October 24, 2002 **Conditional Approval #556**

**November 2002**

John P.C. Duncan, Esq.

Duncan Associates, LLC

180 North LaSalle Street

Suite 2410

Chicago, Illinois 60601-2704

Re: 1) Application by Neuberger Berman Inc. to charter a national trust
bank with the title of

New NBTC, National Association, (Charter Number: 24384) New York, New
York, and,

2)  Application to merge Neuberger Berman Trust Company, National
    Association, (Charter Number: 24151) Seattle, Washington, with trust
    offices in New York, Delaware and Florida, with and into New NBTC,
    National Association (Organizing), New York, New York, under the
    charter of the latter and with the charter number and title of the
    former

> Control Number: 2002 NE 02 0027

Dear Mr. Duncan:

The Comptroller of the Currency ("OCC") has reviewed your application to
establish a new national trust bank, which will engage solely in
fiduciary activities, with the title of New NBTC, National Association
(hereinafter, "New Bank"), to be located at 605 Third Avenue, 44^th^
Floor, New York, New York. After a thorough evaluation of all data
available to the OCC, we have found that your proposal meets the
requirements for preliminary conditional approval.

This is also to inform you that today the OCC conditionally approved the
proposal to merge Neuberger Berman Trust Company, National Association
(hereinafter, "NBTC, NA"), an uninsured national trust bank, with and
into New Bank, under the charter of the latter and with the charter
number and title of the former ("Resulting Bank").

The OCC has also approved Resulting Bank's return of capital, under 12
U.S.C. § 59, in the amount of \$2,000,000 as outlined in your
application dated September 17, 2002, to occur subsequent the opening of
New Bank and consummation of the merger. Pursuant to 12 U.S.C. § 59, a
reduction in capital stock requires approval by shareholders owning at
least two-thirds of Resulting Bank's capital stock and, if necessary,
amendments to the [Articles of Association]{.underline}. The bank should
refer to the *Comptroller's Licensing Manual*, Capital and Dividends
Booklet for guidance in completing this change in permanent capital.
Appropriate notice should be submitted to the Licensing Manager of the
Northeastern District Office when the changes have been accomplished.

We note that Neuberger Berman, Inc. ("Company") has represented the
Resulting Bank's capital structure, after the merger and return of
capital, will be unchanged from NBTC, NA's pre-merger capital structure,
consisting of \$2,000,000 in common stock, \$1,500,000 in surplus and
undivided profits of \$428,000, as adjusted for operating results from
June 30, 2002.

These approvals are granted based on a thorough review of all
information available, including the representations and commitments
made in the application and by the representatives of the banks. We also
made our decision to grant preliminary conditional approval to organize
New Bank with the understanding that the proposed New Bank will apply
for membership in the Federal Reserve System and will not be
FDIC-insured.

The preliminary conditional approval to organize New Bank, the merger
and capital approvals are subject to the following conditions "imposed
in writing by the agency in connection with the granting of any
application or other request" within the meaning of 12 U.S.C. § 1818
and, as such, are enforceable under 12 U.S.C. § 1818.

1.  The transactions and activities described in the applications must
    be conducted and consummated in the order described and in
    accordance with the representations made in the applications.

2.  At all times, Resulting Bank shall maintain a minimum of \$3 million
    in Tier 1 capital.

3.  If the Resulting Bank fails to maintain Tier 1 capital in the amount
    of \$3 million, Resulting Bank shall be deemed "undercapitalized,"
    for purposes of 12 U.S.C. **§** 1831o and 12 C.F.R. Part 6, and the
    OCC shall have the authority to take any action authorized under all
    provisions of 12 U.S.C. § 1831o and 12 C.F.R. Part 6 applicable to
    an undercapitalized national bank. For purposes of section
    1831o(e)(5), an action "necessary to carry out the purpose of this
    section" shall include restoration of the Bank's capital so that it
    is not "undercapitalized" and any other action deemed advisable by
    the OCC to address the Bank's capital deficiency or the safety and
    soundness of its operation.

4.  The Resulting Bank: (i) shall give the New York Field Office at
    least sixty (60) days prior written notice of the Bank's intent to
    significantly deviate or change from its business plan or

operations[^1] and (ii) shall obtain the OCC's prior written
determination of no objection before

the Resulting Bank engages in any significant deviation or change from
its business plan or

> operations.

5.  The Resulting Bank must maintain on file, at its premises, current
    financial information (e.g. audited financial reports, quarterly
    financial statements, 10-K and 10-Q reports as appropriate) on
    Neuberger Berman, Inc. The financial information must be provided to
    the Bank's supervisory office once it becomes available.

6\. All transactions between the Resulting Bank and any affiliates,
foreign or domestic, shall be conducted subject to the applicable
provisions of 12 U.S.C. § 371c, and 12 U.S.C. § 371c-1, and other
applicable Federal law. The Board of Directors of the Resulting Bank
annually shall review and approve the service agreements, and any other
transactions with foreign and domestic affiliates, including in
particular any cost allocation, fee-sharing or tax-sharing provisions in
such agreements or other transactions.

New Bank's initial Tier 1 capital, net of all organizational and
pre-opening expenses

shall be \$2 million. The manner in which capital is raised must not
deviate from that described in the application without prior OCC
notification.

Prior to opening New Bank and prior to the merger consummation, the
Resulting Bank and the Company must amend the Company's January 4, 2001
Capital and Liquidity Agreement to increase its minimum Tier 1 capital
commitment to the Resulting Bank from \$2 million to \$3 million. All
other terms and provisions of the agreement shall remain in effect.

Please be advised that the OCC is currently reviewing its capital and
liquidity policy with respect to national trust banks. Should there be a
change to our policy as a result of the review, we will advise you
accordingly. In addition, if the Resulting Bank's future fiduciary and
related assets increase significantly, or if the Resulting Bank assumes
additional risk, the OCC may require the Resulting Bank to hold
additional capital.

Until final approval is granted and the merger is consummated, the OCC
has the right to alter, suspend, or revoke these approvals should any
interim development be deemed by the OCC to warrant such action.

Please refer to the \"Corporate Organization\" booklet (enclosed) in the
*Comptroller's Licensing Manual* for the instructions on organizing New
Bank. The booklet contains all of the steps, as applicable, you must
take to receive your charter.

We have reviewed the enclosed articles of association and organization
certificate for New Bank and have found them to be in compliance with
applicable statutes. As a \"body corporate\" or legal entity, you may
begin taking those steps necessary for obtaining final approval, but you
may not begin the business of banking until you fulfill all requirements
for a bank in organization and you are granted final approval by the
OCC. You must maintain complete data and supporting documents for
disbursements made by organizers for charges to the general ledger of
New Bank. All official documents, stationery, advertisements, and other
references to New Bank should be followed by \"In Organization.\"

Enclosed are standard requirements that must be met, as applicable,
before New Bank will be allowed to commence business. Management must
ensure that the applicable policies and procedures are established and
adopted by the Board of Directors before New Bank commences business.
Applicable standard requirements also must be satisfied before New Bank
will be allowed to commence business.

The OCC poses no objection to the following persons serving as executive
officers and directors of New Bank as proposed in the application.

Albert C. Bellas Chairman of the Board and CEO

Howard L. Ganek Director

Richard S. Levine Director

Martin McKerrow Director

Stephen Brent Wells Director and President

Janet W. Prindle Director

Heidi L. Steiger Director

Edward Berman SVP and Chief Institutional Trust Officer

> Treasurer and Security Officer

Joseph F. Collins, III SVP and Chief Fiduciary Officer

Diane E. Lederman, Esq. SVP and Trust Compliance Officer, General
Counsel

John Mack SVP and Trust Officer

Ralph D. Sinsheimer SVP -- Wealth Management

You are also reminded that until January 5, 2003, the Resulting Bank
must seek and obtain the OCC's determination of no objection to any new
executive officer or director *prior* to that person assuming such
position.

If the New Bank is not opened, and the merger and capital change are not
consummated within one year from the approval date, the preliminary
conditional approval will expire and merger and capital approval shall
automatically terminate.

As a reminder, the bank should advise us in writing and in advance of
the desired effective date for the merger transaction so that the OCC
may issue the necessary certification letter. We will issue a letter
certifying consummation of the merger transaction when we have received:

1)  A Secretary's Certificate for both banks, certifying that a majority
    of the board of directors approved the transaction, if not
    previously provided.

2)  A Secretary's Certificate for both banks, certifying shareholder
    approval of the merger

> transaction, if not previously provided.

3)  An executed merger agreement, if not previously provided.

These decisions, and the activities and communications by OCC employees
in connection with the filing, do not constitute a contract, express or
implied, or any other obligation binding upon the OCC, the U.S., any
agency or entity of the U.S., or any officer or employee of the U.S, and
do not affect the ability of the OCC to exercise its supervisory,
regulatory and examination authorities

under applicable law and regulations. The foregoing may not be waived or
modified by any employee or agent of the OCC or the U.S.

You should direct any questions concerning this preliminary conditional
charter approval and conditional merger approval to Linda Leickel,
Licensing Analyst at (212) 790-4055.

Sincerely,

**-signed-**

Anthony DosSantos

Licensing Manager

Enclosures: Accepted Articles and Organization Certificate

> Standard Requirements and Minimum Policies

Notice of Reduction in Capital

Secretary's Certificate

[^1]: If such deviation is the subject of an application filed with the
    OCC for its prior approval, the OCC does not require notice to the
    supervisory office.