Exhibit 10.295

THE CHARLES SCHWAB CORPORATION

2004 STOCK INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase Common Stock of The
Charles Schwab Corporation (“Schwab”) under the Charles Schwab Corporation 2004
Stock Incentive Plan (the “Plan”):

 

Name of Grantee:

  Joseph R. Martinetto

Total Number of Shares Granted:

  33342

Exercise Price Per Share:

  20.97

Grant Date:

  May 18, 2007

Expiration Date:

  May 18, 2014

Accelerated Vesting on Retirement:

  Yes

Vesting Schedule:

  So long as you remain employed in good standing by Schwab or its subsidiaries
and subject to the terms of the Nonqualified Stock Option Agreement, you will
acquire the right to exercise this option (become “vested” in this option) on
the following dates and in the following amounts:

 

Number of shares that will vest on Vest Date

8335 on 05/18/2008 8336 on 05/18/2009 8335 on 05/18/2010 8336 on 05/18/2011

You and Schwab agree that this option is granted under and governed by the terms
and conditions of the Plan and the Nonqualified Stock Option Agreement, both of
which are made a part of this notice. Please review the Nonqualified Stock
Option Agreement and the Plan carefully, as they explain the terms and
conditions of this option. You agree that Schwab may deliver electronically all
documents relating to the Plan or this option (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other
documents that Schwab is required to deliver to its stockholders.

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THE CHARLES SCHWAB CORPORATION

2004 STOCK INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

 

Tax Treatment   This option is a nonqualified stock option and is not intended
to qualify as an incentive stock option under federal tax laws. Vesting  
Subject to the provisions of this Agreement, this option becomes vested in
installments as described in the Notice of Stock Option Grant.

Accelerated

Vesting

  This option will become fully exercisable if your service with Schwab and its
subsidiaries terminates on account of your death or disability.   If “Yes”
appears next to “Accelerated Vesting on Retirement” in the Notice of Stock
Option Grant, this option will become fully exercisable if your service with
Schwab and its subsidiaries terminates on account of your retirement provided
that your retirement occurs at least two years after the Grant Date indicated in
the Notice of Stock Option Grant.   If, prior to the date your service
terminates, Schwab is subject to a “change in control” (as defined in the Plan
document), this option will become fully exercisable immediately preceding the
change in control. If Schwab’s Compensation Committee (or its delegate) (the
“Compensation Committee”) determines that a change in control is likely to
occur, Schwab will advise you and this option will become fully exercisable as
of the date 10 days prior to the anticipated date of the change in control.

Definition of

Disability

  For all purposes of this Agreement, “disability” means that you have a
disability such that you have been determined to be eligible for benefits under
Schwab’s long-term disability plan.

Definition of

Retirement

  For all purposes of this Agreement, “retirement” will mean:  

•     any termination of employment with Schwab and its subsidiaries with the
exception of U.S. Trust Corporation or its subsidiaries for any reason other
than death at any time after you attain age 50, but only if, at the time of your
termination, you have been credited with at least 7 years of service; and

 

•     any termination of employment from U.S. Trust Corporation or its
subsidiaries for any reason other than death at any time after (1) you attain
age 65, (2) the sum of your age and credited years of service, at the time of
your termination, is equal to or greater than 80, or (3) you attain age 60, but
only if, at the time of your termination, you have been credited with at least
10 years of service.

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  The phrase “years of service” above has the same meaning given to it under the
SchwabPlan Retirement Savings and Investment Plan (or any successor plan).

Exercise

Procedures

  You or your representative may exercise this option by following the
procedures prescribed by Schwab. If this option is being exercised by your
representative, your representative must furnish proof satisfactory to Schwab of
your representative’s right to exercise this option. After completing the
prescribed procedures, Schwab will cause to be issued the shares purchased,
which will be registered in the name of the person exercising this option.

Forms of

Payment

  When you submit your notice of exercise, you must include payment of the
option exercise price for the shares you are purchasing. Payment may be made in
one of the following forms:  

•     Cash, your personal check, a cashier’s check or a money order.

 

•     Shares of Schwab stock that are surrendered to Schwab. These shares will
be valued at their fair market value on the date when the new shares are
purchased.

 

•     By delivery (in a manner prescribed by Schwab) of an irrevocable direction
to Charles Schwab & Co., Inc. to sell shares of Schwab stock (including shares
to be issued upon exercise of this option) and to deliver all or part of the
sale proceeds to Schwab in payment of all or part of the exercise price.

Term   This option expires no later than the Expiration Date specified in the
Notice of Stock Option Grant but may expire earlier upon your termination of
service, as described below.

Termination of

Service

  This option will expire on the date three months following the date of your
termination of employment with Schwab and its subsidiaries for any reason other
than on account of death, disability or retirement. The terms “disability” and
“retirement” are defined above.   If you cease to be an employee of Schwab and
its subsidiaries by reason of your disability or death, then this option will
expire on the first anniversary of the date of your death or disability.   If
you cease to be an employee of Schwab and its subsidiaries by reason of your
retirement, then this option will expire on the second anniversary of the date
of your retirement.

Effect of

Entitlement to

Severance

  If you are entitled to severance benefits under The Charles Schwab Severance
Pay Plan (or any successor plan), then vesting of this option shall be
determined under the terms of that plan.

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Cancellation of

Options

  To the fullest extent permitted by applicable laws, this option will
immediately be cancelled and expire in the event that Schwab terminates your
employment on account of conduct contrary to the best interests of Schwab,
including, without limitation, conduct constituting a violation of law or Schwab
policy, fraud, theft, conflict of interest, dishonesty or harassment. The
determination whether your employment has been terminated on account of conduct
inimical to the best interests of Schwab shall be made by Schwab in its sole
discretion.

Restrictions on

Exercise and

Issuance or

Transfer of

Shares

  You cannot exercise this option and no shares of Schwab stock may be issued
under this option if the issuance of shares at that time would violate any
applicable law, regulation or rule. Schwab may impose restrictions upon the
sale, pledge or other transfer of shares (including the placement of appropriate
legends on stock certificates) if, in the judgment of Schwab and its counsel,
such restrictions are necessary or desirable to comply with applicable law,
regulations or rules.

Stockholder

Rights

  You, or your estate or heirs, have no rights as a stockholder of Schwab until
you have exercised this option by giving the required notice to Schwab and
paying the exercise price. No adjustments are made for dividends or other rights
if the applicable record date occurs before you exercise this option, except as
described in the Plan.

No Right to

Employment

  Nothing in this Agreement will be construed as giving you the right to be
retained as an employee, consultant or director of Schwab and its subsidiaries
for any specific duration or at all.

Transfer of

Option

  In general, only you may exercise this option prior to your death. You may not
transfer or assign this option, except as provided below. For instance, you may
not sell this option or use it as security for a loan. If you attempt to do any
of these things, this option will immediately become invalid. You may, however,
dispose of this option in your will or in a beneficiary designation.   You may
transfer this option as a gift to one or more family members. For this purpose,
“family member” means a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law
(including adoptive relationships), any individual sharing your household, e.g.,
a domestic partner, other than a tenant or employee, a trust in which one or
more of these individuals have more than 50% of the beneficial interest, a
foundation in which you or one or more of these persons control the management
of assets, and any entity in which you or one or more of these persons own more
than 50% of the voting interest.

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  Schwab may, in its sole discretion, allow you to transfer this option under a
domestic relations order in settlement of marital or domestic property rights.  
In order to transfer this option, you and the transferee(s) must execute the
forms prescribed by Schwab, which include the consent of the transferee(s) to be
bound by this Agreement.

Limitation on

Payments

  If a payment from the Plan would constitute an excess parachute payment or if
there have been certain securities law violations, then your award may be
reduced or cancelled and you may be required to disgorge any profit that you
have realized from your award.   If a disqualified individual receives a payment
or transfer under the Plan that would constitute an excess parachute payment
under the Internal Revenue Code of 1986, as amended (the “Code”), such payment
will be reduced, as described below. Generally, someone is a “disqualified
individual” if he or she is (a) an officer of Schwab, (b) a member of the group
consisting of the highest paid 1% of the employees of Schwab or, if less, the
highest paid 250 employees of Schwab, or (c) a 1% stockholder of Schwab. For
purposes of the section on “Limitation on Payments,” the term “Schwab” will
include affiliated corporations to the extent determined by the Auditors in
accordance with section 280G(d)(5) of the Code.   In the event that the
independent auditors most recently selected by the Schwab Board of Directors
(the “Auditors”) determine that any payment or transfer in the nature of
compensation to or for your benefit, whether paid or payable (or transferred or
transferable) pursuant to the terms of the Plan or otherwise (a “Payment”),
would be nondeductible for federal income tax purposes because of the provisions
concerning “excess parachute payments” in section 280G of the Code, then the
aggregate present value of all Payments will be reduced (but not below zero) to
the Reduced Amount; provided, however, that the Compensation Committee may
specify in writing that the award will not be so reduced and will not be subject
to reduction under this section.   For this purpose, the “Reduced Amount” will
be the amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
Schwab because of section 280G of the Code.   If the Auditors determine that any
Payment would be nondeductible because of section 280G of the Code, then Schwab
will promptly give you notice to that effect and a copy of the detailed
calculation and of the Reduced Amount. You may then elect, in your discretion,
which and how much of the Payments will be eliminated or reduced (as long as
after such election, the aggregate present value of the Payments equals the
Reduced Amount). You will advise Schwab in writing of your election within 10
days of receipt of the notice. If you do not make such an election within the
10-day period, then Schwab

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  may elect which and how much of the Payments will be eliminated or reduced (as
long as after such election the aggregate present value of the Payments equals
the Reduced Amount). Schwab will notify you promptly of its election. Present
value will be determined in accordance with section 280G(d)(4) of the Code. The
Auditors’ determinations will be binding upon you and Schwab and will be made
within 60 days of the date when a Payment becomes payable or transferable.   As
promptly as practicable following these determination and elections, Schwab will
pay or transfer to or for your benefit such amounts as are then due to you under
the Plan, and will promptly pay or transfer to or for your benefit in the future
such amounts as become due to you under the Plan.   As a result of uncertainty
in the application of section 280G of the Code at the time of an initial
determination by the Auditors, it is possible that Payments will have been made
by Schwab which should not have been made (an “Overpayment”) or that additional
Payments which will not have been made by Schwab could have been made (an
“Underpayment”), consistent in each case with the calculation of the Reduced
Amount. In the event that the Auditors, based upon the assertion of a deficiency
by the Internal Revenue Service against you or Schwab which the Auditors believe
has a high probability of success, determine that an Overpayment has been made,
such Overpayment will be treated for all purposes as a loan to you which you
will repay to Schwab on demand, together with interest at the applicable federal
rate provided in section 7872(f)(2) of the Code. However, no amount will be
payable by you to Schwab if and to the extent that such payment would not reduce
the amount which is subject to taxation under section 4999 of the Code. In the
event that the Auditors determine that an Underpayment has occurred, such
Underpayment will promptly be paid or transferred by Schwab to or for your
benefit, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code.

Claims

Procedure

  You may file a claim for benefits under the Plan by following the procedures
prescribed by Schwab. If your claim is denied, generally you will receive
written or electronic notification of the denial within 90 days of the date on
which you filed the claim. If special circumstances require more time to make a
decision about your claim, you will receive notification of when you may expect
a decision. You may appeal the denial by submitting to the Plan Administrator a
written request for review within 30 days of receiving notification of the
denial. Your request should include all facts upon which your appeal is based.
Generally, the Plan Administrator will provide you with written or electronic
notification of its decision within 90 days after receiving the review request.
If special circumstances require more time to make a decision about your
request, you will receive notification of when you may expect a decision.

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Plan

Administration

  The Plan Administrator has discretionary authority to make all determinations
related to this option and to construe the terms of the Plan, the Notice of
Stock Option Grant and this Agreement. The Plan Administrator’s determinations
are conclusive and binding on all persons.

Right to

Replace Option

with SARs

  The Compensation Committee shall have the right to replace this option (or any
portion of this option) to the extent outstanding with a Stock Appreciation
Right subject to substantially the same terms and conditions contained in this
Agreement to be settled in shares of Schwab stock on a one-to-one basis;
provided, that this provision shall not become effective if it would cause
Schwab to recognize compensation expense. Adjustments   In the event of a stock
split, a stock dividend or a similar change in Schwab stock, the Compensation
Committee, in its discretion, may adjust the number of shares covered by this
option and the exercise price per share. Severability   In the event that any
provision of this Agreement is held invalid or unenforceable, the provision will
be severable from, and such invalidity or unenforceability will not be construed
to have any effect on, the remaining provisions of this Agreement. Applicable
Law   This Agreement will be interpreted and enforced under the laws of the
State of California (without regard to their choice-of-law provisions), as such
laws are applied to contracts entered into and performed in California.

The Plan and

Other

Agreements

  The text of the Plan is incorporated in this Agreement by reference. This
Agreement and the Plan constitute the entire understanding between you and
Schwab regarding this option. Any prior agreements, commitments or negotiations
concerning this option are superseded. This Agreement may be amended only by
another written agreement approved by the Compensation Committee and signed by
both parties. If there is any inconsistency or conflict between any provision of
this Agreement and the Plan, the terms of the Plan will control. Nothing in this
Agreement gives you the ability to negotiate or change the key terms and
conditions described above, in the Notice of Stock Option Grant and in the Plan.