<PAGE>
 
                                                                   EXHIBIT 10.24

                              PIMCO ADVISORS L.P.

                      EXECUTIVE DEFERRED COMPENSATION PLAN


        PIMCO Advisors L.P., a Delaware limited partnership, by resolution of
its Equity Board, adopted The PIMCO Advisors L.P. Executive Deferred
Compensation Plan (the "Plan"), effective as of December 1, 1996, for the
benefit of its employees who are Eligible Participants (as defined herein) in
the Plan.  Each of the other Entities (as defined herein) has adopted the Plan
effective as of December 1, 1996 for the benefit of its employees who are
Eligible Participants in the Plan.

        The Plan is a nonqualified deferred compensation plan pursuant to which
a portion of the Compensation (as defined herein) otherwise payable to certain
eligible employees will be mandatorily deferred, and pursuant to which such
eligible employees may elect to defer additional amounts of Compensation.  The
Plan is unfunded and is maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended.

                                   ARTICLE I

                                  DEFINITIONS

Section 1.1 - General
-----------   -------

        Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meanings specified below unless the context
clearly indicates to the contrary.

Section 1.2 - Additional Contribution
-----------   -----------------------

        "Additional Contribution" shall have the meaning set forth in Section
6.2.

Section 1.3 - Base Compensation
-----------   -----------------

        "Base Compensation" of an Employee, determined on any date, shall mean
the annual rate of such Employee's salary paid by such person's Employer and
shall exclude such Employee's bonuses, commissions, incentive compensation and
other similar amounts, and shall include Base Compensation deferred under
Article III.
<PAGE>
 
Section 1.4 - Beneficiary
-----------   -----------

        "Beneficiary" shall mean a person or trust properly designated by a
Participant in the manner provided in Section 8.2 and, where appropriate, his
Spouse or heirs at law, as provided in such Section.

Section 1.5 - Benefit
-----------   -------

        "Benefit" shall mean a distribution to be made at the times and over the
applicable periods specified in Article VIII.

Section 1.6 - Bonus Compensation
-----------   ------------------

        "Bonus Compensation" of an Employee shall mean any bonus or profit
sharing payment that the Employer elects to pay to the Employee, as well as any
periodic commission compensation that the Employer elects to pay to the
Employee, and shall include Bonus Compensation deferred under Article III.

Section 1.7 - Change of Control
-----------   -----------------

        "Change of Control" shall mean  the merger or consolidation of the
Partnership into another partnership, corporation or other entity, the
acquisition by another partnership, corporation or person (excluding the
Restructuring Corporation or any employee benefit plan of the Partnership or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Partnership) of all or substantially all of the Partnership's assets or 51%
or more of the Partnership's then outstanding units, or the liquidation or
dissolution of the Partnership.

Section 1.7 - Class A Units
-----------   -------------

        "Class A Units" shall mean Class A units of limited partner interest in
the Partnership.

Section 1.8 - Code
-----------   ----

        "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

Section 1.9 - Committee
-----------   ---------

        "Committee" shall mean the committee established pursuant to Section
9.2.  The Committee shall have all duties and responsibilities under Article IX.

                                       2
<PAGE>
 
Section 1.10 - Compensation
------------   ------------

        "Compensation" of a Participant for any Plan Year shall mean the sum of
his Base Compensation and Bonus Compensation, including amounts deferred under
Article III.

Section 1.11 - Deferral Account
------------   ----------------

        The "Deferral Account" of a Participant shall mean his individual
account and all subaccounts therein, if any, in the Plan established in
accordance with Section 5.1.

Section 1.12 - Deferred Compensation
------------   ---------------------

        "Deferred Compensation" shall mean Compensation deferred by a
Participant pursuant to Article III while employed by an Entity.

Section 1.13 - Eligible Participant
------------   --------------------

        "Eligible Participant" shall mean any Employee who is eligible to
participate in the Plan during a Plan Year, as provided in Article II.

Section 1.14 - Employee
------------   --------

        "Employee" shall mean any person who renders services to an Entity in
the status of an employee as that term is defined in Code Section 3121(d).

Section 1.15 - Employer
------------   --------

        "Employer" of a Participant, determined on any date, shall mean the
Entity of which the Participant is an Employee.

Section 1.16 - Equity Holdings
------------   ---------------

        "Equity Holdings" of a Participant, determined on any date, shall mean
the aggregate Fair Market Value of all units of limited or general partnership
interest in the Partnership held directly by a Participant or in which the
Participant has a pecuniary interest (to the extent of such interest) and which
were acquired in connection with the Participant's employment with the Employer
or a predecessor thereto or an affiliate thereof, as well as the dollar amount
by which any options for any such units are in-the-money as of such
determination date.  After a Restructuring, "Equity Holdings" shall include, in
addition to the foregoing, all holdings of any successor security, as determined
by the Committee.

Section 1.17 - Entities; Entity
------------   ----------------

        (a) "Entities" shall mean the Partnership and any Investment Management
Firm or other corporation, partnership or limited liability company which
subsequently adopts the 

                                       3
<PAGE>
 
Plan as a whole or as to any one or more divisions, in accordance with Section
10.4(b), and any successor entity or company which continues the Plan under
Section 10.4(a).

        (b) "Entity" shall mean one of the Entities.

Section 1.18 - Equity Board
------------   ------------

        "Equity Board" shall mean the Equity Board of the Partnership or any
successor board established by the Partnership.

Section 1.19 - ERISA
------------   -----

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.

Section 1.20 - Fair Market Value
------------   -----------------

        The "Fair Market Value" of Class A Units shall mean the average of the
closing prices for the Class A Units for the five trading days immediately
preceding the date on which the determination is made as reported on the New
York Stock Exchange (the "NYSE") or, if such security is not listed or admitted
for trading on the NYSE, on the principal national security exchange on which
such security is listed or admitted for trading or, if not listed or admitted
for trading on any national securities exchange, on the Nasdaq National Market
or, if such security is not quoted on such National Market, the average of the
closing bid and asked prices on such days in the over-the-counter market as
reported by Nasdaq or, if bid and asked prices for such security on such day
shall not have been reported through Nasdaq, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Committee or if not
publicly traded, the fair value of the security determined reasonably and in
good faith by the Committee.  After a Restructuring, "Fair Market Value" shall
mean such price for any successor exchange-traded or Nasdaq-quoted security, as
determined by the Committee.

Section 1.21 - Installment Starting Date
------------   -------------------------

        "Installment Starting Date" shall mean the first day of the first period
for which an installment of a Benefit is payable to a Participant pursuant to
Section 8.1(a)(ii).

                                       4
<PAGE>
 
Section 1.22 - Investment Date
------------   ---------------

        "Investment Date" shall have the meaning set forth in Section 6.2.

Section 1.23 - Investment Fund
------------   ---------------

        An "Investment Fund" shall mean a mutual fund or similar investment
selected by the Trustee and consisting of short-term investment grade interest-
bearing securities.

Section 1.24 - Investment Management Firm
------------   --------------------------

        "Investment Management Firm" shall mean each of the following
subsidiaries of the Partnership:  Pacific Investment Management Company, a
Delaware general partnership, Columbus Circle Investors, a Delaware general
partnership, NFJ Investment Group, a Delaware general partnership, Parametric
Portfolio Associates, a Delaware general partnership, Cadence Capital
Management, a Delaware general partnership, and Blairlogie Capital Management, a
United Kingdom limited partnership.

Section 1.25 - Investment Management Services
------------   ------------------------------

        "Investment Management Services" shall mean any services which involve:
(i) the management, for a fee or other remuneration, of an investment account or
fund (or portions thereof or a group of investment accounts or funds), or (ii)
the giving of advice, for a fee or other remuneration, with respect to the
investment of specific assets or funds (or any specific group of assets or
funds); provided, however, that Investment Management Services shall not include
the giving of general investment advice that is not related to an identifiable
investment account or fund (or group of investment accounts or funds) for which
the advisor receives no remuneration.

Section 1.26 - Managing Director
------------   -----------------

        "Managing Director" shall mean a person who, at the time of reference,
is actively employed by an Investment Management Firm in the capacity of, and
holds the title of, Managing Director.

Section 1.27 - Operating Board
------------   ---------------

        "Operating Board" shall mean the Operating Board of the Partnership or
any successor board established by the Partnership.

Section 1.28 - Participant
------------   -----------

        "Participant" shall mean an Employee who is an Eligible Participant
during the Plan Year in question, or who was an Eligible Participant during a
prior Plan Year.

Section 1.29 - Partnership
------------   -----------

                                       5
<PAGE>
 
        "Partnership" shall mean PIMCO Advisors L.P., a Delaware limited
partnership, and all of its operating divisions.

Section 1.30 - Partnership Agreement
------------   ---------------------

        "Partnership Agreement" shall mean the Amended and Restated Agreement of
Limited Partnership of the Partnership, as the same may be amended or restated
from time to time.

Section 1.31 - Payday
------------   ------

        "Payday" shall mean the regular and recurring established day for
payment of Base Compensation to Employees.

Section 1.32 - Plan
------------   ----

        "Plan" shall mean The PIMCO Advisors L.P. Executive Deferred
Compensation Plan.

Section 1.33 - Plan Year
------------   ---------

        "Plan Year" shall mean the calendar year, and any partial year in which
the Plan is adopted.

Section 1.34 - Prohibited Competitive Activity
------------   -------------------------------

        "Prohibited Competitive Activity" shall have the meaning ascribed
thereto in Section 7.5 hereto.

Section 1.35 - Prohibited Investment Management Services
------------   -----------------------------------------

        "Prohibited Investment Management Services" shall mean any Investment
Management Services which compete with the Investment Management Services of any
Investment Management Firm or any subsidiary of an Investment Management Firm.

Section 1.36 - Rabbi Trust
------------   -----------

        "Rabbi Trust" shall mean that certain trust dated as of December 1, 1996
established by the Partnership and the other Employers for purposes of funding
payments made pursuant to the Plan, investing such payments pursuant to Article
VI and distributing Benefits to Participants and Beneficiaries pursuant to
Article VIII.

Section 1.37 - Restructuring and Restructuring Corporation
------------   -------------------------------------------

        "Restructuring" and "Restructuring Corporation" shall have the meanings
ascribed thereto in the Partnership Agreement.

                                       6
<PAGE>
 
Section 1.38 - Restructuring Corporation
------------   -------------------------

        "Restructuring Corporation" shall have the meaning ascribed thereto in
the Partnership Agreement.

Section 1.39 - Rules of the Plan
------------   -----------------

        "Rules of the Plan" shall mean rules adopted by the Committee pursuant
to Section 9.1(a)(ii), as the same may be amended or revoked from time to time.

Section 1.40 - Spouse
------------   ------

        "Spouse" of a Participant shall mean the Spouse to whom he was married
on the earlier of his Installment Starting Date or the Date of his Death;
provided, however, that, to the extent required by a qualified domestic
relations order issued in accordance with Code Section 414(p), a former Spouse
shall be treated as a Spouse.

Section 1.41 - Subsidiary Managed Funds
------------   ------------------------

        "Subsidiary Managed Funds" means, as of any date, those funds or
investments with respect to which any Investment Management Firm or any
subsidiary of an Investment Management Firm is performing any Investment
Management Services.

Section 1.42 - Termination of Employment
------------   -------------------------

        (a) "Termination of Employment" of a Participant shall mean the
Participant's resignation from or discharge by an Entity, or his disability,
death or retirement, but shall not include his transfer among the Entities.  The
Committee shall have sole discretion to determine whether a Participant shall
have "retired" for purposes of this Plan.

        (b) A leave of absence or sick leave authorized by an Entity in
accordance with established policies or a vacation period shall not constitute a
Termination of Employment; provided, however, that failure to return to work
upon expiration of any leave of absence, sick leave or vacation shall be
considered a resignation on such date as is determined by the employment rules
and policies of the Entity.

Section 1.43 - Trustee
------------   -------

        "Trustee" shall mean the trustee under the Rabbi Trust.

Section 1.44 - Vested
------------   ------

        "Vested," when used with reference to a Participant's Deferral Account
(and the subaccounts therein), shall mean nonforfeitable, except as provided in
the Plan.

                                       7
<PAGE>
 
                                   ARTICLE II

                                  ELIGIBILITY

Section 2.1 - Requirements for Participation
-----------   ------------------------------

        (a)  Any Employee whose Compensation is greater than $250,000 (or such
other dollar amount as is established by the Committee with respect to the Plan
Year in question) shall become an Eligible Participant as of the first day of
such Plan Year, and shall remain an Eligible Participant until the last day of
such Plan Year; provided, however, that:

        (i) with respect to an Employee whose Compensation (determined as
provided in (b) below) for a Plan Year is less than $1,000,000:

            (A) participation in the Plan is required if the Employee's Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value less than his or her Compensation;

            (B) participation in the Plan is optional if the Employee's Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value equal to or greater than his or her
                Compensation but less than twice his or her Compensation; and

            (C) An Employee may not participate in the Plan if his or her Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value equal to or greater than twice his or her
                Compensation;

        (ii) with respect to Employees whose Compensation (determined as
provided in (b) below) for a Plan Year is greater than or equal to $1,000,000:

            (A) participation in the Plan is required if the Employee's Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value less than twice his or her Compensation;

            (B) participation in the Plan is optional if the Employee's Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value equal to or greater than twice his or her
                Compensation but less than four times his or her Compensation;
                and

            (C) An Employee may not participate in the Plan if his or her Equity
                Holdings determined as of the first day of the Plan Year have a
                Fair Market Value equal to or greater than four times his or her
                Compensation.

        (b) For purposes of determining eligibility for participation under this
Section 2.1, Compensation shall be determined by adding the Employee's rate of
Base Compensation

                                       8
<PAGE>
 
in effect at December 1 of the year prior to the Plan Year for which the
determination is being made to the total Bonus Compensation paid or payable for
such previous year, except with respect to employees hired during the Plan Year,
for whom eligibility shall be determined by the Committee based on such
Participant's Base Compensation and expected Bonus Compensation.

        (c) New employees who meet the foregoing criteria shall become Eligible
Participants as of the first day of employment, and shall remain so until the
last day of such Plan Year.

        (d) The Committee shall have final authority with respect to any
determination regarding Participation in the Plan.

Section 2.2 - Mandatory Deferral
-----------   ------------------

        Each Eligible Participant shall have a minimum amount of his
Compensation deferred to his Deferral Account pursuant to Sections 3.1, 3.2 and
3.3.

Section 2.3 - Elective Deferral
-----------   -----------------

        In addition to Compensation mandatorily deferred pursuant to Sections
3.1, 3.2 and 3.3, each Eligible Participant may elect, in accordance with the
Rules of the Plan, to defer Compensation to his Deferral Account pursuant to
Section 3.4.

Section 2.4 - Deferral Procedure
-----------   ------------------

        (a)  No later than two weeks after the Plan is adopted, the Committee
shall provide each Employee who is an Eligible Participant for the Plan Year in
which the Plan is adopted with a Compensation deferral form on which the
Eligible Participant will provide the information set forth in Section 2.5,
including any election by the Eligible Participant to defer Compensation paid on
account of services rendered in such Plan Year pursuant to Section 3.4.  Each
Eligible Participant shall complete and sign the Compensation deferral form and
return it to the Committee no later than four weeks following the date that the
Plan is adopted.

        (b)  In the third quarter of each Plan Year following the adoption of
the Plan, the Committee shall provide each Employee who will or may be an
Eligible Participant for the ensuing Plan Year a Compensation deferral form on
which such Eligible Participant will provide the information set forth in
Section 2.5, including any election by the Participant to defer Compensation
paid for such Plan Year pursuant to Section 3.4.  Each Eligible Participant
shall complete and sign the Compensation deferral form and return it to the
Committee no later than the last day of such quarter.

                                       9
<PAGE>
 
Section 2.5 - Content of Deferral Form
-----------   ------------------------

        Each Eligible Participant shall set forth on his Compensation deferral
form:

            (a) his consent that he, his successors in interest and assigns and
    all persons claiming under him shall be bound, to the extent authorized by
    law, by the statements contained therein and by the provisions of the Plan
    as they now exist, and as they may be amended from time to time;

            (b) if applicable, the amount of his Compensation that he elects to
    defer pursuant to Section 3.4 and, in such case, his authorization to his
    Employer to reduce his Compensation in accordance with such election;

            (c) the number of years (not to be less than five, as provided in
    Section 7.2) that Compensation deferred pursuant to Article 3 is to be held
    by the Trustee;

            (d) the form of distribution upon Termination of Employment elected
    in accordance with Section 8.1;

            (e) indicate whether interest and distributions in respect of such
    Eligible Participant's Deferral Account shall be reinvested by the Trustee
    in Class A Units; and

            (f) such other information as may be required for the administration
    of the Plan.

Such Compensation deferral form shall be in the form specified by the Committee
from time to time.

                                       10
<PAGE>
 
                                  ARTICLE III

                             PARTICIPANT DEFERRALS

Section 3.1 - Mandatory Deferral of Compensation
-----------   ----------------------------------

        (a) The Committee shall determine the amount to be deferred for each
Plan Year in advance of the commencement of such year.  Initially, each Eligible
Participant shall have the following amounts of his Compensation deferred to his
Deferral Account for any Plan Year in which he is an Eligible Participant:

    (i) no less than 10% of compensation in excess of $250,000 up to $500,000;

    (ii) no less than 30% of compensation in excess of $500,000 up to
$1,000,000; and
 
    (iii) no less than 30% of all compensation in excess of $1,000,000.

        (b) Any Entity adopting this Plan may specify percentages in excess of
those set forth above; provided however, that deferral of amounts of
Compensation in excess of $1,000,000 may not exceed 50%, and in no event may
more than 40% of Compensation be deferred in the aggregate.  No amounts shall be
deferred unless the amount deferred exceeds $1,000.

Section 3.2 - Mandatory Deferrals
-----------   -------------------

        (a) Except as provided in (b) and (c) below, the amount of Compensation
to be deferred by an Eligible Participant shall be determined at the time of
each payment of Bonus Compensation, and shall be withheld from the Eligible
Participant's Bonus Compensation paycheck, as follows.  At the time of the first
payment or installment of Bonus Compensation for a Plan Year, the total amount
of the Bonus Compensation for such Plan Year for an Eligible Participant shall
be added to such Eligible Participant's Base Compensation in effect for that
Plan Year.  The deferral schedule in effect for that Plan Year shall be applied
to such amount to produce the total amount to be deferred.  That amount shall be
deferred from the Eligible Participant's Bonus Compensation payment, unless such
total Bonus Compensation is to be paid in more than one installment, in which
case an equal portion of the total amount to be deferred shall be deferred from
each such payment of the Bonus Compensation.  In the event that the Eligible
Participant's Bonus Compensation is paid in more than one installment, the
amount to be deferred shall not be recalculated or adjusted in the event of any
increase in Base Compensation later in that Plan Year.

        (b) For Eligible Participants whose Bonus Compensation consists of
commission payments, the amount to be deferred from each payment of Bonus
Compensation shall be determined by (i) applying the deferral schedule in effect
for that Plan Year to the sum of the total Base Compensation for such Plan Year
and the actual aggregate amount of commissions paid to that date in that Plan
Year and (ii) subtracting any amounts deferred from previous commission payments
made in that Plan Year.

                                       11
<PAGE>
 
        (c) For other Eligible Participants whose total Bonus Compensation
cannot be determined at the time of the first payment thereof, amounts shall be
deferred from each installment of Bonus Compensation based on (i) applying the
deferral schedule in effect for that Plan Year to the sum of the total Base
Compensation for such Plan Year and the aggregate amount of Bonus Compensation
paid to that date on account of service in such Plan Year and (ii) subtracting
any amounts deferred from previous payments of Bonus Compensation paid on
account of service in that Plan Year.

        Examples of typical deferral payments based on the initial deferral
percentages are attached to this plan as Schedule 1.

Section 3.3 - Mandatory Deferrals for the Plan Year in Which the Plan is Adopted
-----------   ------------------------------------------------------------------

        If an Employee is an Eligible Participant for the Plan Year in which the
Plan is adopted, then the amount of Compensation to be deferred pursuant to
Section 3.2 shall be reduced by multiplying the amount to be deferred by a
fraction, the numerator of which is the number of days from, and including, the
date of adoption of the Plan to, and including, December 31 of the year in which
the Plan is adopted, and the denominator of which is 365.

Section 3.4 - Elective Deferral of Compensation
-----------   ---------------------------------

        (a) Each Eligible Participant may, pursuant to Sections 2.4 and 2.5 and
in accordance with the Rules of the Plan, make an irrevocable election to defer
Compensation in excess of the amount of Compensation that is mandatorily
deferred pursuant to Sections 3.1, 3.2 and 3.3 (subject to any maximum amount
that may be established by the Committee in its discretion).  In the event that
an Eligible Participant makes such an election, the amount of Compensation
transferred by the Employer to the Trustee shall be increased accordingly.

        (b) Any election to defer Compensation pursuant to this Section 3.4
shall be made on the form described in Section 2.4, shall be irrevocable and
shall be effective for the following Plan Year (or, with respect to the Plan
Year in which the Plan is adopted, shall be effective for the portion of the
Plan Year following the month in which the election is made) and shall remain in
effect until the last day of such Plan Year, except as provided in Section 3.5.
The Committee may in its discretion impose limits on the amount of Compensation
that may be deferred under this Section 3.4.  Unless otherwise provided by the
Committee, no Eligible Participant may defer in a given Plan Year to the extent
that the amount deferred exceeds such Eligible Participant's total Compensation
less $150,000.

Section 3.5 - Discontinuance of Deferral
-----------   --------------------------

        An Eligible Participant may request a reduction or discontinuance of the
elective portion of his Compensation deferral on a form specified by the
Committee in accordance with the Rules of the Plan.  The reduction or
discontinuance shall apply only to the portion of such Eligible Participant's
Compensation that has not yet been earned.

                                       12
<PAGE>
 
                                   ARTICLE IV

                   DEFERRAL CREDITS; OBLIGATIONS OF ENTITIES

Section 4.1 - Deferral Credits
-----------   ----------------

        For each date that an Eligible Participant's Compensation is deferred
during a Plan Year, such Eligible Participant's Deferral Account shall be
credited with an amount equal to 100% of all Compensation deferred to his
Deferral Account pursuant to Sections 3.2, 3.3 and 3.4.  Each such Deferral
Account also shall be credited with its pro rata share of any Additional
Contributions made pursuant to Section 6.2.

Section 4.2 - Obligations of the Entities
-----------   ---------------------------

        (a)  Each Entity shall be obligated under Articles VIII and IX with
respect to the portion of a Participant's Deferral Account attributable to
Deferred Compensation and any amounts credited or debited to such portion of the
Participant's Deferral Account under Article VI, and shall not be obligated with
respect to any remaining portion of the Participant's Deferral Account.  In the
event that more than one Entity is obligated under Articles VIII and IX with
respect to a Participant's Deferral Account, the Participant's Deferral Account
shall include subaccounts, which shall be credited or debited with the amounts
attributable to the obligations of each such Entity.

        (b) Each Entity shall, on the date on which Compensation for an Eligible
Participant for which such Entity shall be responsible under (a) above is to be
deferred, pay or cause to be paid to the Trustee an amount equal to such
Compensation to be deferred.  In addition, on each date that under Section 6.2
Additional Contributions are to be made, each Entity shall transfer or cause to
be transferred such portion of the Additional Contribution as shall be
attributable to the Eligible Participants for which such Entity shall be
responsible.

                                       13
<PAGE>
 
                                   ARTICLE V

                                DEFERRAL ACCOUNT

Section 5.1 - Deferral Account
-----------   ----------------

        The Trustee shall establish and maintain for each Participant a Deferral
Account to which shall be credited the amounts allocated thereto under Section
4.1, debited the distributions under Article VIII and credited or debited the
amounts determined under Article VI.

Section 5.2 - Assignments, etc. Prohibited
-----------   ----------------------------

        No part of the Deferral Account of a Participant shall be liable for the
debts, contracts or engagements of such Participant, his Beneficiary or
Beneficiaries or successors in interest, or be taken in execution by levy,
attachment or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any rights to alienate, anticipate, commute, pledge,
incumber or assign any Benefits or payments hereunder in any manner whatsoever
except to designate a Beneficiary or Beneficiaries as provided in Section 8.2.

                                   ARTICLE VI

                              INVESTMENT OF FUNDS

Section 6.1 - Initial Investment of Funds
-----------   ---------------------------

        Following receipt of the same from the Entities, the Trustee shall
invest amounts credited to a Participant's Deferral Account in an Investment
Fund, pending the Trustee's investment of such amounts in Class A Units pursuant
to Section 6.2.  Amounts deferred in any Plan Year and credited to a
Participant's Deferral Account will be held in a subaccount for that Participant
for that Plan Year, having deferral period, reinvestment and other
characteristics as elected by the Participant for that Plan Year as provided in
Section 2.5.

Section 6.2 - Investment in Class A Units
-----------   ---------------------------

        (a)  From time to time (each an "Investment Date"), in the discretion of
the Committee, the Trustee shall invest in Class A Units the amounts transferred
to the Trustee under Section 4.2(b), as well as any amounts held by the Trustee
for investment in Class A Units pursuant to an election by Participant to have
distributions reinvested, which theretofore had not been so invested.  Such
investment shall occur, first, by means of a "Dutch auction" held by the Trustee
for holders of unregistered Class A Units, with a stated maximum purchase price
per unit equal to 90% of the Fair Market Value of the Class A Units, as
determined on the Investment Date.  The Committee shall, in its discretion,
adopt such rules and procedures as it may deem appropriate with respect to such
actions.  To the extent that after such auction any funds remain in the Trust
uninvested in Class A Units, the Trustee shall purchase Class A Units in the
public market.

                                       14
<PAGE>
 
        (b)  In the event that the Fair Market Value of the Class A Units so
acquired by the Trustee under (a) above is less than 118% of aggregate amount of
the deferred Compensation being invested on such Investment Date, the
Partnership shall contribute or cause to be contributed to the Trustee cash or
Class A Units (an "Additional Contribution") in an amount sufficient, once any
cash has been invested in Class A Units, to cause:

            the aggregate Fair Market Value (determined as of the Investment
            Date) of the sum of the Class A Units acquired by the Trustee under
            (a) and the Class A Units acquired by the Trustee as a result of the
            Additional Contribution

    to equal 118 % of

            the aggregate amount of the deferred Compensation invested under (a)
            above.

        (c)  Each Eligible Participant's Deferral Account (or the subaccounts
therein) shall thereafter be credited with that portion of the Class A Units
acquired by the Trustee under (a) and (b) above which bears the same proportion
to the total number of Class A Units so acquired as the amount of Compensation
credited to the Eligible Participant's Deferral Account for that Plan Year bears
to the total amount of Compensation credited to all Eligible Participants'
Deferral Accounts for that Plan Year.

Section 6.3 - No Rights as Unitholders
-----------   ------------------------

        The rights of a Participant to Class A Units or any other assets
credited to his Deferral Account shall be no greater than the right of an
unsecured general creditor of the Employer, as provided in Section 10.3.

Section 6.3 - Quarterly Distributions
-----------   -----------------------

        Unless otherwise elected by the Participant with respect to Compensation
deferred in a particular Plan Year, all amounts earned on funds credited to a
Participant's Deferral Account pending purchase of Class A Units and all cash
distributions made on Class A Units credited to such Deferral Account (or the
subaccounts therein) shall be credited to the appropriate subaccount of such
Participant's Deferral Account, and paid by the Trustee to the Participant or
his or her Beneficiary quarterly, within thirty days after the distribution is
paid on the Class A Units.

                                       15
<PAGE>
 
                                  ARTICLE VII

                     VESTING OF ACCOUNTS; MINIMUM DEFERRAL
                              PERIODS; FORFEITURE

Section 7.1 - Vesting of Accounts
-----------   -------------------

        Except as provided in Sections 7.3 and 7.4, a Participant's interest in
his Deferral Account shall become Vested, with respect to deferrals made on
account of a particular Plan Year, immediately upon deferral, except for any
portion attributable to Additional Contributions under Section 6.2(b), which
shall vest on the first day of the sixth year following the Plan Year on account
of which the deferral was made or, if earlier, upon the occurrence of a Change
of Control or the death or retirement of a Participant.  In the event of a
Termination of Employment for any reason in advance of such date, all amounts
not Vested in such Participant's Deferral Account (or any subaccount therein)
shall be forfeited and any contributions or Class A Units therein returned by
the Trustee to the Partnership.

Section 7.2 - Minimum Deferral Period
-----------   -----------------------

        (a)  Except as provided in Article VIII, Compensation deferred pursuant
to Article III on account of services rendered in a Plan Year by an Eligible
Participant who is a Managing Director shall be deferred for a minimum period of
five years following such Plan Year, and Compensation deferred pursuant to
Article III on account of services rendered in a Plan Year by any other Eligible
Participant shall be deferred for a minimum period of five years following such
Plan Year.

        (b)  An Eligible Participant may elect in the Compensation deferral form
described in Sections 2.4 and 2.5 to defer Compensation for any whole number of
years extending beyond the applicable minimum period set forth in Section
7.2(a), or may specify that such Compensation is to be deferred until the
Participant's death or retirement.  In addition, but only upon a showing of an
Unforeseen Emergency to the Committee's satisfaction, a Participant may request
(i) a reduction of such deferral period or, if such reduction is not sufficient,
(ii) a withdrawal from such Participant's deferral account on a form specified
by the Partnership.  For purposes of this Plan, an "Unforeseen Emergency" shall
be defined as a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependent
of the Participant, the 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.  Reduction of the deferral
period or deferral account withdrawals may only be granted by the Committee in
cases to the extent that the Participant's hardship may not be relieved (i)
through reimbursement or compensation by insurance or otherwise, (ii) by
liquidation of the Participant's assets, to the extent that liquidation of such
assets would not itself cause severe financial hardship, or (iii) by cessation
of deferrals under the Plan.  Examples of what are not considered to be
Unforeseen Emergencies include the need to send a Participant's child to college
or the desire to purchase a home.  Reductions in deferral periods or account
withdrawals may only be made to the extent reasonably necessary to satisfy the
emergency need.

                                       16
<PAGE>
 
Section 7.3 - Forfeiture Upon Certain Events
-----------   ------------------------------

        Upon a Participant's Termination of Employment, all Compensation, Class
A Units or other investments credited to the Participant's Deferral Account
hereunder shall continue to be held by the Trustee until the expiration of the
deferral periods prescribed by this Article VII; provided, however, that all
Compensation, Class A Units or other investments credited to such Participant's
Deferral Account hereunder (other than such amounts attributable to elective
deferrals pursuant to Section 3.4) shall be forfeited, and shall be transferred
and paid by the Trustee to the Participant's Employer, in the event that the
Committee determines that such forfeiture is merited because such Participant
has engaged in gross misconduct, including fraud, theft, serious violations of
federal or state securities laws or regulations, or willful and persistent
violation of the Partnership's or any Employer's policies established for the
purpose of compliance with federal or state securities laws.

Section 7.4 - Forfeiture Upon Competition
-----------   ---------------------------

        If so specified by an Entity adopting this Plan, in the event that a
Managing Director of such an Entity engages in any Prohibited Competition
Activity subsequent to his Termination of Employment, all Compensation, Class A
Units or other investments credited to such Managing Director's Deferral Account
hereunder, to the extent attributable to Compensation in excess of $1,000,000
and other than amounts attributable to elective deferrals pursuant to Section
3.4, shall thereafter be forfeited, and shall be transferred and paid by the
Trustee to the Managing Director's Employer.

Section 7.5 - Prohibited Competition Activity
-----------   -------------------------------

        (a) "Prohibited Competition Activity" means any of the following
activities:

          (i) Directly or indirectly, for or on behalf of any person, firm,
corporation or other entity (other than an Investment Management Firm or any
subsidiary of an Investment Management Firm), (A) diverting or taking away any
Subsidiary Managed Funds, or (B) soliciting any person or entity for the purpose
of diverting or taking away any such Subsidiary Managed Funds.

          (ii) Directly or indirectly, for or on behalf of any person, firm,
corporation or other entity (other than an Investment Management Firm or any
subsidiary of an Investment Management Firm), performing any Prohibited
Investment Management Services.  In the event that a Managing Director desires
to perform Investment Management Services which he believes will not constitute
Prohibited Investment Management Services, the Managing Director may, prior to
his commencing the performance of such Investment Management Services, request
the Partnership to make a determination as to whether the proposed Investment
Management Services constitute Prohibited Investment Management Services.  Any
such request shall be made in writing and shall contain all information
concerning the proposed Investment Management Services which the Managing
Director reasonably believes to be material to the determination to be made.  In
addition, the

                                       17
<PAGE>
 
Managing Director shall submit such other information as may be reasonably
requested by the Partnership.

          (iii) Directly or indirectly, soliciting or encouraging any employee
of the Partnership or any affiliate to leave such employment or directly or
indirectly employing or causing to be employed any such employee.

        (b) For purposes of this Section 7.5, the Managing Director shall be
deemed to be indirectly engaged in an activity described in Section 7.5(a)(i) or
7.5(a)(ii) if such activity is carried out or effected by or through another
party that is acting at the direction of, or in conjunction with, the Managing
Director.

        (c) No activity shall be considered to constitute Prohibited Competition
Activity if the involvement of the Managing Director in such activity has been
approved, prior to the time that the Managing Director becomes involved in such
activity, by a majority vote of the Qualified Members of the Operating Board and
a majority vote of the Qualified Members of the Equity Board.  The determination
by a majority vote of the Qualified Members of the Operating Board and a
majority vote of the Qualified Members of the Equity Board to grant or withhold
approval for the Managing Director to be involved in any activity that would
otherwise constitute Prohibited Competition Activity shall be final and shall be
binding on the parties.  For such purposes, "Qualified Members" mean those
members of the Operating Board or the Equity Board, as the case may be, other
than the Managing Director or any other member who will be involved in the
proposed activity for which the approval is being sought.

        (d) In the event that the Operating Board, by a majority vote of its
Qualified Members, determines that a Managing Director has engaged in any
activity (the "Disputed Activity") which constitutes the performance of
Prohibited Competition Activity, then the Partnership may provide written notice
(the "Disputed Activity Notice") to the Managing Director of its determination
that such Disputed Activity constitutes the performance of Prohibited
Competition Activity.  Such Disputed Activity Notice shall explain, in
reasonable detail, the nature of the Disputed Activity and the reasons why the
Operating Board believes such Disputed Activity constitutes the performance of
Prohibited Competition Activity.  During the thirty-day period immediately
following the effective date of the Disputed Activity Notice, the Managing
Director shall be entitled to take such remedial action as may be necessary to
cure and eliminate, in all material respects, the performance of the asserted
Prohibited Competition Activity, and any such cure or elimination effected
within such thirty-day period shall cause the Disputed Activity which was the
subject of the Disputed Activity Notice to be deemed not to have constituted the
performance of Prohibited Competition Activity.

                                       18
<PAGE>
 
                                  ARTICLE VIII

                        PAYMENT OF BENEFITS; DESIGNATION
                                OF BENEFICIARIES

Section 8.1 - Payment of Benefits
-----------   -------------------

        (a) At the expiration of the deferral period applicable to Compensation
of a Participant that is deferred for a particular Plan Year (as determined in
accordance with Article VII), the Trustee shall, subject to Section 10.5,
transfer to the Participant the number of Class A Units credited to the
appropriate subaccount of his or her Deferral Account pursuant to Section 6.2,
less any amounts required to be withheld by law, in one of the following
methods, as elected by the Participant prior to such Plan Year for which the
deferral was made:

            (i) the transfer of such Class A Units in one lump sum, or

            (ii) the transfer of such Class A Units in any fixed number of
    annual or more frequent installments (not exceeding 20 years or four
    installments per year) as is designated by such Participant, the number of
    Class A Units included in each such installment to be determined by dividing
    the then current number of Class A Units to be transferred by the remaining
    number of installments to be paid;

provided, however, that if the Participant fails to make such an election prior
to such Plan Year, the applicable subaccount of his or her Deferral Account
shall be distributed as provided in paragraph (i).

        (b) If a Participant elects to receive Class A Units in one lump sum as
provided in paragraph (i) of Section 8.1(a), then the Participant shall receive
the Class A Units to be transferred not later than the date which is thirty days
after the end of the expiration of the applicable deferral period.  If a
Participant elects to receive Class A Units in installments as provided in
paragraph (ii) of Section 8.1(a), then the Participant shall receive each
installment of the Class A Units to be transferred not later than thirty days
after the end of each installment period.

Section 8.2 - Designation of Beneficiaries; Substitute Rights of Spouse or Heirs
-----------   ------------------------------------------------------------------
at Law
------

        (a) Each Participant shall have the right to designate, revoke and
redesignate one or more Beneficiaries hereunder and to direct payment of the
Benefits provided herein to his Beneficiaries who survive him and comply with
the Rules of the Plan.

        (b) Designation, revocation or redesignation must be made in writing on
a form provided by the Committee (or its delegate) and becomes effective upon
delivery to the Committee (or its delegate).

                                       19
<PAGE>
 
        (c) If a Participant who has designated a Beneficiary or Beneficiaries
dies, and the Beneficiary or Beneficiaries does not survive the Participant (or
does not survive to the date of any distribution under Section 8.1) or fails to
comply with the Rules of the Plan, the amount otherwise payable to such
Beneficiary or Beneficiaries shall be paid in the manner provided under Section
8.1 to his surviving spouse, if any, and otherwise to his heirs at law, as
determined under the law of the state in which he resided on the day he died
governing succession to personal property.

Section 8.3 - Benefits Upon Death of a Participant
-----------   ------------------------------------

        (a) Upon the death of a Participant, and subject to Section 10.5, any
Class A Units and/or Compensation credited to the Participant's Deferral
Account, less any amounts required to be withheld by law, shall be distributed
by the Trustee in one lump sum to such Participant's Beneficiary or
Beneficiaries, notwithstanding the deferral periods set forth in Article VII.

        (b) Such payment shall be made not later than sixty days after the end
of the calendar quarter in which the Participant's death occurs.


                                   ARTICLE IX

                           ADMINISTRATIVE PROVISIONS

Section 9.1 - Duties and Powers of the Committee
-----------   ----------------------------------

        (a)  The Committee shall administer the Plan in accordance with the Plan
and ERISA and shall have full discretionary power and authority:

            (i) to engage actuaries, attorneys, accountants, appraisers,
    brokers, consultants, administrators, physicians or other firms or persons
    and (with its officers, directors and employees) to rely upon the reports,
    advice, opinions or valuations of any such persons except as required by
    law;

            (ii) to adopt Rules of the Plan that are not inconsistent with the
    Plan or applicable law and to amend or revoke any such rules;

            (iii)  to determine the deferral amounts under Section 3.1;

            (iv) to construe the Plan and the Rules of the Plan;

            (v) to determine questions of eligibility and forfeiture;

            (vi) to determine entitlement to a Benefit and to distributions to
    Participants, Beneficiaries, and all other persons;

                                       20
<PAGE>
 
            (vii)  to make findings of fact as necessary to make any
    determinations and decisions in the exercise of such discretionary power and
    authority;

            (viii)  to appoint claims and review officials to conduct claims
    procedures as provided in Section 9.11; and

            (ix) to delegate any duty, power or responsibility to the Trustee,
    to any firm or person engaged under paragraph (i) or to any other person or
    persons.

        (b) Every finding, decision, and determination made by the Committee (or
its delegate) shall, to the full extent permitted by law, be final and binding
upon all parties, except to the extent found by a court of competent
jurisdiction to constitute an abuse of discretion.

Section 9.2 - Committee
-----------   ---------

        (a) Unless otherwise provided by the Equity Board, the Committee shall
be composed of the members of the Partnership's Unit Incentive Committee.

        (b) The Committee shall have such powers, duties and responsibilities as
are delegated to it by the Equity Board.  The Equity Board may amend, modify or
terminate the delegation of powers, duties and responsibilities to the Committee
from time to time.  Any power, duty or responsibility no longer delegated to the
Committee shall become a power, duty or responsibility of the Equity Board, and
may be delegated by the Equity Board to such person or persons as the Equity
Board determines appropriate.  Committee members shall not receive payment for
their services as such.

        (c) Appointment of Committee members shall be effective upon filing of
written acceptance of appointment with the Equity Board.  A Committee member may
resign at any time by delivery of written notice to the Equity Board.

        (d) Vacancies in the Committee shall be filled in accordance with
subsection (a).

        (e) The Committee shall act by a majority of its members in office,
either by meeting or by a written instrument executed by a majority of the
Committee members.  The Committee may, by a written instrument executed by all
of the Committee members then in office, authorize one of its members to execute
any instrument required to be executed by the Committee.

        (f) The Chairperson of the Committee shall appoint a Secretary to keep
the minutes of its meetings.

                                       21
<PAGE>
 
        (g) The Committee may delegate authority over day-to-day operations of
the Plan to an administrative committee composed of officers of the Partnership.

Section 9.3 - Limitations upon Powers of the Committee
-----------   ----------------------------------------

        The Plan shall be uniformly and consistently interpreted and applied
with regard to all Participants in similar circumstances.  The Plan shall be
administered, interpreted and applied fairly and equitably and in accordance
with the specified purposes of the Plan.

Section 9.4 - Compensation and Indemnification of Committee; Expenses of
-----------   ----------------------------------------------------------
Administration
--------------

        (a) The Partnership shall pay or reimburse the Chief Executive Officer
of the Partnership (and his delegates), each other Committee member and each
Employee functioning under Section 9.1(a)(viii) for all expenses (including
reasonable attorneys' fees) properly incurred by them in the administration of
the Plan.

        (b) The Partnership shall indemnify and hold each such Employee and
Committee member harmless from all claims, liabilities and costs (including
reasonable attorneys' fees) arising out of the good faith performance of his
functions hereunder.

        (c) The Entities may obtain and provide for any Employee and Committee
member, at the expense of the Entities, liability insurance against liabilities
imposed on him by law.

        (d) Legal fees incurred in the preparation and amendment of documents
shall be paid by the Partnership.

        (e) Except as provided in subsection (a), fees and expenses of persons
rendering services to the Plan shall not be paid or reimbursed by the Entities,
except as agreed upon by the Entities.

Section 9.5 - Effect of Committee Action
-----------   --------------------------

        Except as provided in Section 9.3, all actions taken and all
determinations made by the Committee (or its delegate) in good faith shall be
final and binding upon all Participants, their Beneficiaries and any other
person.

Section 9.6 - Recordkeeping
-----------   -------------

        (a) The Trustee shall maintain suitable records of each Participant's
Deferral Accounts (and the subaccounts therein), and the Committee shall
maintain suitable records of its deliberations and decisions.

        (b) The Committee shall appoint a secretary, and at its discretion, an
assistant secretary, to keep the record of proceedings, to transmit its
decisions, instructions, consents or directions to any interested party, to
execute and file, on behalf of the Committee, such

                                       22
<PAGE>
 
documents, reports or other matters as may be necessary or appropriate under
ERISA and to perform ministerial acts.

        (c) The Committee shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Entities.

Section 9.7 - Statement to Participants
-----------   -------------------------

        Within sixty days after the last day of each calendar quarter of the
Plan Year, the Trustee shall furnish to each Participant a statement setting
forth the value of his Deferral Account and such other information as the
Committee shall instruct the Trustee to furnish.

Section 9.8 - Inspection of Records
-----------   ---------------------

        Copies of the Plan and the records of a Participant's Deferral Account
(and the subaccounts therein) shall be open to inspection by him or his duly
authorized representatives at the office of the Partnership at any reasonable
business hour.

Section 9.9 - Identification of Fiduciaries
-----------   -----------------------------

        (a) The Committee shall be the named fiduciary of the Plan and, as
permitted or required by law, shall have exclusive authority and discretion to
operate and administer the Plan.

        (b) The named fiduciary, the Trustee, the Equity Board, the Entities,
and every person who exercises any discretionary authority or discretionary
control respecting the Plan or who has any discretionary authority or
discretionary responsibility in the administration of the Plan, including any
person designated by the named fiduciary to carry out fiduciary responsibilities
under the Plan, shall be a fiduciary and as such shall be subject to provisions
of ERISA and other applicable laws governing fiduciaries.

Section 9.10 - Procedure for Allocation of Administrative Responsibilities
------------   -----------------------------------------------------------

        (a) Administrative responsibilities under the Plan shall be allocated as
follows:

            (i) the sole duties, responsibilities and powers allocated to the
    Equity Board, any Entity, the Trustee, the Committee and any other person
    shall be those expressly provided in the relevant Sections of the Plan, and

            (ii) all administrative responsibilities not allocated to the Equity
    Board, the Entities, or the Trustee are allocated to the Committee, subject
    to delegation.

        (b) Administrative responsibilities under the Plan may be reallocated
among fiduciaries by amending the Plan in the manner prescribed in Section 10.9,
followed by the fiduciaries' acceptance of, or operation under, such amended
Plan.

                                       23
<PAGE>
 
Section 9.11 - Claims Procedure
------------   ----------------

        (a) Other than claims relating to whether a Managing Director has
engaged in Prohibited Competition Activity (which claims shall be governed by
Section 7.5), a claim by a Participant, Beneficiary or any other person shall be
presented to the claims official appointed by the Committee (or its delegate) in
writing within the maximum time permitted by law or under the regulations of the
Secretary of Labor or his delegate pertaining to claims procedures.

        (b) The claims official shall, within a reasonable time, consider the
claim and shall issue his determination thereon in writing.

        (c) If the claim is granted, the appropriate distribution or payment
shall be made by the Entities.

        (d) If the claim is wholly or partially denied, the claims official
shall, within 90 days (or such longer period as may be reasonably necessary),
provide the claimant with written notice of such denial, setting forth, in a
manner calculated to be understood by the claimant:

            (i) the specific reason or reasons for such denial;

            (ii) specific reference to pertinent Plan provisions on which the
    denial is based;

            (iii)  a description of any additional material or information
    necessary for the claimant to perfect the claim and an explanation of why
    such material or information is necessary; and

            (iv) an explanation of the Plan's claims review procedure.

        (e) The Committee (or its delegate) shall provide each claimant with a
reasonable opportunity to appeal the claim official's denial of a claim to a
review official (appointed by the Committee (or its delegate) in writing) for a
full and fair review.  The claimant or his duly authorized representative

            (i) may request a review upon written application to the review
    official (which shall be filed with it),

            (ii) may review pertinent documents, and

            (iii)  may submit issues and comments in writing.

        (f) The review official may establish such time limits within which a
claimant may request review of a denied claim as are reasonable in relation to
the nature of the

                                       24
<PAGE>
 
Benefit which is the subject of the claim and to other
attendant circumstances but which, in no event, shall be less than sixty days
after receipt by the claimant of written notice of denial of his claim.

        (g) The decision by the review official upon review of a claim shall be
made not later than sixty days after his receipt of the request for review,
unless special circumstances require an extension of time for processing, in
which case a decision shall be rendered as soon as possible, but no later than
120 days after receipt of such request for review.

        (h) The decision on review shall be in writing and shall include
specific reasons for the decision written in a manner calculated to be
understood by the claimant with specific references to the pertinent Plan
provisions on which the decision is based.

        (i) In considering claims under this claims procedure, the claims
official and the review official shall have fiduciary and discretionary
authority to make findings of fact and to construe the terms of the Plan and, to
the full extent permitted by law, the determination of the claims official (if
no review is properly requested) or the decision of the review official (on
review, if review has been properly requested) shall be final and binding on all
parties unless held by a court of competent jurisdiction to constitute an abuse
of discretion.

Section 9.12 - Conflicting Claims
------------   ------------------

        If the Committee is confronted with conflicting claims concerning a
Participant's Deferral Account, the Committee may interplead the claimants in an
action at law, or in an arbitration conducted in accordance with the rules of
the American Arbitration Association, as the Committee shall elect in its sole
discretion, and in either case, the attorneys' fees, expenses and costs
reasonably incurred by the Committee in such proceeding shall be paid from the
Participant's Deferral Account.

Section 9.13 - Service of Process
------------   ------------------

        The Secretary of the Partnership is hereby designated as agent of the
Plan for the service of legal process.

                                       25
<PAGE>
 
                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

Section 10.1 - Termination of the Plan
------------   -----------------------

        (a) While the Plan is intended as a permanent program, the Equity Board
shall have the right at any time to declare the Plan terminated completely as to
the Entities or as to any Entity or any division, facility or other operational
unit thereof; provided, however, that no amendment shall decrease the amount of
interest any Participant or any other person entitled to payment under the Plan
has in the Participant's Deferral Account.

        (b) Discharge or layoff of Employees of an Entity or any unit thereof
without such a declaration shall not result in a termination of the Plan.

        (c) In the event of any termination, the Committee shall continue to
maintain Participants' Deferral Accounts and payment of such Deferral Accounts
shall be made in accordance with Article VIII or as otherwise provided by the
Equity Board.

Section 10.2 - Limitation on Rights of Employees
------------   ---------------------------------

        The Plan is strictly a voluntary undertaking on the part of the Entities
and shall not constitute a contract between an Entity and any Employee with
respect to, or consideration for, or an inducement or condition of, the
employment of an Employee.  Nothing contained in the Plan shall give any
Employee the right to be retained in the service of an Entity or to interfere
with or restrict the rights of the Entities, which are hereby expressly
reserved, to discharge or retire any Employee, except as provided by law, at any
time without notice and with or without cause.  Inclusion under the Plan will
not give any Employee any right or claim to any Benefit hereunder except to the
extent such right has specifically become fixed under the terms of the Plan.
The doctrine of substantial performance shall have no application to Employees,
Participants, Beneficiaries or any other persons entitled to payments under the
Plan.  Each condition and provision, including numerical items, has been
carefully considered and constitutes the minimum limit on performance which will
give rise to the applicable right.

Section 10.3 - Unfunded Obligations of the Entities
------------   ------------------------------------

        The obligations of the Entities under the Plan shall be unfunded and
unsecured, and nothing contained herein shall be construed as providing for
assets to be segregated from the assets of the Entities for the benefit of any
Participant or any other person or persons to whom Benefits are to be paid
pursuant to the terms of the Plan.  The interest of any Participant or any other
person hereunder shall be limited to the right to receive the Benefits as set
forth herein.  To the extent that a Participant or any other person acquires a
right to receive Benefits under the Plan, such rights shall be no greater than
the right of an unsecured general creditor of the Entities.  The Plan is
intended to be "unfunded" for purposes of the Code and Title I of ERISA.

                                       26
<PAGE>
 
Section 10.4 - Consolidation or Merger; Adoption of Plan by Other Entities
------------   -----------------------------------------------------------

        (a) In the event of the consolidation or merger of an Entity with or
into any other corporation, partnership or other entity, or the sale by an
Entity of all or substantially all of its assets, the resulting successor may
continue the Plan by adopting it in a resolution of its board of directors or
agreement of its partners.  If within 90 days from the effective date of such
consolidation, merger or sale of assets, such new corporation does not adopt the
Plan, the Plan shall be terminated in accordance with Section 10.1 as to the
Entity.

        (b) Any Entity may, with the approval of the Equity Board, adopt the
Plan as a whole entity effective as of the first day of any Plan Year by
resolution of its own board of directors or agreement of its partners.  Such
Entity shall give written notice of such adoption to the Committee by its duly
authorized officers.

Section 10.5 - Restructuring
------------   -------------

        From and after a Restructuring of the Partnership (as described in the
Partnership Agreement), subject to the limits set forth below, the Trustee shall
be authorized to take such actions as the Committee may find to be appropriate
and equitable to cause the Class A Units held in all Participants' Deferral
Accounts to be exchanged or otherwise substituted for such securities as may be
received by other holders of publicly-traded Class A Units in exchange for such
units in connection with the Restructuring, including, without limitation,
transferring to the Restructuring Corporation the Class A Units held by the
Trust in exchange for shares of common stock of the Restructuring Corporation;
provided, however, that unless required to be earlier exchanged to maintain the
Partnership's status as a partnership for federal income tax purposes, the
Trustee shall retain the Class A Units held in the Trust following the
Restructuring and not exchange the same for any successor security except upon
distribution of Class A Units to Participants or their beneficiaries who are not
eligible to be "Non-public Partners" under the Partnership Agreement.  If and to
the extent Class A Units are exchanged for a successor security after the
Restructuring, as applicable all references in this Plan to "Class A Units"
shall be deemed to refer to such successor security.

Section 10.6 - Registration of Class A Units
------------   -----------------------------

        As soon as practicable following the adoption of the Plan, the
Partnership (or, after the Restructuring, the Restructuring Corporation or other
successor issuer of publicly-traded securities) shall file with the Securities
Exchange Commission a registration statement on the applicable form registering
the Class A Units purchased pursuant to Section 6.2 (or, after the
Restructuring, any securities exchanged or exchangeable for Class A Units
pursuant to Section 10.5).

Section 10.7 - Errors and Misstatements
------------   ------------------------

        In the event of any misstatement or omission of fact by a Participant to
the Committee or any clerical error resulting in payment of Benefits in an
incorrect amount, the Committee shall promptly cause the amount of future
payments to be corrected upon

                                       27
<PAGE>
 
discovery of the facts and the Entities shall pay the Participant or any other
person entitled to payment under the Plan any underpayment in cash in a lump sum
or to recoup any overpayment from future payments to the Participant or any
other person entitled to payment under the Plan in such amounts as the Committee
shall direct or to proceed against the Participant or any other person entitled
to payment under the Plan for recovery of any such overpayment.

Section 10.8 - Payment on Behalf of Minor, etc.
------------   --------------------------------

        In the event any amount becomes payable under the Plan to a minor or a
person who, in the sole judgment of the Committee is considered by reason of
physical or mental condition to be unable to give a valid receipt therefor, the
Committee may direct that such payment be made to any person found by the
Committee in its sole judgment, to have assumed the care of such minor or other
person.  Any payment made pursuant to such determination shall constitute a full
release and discharge of the Entities, the Equity Board, the Committee, the
Trustee and their officers, directors and Employees.

Section 10.9 - Amendment of Plan
------------   -----------------

        As limited by any applicable law, the Plan may be wholly or partially
amended by the Equity Board from time to time including retroactive amendments
necessary to conform to the provisions and requirements of ERISA or the Code or
regulations pursuant thereto; provided, however, that no amendment shall
decrease the amount of interest any Participant or any other person entitled to
payment under the Plan has in the Participant's Deferral Account.

Section 10.10 - Governing Law
-------------   -------------

        This Plan shall be construed, administered and governed in all respects
under and by applicable federal laws and, where state law is applicable, the
laws of the State of California.

Section 10.11 - Pronouns and Plurality
-------------   ----------------------

        The masculine pronoun shall include the feminine pronoun, and the
singular the plural where the context so indicates.

Section 10.12 - Titles
-------------   ------

        Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.

                                       28
<PAGE>
 
Section 10.13 - References
-------------   ----------

        Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.

        Executed at Newport Beach, California.

                                PIMCO Advisors, L.P.

                                By:
                                   ---------------------------------------------

                                Title:
                                      ------------------------------------------

                                       29