This option is fully vested and non-forfeitable at all times.

This option is a non-qualified stock option and is not intended to qualify as an incentive stock option under federal tax laws.

This option has been issued under the Plan pursuant to your deferral election under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II (the “Deferred Compensation Plan”) and is fully vested and non-forfeitable at all times.

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.

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

•     Cash in your Schwab brokerage account in an amount sufficient to cover the option exercise price of the shares and the required tax withholding (this exercise method is sometimes referred to as “Exercise and Hold”).

•     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. (This exercise method is sometimes referred to as a “Stock Swap.”)

•     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. (This exercise method is sometimes referred to as “Exercise and Sell” or “Sell to Cover.”)

This option expires no later than the 10th anniversary of the Grant Date but may expire earlier upon your termination of service, as described below.

This option will expire on the date three months following the date of your termination of service as a non-employee director if such service terminates for any reason other than on account of becoming a common-law employee of Schwab or its subsidiaries, death, disability or retirement. The terms “disability” and “retirement” are defined below.

If you become an employee of Schwab or its subsidiaries, this option will expire on the date three months following the date you cease to be an employee of Schwab and its subsidiaries (other than by reason of disability, death or retirement). If you cease to be a non-employee director or 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 a non-employee director by reason of your retirement, then this option will expire on the 10th anniversary of the Grant Date.

For all purposes of this Agreement, “disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which has lasted, or can be expected to last, for a continuous period of not less than 12 months or which can be expected to result in death as determined by Schwab in its sole discretion.

For all purposes of this Agreement, “retirement” means your resignation or removal from the Board at any time after you have attained age 70 or completed 5 years of service as a non-employee director.

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 dispose of this option in your will or in a beneficiary designation. You may designate one or more beneficiaries by filing a beneficiary designation form. You may change your beneficiary designation by filing a new form with Schwab at any time prior to your death. If you do not designate a beneficiary or if your designated beneficiary predeceases you, then your options will be exercisable by your estate.

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.