PROVIDIAN FINANCIAL CORPORATION



                           DEFERRED COMPENSATION PLAN
                       FOR SENIOR EXECUTIVES AND DIRECTORS




                 As Amended and Restated Effective April 1, 1999


1.       Purpose...............................................................1

2.       Definitions...........................................................1

3.       Participation in the Plan.............................................5

4.       Deferred Compensation Elections.......................................5

5.       Deferred Compensation Accounts........................................7

6.       Payment of Plan Benefits.............................................11

7.       Administration.......................................................14

8.       Beneficiary Designation..............................................14

9.       Claims, Inquiries and Appeals........................................15

10.      Miscellaneous........................................................16


                        PROVIDIAN FINANCIAL CORPORATION
                           DEFERRED COMPENSATION PLAN
                       FOR SENIOR EXECUTIVES AND DIRECTORS

                 As Amended and Restated Effective April 1, 1999

1.       Purpose

     The purpose of the Deferred  Compensation  Plan for Senior  Executives  and
Directors (the "Plan") is to provide  retirement,  long-term  savings,  death or
termination of service  benefits to Senior  Executives (as hereinafter  defined)
and  Non-Employee  Directors  (as  hereinafter  defined) of Providian  Financial
Corporation and its affiliates.  The Plan succeeds the Providian  Bancorp,  Inc.
Deferred  Compensation  Plan  (formerly  known as the First Deposit  Corporation
Deferred  Compensation  Plan), which was originally adopted effective January 1,
1991 (the "Predecessor  Plan"), as to those  Participants who were participating
in the Predecessor  Plan  immediately  prior to the Effective Date (as hereafter
defined).

2.       Definitions

     2.1 "Active Service" means  employment by the Company,  service as a member
of the Board (a  "Director")  or service  as a paid  consultant  to the  Company
immediately  following  a period of  employment  or  service  as a  Director  (a
"Consultant"), provided that amounts paid for services as a Consultant shall not
be included as Compensation  for purposes of the Plan.  Active Service shall not
be  considered  to have ceased as long as a  Participant  continues to serve the
Company  in  any  of  the  capacities  described  above,  without  interruption,
notwithstanding  a change in the capacity of such service and without  regard to
whether  or not the  Participant  continues  to be  eligible  to elect  Deferred
Compensation hereunder.

     2.2  "Beneficiary"   means  the  person  or  persons  so  designated  by  a
Participant in accordance with Section 8 hereof.

     2.3  "Board"  shall  mean the Board of  Directors  of  Providian  Financial
Corporation.

     2.4 "Board  Cycle"  shall mean the period  beginning on June 1 of each year
and ending on May 31 of the  following  year,  provided  that the initial  Board
Cycle shall commence on the Effective Date and end on May 31, 1998.

     2.5 "Cash Account" means a Deferred  Compensation  Account (or  subaccount)
pursuant to which a Participant's  Deferred  Compensation shall be credited with
interest as provided in Section 5.4 hereof.

     2.6 "Change in Control"  shall mean the  occurrence of any of the following
after the Effective Date:

          (a) 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")) who becomes a beneficial owner (within the meaning of
     Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i)
     the  then   outstanding   shares  of  common  stock  of  the  Company  (the
     "Outstanding  Company Common  Stock") or (ii) the combined  voting power of
     the then  outstanding  voting  securities  of the Company  entitled to vote
     generally in the election of directors  (the  "Outstanding  Company  Voting
     Securities");  provided,  however,  that beneficial ownership by any of the
     following shall not constitute a Change of Control:  (x) the Company or any
     of its  subsidiaries,  (y) any  employee  benefit  plan (or related  trust)
     sponsored or  maintained by the Company or any of its  subsidiaries  or (z)
     any corporation  with respect to which,  following such  acquisition,  more
     than 60% of,  respectively,  the then outstanding shares of common stock of
     such  corporation  and the combined  voting  power of the then  outstanding
     voting  securities of such  corporation  entitled to vote  generally in the
     election of directors is then beneficially  owned,  directly or indirectly,
     by all or  substantially  all of the  individuals and entities who were the
     beneficial owners,  respectively,  of the Outstanding  Company Common Stock
     and  Outstanding  Company  Voting  Securities  immediately  prior  to  such
     acquisition  in  substantially  the same  proportions  as their  ownership,
     immediately  prior to such acquisition,  of the Outstanding  Company Common
     Stock and Outstanding Company Voting Securities, as the case may be; or

          (b)  Individuals  who, as of the date hereof,  constitute the Board of
     the Company (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 the date  hereof  whose  election,  or
     nomination  for election by the Company's  stockholders,  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 either an actual or
     threatened  election  contest  (as such  terms  are used in Rule  14a-11 of
     Regulation 14A promulgated under the Exchange Act); or

          (c) A reorganization,  merger or consolidation, with respect to which,
     in each case, all or substantially  all of the individuals and entities who
     were the beneficial owners, respectively, of the Outstanding Company Common
     Stock and Outstanding  Company voting Securities  immediately prior to such
     reorganization,   merger   or   consolidation   do  not,   following   such
     reorganization,  merger or  consolidation,  beneficially  own,  directly or
     indirectly,  more than 60% of, respectively,  the then outstanding share 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 reorganization,  merger
     or consolidation in substantially  the same proportions as their ownership,
     immediately  prior to such  reorganization,  merger or consolidation of the
     Outstanding Company Common Stock and Outstanding Company Voting Securities,
     as the case may be; or

          (d) (i)  Approval  by the  stockholders  of the  Company of a complete
     liquidation  or  dissolution  of the  Company  or (ii)  the  sale or  other
     disposition of all or substantially all of the assets of the Company, other
     than to a corporation,  with respect to which  following such sale or other
     disposition, more than 60% of, respectively,  the then outstanding share of
     common stock of such  corporation and the combined voting power of the then
     outstanding  voting  securities  of  such  corporation   entitled  to  vote
     generally in the election of directors is then beneficially owned, directly
     or indirectly, by all or substantially, all of the individuals and entities
     who were the beneficial owners,  respectively,  of the Outstanding  Company
     Common Stock and Outstanding Company Voting Securities immediately prior to
     such sale or other  disposition  in  substantially  the same  proportion as
     their ownership,  immediately prior to such sale or other  disposition,  of
     the  Outstanding  Company  Common  Stock  and  Outstanding  Company  Voting
     Securities, as the case may be.

     2.7 "Committee" means the Human Resources Committee of the Board.

     2.8  "Company"  means  Providian  Financial  Corporation  and its affiliate
corporations who participate in the Plan.

     2.9 "Compensation" means, in the case of a Senior Executive, the Salary and
Incentive Award payable to the Senior Executive by the Company, and, in the case
of a Non-Employee  Director,  the Retainer paid to the Non-Employee  Director by
the Company in  connection  with his or her  service as a Director of  Providian
Financial  Corporation.  Compensation  also shall  include such other amounts of
wages,  earnings or benefits to which a  Participant  may be entitled to receive
from the Company that the Committee,  in accordance with Section 4.4, permits to
be deferred by such Participant under the Plan,  including (without  limitation)
incentive pay, bonuses,  commissions,  stock awards or gains attributable to the
appreciation of stock awards  (including  options),  non-recurring  payments and
similar items.

     2.10  "Deferred  Compensation"  means  the  amount of  Compensation  that a
Participant  defers pursuant to his or her Election and that the Participant and
the Company mutually agree shall be deferred in accordance with the Plan.

     2.11  "Deferred  Compensation  Account"  means  either a Cash  Account or a
Phantom  Stock Unit  Account  (or any  subaccounts  thereof)  maintained  by the
Company  on its books  for a  Participant  and to which  shall be  credited  the
Participant's  Deferred  Compensation,  together with interest or other gains or
losses   determined  under  Section  5,  and  which  shall  be  reduced  by  any
distributions  made to a  Participant.  The Company,  at the  discretion  of the
Committee,   may  establish  such  other  Deferred   Compensation  Accounts  (or
subaccounts) or discontinue any Deferred  Compensation Accounts (or subaccounts)
as it determines to be appropriate from time to time.

     2.12 "Effective Date" means June 11, 1997.

     2.13 "Election" means the election of a Participant to defer  Compensation,
which shall be made on such form or forms as the Company may prescribe from time
to time.

     2.14 "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended.

     2.15 "Fiscal Year" means the fiscal year of the Company, which currently is
the calendar year.

     2.16 "Incentive Plan" means the Providian Financial Corporation  Management
Incentive Plan.

     2.17  "Incentive  Award"  means  a  cash  amount  payable  pursuant  to the
Incentive Plan upon the achievement of pre-established performance objectives.

     2.18  "Market  Value"  means the  average of the daily high and low trading
prices of a share of Stock on the New York Stock  Exchange  ("NYSE") on the date
upon which such Market Value is to be determined  for the purpose of crediting a
Participant's  Phantom  Stock  Unit  Account  or  making  a  distribution  to  a
Participant therefrom.

     2.19  "Non-Employee  Director"  means  a  member  of the  Board  who is not
currently an employee or officer of the Company.

     2.20 "Participant"  means any Senior Executive selected by the Committee to
participate in the Plan and each Non-Employee Director.

     2.21 "Phantom Stock Unit Account" means a Deferred Compensation Account (or
subaccount)  pursuant to which a Participant's  Deferred  Compensation  shall be
treated as if it had been used to purchase shares of Stock of the Company on the
date on  which  the  Participant's  Deferred  Compensation  is  credited  to the
Participant's Deferred Compensation Account.

     2.22 "Plan" means this Deferred Compensation Plan for Senior Executives and
Directors.

     2.23 "Plan Year" means the calendar year.

     2.24 "Retainer"  means the annual fees paid to a Non-Employee  Director for
his or her service as a Director,  which shall include any fees paid for service
on a committee of the Board or as chair thereof and meeting  attendance fees (if
any), but shall exclude  expense  reimbursements  and any  remuneration or other
payments  paid to the  Non-Employee  Director  for  services or otherwise in any
capacity other than as a Non-Employee Director.

     2.25  "Retirement  Age" means  attainment by a Participant  of the first to
occur of (i) normal  retirement age specified in the Company's  retirement plan,
(ii) age  sixty-five  (65),  or (iii)  age  fifty-five  (55) (or  older)  having
completed at least ten (10) years of Active Service.

     2.26  "Salary"  means  the base  salary  of a  Participant  who is a Senior
Executive.

     2.27  "Senior  Executive"  means an officer or other key  employee who is a
top-level executive of the Company, as determined by the Committee.

     2.28  "Stock"  shall mean common  stock,  par value $.01 per share,  of the
Company.

     2.29  "Unforeseeable   Hardship"  means  severe  financial  hardship  to  a
Participant  resulting from a sudden and  unexpected  illness or accident of the
Participant or a dependent (as defined in Section 152(a) of the Internal Revenue
Code) of the Participant, loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable  circumstances arising as a result
of events beyond the control of the Participant.

3.       Participation in the Plan

     3.1  Eligibility  for  participation  in the Plan  shall be  limited to (1)
Senior  Executives  who are members of a select  group of  management  or highly
compensated employees of the Company, within the meaning of Section 401(a)(1) of
ERISA, and (2) Non-Employee Directors.

     3.2 The total number of Senior  Executives  selected to  participate in the
Plan shall be determined by the Committee.

4.       Deferred Compensation Elections

     4.1 Deferrals of Salary.

          (a) A Senior  Executive who makes an Election in accordance  with this
     Section 4.1 may elect to defer receipt of up to seventy-five  percent (75%)
     of his or her Salary or such lesser  amount  determined by the Company from
     time to time  and  communicated  to  Senior  Executives.  The  Company  may
     establish  a  reasonable  minimum  as to the  amount of Salary  that may be
     deferred hereunder and may also require that deferrals be made in specified
     dollar or  percentage  increments,  which shall be  communicated  to Senior
     Executives  from time to time. The amount of Salary  deferred also shall be
     subject to the provisions of Section 4.6.

          (b) Each Senior Executive who immediately  prior to the Effective Date
     has an election in effect with  respect to the deferral of Salary under the
     Predecessor Plan (a "Predecessor  Election") shall  automatically  begin to
     participate  in the Plan on the Effective  Date and shall be deemed to have
     made an Election under the Plan to defer the amount of Salary  specified in
     the Predecessor  Election.  Each other Senior  Executive who is eligible to
     participate  on the Effective  Date may begin to participate in the Plan as
     of July 1, 1997, with respect to Salary for services performed on and after
     that date, provided that such Senior Executive completes and returns to the
     Company  within 30 days after the  Effective  Date an executed  Election to
     defer a portion of such  Salary in  accordance  with the Plan.  Each Senior
     Executive who first  becomes  eligible  after the Effective  Date may begin
     deferring  Salary under the Plan with respect to services  performed on and
     after  the  first  day of the month  next  following  the date such  Senior
     Executive  completes  and  returns an  executed  Election  to the  Company,
     provided  that such Election is made within 30 days after the date that the
     Senior  Executive is notified of his or her  eligibility  to participate in
     the Plan.

          (c) A Senior  Executive  who has not made an Election as  described in
     Section  4.1(b)  may  begin  deferring  Salary  with  respect  to  services
     performed  on and after the  beginning of any Plan Year by  completing  and
     returning  an executed  Election to the Company  prior to the  beginning of
     such  Plan  Year (or such  earlier  date  established  by the  Company  and
     announced to the Senior Executive).

          (d) After the beginning of a Plan Year, a Senior Executive's  Election
     shall be irrevocable  with respect to Salary payable for such Plan Year. An
     Election to defer Salary shall continue in effect for each  subsequent Plan
     Year until changed or revoked by the Senior Executive,  as provided in this
     Section 4.1(d), unless otherwise determined by the Company and announced to
     the Senior  Executive.  A Senior  Executive may change the amount of his or
     her Salary to be deferred or may cease  deferring  Salary,  by completing a
     new  Election  or  revoking  his or her  Election,  provided  that  the new
     Election or the  revocation  shall become  effective as of the beginning of
     the next Plan  Year.  A Senior  Executive  who  previously  has  revoked an
     Election  to defer all or a part of his or her  Salary  may again  elect to
     defer Salary  under the terms of the Plan by  completing  and  returning an
     executed  Election to the Company  prior to the  beginning of the Plan Year
     (or such  earlier  date  established  by the Company and  announced  to the
     Senior Executive) to which such Election applies.

     4.2 Deferral of Retainer.

          (a) Prior to the  beginning  of each Board  Cycle,  each  Non-Employee
     Director may elect to defer from  twenty-five  percent (25%) to one hundred
     percent  (100%) of the cash  portion of his or her  Retainer  payable  with
     respect to such Board Cycle.  The amount of Retainer  deferred  shall be an
     increment of five percent  (5%) and shall be subject to the  provisions  of
     Section  4.6.  In  order  to defer  all or part of his or her  Retainer,  a
     Non-Employee  Director must complete and return an executed Election to the
     Company  prior to the time  announced  by the  Company,  which in any event
     shall be prior to the  beginning of the Board Cycle to which such  Election
     relates.

          (b) A  Non-Employee  Director's  Election to defer a portion of his or
     her  Retainer  for a Board  Cycle shall apply only for such Board Cycle and
     shall be  irrevocable.  In order to defer a portion of his or her  Retainer
     for a  subsequent  Board Cycle,  a  Non-Employee  Director  must make a new
     Election in accordance with Section 4.2(a).

          (c) At the  time  of  making  an  election  under  Section  4.2(a),  a
     Non-Employee  Director  also may elect to have an  amount of such  Deferred
     Compensation credited as Nonrestricted Units (as defined in Section 5.5) to
     a Phantom  Stock Unit Account as provided in Section 5.9. The Company shall
     credit matching Restricted Units (as defined in Section 5.5) to the Phantom
     Stock  Unit  Account  of  each  Non-Employee  Director  who  makes  such an
     election, pursuant to Section 5.9.

     4.3 Deferral of Incentive Awards.

          (a) Prior to the beginning of each Fiscal Year,  each  Participant who
     is a Senior Executive may elect to defer from twenty-five  percent (25%) to
     one  hundred  percent  (100%) of the cash  portion of his or her  Incentive
     Award payable with respect to such Fiscal Year pursuant to the terms of the
     Incentive  Plan.  The  amount  of  Incentive  Award  deferred  shall  be an
     increment of five percent  (5%) and shall be subject to the  provisions  of
     Section  4.6.  In order to defer all or part of the cash  portion of his or
     her  Incentive  Award,  a Senior  Executive  must  complete  and  return an
     executed  Election  to the  Company  prior  to the  time  announced  by the
     Company,  which in any event shall be prior to the  beginning of the Fiscal
     Year to which such Election relates.

          (b) A Senior  Executive's  Election  to defer a portion  of his or her
     Incentive Award for a Fiscal Year shall apply only for such Fiscal Year and
     shall be  irrevocable.  In order to defer a portion of his or her Incentive
     Award for a  subsequent  Fiscal Year,  a Senior  Executive  must make a new
     Election in accordance with Section 4.3(a).

     4.4 Deferral of Other Compensation Amounts.

          (a) From time to time,  as  determined  by the  Committee  in its sole
     discretion,  a  Participant  may be  permitted  to defer  receipt  of other
     amounts of Compensation  (e.g., gains in stock option value attributable to
     appreciation  of the Company's  common stock) and be credited with Deferred
     Compensation hereunder in lieu of receiving such Compensation. The form and
     amount or portion of any Deferred  Compensation  that may be credited under
     this Section 4.4 shall be established by the Committee and  communicated to
     Participants determined by the Committee to be eligible therefor.

          (b) An Election to defer Compensation under this Section 4.4, shall be
     made  at  such  time  prior  to  an  eligible   Participant's   receipt  or
     constructive  receive  thereof  as  the  Committee  determines,   and  such
     Election,  once made,  shall be irrevocable.  The Committee shall determine
     the  Deferred  Compensation  Account  or  Accounts  to  which  Compensation
     deferred  under this Section 4.4 shall be credited and may establish  other
     rules and  procedures for the deferral of  Compensation  under this Section
     4.4.

     4.5 The Company may establish rules and  procedures,  and from time to time
modify or change such rules and procedures, governing the manner of Elections of
Deferred  Compensation  under the Plan, as it may  determine in its  discretion,
including (but not limited to)  establishing and changing any minimum or maximum
amounts of Compensation that may be deferred hereunder.

     4.6 All  Deferred  Compensation  shall be withheld  and  deducted  from the
Participant's  Salary,  Retainer,  Incentive Award or other Compensation (as the
case may be) without  reduction for any income taxes or  withholding  (except to
the extent  required by law) and shall be credited to the  appropriate  Deferred
Compensation Accounts for the Participant as provided below. Notwithstanding the
foregoing,  the  Company  may  reduce  the amount  credited  to a  Participant's
Deferred  Compensation  Accounts  by any amounts  which the Company  must pay to
satisfy its  withholding  obligations  for employment or other taxes  (including
FICA),  amounts  authorized by a Participant  to purchase  benefits  under other
employee benefit plans sponsored by the Company,  or any other amounts which the
Company is obligated to withhold by law or which the  Participant has authorized
to be withheld from his or her Compensation.

5.       Deferred Compensation Accounts

     5.1 The Company shall establish one or more Deferred  Compensation Accounts
(which shall  include any  subaccounts  established  under Section  2.11),  with
respect  to  Deferred  Compensation  under the  Plan,  for each  Participant  in
accordance with the instructions provided by such Participant. The establishment
of such Deferred Compensation Accounts constitutes only a method, by bookkeeping
entry, of determining the amount of deferred payments to be made under the Plan.
The  Company  shall be under no  obligation  to acquire or hold any Stock or any
other  securities  or  specific  assets  by reason  of the  credits  made to the
Deferred Compensation Accounts hereunder.

     5.2 A Participant's or Beneficiary's  rights to receive payments under this
Plan are merely those of an  unsecured  general  creditor of the  Company.  Such
rights constitute a mere promise by the Company to make payments to Participants
and their  Beneficiaries in the future. All amounts under the Plan,  including a
Participant's  Deferred Compensation  Accounts,  shall remain (until paid to the
Participant or Beneficiary)  the property of the Company and shall be subject to
the claims of the Company's  creditors in the event of the  Company's  financial
insolvency. The Plan shall be unfunded for federal tax purposes and for purposes
of Title I of ERISA.  The obligation of the Company may, in its sole discretion,
be satisfied from any source of funds, including but not limited to payment from
a trust or trusts  established  by the Company  which permit such payments to be
made  therefrom.  No  Participant  or  Beneficiary  shall  have any  secured  or
beneficial interest in any property,  rights or investments held by the Company,
whether or not held in  connection  with the Plan,  including but not limited to
any assets held in any trust  established by the Company in connection  with the
Plan.

     5.3 Subject to Section 5.7, a Participant's  Deferred Compensation shall be
credited  to a Cash  Account  or a Phantom  Stock  Unit  Account  (or such other
Deferred  Compensation  Account as may then be in  effect),  as  selected by the
Participant,  as soon as  practicable  following  the time at which such amounts
would have been paid to the  Participant  in the absence of an Election to defer
such amount of  Compensation,  provided that one-fourth (1/4) of the full amount
elected to be deferred from a Non-Employee Director's Retainer for a Board Cycle
will be credited to the Deferred  Compensation  Account or Accounts  selected by
such  Non-Employee  Director on the first day of each quarter of the Board Cycle
on which Stock is traded on the NYSE,  except that no amounts  shall be credited
for any quarter of the Board Cycle that begins after the  Non-Employee  Director
has ceased  service as a  Non-Employee  Director.  For  purposes of the Plan,  a
quarter of a Board Cycle  shall be the period of three  months  commencing  each
June 1, September 1, December 1 and March 1.

     5.4  Interest on the Cash Account  balance  shall be  calculated  and shall
either be paid to the  Participant or credited to the account at the end of each
calendar  quarter in accordance with the direction of the  Participant  given at
the  time  of  his or her  Election.  In the  absence  of  directions  from  the
Participant, interest shall be credited to the Cash Account. Amounts credited to
the Cash  Account  after the first day of a calendar  quarter  shall be credited
with pro rata interest on the basis of the number of days of such quarter during
which such amounts were credited.  Distributions or withdrawals prior to the end
of a calendar  quarter  shall be credited  with  interest for the number of days
during the quarter for which such amount was credited. The interest rate for the
quarter  shall be equal to the Prime  Rate of  Interest  reported  in the "Money
Rates"  section of the Wall Street  Journal as of the beginning of such quarter,
plus two percent (2%).

     5.5 Deferred Compensation or other amounts credited to a Phantom Stock Unit
Account shall be converted  into a number of phantom stock units of Stock of the
Company.  Such phantom stock units may be credited subject to certain vesting or
forfeiture  restrictions   established  under  the  Plan  or  by  the  Committee
("Restricted  Units") or may be fully vested and nonforfeitable  ("Nonrestricted
Units") when credited. The number of phantom stock units of Stock of the Company
to be so credited shall be equal to the Deferred  Compensation  or other amounts
to be credited to the Phantom Stock Unit Account, divided by the Market Value of
a share of Stock on the date of the credit.  Permitted accretion and adjustments
shall be credited and determined as set forth below.

          (a) As of the date when any cash  dividend or other cash  distribution
     is payable  with  respect  to the Stock,  there  shall be  credited  to the
     Phantom  Stock Unit  Account an amount  equal to the value which would have
     been  payable with respect to shares of Stock equal in number to the number
     of phantom  stock units then  credited to the Phantom  Stock Unit  Account.
     Such amount  shall then be converted  into a number of phantom  stock units
     based upon the amount to be credited divided by the Market Value of a share
     of Stock on the date of the credit.  All phantom stock units credited under
     this Section 5.5(a) shall be Nonrestricted Units, without regard to whether
     the phantom stock units from which they are derived are Restricted Units or
     Nonrestricted Units.

          (b) In the event of any change in the number of shares of  outstanding
     Stock by reason of any stock split,  stock dividend,  recapitalization,  or
     the like, whereby the outstanding shares of Stock are adjusted,  the number
     of phantom stock units  credited to the Phantom Stock Unit Account shall be
     equitably adjusted to reflect such change. Any adjustments provided in this
     Section 5.5(b) with respect to Nonrestricted  Units shall be in the form of
     Nonrestricted  Units. Any adjustments  provided in this Section 5.5(b) with
     respect to Restricted Units shall be in the form of Restricted Units, which
     shall be  subject  to the  same  terms  and  conditions  applicable  to the
     original Restricted Units from which they are derived.

     5.6 The Company may change,  discontinue,  or add any Deferred Compensation
Accounts at any time as  determined  by the  Committee in the  Committee's  sole
discretion.  Any Deferred Compensation Account not specifically  described above
shall be credited with such interest,  gains or losses,  or other accretions and
adjustments,  as  determined  to be  appropriate  by the  Committee  in order to
simulate the  investment  performance of such asset,  category of assets,  fund,
index or other investment vehicle selected by the Committee in its discretion to
be applicable to such Deferred Compensation Account.

     5.7  Except  as   specifically   provided  in  the  Plan  with  respect  to
Non-Employee  Directors and notwithstanding  Section 5.3, no amounts of Deferred
Compensation  shall  be  credited  to a  Phantom  Stock  Unit  Account  for  any
Participant,  and Phantom Stock Unit Accounts  shall not be available  under the
Plan,  until such time, if any, as the Committee or the Board in its  discretion
determines that Phantom Stock Unit Accounts shall be permitted  hereunder.  With
respect to Phantom  Stock Unit Accounts  currently  provided for in the Plan for
Non-Employee  Directors and any additional  Phantom Stock Unit Accounts added to
the Plan by the  Committee  or the  Board,  such  accounts,  each  Participant's
election to have Deferred  Compensation credited to such an account, any Account
Transfers  (as defined in Section  5.8),  and any  elections  as to the time and
manner of distributions under the Plan shall be approved by the Committee or the
Board and  administered  in all respects in accordance  with the  conditions set
forth in Rule 16b-3  promulgated  under the  Exchange Act in order to obtain the
maximum  available  exemption  from  Section  16(b)  of  the  Exchange  Act  for
transactions involving Phantom Stock Unit Accounts.

     5.8 Subject to Section  5.7,  the  Committee  or the Board may,  but is not
required to, establish rules and procedures under which  Participants may direct
that  amounts  credited  to  one  or  more  Deferred  Compensation  Accounts  be
transferred to other Deferred  Compensation Accounts that may be available under
the Plan (an "Account Transfer"), provided that the following shall apply:

          (a) Effective as of June 1, 1999, a  Non-Employee  Director may at any
     time direct an Account  Transfer from his or her Phantom Stock Unit Account
     of amounts attributable to Nonrestricted Units (including any Corresponding
     Units (as defined in Section 5.9(b) below),  subject to Section  5.9(c)(1))
     to his or her Cash Account (or to any other Deferred  Compensation  Account
     then available under the Plan). Such direction must be made in writing,  be
     delivered to the person designated by the Committee and indicate the number
     of Nonrestricted  Units to be transferred.  As of the first day of the next
     succeeding  quarter of the Board Cycle on which Stock is traded on the NYSE
     following  the  Company's  receipt  of a  Non-Employee  Director's  written
     direction (the "Transfer Date"),  such number of Nonrestricted  Units shall
     be deducted from his or her Phantom Stock Unit Account,  and there shall be
     credited  to  his  or  her  Cash  Account  (or  other  applicable  Deferred
     Compensation  Account,  if any) an amount  equal to the  Market  Value of a
     share of Stock on the  Transfer  Date  multiplied  by the number of phantom
     stock units to be transferred.  No Account  Transfers may be made as to any
     Restricted Units.

          (b) In no event shall a Participant  be permitted to direct either (i)
     an Account  Transfer to the Phantom  Stock Unit  Account  within six months
     after an Account  Transfer  from such  account or (ii) an Account  Transfer
     from the  Phantom  Stock Unit  Account  within six months  after an Account
     Transfer to such account.

     5.9 Effective with the Board Cycle commencing June 1, 1999:

          (a) A  Non-Employee  Director may elect,  in  accordance  with Section
     4.2(c),  to have from  twenty-five  percent  (25%) to one  hundred  percent
     (100%) of his or her Deferred  Compensation for a Board Cycle credited to a
     Phantom Stock Unit Account,  provided that such  Non-Employee  Director has
     not elected to receive any  portion of his or her  Retainer  for such Board
     Cycle in the form of  Nonrestricted  Stock  under the  Providian  Financial
     Corporation Stock Ownership Plan.  Subject to the foregoing,  the amount of
     Deferred  Compensation that may be credited to a Phantom Stock Unit Account
     shall be an increment of five  percent  (5%) of a  Non-Employee  Director's
     Deferred  Compensation  for a Board cycle.  On each quarterly date on which
     Deferred Compensation is credited pursuant to Section 5.3, one-fourth (1/4)
     of the amount of Deferred Compensation elected to be credited to his or her
     Phantom  Stock  Unit  Account  for the Board  Cycle  shall be  credited  as
     Nonrestricted Units. The balance of Deferred  Compensation credited on such
     date under  Section  5.3,  if any,  shall be credited to one or more of the
     Non-Employee  Director's other Deferred Compensation Accounts in accordance
     with his or her selection and the terms of the Plan.

          (b) Each  Non-Employee  Director  receiving a credit of  Nonrestricted
     Units  hereunder  also shall be credited,  by the  Company,  on the date of
     credit of the  Nonrestricted  Units, a number of matching  Restricted Units
     determined by dividing one-sixteenth (1/16) of the Non-Employee  Director's
     annual   Retainer   for  the  full  Board  Cycle  with   respect  to  which
     Nonrestricted Units are credited by the Market Value of a share of Stock on
     the date of credit. Restricted Units credited hereunder and an equal number
     of Nonrestricted  Units credited on the same date  ("Corresponding  Units")
     shall be subject to the terms and  conditions  set forth in Section  5.9(c)
     until the end of the  specified  restricted  period  ("Restricted  Period")
     applicable  to such  Restricted  Units.  Restricted  Units  not  previously
     forfeited shall vest and become nonforfeitable at the end of the applicable
     Restricted Period and shall thereafter be Nonrestricted Units.

          (c) The "Vesting  Commencement Date" for Restricted Units shall be the
     first day of the Board Cycle to which a Non-Employee Director's election to
     have  Deferred  Compensation  credited  to his or her  Phantom  Stock  Unit
     Account  applies.  The  Restricted  Period for fifty  percent  (50%) of the
     Restricted Units credited to a Non-Employee  Director's  Phantom Stock Unit
     Account  on a date of  credit  shall be three (3)  years  from the  Vesting
     Commencement  Date for such Restricted Units. The Restricted Period for the
     remaining fifty percent (50%) of the Restricted Units credited on such date
     shall be six (6) years from the Vesting Commencement Date.  Notwithstanding
     the foregoing,  in the event of a Change in Control,  the Restricted Period
     as to all  Restricted  Units shall  terminate,  and any phantom stock units
     which are then  Restricted  Units shall  immediately  become  Nonrestricted
     Units.  During the applicable  Restricted  Period,  the following terms and
     conditions shall apply:

               (1) If a Non-Employee  Director  directs that an Account Transfer
          be made of any Corresponding  Units from his or her Phantom Stock Unit
          Account to another Deferred Compensation Account, then an equal number
          of  matching  Restricted  Units  credited  at the  same  time  as such
          Corresponding  Units were credited shall be forfeited,  and all rights
          of the  Non-Employee  Director to receive any benefits  under the Plan
          attributable to such forfeited  Restricted Units shall terminate.  For
          this  purpose,  Account  Transfers  from the  Non-Employee  Director's
          Phantom  Stock  Unit  Account  shall be deemed to be made  first  from
          Nonrestricted  Units that are not Corresponding  Units, if any, and an
          Account  Transfer will be made as to  Corresponding  Units only if and
          when the  remaining  Nonrestricted  Units in his or her Phantom  Stock
          Unit Account are all Corresponding Units.

               (2) If a  Non-Employee  Director  is  removed  from the Board for
          cause (as determined by the disinterested  members of the Board),  any
          phantom stock units credited to such  Non-Employee  Director which are
          still  Restricted  Units  shall be  forfeited  and all  rights  of the
          Participant  to receive any benefits  under the Plan  attributable  to
          such forfeited  Restricted  Units shall  terminate.  If a Non-Employee
          Director  ceases to be a director  for any reason other than for cause
          (as determined by the  disinterested  members of the Board),  then the
          Restricted  Period  shall  terminate  as to all  remaining  Restricted
          Units,  and any phantom  stock units which are then  Restricted  Units
          shall immediately become Nonrestricted Units.

6.       Payment of Plan Benefits

     6.1  Distribution  Elections.  Subject in all  respects to Section 5.7, the
following shall apply:

          (a) At the time of each Election, pursuant to Section 4.2, Section 4.3
     or Section  4.4,  to defer  receipt  of a portion  of his or her  Retainer,
     Incentive  Award or other form of  Compensation  for the  succeeding  Board
     Cycle,  Fiscal  Year or other  applicable  period  (as the case may be),  a
     Participant  also may make an  election,  on such form as the  Company  may
     prescribe,  as to the time and manner of  payment of the  portion of his or
     her Deferred  Compensation  Accounts attributable to the amount of Deferred
     Compensation specified in such Election.

          (b) A  Participant  also may elect the time and manner for the payment
     of the portion of his or her Deferred Compensation Accounts attributable to
     Salary  deferred under the Plan.  Such a payment  election shall be made on
     such form and at such time or times as the Company may prescribe.  Only one
     payment  election  under this Section  6.1(b) shall be in effect at any one
     time,  and such  election  shall  apply to all  amounts in a  Participant's
     Deferred Compensation Accounts attributable to deferrals of Salary.

          (c) The permitted  payment methods which a Participant may elect shall
     be a lump sum or substantially equal installments  payable over three, five
     or ten years, paid or commencing at the time specified in the Participant's
     payment election or, if earlier, following the Participant's termination of
     Active Service. Subject to Sections 6.2(a) and 6.3 below,  distributions of
     applicable  amounts  determined  under Section  6.2(c) shall be made from a
     Participant's  Deferred  Compensation  Accounts  in  accordance  with  each
     payment election of the Participant hereunder.

          (d) A Participant may change his or her payment election in accordance
     with  procedures  determined  by the  Company,  provided  that any  changed
     election shall not be effective unless the Participant  continues in Active
     Service for a period of thirteen  (13)  months  following  the time of such
     election and shall only apply after the end of such thirteen-month  period.
     If a  Participant  ceases  Active  Service prior to the end of the thirteen
     months,   then   distributions   shall  be  made  in  accordance  with  the
     Participant's prior outstanding elections in effect.

          (e) Subject to Section 5.7, no elections under this Section 6.1 may be
     made or changed as to distributions from a Participant's Phantom Stock Unit
     Account (if any), unless the Committee or the Board has approved in advance
     such  election  or  change  of  election  in a manner  that  satisfies  the
     requirements for exemption of Phantom Stock Unit Account transactions under
     Rule 16b-3 of the Exchange Act.

     6.2 Retirement or Disability.

          (a) If a  Participant's  Active  Service with the Company ceases after
     Retirement Age or by reason of long-term  disability  recognized as such by
     the Company  ("Disability"),  the amounts then credited to a  Participant's
     Deferred  Compensation  Accounts shall be paid (or payment shall  commence)
     within a reasonable  time following such event in the form of a lump sum or
     substantially  equal annual  installment  as provided in the  Participant's
     payment  elections then in effect  pursuant to Section 6.1. Any installment
     payments that remain unpaid following earlier  commencement  shall continue
     in accordance with the method in effect at such time.

          (b) Any portions of a Participant's  Deferred Compensation Accounts as
     to which no  payment  election  is in  effect  at the time a  Participant's
     Active  Service ceases after  Retirement Age or due to Disability  shall be
     paid in five substantially  equal annual  installments  commencing within a
     reasonable time following such termination of Active Service.

          (c) The amount  paid to a  Participant  pursuant  to this  Section 6.2
     shall be as follows:

               (1) For a Cash  Account,  the number of dollars equal to the Cash
          Account balance as of the date of the cessation of Active Service.

               (2) For a Phantom Stock Unit Account, the number of dollars equal
          to the number of phantom stock units in the Phantom Stock Unit Account
          of such  Participant on the date of cessation of such Active  Service,
          multiplied  by the  Market  Value  of a  share  of  Stock  immediately
          preceding the date of the cessation of such Active Service.

               (3)  If a  Participant  receives  payment  in  installments,  the
          Company shall calculate and credit interest until each payment date on
          the unpaid balance of such Participant's account at the rate specified
          in Section 5.4;  however,  if the  Participant  has elected to receive
          interest  payments as provided in Section  5.4,  such amount  shall be
          less any interest payments received.

          (d) If a  Participant  whose Active  Service  ceased due to Disability
     again  commences  Active  Service  with the Company,  installment  payments
     pursuant to this Section 6.2 shall cease. The unpaid balance of the account
     shall then be credited to a Cash Account or Phantom Stock Unit Account,  as
     elected  by the  Participant,  which  shall be  maintained  subject  to the
     provisions of the Plan as if Active  Service had never  ceased.  The amount
     credited to the Phantom Stock Unit Account shall be converted into a number
     of phantom stock units based upon the amount to be credited  divided by the
     Market  Value  of a share of Stock  immediately  preceding  the date of the
     credit.

     6.3 Early Termination of Active Service. Within a reasonable time following
the  cessation  of a  Participant's  Active  Service  with the Company  prior to
Retirement  Age for any reason other than  Disability  (including by reason of a
Participant's death), and notwithstanding any election which the Participant has
made  under the Plan  pursuant  to Section  6.1,  the  Company  will pay to such
Participant or to the Participant's Beneficiary all amounts then credited to the
Participant's  Deferred  Compensation  Accounts  (including any remaining unpaid
installments  with  respect  to  distributions  that  previously  had  commenced
pursuant to the Participant's  payment elections under Section 6.1), in the form
of a single lump sum determined in accordance with Section 6.2(c).

     6.4  Unforeseeable  Hardship.  Upon  application  by a  Participant  who is
receiving payments in the form of installments  following separation from Active
Service on account of Disability, the Committee may direct payment in a lump sum
of  all  or a  portion  of  the  remaining  amounts  credited  to  the  Deferred
Compensation  Accounts  of  such  Participant  in  the  event  of  Unforeseeable
Hardship.  Any such  application must set forth the  circumstances  constituting
such Unforeseeable  Hardship.  Notwithstanding the foregoing,  the Committee may
not direct payment of any amounts credited to the Deferred Compensation Accounts
of a  Participant  to the extent that such  Unforeseeable  Hardship is or may be
relieved (a) through  reimbursement  or  compensation by insurance or otherwise;
(b) by  liquidation  of  the  Participant's  assets,  to the  extent  that  such
liquidation  would  itself  not  cause  severe  financial  hardship;  or  (c) by
cessation of deferrals  under the Plan. Any  distribution  due to  Unforeseeable
Hardship shall only be permitted to the extent reasonably needed to satisfy such
hardship,  and shall be made in the sole discretion of the Committee,  both with
respect to the determination as to whether an Unforeseeable  Hardship exists and
as to the amount distributable. In all cases, the requirements and standards set
forth in  Section  1.457-2(h)  (4) and (5) of the Income  Tax  Regulations  will
govern the  determinations of a Participant's  eligibility for and the amount of
any distributions under this Section 6.4.

     6.5  Withholding.  All  payments  made  pursuant to this Section 6 shall be
reduced by the amount of any  federal,  state,  or local  income or other  taxes
required to be withheld by the Company or other payor.

     6.6 No Assignment or  Alienation.  The right to receive  payment under this
Plan shall not be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge,  and any attempt to anticipate,  alienate,  sell, assign,
pledge,  encumber,  or charge such right  shall be void.  No payment or right to
payment  shall in any  manner  be liable  for or  subject  to debts,  contracts,
liabilities or torts of the Participant or the Participant's Beneficiary.

     6.7 Change in Status.  Notwithstanding  the  foregoing  provisions  of this
Section  6, if a  Senior  Executive  ceases  to be a  Senior  Executive  or if a
Non-Employee  Director  ceases to be a  Non-Employee  Director  (whether  or not
cessation  of  Active  Service   occurs),   the  Committee  may  disregard  such
Participant's payment election and may cause the amount credited to his Deferred
Compensation  Accounts to be paid to the  Participant  in a lump sum;  provided,
however,  that the Participant shall have no right to receive payments under the
Plan prior to the time specified in his or her payment  election or as otherwise
determined under Sections 6.1 through 6.4.

     6.8  Certain  Further  Deferral  of  Payments.  Notwithstanding  any  other
provisions of this Plan, to the extent that any amounts payable  hereunder would
not be deductible  by the Company for federal  income tax purposes on account of
the limitations of Section 162(m) of the Internal  Revenue Code, the Company may
defer  payment of such amounts to the earliest one or more  subsequent  calendar
years in which the payment of such amounts would be deductible by the Company.

7.       Administration

     7.1 The  Committee  shall  be the sole  administrator  of the Plan and will
administer  the Plan  and  interpret,  construe  and  apply  its  provisions  in
accordance  with its terms.  The  Committee  shall further  establish,  adopt or
revise such rules and  regulations as it may deem necessary or advisable for the
administration of the Plan.  However,  no member of the Committee shall have the
right to vote or decide  upon any matter  relating  solely to himself or herself
under  the Plan or to vote in any case in which his or her  individual  right to
claim any benefit under the Plan is particularly  involved. In any case in which
a Committee  member is so disqualified to act, and the remaining  members cannot
agree,  the Board  shall  decide the matter in which he or she is  disqualified;
provided however, that if such disqualified Committee member is also a member of
the Board, he or she shall be similarly  disqualified from voting on or deciding
the matter in his or her capacity as a member of the Incumbent Board.

     7.2 Each Participant will receive quarterly  statements in such form as the
Company deems desirable  setting forth the balance standing to the credit of the
Participant's Deferred Compensation Accounts.

8.       Beneficiary Designation

     8.1 Each  Participant  shall have the right,  at any time, to designate any
person or persons  as  Beneficiary  or  Beneficiaries  (both  primary as well as
contingent)  to whom  payment  under this Plan shall be made in the event of the
Participant's  death prior to complete  distribution  to the  Participant of the
benefits due the Participant under the Plan. Each Beneficiary  designation shall
become  effective  only when  filed in  writing  with the  Committee  during the
Participant's  lifetime  on a form  prescribed  by the  Committee  with  written
acknowledgement of receipt.

     8.2 The  filing  of a new  Beneficiary  designation  form will  cancel  all
Beneficiary  designations  previously filed. The spouse of a married Participant
domiciled in a community property  jurisdiction shall join in any designation of
Beneficiary or Beneficiaries other than the spouse.

     8.3 If a Participant fails to designate a Beneficiary as provided above, or
if all  designated  Beneficiaries  predecease  the  Participant  or die prior to
complete  distribution of the Participant's  benefits,  then the Committee shall
direct the distribution of such benefits to the Participant's estate.

9.       Claims, Inquiries and Appeals

     9.1 Any  application or request for benefits,  inquiries  about the Plan or
inquiries about present or future rights under the Plan must be submitted to the
Company at:

                           Providian Financial Corporation
                           201 Mission Street
                           San Francisco, CA  94105
                           Attention:  Chief Human Resources Officer

     9.2 In the event that any application for benefits is denied in whole or in
part, the Company shall notify the applicant,  in writing,  of the denial of the
application,  and of the  applicant's  right to receive a review of such denial.
The  written  notice of  denial  will be set  forth in a manner  designed  to be
understood by the individual,  and will include specific reasons for the denial,
specific  references  to the Plan  provision  upon which the denial is based,  a
description  of any  information  or material  necessary  for the  individual to
perfect  the  claim  for  benefits  and  an  explanation  of the  Plan's  review
procedure.

     This written  notice will be given to the  individual  within 90 days after
the Company receives the application,  unless special  circumstances  require an
extension of time,  in which case,  the Company has up to an  additional 90 days
for  processing  the  application.  If an  extension of time for  processing  is
required,  written  notice of the  extension  will be furnished to the applicant
before the end of the initial 90-day period.

     This  notice  of  extension   will   describe  the  special   circumstances
necessitating the additional time and the date by which the Company is to render
its decision on the application.  If written notice of denial of the application
for benefits is not furnished  within the specified time, the application  shall
be deemed to be  denied.  The  applicant  will then be  permitted  to appeal the
denial in accordance with the review procedure described below.

     9.3 Any person (or that  person's  authorized  representative)  for whom an
application for benefits is denied (or deemed denied),  in whole or in part, may
appeal the denial by submitting a request for a review to the  Committee  within
60 days after the application is denied (or deemed  denied).  The Committee will
give the  applicant  (or his or her  representative)  an  opportunity  to review
pertinent  documents in preparing a request for a review. A request for a review
shall be in writing and shall be addressed to the Committee at:

                           Human Resources Committee
                           c/o Chief Human Resources Officer
                           Providian Financial Corporation
                           201 Mission Street
                           San Francisco, CA  94105

A request for review must set forth all of the grounds on which it is based, all
facts in support of the request and any other matters that the  applicant  feels
are  pertinent.  The Committee  may require the  applicant to submit  additional
facts,  documents or other  material as it may find  necessary or appropriate in
making its review.

     9.4 The Committee  will act on each request for review within 60 days after
receipt of the request,  unless  special  circumstances  require an extension of
time (not to exceed an  additional  60 days) for  processing  the  request for a
review. If an extension for review is required,  written notice of the extension
will be  furnished  to the  applicant  within the  initial  60-day  period.  The
Committee will give prompt, written notice of its decision to the applicant.  In
the event that the Committee confirms the denial of the application for benefits
in whole or in part,  the notice  will  outline,  in a manner  calculated  to be
understood  by the  applicant,  the  specific  Plan  provisions  upon  which the
decision is based. If written notice of the Committee's decision is not given to
the applicant  within the time  prescribed in this Section 9.4, the  application
will be deemed denied on review.

     9.5 The Committee may establish rules and  procedures,  consistent with the
Plan  and  with  ERISA,  as  necessary  and  appropriate  in  carrying  out  its
responsibilities  in reviewing  benefit  claims.  The  Committee  may require an
applicant who wishes to submit  additional  information  in  connection  with an
appeal  from  the  denial  (or  deemed  denial)  of  benefits  to do  so at  the
applicant's own expense.

     9.6 No legal  action for benefits  under the Plan may be brought  until the
claimant (i) has submitted a written application for benefits in accordance with
the  procedures  described by Section 9.1 above,  (ii) has been  notified by the
Company that the  application is denied (or the application is deemed denied due
to the Company's failure to act on it within the established time period), (iii)
has filed a written  request for a review of the  application in accordance with
the appeal procedure  described in Section 9.3 above, and (iv) has been notified
in writing that the  Committee has denied the appeal (or the appeal is deemed to
be denied due to the Committee's  failure to take any action on the claim within
the time prescribed by Section 9.4 above).

10.      Miscellaneous

     10.1  This  Plan  shall be  effective  June  11,  1997,  with  continuation
thereafter contemplated,  subject to review of its operation. However, this Plan
shall at all times remain subject to amendment,  modification  or termination by
action  of the  Committee  or the  Board;  provided,  however,  in the  event of
termination,  any amount held in a Participant's  Deferred Compensation Accounts
shall be distributed to the Participant in accordance with Section 6 hereof.

     10.2 This Plan shall not be deemed to  constitute a contract of  employment
between the Company and any Participant. Nothing contained in this Plan shall be
deemed to give any  Participant  the right to be  retained in the service of the
Company  or to  interfere  with  the  right  of the  Company  to  discharge  any
Participant at any time regardless of the effect which such discharge shall have
upon such individual as a Participant in the Plan.

     10.3 This Plan shall be  construed in  accordance  with and governed by the
laws of the  State of  California,  except  to the  extent  that  such  laws are
preempted by ERISA.

     10.4 In the  event any  provision  of this  Plan is held  invalid,  void or
unenforceable,  the same  shall  not  affect,  in any  respect  whatsoever,  the
validity of any other provisions of this Plan.

     10.5  Any  notice  of  filing  required  or  permitted  to be  given to the
Committee  under the Plan shall be sufficient if in writing and hand  delivered,
or sent by registered or certified mail, to the principal office of the Company,
directed to the attention of the chief human resources  officer for the Company.
Such notice shall be deemed given as of the date of delivery or, the postmark on
the receipt for registration or certification.

     10.6 This Plan shall be binding  upon the  Company and its  successors  and
assigns.

     10.7 In the  event  that  any  Participants  subsequently  are  found to be
ineligible  under the Plan by reason of not being  members of a select  group of
management  or highly  compensated  employees  within  the  meaning  of  Section
401(a)(1)  of ERISA,  according  to a  determination  made by the United  States
Department of Labor,  the Committee will take whatever steps it deems necessary,
in its sole  discretion,  to  equitably  protect the  interests  of the affected
Participants.