GUARANTEE AGREEMENT

Exhibit 4.16

GUARANTEE AGREEMENT

by and between

THE CHARLES SCHWAB CORPORATION,

as Guarantor

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.,

as Guarantee Trustee

dated as of October 5, 2007

Table of Contents

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GUARANTEE AGREEMENT

THIS GUARANTEE AGREEMENT, dated as of October 5, 2007 (the “ Guarantee Agreement ”), is executed and delivered by THE CHARLES SCHWAB CORPORATION, a Delaware corporation (the “ Guarantor ”) having its principal office at 120 Kearny Street, San Francisco, California 94108, and THE BANK OF NEW YORK TRUST COMPANY, N.A., as trustee (the “ Guarantee Trustee ”), for the benefit of the Holders (as defined herein) from time to time of the Trust Preferred Securities and the Trust Common Securities (each as defined herein and, together, the “ Trust Securities ”) of Schwab Capital Trust I, a Delaware statutory trust (the “ Issuer Trust ”).

WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of October 5, 2007 (the “ Trust Agreement ”), among the Guarantor, as Sponsor, the Property Trustee, the Delaware Trustee and the Administrative Trustees named therein and the Holders from time to time of undivided beneficial interests in the assets of the Issuer Trust, the Issuer Trust is issuing $300,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement) of its Fixed to Floating Rate Trust Preferred Securities, Liquidation Amount $1,000 per Trust Preferred Security (the “ Trust Preferred Securities ”), and $10,000 aggregate Liquidation Amount of its Fixed to Floating Rate Trust Common Securities, Liquidation Amount $1,000 per Trust Common Security (the “ Trust Common Securities ”), representing undivided beneficial interests in the assets of the Issuer Trust and having the terms set forth in the Trust Agreement;

WHEREAS, the Issuer Trust will use the proceeds of the issuance of the Trust Securities to purchase the Junior Subordinated Notes (as defined in the Trust Agreement) of the Guarantor, which will be deposited with The Bank of New York Trust Company, N.A., as Property Trustee under the Trust Agreement, as trust assets; and

WHEREAS, as incentive for the Holders to purchase Trust Securities the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay in fullto the Holders of the Trust Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of Trust Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Trust Securities.

ARTICLE I

DEFINITIONS

Section 1.1. Definitions .

As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however , that an Affiliate of the Guarantor shall not be deemed to be an Affiliate of the Issuer Trust. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Corporate Trust Office ” means the office of the Guarantee Trustee at which its corporate trust business shall be principally administered, which on the date hereof is 101 Barclay Street, New York, New York 10286.

“ Event of Default ” means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, however , that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured such default within 30 days after receipt of such notice.

“ Guarantee Payments ” means the following payments or distributions, without duplication, with respect to the Trust Securities, to the extent not paid or made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Trust Securities, to the extent the Issuer Trust shall have funds on hand available therefor at such time, (ii) the Redemption Price (as defined in the Trust Agreement), with respect to any Trust Securities called for redemption by the Issuer Trust, to the extent the Issuer Trust shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary termination, winding-up or liquidation of the Issuer Trust, unless Junior Subordinated Notes are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of $1,000 per Trust Security plus accrued and unpaid Distributions on the Trust Securities to the date of payment, to the extent the Issuer Trust shall have funds on hand available therefor at such time and (b) the amount of assets of the Issuer Trust remaining available for distribution to Holders upon liquidation of the Issuer Trust, after satisfaction of liabilities to creditors of the Issuer Trust as required by applicable law (in either case, the “Liquidation Distribution”).

“ Guarantee Trustee ” has the meaning specified in the first paragraph of this Guarantee Agreement, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee.

“ Guarantor ” has the meaning specified in the first paragraph of this Guarantee Agreement.

“ Holder ” means any holder, as registered on the books and records of the Trust Securities Registrar, of any Trust Securities; provided, however , that in determining whether the holders of the requisite percentage of Trust Preferred Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee.

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“ Indemnified Person ” has the meaning specified in Section 3.3(b).

“ Indenture ” means the Junior Subordinated Indenture, dated as of October 5, 2007, between the Guarantor and The Bank of New York Trust Company, N.A., as trustee, as amended and supplemented by the First Supplemental Indenture thereto, dated as of October 5, 2007.

“ Issuer Trust ” has the meaning specified in the first paragraph of this Guarantee Agreement.

“ Majority in Liquidation Amount ” means, except as provided by the Trust Indenture Act, Holder(s) of Outstanding (as defined in the Trust Agreement) Trust Securities, voting together as a single class, or, as the context may require, Holders of Outstanding Trust Preferred Securities or Holders of Outstanding Trust Common Securities, as the case may be, voting separately as a class, who are the record owners of more than 50% of the aggregate Liquidation Amount (as defined in the Trust Agreement) of all Outstanding Trust Securities of the relevant class. In determining whether the Holders of the requisite amount of Trust Securities have voted, Trust Securities which are owned by the Guarantor or any Affiliate of the Guarantor or any other obligor on the Trust Securities shall be disregarded for the purpose of any such determination.

“ Officers’ Certificate ” means a certificate signed by the Chairman and Chief Executive Officer, President, Chief Financial Officer or a Vice President, and by the Treasurer, an Associate Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary of the Guarantor, and delivered to the Guarantee Trustee. One of the officers signing an Officers’ Certificate given pursuant to Section 2.5 shall be the principal executive, financial or accounting officer of the Guarantor. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include:

(a) a statement by each officer signing the Officers’ Certificate that such officer has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by such officer in rendering the Officers’ Certificate;

(c) a statement that such officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with.

“ Opinion of Counsel ” means a written opinion of counsel, who may be counsel for the Guarantor, and who shall be acceptable to the Guarantee Trustee.

“ Person ” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust,

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unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

“ Responsible Officer ” means, with respect to the Guarantee Trustee, any officer of the Guarantee Trustee within the Institutional Trust Services – Conventional Debt Unit or any successor group of the Guarantee Trustee located at the Corporate Trust Office who has direct responsibility for the administration of this Guarantee and for purposes of Sections 2.7(a) and 3.1(d)(iii) also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject.

“ Successor Guarantee Trustee ” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1.

“ Trust Agreement ” has the meaning specified in the second paragraph of this Guarantee Agreement.

“ Trust Common Securities ” has the meaning specified in the second paragraph of this Guarantee Agreement.

“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended.

“ Trust Preferred Securities ” has the meaning specified in the second paragraph of this Guarantee Agreement.

“ Trust Securities ” has the meaning specified in the first paragraph of this Guarantee Agreement.

ARTICLE II

TRUST INDENTURE ACT

Section 2.1. Trust Indenture Act; Application .

(a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions.

(b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.2. List of Holders .

(a) The Guarantor will furnish or cause to be furnished to the Guarantee Trustee: (i) semi-annually, not more than 15 days after May 15 and November 15 in each year, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders as of such May 15 and November 15, and (ii) at such other times as the Guarantee

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Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, in each case to the extent such information has not otherwise been received by the Guarantee Trustee in its capacity as such.

(b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3. Reports by the Guarantee Trustee .

Within 60 days after May 15 of each year, commencing May 15, 2008, the Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.

Section 2.4. Periodic Reports to the Guarantee Trustee .

The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act, in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of documents, reports and information required by Section 314 to the Guarantee Trustee is for informational purposes only and the Guarantee Trustee’s receipt of such shall not constitute notice or constructive notice of any information contained therein or determinable from information contained therein, including the Guarantor’s compliance with any of its covenants hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on Officers’ Certificates).

Section 2.5. Evidence of Compliance with Conditions Precedent .

The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given in the form of an Officers’ Certificate. Any opinion of counsel to be given by counsel pursuant to Section 314(c)(2) of the Trust Indenture Act may be given in the form of an Opinion of Counsel.

Section 2.6. Events of Default; Waiver .

The Holders of a Majority in Liquidation Amount of the Trust Preferred Securities may, by vote, on behalf of the Holders of all the Trust Securities, waive any past default or Event of Default and its consequences. Upon such waiver, any such default or Event of Default shall cease to exist, and any default or Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver

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shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

Section 2.7. Event of Default; Notice .

(a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as a committee of Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

(b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless a Responsible Officer charged with the administration of this Guarantee Agreement shall have obtained written notice of such Event of Default.

Section 2.8. Conflicting Interests .

The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

Section 3.1. Powers and Duties of the Guarantee Trustee .

(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee.

The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

(b) If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.

(c) Prior to the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, the Guarantee Trustee shall undertake

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to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. Upon the occurrence of an Event of Default (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trus