Exhibit 10.305

THE CHARLES SCHWAB CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN II

(Effective December 9, 2004)

(Amended and Restated December 12, 2007)

 

 

THE CHARLES SCHWAB CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

 

Section

        Page Article I.    Purpose    1

1.1

   Establishment of the Plan    1

1.2

   Purpose of the Plan    1 Article II.    Definitions    1

2.1

   Definitions    1

2.2

   Gender and Number    2 Article III.    Administration    2

3.1

   Committee and Administrator    2 Article IV.    Participants    3

4.1

   Participants    3 Article V.    Deferrals    3

5.1

   Deferrals    3

5.2

   Timing of Elections    3

5.3

   Deferral Procedures    3

5.4

   Election of Manner of Payment    3

5.5

   Accounts and Earnings    4

5.6

   Maintenance of Accounts    5

5.7

   Change in Control    5

5.8

   Payment of Deferred Amounts    7

5.9

   Payment on Certain Events    7 Article VI.    General Provisions    7

6.1

   Unfunded Obligation    7

6.2

   Informal Funding Vehicles    7

6.3

   Beneficiary    9

6.4

   Incapacity of Participant or Beneficiary    8

6.5

   Nonassignment    8

6.6

   No Right to Continued Service    8

6.7

   Tax Withholding    8

6.8

   Claims Procedure and Arbitration    9

6.9

   Termination and Amendment    9

6.10

   Applicable Law    10 Article VII.    EXECUTION    10

 

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THE CHARLES SCHWAB CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN II

Article I. Purpose

1.1 Establishment of the Plan. Effective as of December 9, 2004, The Charles
Schwab Corporation (hereinafter, the “Company”) hereby establishes The Charles
Schwab Corporation Directors’ Deferred Compensation Plan II (the “Plan”), as set
forth in this document. This Plan shall apply to cash compensation that is
earned, deferred and accrued by eligible Participants after December 31, 2004.
This Plan is adopted by the Committee pursuant to its authority under the
Company’s 2004 Stock Incentive Plan to prescribe procedures for Directors to
elect to receive annual retainer payments and/or meeting fees from the Company
in the form of Nonqualified Stock Options and Restricted Stock Units, among
other awards, to be issued under the 2004 Stock Incentive Plan.

1.2 Purpose of the Plan. The Plan permits Directors to defer the payment of
directors’ fees that they may earn. The opportunity to elect such deferrals is
provided in order to help the Company attract and retain outside directors. This
Plan is unfunded and is maintained primarily for the purpose of providing
deferred compensation for its outside directors. It is intended to be exempt
from the requirements of the Employee Retirement Income Security Act of 1974, as
amended. The Plan also is intended to meet the requirements of section 409A of
the Internal Revenue Code of 1986 and is to be construed in accordance with that
section and any regulatory guidance issued thereunder.

Article II. Definitions

2.1 Definitions. The following definitions are in addition to any other
definitions set forth elsewhere in the Plan. Whenever used in the Plan, the
capitalized terms in this Section shall have the meanings set forth below unless
otherwise required by the context in which they are used:

 

  (a) “Administrator” the administrator described in Section 3.1 that is
selected by the Committee to assist in the administration of the Plan.

 

  (b) “Beneficiary” means a person entitled to receive any benefit payments that
remain to be paid after a Participant’s death, as determined under Section 6.3.

 

  (c) “Board” means the Board of Directors of the Company.

 

  (d) “Code” means the Internal Revenue Code of 1986, as amended.

 

  (e) “Company” means The Charles Schwab Corporation, a Delaware corporation.

 

  (f) “Committee” means the Compensation Committee of the Board.

 

  (g) “Deferral Account” means the account representing deferrals of cash
compensation, plus investment adjustments, as described in Sections 5.5 and 5.6.

 

  (h) “Director” means each member of the Board of Directors who is not an
employee of the Company or any of its subsidiaries. The term “Director” shall
also include each member of the Board of Directors of any subsidiary of the
Company who is not an employee of the Company or any of its subsidiaries, but
only if the Committee has approved participation in the Plan for such
subsidiary’s non-employee directors.

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  (i) “Disability” means a condition such that an individual (a) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or (b) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Company or its subsidiaries.

 

  (j) “Nonqualified Stock Options” means nonqualified stock options as defined
in and issued under the Company’s 2004 Stock Incentive Plan.

 

  (k) “Plan” means The Charles Schwab Corporation Directors’ Deferred
Compensation Plan II, as in effect from time to time.

 

  (l) “Plan Year” means the calendar year.

 

  (m) “Restricted Stock Units” means restricted stock units as defined in and
issued under the Company’s 2004 Stock Incentive Plan.

 

  (n) “Separation from Service” means a good faith and complete termination of
the Participant’s service relationship with the Company, other than by reason of
death.

 

  (o) “Specified Employee” means a “specified employee” within the meaning of
section 409A of the Code.

 

  (p) “Termination” means the date a Participant ceases to be a Director and
otherwise incurs a “Separation from Service”.

 

  (q) “Unforeseeable Emergency” means a severe financial hardship to the
Participant resulting from (i) an illness or accident of the Participant, the
Participant’s spouse, or the Participant’s dependent (as defined in section
152(a) of the Code); (ii) loss of the Participant’s property due to casualty; or
(iii) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, as determined in the
sole discretion of the Administrator in accordance with section 409A of the
Code.

 

  (r) “Valuation Date” means each December 31 and any other date designated from
time to time by the Committee for the purpose of determining the value of a
Participant’s Deferral Account balance pursuant to Section 5.5.

2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine or feminine terminology shall also include the neuter and other
gender, and the use of any term in the singular or plural shall also include the
opposite number.

Article III. Administration

3.1 Committee and Administrator. The Committee shall administer the Plan and may
select one or more persons to serve as the Administrator. The Administrator
shall perform such administrative functions as the Committee may

 

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delegate to it from time to time. Any person selected to serve as the
Administrator may, but need not, be a Committee member or an officer or employee
of the Company. However, if a person serving as Administrator or a member of the
Committee is a Participant, such person may not vote on a matter affecting his
or her interest as a Participant.

The Committee shall have discretionary authority to construe and interpret the
Plan provisions and resolve any ambiguities thereunder; to prescribe, amend, and
rescind administrative rules relating to the Plan; to determine eligibility for
benefits under the Plan; and to take all other actions that are necessary or
appropriate for the administration of the Plan. Such interpretations, rules, and
actions of the Committee shall be final and binding upon all concerned and, in
the event of judicial review, shall be entitled to the maximum deference
allowable by law. Where the Committee has delegated its responsibility for
matters of interpretation and Plan administration to the Administrator, the
actions of the Administrator shall constitute actions of the Committee.

Article IV. Participants

4.1 Participants. Each Director shall be eligible to participate in this Plan.

Article V. Deferrals

5.1 Deferrals. Each Director may elect to defer up to 100 percent of the fees
otherwise receivable from the Company for service as a Director. Any such
election must be made by entering a deferred compensation agreement with the
Company in accordance with the procedures established by the Administrator on or
before the applicable deadline under Section 5.2.

5.2 Timing of Elections.

(a) Except as otherwise provided under subparagraph (b) below, compensation for
services performed during a Plan Year may be deferred at the Participant’s
election only if the election to defer such compensation is made not later than
the close of the preceding Plan Year or, if permitted by the Administrator in
its sole discretion, at such other time permitted under the Code.

(b) In the case of the first Plan Year in which a Participant becomes eligible
to participate in the Plan, the Administrator may, in its sole discretion,
provide that the Participant may make an election to defer compensation for
services to be performed subsequent to the election provided that such election
is made not later than 30 days after the date the Participant becomes eligible
to participate in the Plan.

5.3 Deferral Procedures. Subject to Section 5.2, Participants shall have an
opportunity to elect deferrals with respect to each Plan Year. Unless the
Committee specifies other rules for the deferrals that may be elected, deferrals
may be made in increments of 10 percent or in a fixed dollar amount. If a
deferral is elected, the election shall be irrevocable with respect to the
applicable Plan Year. Deferral elections shall be made by following the
procedures adopted by the Committee or the Administrator. As provided in
Section 6.7, any deferral is subject to any applicable tax withholding measures
and may be reduced to satisfy any applicable tax withholding requirements.

5.4 Election of Manner of Payment.

(a) Notwithstanding anything to the contrary in this Plan, except as otherwise
permitted under section 409A of the Code, a Participant’s Deferral Account shall
not be distributed earlier than (i) Separation from Service or, in

 

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the case of a Specified Employee, the date that is at least six (6) months after
Separation from Service; (ii) Disability; (iii) death; (iv) a specified time or
schedule; (v) to the extent permitted under section 409A of the Code and any
regulatory guidance promulgated thereunder, a change in the ownership or
effective control of the Company, or in the ownership of a substantial portion
of the assets of the Company; or (vi) the occurrence of an Unforeseeable
Emergency.

(b) The acceleration of the time or schedule of any payment under the Plan shall
not be permitted unless permitted by the Administrator in accordance with the
requirements of section 409A of the Code and any regulatory guidance promulgated
thereunder.

5.5 Accounts and Earnings. The Company shall establish a Deferral Account for
each Participant who has elected a deferral under Section 5.1 above, and its
accounting records for the Plan with respect to each such Participant shall
include a separate Deferral Account or subaccount for each deferral election of
the Participant that could cause a payment made at a different time or in a
different form from other payments of deferrals elected by the same Participant.
Each Deferral Account balance shall reflect the Company’s obligation to pay a
deferred amount to a Participant or Beneficiary as provided in this Article V.

Under procedures approved by the Committee and communicated to Participants, a
Participant shall elect between the following two alternatives with respect to
the deferred amounts at the same time that the Participant elects to defer the
fees payable for a Plan Year. Once made, a Participant’s election for the method
of payment may not be changed; however, a Participant may make a different
election with respect to amounts that the Participant elects to defer in
subsequent Plan Years.

(1) Payment in Shares. Under this alternative, a Participant automatically shall
be granted fully vested Restricted Stock Units pursuant to section 8 of the
Company’s 2004 Stock Incentive Plan in a number equal to (i) the amounts
deferred hereunder, divided by (ii) the closing price of the Common Stock of the
Company on the date the fees deferred pursuant to Section 5.1 hereof would
otherwise have been payable. The Company shall issue a number of shares of
Common Stock equal to the number of such Restricted Stock Units to one or more
grantor trusts formed by the Company (“rabbi trusts”) pursuant to Section 6.2
hereof. Any dividends paid on shares of the Common Stock of the Company issued
to a rabbi trust shall be reinvested in Common Stock of the Company, which shall
be credited to the Participant as additional Restricted Stock Units pursuant to
sections 7(f) and 8 of the Company’s 2004 Stock Incentive Plan. Notwithstanding
the foregoing, the issuance of shares of Common Stock to a rabbi trust and the
crediting of assumed earnings shall not mean that any deferred compensation
promised to a Participant is secured by particular investment assets or that the
Participant is actually earning any form of investment income under the Plan.
The Restricted Stock Units shall be settled in shares of Common Stock of the
Company and shall be paid in a lump sum by the end of February in the year
immediately following the Participant’s Termination.

(2) Issuance of Stock Options Under Company’s Stock Incentive Plan. Under this
alternative, a Participant automatically shall be granted fully vested
Nonqualified Stock Options pursuant to section 8 of the Company’s 2004 Stock
Incentive Plan. A Participant who elects this alternative shall, on the date the
fees deferred pursuant to Section 5.1 hereof would otherwise have been payable,
automatically be granted a number of Nonqualified Stock Options with a fair
market value equal to the amounts deferred, as determined under the valuation
method used by the Company to value stock options at the time of the deferral.

 

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The award of Restricted Stock Units and Nonqualified Stock Options shall be
subject to all of the requirements of the Company’s 2004 Stock Incentive Plan,
including without limitation the limits on authorized shares and individual
awards, and the terms and conditions of an individual Restricted Stock Unit or
Nonqualified Stock Option award agreement in a form approved by the Committee
pursuant to its authority under the 2004 Stock Incentive Plan.

5.6 Maintenance of Accounts. The Accounts of each Participant shall be entered
on the books of the Company and shall represent a liability, payable when due
under this Plan, from the general assets of the Company. Prior to benefits
becoming due hereunder, the Company shall expense the liability for such
accounts in accordance with policies determined appropriate by the Company’s
auditors. Except to the extent provided under Section 5.5(1), the Accounts
created for a Participant by the Company shall not be funded by a trust or an
insurance contract; nor shall any assets of the Company be segregated or
identified to such account; nor shall any property or assets of the Company be
pledged, encumbered, or otherwise subjected to a lien or security interest for
payment of benefits hereunder.

5.7 Change in Control. In the event of a Change in Control (as defined below),
the following rules shall apply:

 

  (a) All Participants shall continue to have a fully vested, nonforfeitable
interest in their Deferral Accounts.

 

  (b) To the extent permitted under section 409A of the Code and any regulatory
guidance issued thereunder, deferrals of amounts for the year that includes the
Change in Control shall cease beginning with the first payment otherwise due
that follows the Change in Control.

 

  (c) To the extent permitted under section 409A of the Code and any regulatory
guidance issued thereunder and not withstanding the Participant’s election
pursuant to Section 5.5(1), Restricted Stock Units shall be settled no later
than 30 days following the Change in Control.

 

  (d) Subject to section 409A and any regulatory guidance promulgated
thereunder, nothing in this Plan shall prevent a Participant from enforcing any
rules in a contract or another plan of the Company or any subsidiary concerning
the method of determining the amount of fees or other form of compensation to
which a Participant may become entitled following a Change in Control, or the
time at which that compensation is to be paid in the event of a Change in
Control. For purposes of this Plan, a “Change in Control” means any of the
following but only to the extent that such change in control transaction is a
change in the ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company as defined in
the regulations promulgated under Section 409A of the Code:

(1) The acquisition by any individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
then outstanding shares of common stock of the Company (the “Outstanding
Corporation Common Stock”) or 30% or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Corporation Voting Securities”);
provided, however, that for purposes of this

 

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paragraph (1), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of paragraph
(3) hereof; or

(2) Individuals who, at the beginning of any one year period, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to such date whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(3) Consummation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or

A Change of Control shall occur on the first day on which any of the preceding
conditions has been satisfied. However, notwithstanding the foregoing, this
Section 5.7 shall not apply to any Participant who alone or together with one or
more other persons acting as a partnership, limited partnership syndicate, or
other group for the

 

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purpose of acquiring, holding or disposing of securities of the Company,
triggers a “Change in Control” within the meaning of paragraphs (1) and (2)
above. Moreover, no acquisition by (i) Charles Schwab and/or his spouse or any
of his or her lineal descendants or (ii) any trust created by or for the benefit
of Charles Schwab and/or his spouse or any of his lineal descendants or
(iii) the Schwab Family Foundation shall constitute a Change of Control.

5.8 Payment of Deferred Amounts. A Participant shall have a fully vested,
nonforfeitable interest in his or her Deferral Account balance at all times.
However, vesting does not confer a right to payment. Restricted Stock Units
shall be paid within ninety (90) days of Separation from Service.

5.9 Payment on Certain Events. Notwithstanding any elections that have been made
under Section 5.5(1), a Participant’s Restricted Stock Units shall be paid in a
lump sum within sixty (60) days in the event of the Participant’s death,
Disability, or upon receipt of a written request from a Participant and the
Administrator’s determination that the Participant (or his or her Beneficiary in
the case of the Participant’s death) has incurred an Unforeseeable Emergency;
provided, that the amounts distributed because of an Unforeseeable Emergency
shall not exceed the amounts necessary to satisfy such Unforeseeable Emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such Unforeseeable
Emergency is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the individual’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).

Article VI. General Provisions

6.1 Unfunded Obligation. The deferred amounts to be paid to Participants
pursuant to this Plan constitute unfunded obligations of the Company. Except to
the extent specifically provided hereunder, the Company is not required to
segregate any monies from its general funds, to create any trusts, or to make
any special deposits with respect to this obligation. Title to and beneficial
ownership of any investments, including any grantor trust investments which the
Company has determined and directed the Administrator to make to fulfill
obligations under this Plan shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or Accounts shall not
create or constitute a trust or a fiduciary relationship between the
Administrator or the Company and a Participant, or otherwise create any vested
or beneficial interest in any Participant or his or her Beneficiary or his or
her creditors in any assets of the Company whatsoever. The Participants shall
have no claim for any changes in the value of any assets which may be invested
or reinvested by the Company in an effort to match its liabilities under this
Plan.

6.2 Informal Funding Vehicles. To the extent required pursuant to
Section 5.5(1), the Company shall arrange for the establishment and use of a
grantor trust or other informal funding vehicle to facilitate the payment of
benefits and to discharge the liability of the Company and participating
Affiliates under this Plan to the extent of payments actually made from such
trust or other informal funding vehicle. In addition, the Company may, but need
not, arrange for the establishment and use of such a grantor trust or other
informal funding vehicle to the extent otherwise permitted pursuant to the Plan.

Any investments and any creation or maintenance of memorandum accounts or a
trust or other informal funding vehicle shall not create or constitute a trust
or a fiduciary relationship between the Committee or the Company or an affiliate
and a Participant, or otherwise confer on any Participant or Beneficiary or his
or her creditors a vested or beneficial interest in any assets of the Company or

 

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any Affiliate whatsoever. Participants and Beneficiaries shall have no claim
against the Company or any Affiliate for any changes in the value of any assets
which may be invested or reinvested by the Company or any Affiliate with respect
to this Plan.

6.3 Beneficiary. The term “Beneficiary” shall mean the person or persons to whom
payments are to be paid pursuant to the terms of the Plan in the event of the
Participant’s death. A Participant may designate a Beneficiary by following the
procedures established by the Administrator, executed by the Participant, and
delivered to the Administrator. The Administrator may require the consent of the
Participant’s spouse to a designation if the designation specifies a Beneficiary
other than the spouse. Subject to the foregoing, a Participant may change a
Beneficiary designation at any time. Subject to the property rights of any prior
spouse, if no Beneficiary is designated, if the designation is ineffective, or
if the Beneficiary dies before the balance of the Account is paid, the balance
shall be paid to the Participant’s surviving spouse, or if there is no surviving
spouse, to the Participant’s estate.

6.4 Incapacity of Participant or Beneficiary. Every person receiving or claiming
benefits under the Plan shall be conclusively presumed to be mentally competent
and of age until the date on which the Administrator receives a written notice,
in a form and manner acceptable to the Administrator, that such person is
incompetent or a minor, for whom a guardian or other person legally vested with
the care of his or her person or estate has been appointed; provided, however,
that if the Administrator finds that any person to whom a benefit is payable
under the Plan is unable to care for his or her affairs because of incompetency,
or because he or she is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) may be paid to
the spouse, a child, a parent, a brother or sister, or to any person or
institution considered by the Administrator to have incurred expense for such
person otherwise entitled to payment. To the extent permitted by law, any such
payment so made shall be a complete discharge of liability therefor under the
Plan.

If a guardian of the estate of any person receiving or claiming benefits under
the Plan is appointed by a court of competent jurisdiction, benefit payments may
be made to such guardian provided that proper proof of appointment and
continuing qualification is furnished in a form and manner acceptable to the
Administrator. In the event a person claiming or receiving benefits under the
Plan is a minor, payment may be made to the custodian of an account for such
person under the Uniform Gifts to Minors Act. To the extent permitted by law,
any such payment so made shall be a complete discharge of any liability
therefore under the Plan.

6.5 Nonassignment. The right of a Participant or Beneficiary to the payment of
any amounts under the Plan may not be assigned, transferred, pledged or
encumbered nor shall such right or other interests be subject to attachment,
garnishment, execution, or other legal process.

6.6 No Right to Continued Service. Nothing in the Plan shall be construed to
confer upon any Participant any right to continue as a Director of the Company.

6.7 Tax Withholding. Any appropriate taxes shall be withheld from payments made
to Participants pursuant to the Plan. To the extent tax withholding is payable
in connection with the Participant’s deferral of income rather than in
connection with the payment of deferred amounts, such withholding may be made
from amounts currently payable to the Participant, or, as determined by the
Administrator, the amount of the deferral elected by the Participant may be
reduced in order to satisfy required tax withholding for any applicable taxes.

 

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6.8 Claims Procedure and Arbitration. The Administrator shall establish a
reasonable claims procedure. Following a Change in Control of the Company (as
determined under Section 5.7) the claims procedure shall include the following
arbitration procedure.

Since time will be of the essence in determining whether any payments are due to
the Participant under this Plan following a Change in Control, a Participant may
submit any claim for payment to arbitration as follows: On or after the second
day following the Change in Control or other event triggering a right to
payment, the claim may be filed with an arbitrator of the Participant’s choice
by submitting the claim in writing and providing a copy to the Company. The
arbitrator must be:

 

  (a) a member of the National Academy of Arbitrators or one who currently
appears on arbitration panels issued by the Federal Mediation and Conciliation
Service or the American Arbitration Association; or

 

  (b) a retired judge of the State in which the claimant is a resident who
served at the appellate level or higher. The arbitration hearing shall be held
within 72 hours (or as soon thereafter as possible) after filing of the claim
unless the Participant and the Company agree to a later date. No continuance of
said hearing shall be allowed without the mutual consent of the Participant and
the Company. Absence from or nonparticipation at the hearing by either party
shall not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator’s discretion, and the
arbitrator may close the hearing in his or her sole discretion upon deciding he
or she has heard sufficient evidence to satisfy issuance of an award. In
reaching a decision, the arbitrator shall have no authority to ignore, change,
modify, add to or delete from any provision of this Plan, but instead is limited
to interpreting this Plan. The arbitrator’s award shall be rendered as
expeditiously as possible, and unless the arbitrator rules within seven days
after the close of the hearing, he will be deemed to have ruled in favor of the
Participant. If the arbitrator finds that any payment is due to the Participant
from the Company, the arbitrator shall order the Company to pay that amount to
the Participant within 48 hours after the decision is rendered. The award of the
arbitrator shall be final and binding upon the Participant and the Company.
Judgment upon the award rendered by the arbitrator may be entered in any court
in any State of the United States. In the case of any arbitration regarding this
Agreement, the Participant shall be awarded the Participant’s costs, including
attorney’s fees. Such fee award may not be offset against the deferred
compensation due hereunder. The Company shall pay the arbitrator’s fee and all
necessary expenses of the hearing, including stenographic reporter if employed.

6.9 Termination and Amendment. The Committee may from time to time amend,
suspend or terminate the Plan, in whole or in part, and if the Plan is
suspended, the Committee may reinstate any or all of its provisions. The
Executive Vice President—Human Resources has the authority to amend the Plan to
comply with the requirements of the Code, to avoid a plan failure under section
409A of the Code and to facilitate administration of the Plan to the extent that
any such amendments will not materially increase the cost of the Plan. Except as
otherwise required by law, the Committee may delegate to the Administrator all
or any of its foregoing powers to amend or suspend the Plan. Any such amendment
or suspension may affect future deferrals without the consent of any Participant
or Beneficiary. However, with respect to deferrals that have already occurred,
no amendment or suspension may impair the right of a

 

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Participant or a designated Beneficiary to receive payment of the related
deferred compensation in accordance with the terms of the Plan prior to the
effective date of such amendment or suspension, unless the affected Participant
or Beneficiary gives his or her express written consent to the change; provided
that such consent shall not be required if an amendment is required to avoid a
plan failure under section 409A of the Code.

The Committee may terminate the Plan at any time and in the Committee’s
discretion the Deferral Accounts of Participants may be distributed within the
period beginning twelve months after the date the Plan was terminated and ending
twenty-four months after the date the Plan was terminated, or pursuant to
Section 5.5. 5.7 or 5.9, if earlier. If the Plan is terminated and Deferral
Accounts are distributed, the Company shall terminate all account balance
non-qualified deferred compensation plans with respect to all participants and
shall not adopt a new account balance non-qualified deferred compensation plan
for at least three years after the date the Plan was terminated.

The Committee, in its discretion, may terminate the Plan upon a corporate
dissolution of the Company that is taxed under section 331 of the Code or with
the approval of a bankruptcy court pursuant to 11 U.S.C. section 503(b)(1(A),
provided that the Participants’ Deferral Accounts are distributed and included
in the gross income of the Participants by the latest of (i) the calendar year
in which the Plan terminates or (ii) the first calendar year in which payment of
the Deferral Accounts is administratively practicable.

6.10 Applicable Law. The Plan shall be construed and governed in accordance with
applicable federal law and, to the extent not preempted by such federal law, the
laws of the State of California to the extent the application of such state laws
would not result in the taxation of amounts deferred under the Plan until such
amounts are distributed to participants under the Plan.

Article VII. EXECUTION

To record the adoption of the Plan to read as set forth herein effective as of
December 12, 2007, The Charles Schwab Corporation has caused its authorized
officer to execute the same this 19th day of December, 2007.

 

THE CHARLES SCHWAB CORPORATION By:   /s/ Joseph Martinetto   Joseph Martinetto
Its:   Chief Financial Officer

 

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