Document:

Exhibit 10.224

                         THE CHARLES SCHWAB CORPORATION
                            1992 STOCK INCENTIVE PLAN
           (Restated to include Amendments through September 20, 2001)

Article 1.  Introduction.

     The Plan was  adopted  by the Board of  Directors  on March 26,  1992.  The
purpose of the Plan is to promote the  long-term  success of the Company and the
creation  of  incremental  stockholder  value  by (a)  encouraging  Non-Employee
Directors and Key Employees to focus on long-range  objectives,  (b) encouraging
the  attraction and retention of  Non-Employee  Directors and Key Employees with
exceptional  qualifications  and  (c)  linking  Non-Employee  Directors  and Key
Employees  directly to  stockholder  interests.  The Plan seeks to achieve  this
purpose by providing  for Awards in the form of Restricted  Shares,  Performance
Share  Awards or  Options,  which may  constitute  incentive  stock  options  or
nonstatutory  stock  options.  The Plan shall be governed  by, and  construed in
accordance with, the laws of the State of Delaware.

Article 2.  Administration.

     2.1       The Committee. The Plan shall be  administered  by the Committee.
The Committee shall consist of two or more Non-Employee Directors,  who shall be
appointed by the Board.

     2.2       Committee Responsibilities.  The  Committee  shall select the Key
Employees  who are to  receive  Awards  under the Plan,  determine  the  amount,
vesting  requirements  and other  conditions  of such Awards,  may interpret the
Plan,  and make all other  decisions  relating to the operation of the Plan. The
Committee  may  adopt  such  rules  or  guidelines  as it deems  appropriate  to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.

Article 3.  Limitations on Awards.

     The aggregate  number of Restricted  Shares,  Performance  Share Awards and
Options  awarded  under the Plan shall not exceed  29,150,000  (including  those
shares awarded prior to the amendment of the Plan).  If any  Restricted  Shares,
Performance  Share Awards or Options are forfeited,  or if any Performance Share
Awards terminate for any other reason without the associated Common Shares being
issued, or if any Options terminate for any other reason before being exercised,
then such  Restricted  Shares,  Performance  Share Awards or Options shall again
become available for Awards under the Plan.

     Subject to the overall limit on the aggregate  shares set forth above,  the
following limitations shall apply: (a) The maximum number of Common Shares which
may be  granted  subject to an Option to any one  Participant  in any one fiscal
year shall be  2,250,000;  and (b) The maximum  number of  Restricted  Shares or
Performance  Share Awards which may be granted to any one Participant in any one
fiscal  year  shall be  900,000.  The  limitations  set  forth in the  preceding
sentence shall be subject to adjustment pursuant to Article 10; and

     The  limitations  of this  Article 3 shall each be  subject  to  adjustment
pursuant to Article  10. Any Common  Shares  issued  pursuant to the Plan may be
authorized but unissued shares or treasury shares.

Article 4. Eligibility.

     4.1       General Rule.  Key  Employees and  Non-Employee  Directors  shall
be eligible for  designation  as Participants by the Committee.

     4.2       Non-Employee Directors.  In  addition  to  any awards pursuant to
Section 4.1,  Non-Employee  Directors shall be entitled to receive the automatic
NSOs described in this Section 4.2.

     (a)  Each  Non-Employee  Director shall receive a Non-Officer  Stock Option
     covering  3,500 Common  Shares for each Award Year with respect to which he
     or she serves as a  Non-Employee  Director on the grant date  described  in
     subsection  (b) below;  provided  that the  Non-Officer  Stock Option shall
     cover 2,500 shares if the Exercise  Price  determined as of the grant date,
     is $35 or more;

     (b)  The  NSO  for a  particular  Award  Year  shall  be  granted  to  each
     Non-Employee Director as of May 15 of each Award Year, and if May 15 is not
     a  business  day,  then  the  grant  shall  be made  on and as of the  next
     succeeding business day;

     (c)  Each NSO shall be exercisable in full at all times during its term;

     (d)  The term of each NSO shall be 10  years;  provided,  however, that any
     unexercised  NSO shall expire on the earlier of the date 10 years after the
     date of grant or three (3)  months  following  the date  that the  Optionee
     ceases to be a Non-Employee Director or a Key Employee for any reason other
     than  death or  disability.  If an  Optionee  ceases  to be a  Non-Employee
     Director or Key Employee on account of death or disability, any unexercised
     NSO shall  expire  on the  earlier  of the date 10 years  after the date of
     grant or one year after the date of death or disability  of such  Director;
     and

     (e)  The  Exercise  Price  under each NSO shall be equal to the Fair Market
     Value  on the date of  grant  and  shall  be  payable  in any of the  forms
     described in Article 6.

     4.3       Ten-Percent Stockholders.  A  Key  Employee who owns more than 10
percent of the total combined  voting power of all classes of outstanding  stock
of the Company or any of its Subsidiaries shall not be eligible for the grant of
an ISO unless (a) the  Exercise  price under such ISO is at least 110 percent of
the Fair Market Value of a Common Share on the date of grant and (b) such ISO by
its terms is not exercisable after the expiration of five years from the date of
grant.

     4.4       Attribution Rules.  For  purposes  of Section 4.3, in determining
stock ownership, a Key Employee shall be deemed to own the stock owned, directly
or  indirectly,  by or for his or her brothers,  sisters,  spouse,  ancestors or
lineal  descendants.   Stock  owned,  directly  or  indirectly,   by  or  for  a
corporation,   partnership,  estate  or  trust  shall  be  deemed  to  be  owned
proportionately  by or for its stockholders,  partners or  beneficiaries.  Stock
with respect to which the Key Employee holds an option shall not be counted.

     4.5       Outstanding Stock.  For  purposes  of  Section  4.3, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the ISO to the Key Employee.  "Outstanding stock" shall not include
treasury shares or shares authorized for issuance under outstanding options held
by the Key Employee or by any other person.

     4.6       Options   Issued   To  Non-Employee  Directors  In  Lieu  of  Fee
Deferrals.  In  addition  to any  awards  pursuant  to  Sections  4.1 and 4.2, a
Non-Employee  Director  who elects to defer the  receipt of amounts  pursuant to
Section 5.1 of The Charles Schwab Corporation  Directors' Deferred  Compensation
Plan (the "Directors  Deferred  Compensation  Plan") and elects to receive stock
options in lieu of a Deferral  Account balance pursuant to Section 5.4(2) of the
Directors  Deferred  Compensation  Plan, shall be entitled to receive a grant of
NSOs  hereunder  on  the  date  the  amounts  would  have  been  payable  to the
Non-Employee  Director if the  Non-Employee  Director had not made such deferral
election.  Any NSOs issued  pursuant to this Section shall be issued pursuant to
the terms set forth in subsections (c), (d) and (e) of Section 4.2 hereof.

     4.7       Performance  Shares  Issued To Non-Employee Directors Pursuant to
Fee  Deferrals.  In addition to any awards  pursuant to Sections  4.1 and 4.2, a
Non-Employee  Director  who elects to defer the  receipt of amounts  pursuant to
Section 5.1 of The Directors'  Deferred  Compensation Plan and elects to receive
payment  in  Shares  pursuant  to  Section  5.4(1)  of  the  Directors  Deferred
Compensation  Plan,  shall be entitled to receive a grant of Performance  Shares
hereunder on the date the amounts  would have been  payable to the  Non-Employee
Director if the Non-Employee  Director had not made such deferral election.  For
purposes of this  section,  the term  Non-Employee  Director  shall also include
non-employee  directors  of  any  Subsidiary,  if  the  Committee  has  approved
participation in the Directors Deferred  Compensation Plan for such Subsidiary's
non-employee directors.

Article 5. Options.

     5.1       Stock Option Agreement.  Each  grant  of an Option under the Plan
shall be  evidenced  by a Stock  Option  Agreement  between the Optionee and the
Company.  Such Option shall be subject to all applicable terms and conditions of
the Plan,  and may be subject to any other  terms and  conditions  which are not
inconsistent  with  the Plan and  which  the  Committee  deems  appropriate  for
inclusion in a Stock  Option  Agreement.  The  provisions  of the various  Stock
Option  Agreements  entered  into  under  the Plan  need not be  identical.  The
Committee  may designate all or any part of an Option as an ISO (or, in the case
of a Key Employee who is subject to the tax laws of a foreign  jurisdiction,  as
an option  qualifying for favorable tax treatment under the laws of such foreign
jurisdiction), except for Options granted to Non-Employee Directors.

     5.2       Options Nontransferability.  No  Option  granted  under  the Plan
shall be  transferable by the Optionee other than by will or the laws of descent
and distribution. An Option may be exercised during the lifetime of the Optionee
only by him or her. No Option or interest therein may be transferred,  assigned,
pledged or hypothecated  by the Optionee during his or her lifetime,  whether by
operation of law or otherwise,  or be made subject to  execution,  attachment or
similar process.

     5.3       Number of Shares.  Each  Stock Option Agreement shall specify the
number of  Common  Shares  subject  to the  Option  and  shall  provide  for the
adjustment  of such number in  accordance  with  Article  10. Each Stock  Option
Agreement shall also specify whether the Option is an ISO or an NSO.

     5.4       Exercise Price.  Each  Stock  Option  Agreement shall specify the
Exercise  Price.  The Exercise  Price under an Option shall not be less than 100
percent of the Fair Market Value of a Common Share on the date of grant,  except
as otherwise  provided in Section 4.3.  Subject to the preceding  sentence,  the
Exercise  Price  under any Option  shall be  determined  by the  Committee.  The
Exercise Price shall be payable in accordance with Article 6.

     5.5       Exercisability  and  Term.  Each  Stock  Option  Agreement  shall
specify  the  date  when  all or any  installment  of the  Option  is to  become
exercisable.  The Stock  Option  Agreement  shall also  specify  the term of the
Option.  The term of an ISO shall in no event  exceed 10 years  from the date of
grant,  and  Section 4.3 may require a shorter  term.  Subject to the  preceding
sentence,  the Committee shall determine when all or any part of an Option is to
become  exercisable  and when  such  Option  is to  expire;  provided  that,  in
appropriate  cases,  the Company shall have the discretion to extend the term of
an Option or the time within which,  following  termination  of  employment,  an
Option may be exercised,  or to accelerate the  exercisability  of an Option.  A
Stock Option  Agreement may provide for expiration  prior to the end of its term
in the event of the  termination of the Optionee's  employment and shall provide
for the  suspension  of vesting  when an employee is on a leave of absence for a
period in excess  of six  months in  appropriate  cases,  as  determined  by the
Company;  provided  that,  except  to  the  extent  otherwise  specified  by the
Committee  at the time of grant,  (i) the  exercisability  of  Options  shall be
accelerated  in the event of the  Participant's  death or Disability and (ii) in
the case of Retirement,  the exercisability of all outstanding  Options shall be
accelerated,  other than any Options that had been  granted  within two years of
the date of the Optionee's  Retirement.  Except as provided in Section 4.2, NSOs
may also be awarded in combination with Restricted Shares, and such an Award may
provide  that the NSOs will not be  exercisable  unless the  related  Restricted
Shares are  forfeited.  In addition,  NSOs  granted  under this Section 5 may be
granted  subject to forfeiture  provisions  which provide for  forfeiture of the
Option upon the exercise of tandem awards, the terms of which are established in
other programs of the Company.

     5.6       Limitation on Amount of ISOs.  The  aggregate  fair  market value
(determined at the time the ISO is granted) of the Common Shares with respect to
which  ISOs are  exercisable  for the  first  time by the  Optionee  during  any
calendar year (under all incentive  stock option plans of the Company) shall not
exceed $100,000;  provided,  however, that all or any portion of an Option which
cannot be exercised as an ISO because of such limitation  shall be treated as an
NSO.

     5.7       Effect  of  Change  in  Control.   The  Committee  (in  its  sole
discretion) may determine,  at the time of granting an Option,  that such Option
shall become fully  exercisable  as to all Common Shares  subject to such Option
immediately preceding any Change in Control with respect to the Company.

     5.8       Restrictions on Transfer of  Common  Shares.  Any  Common  Shares
issued upon  exercise of an Option shall be subject to such  special  forfeiture
conditions,  rights of  repurchase,  rights of first refusal and other  transfer
restrictions  as the Committee may  determine.  Such  restrictions  shall be set
forth in the  applicable  Stock Option  Agreement and shall apply in addition to
any general restrictions that may apply to all holders of Common Shares.

     5.9       Authorization of Replacement Options. Concurrently with the grant
of any Option to a  Participant  (other  than NSOs  granted  pursuant to Section
4.2),  the  Committee  may  authorize  the  grant  of  Replacement  Options.  If
Replacement  Options have been  authorized  by the  Committee  with respect to a
particular  award of Options (the  "Underlying  Options"),  the Option Agreement
with  respect  to the  Underlying  Options  shall so  state,  and the  terms and
conditions of the Replacement  Options shall be provided  therein.  The grant of
any  Replacement  Options  shall be  effective  only  upon the  exercise  of the
Underlying  Options  through the use of Common Shares pursuant to Section 6.2 or
Section 6.3. The number of Replacement  Options shall equal the number of Common
Shares used to exercise the Underlying Options,  and, if the Option Agreement so
provides,  the  number of Common  Shares  used to  satisfy  any tax  withholding
requirements  incident to the exercise of the  Underlying  Options in accordance
with Section 13.2. Upon the exercise of the Underlying Options,  the Replacement
Options shall be evidenced by an amendment to the Underlying  Option  Agreement.
Notwithstanding the fact that the Underlying Option may be an ISO, a Replacement
Option is not intended to qualify as an ISO. The Exercise Price of a Replacement
Option shall be no less than the Fair Market Value of a Common Share on the date
the  grant  of the  Replacement  Option  becomes  effective.  The  term  of each
Replacement  Option  shall  be  equal to the  remaining  term of the  Underlying
Option.  No Replacement  Options shall be granted to Optionees  when  Underlying
Options  are  exercised  pursuant  to the  terms of the Plan and the  Underlying
Option  Agreement  following  termination  of  the  Optionee's  employment.  The
Committee, in its sole discretion, may establish such other terms and conditions
for Replacement Options as it deems appropriate.

     5.10      Options Granted to Non-United States Key Employees.  In  the case
of Key Employees who are subject to the tax laws of a foreign jurisdiction,  the
Company may issue Options to such Key Employees  that contain terms  required to
conform with any requirements for favorable tax treatment imposed by the laws of
such foreign  jurisdiction,  or as otherwise may be required by the laws of such
foreign  jurisdiction.  The terms of any such  Options  shall be governed by the
Plan,  subject to the terms of any Addendum to the Plan specifically  applicable
to such Options.

     5.11      Effect  of  Job  Elimination.   Notwithstanding  anything  to the
contrary  contained in the Plan or in any Stock Option  Agreement or Stock Award
Agreement  entered  into with respect to an Award  pursuant to the Plan,  in the
case of a  Participant  who is an Officer,  and who becomes  entitled to receive
payments  with  respect to a Severance  Period  pursuant  to the Charles  Schwab
Severance Pay Plan (the "Severance  Plan") on account of a Job Elimination,  the
terms  of the Plan and any  Stock  Option  Agreement  or Stock  Award  Agreement
entered  into  with  respect  to an  Award  shall be  applied  by  treating  the
Participant as if the Participant had terminated employment on the Participant's
Termination  Date.  For purposes of applying  this Section,  the terms  Officer,
Severance Period,  Termination Date, and Job Elimination shall have the meanings
set forth in the Severance Plan.

Article 6.  Payment for Option Shares.

     6.1       General Rule.  The entire Exercise  Price of Common Shares issued
upon  exercise of Options  shall be payable in cash at the time when such Common
Shares are purchased, except as follows:

     (a)  In the case of an ISO  granted  under the Plan,  payment shall be made
     only  pursuant to the express  provisions  of the  applicable  Stock Option
     Agreement. However, the Committee may specify in the Stock Option Agreement
     that payment may be made pursuant to Section 6.2 or 6.3.

     (b)  In the case of an NSO, the  Committee  may at any time accept  payment
     pursuant to Section 6.2 or 6.3.

     6.2       Surrender of Stock.  To  the  extent  that  this  Section  6.2 is
applicable,  payment for all or any part of the Exercise  Price may be made with
Common Shares which are surrendered to the Company.  Such Common Shares shall be
valued at their Fair  Market  Value on the date when the new  Common  Shares are
purchased under the Plan. In the event that the Common Shares being  surrendered
are  Restricted  Shares that have not yet become vested,  the same  restrictions
shall be imposed upon the new Common Shares being purchased.

     6.3       Exercise/Sale.  To  the  extent  this  Section 6.3 is applicable,
payment may be made by the delivery (on a form  prescribed by the Company) of an
irrevocable  direction  to Charles  Schwab & Co.,  Inc.  to sell  Common  Shares
(including  the Common  Shares to be issued upon exercise of the Options) and to
deliver  all or part of the sales  proceeds  to the Company in payment of all or
part of the Exercise Price and any withholding taxes.

Article 7.  Restricted Shares and Performance Share Awards.

     7.1       Time,  Amount  and  Form  of  Awards.  The  Committee  may  grant
Restricted  Shares or  Performance  Share  Awards with  respect to an Award Year
during  such Award  Year or at any time  thereafter.  Each such  Award  shall be
evidenced  by a Stock  Award  Agreement  between  the  Award  recipient  and the
Company.  The amount of each Award of  Restricted  Shares or  Performance  Share
Awards  shall be  determined  by the  Committee.  Awards  under  the Plan may be
granted in the form of Restricted  Shares or Performance  Share Awards or in any
combination  thereof, as the Committee shall determine at its sole discretion at
the time of the grant. Restricted Shares or Performance Share Awards may also be
awarded  in  combination  with  NSOs,  and such an Award  may  provide  that the
Restricted  Shares or  Performance  Share  Awards will be forfeited in the event
that the related NSOs are exercised.

     7.2       Payment for Restricted Share Awards.  To the extent that an Award
is granted in the form of Restricted Shares, the Award recipient, as a condition
to the grant of such  Award,  shall be  required  to pay the  Company in cash an
amount equal to the par value of such Restricted Shares.

     7.3       Vesting or Issuance Conditions.  Each  Award of Restricted Shares
shall  become  vested,  in full or in  installments,  upon  satisfaction  of the
conditions specified in the Stock Award Agreement. Common Shares shall be issued
pursuant  to  Performance   Share  Awards  in  full  or  in  installments   upon
satisfaction of the issuance conditions  specified in the Stock Award Agreement.
The  Committee  shall select the vesting  conditions  in the case of  Restricted
Shares, or issuance  conditions in the case of Performance  Share Awards,  which
may be based upon the Participant's service, the Participant's performance,  the
Company's  performance  or such  other  criteria  as the  Committee  may  adopt;
provided  that,  in the case of an Award of  Restricted  Shares where vesting is
based  entirely on the  Participant's  service  (except to the extent  otherwise
specified  by the  Committee  at the  time  of  grant),  (i)  vesting  shall  be
accelerated in the event of the Participant's  death or Disability;  (ii) in the
case of Retirement,  vesting shall be accelerated for all Restricted Shares that
had been  granted  more  than two years  prior to the date of the  Participant's
Retirement;  and (iii) vesting shall be suspended when an employee is on a leave
of  absence  for a period in  excess of six  months  in  appropriate  cases,  as
determined by the Company. The Committee, in its sole discretion, may determine,
at the time of making an Award of  Restricted  Shares,  that  such  Award  shall
become fully vested in the event that a Change in Control occurs with respect to
the Company. The Committee,  in its sole discretion,  may determine, at the time
of making a Performance Share Award,  that the issuance  conditions set forth in
such Award  shall be waived in the event that a Change in  Control  occurs  with
respect to the Company.

     7.4       Form of Settlement of Performance  Share  Awards.  Settlement  of
Performance Share Awards shall only be made in the form of Common Shares.  Until
a Performance  Share Award is settled,  the number of  Performance  Share Awards
shall be subject to adjustment pursuant to Article 10.

     7.5       Death of Recipient.  Any  Common  Shares  that  are  to be issued
pursuant  to a  Performance  Share Award  after the  recipient's  death shall be
delivered or distributed to the recipient's  beneficiary or beneficiaries.  Each
recipient of a  Performance  Share Award under the Plan shall  designate  one or
more  beneficiaries  for this  purpose  by filing the  prescribed  form with the
Company. A beneficiary  designation may be changed by filing the prescribed form
with  the  Company  at any  time  before  the  Award  recipient's  death.  If no
beneficiary  was designated or if no designated  beneficiary  survives the Award
recipient,  then  any  Common  Shares  that  are  to  be  issued  pursuant  to a
Performance  Share  Award after the  recipient's  death  shall be  delivered  or
distributed to the recipient's  estate.  The Committee,  in its sole discretion,
shall  determine  the  form  and time of any  distribution(s)  to a  recipient's
beneficiary or estate.

Article 8.  Claims Procedures.

     Claims  for  benefits  under the Plan  shall be filed in  writing  with the
Committee on forms supplied by the Committee.  Written notice of the disposition
of a claim shall be furnished to the claimant  within 90 days after the claim is
filed.  If the claim is denied,  the notice of  disposition  shall set forth the
specific  reasons for the denial,  citations to the pertinent  provisions of the
Plan, and, where appropriate,  an explanation as to how the claimant can perfect
the claim. If the claimant wishes further consideration of his or her claim, the
claimant may appeal a denied claim to the Committee  (or to a person  designated
by the Committee) for further review. Such appeal shall be filed in writing with
the  Committee  on a form  supplied by the  Committee,  together  with a written
statement of the claimant's position, no later than 90 days following receipt by
the  claimant  of  written  notice  of the  denial of his or her  claim.  If the
claimant so requests,  the  Committee  shall  schedule a hearing.  A decision on
review  shall be made  after a full and fair  review  of the  claim and shall be
delivered in writing to the claimant no later than 60 days after the Committee's
receipt of the notice of appeal,  unless  special  circumstances  (including the
need to hold a hearing)  require an extension of time for processing the appeal,
in which case a written decision on review shall be delivered to the claimant as
soon as possible  but not later than 120 days after the  Committee's  receipt of
the  appeal  notice.  The  claimant  shall be  notified  in  writing of any such
extension of time. The written decision on review shall include specific reasons
for the  decision,  written  in a  manner  calculated  to be  understood  by the
claimant, and shall specifically refer to the pertinent Plan provisions on which
it is based. All  determinations  of the Committee shall be final and binding on
Participants and their beneficiaries.

Article 9.  Voting Rights and Dividends.

     9.1       Restricted Shares.

     (a)  All holders of Restricted  Shares who are not Named Executive Officers
     shall have the same voting,  dividend,  and other  rights as the  Company's
     other stockholders.

     (b)  During the period of  restriction, Named  Executive  Officers  holding
     Restricted Shares granted hereunder shall be credited with all regular cash
     dividends  paid with  respect to all  Restricted  Shares  while they are so
     held. If a dividend is paid in the form of cash,  such cash dividend  shall
     be credited to Named Executive Officers subject to the same restrictions on
     transferability and forfeitability as the Restricted Shares with respect to
     which they were paid. If any dividends or distributions  are paid in shares
     of Common  Stock,  the shares of Common  Stock shall be subject to the same
     restrictions on transferability and forfeitability as the Restricted Shares
     with respect to which they were paid. Subject to the succeeding  paragraph,
     and to the  restrictions  on vesting  and the  forfeiture  provisions,  all
     dividends  credited to a Named Executive Officer shall be paid to the Named
     Executive Officer within forty-five (45) days following the full vesting of
     the Restricted Shares with respect to which such dividends were earned.

          In the event that any dividend constitutes a "derivative  security" or
     an "equity  security"  pursuant to Rule 16(a) under the Exchange  Act, such
     dividend  shall be subject to a vesting  period equal to the longer of: (i)
     the remaining vesting period of the Restricted Shares with respect to which
     the dividend is paid; or (ii) six (6) months. The Committee shall establish
     procedures for the application of this provision.

          Named Executive Officers holding Restricted Shares shall have the same
     voting rights as the Company's other stockholders.

     9.2       Performance Share Awards. The holders of Performance Share Awards
shall have no voting or dividend rights until such time as any Common Shares are
issued pursuant thereto, at which time they shall have the same voting, dividend
and other rights as the Company's other stockholders.

Article 10.  Protection Against Dilution; Adjustment of Awards.

     10.1      General.  In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend  payable  in  a  form  other  than  Common  Shares,  a  combination  or
consolidation  of  the  outstanding  Common  Shares  (by   reclassification   or
otherwise) into a lesser number of Common Shares, a recapitalization,  a spinoff
or a similar occurrence, the Committee shall make appropriate adjustments in one
or more of (a) the number of Options,  Restricted  Shares and Performance  Share
Awards  available for future  Awards under Article 3, (b) the maximum  number of
Common Shares which may be granted under Article 3 to any one Participant in any
one  fiscal  year  either  subject  to an  Option  or as  Restricted  Shares  or
Performance Share Awards, (c) the number of Performance Share Awards included in
any prior Award which has not yet been settled,  (d) the number of Common Shares
covered  by  each  outstanding  Option  or (e) the  Exercise  Price  under  each
outstanding Option.

     10.2      Reorganizations.  In  the  event that the Company is a party to a
merger or other  reorganization,  outstanding  Options,  Restricted  Shares  and
Performance  Share  Awards  shall be  subject  to the  agreement  of  merger  or
reorganization.   Such  agreement  may  provide,  without  limitation,  for  the
assumption of outstanding Awards by the surviving corporation or its parent, for
their  continuation by the Company (if the Company is a surviving  corporation),
for accelerated vesting or for settlement in cash.

     10.3      Reservation of Rights.  Except  as provided in this Article 10, a
Participant  shall have no rights by reason of any subdivision or  consolidation
of shares of stock of any class,  the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class. Any issue by
the  Company of shares of stock of any class,  or  securities  convertible  into
shares of stock of any class,  shall not  affect,  and no  adjustment  by reason
thereof  shall be made with  respect to, the number or Exercise  Price of Common
Shares  subject to an Option.  The grant of an Award  pursuant to the Plan shall
not  affect in any way the right or power of the  Company  to make  adjustments,
reclassifications,  reorganizations  or  changes  of  its  capital  or  business
structure, to merge or consolidate or to dissolve,  liquidate,  sell or transfer
all or any part of its business or assets.

Article 11. Limitation of Rights.

     11.1      Employment Rights.  Neither  the Plan nor any Award granted under
the Plan shall be deemed to give any  individual  a right to remain  employed by
the Company or any  Subsidiary.  The Company  and its  Subsidiaries  reserve the
right to terminate the  employment of any employee at any time,  with or without
cause, subject only to a written employment agreement (if any).

     11.2      Stockholders' Rights.   A  Participant  shall  have  no  dividend
rights,  voting or other  rights as a  stockholder  with  respect  to any Common
Shares  covered by his or her Award prior to the issuance of such Common Shares,
whether  by  issuance  of a  certificate,  book  entry  or other  procedure.  No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date when such  certificate is issued,  except as expressly
provided in Articles 7, 9 and 10.

     11.3      Creditors' Rights.  A  holder  of  Performance Share Awards shall
have  no  rights  other  than  those  of a  general  creditor  of  the  Company.
Performance  Share Awards  represent  unfunded and unsecured  obligations of the
Company,  subject to the terms and  conditions  of the  applicable  Stock  Award
Agreement.

     11.4      Government  Regulations.    Any  other  provision  of  the   Plan
notwithstanding, the obligations of the Company with respect to Common Shares to
be issued  pursuant to the Plan shall be subject to all applicable  laws,  rules
and  regulations,  and such  approvals  by any  governmental  agencies as may be
required.  The Company reserves the right to restrict,  in whole or in part, the
delivery of Common Shares pursuant to any Award until such time as:

     (a)  Any legal requirements  or  regulations  have been met relating to the
     issuance of such Common Shares or to their  registration,  qualification or
     exemption from  registration or  qualification  under the Securities Act of
     1933, as amended, or any applicable state securities laws; and

     (b)  Satisfactory  assurances  have been received that such Common  Shares,
     when  issued,  will be duly  listed on the New York Stock  Exchange  or any
     other securities exchange on which Common Shares are then listed.

Article 12.  Limitation of Payments.

     12.1      Basic   Rule.    Any  provision  of  the  Plan  to  the  contrary
notwithstanding,  in the  event  that the  independent  auditors  most  recently
selected by the Board (the "Auditors") determine that any payment or transfer in
the nature of compensation to or for the benefit of a Participant,  whether paid
or payable (or transferred or  transferable)  pursuant to the terms of this Plan
or  otherwise  (a  "Payment"),  would be  nondeductible  for federal  income tax
purposes because of the provisions  concerning  "excess  parachute  payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount;  provided,  however, that
the  Committee,  at the time of making an Award  under  this Plan or at any time
thereafter,  may specify in writing  that such Award shall not be so reduced and
shall not be subject to this  Article 12. For  purposes of this  Article 12, the
"Reduced  Amount"  shall be the  amount,  expressed  as a present  value,  which
maximizes  the  aggregate  present  value of the  Payments  without  causing any
Payment to be nondeductible by the Company because of section 280G of the Code.

     12.2      Reduction of Payments. If the Auditors determine that any Payment
would be  nondeductible  because of section  280G of the Code,  then the Company
shall  promptly  give the  Participant  notice to that  effect and a copy of the
detailed  calculation thereof and of the Reduced Amount, and the Participant may
then elect,  in his or her sole  discretion,  which and how much of the Payments
shall be  eliminated or reduced (as long as after such  election,  the aggregate
present  value of the Payments  equals the Reduced  Amount) and shall advise the
Company in writing of his or her  election  within 10 days of receipt of notice.
If no such election is made by the Participant  within such 10-day period,  then
the Company may elect which and how much of the Payments  shall be eliminated or
reduced  (as long as after such  election  the  aggregate  present  value of the
Payments equals the Reduced Amount) and shall notify the Participant promptly of
such  election.  For  purposes  of this  Article  12,  present  value  shall  be
determined in accordance with section 280G(d)(4) of the Code. All determinations
made by the Auditors under this Article 12 shall be binding upon the Company and
the  Participant  and  shall be made  within  60 days of the date when a Payment
becomes  payable or  transferable.  As promptly as  practicable  following  such
determination and the elections hereunder,  the Company shall pay or transfer to
or for the benefit of the Participant such amounts as are then due to him or her
under the Plan,  and shall promptly pay or transfer to or for the benefit of the
Participant  in the  future  such  amounts as become due to him or her under the
Plan.

     12.3      Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial  determination
by the Auditors  hereunder,  it is possible that Payments will have been made by
the  Company  which  should  not  have  been  made  (an  "Overpayment")  or that
additional Payments which will not have been made by the Company could have been
made (an  "Underpayment"),  consistent in each case with the  calculation of the
Reduced  Amount  hereunder.  In the  event  that the  Auditors,  based  upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant  which the Auditors  believe has a high  probability of success,
determine that an Overpayment has been made, such  Overpayment  shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company on  demand,  together  with  interest  at the  applicable  federal  rate
provided in section 7872(f)(2) of the Code;  provided,  however,  that no amount
shall be payable by the  Participant  to the  Company if and to the extent  that
such  payment  would not reduce the amount  which is subject to  taxation  under
section  4999 of the Code.  In the event  that the  Auditors  determine  that an
Underpayment  has  occurred,   such  Underpayment  shall  promptly  be  paid  or
transferred  by the Company to or for the benefit of the  Participant,  together
with interest at the applicable  federal rate provided in section  7872(f)(2) of
the Code.

     12.4      Related  Corporations.  For  purposes  of this  Article  12,  the
term "Company" shall include affiliated corporations to the extent determined by
the Auditors in accordance with section 280G(d)(5) of the Code.

Article 13. Withholding Taxes.

     13.1      General.  To  the  extent  required by applicable federal, state,
local or foreign law, the  recipient  of any payment or  distribution  under the
Plan shall make arrangements satisfactory to the Company for the satisfaction of
any  withholding  tax  obligations  that  arise by  reason  of such  payment  or
distribution.  The  Company  shall  not be  required  to make  such  payment  or
distribution until such obligations are satisfied.

     13.2      Nonstatutory Options,  Restricted  Shares  or  Performance  Share
Awards. The Committee may permit an Optionee who exercises NSOs, or who receives
Awards of Restricted Shares, or who receives Common Shares pursuant to the terms
of a Performance  Share Award,  to satisfy all or part of his or her withholding
tax  obligations  by having the Company  withhold a portion of the Common Shares
that  otherwise  would be issued to him or her under such  Awards.  Such  Common
Shares  shall be  valued  at their  Fair  Market  Value on the date  when  taxes
otherwise  would be  withheld  in cash.  The  payment  of  withholding  taxes by
surrendering Common Shares to the Company, if permitted by the Committee,  shall
be subject to such  restrictions  as the  Committee  may impose,  including  any
restrictions required by rules of the Securities and Exchange Commission.

Article 14.  Assignment or Transfer of Award.

     14.1      General Rule.  Any  Award  granted  under  the  Plan shall not be
anticipated,  assigned,  attached,  garnished,  optioned,  transferred  or  made
subject to any creditor's  process,  whether  voluntarily,  involuntarily  or by
operation of law, except to the extent specifically permitted by Section 14.2.

     14.2      Exceptions to General Rule.  Notwithstanding  Section  14.1, this
Plan shall not preclude (i) a Participant  from  designating  a  beneficiary  to
succeed,  after the Participant's  death, to those of the  Participant's  Awards
(including without limitation, the right to exercise any unexercised Options) as
may be determined by the Company from time to time in its sole discretion,  (ii)
a  transfer  of  any  Award  hereunder  by  will  or  the  laws  of  descent  or
distribution, or (iii) a voluntary transfer of an Award (other than an ISO) to a
trust or  partnership  for the  exclusive  benefit of one or more members of the
Participant's  family,  but only if the Participant has sole investment  control
over such trust or partnership.

Article 15.  Future of Plans.

     15.1      Term of the Plan.  The Plan,  as  set  forth herein, shall become
effective on May 8, 1992. The Plan shall remain in effect until it is terminated
under Section 15.2, except that no ISOs shall be granted after May 7, 2002.

     15.2      Amendment or Termination.  The Committee may, at any time and for
any reason,  amend or terminate the Plan; provided, however, that any  amendment
of the Plan shall be subject to the approval of the  Company's  stockholders  to
the extent required by applicable laws, regulations or rules.

     15.3      Effect of Amendment or Termination.  No Award shall be made under
the Plan after the termination thereof.  The  termination  of  the  Plan, or any
amendment thereof, shall not affect any Option,  Restricted Share or Performance
Share Award previously granted under the Plan.

Article 16.  Definitions.

     16.1      "Award" means any award of an Option,  a  Restricted  Share  or a
Performance  Share Award under the Plan.

     16.2      "Award Year"  means  a fiscal year beginning January 1 and ending
December 31 with respect to which an Award may be granted.

     16.3      "Board" means the Company's Board of  Directors,  as  constituted
from time to time.

     16.4      "Change in Control" means the occurrence of any of the  following
events after the effective date of the Plan as set out in Section 15.1:

     (a)  A change in control required to be  reported  pursuant to Item 6(e) of
     Schedule 14A of Regulation 14A under the Exchange Act;

     (b)  A change in the  composition  of the Board, as a result of which fewer
     than two-thirds of the incumbent directors are directors who either (i) had
     been  directors  of the Company 24 months prior to such change or (ii) were
     elected, or nominated for election, to the Board with the affirmative votes
     of at least a  majority  of the  directors  who had been  directors  of the
     Company 24 months  prior to such change and who were still in office at the
     time of the election or nomination;

     (c)  Any "person" (as such term is used in sections  13(d) and 14(d) of the
     Exchange Act) becomes the  beneficial  owner,  directly or  indirectly,  of
     securities of the Company  representing  20 percent or more of the combined
     voting power of the Company's then outstanding  securities  ordinarily (and
     apart from rights accruing under special circumstances) having the right to
     vote at  elections  of  directors  (the "Base  Capital  Stock");  provided,
     however, that any change in the relative beneficial ownership of securities
     of any person  resulting solely from a reduction in the aggregate number of
     outstanding  shares of Base Capital Stock,  and any decrease  thereafter in
     such person's  ownership of  securities,  shall be  disregarded  until such
     person  increases  in any manner,  directly or  indirectly,  such  person's
     beneficial ownership of any securities of the Company.

     16.5      "Code" means the Internal Revenue Code of 1986, as amended.

     16.6      "Committee"  means  the  Compensation  Committee of the Board, as
constituted from time to time.

     16.7      "Common Share"  means  one  share  of  the  common  stock  of the
Company.

     16.8      "Company"  means  The  Charles  Schwab  Corporation,  a  Delaware
corporation.

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

     16.10     "Exchange Act"  means  the  Securities  Exchange  Act of 1934, as
amended.

     16.11     "Exercise Price"  means the amount for which one Common Share may
be purchased upon exercise of an Option,  as  specified  by the Committee in the
applicable Stock Option Agreement.

     16.12     "Fair  Market  Value"  means the market price of a Common  Share,
determined  by the  committee as follows:

     (a)  If the Common  Share  was  traded on a stock  exchange  on the date in
     question,  then the Fair Market  Value shall be equal to the closing  price
     reported by the applicable composite-transactions report for such date;

     (b)  If  the  Common  Share  was  traded  over-the-counter  on  the date in
     question  and was  classified  as a national  market  issue,  then the Fair
     Market  Value shall be equal to the last  transaction  price  quoted by the
     NASDAQ system for such date;

     (c)  If  the  Common  Share  was  traded  over-the-counter  on  the date in
     question but was not classified as a national  market issue,  then the Fair
     Market  Value  shall  be  equal  to the  mean  between  the  last  reported
     representative  bid and asked prices  quoted by the NASDAQ  system for such
     date; and

     (d)  If  none  of  the  foregoing  provisions  is applicable, then the Fair
     Market  Value shall be  determined  by the  Committee in good faith on such
     basis as it deems appropriate.

     16.13     "ISO" means an incentive stock option described in section 422(b)
of the Code.

     16.14     "Key Employee" means (1) a key common-law employee of the Company
or any  Subsidiary,  as  determined  by  the  Committee,  or (2) a  non-employee
director of any Subsidiary, as determined by the Committee.

     16.15     "Named Executive Officer" means a Participant who, as of the date
of vesting of an Award is one of a group of "covered employees,"  as  defined in
the Regulations promulgated under Code Section 162(m), or any successor statute.

     16.16     "Non-Employee Director"  means a member of the Board who is not a
common-law employee.

     16.17     "NSO"  means  an  employee stock option not described in sections
422 through 424 of the Code.

     16.18     "Option" means an ISO or NSO or,  in  the  case of a Key Employee
who is subject to the tax laws of a foreign  jurisdiction,  an option qualifying
for  favorable tax treatment  under the laws of such  jurisdiction,  including a
Replacement Option,  granted under the Plan and entitling the holder to purchase
one Common Share.

     16.19     "Optionee"  means an  individual,  or his or her  estate, legatee
or heirs at law that holds an Option.

     16.20     "Participant"  means  a Non-Employee Director or Key Employee who
has received an Award.

     16.21     "Performance Share Award"  means the conditional right to receive
in the future one Common Share, awarded to a Participant under the Plan.

     16.22     "Plan" means this 1992 Stock Incentive Plan of The Charles Schwab
Corporation, as it may be amended from time to time.

     16.23     "Replacement Option"  means  an  Option  that  is  granted when a
Participant  uses a Common  Share held or to be acquired by the  Participant  to
exercise an Option and/or to satisfy tax  withholding  requirements  incident to
the exercise of an Option.

     16.24     "Restricted Share"  means a Common Share awarded to a Participant
under the Plan.

     16.25     "Stock Award Agreement"  means  the agreement between the Company
and the  recipient  of a  Restricted  Share or  Performance  Share  Award  which
contains the terms,  conditions and  restrictions  pertaining to such Restricted
Share or Performance Share Award.

     16.26     "Stock Option Agreement"  means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her option.

     16.27     "Subsidiary"  means  any  corporation  or  other  entity,  if the
Company  and/or one or more other  Subsidiaries  own not less than 50 percent of
the total  combined  voting  power of all classes of  outstanding  stock of such
corporation (or ownership interest of such other entity). A corporation or other
entity that attains the status of a  Subsidiary  on a date after the adoption of
the Plan shall be considered a Subsidiary commencing as of such date.

     16.28.    "Retirement"  shall  mean  any  termination  of  employment of an
Optionee  for any reason  other than  death at any time after the  Optionee  has
attained  fifty  (50),  but  only  if,  at the  time  of such  termination,  the
Participant has been credited with at least seven (7) Years of Service under the
Charles Schwab Profit Sharing and Employee Stock  Ownership  Plan. The foregoing
definition shall apply to all Stock Option  Agreements  entered into pursuant to
the Plan,  irrespective of any definition to the contrary  contained in any such
Stock Option Agreement.

     16.29     "Disability"  means  the  inability  to engage in any substantial
gainful  activity   considering  the  Participant's   age,  education  and  work
experience by reason of any medically  determined  physical or mental impairment
that has continued without  interruption for a period of at least six months and
that can be expected  to be of long,  continued  and  indefinite  duration.  All
determinations  as to whether a Participant  has incurred a Disability  shall be
made by the Employee  Benefits  Administration  Committee  of the  Company,  the
findings of which shall be final, binding and conclusive.

<PAGE>

                                   ADDENDUM A

     The  provisions  of the Plan,  as amended by the terms of this  Addendum A,
shall apply to the grant of Approved Options to Key U.K. Employees.

     1. For purposes of this Addendum A, the following  definitions  shall apply
in addition to those set out in section 16 of the Plan:

     Approved  Option  Means a stock  option  designed to qualify as an approved
     executive share option under the Taxes Act;

     Inland Revenue means the Board of the Inland Revenue in the United Kingdom.

     Key U.K.  Employee  means a  designated  employee of  Sharelink  Investment
     Services plc or any  subsidiary  (as that term is defined in the  Companies
     Act 1985 of the United Kingdom,  as amended) of which Sharelink  Investment
     Services plc has control for the purposes of section 840 of the Taxes Act;

     Taxes Act means the  Income  and  Corporation  Taxes Act 1988 of the United
     Kingdom.

     2.   An Approved Option may only be granted to a Key U.K. Employee who:

          (i)      is employed on a full-time basis; and

          (ii)     does not fall within the provisions of paragraph 8 of
                   Schedule 9 to the Taxes Act.

     For purposes of this section 2(i) of Addendum A, "full-time"  shall mean an
employee who is required to work 20 hours per week, excluding meal breaks.

     3. No  Approved  Option may be granted to a Key U.K.  Employee  if it would
cause the aggregate of the exercise  price of all  subsisting  Approved  Options
granted to such employee under the Plan, or any other subsisting options granted
to such employee  under any other share option scheme  approved under Schedule 9
of the Taxes Act and  established  by the Company or an associated  company,  to
exceed the higher of (a) one hundred thousand pounds sterling and (b) four times
such  employee's  relevant  emoluments  for the  current  or  preceding  year of
assessment  (whichever is greater);  but where there were no relevant emoluments
for the  previous  year of  assessment,  the  limit  shall be the  higher of one
hundred  thousand  pounds  sterling  or  four  times  such  employee's  relevant
emoluments  for the period of twelve months  beginning with the first day during
the  current  year  of  assessment  in  respect  of  which  there  are  relevant
emoluments.  For the  purpose  of this  section  3 of  Addendum  A,  "associated
company"  means an associated  company  within the meaning of section 416 of the
Taxes Act;  "relevant  emoluments"  has the meaning given by paragraph  28(4) of
Schedule 9 to the Taxes Act and "year of  assessment"  means a year beginning on
any April 6 and ending on the following April 5.

     4. Common Shares issued  pursuant to the exercise of Approved  Options must
satisfy the  conditions  specified in  paragraphs  10 to 14 of Schedule 9 to the
Taxes Act.

     5.  Notwithstanding the provisions of Section 5.4 of the Plan, the exercise
price of an  Approved  Option  shall not be less than 100 percent of the closing
price of a Common  Share as  reported in the New York Stock  Exchange  Composite
Index on the date of grant.

     6. No Approved  Option may be exercised at any time by a Key U.K.  Employee
when that Key U.K.  Employee  falls  within the  provisions  of  paragraph  8 of
Schedule 9 to the Taxes Act. If at any time the shares under an Approved  Option
cease to comply with the  conditions in paragraphs 10 to 14 of Schedule 9 to the
Taxes Act, then all Approved Options then  outstanding  shall lapse and cease to
be exercisable from the date of the shares ceasing so to comply, and no optionee
shall  have any  cause of  action  against  the  Company,  Sharelink  Investment
Services  plc or any  subsidiary  of the Company or any other  person in respect
thereof.

     7. An  Approved  Option  may  contain  such  other  terms,  provisions  and
conditions  as may be  determined  by the  Committee  consistent  with the Plan,
provided that the approved option  otherwise  complies with the requirements for
approved executive option schemes specified in Schedule 9 of the Taxes Act.

     8. In relation to an Approved Option,  notwithstanding the terms of section
10.1 of the Plan,  no  adjustment  shall be made pursuant to section 10.1 of the
Plan to any  outstanding  Approved  Options  without  the prior  approval of the
Inland Revenue.

     9. In  relation  to an  Approved  Option any Key U.K.  Employee  shall make
arrangements  satisfactory  to the  Company  for  the  satisfaction  of any  tax
withholding or deduction -- at -- source obligations that arise by reason of the
grant to him or her of such option, or its subsequent exercise.

     10. In relation to an Approved  Option,  in addition to the  provisions set
out  in  section  15.2  of the  Plan,  no  amendment  which  affects  any of the
provisions  of the Plan relating to Approved  Options  shall be effective  until
approved by the Inland  Revenue,  except for such  amendment  as are required to
obtain and maintain the approval of Inland Revenue pursuant to Schedule 9 to the
Taxes Act.Exhibit 10.225
                         THE CHARLES SCHWAB CORPORATION
                            2001 STOCK INCENTIVE PLAN
                          as Amended September 20, 2001

Article 1.  Introduction.

     The Plan was adopted by the Board of Directors  on February  28, 2001.  The
purpose of this Plan is to promote the long-term  success of the Company and the
creation  of  incremental  stockholder  value  by (a)  encouraging  Non-Employee
Directors and Key Employees to focus on long-range  objectives,  (b) encouraging
the  attraction and retention of  Non-Employee  Directors and Key Employees with
exceptional  qualifications  and  (c)  linking  Non-Employee  Directors  and Key
Employees  directly to  stockholder  interests.  The Plan seeks to achieve  this
purpose by providing  for Awards in the form of Restricted  Shares,  Performance
Share  Awards or  Options,  which may  constitute  incentive  stock  options  or
nonstatutory  stock  options.  The Plan shall be governed  by, and  construed in
accordance with, the laws of the State of Delaware.

Article 2.  Administration.

     2.1       The  Committee.  The Plan shall be administered by the Committee.
The Committee shall consist of two or more Directors,  who shall be appointed by
the Board.

     2.2       Committee Responsibilities.  The  Committee  shall select the Key
Employees  who are to  receive  Awards  under the Plan,  determine  the  amount,
vesting  requirements  and other  conditions  of such Awards,  may interpret the
Plan,  and make all other  decisions  relating to the operation of the Plan. The
Committee  may  adopt  such  rules  or  guidelines  as it deems  appropriate  to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.

Article 3.  Limitations on Awards.

     The aggregate  number of Restricted  Shares,  Performance  Share Awards and
Options  awarded under the Plan shall not exceed  70,000,000.  If any Restricted
Shares, Performance Share Awards or Options are forfeited, or if any Performance
Share Awards terminate for any other reason without the associated Common Shares
being  issued,  or if any Options  terminate  for any other reason  before being
exercised,  then such  Restricted  Shares,  Performance  Share Awards or Options
shall again become available for Awards under the Plan.

     Subject to the overall limit on the aggregate  shares set forth above,  the
following limitations shall apply: (a) The maximum number of Common Shares which
may be  granted  subject to an Option to any one  Participant  in any one fiscal
year shall be  5,000,000;  and (b) The maximum  number of  Restricted  Shares or
Performance  Share Awards which may be granted to any one Participant in any one
fiscal  year shall be  1,000,000.  The  limitations  set forth in the  preceding
sentence shall be subject to adjustment pursuant to Article 10; and

     The  limitations  of this  Article 3 shall each be  subject  to  adjustment
pursuant to Article  10. Any Common  Shares  issued  pursuant to the Plan may be
authorized but unissued shares or treasury shares.

Article 4. Eligibility.

     4.1       General Rule.  Key Employees and  Non-Employee Directors shall be
eligible for  designation  as Participants by the Committee.

     4.2       Non-Employee Directors.  In  addition  to  any awards pursuant to
Section 4.1, Non-Employee Directors shall be entitled to receive  the  automatic
NQSOs described in this Section 4.2.

     (a)  Each Non-Employee  Director shall receive an NQSO covering a number of
     Common Shares for each Award Year with respect to which he or she serves as
     a  Non-Employee  Director on the grant date  described  in  subsection  (b)
     below,  to be calculated  by dividing  $150,000 by the Fair Market Value of
     the Common Shares on the grant date described in subsection (b) below; and

     (b)  The  NQSO  for a  particular  Award  Year  shall  be  granted  to each
     Non-Employee Director as of May 15 of each Award Year, and if May 15 is not
     a  business  day,  then  the  grant  shall  be made  on and as of the  next
     succeeding business day;

     (c)  Each NQSO shall be exercisable in full at all times during its term;

     (d)  The term of each NQSO shall be 10 years;  provided,  however, that any
     unexercised NQSO shall expire on the earlier of the date 10 years after the
     date of grant or three (3)  months  following  the date  that the  Optionee
     ceases to be a Non-Employee Director or a Key Employee for any reason other
     than  death or  disability.  If an  Optionee  ceases  to be a  Non-Employee
     Director or Key Employee on account of death or disability, any unexercised
     NQSO shall  expire on the  earlier  of the date 10 years  after the date of
     grant or one year after the date of death or disability  of such  Director;
     and

     (e)  The Exercise  Price  under each NQSO shall be equal to the Fair Market
     Value  on the date of  grant  and  shall  be  payable  in any of the  forms
     described in Article 6.

     4.3       Ten-Percent Stockholders.  A  Key  Employee who owns more than 10
percent of the total combined  voting power of all classes of outstanding  stock
of the Company or any of its Subsidiaries shall not be eligible for the grant of
an ISO unless (a) the  Exercise  price under such ISO is at least 110 percent of
the Fair Market Value of a Common Share on the date of grant and (b) such ISO by
its terms is not exercisable after the expiration of five years from the date of
grant.

     4.4       Attribution Rules.  For  purposes  of Section 4.3, in determining
stock ownership, a Key Employee shall be deemed to own the stock owned, directly
or  indirectly,  by or for his or her brothers,  sisters,  spouse,  ancestors or
lineal  descendants.   Stock  owned,  directly  or  indirectly,   by  or  for  a
corporation,   partnership,  estate  or  trust  shall  be  deemed  to  be  owned
proportionately  by or for its stockholders,  partners or  beneficiaries.  Stock
with respect to which the Key Employee holds an option shall not be counted.

     4.5       Outstanding Stock.  For  purposes  of  Section  4.3, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the ISO to the Key Employee.  "Outstanding stock" shall not include
treasury shares or shares authorized for issuance under outstanding options held
by the Key Employee or by any other person.

     4.6       Options  Issued  To   Non-Employee   Directors  In  Lieu  of  Fee
Deferrals.  In  addition  to any  awards  pursuant  to  Sections  4.1 and 4.2, a
Non-Employee  Director  who elects to defer the  receipt of amounts  pursuant to
Section 5.1 of The Charles Schwab Corporation  Directors' Deferred  Compensation
Plan (the "Directors  Deferred  Compensation  Plan") and elects to receive stock
options in lieu of a Deferral  Account balance pursuant to Section 5.4(2) of the
Directors  Deferred  Compensation  Plan, shall be entitled to receive a grant of
NQSOs  hereunder  on the  date  the  amounts  would  have  been  payable  to the
Non-Employee  Director if the  Non-Employee  Director had not made such deferral
election.  Any NQSOs issued pursuant to this Section shall be issued pursuant to
the terms set forth in subsections (c), (d) and (e) of Section 4.2 hereof.

     4.7       Performance  Shares  Issued To Non-Employee Directors Pursuant to
Fee  Deferrals.  In addition to any awards  pursuant to Sections  4.1 and 4.2, a
Non-Employee  Director  who elects to defer the  receipt of amounts  pursuant to
Section 5.1 of The Directors'  Deferred  Compensation Plan and elects to receive
payment  in  Shares  pursuant  to  Section  5.4(1)  of  the  Directors  Deferred
Compensation  Plan,  shall be entitled to receive a grant of Performance  Shares
hereunder on the date the amounts  would have been  payable to the  Non-Employee
Director if the Non-Employee  Director had not made such deferral election.  For
purposes of this  section,  the term  Non-Employee  Director  shall also include
non-employee  directors  of  any  Subsidiary,  if  the  Committee  has  approved
participation in the Directors Deferred  Compensation Plan for such Subsidiary's
non-employee directors.

Article 5. Options.

     5.1       Stock Option Agreement.  Each  grant  of an Option under the Plan
shall be  evidenced  by a Stock  Option  Agreement  between the Optionee and the
Company.  Such Option shall be subject to all applicable terms and conditions of
the Plan,  and may be subject to any other  terms and  conditions  which are not
inconsistent  with  the Plan and  which  the  Committee  deems  appropriate  for
inclusion in a Stock  Option  Agreement.  The  provisions  of the various  Stock
Option  Agreements  entered  into  under  the Plan  need not be  identical.  The
Committee  may designate all or any part of an Option as an ISO (or, in the case
of a Key Employee who is subject to the tax laws of a foreign  jurisdiction,  as
an option  qualifying for favorable tax treatment under the laws of such foreign
jurisdiction), except for Options granted to Non-Employee Directors.

     5.2       Options Nontransferability.  Subject to the provisions of Section
14.2,  no Option  granted under the Plan shall be  transferable  by the Optionee
other than by will or the laws of  descent  and  distribution.  An Option may be
exercised  during the lifetime of the Optionee  only by him or her. No Option or
interest  therein may be transferred,  assigned,  pledged or hypothecated by the
Optionee  during his or her lifetime,  whether by operation of law or otherwise,
or be made subject to execution, attachment or similar process.

     5.3       Number of Shares.  Each  Stock Option Agreement shall specify the
number of  Common  Shares  subject  to the  Option  and  shall  provide  for the
adjustment  of such number in  accordance  with  Article  10. Each Stock  Option
Agreement shall also specify whether the Option is an ISO or an NQSO.

     5.4       Exercise Price.  Each  Stock  Option  Agreement shall specify the
Exercise  Price.  The Exercise  Price under an Option shall not be less than 100
percent of the Fair Market Value of a Common Share on the date of grant,  except
as otherwise  provided in Section 4.3.  Subject to the preceding  sentence,  the
Exercise  Price  under any Option  shall be  determined  by the  Committee.  The
Exercise Price shall be payable in accordance with Article 6.

     5.5       Exercisability  and  Term.  Each  Stock  Option  Agreement  shall
specify  the  date  when  all or any  installment  of the  Option  is to  become
exercisable.  The Stock  Option  Agreement  shall also  specify  the term of the
Option.  The term of an ISO shall in no event  exceed 10 years  from the date of
grant,  and  Section 4.3 may require a shorter  term.  Subject to the  preceding
sentence,  the Committee shall determine when all or any part of an Option is to
become  exercisable  and when  such  Option  is to  expire;  provided  that,  in
appropriate  cases,  the Company shall have the discretion to extend the term of
an Option or the time within which,  following  termination  of  employment,  an
Option may be exercised,  or to accelerate the  exercisability  of an Option.  A
Stock Option  Agreement may provide for expiration  prior to the end of its term
in the event of the  termination of the Optionee's  employment and shall provide
for the  suspension  of vesting  when an employee is on a leave of absence for a
period in excess  of six  months in  appropriate  cases,  as  determined  by the
Company;  provided  that,  except  to  the  extent  otherwise  specified  by the
Committee  at the time of grant,  (i) the  exercisability  of  Options  shall be
accelerated in the event of the Participant's  death or Disability;  (ii) in the
case of  Retirement,  the  exercisability  of all  outstanding  Options shall be
accelerated,  other than any Options that had been  granted  within two years of
the date of the Optionee's Retirement; and (iii) vesting shall be suspended when
an  employee  is on a leave of  absence  for a period in excess of six months in
appropriate  cases, as determined by the Company.  Except as provided in Section
4.2, NQSOs may also be awarded in combination with Restricted  Shares,  and such
an Award may provide that the NQSOs will not be  exercisable  unless the related
Restricted Shares are forfeited. In addition, NQSOs granted under this Section 5
may be granted subject to forfeiture  provisions which provide for forfeiture of
the  Option  upon the  exercise  of  tandem  awards,  the  terms  of  which  are
established in other programs of the Company.

     5.6       Limitation on Amount of ISOs.  The  aggregate  fair  market value
(determined at the time the ISO is granted) of the Common Shares with respect to
which  ISOs are  exercisable  for the  first  time by the  Optionee  during  any
calendar year (under all incentive  stock option plans of the Company) shall not
exceed $100,000;  provided,  however, that all or any portion of an Option which
cannot be exercised as an ISO because of such limitation  shall be treated as an
NQSO.

     5.7       Effect  of  Change  in  Control.   The  Committee  (in  its  sole
discretion) may determine,  at the time of granting an Option,  that such Option
shall become fully  exercisable  as to all Common Shares  subject to such Option
immediately preceding any Change in Control with respect to the Company.

     5.8       Restrictions on Transfer of  Common  Shares.  Any  Common  Shares
issued upon  exercise of an Option shall be subject to such  special  forfeiture
conditions,  rights of  repurchase,  rights of first refusal and other  transfer
restrictions  as the Committee may  determine.  Such  restrictions  shall be set
forth in the  applicable  Stock Option  Agreement and shall apply in addition to
any general restrictions that may apply to all holders of Common Shares.

     5.9       Authorization of Replacement Options. Concurrently with the grant
of any Option to a  Participant  (other than NQSOs  granted  pursuant to Section
4.2),  the  Committee  may  authorize  the  grant  of  Replacement  Options.  If
Replacement  Options have been  authorized  by the  Committee  with respect to a
particular  award of Options (the  "Underlying  Options"),  the Option Agreement
with  respect  to the  Underlying  Options  shall so  state,  and the  terms and
conditions of the Replacement  Options shall be provided  therein.  The grant of
any  Replacement  Options  shall be  effective  only  upon the  exercise  of the
Underlying  Options  through the use of Common Shares pursuant to Section 6.2 or
Section 6.3. The number of Replacement  Options shall equal the number of Common
Shares used to exercise the Underlying Options,  and, if the Option Agreement so
provides,  the  number of Common  Shares  used to  satisfy  any tax  withholding
requirements  incident to the exercise of the  Underlying  Options in accordance
with Section 13.2. Upon the exercise of the Underlying Options,  the Replacement
Options shall be evidenced by an amendment to the Underlying  Option  Agreement.
Notwithstanding the fact that the Underlying Option may be an ISO, a Replacement
Option is not intended to qualify as an ISO. The Exercise Price of a Replacement
Option shall be no less than the Fair Market Value of a Common Share on the date
the  grant  of the  Replacement  Option  becomes  effective.  The  term  of each
Replacement  Option  shall  be  equal to the  remaining  term of the  Underlying
Option.  No Replacement  Options shall be granted to Optionees  when  Underlying
Options  are  exercised  pursuant  to the  terms of the Plan and the  Underlying
Option  Agreement  following  termination  of  the  Optionee's  employment.  The
Committee, in its sole discretion, may establish such other terms and conditions
for Replacement Options as it deems appropriate.

     5.10      Options Granted to Non-United States Key Employees.  In  the case
of Key Employees who are subject to the tax laws of a foreign jurisdiction,  the
Company may issue Options to such Key Employees  that contain terms  required to
conform with any requirements for favorable tax treatment imposed by the laws of
such foreign  jurisdiction,  or as otherwise may be required by the laws of such
foreign  jurisdiction.  The terms of any such  Options  shall be governed by the
Plan,  subject to the terms of any Addendum to the Plan specifically  applicable
to such Options.

     5.11      Effect  of  Job  Elimination.  Notwithstanding  anything  to  the
contrary  contained in the Plan or in any Stock Option  Agreement or Stock Award
Agreement  entered  into with respect to an Award  pursuant to the Plan,  in the
case of a  Participant  who is an Officer,  and who becomes  entitled to receive
payments  with  respect to a Severance  Period  pursuant  to the Charles  Schwab
Severance Pay Plan (the "Severance  Plan") on account of a Job Elimination,  the
terms  of the Plan and any  Stock  Option  Agreement  or Stock  Award  Agreement
entered  into  with  respect  to an  Award  shall be  applied  by  treating  the
Participant as if the Participant had terminated employment on the Participant's
Termination  Date.  For purposes of applying  this Section,  the terms  Officer,
Severance Period,  Termination Date, and Job Elimination shall have the meanings
set forth in the Severance Plan.

Article 6.  Payment for Option Shares.

     6.1       General Rule.  The entire Exercise Price of Common Shares  issued
upon  exercise of Options  shall be payable in cash at the time when such Common
Shares are  purchased,  except that the  Company may at any time accept  payment
pursuant to Section 6.2 or 6.3.

     6.2       Surrender of Stock.  To  the  extent  that  this  Section  6.2 is
applicable,  payment for all or any part of the Exercise  Price may be made with
Common Shares which are surrendered to the Company.  Such Common Shares shall be
valued at their Fair  Market  Value on the date when the new  Common  Shares are
purchased under the Plan. In the event that the Common Shares being  surrendered
are  Restricted  Shares that have not yet become vested,  the same  restrictions
shall be imposed upon the new Common Shares being purchased.

     6.3       Exercise/Sale.  To  the  extent  this  Section 6.3 is applicable,
payment may be made by the delivery (in a manner  prescribed  by the Company) of
an  irrevocable  direction to Charles  Schwab & Co.,  Inc. to sell Common Shares
(including  the Common  Shares to be issued upon exercise of the Options) and to
deliver  all or part of the sales  proceeds  to the Company in payment of all or
part of the Exercise Price and any withholding taxes.

Article 7.  Restricted Shares and Performance Share Awards.

     7.1       Time,  Amount  and  Form  of  Awards.  The  Committee  may  grant
Restricted  Shares or  Performance  Share  Awards with  respect to an Award Year
during  such Award  Year or at any time  thereafter.  Each such  Award  shall be
evidenced  by a Stock  Award  Agreement  between  the  Award  recipient  and the
Company.  The amount of each Award of  Restricted  Shares or  Performance  Share
Awards  shall be  determined  by the  Committee.  Awards  under  the Plan may be
granted in the form of Restricted  Shares or Performance  Share Awards or in any
combination  thereof, as the Committee shall determine at its sole discretion at
the time of the grant. Restricted Shares or Performance Share Awards may also be
awarded  in  combination  with  NQSOs,  and such an Award may  provide  that the
Restricted  Shares or  Performance  Share  Awards will be forfeited in the event
that the related NQSOs are exercised.

     7.2       Payment for Restricted Share Awards.  To the extent that an Award
is granted in the form of Restricted Shares, the Award recipient, as a condition
to the grant of such  Award,  shall be  required  to pay the  Company in cash an
amount equal to the par value of such Restricted Shares.

     7.3       Vesting or Issuance Conditions.  Each  Award of Restricted Shares
shall  become  vested,  in full or in  installments,  upon  satisfaction  of the
conditions specified in the Stock Award Agreement. Common Shares shall be issued
pursuant  to  Performance   Share  Awards  in  full  or  in  installments   upon
satisfaction of the issuance conditions  specified in the Stock Award Agreement.
The  Committee  shall select the vesting  conditions  in the case of  Restricted
Shares, or issuance  conditions in the case of Performance  Share Awards,  which
may be based upon the Participant's service, the Participant's performance,  the
Company's  performance  or such  other  criteria  as the  Committee  may  adopt;
provided  that,  in the case of an Award of  Restricted  Shares where vesting is
based  entirely on the  Participant's  service  (except to the extent  otherwise
specified  by the  Committee  at the  time  of  grant),  (i)  vesting  shall  be
accelerated in the event of the Participant's  death or Disability;  (ii) in the
case of Retirement,  vesting shall be accelerated for all Restricted Shares that
had been  granted  more  than two years  prior to the date of the  Participant's
Retirement;  and (iii) vesting shall be suspended when an employee is on a leave
of  absence  for a period in  excess of six  months  in  appropriate  cases,  as
determined by the Company. The Committee, in its sole discretion, may determine,
at the time of making an Award of  Restricted  Shares,  that  such  Award  shall
become fully vested in the event that a Change in Control occurs with respect to
the Company. The Committee,  in its sole discretion,  may determine, at the time
of making a Performance Share Award,  that the issuance  conditions set forth in
such Award  shall be waived in the event that a Change in  Control  occurs  with
respect to the Company.

     7.4       Form of Settlement of Performance  Share  Awards.  Settlement  of
Performance Share Awards shall only be made in the form of Common Shares.  Until
a Performance  Share Award is settled,  the number of  Performance  Share Awards
shall be subject to adjustment pursuant to Article 10.

     7.5       Death of Recipient.  Any  Common  Shares  that  are  to be issued
pursuant  to a  Performance  Share Award  after the  recipient's  death shall be
delivered or distributed to the recipient's  beneficiary or beneficiaries.  Each
recipient of a  Performance  Share Award under the Plan shall  designate  one or
more  beneficiaries  for this  purpose  by filing the  prescribed  form with the
Company. A beneficiary  designation may be changed by filing the prescribed form
with  the  Company  at any  time  before  the  Award  recipient's  death.  If no
beneficiary  was designated or if no designated  beneficiary  survives the Award
recipient,  then  any  Common  Shares  that  are  to  be  issued  pursuant  to a
Performance  Share  Award after the  recipient's  death  shall be  delivered  or
distributed to the recipient's  estate.  The Committee,  in its sole discretion,
shall  determine  the  form  and time of any  distribution(s)  to a  recipient's
beneficiary or estate.

Article 8.  Claims Procedures.

     Claims  for  benefits  under the Plan  shall be filed in  writing  with the
Committee on forms supplied by the Committee.  Written notice of the disposition
of a claim shall be furnished to the claimant  within 90 days after the claim is
filed.  If the claim is denied,  the notice of  disposition  shall set forth the
specific  reasons for the denial,  citations to the pertinent  provisions of the
Plan, and, where appropriate,  an explanation as to how the claimant can perfect
the claim. If the claimant wishes further consideration of his or her claim, the
claimant may appeal a denied claim to the Committee  (or to a person  designated
by the Committee) for further review. Such appeal shall be filed in writing with
the  Committee  on a form  supplied by the  Committee,  together  with a written
statement of the claimant's position, no later than 90 days following receipt by
the  claimant  of  written  notice  of the  denial of his or her  claim.  If the
claimant so requests,  the  Committee  shall  schedule a hearing.  A decision on
review  shall be made  after a full and fair  review  of the  claim and shall be
delivered in writing to the claimant no later than 60 days after the Committee's
receipt of the notice of appeal,  unless  special  circumstances  (including the
need to hold a hearing)  require an extension of time for processing the appeal,
in which case a written decision on review shall be delivered to the claimant as
soon as possible  but not later than 120 days after the  Committee's  receipt of
the  appeal  notice.  The  claimant  shall be  notified  in  writing of any such
extension of time. The written decision on review shall include specific reasons
for the  decision,  written  in a  manner  calculated  to be  understood  by the
claimant, and shall specifically refer to the pertinent Plan provisions on which
it is based. All  determinations  of the Committee shall be final and binding on
Participants and their beneficiaries.

Article 9.  Voting Rights and Dividends.

     9.1       Restricted  Shares.   All holders of Restricted Shares shall have
the same voting, dividend, and other rights as the Company's other stockholders.

     9.2       Performance Share Awards. The holders of Performance Share Awards
shall have no voting or dividend rights until such time as any Common Shares are
issued pursuant thereto, at which time they shall have the same voting, dividend
and other rights as the Company's other stockholders.

Article 10.  Protection Against Dilution; Adjustment of Awards.

     10.1      General.  In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend  payable  in  a  form  other  than  Common  Shares,  a  combination  or
consolidation  of  the  outstanding  Common  Shares  (by   reclassification   or
otherwise) into a lesser number of Common Shares, a recapitalization,  a spinoff
or a similar occurrence, the Committee shall make appropriate adjustments in one
or more of (a) the number of Options,  Restricted  Shares and Performance  Share
Awards  available for future  Awards under Article 3, (b) the maximum  number of
Common Shares which may be granted under Article 3 to any one Participant in any
one  fiscal  year  either  subject  to an  Option  or as  Restricted  Shares  or
Performance Share Awards, (c) the number of Performance Share Awards included in
any prior Award which has not yet been settled,  (d) the number of Common Shares
covered  by  each  outstanding  Option  or (e) the  Exercise  Price  under  each
outstanding Option.

     10.2      Reorganizations. Subject to the provisions of Section 5.7, in the
event  that  the  Company  is a  party  to a  merger  or  other  reorganization,
outstanding  Options,  Restricted  Shares and Performance  Share Awards shall be
subject  to the  agreement  of  merger or  reorganization.  Such  agreement  may
provide,  without  limitation,  for the assumption of outstanding  Awards by the
surviving  corporation or its parent,  for their continuation by the Company (if
the  Company  is a  surviving  corporation),  for  accelerated  vesting  or  for
settlement in cash.

     10.3      Reservation of Rights.  Except  as provided in this Article 10, a
Participant  shall have no rights by reason of any subdivision or  consolidation
of shares of stock of any class,  the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class. Any issue by
the  Company of shares of stock of any class,  or  securities  convertible  into
shares of stock of any class,  shall not  affect,  and no  adjustment  by reason
thereof  shall be made with  respect to, the number or Exercise  Price of Common
Shares  subject to an Option.  The grant of an Award  pursuant to the Plan shall
not  affect in any way the right or power of the  Company  to make  adjustments,
reclassifications,  reorganizations  or  changes  of  its  capital  or  business
structure, to merge or consolidate or to dissolve,  liquidate,  sell or transfer
all or any part of its business or assets.

Article 11. Limitation of Rights.

     11.1      Employment Rights.  Neither  the Plan nor any Award granted under
the Plan shall be deemed to give any  individual  a right to remain  employed by
the Company or any  Subsidiary.  The Company  and its  Subsidiaries  reserve the
right to terminate the  employment of any employee at any time,  with or without
cause, subject only to a written employment agreement (if any).

     11.2      Stockholders'  Rights.  A  Participant  shall  have  no  dividend
rights,  voting or other  rights as a  stockholder  with  respect  to any Common
Shares  covered by his or her Award prior to the issuance of such Common Shares,
whether  by  issuance  of a  certificate,  book  entry  or other  procedure.  No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date when such  certificate is issued,  except as expressly
provided in Articles 7, 9 and 10.

     11.3      Creditors' Rights.  A  holder  of  Performance Share Awards shall
have  no  rights  other  than  those  of a  general  creditor  of  the  Company.
Performance  Share Awards  represent  unfunded and unsecured  obligations of the
Company,  subject to the terms and  conditions  of the  applicable  Stock  Award
Agreement.

     11.4      Government   Regulations.    Any  other  provision  of  the  Plan
notwithstanding, the obligations of the Company with respect to Common Shares to
be issued  pursuant to the Plan shall be subject to all applicable  laws,  rules
and  regulations,  and such  approvals  by any  governmental  agencies as may be
required.  The Company reserves the right to restrict,  in whole or in part, the
delivery of Common Shares pursuant to any Award until such time as:

     (a)  Any legal requirements  or  regulations  have been met relating to the
     issuance of such Common Shares or to their  registration,  qualification or
     exemption from  registration or  qualification  under the Securities Act of
     1933, as amended, or any applicable state securities laws; and

     (b)  Satisfactory  assurances  have been received that such Common  Shares,
     when  issued,  will be duly  listed on the New York Stock  Exchange  or any
     other securities exchange on which Common Shares are then listed.

Article 12.  Limitation of Payments.

     12.1      Basic   Rule.    Any  provision  of  the  Plan  to  the  contrary
notwithstanding,  in the  event  that the  independent  auditors  most  recently
selected by the Board (the "Auditors") determine that any payment or transfer in
the nature of compensation to or for the benefit of a Participant,  whether paid
or payable (or transferred or  transferable)  pursuant to the terms of this Plan
or  otherwise  (a  "Payment"),  would be  nondeductible  for federal  income tax
purposes because of the provisions  concerning  "excess  parachute  payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount;  provided,  however, that
the  Committee,  at the time of making an Award  under  this Plan or at any time
thereafter,  may specify in writing  that such Award shall not be so reduced and
shall not be subject to this  Article 12. For  purposes of this  Article 12, the
"Reduced  Amount"  shall be the  amount,  expressed  as a present  value,  which
maximizes  the  aggregate  present  value of the  Payments  without  causing any
Payment to be nondeductible by the Company because of section 280G of the Code.

     12.2      Reduction of Payments. If the Auditors determine that any Payment
would be  nondeductible  because of section  280G of the Code,  then the Company
shall  promptly  give the  Participant  notice to that  effect and a copy of the
detailed  calculation thereof and of the Reduced Amount, and the Participant may
then elect,  in his or her sole  discretion,  which and how much of the Payments
shall be  eliminated or reduced (as long as after such  election,  the aggregate
present  value of the Payments  equals the Reduced  Amount) and shall advise the
Company in writing of his or her  election  within 10 days of receipt of notice.
If no such election is made by the Participant  within such 10-day period,  then
the Company may elect which and how much of the Payments  shall be eliminated or
reduced  (as long as after such  election  the  aggregate  present  value of the
Payments equals the Reduced Amount) and shall notify the Participant promptly of
such  election.  For  purposes  of this  Article  12,  present  value  shall  be
determined in accordance with section 280G(d)(4) of the Code. All determinations
made by the Auditors under this Article 12 shall be binding upon the Company and
the  Participant  and  shall be made  within  60 days of the date when a Payment
becomes  payable or  transferable.  As promptly as  practicable  following  such
determination and the elections hereunder,  the Company shall pay or transfer to
or for the benefit of the Participant such amounts as are then due to him or her
under the Plan,  and shall promptly pay or transfer to or for the benefit of the
Participant  in the  future  such  amounts as become due to him or her under the
Plan.

     12.3      Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial  determination
by the Auditors  hereunder,  it is possible that Payments will have been made by
the  Company  which  should  not  have  been  made  (an  "Overpayment")  or that
additional Payments which will not have been made by the Company could have been
made (an  "Underpayment"),  consistent in each case with the  calculation of the
Reduced  Amount  hereunder.  In the  event  that the  Auditors,  based  upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant  which the Auditors  believe has a high  probability of success,
determine that an Overpayment has been made, such  Overpayment  shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company on  demand,  together  with  interest  at the  applicable  federal  rate
provided in section 7872(f)(2) of the Code;  provided,  however,  that no amount
shall be payable by the  Participant  to the  Company if and to the extent  that
such  payment  would not reduce the amount  which is subject to  taxation  under
section  4999 of the Code.  In the event  that the  Auditors  determine  that an
Underpayment  has  occurred,   such  Underpayment  shall  promptly  be  paid  or
transferred  by the Company to or for the benefit of the  Participant,  together
with interest at the applicable  federal rate provided in section  7872(f)(2) of
the Code.

     12.4      Related  Corporations.  For  purposes  of this  Article  12,  the
term "Company" shall include affiliated corporations to the extent determined by
the Auditors in accordance with section 280G(d)(5) of the Code.

Article 13. Withholding Taxes.

     13.1      General.  To  the  extent  required by applicable federal, state,
local or foreign law, the  recipient  of any payment or  distribution  under the
Plan shall make arrangements satisfactory to the Company for the satisfaction of
any  withholding  tax  obligations  that  arise by  reason  of such  payment  or
distribution.  The  Company  shall  not be  required  to make  such  payment  or
distribution until such obligations are satisfied.

     13.2      Nonstatutory  Options,  Restricted  Shares  or  Performance Share
Awards.  The  Committee  may permit an  Optionee  who  exercises  NQSOs,  or who
receives Awards of Restricted  Shares, or who receives Common Shares pursuant to
the terms of a  Performance  Share  Award,  to satisfy all or part of his or her
withholding  tax  obligations  by having the  Company  withhold a portion of the
Common  Shares that  otherwise  would be issued to him or her under such Awards.
Such Common  Shares  shall be valued at their Fair Market Value on the date when
taxes otherwise  would be withheld in cash. The payment of withholding  taxes by
surrendering Common Shares to the Company, if permitted by the Committee,  shall
be subject to such  restrictions  as the  Committee  may impose,  including  any
restrictions required by rules of the Securities and Exchange Commission.

Article 14.  Assignment or Transfer of Award.

     14.1      General Rule.  Any  Award  granted  under  the  Plan shall not be
anticipated,  assigned,  attached,  garnished,  optioned,  transferred  or  made
subject to any creditor's  process,  whether  voluntarily,  involuntarily  or by
operation of law, except to the extent specifically permitted by Section 14.2.

     14.2      Exceptions to General Rule.  Notwithstanding  Section  14.1, this
Plan shall not preclude (i) a Participant  from  designating  a  beneficiary  to
succeed,  after the Participant's  death, to those of the  Participant's  Awards
(including without limitation, the right to exercise any unexercised Options) as
may be determined by the Company from time to time in its sole discretion,  (ii)
a  transfer  of  any  Award  hereunder  by  will  or  the  laws  of  descent  or
distribution, or (iii) a voluntary transfer of an Award (other than an ISO) to a
trust or  partnership  for the  exclusive  benefit of one or more members of the
Participant's  family,  but only if the Participant has sole investment  control
over such trust or partnership.

Article 15.  Future of Plans.

     15.1      Term of the Plan.  The  Plan,  as  set forth herein, shall become
effective on May 7, 2001. The Plan shall remain in effect until it is terminated
under Section 15.2, except that no ISOs shall be granted after May 6, 2011.

     15.2      Amendment or Termination.  The Committee may, at any time and for
any reason, amend or terminate the Plan; provided, however, that  any  amendment
of the Plan shall be subject to the approval of the  Company's  stockholders  to
the extent required by applicable laws, regulations or rules.

     15.3      Effect of Amendment or Termination.  No Award shall be made under
     the Plan after the termination thereof. The termination of the Plan, or any
     amendment  thereof,  shall  not  affect  any  Option,  Restricted  Share or
     Performance Share Award previously granted under the Plan.

Article 16.  Definitions.

     16.1      "Award"  means  any  award of an Option, a Restricted  Share or a
Performance  Share Award under the Plan.

     16.2      "Award Year"  means  a fiscal year beginning January 1 and ending
December 31 with respect to which an Award may be granted.

     16.3      "Board" means the Company's Board o f Directors,  as  constituted
from time to time.

     16.4      "Change in Control"  means the occurrence of any of the following
events after the effective date of the Plan as set out in Section 15.1:

     (a)  A change in control  required to be  reported pursuant to Item 6(e) of
     Schedule 14A of Regulation 14A under the Exchange Act;

     (b)  A change in the  composition  of the Board, as a result of which fewer
     than two-thirds of the incumbent directors are directors who either (i) had
     been  directors  of the Company 24 months prior to such change or (ii) were
     elected, or nominated for election, to the Board with the affirmative votes
     of at least a  majority  of the  directors  who had been  directors  of the
     Company 24 months  prior to such change and who were still in office at the
     time of the election or nomination;

     (c)  Any "person" (as such term is used in sections  13(d) and 14(d) of the
     Exchange Act) becomes the  beneficial  owner,  directly or  indirectly,  of
     securities of the Company  representing  20 percent or more of the combined
     voting power of the Company's then outstanding  securities  ordinarily (and
     apart from rights accruing under special circumstances) having the right to
     vote at  elections  of  directors  (the "Base  Capital  Stock");  provided,
     however, that any change in the relative beneficial ownership of securities
     of any person  resulting solely from a reduction in the aggregate number of
     outstanding  shares of Base Capital Stock,  and any decrease  thereafter in
     such person's  ownership of  securities,  shall be  disregarded  until such
     person  increases  in any manner,  directly or  indirectly,  such  person's
     beneficial ownership of any securities of the Company.

     16.5      "Code" means the Internal Revenue Code of 1986, as amended.

     16.6      "Committee"  means  the  Compensation  Committee of the Board, as
constituted from time to time.

     16.7      "Common Share"  means  one  share  of  the  common  stock  of the
Company.

     16.8      "Company"  means  The  Charles  Schwab  Corporation,  a  Delaware
corporation.

     16.9      "Disability"  means  the  inability  to engage in any substantial
gainful  activity   considering  the  Participant's   age,  education  and  work
experience by reason of any medically  determined  physical or mental impairment
that has continued without  interruption for a period of at least six months and
that can be expected  to be of long,  continued  and  indefinite  duration.  All
determinations  as to whether a Participant  has incurred a Disability  shall be
made by the Employee  Benefits  Administration  Committee  of the  Company,  the
findings of which shall be final, binding and conclusive.

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

     16.11     "Exchange Act"  means  the  Securities  Exchange  Act of 1934, as
amended.

     16.12     "Exercise Price"  means the amount for which one Common Share may
be  purchased  upon  exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.

     16.13     "Fair  Market  Value"  means the market price of a Common  Share,
determined  by the  committee as follows:

     (a)  If the Common  Share  was  traded on a stock  exchange  on the date in
     question,  then the Fair Market  Value shall be equal to the closing  price
     reported by the applicable composite-transactions report for such date;

     (b)  If  the  Common  Share  was  traded  over-the-counter  on  the date in
     question  and was  classified  as a national  market  issue,  then the Fair
     Market  Value shall be equal to the last  transaction  price  quoted by the
     NASDAQ system for such date;

     (c)  If  the  Common  Share  was  traded  over-the-counter  on  the date in
     question but was not classified as a national  market issue,  then the Fair
     Market  Value  shall  be  equal  to the  mean  between  the  last  reported
     representative  bid and asked prices  quoted by the NASDAQ  system for such
     date; and

     (d)  If  none  of  the  foregoing  provisions  is applicable, then the Fair
     Market  Value shall be  determined  by the  Committee in good faith on such
     basis as it deems appropriate.

     16.14     "ISO" means an incentive stock option described in section 422(b)
of the Code.

     16.15     "Key Employee" means (1) a key common-law employee of the Company
or any  Subsidiary,  as  determined  by  the  Committee,  or (2) a  non-employee
director of any Subsidiary, as determined by the Committee.

     16.16     "Named Executive Officer" means a Participant who, as of the date
of vesting of an Award is one of a group of "covered employees,"  as  defined in
the Regulations promulgated under Code Section 162(m), or any successor statute.

     16.17     "Non-Employee Director"  means a member of the Board who is not a
common-law employee.

     16.18     "NQSO"  means  an employee stock option not described in sections
422 through 424 of the Code.

     16.19     "Option"  means  an ISO or NQSO or, in the case of a Key Employee
who is subject to the tax laws of a foreign  jurisdiction,  an option qualifying
for  favorable tax treatment  under the laws of such  jurisdiction,  including a
Replacement Option,  granted under the Plan and entitling the holder to purchase
one Common Share.

     16.20     "Optionee"  means an  individual,  or his or her  estate, legatee
or heirs at law that holds an Option.

     16.21     "Participant"  means  a Non-Employee Director or Key Employee who
has received an Award.

     16.22     "Performance Share Award"  means the conditional right to receive
in the future one Common Share, awarded to a Participant under the Plan.

     16.23     "Plan" means this 1992 Stock Incentive Plan of The Charles Schwab
Corporation, as it may be amended from time to time.

     16.24     "Replacement Option"  means  an  Option  that  is  granted when a
Participant  uses a Common  Share held or to be acquired by the  Participant  to
exercise an Option and/or to satisfy tax  withholding  requirements  incident to
the exercise of an Option.

     16.25     "Restricted Share"  means a Common Share awarded to a Participant
under the Plan.

     16.26     "Retirement"  shall  mean  any  termination  of  employment of an
Optionee  for any reason  other than  death at any time after the  Optionee  has
attained  Retirement Age. For this purpose,  Retirement Age shall mean age fifty
(50), but only if, at the time of such  termination,  the  Participant  has been
credited  with at  least  seven  (7)  Years  of  Service  under  the  SchwabPlan
Retirement Savings and Investment Plan; provided,  however,  that if at the time
of grant of an Option an Optionee  is a  Participant  in a qualified  retirement
plan maintained by a Subsidiary  (other than the SchwabPlan  Retirement  Savings
and  Investment  Plan),  then  Retirement Age shall have the same meaning as the
Normal Retirement Date as defined in such plan.

     16.27     "Stock Award Agreement"  means  the agreement between the Company
and the  recipient  of a  Restricted  Share or  Performance  Share  Award  which
contains the terms,  conditions and  restrictions  pertaining to such Restricted
Share or Performance Share Award.

     16.28     "Stock Option Agreement"  means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her option.

     16.29     "Subsidiary"  means  any  corporation  or  other  entity,  if the
Company  and/or one or more other  Subsidiaries  own not less than 50 percent of
the total  combined  voting  power of all classes of  outstanding  stock of such
corporation (or ownership interest of such other entity). A corporation or other
entity that attains the status of a  Subsidiary  on a date after the adoption of
the Plan shall be considered a Subsidiary commencing as of such date.

<PAGE>

                                   ADDENDUM A

     The  provisions  of the Plan,  as amended by the terms of this  Addendum A,
shall apply to the grant of Approved Options to Key U.K. Employees.

     1.   For purposes of this Addendum A, the following definitions shall apply
in addition to those set out in section 16 of the Plan:

     Approved  Option  Means a stock  option  designed to qualify as an approved
     executive share option under the Taxes Act;

     Inland Revenue means the Board of the Inland Revenue in the United Kingdom.

     Key U.K.  Employee  means a  designated  employee of  Sharelink  Investment
     Services plc or any  subsidiary  (as that term is defined in the  Companies
     Act 1985 of the United Kingdom,  as amended) of which Sharelink  Investment
     Services plc has control for the purposes of section 840 of the Taxes Act;

     Taxes Act means the  Income  and  Corporation  Taxes Act 1988 of the United
     Kingdom.

     2.   An Approved Option may only be granted to a Key U.K. Employee who:

          (i)  is  employed on a  full-time  basis;  and
          (ii) does  not fall within the provisions of paragraph 8 of Schedule 9
               to the Taxes Act.

     For purposes of this section 2(i) of Addendum A, "full-time"  shall mean an
employee who is required to work 20 hours per week, excluding meal breaks.

     3.   No Approved Option may be granted to a Key U.K. Employee if  it  would
cause the aggregate of the exercise  price of all  subsisting  Approved  Options
granted to such employee under the Plan, or any other subsisting options granted
to such employee  under any other share option scheme  approved under Schedule 9
of the Taxes Act and  established  by the Company or an associated  company,  to
exceed the higher of (a) one hundred thousand pounds sterling and (b) four times
such  employee's  relevant  emoluments  for the  current  or  preceding  year of
assessment  (whichever is greater);  but where there were no relevant emoluments
for the  previous  year of  assessment,  the  limit  shall be the  higher of one
hundred  thousand  pounds  sterling  or  four  times  such  employee's  relevant
emoluments  for the period of twelve months  beginning with the first day during
the  current  year  of  assessment  in  respect  of  which  there  are  relevant
emoluments.  For the  purpose  of this  section  3 of  Addendum  A,  "associated
company"  means an associated  company  within the meaning of section 416 of the
Taxes Act;  "relevant  emoluments"  has the meaning given by paragraph  28(4) of
Schedule 9 to the Taxes Act and "year of  assessment"  means a year beginning on
any April 6 and ending on the following April 5.

     4.   Common Shares issued pursuant to the exercise of Approved Options must
satisfy the  conditions  specified in  paragraphs  10 to 14 of Schedule 9 to the
Taxes Act.

     5.   Notwithstanding  the  provisions  of  Section  5.4  of  the  Plan, the
exercise  price of an Approved  Option shall not be less than 100 percent of the
closing  price of a Common  Share as  reported  in the New York  Stock  Exchange
Composite Index on the date of grant.

     6.   No Approved Option may be exercised at any time by a Key U.K. Employee
when that Key U.K.  Employee  falls  within the  provisions  of  paragraph  8 of
Schedule 9 to the Taxes Act. If at any time the shares under an Approved  Option
cease to comply with the  conditions in paragraphs 10 to 14 of Schedule 9 to the
Taxes Act, then all Approved Options then  outstanding  shall lapse and cease to
be exercisable from the date of the shares ceasing so to comply, and no optionee
shall  have any  cause of  action  against  the  Company,  Sharelink  Investment
Services  plc or any  subsidiary  of the Company or any other  person in respect
thereof.

     7.   An  Approved  Option  may  contain  such  other  terms, provisions and
conditions  as may be  determined  by the  Committee  consistent  with the Plan,
provided that the approved option  otherwise  complies with the requirements for
approved executive option schemes specified in Schedule 9 of the Taxes Act.

     8.   In  relation  to  an  Approved  Option,  notwithstanding  the terms of
section 10.1 of the Plan, no  adjustment  shall be made pursuant to section 10.1
of the Plan to any  outstanding  Approved  Options without the prior approval of
the Inland Revenue.

     9.   In  relation  to an  Approved  Option any Key U.K. Employee shall make
arrangements  satisfactory  to the  Company  for  the  satisfaction  of any  tax
withholding or deduction -- at -- source obligations that arise by reason of the
grant to him or her of such option, or its subsequent exercise.

     10.  In relation to an Approved  Option, in addition to the  provisions set
out  in  section  15.2  of the  Plan,  no  amendment  which  affects  any of the
provisions  of the Plan relating to Approved  Options  shall be effective  until
approved by the Inland  Revenue,  except for such  amendment  as are required to
obtain and maintain the approval of Inland Revenue pursuant to Schedule 9 to the
Taxes Act.

<PAGE>

                                    ADDENDUM

               THE UNITED KINGDOM 2001 OFFICER SHARE OPTION SCHEME

                        OF THE CHARLES SCHWAB CORPORATION

This Addendum to The Charles Schwab Corporation 2001 Stock Incentive Plan (the
"2001 Plan") shall constitute the rules of the United Kingdom 2001 Officer Share
Option Scheme ("Scheme") of The Charles Schwab Corporation (the "Company"), as
approved by the United Kingdom's Board of Inland Revenue ("Inland Revenue")
under Schedule 9 to the United Kingdom's Income and Corporation Taxes Act 1988
(the "Act").

Definitions

1    Except as specifically set forth in this Addendum, the terms and conditions
     of the 2001 Plan shall  apply to the scheme.  In  addition,  the  following
     definitions will apply to this Scheme:

     1.1  References  to the  "Act"  are  to the  United  Kingdom's  Income  and
          Corporation Taxes Act 1998.

     1.2  The  expression  "New  Option"  means an  Option  over  shares  in the
          Acquiring  Company  (as  defined  in rule 5.2) or some  other  company
          falling  within  paragraph  10(b) or 10(c) of  Schedule  9 to the Act,
          meeting the requirements of sub-paragraphs 15(3)(a) to (d) of Schedule
          9 to the Act,  granted in consideration of the release of a subsisting
          Option within the "appropriate  period" (as defined by paragraph 15(2)
          of Schedule 9 to the Act).

     1.3  The expression  "Option-holder" means the person to whom an option has
          been granted  under this Scheme and  references  to "Optionee " in the
          2001 Plan shall be construed accordingly.

     1.4  The  expression  "Participating  Company"  means the  Company  and any
          company which is under the control of the Company,  within the meaning
          of  section  840 of the Act,  and to which the  Committee  shall  have
          resolved that this Scheme shall for the time being extend.

     1.5  References to  "Qualifying  Shares" in this Addendum are references to
          Shares  which  satisfy  the  requirements  of  paragraphs  10 to 14 of
          Schedule 9 to the Act.

     1.6  References  to "Shares" in this  addendum are  references to shares or
          shares of Common Stock in the Company.

Eligibility and Grant

2.1  Options may only be granted  under the Scheme to a Key  Employee  who is an
     employee  (other than one who is a director)  or a full-time  director of a
     Participating  Company, and for this purpose a person shall be treated as a
     full-time  director of a  Participating  Company if he is obliged to devote
     not less than 25 hours a week, excluding meal breaks, to the performance of
     the  duties of his office or  employment  with that  company  (or with that
     company and any other company which is a Participating Company). References
     in the 2001 Plan to "employee" shall be construed accordingly.

2.2  No Options  under this Scheme may be granted to, or exercised  by, a person
     who is not eligible to  participate  by virtue of paragraph 8 of Schedule 9
     to the Act, as modified by section 187 (3) (a) of the Act.

2.3  No Option may be granted at a time when the Shares over which it is granted
     are not Qualifying Shares.

2.4  For the purposes of Article 5.4, the Fair Market  Value,  as  determined by
     the  Committee  in  respect of any Option  under this  Scheme,  shall be as
     defined in  Article16.13(a) of the 2001 Plan if the Stock Exchange referred
     to in that  Article is the New York Stock  Exchange  and the closing  price
     referred  to in that  Article  is the  closing  price on the New York Stock
     Exchange  and in any other case shall be not less than the market  value of
     the shares as agreed in  advance  with the United  Kingdom  Inland  Revenue
     Shares Valuation Division.

2.5  Only  Options  (as  defined in the 2001 Plan)  shall be granted  under this
     Scheme and no Replacement  Options,  Restricted Shares or Performance Share
     Awards as outlined in Articles  5.9 and 7 of the 2001 Plan shall be granted
     under  this  Scheme.  Articles5.9,  7, 9 and 12 of the 2001 Plan  shall not
     apply for the  purposes  of this  Scheme  and an Option  granted  under the
     Scheme  need not comply  with the  requirement  in the second  sentence  of
     Article 5.3.

2.6  No Option  granted  under this Scheme  shall be  exercisable  more than ten
     years after the date the Option is granted. Limitation on Awards

3.   For the purposes of Article 3 of the 2001 Plan,  any Option  granted  under
     this  Scheme to any  person  shall be limited  and take  effect so that the
     sterling  equivalent of the amount  payable on the exercise of such Option,
     when added to the aggregate sterling equivalent of Shares which are capable
     of being acquired under subsisting rights obtained by the Participant under
     this Scheme or any other share option scheme  established by the Company or
     any associated  company (within the meaning contained in section 416 of the
     Act) of the Company and approved under Schedule 9 to the Act (but excluding
     any rights  obtained under a savings related share option scheme) shall not
     exceed the limit set out in paragraph 28 of Schedule 9 to the Act.

     For the purposes of this  Scheme,  the  sterling  equivalent  of any amount
     payable on the  exercise of an option  shall be the amount  converted  into
     pounds  sterling  at the highest  buying rate shown in the day's  spread as
     published in the Financial Times for the date of grant of such option or at
     such other rate as may be agreed from time to time with the United  Kingdom
     Inland Revenue Shares Valuation Division.

Exercise

4.1  No Option may be exercised  whilst this Scheme is and is intended to remain
     approved by the Inland  Revenue  unless the Shares  which would be acquired
     are Qualifying Shares.

4.2  Any terms and conditions  imposed by the Committee under Article 5.1 of the
     2001 Plan for the  exercise of Options  granted  under this Scheme shall be
     factual  and  objective,  laid down at the time of grant,  and shall not be
     amended  or waived  after  the time of grant  unless  event or events  have
     occurred  such that the  Committee  reasonably  believes  that the original
     conditions  as amended or waived will be a fairer  measure and would not be
     less  difficult  to satisfy  than the original  condition.  Any  conditions
     imposed shall not be effective  until approved by the United Kingdom Inland
     Revenue.  Any other terms  determined by the Company may only be imposed if
     they otherwise  comply with the  requirements  set out in Schedule 9 to the
     Act.

4.3  Notwithstanding  Article 5.2 of the 2001 Plan, no Option may be transferred
     by will, and on the death of the Option-holder any subsisting Option may be
     exercised by his personal representatives not later than one year after the
     date of his death. Article 14.2 of the 2001 Plan shall not apply.

4.4  Article  5.5 of the 2001 Plan  shall not apply to this  Scheme.  Each Stock
     Option  Agreement  shall specify the date when all or any instalment of the
     Option is to become  exercisable  (the  vesting of the  Option).  The Stock
     Option Agreement shall also specify the term of the Option.  Any subsisting
     Options  may be  exercised  by the  Participant  or,  if  deceased,  by his
     personal  representatives in whole or in part (including any unvested part)
     at the  time  of or,  subject  to  rule  4.5,  at any  time  following  the
     occurrence of the earliest of the following events:

     (i)  the death of the Participant; and

     (ii) upon  the  Participant  ceasing  to be a  director  or  employee  of a
          Participating  Company or the Company or any  Subsidiary as defined in
          Article  16.29 of the 2001 Plan where that  cessation was by reason of
          Disability, injury or Retirement.

4.5  An Option  shall lapse and become  thereafter  incapable of exercise on the
     earliest of the following events:

     (i)  the tenth anniversary of the date the Option is granted;

     (ii) where  a  Participant  ceases  to  be  a  director  or  employee  of a
          Participating  Company or the Company or any  Subsidiary as defined in
          Article  16.29 of the 2001  Plan by reason  of  death,  Disability  or
          injury, the first anniversary following such cessation;

     (iii)where  a  Participant  ceases  to  be  a  director  or  employee  of a
          Participating  Company or the Company or any  Subsidiary as defined in
          Article  16.29 of the 2001 Plan by reason of  Retirement,  the  second
          anniversary following such cessation; and

     (iv) the end of the period of exercisability  determined in accordance with
          rule 5.

4.6  Payment  for Shares on the  exercise of Options  granted  under this Scheme
     shall be in cash and not through the  delivery of Shares of Common Stock or
     otherwise as described in Articles 6.2 and 6.3 of the 2001 Plan.

4.7  Shares shall be issued and the  Option-holder  registered  as a shareholder
     within 30 days of receipt of a valid exercise notice.

4.8  Notwithstanding  the provisions of Article 5.8 or 6.2 of the 2001 Plan, any
     Shares issued upon the exercise of an Option under this Scheme shall not be
     subject to any forfeiture conditions, rights of repurchase, rights of first
     refusal or any other transfer restrictions that do not apply to all holders
     of Shares.

4.9  Article 13 shall  apply so that the  Company  shall not be obliged to issue
     the shares until the obligations are satisfied .

4.10 The Company shall keep available  sufficient  unissued  Shares or Shares in
     the Treasury to satisfy the exercise in full of all Options  granted  under
     this Scheme and for the time being remaining capable of being exercised.

Takeover, Change of Control

5.1  If any person obtains control of the Company (within the meaning of section
     840 of the Act) as a result of making:

     (i)  a general  offer to acquire the whole of the issued  share  capital of
          the Company  (other than that which is already  owned by him) which is
          unconditional  or  which  is made on a  condition  such  that if it is
          satisfied  the  person  making  the  offer  will have  control  of the
          Company; or

     (ii) a general offer to acquire all the shares (other than shares which are
          already  owned by him) in the  Company  which are of the same class as
          Shares subject to a subsisting Option,

     then the Committee shall notify all  Participants as soon as is practicable
     after the change of control.  Any  subsisting  Option may be exercised from
     the date of the receipt of that  notification  up to the expiry of a period
     ending  six  months  from the time  when the  person  making  the offer has
     obtained  control of the  Company  and any  condition  subject to which the
     offer is made has been satisfied.

5.2  If as a result of the events  specified in rule 5.1 an "Acquiring  Company"
     (as defined in paragraph 15 of Schedule 9 to the Act) has obtained  control
     of the Company,  the Participant  may, if the Acquiring  Company so agrees,
     release any subsisting  Option he holds in consideration for the grant of a
     New Option.

5.3  Where the circumstances noted in rule 5.2 apply, New Options may be granted
     within  the  terms  of  paragraph  15(1)  of  Schedule  9  to  the  Act  in
     consideration  for the  release of Options  previously  granted  under this
     Scheme. Such New Options are deemed to be equivalent to the old Options and
     to have been  granted  within the terms of this  Scheme,  provided  the New
     Options  satisfy the conditions in paragraph 15(3) of Schedule 9 to the Act
     and the release of the Option takes place within six months of the date the
     Acquiring  Company obtains  control of the Company.  A New Option issued in
     consideration  of the release of an Option  shall be evidenced by an option
     which shall import the relevant provisions of this Scheme.

5.4  A New Option shall,  for all other  purposes of this Scheme,  be treated as
     having been acquired at the same time as the corresponding released Option.

5.5  If any person obtains  control of the Company other than as a result of the
     events  specified  in  rule  5.1,  then  the  Committee  shall  notify  all
     Participants  as soon as  practicable  after  the  change of  control.  Any
     subsisting  Option may be  exercised  from the date of the  receipt of that
     notification  up to the expiry of a period  ending six months from the time
     when the person obtains control of the Company.

5.6  If, as a result of the events  specified in rules 5.1 or 5.3, a company has
     obtained  control of the Company,  the  Committee  shall be entitled at any
     time to require all holders of subsisting Options to exercise those Options
     within 30 days by notice in writing to the Participant to this effect.

5.7  The periods of exercisability under this rule 5 and the date of lapse under
     rule 4.5 are those of whichever of the  pre-conditions of rules 5.1, 5.3 or
     5.4  are  first   achieved.   The  subsequent   achievement  of  any  other
     pre-conditions  will not  cause a period of  exercisability  to begin nor a
     date of lapse to arise.

5.8  For the  purpose  of this rule 5 other  than rule  5.2,  a person  shall be
     deemed to have  obtained  control of the Company if he and others acting in
     concert with him have together obtained control of it.

5.9  The exercise of an Option pursuant to the preceding provisions of this rule
     5 shall not be subject to any conditions imposed pursuant to Article 5.1 of
     the 2001 Plan as amended by rule 4.2.

Employment Relationship

6.   With respect to Options granted  pursuant to the Scheme,  Article 11 of the
     2001 Plan shall be subject to the  following:  Any  Participant or Employee
     shall  waive  any  and  all  rights  to  compensation  or  damages  on  the
     termination  of  his  office  or  employment   with  any  past  or  present
     Participating  Company or Subsidiary for any reason  whatsoever  insofar as
     those rights arise or may arise from his ceasing to have rights under or to
     be  entitled to  exercise  any Option  under this Scheme as a result of the
     termination.  Neither  the grant of an  Option  nor any  benefit  which may
     accrue to a  Participant  on the  exercise of an Option  shall form part of
     that Participant's  remuneration entitlement from his office or employment,
     nor shall the grant of an Option  create  any right or  entitlement  on the
     Participant to have any further Options granted to him under this Scheme if
     at all.

Protection Against Dilution: Variation of Share Capital

7.   With respect to Options granted pursuant to the Scheme, Article 10.1 of the
     2001 Plan shall apply, but (i) with the omission of the following words and
     phrases : "a  declaration  of a  dividend  payable  in Common  Shares",  "a
     declaration of a dividend  payable in a form other than Common Shares",  "a
     spin-off or similar  occurrence;"  and (ii) as if the following  words were
     added "or any other variation of the issued Common Shares" before the words
     "the Committee".  Adjustments to Options, as described in Article 10 of the
     2001 Plan,  shall be at the  discretion  of the  Committee and shall not be
     effective  under this Scheme until  approved by the United  Kingdom  Inland
     Revenue.

Alteration of Scheme rules

8.   The Committee may make such alterations to the provisions of this Scheme as
     may be permitted by Article 15.2 of the 2001 Plan,  provided  that any such
     alteration  made at a time when this  Scheme is to remain  approved  by the
     United  Kingdom  Inland  Revenue shall not have effect unless and until the
     alteration  has the prior  approval in writing of the United Kingdom Inland
     Revenue.

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