EXHIBIT 10 (iii) 26









                              CH ENERGY GROUP, INC.
                            DIRECTORS AND EXECUTIVES
                  DEFERRED COMPENSATION PLAN TRUST AGREEMENT



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                               TABLE OF CONTENTS
                                                                          Page


ARTICLE I.        TITLE AND DEFINITIONS.....................................1
      Section 1.1 Title.....................................................1
      Section 1.2 Definitions...............................................2

ARTICLE II.       ADMINISTRATION............................................2
      Section 2.1 Trustee Responsibility....................................2
      Section 2.2 Maintenance of Records....................................2

ARTICLE III.      FUNDING...................................................3
      Section 3.1 Contributions.............................................3
      Section 3.2 Subtrusts.................................................3

ARTICLE IV.       PAYMENTS FROM TRUST FUND..................................4
      Section 4.1 Payments to Trust Beneficiaries...........................4
      Section 4.2 Trustee Responsibility Regarding Payments to Trust
                  Beneficiaries When the Company is Insolvent...............5
      Section 4.3 Payments to the Company...................................5
      Section 4.4 Trustee Compensation and Expenses; Other Fees and
                  Expenses..................................................5
      Section 4.5 Taxes.....................................................6
      Section 4.6 Alienation................................................6
      Section 4.7 Disputes..................................................6

ARTICLE V.        INVESTMENT OF TRUST ASSETS................................6
      Section 5.1 Investment of Subtrust Assets.............................6
      Section 5.2 Disposition of Income.....................................6

ARTICLE VI.       TRUSTEE...................................................7
      Section 6.1 General Powers and Duties.................................7
      Section 6.2 Records...................................................8
      Section 6.3 Third Persons.............................................8
      Section 6.4 Limitation on Obligation of Trustee.......................8

ARTICLE VII.      RESIGNATION AND REMOVAL OF TRUSTEE........................8
      Section 7.1 Method and Procedure......................................8

ARTICLE VIII.     AMENDMENT AND TERMINATION.................................9
      Section 8.1 Amendments................................................9
      Section 8.2 Duration and Termination..................................9
      Section 8.3 Distribution upon Termination............................10

                                       (i)

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ARTICLE IX.       MISCELLANEOUS............................................10
      Section 9.1 Limitation on Participants' Rights.......................10
      Section 9.2 Receipt or Release.......................................10
      Section 9.3 Governing Law............................................10
      Section 9.4 Headings, etc., No Part of Agreement.....................11
      Section 9.5 Instrument in Counterparts...............................11
      Section 9.6 Successors and Assigns...................................11
      Section 9.7 Indemnity................................................11


                                       (ii)

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                              CH ENERGY GROUP, INC.
                            DIRECTORS AND EXECUTIVES
                  DEFERRED COMPENSATION PLAN TRUST AGREEMENT


      This Trust  Agreement made and entered into as of this 1st day of January,
2000, by and between CH ENERGY GROUP,  INC.  (hereinafter  called the "Company")
and FIRST AMERICAN TRUST COMPANY  (hereinafter called "Trustee"),  evidences the
terms of a trust  for the  benefit  of  members  of the  Board of  Directors  of
Company, certain employees,  former employees and their designated beneficiaries
(hereinafter  collectively called "Trust Beneficiaries") who will be entitled to
receive  benefits  under the CH Energy  Group,  Inc.  Directors  and  Executives
Deferred Compensation Plan ("Plan").

      This Trust is intended to be a grantor trust,  of which the Company is the
grantor,  within the  meaning of subpart  E, part I,  subchapter  J,  Chapter l,
subtitle A of the Internal  Revenue Code of 1986,  as amended,  (the "Code") and
shall be construed accordingly.

                              W I T N E S S E T H:

      WHEREAS, the Company wishes to establish an irrevocable trust (hereinafter
called the  "Trust")  and to  transfer to the Trust  assets  which shall be held
therein,  subject to the claims of the  Company's  creditors in the event of the
Company's insolvency,  until paid to the Trust Beneficiaries as benefits in such
manner and at such times as required hereunder; and

      WHEREAS,  it is the  intention  of  the  parties  that  this  Trust  shall
constitute an unfunded  arrangement  and shall not affect the status of the Plan
as  an  unfunded  plan   maintained  for  the  purpose  of  providing   deferred
compensation  for a select group of management or highly  compensated  employees
for purposes of Title I of the Employee  Retirement Income Security Act of 1974,
as amended ("ERISA");

      WHEREAS,  the  inclusion  of members of the Board of Directors in the Plan
and as  Trust  Beneficiaries  shall  not  affect  the  status  of the Plan as an
unfunded plan maintained for the purpose of providing deferred  compensation for
a select group of  management  or highly  compensated  employees for purposes of
Title I of ERISA.

      NOW, THEREFORE, it is mutually understood and agreed as follows:


                                    ARTICLE I.

                              TITLE AND DEFINITIONS
Section 1.1 Title.

      This Trust Agreement shall be known as the CH Energy Group, Inc.
Directors and Executives Deferred Compensation Plan Trust Agreement.


<PAGE>


Section 1.2 Definitions.

      The following words, when used in this Trust Agreement with initial letter
capitalized, shall have the meanings set forth below:

      "Company" shall mean CH Energy Group, Inc. and any successor corporations.
Company shall include each  corporation  which is a member of a controlled group
of  corporations  (within the meaning of Section 414(b) of the Code) of which CH
Energy Group, Inc. is a component member, if the Board of Directors of CH Energy
Group,  Inc.  provides that such corporation  shall  participate in the Plan and
such corporations governing board of directors adopts this Plan.

      "General  Fund"  shall  mean that  portion  of the Trust fund which is not
allocated to a Subtrust.

      "Plan"  shall mean the CH Energy  Group,  Inc.  Directors  and  Executives
Deferred Compensation Plan as amended from time to time.

      "Policy" shall mean an insurance  policy  purchased in accordance with the
terms of the Plan.

      "Subtrust"  shall mean a separate  subtrust  established for a Participant
pursuant to Section 3.2.

      Capitalized terms not defined above shall be defined in accordance with
the Plan.

                                   ARTICLE II.

                                 ADMINISTRATION

Section 2.1 Trustee Responsibility.

      By its  acceptance of this Trust,  Trustee  agrees to make payments  under
this Trust to Trust  Beneficiaries  in  accordance  with the  provisions of this
Trust Agreement.

Section 2.2 Maintenance of Records.

      The  Committee  shall have the duty and  responsibility  to  maintain  all
individual  Trust  Beneficiary  records  and to prepare and file all reports and
other information required by any federal or state law or regulation relating to
the Trust and the Trust assets.


                                       -2-

<PAGE>

                                   ARTICLE III.

                                     FUNDING

Section 3.1 Contributions.

     (a) The  Company  hereby  deposits  with the  Trustee  in trust  the sum of
$100.00 to be held in the General Fund of the Trust.

     (b) The Company shall contribute to the Trust an amount equal to the amount
deferred  by each  Participant  for the  Plan  Year  and  Company  Discretionary
Contribution Amounts for the Plan Year. In no event shall these contributions be
made after the Company's tax return due date for that Plan Year. The Company may
also contribute cash to the Trust in an amount  approximately equal to the "cost
of insurance" (as defined in the Policies)  needed to fund any death benefits as
may be provided in the Plan, whether the Participant is employed or otherwise.

     (c)  Except  as  provided  otherwise  herein,  all  contributions  received
pursuant  to (a) and (b)  above,  together  with the  income  therefrom  and any
increment  thereon,  shall be held by Trustee as a single Trust  pursuant to the
terms of this Trust Agreement without distinction between principal and income.

     (d) The  principal  of the Trust,  and any earnings  thereon  shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan  Participants and general  creditors as herein set
forth.  Trust  Beneficiaries  shall  not have any  preferred  claim  on,  or any
beneficial ownership interest in, any assets of the Trust prior to the time such
assets are paid to Trust  Beneficiaries  as benefits as provided in Section 4.1,
and all  rights  created  under  this Trust  Agreement  shall be mere  unsecured
contractual  rights of Trust  Beneficiaries  against the  Company or Trust.  Any
assets  held by the Trust will be subject  to the  claims of  Company's  general
creditors under federal and state law in the event of Insolvency,  as defined in
Section 4.2(a) herein.


Section 3.2 Subtrusts.

     (a) If directed by the  Committee,  the Trustee shall  establish a separate
Subtrust for that Participant and credit the amount of such contribution to that
Participant's  Subtrust.  Each Subtrust shall reflect an individual  interest in
the assets of the Trust fund and shall not require any segregation of particular
assets.

     (b)  Following the  allocation  of assets to Subtrusts  pursuant to Section
3.2(a), the Trustee shall allocate  investment  earnings and losses of the Trust
fund, only at the direction of the Committee,  among the Subtrusts in accordance
with Section 5.2. Payments to general  creditors  pursuant to Section 4.2 hereof
shall be charged against the Subtrusts in proportion to their account  balances,
except  that the payment of  benefits  to a Trust  Beneficiary  shall be charged
against the Subtrust established or maintained for such Trust Beneficiary.

     (c) Amounts  allocated to a  Participant's  Subtrust may not be utilized to
pay  benefits to another  Participant  or  Beneficiary  of another  Participant.
Following payment of a

                                       -3-
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Participant's   entire   benefit  under  the  Plan,   including   payment  of  a
Non-Scheduled  In-Service Withdrawal or Hardship Distribution under Sections 6.2
and 6.3 of the Plan (whether by the Trustee  pursuant to the terms of this Trust
Agreement or by the Company or by a combination thereof),  any amounts remaining
allocated to that  Participant's  Subtrust  (and any Policy held with respect to
such Participant) shall be transferred by the Trustee to the Company. In lieu of
transferring the Policy, the Committee may direct the Trustee to designate a new
beneficiary  (which  may be  the  Company)  under  the  Policy  or  cash  in the
applicable Policy and transfer the proceeds to the Company

                                  ARTICLE IV.

                            PAYMENTS FROM TRUST FUND

Section 4.1 Payments to Trust Beneficiaries.

     (a) The  Committee  shall direct the Trustee to pay (or to commence to pay)
to  a  Participant  (or,  in  the  case  of  the  Participant's  death,  to  the
Participant's  Beneficiary)  the benefit payable to such  Participant  under the
Plan (the "Benefit  Amount") as soon as practicable  following the Participant's
Payment Date (as defined in the Plan). If Subtrusts are established, the Trustee
shall make such payment only from funds allocated to the Participant's  Subtrust
plus the General Fund, if any.

     (b) The Committee shall have full authority and responsibility to determine
the  correct  time and amount of payment of the Benefit  Amount.  In making such
determination, the Committee shall be governed by the terms of the Plan and this
Trust Agreement.


     (c) Any  obligation to a Trust  Beneficiary  under this Trust  Agreement is
also an  obligation  of the  Company  to the  extent  not paid  from the  Trust.
Accordingly,  to the extent  payments to a Trust  Beneficiary  are  discontinued
pursuant  to  Section  4.2,  the  Company  shall be  obligated  to pay the Trust
Beneficiary the same amount (plus applicable interest from its general fund). If
the amount credited to the Trust (or a Subtrust if applicable) is not sufficient
to make the payment of the Benefit  Amount to a Trust  Beneficiary in accordance
with the  determination by the Committee,  the Company agrees that it shall make
the balance of such payment.

     (d)  Unless  a  Trust  Beneficiary  furnishes  documentation  in  form  and
substance  satisfactory  to Trustee that no withholding is required with respect
to a payment of  benefits  from the Trust,  Trustee  shall  deduct from any such
Benefit Payment any federal, state or local taxes required by law to be withheld
by Trustee.  Any taxes that are withheld by Trustee shall be paid  separately to
the Company.  The Company shall be responsible for payment and reporting of such
withheld taxes to the appropriate taxing authorities.

     (e)  Trustee  shall  provide the Company  and the  Committee  with  written
confirmation of the fact and time of any payment  hereunder  within ten business
days  after  making any  payment to a Trust  Beneficiary.

                                       -4-

<PAGE>

Section  4.2  Trustee Responsibility  Regarding  Payments to Trust Beneficiaries
              When the Company is Insolvent.

     (a) The Company shall be considered  "Insolvent" for purposes of this Trust
Agreement  if (i) the  Company is unable to pay its debts as they become due, or
(ii) is  subject to a pending  proceeding  as a debtor  under the United  States
Bankruptcy  Code.

     (b) At all times during the  continuance  of the Trust,  the  principal and
income of the Trust  shall be  subject  to claims of  general  creditors  of the
Company as hereinafter set forth, and at any time Trustee has actual  knowledge,
or has  determined,  that the Company is  Insolvent,  Trustee  shall deliver any
undistributed  principal  and  income in the Trust to satisfy  such  claims as a
court of competent  jurisdiction may direct.  The Company,  through its Board of
Directors or any of its executive  officers,  shall advise  Trustee  promptly in
writing  of the  Company's  Insolvency.  If Trustee  receives  such  notice,  or
otherwise receives written notice from a third party which Trustee,  in its sole
discretion,  deems reliable and responsible,  Trustee shall discontinue payments
to Trust  Beneficiaries,  shall  hold the Trust  assets  for the  benefit of the
Company's general creditors, and shall resume payments to Trust Beneficiaries in
accordance  with  Section  4.1 of this Trust  Agreement  only after  Trustee has
determined that the Company is not Insolvent or is no longer  Insolvent.  Unless
Trustee has actual knowledge of the Company's  Insolvency or has received notice
from the Company or a third party  alleging  the Company is  Insolvent,  Trustee
shall have no duty to inquire  whether the Company is Insolvent.  Trustee may in
all events rely on such evidence  concerning  the solvency of the Company as may
be furnished to Trustee which will give Trustee a reasonable  basis for making a
determination concerning its solvency.  Nothing in this Trust Agreement shall in
any way  diminish  any rights of Trust  Beneficiaries  to pursue their rights as
general  creditors of the Company with respect to benefits payable  hereunder or
otherwise.

     (c) If Trustee discontinues payments of benefits from the Trust pursuant to
Section  4.2(b)  and  subsequently  resumes  such  payments,  the first  payment
following such discontinuance shall include the aggregate amount of all payments
which would have been made to Trust Beneficiaries  together with interest at the
Pension Benefit Guaranty  Corporation rate applicable to immediate  annuities on
the amount delayed during the period of such discontinuance,  less the aggregate
amount of  payments  made to Trust  Beneficiaries  by the Company in lieu of the
payments  provided  for  hereunder  during  any such  period of  discontinuance.


Section 4.3 Payments to the Company.

      Except as provided in Sections  3.2(c) or 4.2,  the Company  shall have no
right or power to direct Trustee to return to the Company or to divert to others
any of the Trust assets before the Trust is terminated pursuant to Section 8.2.


Section 4.4 Trustee Compensation and Expenses; Other Fees and Expenses.

      The Company  shall pay the Trustee such  reasonable  compensation  for its
services as shall be agreed  upon from time to time by the Company and  Trustee,
and  Trustee  shall be  reimbursed

                                       -5-

<PAGE>

by the Company for its expenses  that are  reasonably  necessary and incident to
its administration of the Trust.

      Following  reasonable  consultation  with the Company such expenses  shall
include fees of counsel and other advisors,  if any, incurred by Trustee for the
purpose of determining its responsibilities  under the Trust. Such compensation,
expenses or fees, as well as all other  administrative fees and expenses,  shall
be paid from Trust  assets  unless  paid  directly by the  Company.

Section 4.5 Taxes.

      Trustee shall not be personally  liable for any real and personal property
taxes,  income  taxes and other taxes of any kind  levied or assessed  under the
existing  or future  laws  against  the Trust  assets.  Such taxes shall be paid
directly from the Trust assets unless paid by the Company,  in the discretion of
the Company.

Section 4.6 Alienation.

      The benefits,  proceeds, payments or claims of Trust Beneficiaries payable
from the  Trust  assets  shall not be  subject  in any  manner to  anticipation,
alienation,   sale,   transfer,   assignment,   pledge,   encumbrance,   charge,
garnishment, execution or levy of any kind, either voluntary or involuntary. Any
attempt to anticipate,  alienate,  sell,  transfer,  assign,  pledge,  encumber,
garnish,  levy or  otherwise  dispose of or execute  upon any right or  benefits
payable  hereunder  shall be void.  The Trust  assets shall not in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any Trust Beneficiary  entitled to benefits hereunder and such benefits shall
not be considered an asset of Trust  Beneficiary  in the event of his insolvency
or bankruptcy.

Section 4.7 Disputes.

      All disputes, other than disputes between the Trustee and the Committee
or Company, shall be resolved in accordance with Section 7.8 of the Plan.


                                  ARTICLE V.

                           INVESTMENT OF TRUST ASSETS

Section 5.1 Investment of Subtrust Assets.

      The Trustee  shall invest the assets of the Trust (and each  Subtrust,  if
any) in  accordance  with written  directions  from the  Committee.

Section 5.2 Disposition of Income.

      All income  received by the Trust shall be reinvested.  Any income that is
attributable  to the amount  credited to a Subtrust in  accordance  with Section
3.2, and income thereon, shall be credited to such Subtrust and reinvested.

                                       -6-

<PAGE>

                                   ARTICLE VI.

                                     TRUSTEE

Section 6.1 General Powers and Duties.

      Subject to written directions from the Committee  regarding the investment
of Trust  assets,  Trustee,  on behalf of Trust  Beneficiaries,  shall  have all
powers  necessary  to  administer  the  Trust,  including,  but  not  by  way of
limitation,  the  following  powers in addition to other powers as are set forth
herein or conferred by law:

     (a) To hold,  invest and reinvest  the  principal or income of the Trust in
bonds, common or preferred stock, other securities,  or other personal,  real or
mixed  tangible or intangible  property  (including  investment in deposits with
Trustee which bear a reasonable  interest  rate,  including  without  limitation
investments  in  trust  savings   accounts,   certificates   of  deposit,   time
certificates or similar investments or deposits maintained by the Trustee);

     (b) To hold,  invest and reinvest  the  principal or income of the Trust in
the Policies,  direct  investments  under the Policies and take any other action
regarding the Policies,  as  specifically  directed by the Committee,  including
those  specified by Sections 3.1(b) or 3.2(c) and enter into  split-dollar  life
insurance  agreements  with  Participants  pursuant  to which  each  Participant
designates the beneficiary to receive a portion of the death benefits.

     (c) If directed by the Company or Committee to discontinue a Policy;

     (d) To pay and  provide  for the payment of all  reasonable  and  necessary
expenses of administering the affairs of the Trust,  subject to reimbursement of
such expenses within 30 days by the Company in accordance with Section 4.4;

     (e)  To  pay  and  provide  for  the  payment  of  all  benefits  to  Trust
Beneficiaries in accordance with the provisions of this Trust Agreement;

     (f) To retain  noninterest  bearing deposits or a cash balance with Trustee
of so much of the funds as may be  determined  to be  temporarily  held awaiting
investment or payment of benefits or expenses;

     (g) To  compromise,  arbitrate  or otherwise  adjust  claims in favor of or
against  the  Trust  and  to  institute,   compromise  and  defend  actions  and
proceedings;

     (h) To vote any stock,  bonds or other  securities  of any  corporation  or
other issuer at any time held in the Trust;  to otherwise  consent to or request
any action on the part of any such corporation or other issuer;  to give general
or special proxies or powers of attorney, with or without power of substitution;
to participate in any reorganization, recapitalization, consolidation, merger or
similar  transaction with respect to such stocks,  bonds or other securities and
to deposit such stocks,  bonds or other  securities in any voting trust, or with
any protective or like committee,  or with a trustee,  or with the  depositaries
designated   thereby;   to  exercise  any  subscription  rights  and  conversion
privileges; and to generally exercise any of the powers of an owner with respect
to the stocks, bonds or other securities or properties in the Trust; and

                                       -7-

<PAGE>

     (i) Generally, to do all such acts, execute all such instruments,  take all
such  proceedings,  and exercise all such rights and privileges with relation to
the  property  constituting  the Trust as if  Trustee  were the  absolute  owner
thereof.

Section 6.2 Records.

      Trustee  shall  keep  a  full,   accurate  and  detailed   record  of  all
transactions  of the Trust which the Company  shall have the right to examine at
any time during Trustee's regular business hours.  Within ninety (90) days after
the close of each  calendar  year and  within  forty-five  (45)  days  after the
removal or  resignation  of Trustee,  Trustee  shall  furnish the Company with a
statement of account with respect to the Trust. This account shall set forth all
receipts,  disbursements and other transactions  (including sales and purchases)
effected  by Trustee  during  said year (or until its  removal or  resignation),
shall  show  the  investments  at the end of the year  (or  date of  removal  or
resignation),  including  the cost and fair market  value of each item,  and the
amounts allocated to each Subtrust.

Section 6.3 Third Persons.

      A third  person  dealing  with  Trustee  shall not be required to make any
inquiry as to whether the Company or the Committee has  instructed  Trustee,  or
Trustee is otherwise  authorized,  to take or omit any action,  and shall not be
required to follow the application by Trustee of any money or property which may
be paid or delivered to Trustee.


Section 6.4 Limitation on Obligation of Trustee.

      Trustee  shall have no  responsibility  for the validity of the Plan or of
the Trust and does not  guarantee  the  payment of any  amount  which may become
payable to any Trust Beneficiary under the terms hereof.

                                  ARTICLE VII.

                       RESIGNATION AND REMOVAL OF TRUSTEE

Section 7.1 Method and Procedure.

     (a) Trustee may resign at any time by  delivering  to the Company a written
notice of resignation,  to take effect on a date specified therein,  which shall
be not less than sixty (60) days after the delivery thereof,  unless such notice
shall be waived.

     (b) The Company may remove  Trustee at any time by  delivering to Trustee a
written  notice of removal,  to take effect on a date specified  therein,  which
shall be not less than thirty (30) days after the delivery thereof,  unless such
notice shall be waived.

     (c) In case of the resignation or removal of Trustee,  Trustee shall have a
right to a  settlement  of its  accounts,  which may be made,  at the  option of
Trustee,  either (1) by a judicial settlement in an action instituted by Trustee
in a court of  competent  jurisdiction,  or (2) by an  agreement  of  settlement
between Trustee and the Company.


                                       -8-

<PAGE>

     (d) Upon such settlement,  all right, title and interest of such Trustee in
the  assets  of the  Trust,  and all  rights  and  privileges  under  the  Trust
theretofore  vested in such Trustee  shall vest in the  successor  Trustee,  and
thereupon all liabilities of such Trustee shall  terminate;  provided,  however,
that Trustee shall  execute,  acknowledge  and deliver all documents and written
instruments which are necessary to transfer and convey all the right,  title and
interest in the assets of the Trust,  and all rights and privileges in the Trust
to the successor Trustee.

     (e) The Company,  upon receipt of or giving  notice of the  resignation  or
removal of Trustee,  shall promptly appoint a successor  Trustee.  The successor
Trustee  shall be a bank or trust company  qualified and  authorized to do trust
business in any state and having on the date of  appointment  total assets of at
least  $10,000,000 and a credit rating from Moody's of A or better. In the event
of the  failure or refusal of the Company to appoint  such a  successor  Trustee
within thirty (30) days after the notice of resignation or removal,  Trustee may
secure, at the expense of the Company, the appointment of such successor Trustee
by an  appropriate  action in a court of competent  jurisdiction.  Any successor
Trustee so appointed may qualify by executing  and  delivering to the Company an
instrument  accepting  such  appointment  and, upon  delivery,  such  successor,
without further act, shall become vested with all the right, title and interest,
and all rights and privileges of the predecessor  Trustee with like effect as if
originally named as Trustee herein.

                                 ARTICLE VIII.

                            AMENDMENT AND TERMINATION

Section 8.1 Amendments.

      The Company  shall have the right to amend (but not  terminate)  the Trust
from  time to time and to amend  further  or  cancel  any  such  amendment.  Any
amendment  shall be stated in an instrument  in writing  executed by the Company
and Trustee,  and this Trust Agreement shall be amended in the manner and at the
time  therein set forth,  and the Company  and Trustee  shall be bound  thereby;
provided, however:

     (a) No  amendment  shall have any  retroactive  effect so as to deprive any
Trust  Beneficiary  of any benefits  already  vested under the Plan, or create a
reversion  of Trust  assets to the  Company  except as already  provided in this
Trust  Agreement,  other than such changes,  if any, as may be required in order
for the Trust to be  considered a component of a plan  described in Section 9.3;

     (b) No amendment shall make the Trust revocable; and

     (c) No  amendment  shall  increase  the  duties or  liabilities  of Trustee
without its written consent.


Section  8.2   Duration and Termination.

      This Trust shall not be revocable and shall continue until the earliest of
(a)  the  accomplishment  of the  purpose  for  which  it was  created,  (b) the
exhaustion  of all  appeals  of a final  determination  of a court of  competent
jurisdiction that the interest in the Trust of Trust

                                       -9-

<PAGE>

Beneficiaries  is includable for federal income tax purposes in the gross income
of such Trust Beneficiaries, without such determination having been reversed (or
the earlier  expiration  of the time to appeal),  (c) if required to comply with
California  rules  regulating  the  maximum  length  for  which  trusts  may  be
established,  the  expiration  of twenty (20) years and six (6) months after the
death of the last  surviving  Trust  Beneficiary  who is  living  and is a Trust
Beneficiary on the date this Trust is established,  (d) a  determination  of the
Company to terminate the Trust because  applicable law requires it to be amended
in a way that  could  make it taxable  and  failure to so amend the Trust  would
subject the Company to material penalties, or (e) the dissolution or liquidation
of    the    Company.

Section 8.3 Distribution upon Termination.

      Upon termination of this Trust, Trustee shall liquidate the Trust fund and
provide a final  account to the Company and the  Committee.  To the extent Trust
assets are sufficient, the Trustee shall pay to each Participant the appropriate
Benefit Amount.  After its final account has been settled as provided in Section
7.1(c),  Trustee  shall  return to the  Company any assets  remaining  after the
distributions  described in this Section  8.3.  Upon making such  distributions,
Trustee  shall be  relieved  from all further  liability.  The powers of Trustee
hereunder  shall  continue so long as any assets of the Trust fund remain in its
hands.

                                   ARTICLE IX.

                                  MISCELLANEOUS

Section 9.1 Limitation on Participants' Rights.

      Participation  in the Trust  shall not give  Participants  the right to be
retained  in the  Company's  employ or any right or  interest in the Trust other
than as herein provided.  The Company reserves the right to dismiss Participants
who are employees  without any liability for any claim either against the Trust,
except to the extent  provided  herein,  or against the  Company.  All  benefits
payable hereunder shall be provided solely from the assets of the Trust.


Section 9.2 Receipt or Release.

      Any payment to a Trust  Beneficiary  in accordance  with the provisions of
the Trust shall,  to the extent thereof,  be in full  satisfaction of all claims
against Trustee and the Company, and Trustee may require such Trust Beneficiary,
as a condition  precedent to such  payment,  to execute a receipt and release to
such effect.

Section 9.3 Governing Law.

      This Trust  Agreement  and the Trust hereby  created  shall be  construed,
administered and governed in all respects under  applicable  federal law, and to
the extent  that  federal  law is  inapplicable,  under the laws of the State of
California; provided, however, that if any provision is susceptible to more than
one interpretation,  such interpretation shall be given thereto as is consistent
with the Trust being (a)  classified  as a grantor  trust as defined in Sections
671 et seq. of the Code,  and (b)  classified as a component of an unfunded plan
maintained  primarily  to provide  deferred  compensation  for a select group of
management or highly  compensated

                                       -10-

<PAGE>

employees,  as described in Section  201(2) of ERISA.  If any  provision of this
instrument  shall be held by a court of competent  jurisdiction to be invalid or
unenforceable,  the  remaining  provisions  hereof  shall  continue  to be fully
effective.


Section 9.4 Headings, etc., No Part of Agreement.

      Headings  and  subheadings  in  this  Trust  Agreement  are  inserted  for
convenience of reference  only and are not to be considered in the  construction
of the provisions hereof.

Section 9.5 Instrument in Counterparts.

      This Trust  Agreement  may be  executed in several  counterparts,  each of
which shall be deemed an original,  and said  counterparts  shall constitute but
one and the same  instruments,  which may be  sufficiently  evidenced by any one
counterpart.

Section 9.6 Successors and Assigns.

      This Trust  Agreement  shall inure to the benefit of, and be binding upon,
the parties hereto and their successors and assigns.

Section 9.7 Indemnity.

     (a) Except in the case of  liabilities  and claims arising out of Trustee's
willful misconduct or gross negligence, Company shall indemnify and hold Trustee
harmless  from and  against all  liabilities  and claims  (including  reasonable
attorney's  fees and expenses in defense  thereof)  arising out of or in any way
connected  with  the  Plan  or the  Trust  fund  or the  management,  operation,
administration  or control thereof and based in whole or in part on:

          (1) Any act or inaction of Company or Committee  (which term includes,
     in this  paragraph,  any actual or ostensible  agent of Company) or

          (2) Any act or  inaction  of  Trustee  resulting  from the  absence of
     proper  directions  hereunder,   or  in  accordance  with  any  directions,
     purported  or real,  from  Company  or  Committee,  whether  or not  proper
     hereunder,  if relied upon in good faith by Trustee.

     (b) The  Trustee  does not  warrant  and shall  not be  liable  for any tax
consequences  associated with the Trust or the Plans.

     (c) The Trustee shall not be liable for the  inadequacy of the Trust to pay
all amounts due under the Plans.


                                       -11-

<PAGE>

      IN WITNESS WHEREOF the  undersigned  have executed this Trust Agreement as
of the date first written above.

                                    CH ENERGY GROUP, INC.

                                       By

                                       By


                                    FIRST AMERICAN TRUST COMPANY

                                       By

                                       By











                                       -12-


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