periods, Ms. Gordon occasionally pur-              
          chased and sold stocks of various corporations (e.g., Compaq                
          Computer, Mylex, and General Electric).  During the latter part             
          of 1987, based on Mr. Gordon's advice, Ms. Gordon, who at that              
          time owned the stock of Compaq Computer Corporation, sold for $55           
          each two Compaq Computer call options with expiration dates of              
          February 20, 1988, that were not exercised.                                 
               During all relevant periods, Ms. Gordon, who had an under-             
          standing of some of the financial products bought and sold in               
          financial markets by investors, managed her own investments and             
          reviewed the account statements issued to her in order to keep              

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