Document:

EXHIBIT 10.235

                            Executive Incentive Plan
                                       of
                             U.S. Trust Corporation

             As Amended and Restated effective as of January 1, 2001

1.       Purpose

The Plan  hereinafter  set forth  represents  a  continuation  of the  Executive
Incentive Plan maintained by U.S. Trust  Corporation  before its merger with The
Charles Schwab Corporation pursuant to the Agreement and Plan of Merger dated as
of January 12, 2000.

The purpose of the Executive  Incentive  Plan of U.S.  Trust  Corporation  is to
encourage  greater focus on  performance  among the key executives of U.S. Trust
Corporation  and its Affiliated  Companies by relating a significant  portion of
their total  compensation to the  achievement of annual  financial and strategic
objectives.

2.       Definitions

As used herein, the following terms shall have the following meanings:

      "Affiliated Companies" shall mean United States Trust Company of New York,
      and each other direct or indirect subsidiary of U.S. Trust Corporation.

      "Average  Market  Value"  shall mean,  with respect to one share of Common
      Stock as of any date or with  respect to any period,  the mean between the
      per-share  high and low prices for the Common  Stock on such date,  or the
      average of the mean between such prices on each day during such period, as
      quoted on the New York  Stock  Exchange,  or, if the  Common  Stock is not
      traded on such  system,  on other  such  securities  market or  securities
      exchange on which such shares are traded as the Committee shall determine.

      "Award" shall mean a payment  earned by a Participant  in accordance  with
      the provisions of the Plan.

      "Beneficiary" shall mean the person or persons designated by a Participant
      in  accordance  with  Section 10 to receive any amount,  or Common  Stock,
      payable under the Plan upon the Participant's death.

      "Board of Directors" shall mean the Board of Directors of the Corporation.

      "Change  in  Control"  shall  mean that any of the  following  events  has
      occurred:

            (i)   A change in control of the  Company  required  to be  reported
                  pursuant to Item 6(e) of Schedule 14A of Regulation  14A under
                  the Securities Exchange Act of 1934, as amended (the "Exchange
                  Act");

            (ii)  A change in the  composition  of the Board of Directors of the
                  Company,  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 of
                  Directors  of the  Company  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;

            (iii) 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.

      "Committee"  shall mean the Committee,  as constituted  from time to time,
      appointed by the senior  management of the  Corporation and or the Company
      to administer the Plan.

      "Common  Stock" shall mean the common shares ($.01 par value per share) of
      the Company.

      "Company"   shall  mean  The  Charles  Schwab   Corporation,   a  Delaware
      corporation.

      "Corporation"  shall  mean  the U.S.  Trust  Corporation,  a wholly  owned
      subsidiary of the Company.

      "Determined  Value" shall mean the highest price per share of Common Stock
      paid  in  connection  with  any  Change  in  Control  (including,  without
      limitation,  prices paid in any subsequent  merger or combination with any
      entity that acquire control of the Company.

      "Executive  Deferred  Compensation Plan" shall mean the Executive Deferred
      Compensation Plan of U.S. Trust Corporation.

      "401(k)  Plan" shall mean the 401(k) Plan and ESOP of United  States Trust
      Company of New York and Affiliated Companies.

      "Participant"  shall  mean an  officer  of the  Corporation  or any of its
      Affiliated Companies who is selected to participate in the Plan.

      "Plan" shall mean the Executive  Incentive Plan of U.S. Trust Corporation,
      as set forth herein and as amended from time to time.
         "Plan Year" shall mean each calendar year.

      "Prior  Plan"  shall  mean  the  Executive  Incentive  Plan of U.S.  Trust
      Corporation, as in effect prior to January 1, 2001.

      "Restricted Unit" shall mean a unit of measurement equivalent to one share
      of Common  Stock,  with none of the attendant  rights of a shareholder  of
      such share,  including,  without limitation,  the right to vote such share
      and the right to receive dividends thereon, except to the extent otherwise
      specifically provided herein.

      "Vesting Date" shall mean, with respect to any Restricted Units granted to
      a Participant  hereunder,  the date on which such Restricted  Units become
      vested, as provided in Section 5(d) or Section 8(e).

3.       Participation

Participants  in the Plan  shall be  limited  to those  officers  of U.S.  Trust
Corporation  and  its  Affiliated  Companies  who  the  Committee,  in its  sole
discretion, selects to participate in the Plan.

The Committee may select as a Participant for any Plan Year, any officer who, in
the sole judgment of the Committee,  is expected to make  contributions that are
critical to the success of U.S. Trust  Corporation and its Affiliated  Companies
and to the growth of their business.

Any  person  who has been  selected  as a  Participant  for any Plan Year  shall
continue to be a Participant  in the Plan for each  subsequent  Plan Year during
the period of his or her employment,  subject, however, to the Committee's right
to terminate  such  individual's  participation  in the Plan as of any Plan Year
commencing  after the date on which the  Committee  makes its  determination  to
terminate such individual's participation.

4.       Awards

Awards for any Plan Year beginning on or after January 1, 2001 shall be  made in
accordance with the following provisions:

      (a)   The  Committee   shall   establish  in  writing  (i)  the  corporate
            performance  goal  (the  "Performance  Goal")  that  will  apply  in
            determining the Awards for the year, (ii) the aggregate  amount that
            will be available for Awards for the year if the Performance Goal is
            achieved (the "Target  Awards Pool"),  and (iii) the  percentages of
            the Target Awards Pool that will in fact be available for Awards for
            the year based on the level of achievement of the Performance  Goal,
            which  percentages may be greater than 100% if the Performance  Goal
            is exceeded and less than 100% if the Performance  Goal has not been
            fully achieved (the "Actual Awards Pool").

      (b)   The  Performance  Goal to be  established  for the year shall be the
            achievement  of  such  income  goals  for  the  Corporation  as  the
            Committee shall determine.

      (c)   The  Target  Awards  Pool to be  established  for the year  shall be
            determined by the Committee as a percentage  or  percentages  of the
            aggregate base salary earned for the year while a Participant of all
            Participants,  either individually or by categories of Participants,
            provided that the Committee may, in its sole discretion,  also apply
            such   percentage  or  percentages  to  other  current  or  deferred
            compensation shall be counted. The base salary of an employee who is
            selected to become a  Participant  during a Plan Year in  connection
            with an acquisition of a company by the Corporation or an Affiliated
            Company  during such Plan Year may be adjusted in the  discretion of
            the  Committee to include all or part of his or her base salary with
            the acquired company for such Plan Year.

      (d)   As of the end of the Plan Year,  the Committee  shall  determine the
            extent to which the Performance  Goal for the year has been met and,
            based  thereon,  the amount of the Actual Awards Pool. The Committee
            shall not have any discretion to increase the Actual Awards Pool, as
            so determined, but the Committee may, in its discretion,  reduce the
            amount of the Actual Awards Pool, as so  determined,  to reflect any
            events,  circumstances or factors which the Committee believes to be
            appropriate in determining the total amount to be made available for
            Awards to Participants for the year.

      (e)   After  determining the Actual Awards Pool in accordance with Section
            4(d), the Committee shall determine the amount of the Award, if any,
            earned  for the year by each  Participant,  in  accordance  with the
            following rules:

            (i)   The amount of the Award, if any, earned by a Participant other
                  than a covered  employee  of the Company for the year shall be
                  determined by the Committee,  in its discretion,  based on the
                  level of each such Participant's  achievement of the goals and
                  objectives established for the Participant at the start of the
                  year  and  on  such  other  factors  as  the  Committee  deems
                  appropriate.  The individual  goals for each such  Participant
                  for  each  Plan  Year  shall be set,  and  such  Participant's
                  performance  relative to such goals shall be measured,  by the
                  Committee  based  upon  the   recommendations   of  the  Chief
                  Executive Officer.

            (ii)  The  Committee  may,  in  its   discretion,   make  Awards  to
                  Participants  in an  aggregate  amount less than the amount of
                  the  Actual  Awards  Pool.  The  Committee  may  also,  in its
                  discretion, allocate any portion of the Actual Awards Pool for
                  use in making special additional Awards to any Participant who
                  is  not  a  Covered   Executive   or  to  any  group  of  such
                  Participants.

            (iii) Notwithstanding  any other  provision  herein to the contrary,
                  the  amount of the Award  payable to any  Participant  for any
                  year shall not  exceed  $2.5  million,  as  adjusted  annually
                  beginning  in  1998 to  reflect  percentage  increases  in the
                  Customer Price Index.

            (iv)  A Participant  who terminates  employment with the Corporation
                  and its Affiliated Companies prior to the end of any Plan Year
                  shall receive such portion of an Award,  if any, for that year
                  as the Committee shall determine.

      (f)   All actions  taken by the  Committee  hereunder in  determining  the
            Awards payable to  Participants  for each year shall be reflected in
            the minutes of the  meetings of the  Committee at which such actions
            were taken.

5.       Payment of Awards

The amount payable to a Participant with respect to an Award earned for any Plan
Year  prior to  January  1, 2000  shall be  determined  in  accordance  with the
provisions of the Prior Plan:

The amount  payable  hereunder to a Participant  with respect to an Award earned
for any Plan Year  beginning on or after  January 1, 2000 shall be determined in
accordance with the following provisions:

      (a)   The amount  payable  with respect to a  Participant's  Award for any
            Plan Year  beginning on or after  January 1, 1999 shall be the total
            amount of the Award earned by the Participant.

      (b)   The  amount  payable  with  respect  to a  Participant's  Award,  as
            determined  under (a)  above,  shall be  payable  partly in cash and
            partly  in the  form of a  mandatory  deferred  contribution  to the
            Executive Deferred  Compensation Plan of U.S. Trust Corporation (the
            portions so payable are hereinafter  referred to,  respectively,  as
            the  "Cash   Portion"   and  the   "Restricted   Portion",   of  the
            Participant's  Award),  in such  percentages as the Committee in its
            discretion shall determine;  provided,  however, that the Restricted
            Portion  shall be equal to at least 25%, and shall not exceed 50% of
            the total amount so payable with respect to the Participant's Award.
            Notwithstanding  the  foregoing  and solely for the Plan Year ending
            December 31, 2000, a Participant may elect to receive the Restricted
            Portion of the Participant's  Award in the form of Restricted Units.
            The obligation of the Corporation and its Affiliated Companies under
            this  Plan  with  respect  to  the  award  of a  mandatory  deferred
            contribution  shall be fully  discharged  upon the crediting of such
            mandatory deferred  contribution to the Participant's  Account under
            the Executive  Deferred  Compensation  Plan in  accordance  with the
            applicable provisions of such plan.

      (c)   If a Participant  elects to receive  Restricted Units, the number of
            Restricted  Units to be granted to a Participant with respect to the
            Restricted Portion of the Participant's Award shall be determined by
            dividing  the  dollar  amount  of  the  Restricted  Portion  of  the
            Participant's  Award by the  Average  Market  Value of one  share of
            Common  Stock  on  the  date  on  which  the  Committee   makes  its
            determination of the Awards earned by Participants for the Plan Year
            in question.

      (d)   The mandatory  deferred  contribution  or grant of Restricted  Units
            with respect to the Restricted Portion of a Participant's  Award for
            any  Plan  Year  shall  be  evidenced  by a  written  notice  to the
            Participant   specifying  the  amount  of  the  mandatory   deferred
            contribution  or the  number  of  Restricted  Units  granted  to the
            Participant, and the date of such contribution or grant. In addition
            to other such terms and  conditions  as the Committee may require in
            such notice,  the  Restricted  Portion of each  Participant's  award
            hereunder shall be subject to the following terms and conditions:

            (i)   The  mandatory  deferred   contribution  or  Restricted  Units
                  covered  by  such  grant  shall  become  vested  on the  fifth
                  anniversary of the date of award or grant,  or if earlier,  on
                  the date of the Participant's death, permanent disability,  or
                  retirement  on or  after  the date on  which  the  Participant
                  attains age 65.

            (ii)  Until the Vesting  Date for the  Restricted  Units  covered by
                  such grant,  additional  Restricted Units shall be credited to
                  the  Participant,  with  respect  to the  Restricted  Units so
                  granted,  as of each  date on  which  the  Corporation  pays a
                  dividend on its Common Stock  ("Dividend  Payment Date").  The
                  number of additional  Restricted Units to be credited shall be
                  determined by first  multiplying (A) the sum of (1) the number
                  of  Restricted  Units  covered  by such a grant,  plus (2) the
                  total number of additional  Restricted  Units  credited to the
                  Participant  with  respect to such  Restricted  Units prior to
                  such Dividend Payment Date, by (B) the per-share dollar amount
                  of the  dividend so paid,  and then,  dividing  the  resulting
                  amount  by the  Average  Market  Value of one  share of Common
                  Stock on the Dividend Payment Date. Any additional  Restricted
                  Units  credited  to  the  Participant   with  respect  to  the
                  Restricted  Units covered by such grant shall become vested on
                  the Vesting Date for the Restricted Units so granted.

            (iii) If the  Restricted  Units covered by such grant become vested,
                  payment  with  respect  to such  Restricted  Units,  and  with
                  respect to the  additional  Restricted  Units  credited to the
                  Participant  under (ii)  above in  respect of such  Restricted
                  Units,  shall be made as soon as practicable after the Vesting
                  Date for the Restricted Units so granted,  except as otherwise
                  provided in (iv) below. Subject to provisions of Section 5(f),
                  payment shall be made in the form of a single lump sum payment
                  consisting of (A) a number of shares equal to the total number
                  of whole  Restricted  Units that become vested on such Vesting
                  Date,  and  (B) a cash  payment  in an  amount  determined  by
                  multiplying  (1) the fractional part of a Restricted Unit that
                  becomes vested on such Vesting Date, by (2) the Average Market
                  Value of one share of Common Stock on such Vesting Date.

            (iv)  To the extent  that the  Participant  has  elected,  under the
                  applicable  provisions of the Deferred Restricted Unit Plan of
                  U.S. Trust  Corporation,  to defer payment with respect to any
                  Restricted  Units  that  become  vested,   the   Corporation's
                  obligation  under this Plan for making payment with respect to
                  such  Restricted  Units  shall  be fully  discharged  upon the
                  crediting  of  such  Restricted  Units  to  the  Participant's
                  account under the Deferred  Restricted Unit Plan in accordance
                  with the applicable provisions of such Plan.

            (v)   In the event that the Participant's  employment terminates for
                  any reason prior to the Vesting Date for the Restricted  Units
                  covered by such a grant,  the Restricted Units covered by such
                  a grant,  and any additional  Restricted Units credited to the
                  Participant  under (ii) above with respect to such  Restricted
                  Units, shall be forfeited,  except to the extent the Committee
                  in its discretion otherwise determines.

      (e)   The Cash Portion of a Participant's Award for any Plan Year shall be
            paid in the  form of a  single  lump  sum  cash  payment  as soon as
            practicable  after the end of such Plan  Year,  except to the extent
            that  the  Participant   (i)  has  elected,   under  the  applicable
            provisions  of the 401(k) Plan,  to have any part of such portion of
            such  Award  reduced,  and to  have an  amount  equal  to such  part
            contributed  to the 401(k) Plan on the  Participant's  behalf and/or
            (ii) has elected,  under the applicable  provisions of the Executive
            Deferred  Compensation  Plan,  to defer any part of such  portion of
            such Award.

      (f)   With  respect to that part of the Cash  Portion of any Award that is
            subject to a Participant's election under the 401(k) Plan, an amount
            equal to such part of the Cash Portion shall be  contributed  to the
            401(k)  Plan  on  behalf  of the  Participant;  and  thereupon,  the
            obligation of the  Corporation  and its  Affiliated  Companies  with
            respect  to  payment  of such part of the Cash  Portion of the Award
            shall be fully discharged.  However,  no such contribution  shall be
            made to the extent it would cause any  limitation  applicable  under
            the 401(k) Plan to be exceeded.

      (g)   With  respect to that part of the Cash  Portion of any Award that is
            subject to a  Participant's  election  under the Executive  Deferred
            Compensation  Plan,  the  obligation  of  the  Corporation  and  its
            Affiliated Companied under this Plan with respect to payment of such
            part of the Cash Portion of the Award shall be fully discharged upon
            the  crediting  of such part of the Cash Portion of the Award to the
            Participant's account under the Executive Deferred Compensation Plan
            in accordance with the applicable provisions of such Plan.

      (h)   All  liabilities in respect to the Cash Portion of the Awards earned
            by Participants under the Plan shall be discharged by the respective
            Affiliated Companies employing such Participants.

6.       Certain Adjustments to Plan Shares

In the event of any change in the Common Stock by reason of any stock  dividend,
recapitalization,  reorganization,  merger, consolidation, split-up, combination
or exchange of shares,  or and rights  offering  to purchase  Common  Stock at a
price substantially below fair market value, or any similar change affecting the
Common Stock,  the number and kind of shares  represented  by  Restricted  Units
shall be  appropriately  adjusted  consistent with such change in such manner as
the Committee, in its sole discretion, may deem equitable to prevent substantial
dilution  or  enlargement  of the  rights  granted  to, or  available  for,  the
Participants  hereunder.  The Committee shall give notice to each Participant of
any  adjustment  made  pursuant to this  Section  and,  upon such  notice,  such
adjustment shall be effective and binding for all purposes.

7.       Listing and Qualification of Common Stock

The  Company,  in its  discretion,  may  postpone  the  issuance,  delivery,  or
distribution  of Common  Stock  pursuant  to a grant of  Restricted  Units until
completion of such stock exchange listing or other  qualification of such shares
under any state or federal law,  rule or  regulation as the Company may consider
appropriate,  and may  require  any  Participant  or  Beneficiary  to make  such
representations  and furnish such information as it may consider  appropriate in
connection  with the  issuance  or  delivery  of the shares in  compliance  with
applicable laws, rules and regulations.

8.       Change in Control

Notwithstanding  any  other  provision  in the  Plan to the  contrary,  upon the
occurrence of a Change in Control, the following provisions shall apply.

      (a)   All  Performance  Goals and  individual  goals and  objectives  with
            respect to the Plan Year in which the Change in Control  occurs (the
            "Year of Change")  shall be deemed to have been attained to the full
            and  maximum  extent,  and the  Actual  Awards  Pool for the Year of
            Change shall be determined by multiplying the Target Awards Pool for
            such  year by the  highest  percentage  thereof  established  by the
            Committee under Section  4(a)(iii) for determining the amount of the
            Actual Awards Pool for such year.

      (b)   Unless another  formula shall have been  designated by the Committee
            prior to the Change in Control,  each Participant shall be allocated
            a portion  of the  Actual  Awards  Pool for the Year of  Change,  as
            determined  under (a)  above,  equal to the  amount  of such  Actual
            Awards Pool, multiplied by a fraction. The numerator of which is the
            portion of the  anticipated  annual  compensation of the Participant
            which was taken into  account by the  Committee in  determining  the
            Target Awards Pool for the Year of Change,  and the  denominator  of
            which is the sum of such amounts for all Participants.

      (c)   As soon as practicable  following the Change in Control,  all Awards
            which are deemed to have been earned to the full and maximum  extent
            upon the  occurrence  of the Change in  Control  shall be payable in
            full in  single  cash  lump  sums,  reduced  by any  taxes  withheld
            pursuant to Section 9.

      (d)   No  Awards  payable  in  accordance   with  this  Section  shall  be
            forfeitable on account of a Participant's  termination of employment
            upon or following the Change in Control.

      (e)   All Restricted Units granted or credited to a Participant  hereunder
            that had not  previously  become vested shall become vested upon the
            occurrence of the Change in Control.

      (f)   The Corporation  shall make payment to each Participant with respect
            to all of the  Restricted  Units standing to his or her credit under
            the Plan at the time of the Change in Control. The amount to be paid
            to each Participant shall be an amount determined by multiplying the
            aggregate   number  of   Restricted   Units  then  standing  to  the
            Participant's  credit by the Determined Value of one share of Common
            Stock.  All  amounts  payable to the  Participants  pursuant to this
            Section 8(f),  reduced by any taxes withheld  pursuant to Section 9,
            shall be paid to such Participants as soon as practicable  following
            the Change in Control.

9.       Taxes

The Corporation or any of its Affiliated  Companies may make such provisions and
take such steps as it may deem necessary or appropriate  for the  withholding of
all federal,  state and local taxes  required by law to be withheld with respect
to amounts  payable under the Plan  including,  but not limited to (i) deducting
the amount so required to be withheld  from any other amount then or  thereafter
payable to a Participant or Beneficiary,  and/or (ii) requiring a Participant or
Beneficiary to pay to the  Corporation  or any of its  Affiliated  Companies the
amount so required to be withheld as a condition of the issuance,  delivery,  or
distribution  of any Common  Stock.  The  Committee may permit such amount to be
paid in Common Stock previously  owned by the  Participant,  or a portion of the
Common Stock that otherwise would be distribution to such Participant in respect
to his or her vested  Restricted Units, or a combination of cash and such Common
Stock.

10.      Designation and Change of Beneficiary

Each Participant  shall file with the Committee a written  designation of one or
more persons as the Beneficiary who shall be entitled to receive any amount,  or
any Common Stock,  payable  under the Plan upon his or her death.  A Participant
may,  from time to time,  revoke or change  his or her  Beneficiary  designation
without the consent of any  previously  designated  Beneficiary  by filing a new
designation  with the  Committee.  The last  such  designation  received  by the
Committee  shall be controlling;  provided,  however,  that no  designation,  or
change  or  revocation  thereof,  shall  be  effective  unless  received  by the
Committee  prior  to the  Participant's  death,  and  in no  event  shall  it be
effective as of a date prior to such receipt.  If at the date of a Participant's
death,  there is no designation  of a Beneficiary in effect for the  Participant
pursuant to the provisions of this Section 10, or if no  Beneficiary  designated
by the Participant in accordance with the provisions  hereof survives to receive
any  amount,  or any  Common  Stock,  payable  under  the Plan by  reason of the
Participant   death,   the   Participant's   estate  shall  be  treated  as  the
Participant's Beneficiary for purposes of the Plan.

11.      Payments to Persons Other Than Participant

If the  Committee  shall find that any person to whom any amount,  or any Common
Stock,  is  payable  under  the Plan is  unable  to care for his or her  affairs
because of illness,  accident or legal  incapacity,  then,  if the  Committee so
directs,  any payment due to such  person may be paid to such  person's  spouse,
child or other  relative,  an institution  maintaining or having custody of such
person,  or any other person deemed by the Committee to be a proper recipient on
behalf of such  person,  unless a prior  claim for  payment of such  amount,  or
payment  of  such  Common  Stock,  has  been  made  by a  duly  appointed  legal
representative of such person. Any such payment shall be a complete discharge of
the liability of the Corporation or the applicable Affiliated Company therefor.

12.      Rights of Participants

A  Participant's  rights  and  interests  under the Plan shall be subject to the
following provisions:

      (a)   A Participant shall have the status of a general unsecured  creditor
            of the  Corporation  with respect to his or her right to receive any
            payment under the Plan. The Plan shall  constitute a mere promise by
            the  Corporation  or  the  applicable  Affiliated  Company  to  make
            payments in the future of the benefits  provided  for herein.  It is
            intended that the arrangements  reflected in this Plan be treated as
            unfunded for tax purposes, as well as for purposes of any applicable
            provisions of Title I of ERISA.

      (b)   A  Participant's  rights to  payments  under  the Plan  shall not be
            subject in any manner to anticipation,  alienation,  sale, transfer,
            assignment,  pledge,  encumbrance,  attachment,  or  garnishment  by
            creditors of the Participant or his or her Beneficiary.

      (c)   Neither the Plan nor any action taken  hereunder  shall be construed
            as giving any Participant any right to be retained in the employment
            of the Corporation or any of its Affiliated Companies.

      (d)   No  Participant  shall  have the  right,  by virtue  of having  been
            selected as a Participant in the Plan, to be automatically  entitled
            to receive an Award for any Plan Year.

      (e)   No Award shall be  considered  as  compensation  under any  employee
            benefit  plan  of  the  Company,  the  Corporation  or  any  of  its
            Affiliated  Companies,  except as specifically  provided in any such
            plan or as otherwise determined by the Board of Directors.

13.      Administration of the Plan

The Plan shall be  administered  by the Committee.  A majority of the members of
the  Committee  shall  constitute a quorum.  The Committee may act at a meeting,
including a telephone  meeting,  by action of a majority of the members present,
or  without  a  meeting  by  unanimous  written  consent.  In  addition  to  the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee  shall have the  discretionary  authority and power to establish  from
time to time  guidelines  or  regulations  for the  administration  of the Plan,
interpret  the  Plan,  and  make  all  determinations  considered  necessary  or
advisable  for the  administration  of the Plan.  The Committee may delegate any
ministerial or nondiscretionary function pertaining to the administration of the
Plan to any one or more officers of the Corporation.

All decisions,  actions or interpretations of the Committee under the Plan shall
be final,  conclusive  and binding upon all parties.  No member of the Committee
shall be  personally  liable  by  reason  of any  contract  or other  instrument
executed  by such  member or on his or her  behalf in his or her  capacity  as a
member of the Committee nor for any mistake of judgment made in good faith,  and
the  Corporation  shall indemnify and hold harmless each member of the Committee
and each employee, officer, director or trustee of the Corporation or any of its
Affiliated Companies to whom any duty or power relating to the administration or
interpretation  of the  Plan  may be  delegated,  against  any  cost or  expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the  approval  of the Board of  Directors)  arising out of any act or
omission to act in connection with the Plan, unless arising out of such person's
own fraud or bad faith.

14.      Amendment or Termination

The Board of Directors  may, with  prospective  or  retroactive  effect,  amend,
suspend or  terminate  the Plan or any  portion  thereof at any time,  provided,
however, that no amendment,  suspension or termination of the Plan shall deprive
any  Participant of any rights to Awards  previously made under the Plan without
his or her written  consent.  Any amendment that the Board of Directors would be
permitted  to make  pursuant to the  preceding  sentence may also be made by the
Committee where  appropriate to facilitate the  administration of the Plan or to
comply with applicable law or any applicable rules and regulations of government
authorities,  provided  that  the cost of the  Plan to the  Corporation  and its
Affiliated Companies is not materially increased thereby.

15.      Governing Law

The Plan shall be governed by and construed in  accordance  with the laws of the
State of New York.Exhibit 10.236

                       U.S. TRUST CORPORATION 401(k) PLAN

                             As Amended and Restated
                                 Effective as of
                                 January 1, 2001

<PAGE>

                                Table of Contents

                                                                           Page
ARTICLE 1  DEFINITIONS........................................................2

ARTICLE 2  MEMBERSHIP........................................................11

ARTICLE 3  MATCHING CONTRIBUTIONS AND ESOP DIVIDENDS.........................15

ARTICLE 4  401(k) CONTRIBUTIONS..............................................18

ARTICLE 5  ROLLOVERS.........................................................20

ARTICLE 6  LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS......................22

ARTICLE 7  INVESTMENT OF ACCOUNTS............................................37

ARTICLE 8  NATURE OF INTEREST................................................46

ARTICLE 9  ACCOUNTS..........................................................47

ARTICLE 10 WITHDRAWALS AND LOANS.............................................51

ARTICLE 11 RETIREMENT........................................................60

ARTICLE 12 DISTRIBUTION OF BENEFITS..........................................61

ARTICLE 13 CERTAIN RIGHTS AND LIMITATIONS....................................70

ARTICLE 14 ADMINISTRATION OF THE PLAN........................................74

ARTICLE 15 MANAGEMENT OF THE TRUST FUND......................................86

ARTICLE 16 OTHER PARTICIPATING COMPANIES.....................................87

ARTICLE 17 AMENDMENT AND TERMINATION.........................................90

ARTICLE 18 CONSTRUCTION......................................................93

ARTICLE 19 TOP HEAVY PROVISIONS..............................................93

                                      - i -

<PAGE>

                      U.S. Trust Corporation 401(k) PLAN

                                    FOREWORD

     This document sets forth the U.S. Trust  Corporation  401(k) Plan (formerly
known as the "401(k) Plan and ESOP of United  States  Trust  Company of New York
and Affiliated Companies") (the "Plan"), as amended and restated effective as of
January 1, 2001, except as otherwise  provided herein. The Plan has been amended
and restated:  (a) to reflect the merger of the Corporation  with Charles Schwab
(as  defined  in  Section  1.8  hereof),  (b) to  reflect  the  transfer  of the
sponsorship  of the Plan and settlor  functions  thereunder  from United  States
Trust Company of New York ("U.S. Trust"), as plan sponsor (within the meaning of
Section 3(16)(B) of ERISA), to U.S. Trust  Corporation,  effective as of January
1, 2001, and (c) in certain other respects.
     The Plan has a "401(k)"  feature and an "ESOP" feature.  The 401(k) portion
of the Plan is  intended to qualify as a cash or  deferred  profit-sharing  plan
under sections 401(a) and 401(k) of the Code.  Pursuant to section 401(a)(27) of
the Code,  this portion of the Plan is intended to  constitute a  profit-sharing
plan under which  contributions may be made by a Participating  Company,  in its
discretion, whether or not such Company has current or accumulated profits.
     The ESOP  portion of the Plan is intended to qualify as a stock bonus plan,
as defined in section 1.401-1(b)(iii) of the Regulations,  and an employee stock
ownership plan, as defined in section 4975(e)(7) of the Code, and is designed to
invest  primarily in Common Shares which meet the  requirements  for "qualifying
employer  securities" under sections 4975(e)(8) and 409(l) of the Code. The ESOP
portion of the Plan consists of the portion of the Accounts of Members which are
comprised of ESOP Stock and Capital  Stock.  All rights and  protections  herein
provided  with  respect to Members'  interests  in the ESOP  portion of the Plan
shall be non-terminable  and shall continue under the terms of this Plan even in
the event the ESOP portion of the Plan ceases to be an employee stock  ownership
plan within the meaning of section 4975(e)(7) of the Code.
     The rights of any person who  terminated  employment,  or who retired on or
before the  effective  date of a  particular  provision  of the Plan,  including
eligibility for benefits and the time and form in which  benefits,  if any, will
be paid, shall be determined  solely under the terms of the Plan as in effect on
the date of the person's  termination of employment or  retirement,  unless such
person is thereafter reemployed and again becomes a Member.

                                    ARTICLE 1

                                   DEFINITIONS

     As used in this Plan, the following terms shall have the meanings described
in this Article 1:

     1.1 Account means the separate account or accounts  maintained for a Member
pursuant to Article 9.
     1.2 Affiliated Company means the Company, any corporation which is included
in a controlled  group of corporations  (within the meaning of section 414(b) of
the Code) which  includes  the  Company,  any trade or business  (whether or not
incorporated) which is under common control with the Company (within the meaning
of section 414(c) of the Code), any organization included in the same affiliated
service group (within the meaning of section 414(m) of the Code) as the Company,
and any other entity required to be aggregated with the Company  pursuant to the
Regulations  under  section  414(o)  of  the  Code.  In  identifying  Affiliated
Companies for purposes of applying the provisions of Section 6.5 with respect to
the  limitations  on  contributions,  section  415(h) of the Code shall apply in
conjunction with the preceding sentence.  Notwithstanding the foregoing,  solely
for purposes of determining  eligibility to become a Participating  Company, the
definition  in  sections  414(b)  and  (c) of the  Code  shall  be  modified  by
substituting  the  phrase  "more  than 50  percent"  for the phrase "at least 80
percent" each place it appears in section 1563(a)(1).
     1.3 Annual Incentive Plans means the Executive Incentive Plan of U.S. Trust
Corporation  (the "EIP") and the Annual  Incentive  Plan of United  States Trust
Company of New York and Affiliated  Companies (the "AIP") and similar  incentive
bonus  plan   arrangements   (other  than  arrangements  in  which  a  bonus  is
guaranteed).
     1.4  Beneficiary  means any person  who, as  determined  under the rules of
Section 12.6, is entitled to receive a payment with respect to the interest of a
Member or Former Member upon the death of such Member or Former Member.
     1.5 Board of Directors means the Board of Directors of the Company and such
committee  thereof as it may from time to time appoint to act on its behalf with
respect to the Plan.
     1.6 Break in Service means any Computation  Period during which an Employee
is credited with not more than 500 Hours of Service.
     1.7 Capital  Stock means  Common  Shares that are held in the Schwab  Stock
Fund.
     1.8 Charles Schwab means The Charles Schwab Corporation and any corporation
which is included in a controlled  group of corporations  (within the meaning of
section 414(b) of the Code) which includes The Charles Schwab  Corporation,  any
trade or business  (whether or not  incorporated)  which is under common control
with The Charles Schwab Corporation (within the meaning of section 414(c) of the
Code),  any organization  included in the same affiliated  service group (within
the meaning of section  414(m) of the Code) as The Charles  Schwab  Corporation,
and  any  other  entity  required  to be  aggregated  with  The  Charles  Schwab
Corporation pursuant to the Regulations under section 414(o) of the Code.
     1.9 Code means the Internal  Revenue Code of 1986,  as amended from time to
time.
     1.10 Committee means the Administrative  Committee  appointed under Section
14.1 of the Plan
     1.11 Common Shares means the common shares ($0.01 par value) of The Charles
Schwab Corporation.
     1.12 Company means U.S. Trust Corporation, its successors and assigns.
     1.13  Compensation  means (a) for each Plan Year,  the  regular  basic cash
salary,  before  taking  into  account  any  401(k)  Contributions,  any  salary
reduction  contributions  to a  "cafeteria  plan"  within the meaning of section
125(d) of the Code or any elective  amounts that are not includable in the gross
income of the  Employee  by reason of section  132(f)(4)  of the Code and before
deductions for taxes or other items  withheld,  paid to an Employee for personal
services rendered to one or more Participating Companies for only such period in
a Plan Year during which the Employee was a Member in the Plan, exclusive of pay
for overtime,  special pay, pay in the form of commissions and bonuses;  and (b)
for any pay period  within a Plan Year,  the portion of a Member's  Compensation
for the Plan Year, as determined under clause (a), that is paid to the Member in
such pay period.
     The amount of  Compensation  taken into account under the Plan for any Plan
Year shall not exceed the Compensation Limit in effect for such Plan Year.
     1.14  Compensation  Limit means,  for each Plan Year, the limitation on the
amount of  compensation  that may be taken into  account  under the Plan for any
Employee under section 401(a)(17) of the Code in effect for such Plan Year.
     1.15 Computation  Period means the  12-consecutive  month period commencing
with the date on which a person  first  became an Employee  and each  successive
12-consecutive month period commencing on the anniversary thereof.  With respect
to a person who suffers a Break in Service,  the Computation Period shall be the
12-consecutive  month period  commencing with the date upon which he last became
an Employee and each successive  12-consecutive  month period  commencing on the
anniversary thereof.
     1.16 Direct  Rollover means a direct payment of a distribution  by the Plan
to an Eligible  Retirement Plan or to the Plan from an Eligible  Retirement Plan
made in  accordance  with  section  401(a)(31)  of the  Code  and  the  Treasury
Regulations  and the rulings and notices issued by the Internal  Revenue Service
thereunder, and made in such manner as prescribed by the Committee.
     1.17 Eligible  Rollover  Distribution  means any distribution of all or any
portion  of the  balance to the credit of the  Payee,  except  that an  Eligible
Rollover Distribution does not include: any hardship  distribution  described in
Code section  401(k)(2)(B)(i)(IV);  any distribution  that is one of a series of
substantially  equal periodic  payments (not less frequently than annually) made
for the life (or life expectancy) of the Payee or the joint lives (or joint life
expectancies)  of the Payee and the  Payee's  Designated  Beneficiary,  or for a
specified  period of ten years or more;  any  distribution  to the  extent  such
distribution is required under section 401(a)(9) of the Code; and the portion of
any  distribution  that is not  includible in gross income  (determined  without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
     1.18  Eligible  Retirement  Plan  means an  individual  retirement  account
described  in  section  408(a) of the Code,  an  individual  retirement  annuity
described in section  408(b) of the Code,  an annuity plan  described in section
403(a) of the Code, or a qualified plan described in section 401(a) of the Code.
In the case of an  Eligible  Rollover  Distribution  to a surviving  Spouse,  an
Eligible  Retirement  Plan is an  individual  retirement  account or  individual
retirement annuity.
     1.19  Employee  means any  person  who is  employed  by the  Company  or an
Affiliated Company as a common-law employee;  provided,  however,  that the term
"Employee"  shall  not  include  any  person  (a) who is  treated  as a  "leased
employee" of any Affiliated Company under section 414(n)(2) of the Code, (b) who
is covered under a collective  bargaining  agreement  which does not provide for
coverage  under the Plan, if  retirement  benefits have been the subject of good
faith bargaining, or (c) who is a non-resident alien.
     1.20 ERISA means the Employee  Retirement  Income  Security Act of 1974, as
amended from time to time.
     1.21 ESOP Stock means  Common  Shares that are held in the ESOP Stock Fund.
No shares of ESOP Stock  acquired  with the  proceeds  of an Exempt  Loan may be
subject to a put, call or other option, or to a buy-sell or similar arrangement,
while held by or distributed  from the Plan.  Except as provided in Regulations,
such rights and protections shall be non-terminable.
     1.22  Former  Member  means any person who retains an interest in the Trust
Fund after he has ceased to be a Member.
     1.23 401(k)  Contribution means the contribution made to the Plan on behalf
of a Member pursuant to his election under Section 4.1 or 4.2.
     1.24 401(k) Contribution  Account means the portion of the Member's Account
to which 401(k) Contributions are allocated.
     1.25 Highly  Compensated  Member shall mean,  for any Plan Year, any person
who is a Member at any time during such Plan Year:
     (a) and who, during such Plan Year or the  immediately  preceding Plan Year
was a five-percent owner, as defined in section 416(i)(1)(B)(i) of the Code; or
     (b)  received  414(q)   Compensation,   as  hereinafter   defined,  in  the
immediately  preceding Plan Year in excess of $80,000, as adjusted for such year
under section 415(d) of the Code.
For purposes of this Section,  "414(q)  Compensation" shall mean compensation as
defined in Section 6.5(a).
     1.26 Hour of Service,  with respect to any Computation  Period,  shall mean
the following:
     (a) Each hour for which an  Employee is paid,  or entitled to payment,  for
the performance of duties for an Affiliated Company;
     (b) Each  hour for which an  Employee  is paid,  or  entitled  to  payment,
directly  or  indirectly  (through an insurer,  trust fund or  otherwise)  by an
Affiliated  Company  for a period of time during  which no duties are  performed
(irrespective  of  whether  he has  ceased  to be an  Employee)  on  account  of
vacation, holiday, illness, incapacity,  disability, layoff, or jury duty. It is
provided,  however,  that except as otherwise  required by law, (1) no more than
501 hours shall be credited under this subsection (b) for any single  continuous
period,  (2) no such hours shall be credited  under this  subsection (b) if such
payment is made under a plan maintained solely for the purpose of complying with
the  applicable  worker's  compensation,  disability  insurance or  unemployment
compensation laws, and (3) no such hours shall be credited under this subsection
(b) for any payment which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee;
     (c) Each hour for which back pay, irrespective of mitigation of damages, is
awarded or agreed to by an  Affiliated  Company,  exclusive of hours  previously
credited under subsection (a) or (b),  immediately above. No more than 501 hours
shall be credited under this subsection (c) for any single continuous period;
     (d) The number of Hours of Service to be credited  under  subsections  (a),
(b) and (c) above,  and the periods to which Hours of Service are to be credited
under  subsections  (a), (b) and (c) above,  shall be determined under the rules
set forth in section  2530.200b-2(b)  and (c) of the  Regulations  issued by the
U.S.  Department of Labor,  except that each Employee shall be credited with 190
Hours of Service for each calendar  month during which such Employee is credited
with at least one Hour of Service.
     (e) In the case of any  Employee  who  incurs  any Leave  (whether  paid or
unpaid),  including  a  maternity  or  paternity  absence  described  in section
411(a)(6)(E)(i)  of the Code and any Leave which is subject to the  requirements
of the Family and Medical Leave Act of 1993, the Employee shall be credited, for
the period during which he is on such Leave, with the number of Hours of Service
with which he would  normally  have been credited for such period under the Plan
but for such Leave, as determined by the Committee.
     1.27 Investment  Committee means the Retirement and 401(k)/ESOP  Investment
Committee appointed under Section 14.4.
     1.28 Investment Fund means any separate  investment fund maintained  within
the Trust Fund pursuant to Section 7.1 or 7.2.
     1.29 Leave means any period  during  which a person is an  Employee  but is
absent  from  active  employment  pursuant  to an  authorized  leave of absence,
approved  by an  Affiliated  Company on a  nondiscriminatory  basis  under rules
uniformly  applicable to all Employees similarly  situated,  for a period not to
exceed five years.
     1.30 Matching  Contribution means a Matching  Contribution made to the Plan
pursuant to Article 3.
     1.31 Matching Contributions Account means the portion of a Member's Account
to which Matching Contributions are allocated.
     1.32  Member  means  any  person  included  in the  membership  of the Plan
pursuant to Article 2.
     1.33  Participating  Company  means the  Company  and any other  Affiliated
Company  participating  in this Plan  pursuant  to Article 16 until such time as
such  Affiliated  Company  ceases to participate in the Plan pursuant to Article
16.
     1.34 Payee means any person who is entitled to receive a distribution  from
the Plan, and who is a Member or Former Member, the surviving spouse of a Member
or Former  Member,  or the spouse or former  spouse of a Member or Former Member
who is  entitled  to  receive  a  distribution  under  the Plan by  reason  of a
Qualified Domestic Relations Order as defined in Section 13.2.
     1.35 Plan means the U.S. Trust Corporation 401(k) Plan, as described herein
and as may hereafter be amended.
     1.36 Plan Year means the calendar year.
     1.37 Prior Plan means the Employees'  Profit-Sharing  Plan of United States
Trust Company of New York and Affiliated Companies,  as in effect as of December
31, 1991 and any prior date.
     1.38 Prior Service means  service  credited to an Employee  under this Plan
for service with an entity that was  acquired by or merged with the Company,  as
set forth in Appendix B.
     1.39 Qualified  Member means a Member who has attained age fifty-five  (55)
and who has participated in the ESOP portion of the Plan for ten (10) years.
     1.40 Regulations  means the applicable  regulations  issued under the Code,
ERISA or other applicable law by the Internal Revenue Service, the Department of
Labor  or any  other  governmental  authority  and  any  proposed  or  temporary
regulations  or rules  promulgated by such  authorities  pending the issuance of
such regulations.
     1.41 Retirement Plan means the U.S. Trust Corporation Employees' Retirement
Plan (formerly  known as the Employees'  Retirement  Plan of United States Trust
Company of New York and Affiliated Companies).
     1.42 Rollover Contributions means Rollover Contributions transferred to the
Plan pursuant to Section 5.1.
     1.43 Trustee means United States Trust Company of New York, as trustee, and
any additional or successor  trustee or trustees,  who may from time to time act
as trustee of the Trust Fund pursuant to Article 15 hereof.
     1.44  Trust  Fund means the  contributions  deposited  with and held by the
Trustee  pursuant  to Article 15, any  property  into which the same or any part
thereof may from time to time be  converted,  and any  appreciation  therein and
interest thereon.
     1.45 Valuation Date means such daily, monthly, quarterly or annual dates as
the Committee, in its discretion,  may designate for determining the fair market
value of the assets  comprising any part of the Trust Fund, any Investment Fund,
or any Member's Account.
     1.46  Vested  means  entitled  to a benefit  under the Plan that  cannot be
forfeited due to a subsequent termination of employment.
     1.47 Year of Service means any Computation  Period during which an Employee
is credited with 1,000 or more Hours of Service.

                                    ARTICLE 2

                                   MEMBERSHIP

     2.1 Commencement of Membership.
     (a) Each Employee of a Participating Company who was a Member on January 1,
2001, shall continue to be a Member after that date until the termination of his
membership pursuant to Section 2.2 below.

     (b) Each other Employee of a Participating Company shall become a Member on
the first day of the month immediately following the date on which:
          (1) he receives Compensation from a Participating Company other than a
     pension, severance pay, retainer or fee under contract, and
          (2)  subject  to  Section  2.1(c),  he has  completed  at least  three
     consecutive  months of employment  with a  Participating  Company  (without
     regard to the number of Hours of Service  such  Employee  completes  during
     such three  month  period),  provided  that such  Employee is employed by a
     Participating Company as of such date.
     (c)  Notwithstanding  any provision of the Plan to the  contrary,  a Member
shall be eligible  as of the first day of the month  immediately  following  the
date on which he has  completed  at least  one Year of  Service,  provided  such
Employee  is  employed by a  Participating  Company as of such date,  solely for
purposes of (i)  receiving a Matching  Contribution  pursuant to Section 3.1 and
(ii) making an election  with respect to awards under an Annual  Incentive  Plan
pursuant to Section 4.2.
     (d)  Notwithstanding  any other  provision of the Plan to the contrary,  no
individual  who  provides  services  to a  Participating  Company  pursuant to a
contract,  arrangement or understanding  with either such individual  himself or
with an agency or leasing  organization  that treats the individual as either an
independent  contractor  or an employee  of such agency or leasing  organization
shall be eligible to be a Member of the Plan,  even if such  individual is later
determined (by judicial action or otherwise) to have been a common-law  employee
of an Employer  rather  than an  independent  contractor  or an employee of such
agency or leasing  organization unless the contract  specifically  provides that
such Employee shall be eligible for membership in the Plan.
     (e)  Notwithstanding  Section  2.1(b)(2),  effective  June  1,  2000,  each
Employee of Charles Schwab who transfers  employment directly to a Participating
Company  shall  become  a  Member  on the  first  day of the  month  immediately
following the date on which he first satisfies each of the following  conditions
(a) he receives a stated compensation from a Participating  Company other than a
pension,  severance pay, retainer or fee under contract, and (b) he completes at
least three consecutive months of service with a Participating  Company,  taking
into account for this purpose prior service with The Charles Schwab  Corporation
and its  affiliates  (without  regard  to the  number of Hours of  Service  such
Employee completes during such three month period),  provided that such Employee
is employed by a Participating Company as of such date.
     (f) Notwithstanding  Section 2.1(c),  effective June 1, 2000, each Employee
of Charles Schwab who transfers  employment directly to a Participating  Company
shall be eligible to receive a Matching Contribution pursuant to Section 3.1 and
to make an  election  with  respect  to awards  under an Annual  Incentive  Plan
pursuant to Section 4.2 as of the later of (1)the date he becomes an Employee of
a Participating Company, or (2) the first day of the month immediately following
the date on which he has  completed  at least one Year of  Service,  taking into
account for this purpose prior service with The Charles Schwab  Corporation  and
its affiliates; provided such Employee is employed by a Participating Company as
of such date.
     (g) For purposes of Section 2.1(b)(2) and (c), Prior Service shall be taken
into account.
     2.2 Termination of Membership.  An Employee's  membership in the Plan shall
terminate only as follows:
     (a) An Employee who ceases to be employed by any  Affiliated  Company prior
to his retirement  under Article 11 for any reason,  including his death,  shall
cease to be a Member on the date he ceased to be an Employee.
     (b) An Employee who retires  under Article 11 shall cease to be a Member as
of the last  Valuation  Date of the Plan Year in which he retired  under Article
11.
     (c) Provided retirement benefits were the subject of good faith bargaining,
any Employee  who becomes  covered by a collective  bargaining  agreement  shall
cease  to be a  Member  on  the  effective  date  of the  collective  bargaining
agreement unless such agreement  expressly  provides for such Member's continued
participation in the Plan.
     (d) Except as  provided  in  Section  3.1(b),  an  Employee  who  transfers
employment from a Participating  Company to The Charles Schwab Corporation shall
cease to be a Member  and  shall  become  a  Former  Member  on the date of such
transfer.
     Notwithstanding the foregoing, a person who is on Leave shall cease to be a
Member  (and  shall be  treated  as having  retired  under  Article 11 or having
terminated employment with all Affiliated  Companies,  as applicable to him) (1)
as of the expiration of such Leave,  unless prior to such  expiration he resumes
his active employment with an Affiliated Company, or (2) at such earlier time as
he furnishes  notice to the Affiliated  Company with which he was last in active
employment  that he does not  intend  to resume  his  active  employment  at the
expiration of such Leave.
     2.3 Resumption of Membership. In the event that an Employee's membership in
the Plan is terminated in  accordance  with Section 2.2 of this Article,  and he
again  becomes an Employee of a  Participating  Company as  described in Section
2.1(a), his membership in the Plan shall resume on the date as of which he again
became such an Employee.
     2.4  Veterans'  Rights.  Notwithstanding  any provision of this Plan to the
contrary, contributions,  benefits, and service credit with respect to qualified
military  service will be provided in accordance with Code section 414(u).  Loan
repayments  will be suspended  under this Plan as  permitted  under Code section
414(u)(4).

                                    ARTICLE 3

                    MATCHING CONTRIBUTIONS AND ESOP DIVIDENDS

     3.1 Matching Contributions.
     (a)  Amounts.   For  the  Plan  Year  beginning   January  1,  1999,   each
Participating  Company  shall pay to the Trustee as a Matching  Contribution  an
amount equal to sixty  percent  (60%) of each 401(k)  Contribution  made by each
Member described in Section 2.1(c) who is employed by that Participating Company
during  such Plan Year,  but only up to a maximum of five  percent  (5%) of such
Member's  Compensation  for such Plan Year and only if the Member is an Employee
on the last day of such Plan  Year.  For the Plan Year  beginning  on January 1,
2000,  the  percentage of sixty (60) in the prior sentence shall be increased to
eighty  (80),  and for each  subsequent  Plan Year the  percentage  shall be one
hundred (100). The Matching  Contribution  shall be made in Common Shares unless
the Company,  in its discretion,  elects to contribute cash, or a combination of
cash and Common  Shares.  The  Matching  Contribution  shall be allocated to the
Member's Matching Contributions Account as of the last day of the Plan Year, and
shall be  transferred  to the  Trustee for  investment  in  accordance  with the
provisions of Section 7.4(g).
     (b)  Determination  of Vested  Interest.  A Member shall not be Vested in a
Matching  Contribution  allocated to his Account until completing five (5) Years
of Service.  In determining  whether this requirement is satisfied,  any Year of
Service  completed  prior to a Break  in  Service  by a Member  who was not then
Vested  will  be  disregarded,  but  only  after  the  Member  incurs  five  (5)
consecutive  one-year Breaks in Service.  If before then the Member  completes a
Year of Service,  any amounts  forfeited  pursuant  to  subsection  (d) shall be
restored. With respect to an Employee of Charles Schwab who transfers employment
directly  to a  Participating  Company,  Years of Service  for  purposes of this
subsection (b) shall include service with Charles  Schwab.  For purposes of this
subsection (b), Prior Service shall be taken into account.
     (c) Accelerated Vesting. A Member's interest in his Matching  Contributions
will  become  Vested  without  regard  to his Years of  Service  (i) on his 65th
birthday  if he is  then  an  Employee,  or (ii)  on his  death  while  he is an
Employee.
     (d) Forfeiture of Nonvested  Amounts.  Any nonvested  portion of a Member's
Matching  Contributions  will be  forfeited  on the  earlier  of (i) the date of
distribution  to the Member of the Vested  balance of his  Account,  or (ii) the
date on which the Member incurs five (5) consecutive one-year Breaks in Service.
For  purposes  of this  Article,  if the Vested  balance of a Member's  Matching
Contribution is zero when the Member terminates  employment,  the Member will be
deemed to have received a distribution of his Vested balance.
     (e) Application of Forfeited Amounts. Any forfeited Matching  Contributions
may be used either to reduce restorative payments due under subsection (b) or to
reduce Participating Company Matching Contributions.
     3.2  Distribution  of Certain  Dividends.  Any  dividends  received  by the
Trustee  on Common  Shares  shall be  allocated  and  credited  to the  Members'
Accounts.  The portion of such dividends to be so allocated and credited to each
Member's Account shall be determined on the basis of the number of Common Shares
held in such  Member's  Account as compared  to the total  number of such shares
held in all Members' Accounts.  The dividends allocated and credited to Members'
Accounts  shall be invested by the Trustee in accordance  with the provisions of
Article 7. Dividends paid on ESOP Stock and Capital Stock on and after March 31,
1999 that have not been  allocated  to a Matching  Contributions  Account  shall
thereafter,  subject to Section  3.2(b),  be  distributed to the Members at such
time and in such manner as is prescribed by the Committee in accordance with the
requirements that must be satisfied in order for a deduction to be allowed under
Code section 404(k) with respect to the amount of dividends  being  distributed.
To this end, the dollar value of the dividend  distribution  to any Member shall
not exceed the dollar value of the dividends allocated to that Member during the
period for which the  distribution  is made.  Investment  gains,  if any, earned
prior to such  distribution  shall be  retained  in the Trust  Fund.  Investment
losses, if any, prior to such distribution shall be made up by liquidating other
shares of ESOP Stock or Capital Stock held in the Member's Account,  but only if
such ESOP Stock or Capital  Stock is not  attributable  to the  Member's  401(k)
Contributions.
     3.3  Time  for   Contribution.   All   contributions  to  be  made  by  the
Participating Companies for any Plan Year pursuant to this Article shall be made
no  later  than by the due  date  (including  any  extensions)  for  filing  the
Participating  Companies'  federal  income  tax  returns  for the  taxable  year
corresponding with such Plan Year.
     3.4  Limitations on  Contributions.  Notwithstanding  any provision of this
Article to the  contrary,  the amount of any  contribution,  and the  allocation
thereof or of any shares of ESOP Stock,  that otherwise  would be required to be
made  pursuant to the  provisions of this Article shall be subject to, and shall
not exceed, the applicable limitations set forth in Article 6.
     3.5 Notice to Members.  As promptly as practicable  after the close of each
Plan Year, the Committee  shall notify each Member of the amount  contributed to
the Plan for such Plan Year for the  benefit  of such  Member  pursuant  to this
Article.

                                    ARTICLE 4

                              401(k) CONTRIBUTIONS

     4.1 Elective Payroll Contributions.  In accordance with the rules set forth
in Section 4.3,  each Member who is an Employee of a  Participating  Company may
elect to have his  Compensation for each pay period within any Plan Year reduced
by an amount equal to any percentage  thereof that is an integral multiple of 1%
(not to  exceed  20%),  and to have  the  Participating  Company  by which he is
employed  contribute such amount to the Plan as a 401(k)  Contribution on behalf
of the Member for such year.  Such  amount  shall be  credited  to the  Member's
401(k) Contribution Account.
     4.2 Elective  Incentive Award  Contributions.  In accordance with the rules
set forth in Section  4.3, a Member may elect,  for each Plan Year,  to have any
award that is otherwise  payable to the Member during such year under the Annual
Incentive  Plans  (but in the case of an  award  under  the  EIP,  only the part
thereof that is payable  other than in the form of a grant of  restricted  stock
units) reduced by an amount equal to any whole  percentage  (not to exceed 100%)
of the dollar  value of such  award,  and to have the  Participating  Company or
Companies by which he is employed contribute such amount to the Plan as a 401(k)
Contribution on behalf of the Member for such year. Any 401(k) Contribution made
pursuant to this Section on behalf of a Member  during the period from January 1
to March 15 of any Plan Year shall be treated as follows:
          (a) such Contribution  shall be credited to the Member's Account as of
     the final Valuation Date of the preceding Plan Year;
          (b) such  Contribution  shall be treated as having  been made for such
     preceding  Plan Year,  for  purposes of the 401(k)  Nondiscrimination  Test
     described  in Section  6.2(c),  the section  415  Limitation  described  in
     Section 6.5, and for purposes of the Deduction  Limit  described in Section
     6.6(b);
          (c) such  Contribution  shall be treated as a 401(k)  Contribution for
     the Plan Year during which such  Contribution was made, for purposes of the
     401(k) Dollar Limit described in Section 6.2(a).
     4.3 Election Rules. (a) A Member who makes an election under Section 4.1 or
4.2 may revoke or modify any such  election,  or increase or decrease the amount
to be contributed,  by communicating such election,  revocation, or modification
directly  to the Trustee in  accordance  with such rules and  procedures  as the
Committee shall prescribe.  Any election under Section 4.1, or any revocation or
modification  of such election shall be effective no later than the first day of
the first payroll period which starts at least two weeks after it has been made.
Any AIP/EIP  election  under Section 4.2, or any revocation or  modification  of
such election,  with respect to the amount to be  contributed  for any Plan Year
shall be effective for such Plan Year only if it is made prior to December 15 of
the preceding Plan Year, or such other date as is prescribed by the Committee in
its discretion.
     (a) The Committee may  establish  procedures  pursuant to which a Member is
deemed to have elected a 401(k)  Contribution  under either  Section 4.1 or 4.2.
The Member  must be informed in advance of the deemed  election  and  provided a
reasonable opportunity to revoke the deemed election in favor of a cash payment.
     4.4  Limitation  on  Contributions.  Notwithstanding  any provision of this
Article to the contrary, the amount of any contribution otherwise required to be
made pursuant to a Member's election under any of the provisions of this Article
shall be subject to, and shall not exceed, the applicable  limitations set forth
in Article 6.
     4.5 Time and Manner of Contribution.  All 401(k) Contributions  required to
be made pursuant to a Member's election under Section 4.1 or 4.2 of this Article
shall be made as soon as  practicable  after the date on which the amounts to be
contributed would have been paid to the Member but for his election,  but in any
event by no later than 15 days after such date. All 401(k)  Contributions  shall
be transferred  to the Trustee for investment in accordance  with the provisions
of Article 7. Such  Contributions  and earnings  attributable  thereto  shall be
credited by the Committee to the Members' Accounts as provided in Article 9.
     4.6 Notice to Members.  As promptly as practicable  after the close of each
Plan Year,  the Committee  shall notify all Members of the 401(k)  Contributions
contributed  to the Plan for such Plan Year on  behalf  of such  Member  and the
elections, if any, in effect for the member under Sections 4.1 and 4.2.

                                    ARTICLE 5

                                    ROLLOVERS

     5.1 Rollover  Contributions  of Cash.  The Plan may accept a cash  rollover
from an Employee who is a Member if such rollover  represents a Direct Rollover,
an earlier  distribution to the Member from another  qualified trust (the "Other
Plan") which is described  in section  401(a) and exempt from tax under  section
501(a) of the Code, or a rollover from a conduit Individual  Retirement Account;
provided  however,  if the rollover is not a Direct  Rollover,  the amount to be
rolled over to the Plan constitutes an eligible rollover distribution as defined
in section  402 of the Code and the  rollover  occurs on or before the  sixtieth
(60th) day following the Employee's  receipt of the distribution  from the Other
Plan or the Employee's  receipt of the  distribution  from a conduit  Individual
Retirement Account.
     For purposes of this Section, a "conduit Individual  Retirement Account" is
an Individual  Retirement  Account (as defined in section 408(a) of the Code) in
which the Employee has deposited only amounts  representing a distribution  from
an employer plan qualified under section 401(a) of the Code.
     The cash rollover  accepted by the Plan shall be  separately  accounted for
and the  Member  shall have a  nonforfeitable  interest  in such  account at all
times. The Member's rollover shall be invested as soon as practicable  following
receipt  thereof in accordance with Section 7.4. The Member's  rollover  Account
shall be adjusted to reflect its share of net earnings, losses, appreciation, or
depreciation as of each Valuation Date. The total amount of a Member's  rollover
Account shall be  distributed  to the Member in any form provided for under this
Plan,  as  selected  by the  Member.  Payment  shall  be made at the  same  time
distribution  of the Member's  benefit is paid.
     5.2 Rollover Contributions of Common Shares and Related Interests. The Plan
may accept a rollover of Common  Shares and Related  Interests  from an Employee
who is a Member, if such rollover constitutes a Direct Rollover.
     The rollover of Common  Shares and Related  Interests  accepted by the Plan
shall be  separately  accounted  for and the Member shall have a  nonforfeitable
interest in such account at all times.  The Member's  rollover of Common  Shares
shall  be  initially  credited  to the  Schwab  Stock  Fund and the  Member  may
thereafter  elect to transfer such  investment to one or more Investment Fund or
Funds in accordance with Section 7.5.
     For  purposes of this  Section  5.2.  the term  "Related  Interests"  shall
include any certificate of participation  or similar  interest  allocated to the
Member's account in the Eligible  Retirement Plan from which the Direct Rollover
is received which  constitutes a contingent  future right to receive  additional
Common Shares.  Any Related  Interest  shall be credited to a separate  rollover
account for the Member and not invested in any  Investment  Fund.  If additional
Common Shares  attributable to the Related  Interest are received in the future,
such Common Shares shall be initially  credited to the Schwab Stock Fund and the
Member  may  thereafter  elect  to  transfer  such  investment  to one  or  more
Investment Fund or Funds in accordance with Section 7.5.
     The Member's rollover Account shall be adjusted to reflect its share of net
earnings, losses,  appreciation,  or depreciation as of each Valuation Date. The
total amount of a Member's  rollover  Account shall be distributed to the Member
in any form  provided  for under this Plan,  as selected by the Member.  Payment
shall be made at the same time distribution of the Member's benefit is paid.
     5.3  Transfers.  The  Committee,  in its  discretion,  may permit an amount
representing all or any part of a Member's Account under any other plan that the
Committee determines is qualified under section 401(a) of the Code and that is a
defined  contribution  plan to be  transferred  directly  from such plan to this
Plan.  Any amount so  transferred to this Plan shall be credited to the member's
Account as provided in Article 9, and shall be invested in  accordance  with the
investment  election in effect for such amount at the time it is  transferred to
this Plan, as determined under Section 7.4.

                                    ARTICLE 6

                  LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS

     6.1 In  General.  Notwithstanding  any other  provision  of the Plan to the
contrary,  all  contributions  and  allocations  otherwise  required  to be made
pursuant  to  Article  3 or 4  shall  be  subject  to  each  of  the  applicable
limitations   set  forth  in  this   Article  6.
     6.2 Limitations on 401(k) Contributions. The amount of 401(k) Contributions
otherwise  permitted  to be made on behalf of Members  under  Article 4 shall be
subject to the following limitations:
     (a) 401(k) Dollar Limit. The aggregate  amount of the 401(k)  Contributions
that may be made to the Plan in any Plan Year on behalf of any Member  shall not
exceed  $10,500 (in 2001),  as adjusted  for  increases in the cost of living in
accordance with section 402(g)(5) of the Code and the Regulations.
     (b) 401(k) Percentage Limit. The aggregate amount of 401(k) Contributions a
Member may elect to have contributed to the Plan on his behalf for any Plan Year
under Sections 4.1 and 4.2 shall not exceed 20% of the Member's Compensation for
such year, or such lower  percentage of the Member's  Compensation for such year
as the  Committee  may  determine  in its  discretion  in order to  satisfy  the
requirements of this Section.
     (c) 401(k) Nondiscrimination Test.
          (1) In General.  The Actual Deferral  Percentage for the Plan Year for
     the group of Highly  Compensated  Members  shall not exceed the greater of:
     (i) the  product  of the Actual  Deferral  Percentage  for the  immediately
     preceding  Plan  Year of the  group of  those  Members  who are not  Highly
     Compensated  Members  multiplied by 1.25; or (ii) the product of the Actual
     Deferral  Percentage  for the  preceding  Plan  Year of the  group of those
     Members who are not Highly Compensated  Members multiplied by 2.0, provided
     that the  Actual  Deferral  Percentage  for the Plan  Year of the  group of
     Highly Compensated  Members does not exceed the Actual Deferral  Percentage
     for the immediately  preceding Plan Year of the group of such other Members
     by more than two percentage  points.  For purposes of this  subsection (c),
     the "Actual Deferral  Percentage" for a Plan Year means, for each specified
     group of Members, the average of the ratios (calculated separately for each
     Member in such  group) of (A) the  amount of 401(k)  Contributions  made on
     behalf of the Member for the Plan Year,  to (B) the amount of the  Member's
     compensation  (as  defined  in  Section  6.5)  for the Plan  Year,  where a
     Member's  Actual Deferral  Percentage is zero if no 401(k)  Contribution is
     made on behalf of the Member for such Plan Year.  For  purposes of applying
     the test  under  this  paragraph  (1) for any  Plan  Year  beginning  after
     December 31, 1996,  the Company may elect,  by amending the Plan to provide
     that it has made such election,  to use the Actual  Deferral  Percentage of
     the group of Members who are not Highly Compensated Members for the current
     Plan Year rather than for the preceding Plan Year as otherwise  provided in
     this  paragraph  (1). If such an  election  is made,  it may not be changed
     except to the  extent  provided  in  applicable  governmental  regulations,
     rulings,  notices  or  announcements.  In  accordance  with  the  preceding
     sentence,  the Company made such election for the Plan Year ending December
     31, 2000.
          (2) Special Rules for the 401(k)  Nondiscrimination  Test.  The Actual
     Deferral  Percentage  for each group of Members  shall be calculated to the
     nearest   one-hundredth   of  1%.  The  Committee  shall  maintain  records
     sufficient to demonstrate  the  satisfaction  of the test set forth in this
     subsection  (c)  for  each  Plan  Year.  To  the  extent  required  in  the
     Regulations,  in calculating  the Actual  Deferral  Percentage for any Plan
     Year, 401(k) Contributions which are made for such Plan Year on behalf of a
     Member  who is not a  Highly  Compensated  Member,  and  which  exceed  the
     limitation  on such  contributions  for such Plan Year set forth in Section
     6.2(a), shall be disregarded.
          (3) Aggregation Rules. If this Plan satisfies the requirements of Code
     section 410(b) only if aggregated with one or more other plans,  the Actual
     Deferral Percentages of all Members will be determined as if all such plans
     were a single plan. For purposes of the limitation on 401(k)  Contributions
     set forth in this Article,  the Actual  Deferral  Percentage for any Member
     who is a Highly Compensated Member for the Plan Year and who is eligible to
     have such deferral contributions allocated to his account under two or more
     plans or arrangements  described in Code section 401(k) that are maintained
     by the Company or any Affiliated  Company will be determined as if all such
     deferral contributions were made under a single arrangement.
     6.3 Limitation on Matching Contributions.
     (a) In General.  The Actual  Contribution  Percentage for the Plan Year for
the group of Highly Compensated Members shall not exceed the greater of: (i) the
product of the Actual Contribution Percentage for the immediately preceding Plan
Year of the  group of  those  Members  who are not  Highly  Compensated  Members
multiplied  by 1.25; or (ii) the product of the Actual  Contribution  Percentage
for the  preceding  Plan Year of the group of those  Members  who are not Highly
Compensated  Members  multiplied by 2.0,  provided that the Actual  Contribution
Percentage for the Plan Year of the group of Highly Compensated Members does not
exceed the Actual  Contribution  Percentage for the  immediately  preceding Plan
Year of the group of such other Members by more than two percentage  points. For
purposes of this  subsection,  the "Actual  Contribution  Percentage" for a Plan
Year  means,  for each  specified  group of  Members,  the average of the ratios
(calculated  separately  for each  Member in such  group)  of (A) the  amount of
Matching  Contributions  made on behalf of the Member for the Plan Year,  to (B)
the amount of the Member's compensation (as defined in Section 6.5) for the Plan
Year,  where a Member's  Actual  Contribution  Percentage is zero if no Matching
Contribution  is made on behalf of the  Member  for such Plan  Year.  The Actual
Contribution  Percentage  for each group of Members  shall be  calculated to the
nearest  one-hundredth of 1%. The Committee shall maintain records sufficient to
demonstrate  the  satisfaction of the test set forth in this subsection for each
Plan Year.  For purposes of applying the test under this  subsection (a) for any
Plan Year beginning  after December 31, 1996, the Company may elect, by amending
the  Plan  to  provide  that  it has  made  such  election,  to use  the  Actual
Contribution  Percentage of the group of Members who are not Highly  Compensated
Members for the current  Plan Year  rather than for the  preceding  Plan Year as
otherwise  provided in this  subsection (a). If such an election is made, it may
not be  changed  except  to  the  extent  provided  in  applicable  governmental
regulations, rulings, notices or announcements. In accordance with the preceding
sentence,  the Company made such election for the Plan Year ending  December 31,
2000.
     (b)  Aggregation  Rules.  If this Plan satisfies the  requirements  of Code
section  410(b)  only if  aggregated  with one or more other  plans,  the Actual
Contribution  Percentages of all Members will be determined as if all such plans
were a single plan. In addition, the Actual Contribution  Percentage of a Member
who is a  Highly  Compensated  Member  for a Plan  Year and who is  eligible  to
receive matching contributions  allocated to his account under two or more plans
or  arrangements  described in Code section  401(k) that are  maintained  by the
Company or an Affiliated Company will be determined as if all such contributions
were made to a single plan.
     (c) The determination of excess Matching  Contributions  under this Section
shall be made after first  determining the excess deferrals under Section 6.2(a)
and then determining excess contributions under Section 6.2(c).
     6.4 Multiple Use of Alternative Limitation.
     (a) Limitation.  Notwithstanding the foregoing  provisions of this Article,
if,  after  the  application  of  Sections  6.2 and 6.3,  the sum of the  Actual
Deferral  Percentage  and the Actual  Contribution  Percentage  for the group of
Members who are Highly Compensated Members for a Plan Year exceeds the aggregate
limit (as defined below) for the Plan Year, then the contributions made for such
Plan Year for Members  who are Highly  Compensated  Members  shall be reduced so
that the aggregate limit is not exceeded. Such reductions shall be made first in
contributions  made  pursuant  to  Section  4.1 or 4.2 (but only to the extent a
Matching  Contribution was not made with respect to such contributions) and then
in Matching  Contributions.  Reductions  in  contributions  shall be made in the
manner  provided in Section 6.8 or Section  6.9,  whichever is  applicable.  The
amount  by which a Highly  Compensated  Member's  contributions  is  reduced  in
accordance with the foregoing shall be treated as an excess  contribution  under
Section 6.8 or Section 6.9,  whichever the case may be. For the purposes of this
Section,  the Actual Deferral Percentage and Actual  Contribution  Percentage of
Members who are Highly  Compensated  Members are determined after any reductions
required for such Plan year under Sections 6.8 and 6.9, respectively.
     No reduction, however, shall be required by this Section for a Plan Year if
either  (i) the  Actual  Deferral  Percentage  of the  Members  who  are  Highly
Compensated  members  does not exceed  1.25  multiplied  by the Actual  Deferral
Percentage  for the next  preceding  Plan Year for  Members  who are not  Highly
Compensated  Members, or (b) the Actual  Contribution  Percentage of Members who
are Highly  Compensated  Members does not exceed 1.25  multiplied  by the Actual
Contribution Percentage for the next preceding Plan Year for Members who are not
Highly Compensated Members.
     (b) Definition.  For purposes of this Section,  the term "aggregate  limit"
for a Plan  Year  means  the sum of (i) 125% of the  greater  of (A) the  Actual
Deferral  Percentage  for the next  preceding  Plan Year for Members who are not
Highly  Compensated  Members or (B) the Actual  Contribution  Percentage for the
next preceding Plan Year for Members who are not Highly Compensated Members, and
(ii) the lesser of (A) 200% of, or (B) two percentage points plus, the lesser of
such Actual Deferral Percentage or Actual Contribution  Percentage.  If it would
result in a larger  aggregate  limit,  the word "lesser" is substituted  for the
word  "greater"  in subpart  (i) of this  paragraph  and the word  "greater"  is
substituted for the word "lesser" the second place it is used in subpart (ii) of
this paragraph.
     6.5 Section 415 Limitation.  All  contributions  and allocations  otherwise
required  to be made under  Articles  3 and 4 shall be subject to the  following
limitations:
     (a) Limitation. The Annual Addition to a Member's Account in respect of any
Plan Year shall not exceed  the  lesser of (1) 25% of the  compensation  of such
Member for the Plan Year or (2) $30,000 (as  adjusted  by the  Internal  Revenue
Service for such Plan Year for cost-of-living  increases under section 415(d) of
the Code).  For purposes of this subsection (a), the term  "compensation"  shall
mean the wages,  salaries and other amounts actually paid or made available to a
Member  for  services  actually  rendered  in the course of  employment  with an
Affiliated  Company,  to the extent such amounts are  includible in the Member's
gross income for federal  income tax  purposes,  including,  but not limited to,
commissions,  compensation for services on the basis of a percentage of profits,
commissions on insurance premiums,  tips and bonuses,  any elective deferral (as
defined in Code section 402(g)(3)),  any amount which is contributed or deferred
at the election of the Employee under Code section 125 and any elective  amounts
that are not includible in the gross income of the Employee by reason of section
132(f)(4)  and  excluding  (i)  employer  contributions  to a plan  of  deferred
compensation  which are not  included in the  Member's  gross income for federal
income tax  purposes  for the taxable  year in which  contributed,  (ii) amounts
realized  from the exercise of a  nonqualified  stock option or when  restricted
stock held by the Member  either  becomes  freely  transferable  or is no longer
subject to a substantial  risk of  forfeiture,  (iii) amounts  realized from the
sale,  exchange or other  disposition of stock acquired under a qualified  stock
option and (iv) other amounts which receive special tax treatment. The amount of
compensation, as so defined, taken into account under the Plan for any Plan Year
shall not exceed the  Compensation  Limit in effect for such Plan Year. Also for
purposes of this  subsection,  the term "Annual  Addition" shall mean the sum of
the following amounts credited to the Member's Account or otherwise  contributed
to the Plan on the Member's behalf for any Plan Year: (A) any contribution  made
to the Plan pursuant to Article 3 and allocated to the Member's Account, (B) any
401(k) Contributions made to the Plan on the Member's behalf pursuant to Article
4, (C) any  allocations  as provided in  subsection  (c) below,  (D) any amounts
contributed  by or on behalf of the  Member  under any other  qualified  defined
contribution  plan  maintained  by any  Affiliated  Company,  and (E) such other
amounts as may be required to be included under the Code and Regulations.
     (b)  Reduction of Annual  Addition.  In the event that,  as a result of the
allocation of  forfeitures,  a reasonable  error in estimating a Member's annual
compensation,   a  reasonable   error  in  determining   the  amount  of  401(k)
Contributions  that may be made with respect to any individual  under the limits
of Code section 415, or under other  limited  facts and  circumstances  that the
Commissioner  finds  justify  the  availability  of the  rules set forth in this
paragraph,  the Annual Addition  which,  without regard to subsection (a), would
have been credited to any Member's Account or otherwise  contributed to the Plan
on the Member's behalf in respect of any Plan Year, must be reduced by reason of
the limitation of subsection (a) above,  such reduction  shall first be made, to
the extent necessary,  by distributing the Member's 401(k)  Contributions  (plus
earnings attributable thereto). The distributed amounts shall be disregarded for
purposes of determining  compliance  with the  limitations of Section 6.2(a) and
(c).
     (c) 415(e) Limit.  For Plan Years  commencing prior to January 1, 2000, the
amounts  credited  to the  Account or  otherwise  contributed  under the Plan on
behalf of any Member  for any Plan Year shall not exceed the amount  permissible
under the  overall  limitation  applicable  to such  Member  for such year under
section 415(e) of the Code. In calculating the defined benefit plan fraction and
the defined  contribution plan fraction,  as defined under section 415(e) of the
Code,  for  the  purpose  of  determining  the  aforesaid  Code  section  415(e)
limitation, an amount shall, to the extent permitted under section 1106(i)(4) of
P.L.  99-514 and  section  235(g)(3)  of P.L.  97-248,  be  subtracted  from the
numerator  of the  defined  contribution  plan  fraction  so that the sum of the
defined  benefit plan fraction and the defined  contribution  plan fraction does
not exceed 1.0 for the Plan Year. In addition, the aforesaid Code section 415(e)
limitation  shall,  to the extent  permitted  under  section  1106(i)(3) of P.L.
99-514 and section 235(g)(4) of P.L. 97-248, be calculated by using the Member's
"current accrued benefit", as defined and determined under said provisions.
     (d) Further  Limitations.  The Committee  shall,  to the extent required to
maintain the tax-qualified  status of the Plan, apply the limitations  contained
in this Section (after giving due  consideration to the wishes of the Member) by
taking into account the benefits  payable and the  contributions  made under any
other  plans  maintained  by the  Company  or an  Affiliated  Company  which are
qualified under section 401(a) of the Code.
     6.6 Additional  Limitations on Contributions.  Contributions or allocations
otherwise required to be made pursuant to Article 3 or 4 shall be subject to the
following additional limitations:
     (a)  Profit  Limitation.  To  the  extent  that  the  aggregate  amount  of
contributions  a Participating  Company  otherwise would be required to make for
any Plan Year under  Article 3 or 4 would  exceed the  Company's  Net  Operating
Income for such year,  the  Company  shall not be  required  to make such excess
contributions. However, any part or all of such excess contributions may be made
by the  Participating  Company,  in its sole  discretion.  For this  purpose,  a
Participating  Company's  Net Operating  Income,  with respect to any Plan Year,
shall mean its income for the year,  determined  before  taking into account any
gains or losses realized on the sale or disposition of any securities and before
the payment or  provision  for the payment of Federal  income  taxes,  but after
taking into  account all other  expenses,  including,  without  limitation,  any
contributions  made by the Company under this Plan, the Retirement  Plan and any
other plan of current or deferred compensation maintained by such Company.
     (b)  Deduction   Limitation.   The  aggregate  amount  of  contributions  a
Participating  Company  is  otherwise  required  to make for any Plan Year under
Article 3 or 4 shall not exceed the amount  allowable as a deduction for federal
income tax purposes for such year with respect to such contributions.
     6.7  Adjustments.   Notwithstanding  any  other  provision  herein  to  the
contrary,  at any time  during  the  Plan  Year,  the  Committee  may make  such
adjustments to or impose such  restrictions on the amounts that otherwise are to
be  contributed  to the Plan on behalf of any Member or group of Members  during
the balance of the year,  as the  Committee  deems  necessary  in order for such
contributions  not to exceed any of the limitations set forth in this Article 6,
or in order for the Plan to meet any other  requirement for the Plan's continued
qualification under sections 401(a), and 401(k), of the Code.
     In addition,  notwithstanding  any other provision  herein to the contrary,
each contribution made under the Plan on behalf of a Member,  and the allocation
with respect thereto to the Member's  Account,  is subject to such  contribution
and  allocation  not causing the Plan to lose its  qualification  under sections
401(a),  401(k),  and 401(m) of the Code.  If it should be  determined  that any
contribution  and allocation so made would  otherwise cause the Plan to lose its
qualification under section 401(a), 401(k), or 401(m) of the Code, the Committee
may take  whatever  steps it  determines  to be necessary to preserve the Plan's
qualification under section 401(a), 401(k), or 401(m) of the Code, including (in
addition to the measures  provided for in Sections 6.8 and 6.9)  directing  that
the Member's Account be adjusted to eliminate  therefrom the amount so allocated
with respect to such contribution  (and any income  attributable  thereto),  and
directing  that any  amount  so  eliminated  be  returned  to the  Participating
Companies,  or held in a  suspense  account  for  allocation  to the Member in a
subsequent  Plan Year, or reallocated to the Accounts of such other Members,  in
such amounts, as the Committee determines in its discretion.
     Any 401(k)  Contributions so returned to the Participating  Companies shall
be paid by them to those  Members on whose behalf such amounts were  contributed
to the Plan,  as soon as  practicable  after the  Participating  Companies  have
received them.
     6.8  Correction  of Excess 401(k)  Contributions.  If for any Plan Year the
contributions  made on behalf of a Member for such year  exceed  the  limitation
applicable to such contributions  under Section 6.2(a) or (c), or if any part of
the 401(k)  Contributions  made on behalf of a Member during any taxable year of
the Member is designated as an excess deferral under subsection (b) below,  such
excess contributions,  or the amount so designated,  shall be distributed to the
Member in accordance  with the following  rules;  and any Matching  Contribution
made  with  respect  to  any  such  distributed  401(k)  Contribution  shall  be
forfeited:
     (a) If the aggregate amount of the 401(k) Contributions made on behalf of a
Member for any Plan Year exceeds the dollar limit for such  contributions  under
Section 6.2(a), the excess amount so contributed, as adjusted for income or loss
allocable  thereto,  shall be designated by the Committee as an excess  deferral
and earnings, and shall distributed to the Member by no later than April 15 next
following the close of such Plan Year.
     (b) If the aggregate amount of the 401(k) Contributions made on behalf of a
Member  under this Plan for any taxable  year of the  Member,  when added to the
total amount deferred in such year under other plans or  arrangements  described
in sections 401(k),  408(k) or 403(b) of the Code,  exceeds the limit applicable
to the Member under section 402(g) of the Code for such taxable year, the Member
may  designate  a portion  of such  excess  amount as  allocable  to the  401(k)
Contributions  made on the Member's  behalf under this Plan for such year.  Such
designation  shall be made by filing with the Committee in accordance  with such
procedures as it may prescribe a notice that specifies the amount so designated,
and  which  contains  a  certification  by the  Member  that  if the  amount  so
designated is not distributed,  such amount,  when added to his remaining 401(k)
Contributions  plus the total amount  deferred under other plans or arrangements
described  in  sections  401(k),  408(k) or 403(b) of the Code,  will exceed the
limit  applicable to the Member under section 402(g) of the Code for the taxable
year in question.
     Such notice shall be  submitted  to the  Committee no later than by March 1
next  following the close of such taxable  year.  The amount so  designated,  as
adjusted  for income or loss  allocable  thereto,  shall be  distributed  to the
Member  from his Account by no later than April 15 next  following  the close of
such taxable year.
     (c) If as of the close of any Plan Year the aggregate  amount of the 401(k)
Contributions made for such year on behalf of Members who are Highly Compensated
Members  exceeds the limit for such  contributions  under  Section  6.2(c),  the
excess amount of such  contributions,  as adjusted for income or loss  allocable
thereto,  shall be designated by the Committee as an excess 401(k)  Contribution
and  earnings,  and shall be  distributed  to those Members on whose behalf such
excess  contributions  were made. Such  distributions  shall be made by no later
than  March 15 next  following  the close of such Plan  Year.  Any  amount  that
otherwise  would  be  distributed  to a Member  in  accordance  with the  second
preceding  sentence shall be reduced,  in accordance with Regulations or rulings
issued  under  section  401(k) of the Code,  by any amounts  distributed  to the
Member under subsection (a) or (b) above.
     (d) The  amount of excess  contributions  to be  distributed  to any Member
under  subsection (c) above shall be determined by reducing the Actual  Deferral
Percentages  of the Members who are Highly  Compensated  Members on the basis of
each Highly  Compensated  Member's  contribution,  beginning  with those  Highly
Compensated  Members  with the highest  dollar  amount of 401(k)  Contributions,
until the aggregate  amount of 401(k)  Contributions  for Members who are Highly
Compensated  Members has been reduced to the amount  permissible  under  Section
6.2(c).  The excess  contributions  so determined  shall be distributed to those
Highly  Compensated  Members  for whom a reduction  is made under the  preceding
sentence.   Any  Matching   Contributions  made  with  respect  to  such  excess
contributions shall be forfeited, if forfeitable.
     (e) The amount of income or loss allocable to the excess  contributions  to
be  distributed  to any  Member  who is a  Highly  Compensated  Member  shall be
determined  in accordance  with the  applicable  provisions  of the  Regulations
issued under sections 401(k), 401(m), and 402(g) of the Code.
     (f)  Any  amounts  required  to be  distributed  to a  Member  pursuant  to
subsection (a), (b), (c) or (d) above shall be so  distributed,  notwithstanding
any other provision in this Plan to the contrary.
     6.9 Correction of Excess Matching Contributions.
     (a) If as of the  close  of any  Plan  Year  the  aggregate  amount  of the
Matching  Contributions  made for such year on behalf of Members  who are Highly
Compensated  Members exceeds the limit for such contributions under Section 6.3,
the  excess  amount  of such  contributions,  as  adjusted  for  income  or loss
allocable  thereto,  shall be designated by the Committee as an excess  Matching
Contribution  and  earnings,  and  shall  be  forfeited,   if  forfeitable,   or
distributed  to those  Members on whose  behalf such excess  contributions  were
made. Such distributions  shall be made by no later than March 15 next following
the close of such Plan Year.
     (b) The amount of excess  contributions to be distributed to any Member (or
forfeited) under subsection (a) above shall be determined by reducing the Actual
Contribution  Percentages of the Members who are Highly  Compensated  Members on
the basis of each Highly Compensated Member's contribution, beginning with those
Highly   Compensated   Members  with  the  highest  dollar  amount  of  Matching
Contributions,  until the aggregate amount of 401(k)  Contributions  for Members
who are Highly  Compensated  Members has been reduced to the amount  permissible
under Section 6.3. The excess  contributions  so determined shall be distributed
to those  Highly  Compensated  Members  for whom a  reduction  is made under the
preceding sentence, or if forfeitable, forfeited.
     (c)  The  amount  of  income  or  loss  allocable  to the  excess  Matching
Contributions  shall be determined in accordance with the applicable  provisions
of the Regulations issued under sections 401(k), 401(m), and 402(g) of the Code.
     (d)  Any  amounts  required  to be  distributed  to a  Member  pursuant  to
subsection (a), (b), or (c) above shall be so distributed,  notwithstanding  any
other provision in this Plan to the contrary.

                                    ARTICLE 7

                             INVESTMENT OF ACCOUNTS

     7.1 ESOP Stock  Fund.  There  shall be  maintained  within the Trust Fund a
separate  investment  fund (referred to herein as the "ESOP Stock Fund"),  which
shall be invested in ESOP Stock,  except for  temporary  short-term  investments
pending  investment in such ESOP Stock or to provide  liquid funds  necessary to
make distributions pursuant to Article 12. The ESOP Stock held in the ESOP Stock
Fund was acquired  pursuant to the terms of the Plan in effect prior to April 1,
1999.
     Fractional  shares of ESOP Stock that have been canceled in connection with
distributions made to Members,  or in connection with the transfer of amounts by
Members from the ESOP Stock Fund to other  Investment  Funds as permitted  under
Section 7.6, shall be aggregated  and sold, in such amounts,  and at such times,
as the Committee may direct in its discretion. The proceeds of any such sales in
connection  with  distributions  to be made to Members  shall be retained in the
ESOP Stock Fund as part of the  reserve of liquid  funds  maintained  for use in
connection with making distributions to Members pursuant to Article 12.
     7.2 Other Investment Funds. In addition to the ESOP Stock Fund, there shall
be  established  and  maintained  within  the  Trust  Fund such  other  separate
Investment  Funds as the Investment  Committee in its sole discretion may direct
from time to time,  including,  without  limitation by  specification,  open-end
investment  companies for which the Company or Affiliated Companies serve as the
investment  adviser  and/or  provide  other  services and the Schwab Stock Fund,
which  shall be  invested  primarily  in Capital  Stock,  except for  short-term
investments  pending  investment in Capital Stock or such reasonable  amounts as
may be  required  to provide  for  distributions  pursuant  to  Article  12. All
dividends  received on shares of Capital Stock shall be reinvested in additional
shares of Capital Stock, except to the extent the Investment Committee otherwise
directs that any such cash  dividends on shares of Capital Stock  allocated to a
Member's  Account shall be paid to such Member or his  Beneficiary no later than
90 days after the close of the Plan Year in which  such  dividend  is paid.  The
Investment  Committee may from time to time in its sole  discretion,  establish,
modify or eliminate any Investment Fund.
     7.3 Investment of Dividends.  Dividends on Common Shares held in a Matching
Contributions  Account shall be  reinvested in the Schwab Stock Fund.  Any other
dividends on Common Shares which are allocated and credited to Members' Accounts
under Section 3.2 shall be invested in the Schwab Value  Advantage Money Fund or
a comparable  fund,  unless the Investment  Committee  directs that such amounts
will be invested in the Schwab Stock Fund.
     7.4 Investment of Other  Contributions.  Any 401(k)  Contributions  made on
behalf of a Member  pursuant to Section 4.1 or 4.2, any Matching  Contributions,
any cash or Common  Shares  rolled  over to the Plan and  credited to a Member's
Account pursuant to Sections 5.1 and 5.2 (hereinafter referred to as a "Rollover
Amount"), and any amounts transferred to the Plan pursuant to Section 5.3, shall
be invested in accordance with the following rules:
     (a) Any 401(k) Contributions made on the Member's behalf, any cash credited
to the Rollover Amount or amount  transferred to his Account pursuant to Section
5.3 shall be invested  in such of the Plan's  Investment  Funds  (other than the
ESOP Stock Fund),  in such whole  percentages as the Member shall have specified
in an election for such purpose.
     (b) Any Common Shares in a rollover Account shall be initially  credited to
the Schwab Stock Fund as soon as practicable  following  receipt thereof and the
Member may  thereafter  elect to transfer such  investment to one or more of the
Plan's  Investment  Funds  (other  than  the ESOP  Stock  Fund),  in such  whole
percentages as the Member shall have specified in an election for such purpose.
     (c) In the case of any Rollover  Amount  (other than a Related  Interest as
defined in Section  5.2) or  transferred  amount  pursuant to Section  5.3,  the
Member's investment election shall be effective as soon as practicable following
the date on which such Rollover  Amount or transferred  amount is transferred to
the Trustee.
     (d) A Member shall be permitted to make any investment  election for 401(k)
Contributions,  Rollover  Amounts  (other than a Related  Interest as defined in
Section 5.2), and amounts  transferred  pursuant to Section 5.2, and to make any
change in investment election as to such amounts, by communicating such election
or change in election  directly to the Trustee in accordance with such rules and
procedures as the Committee shall  prescribe.  Any investment  election,  or any
change in investment election, made by use of a voice-response, on-line or other
electronic service shall be effective (1) in the case of 401(k) Contributions to
be made on the Member's  behalf  pursuant to Section 4.1, as of the first day of
the first payroll  period which starts at least two weeks after such election or
change in election has been so made, (2) in the case of 401(k)  Contributions to
be made on the Member's behalf pursuant to Section 4.2, with respect to any such
contributions  or amounts received by the Trustee more than two weeks after such
election  or change  in  election  has been so made,  and (3) in the case of any
Rollover  Amount  (other than a Related  Interest as defined in Section 5.2), or
amount  transferred  pursuant to Section 5.3, the Member's  investment  election
shall be  effective  as soon as  practicable  following  the date on which  such
rollover or transfer is made to the Trustee.
     (e) If no investment  election made in  accordance  with the  provisions of
this  Section 7.4 is in effect for a Member at the time any 401(k)  Contribution
is  made to the  Plan on his  behalf,  or if the  Member  fails  to  provide  an
investment  election in connection with a Rollover Amount or amounts transferred
to the Plan pursuant to Section 5.3, the entire portion of such Contribution, or
the cash portion if the Rollover Account and the amounts transferred pursuant to
Section  5.3 shall be  invested in the Schwab  Value  Advantage  Money Fund or a
comparable fund, until the Member provides an investment election.
     (f) If a Member  fails to provide an  investment  election  with respect to
Common Shares  transferred to a rollover  Account  pursuant to Section 5.2, such
Common  Shares  shall be  invested  in the  Schwab  Stock  Fund until the Member
provides an investment election.
     (g) Matching  Contributions  Accounts shall be invested in the Schwab Stock
Fund,  unless  the  Committee,  acting  on behalf  of the  Company  in a settlor
capacity,  determines  that  Matching  Contributions  Accounts  may be  invested
pursuant to Member instructions in other Investment Funds.
     7.5 Transfers Between  Investment Funds.  Subject to the provisions of this
Section,  a Member may elect to have all or any  portion of his  interest in any
one or more of the Investment Funds  transferred to any other Investment Fund or
Funds, in accordance with such rules as the Committee may determine from time to
time in its discretion.
     (a) Limit on  Transfers.  No amounts may be  transferred  to the ESOP Stock
Fund from any other Investment Fund. No amounts may be transferred from the ESOP
Stock Fund to any other Investment  Fund,  except as provided in Section 7.6. No
amounts may be transferred to or from a Member's Matching Contributions Account,
except as provided in Section 7.6.
     (b) Transfer of Assets.  In order to give effect to the transfers  referred
to above, the Trustee shall transfer from and to the respective Investment Funds
to which such transfers  relate cash in the net amounts  required to give effect
to all elections under this Section.  For this purpose,  the Trustee shall value
the interest of each Member in the Investment Funds to be transferred as to whom
it has received  notice,  and the Trustee shall effect such transfers as soon as
practicable.
     (c) Delayed  Transfer.  In the event the Trustee,  in its sole  discretion,
determines that the transfer from any of the Investment Funds cannot be effected
without jeopardizing the maintenance of an orderly market in the securities held
in such Investment Fund, the Trustee shall so notify the Investment Committee in
writing,  and shall make such  transfer  at the  earliest  time or times that it
considers  practicable  consistent  with the maintenance of such orderly market.
The amount of any partial  transfer  from any  Investment  Fund pursuant to this
subsection  shall be deemed allocable pro rata to all Members whose elections to
have  transfers  made from such  Investment  Fund have not yet been effected and
have not been revoked  (pursuant to this  subsection)  prior to the date of such
partial transfer.
     (d) Electronic  Transfers.  A Member shall be permitted to make an election
which shall  apply to any  transfer  under this  Section by  communicating  such
election directly to the Trustee by means of a voice-response,  on-line or other
electronic service in accordance with such rules and procedures as the Committee
shall prescribe.
     7.6   Diversification   Rights  with   Respect  to  the  ESOP  Stock  Fund.
Notwithstanding the two preceding Sections,  a Qualified Member may elect at any
time to have an amount equal to 25 percent of the value of his Account  invested
in Common  Shares  credited  to him under the ESOP Stock  Fund and the  Matching
Contributions  Account (to the extent such amount  exceeds the amount to which a
prior  election  under  this  Section  7.6  applies)  transferred  to any  other
Investment  Fund. In the case of any  Qualified  Member who has attained age 60,
the 25% amount in the preceding sentence shall be increased to 50%.
     7.7 Special  Voting Rights and Tender Offer Response  Provisions  Regarding
Schwab Stock Fund and ESOP Stock Fund. Each Member, Former Member or Beneficiary
who has any  portion of his  interest  in the Trust Fund  invested in the Schwab
Stock Fund or the ESOP Stock Fund  (hereinafter  referred to collectively as the
"Stock  Funds") shall have the right to instruct the Trustee with respect to the
voting of the shares of Capital  Stock or ESOP Stock  (hereinafter  referred  to
collectively  as the  "Shares")  attributable  to such interest or to direct the
Trustee to tender, exchange or sell such Shares in accordance with the following
provisions:
     (a)  Voting  Rights.  At  least  30 days  before  each  annual  or  special
shareholders' meeting of The Charles Schwab Corporation ("Schwab"),  the Trustee
shall furnish to each Member,  Former Member or Beneficiary  with an interest in
the Stock Funds a copy of the proxy solicitation material,  together with a form
requesting  confidential  instructions  on how the Shares  attributable  to such
interests are to be voted. Upon timely receipt of such instructions, the Trustee
shall vote such Shares as instructed.  The instructions  received by the Trustee
from any individual  Member,  Former Member or Beneficiary  shall be held by the
Trustee in strict confidence and shall not be divulged or released to any person
including  officers or  employees  of Schwab,  of the  Company,  or of any other
Affiliated  Company.  Neither the Trustee,  the  Investment  Committee,  nor the
Committee  is required to make  recommendations  to Members,  Former  Members or
Beneficiaries on whether to vote or how to vote. Each Member,  Former Member, or
Beneficiary,  as a "named  fiduciary" within the meaning of Section 402(a)(1) of
ERISA,  shall also have the  opportunity  to direct the vote of a portion of any
Shares for which a signed voting direction  instrument is not timely received by
the  Trustee  ("Undirected   Shares").   Each  such  Member,  Former  Member  or
Beneficiary shall be entitled to provide a direction with respect to a number of
Undirected  Shares  equal to the product of (a) the total  number of  Undirected
Shares,  multiplied  by (b) a fraction,  the numerator of which is the number of
Shares  allocated to the Account of such Member,  Former Member,  or Beneficiary
who is giving a voting instruction with respect to the Undirected Shares and the
denominator of which is the total number of Shares  allocated to the Accounts of
all Members,  Former Members and Beneficiaries who have given the Trustee voting
instructions with respect to Undirected Shares.
     (b) Tender or Exchange  Offers.  In the event the Trustee receives a tender
or  exchange  offer or any other  offer or option to sell any Shares held in the
Stock  Funds,  which offer or option  requires a response  with  respect to such
Shares, the Trustee shall notify each Member with an interest in the Stock Funds
of such offer or option and utilize its best efforts to  distribute  or cause to
be distributed to such Member in a timely manner all information  distributed to
shareholders  of  Schwab in  connection  with such  offer or  option.  Each such
Member, Former Member or Beneficiary shall have the right from time to time with
respect to the Shares  attributable  to such  interest  to direct the Trustee in
writing  as to the  manner in which to respond to any offer or option to sell or
exchange  such Shares  which shall be pending or which may be made in the future
for  all  Shares  or  any  portion  thereof.  A  Member's,  Former  Member's  or
Beneficiary's  instructions shall remain in force until superseded in writing by
the  Member,  Former  Member or  Beneficiary.  If the  Trustee  shall not timely
receive a direction  from a Member to tender,  exchange or sell pursuant to such
tender or exchange offer or other offer or option to sell:
          (1) with  respect to the Schwab  Stock  Fund,  the  Trustee  shall not
     tender, exchange or sell any such Shares held in the Schwab Stock Fund that
     are  attributable  to  such  Member's,  Former  Member's  or  Beneficiary's
     interest,
          (2) with respect to the ESOP Stock Fund,  each Member,  Former Member,
     or  Beneficiary,  as a "named  fiduciary"  within  the  meaning  of Section
     402(a)(1) of ERISA,  shall also have the  opportunity to direct the Trustee
     to tender,  exchange or sell  pursuant  to such tender or exchange  offer a
     portion of any Shares for which a signed direction instrument is not timely
     received by the Trustee  ("Undirected  Shares").  Each such Member,  Former
     Member or Beneficiary shall be entitled to provide a direction with respect
     to a number of  Undirected  Shares  equal to the  product  of (a) the total
     number of Undirected Shares, multiplied by (b) a fraction, the numerator of
     which is the number of Shares  allocated  to the  Account  of such  Member,
     Former  Member,   or  Beneficiary  who  is  giving  a  tender  or  exchange
     instruction  with respect to the Undirected  Shares and the  denominator of
     which is the total  number  of  Shares  allocated  to the  Accounts  of all
     Members, Former Members and Beneficiaries who have given the Trustee tender
     or exchange instructions with respect to Undirected Shares.
     Unless and until Shares are  tendered,  exchanged or sold,  the  individual
instructions   received  by  the  Trustee  from  Members,   Former   Members  or
Beneficiaries shall be held by the Trustee in strict confidence and shall not be
divulged or released to any person,  including  officers or employees of Schwab,
of the Company, or of any other Affiliated Company; provided,  however, that the
Trustee  shall advise Schwab or the Company,  at any time upon  request,  of the
total number of Shares not subject to instructions to tender,  exchange or sell.
Neither the Trustee,  the Investment  Committee nor the Committee is required to
make  recommendations to Members,  Former Members or Beneficiaries as to whether
to tender or exchange or sell Shares.
     The Trustee shall tender,  exchange, or sell those Shares as to which valid
and timely tender or exchange instructions have been received by it and have not
been subsequently  revoked by the Member,  Former Member or Beneficiary prior to
the expiration date of the offer or option to which the tender, exchange or sell
instructions  are submitted,  determined as set forth above.  Except as to those
Shares  tendered  or  exchanged  in  accordance  with  the  provisions  of  this
subsection (b), the Trustee shall be prohibited  from  tendering,  exchanging or
otherwise  depositing  or forwarding  for sale in  connection  with the offer or
option  any  Shares  held in the  Trust  Fund and shall  withdraw,  prior to the
withdrawal date of the offer or option, any Shares previously  tendered for sale
or  exchanged  as to which  timely  instructions  to  withdraw  such  Shares are
received.
     The cash  proceeds  from the sale of any Shares  tendered  pursuant to this
subsection  (b) shall be  invested  on behalf of the  Member,  Former  Member or
Beneficiary  effecting the tender in the Schwab Value  Advantage  Money Fund (or
such other  Investment  Fund as the Investment  Committee shall determine in its
sole discretion)  under the Trust Fund and any non-cash  proceeds of such tender
or sale shall be  deposited  for the  interest of the Member,  Former  Member or
Beneficiary in such other funding  arrangement  as the Investment  Committee may
establish, in accordance with the terms and conditions of the Plan and the Trust
Agreement. Shares tendered but not purchased shall be returned by the Trustee as
soon as practicable  to the Schwab Stock Fund or the ESOP Stock Fund  (whichever
is applicable) for the interest of such Members, Former Members or Beneficiaries
as had an interest in such Shares prior to the tender offer. In the event only a
portion of the Shares  tendered are  purchased,  those  Shares  tendered but not
purchased  shall be returned in accordance  with the preceding  sentence for the
interest of Members,  Former Members or Beneficiaries  who had instructed Shares
attributable to their interest to be tendered on a proportional basis.
     (c) Trustee's Discretion.  Notwithstanding the provisions of subsection (a)
or (b) above,  the Trustee  shall not be required  to exercise  voting,  tender,
exchange or similar  rights with  respect to Shares in the manner  described  in
subsection  (a) or (b) above,  and may  exercise  voting,  tender,  exchange  or
similar  rights with  respect to Shares in such manner as it  determines  in its
discretion,  if the Trustee determines that exercising voting, tender,  exchange
or other rights in the manner  described in subsection (a) or (b) above would be
contrary to the applicable provisions of ERISA.

                                    ARTICLE 8

                               NATURE OF INTEREST

     8.1 Interest in Trust Fund. Each Member shall have a beneficial interest in
the assets of the Trust Fund attributable to the contributions  theretofore made
for his benefit,  but no Member shall have a direct or indirect  ownership right
or  interest  in any  specific  asset in the Trust  Fund.  Except  for  Matching
Contributions,  such interest shall be fully Vested at all times and in no event
shall it be  subject  to  forfeiture.  Regardless  of the  extent to which  such
interest is fully Vested,  it shall remain subject to and shall be  transferable
only in  accordance  with the  terms and  conditions  of this Plan and the Trust
Agreement.  It  shall  consist  of  the  sum  of his  interests  in the  various
Investment  Funds,  and of his interest in his Account invested in any loan made
to him, as described in Section 10.4(e).
     8.2 Interest in Stock Funds. The beneficial interest of each Member, Former
Member and Beneficiary in the Stock Funds shall be expressed in terms of numbers
of whole  shares and  fractional  interests  in shares with  respect to the ESOP
Accounts  and the  Matching  Contribution  Accounts,  but no Member shall have a
direct or indirect ownership right or interest in any Common Shares.

                                    ARTICLE 9

                                    ACCOUNTS

     9.1  Accounts.  The  Committee  shall  maintain  on the books of the Plan a
separate  Account for each Member,  Former  Member and  Beneficiary  which shall
show, with respect to each Investment Fund the following:
     (a) the amount of each contribution  made on his behalf,  any other amounts
allocated to his  Account,  any Rollover  Amount  (except a Related  Interest as
defined in Section 5.2) and in respect of any transfer of funds  credited to his
Account,  which,  in  accordance  with the  provisions  of  Article  7, has been
invested in such Investment Fund;
     (b) the amount credited to his Account in respect of any such contribution,
allocated  amount or Rollover  Amount and to such Investment Fund from any other
Investment Fund;
     (c) any loan, withdrawal, distribution, or transfer;
     (d) the  Member's  allocable  share of the income and expenses and realized
and unrealized gains and losses;
     (e) any amount that had been subject to the election described in Paragraph
A of Article V of the Prior Plan for any Plan Year  commencing  prior to January
1, 1980;
     (f) any amount that had been subject to the election described in Paragraph
B of Article V of the Prior Plan for any Plan Year commencing after December 31,
1979 and prior to January 1, 1985, or commencing after December 13, 1988;
     (g) any amount attributable to the Profit-Sharing  Amount contributed to or
for the  benefit  of the  Member  under the terms of the Prior Plan for any Plan
Year commencing after December 31, 1984 and prior to January 1, 1989;
     (h) any amount  attributable to any 401(k)  Contributions made hereunder on
behalf of each such Member and Former  Member  hereunder or to any  Tax-Deferred
Savings  Contributions  made on behalf of a Member  or Former  Member  under the
terms of the Prior Plan;
     (i) any amount attributable to any Matching Contributions made hereunder on
behalf of each such Member and former Member hereunder;
     (j) the  amount  deemed  invested  by such  Member or Former  Member in the
outstanding balance of any loan as described in Section 10.4(e); and
     (k) the number of shares  and  fractional  shares of ESOP Stock  which have
been allocated and credited to such Member or Former Member's Account.
     The Account maintained for each Member shall also show, with respect to any
Plan Year, the dollar amount of any contribution  that is to be made to the Plan
on the  Member's  behalf  for such  year but  which has not yet been made to the
Plan,  or  invested in any  Investment  Fund,  as of the close of such year.  In
addition to the foregoing, the Committee shall maintain on the books of the Plan
a separate  rollover  Account for any Related  Interests  (as defined in Section
5.2.) transferred to the Plan for a Member.
     9.2  Cancellation of Shares.  In the event of any complete  distribution or
withdrawal  to be made to a Member in cash from the Schwab  Stock Fund, a number
of such  Shares  credited  to the  Account  of the  Member in such Fund shall be
canceled, and cash shall be segregated from the assets of such fund, for payment
to the Member in accordance with the provisions of the Plan. In the event that a
complete distribution or installment payments are to be made to a Member, Former
Member or  Beneficiary  of an interest  in the Schwab  Stock Fund in the form of
Capital  Stock  (and in cash for any  fractional  shares  thereof),  all  Shares
credited to such  person in the Schwab  Stock Fund shall be  canceled.  Upon its
cancellation of such shares,  the Trustee shall segregate from the assets of the
Schwab Stock Fund, on the date of such cancellation, the largest number of whole
shares of Capital  Stock which,  as of the  Valuation  Date  coinciding  with or
immediately  preceding  the  date of  such  cancellation,  did not  have a value
exceeding the value of the Shares being canceled, and an amount of cash equal to
the  difference,  if any, as of such  Valuation  Date,  between the value of the
whole shares  being so  segregated  and the value of the Shares being  canceled.
Such  Capital  Stock and cash shall be held by the  Trustee  for  payment to the
Member in accordance with the provisions of the Plan.
     9.3  Distribution of ESOP Stock. In the event that a complete  distribution
or installment payments are to be made to a Member, Former Member or Beneficiary
of an interest in the ESOP Stock Fund, the Committee shall direct the Trustee to
segregate  from the assets of such Fund the  number of whole  shares of the ESOP
Stock credited to the Member's  Account as of the Valuation Date coinciding with
or immediately preceding the date on which the distribution is to be made or the
installment  payments  are to  commence,  as  applicable,  and an amount of cash
representing  the  fractional  shares,  if any,  of such  ESOP  stock as of such
Valuation  Date.  Such ESOP  Stock  and cash  shall be held by the  Trustee  for
payment to such person in accordance with the provisions of the Plan.
     9.4  Statements  of Account.  The  Committee  shall  submit to each Member,
Former Member and  Beneficiary,  as soon as practicable  after the close of each
Plan Year, a statement setting forth
     (a) in the case of the ESOP Stock Fund, the number of shares and fractional
shares of ESOP Stock allocated and credited to such person's Account during such
Plan Year and credited to such person's Account at the close of such Plan Year,
     (b) the value of such  person's  interest  in each  Investment  Fund at the
close of such Plan Year,
     (c) the amount of the 401(k)  Contributions  made on behalf of such  Member
and Former Member under Sections 4.1 and 4.2 for the last Plan Year,
     (d) the amount of Matching Contributions made on behalf of such Members and
former Members for the last Plan Year, and
     (e) such additional information as the Committee deems desirable.
     9.5  Electronic  Service.  To the extent  permitted by the  Committee,  and
subject to such rules and  procedures as the Committee may  prescribe,  a Member
may obtain the  following  information  by using a  telephone,  on-line or other
electronic service which is made available by the Committee,  in its discretion,
for the purpose of allowing a Member to communicate directly with the Trustee:
     (a) the balance of his Account, and the portion of such balance invested in
each  Investment Fund or which consists of shares of ESOP Stock allocated to his
Account,
     (b) his current investment elections as to future 401(k) Contributions, and
his current election as to the percentage of his Compensation, or the percentage
of his award under each of the Annual  Incentive Plans, to be contributed to the
Plan on his behalf as a 401(k) Contribution,
     (c) the amount in his Account available for a loan or a withdrawal,
     (d) the  balance  of any  outstanding  Plan  loan,  and the  amount of each
monthly payment under such loan,
     (e) such other information as determined by the Committee.

                                    ARTICLE 10

                              WITHDRAWALS AND LOANS

     10.1 Hardship Withdrawals. A Member may make a hardship withdrawal from his
Account at any time of 401(k)  Contributions made on his behalf,  subject to the
following conditions:
          (1) The withdrawal  must be made on account of an "immediate and heavy
     financial    need"    of   the    Member,    as    defined    in    section
     1.401(k)-1(d)(2)(iv)(A)  and  (C) of  the  Treasury  Regulations  or in any
     revenue  ruling or notice issued by the Internal  Revenue  Service,  and as
     determined by the Committee in its sole discretion.
     (b) The amount withdrawn may not exceed the lesser of
          (1) the amount  required  to meet the  Member's  "immediate  and heavy
     financial need", or
          (2) the balance of the Member's Account, reduced by
               (i) the unpaid amount  outstanding on any loan made to the Member
          under Section 10.4(e),
               (ii) all earnings credited to the Member's Account after December
          31, 1988 (net of any negative  earnings  that may have been charged to
          the  Member's  Account  after such  date)  with  respect to any 401(k)
          Contributions  (or  any  Tax-Deferred  Savings  Contributions  or  any
          contributions  with  respect to Elective  Profit-Sharing  Amounts,  as
          defined in the  applicable  provisions  of the Prior Plan) made to the
          Plan on the Member's behalf, and
               (iii) the portion of such Account,  if any,  invested in the ESOP
          Stock  Fund  and  the  Member's  Matching  Contribution  Account.  For
          purposes of clause (1) hereof,  the amount required to meet a Member's
          "immediate  and heavy  financial  need" may  include the amount of any
          taxes and  penalties  payable with respect to the amount  withdrawn by
          the Member hereunder.
     (c) The Member  must also  withdraw at such time,  or must have  previously
withdrawn,  all amounts the Member may be  permitted to withdraw  under  Section
10.2,  and all  employee  contributions  permitted to be withdrawn by the Member
under any other plan maintained by the Company or any other Affiliated  Company.
In  addition,  the Member must have  obtained  all  nontaxable  loans  currently
available under this Plan, and under any other plan maintained by the Company or
any other  Affiliated  Company,  to the extent  obtaining such loans is required
under section 401(k) of the Code and the Regulations issued thereunder.
     (d)  Notwithstanding  any other  provision of the Plan to the contrary,  no
401(k)  Contributions  may be made on  behalf of the  Member  for a period of 12
months  following the Member's receipt of a hardship  withdrawal  hereunder that
includes any amounts  attributable  to any 401(k)  Contributions  made under the
Plan (or any contributions with respect to Elective Profit-Sharing Amounts under
the terms of the Prior Plan) on the Members'  behalf.  In addition,  during such
12-month period,  no employee  contributions  may be made by the Member,  and no
amounts  may  be  deferred  at the  Member's  election,  under  any  other  plan
maintained by the Company or any other Affiliated Company.
     (e) Notwithstanding the provisions of Section 6.2(a), the maximum amount of
401(k)  Contributions  that may be made on a  Member's  behalf for the Plan Year
following  the  Plan  Year in  which  the  Member  makes a  hardship  withdrawal
described in  subsection  (d) above shall not exceed the 401(k) dollar limit (as
indexed) in accordance  with section  402(g) for such following  year,  less the
amount of the 401(k) Contributions made on the Member's behalf for the Plan Year
in which such hardship withdrawal was made.
     10.2 Discretionary Withdrawals. A Member may make discretionary withdrawals
from his Account, subject to the following conditions:
     (a) No more  than  one  discretionary  withdrawal  may be made by a  Member
hereunder during any Plan Year.
     (b) After attaining age 59-1/2, a Member may withdraw any portion or all of
his Account other than any amount (1) that, under Section 10.4(e),  is deemed to
be invested in the  outstanding  balance of any loan made to the Member,  or (2)
that is invested in the ESOP Stock Fund or allocated  to the  Member's  Matching
Contributions Account and is not subject to diversification under Section 7.6.
     (c) Prior to attaining age 59-1/2, a Member may withdraw any portion of his
Account other than
          (1) any amount described in clause (1) or (2) of subsection (b) above,
          (2) any amount that had been subject to the  election  provided for in
     Paragraph  B of  Article V of the Prior  Plan for any Plan Year  commencing
     after December 31, 1979 and prior to January 1, 1985,
          (3) the  Profit-Sharing  Amount  contributed  for the  benefit  of the
     Member under the Prior Plan for any Plan Year commencing after December 31,
     1984,
          (4) amounts attributable to any 401(k) Contribution made on his behalf
     hereunder for any year or to any Tax-Deferred Savings Contributions made on
     his behalf for any year under the terms of the Prior Plan and
          (5) amounts described in clause (ii) of Section 10.1(b)(2).
     10.3  Withdrawal  Procedures.   Withdrawals  shall  be  made  hereunder  in
accordance with the following procedures:
     (a) A Member who wishes to make a  withdrawal  under  Section  10.1 or 10.2
shall  communicate  such  request  by means  of a  telephone,  on-line  or other
electronic service made available by the Committee in its discretion, subject to
such rules and procedures as the Committee  shall  prescribe,  setting forth the
amount the Member wishes to withdraw and specifying  those  Investment  Funds in
which the Member's Account is invested from which the withdrawal is to be made.
     (b) In the  case of a  hardship  withdrawal,  the  Member's  request  shall
include  the amount  needed and such  information  as may be  required to make a
determination  as to whether or not the conditions  described in Section 10.1(a)
and (b)(1) will be met in the Member's case.
     (c) After making a request for a withdrawal,  the Trustee shall furnish the
Member with the documents which must be completed by the Member in order to make
the withdrawal.  As soon as practicable after such documents have been completed
and filed by the Member (or in the case of a hardship withdrawal,  after receipt
of such  completed  documents  from the  Member  and  approval  of the  Member's
request), the Trustee shall distribute the amount of the withdrawal so requested
(or approved) pro rata from the Investment Funds.
     10.4 Loans to Members.  Any Member who is actively  employed by the Company
or who is a "party in interest," within the meaning of ERISA Section 3(14), with
respect to the Plan (hereinafter referred to as an "Eligible Member") may borrow
from the Eligible Member's  Account,  other than such Eligible Member's Matching
Contributions  Account and his  interest in the ESOP Stock Fund,  in  accordance
with the following provisions:
     (a)  Application.  An Eligible  Member may request a loan by  communicating
such request by means of a telephone,  on-line or other electronic  service made
available  by the  Committee  in its  discretion,  subject  to  such  rules  and
procedures as the Committee shall prescribe. Such request shall:
          (1) specify the terms  pursuant to which the loan is  requested  to be
     made;
          (2) provide such information and  documentation as the Committee shall
     require.
     Upon receiving such request, the Trustee shall obtain such documentation as
the  Committee  may require,  including  the Eligible  Member's  execution of an
authorization  for the repayment of the loan through  payroll  deductions  and a
promissory  note granting a security  interest in his interest in the Trust Fund
not to exceed fifty  percent  (50%) of such  interest (or such lesser  amount of
such interest as the Committee may determine  constitutes  adequate security for
such loan under applicable laws and Regulations) to secure the loan.
     A loan shall not be effective  until such documents have been duly executed
by the Eligible  Member in accordance  with such procedures as the Committee may
establish from time to time.
     (b)  Terms.  The  Committee  shall  establish   standards,   determined  in
accordance with applicable  Regulations,  which shall be uniformly applicable to
all  Eligible  Members  similarly  situated  and shall  govern the  approval  or
disapproval  of Member loan  applications.  The terms for each loan shall be set
solely in accordance  with such  standards.  Such standards  shall prescribe the
annual rate of interest to be charged on each loan,  which shall be a reasonable
rate of interest  determined  by  reference to the  prevailing  rate of interest
charged by commercial  lenders under similar  circumstances  in accordance  with
applicable  Regulations.  Such standards may also prescribe a maximum percentage
of an Eligible  Member's pay which may be subjected to payroll  deductions  with
loan  repayment  under  varying  circumstances,  minimum and  maximum  repayment
periods,  a required  minimum loan amount  (which may not exceed  $1,000),  loan
origination and maintenance fees, and other relevant factors. An Eligible Member
may not have more than two (2) loans outstanding at any time. An Eligible Member
may not refinance an existing  loan or obtain a subsequent  loan for the purpose
of  repaying  an  existing  loan;  provided,  however,  that the  Committee  may
establish  uniform  guidelines to permit one or more  subsequent  loans prior to
full repayment of an outstanding loan and, with respect to any outstanding loan,
to permit the  Eligible  Member to reborrow an amount equal to the excess of the
original amount of the loan over the balance of the loan outstanding at the time
of such  reborrowing.  The maximum loan permitted (when added to the outstanding
balance of all other loans) shall not exceed the lesser of
          (1) $50,000 reduced by the excess (if any) of
               (i) the highest  outstanding  loan  balance  attributable  to the
          Eligible Member  requesting the loan during the one-year period ending
          on the day preceding the date of the loan, over
               (ii) the outstanding  balance of all other loans from the Plan to
          the Eligible  Member on the date of the loan, or
          (2) 50 percent of the value of the Eligible  Member's  Vested interest
     in his Account as of the Valuation Date  immediately  preceding the date on
     which the Committee receives the completed application for the loan.
     (c)  Approval.  The  Committee  shall  establish a procedure  for  promptly
approving or  disapproving  loan  applications  after receipt  thereof,  and for
promptly notifying the applying Eligible Member of such approval or disapproval.
The Committee's  review standards shall be those which would be used in a normal
commercial  setting  by an entity in the  business  of making  similar  types of
loans.
     (d) Loan  Proceeds.  Subject to subsection (c) above,  the Committee,  upon
approval of a completed application,  the Trustee shall transfer to the Eligible
Member  cash in an  aggregate  amount  equal  to the  amount  of the  loan.  The
transferred  amount shall be withdrawn  pro-rata  from each  Investment  Fund in
which the Eligible Member's Account is invested, other than amounts derived from
the ESOP Stock Fund that is not subject to diversification under Section 7.6.
     (e) Investment in Loan. The unpaid balance owed by an Eligible  Member on a
loan under the Plan shall not reduce the amount  credited to his or her Account.
However,  from the time of payment of the  proceeds of the loan to the  Eligible
Member,  such  Account  shall be deemed  invested,  to the extent of such unpaid
balance,  in such loan until the complete repayment thereof or distribution from
such Account.
     (f)  Repayment.  Each loan to an  Eligible  Member  under the Plan shall be
repaid in level amounts through regular payroll deductions;  provided,  however,
that an Eligible  Member  shall be  permitted  to prepay a loan in its  entirety
without  penalty  (but  without  any  change  in  the  subsequent   amortization
schedule). Except as otherwise permitted by the Code and Regulations,  each loan
shall have a repayment period not to exceed 60 months, or 120 months if the loan
is used to acquire any dwelling unit which within a reasonable period of time is
to be  used  as the  principal  residence  of  the  Eligible  Member.  Principal
residence  status shall be  determined  by the Committee at the time the loan is
made.  Any  repayment  of  principal  and interest on a loan made to an Eligible
Member  under the Plan  shall be  invested  in the  Plan's  Investment  Funds in
accordance  with the  investment  election in effect for the  Eligible  Member's
401(k)  Contributions  under  Section 7.4 on the day on which such  repayment is
received by the  Trustee,  or, if no such  election is in effect on such day, in
the Schwab  Value  Advantage  Money Fund or a comparable  fund.  Effective as of
April 1, 1999, if an Eligible Member's Account becomes distributable pursuant to
Article  12,  any loan to such  Eligible  Member  shall  become due and shall be
repaid within 90 days after the date such Eligible Member terminates  employment
with an Affiliated Company.
     (g)  Security.  The loan shall be secured  by the  portion of the  Eligible
Member's  Account  equal to the total amount of the loan.  As a condition of any
loan to an Eligible Member hereunder, the Eligible Member shall agree in writing
that in the event of a default by the Eligible  Member on such loan, the balance
of his Account may, to the extent used as security for the loan,  be utilized as
an offset against, or otherwise may be applied to satisfy, the Eligible Member's
obligation to repay any amount outstanding on such loan
     (h) Default. The failure to make any payment under the loan when due, under
any  circumstances,  shall  constitute  a  default  on the  loan,  except  that,
effective as of April 1, 1999,  an event of default shall not be deemed to occur
before the last day of the calendar  quarter  following the calendar  quarter in
which such payment was due.  Notwithstanding the foregoing,  an event of default
shall not occur  with  respect  to an  Eligible  Member  whose  Account  becomes
distributable  under  Article  11  before  the  last  day of the  90-day  period
beginning  on the  date  such  Eligible  Member  terminates  employment  with an
Affiliated Company. Notwithstanding any other provision of the Plan, a loan made
pursuant to this Section  shall be a first lien  against the  Eligible  Member's
Account to the extent of the security  interest in such  Account.  Any amount of
principal  or  interest  due and  unpaid on the loan at the time of any  default
shall be satisfied  by deduction  from the  Eligible  Member's  Account,  to the
extent used as security for the loan as follows:
          (1) in the case of an Eligible  Member who is an  Employee  and who is
     not, at the time of the default,  eligible to receive a distribution of his
     Account,   at  such  time  as  he  first  becomes  eligible  to  receive  a
     distribution of his Account for any reason; or
          (2) in the case of any other Eligible  Member,  immediately  upon such
     default.  The Committee shall take any  commercially  reasonable  action it
     deems necessary or desirable to satisfy any remaining obligations under the
     loan.
     (i)  Administration.  The loan program under the Plan shall be administered
in all respects by the Committee or its delegatee.

                                    ARTICLE 11

                                   RETIREMENT

     11.1 Retirement Under Retirement Plan or Employment  Agreement.  Any Member
who is also a member of the Retirement  Plan, or who is employed  pursuant to an
employment  agreement,  and  who  terminates  his  employment  under  the  early
retirement,  normal retirement,  postponed  retirement or disability  retirement
provisions of the  Retirement  Plan,  shall also be deemed to have retired under
this  Plan on the day on which he  retired  under  the  Retirement  Plan or such
agreement.
     11.2 Other Employees. Any Member who is not a member of the Retirement Plan
or who does not retire pursuant to the terms of an employment agreement shall be
retired on whichever of the following dates is applicable:
     (a)  Early  Retirement.  On the last day of any month  ending  after he has
attained  age 55 which is not less than 30 days nor more than 90 days  after the
Member  has  filed in  accordance  with such  procedures  as the  Committee  may
prescribe a request for his retirement on such date with the Committee.
     (b)  Normal  Retirement.  On the last day of the month in which the  Member
attains age 65, if he elects to retire on such day.
     (c) Postponed Retirement.  If the Member continues as an Employee after the
last day of the month in which he  attains  age 65, on the last day of any month
thereafter on which the Member elects to retire.
     (d) Disability Retirement.  In the case of a Member who is suffering from a
mental or physical  disability which entitles him to receive a benefit under the
long-term  disability plan maintained by the Affiliated  Companies,  on the last
day of the month in which such disability arises.

                                    ARTICLE 12

                            DISTRIBUTION OF BENEFITS

     12.1  Distributions.   A  Member's  Vested  Account  balance  shall  become
distributable  to him upon his  retirement  under  Article 11, or upon any other
termination of employment with the Affiliated Companies.  Distributions shall be
made in accordance with the rules set forth hereinafter.
     12.2 Commencement of  Distributions.  The distribution of a Member's Vested
Account  balance  hereunder  shall  be  made,  or  shall  commence,  as  soon as
practicable  following  the  date on  which  the  Member  retires  or  otherwise
terminates  employment.  Any Member who retires  under  Article 11 may delay the
distribution  of his Account  balance  until after the final  Valuation  Date on
which his Account is  credited  with any  earnings  or losses in any  Investment
Fund, or with any ESOP Stock or Matching Contributions,  to which he is entitled
in respect of any  contribution  made to the Trust Fund on his behalf  after the
date of his  retirement.  As provided  under  Sections  12.3,  12.4, and 12.5, a
Member  generally has the right to a period of at least thirty (30) days to make
certain decisions with respect to the distribution of his benefits. However, the
Committee  may  permit the  Member to waive  this  right  provided  that (1) the
Committee clearly notifies the Member that the Member has a right to a period of
at least 30 days, and (2) the Member, after receiving the notice,  affirmatively
elects to begin the distribution as soon as practicable.
     12.3 Form and Amount of Distributions.
     (a)  Optional  Forms  of  Payment.  The  Member  shall  elect  to have  the
distribution of his Account balance paid in the form of either
          (1) a single lump-sum payment or
          (2) prior to the  Elimination  Date (as  defined in Section  12.3(c)),
     installment payments.  It is provided,  however, that a Member shall not be
     entitled to make the election described in the preceding sentence,  and his
     Account  balance  shall  automatically  be  paid in the  form  of a  single
     lump-sum payment, unless
               (i) he has retired under Section 11.1 or Section 11.2, other than
          by reason of a disability retirement, and
               (ii) as of the  Valuation  Date  coinciding  with or  immediately
          preceding  the  date on  which  the  distribution  of his  Account  is
          scheduled to be made or commence,  the balance of his Account  exceeds
          $5,000.
     A Member shall make the election  described in the  preceding  paragraph by
submitting  to the  Committee  in  accordance  with  such  procedures  as it may
establish  notice of such  election  no more  than 90 days,  but no less than 30
days, prior to the date on which the distribution from his Account is to be made
or commence (the "Benefit Starting Date").
     (b) Amount of Lump-Sum  Payments.  If the Member's Account balance is to be
paid in the form of a single lump-sum payment,  the amount of such payment shall
be equal to the balance of his Account on the Valuation Date  coinciding with or
immediately  preceding  the date on which the payment is to be made. In the case
of a Member who is eligible, but declines, to make the election described in the
second  sentence of Section 12.2,  any amount  credited to his Account after the
Valuation Date referred to in the preceding sentence shall be distributed to the
Member, in the form of a single lump-sum  payment,  as soon as practicable after
the date on which such amount is credited to his Account.
     (c) Rules for Installment Payments.  Notwithstanding any other provision of
the Plan, the installment form of payment set forth in Section 12.3(a)(ii) shall
be eliminated from the Plan,  effective with respect to distributions made as of
the earlier to occur of the following dates (the "Elimination Date") (i) 90 days
after  the  Member  has  received  a summary  plan  description  describing  the
elimination of the installment form of payment from the Plan, or (ii) January 1,
2003. If, prior to the  Elimination  Date, the Member elects to have his Account
balance distributed in installment  payments,  the rules set forth in Appendix A
shall apply.
     12.4 Payments in Cash or in Stock.  Any  distribution  from any  Investment
Fund, other than the Schwab Stock Fund and the ESOP Stock Fund, shall be made in
cash  (or  in-kind  to a  Schwab  Rollover  IRA or a  Charles  Schwab  brokerage
account).  Except as provided below, any distribution from the Schwab Stock Fund
and the ESOP Stock  Fund shall be made in shares of Capital  Stock or ESOP Stock
(and cash representing fractional shares thereof).
     If a  Member's  Account  balance  is to be  paid in the  form  of a  single
lump-sum  payment  under  Section  12.3,  then such Member may elect to have the
portion of his Account balance invested in the Schwab Stock Fund,  and/or in the
ESOP Stock Fund, paid to him, from each such fund, as follows:
     (a) cash in an amount equal to the sum of (1) the value of the total number
of shares of Capital Stock or ESOP Stock, as applicable,  being held for payment
by the Trustee to the Member under Section 9.2 or 9.3, as of the Valuation  Date
on which the Trustee receives the proceeds of the sale of the Member's  interest
in such fund,  plus (2) the amount of cash being held by the Trustee for payment
to the Member under Section 9.2 or 9.3; or
     (b) shares of Capital  Stock or ESOP  Stock  held by the  Trustee  for such
member,  plus the amount of cash representing the fractional  shares, if any, of
such ESOP Stock or Capital  Stock and cash being held by the Trustee for payment
to the Member pursuant to Section 9.2 or 9.3.
     Such  election  shall be made on the  election  form  described  in Section
12.3(a) (or if the Member is not furnished with such an election form because he
is not eligible to make the election described in Section 12.3(a) on an election
form  furnished to the Member by the  Committee  for such purpose and filed with
the Committee no more than 90 days, and no less than 30 days, before the Benefit
Starting Date, as defined in Section 12.3(a)).
     12.5 Consent to Distribution Prior to Age 65. Notwithstanding the preceding
Sections of this Article 12, no  distribution  of a Member's  Account balance to
the Member shall be made or commence prior to his attaining age 65 unless either
(a) the amount of such Account  balance does not exceed  $5,000 on the Valuation
Date  coinciding   with  or  immediately   preceding  the  date  on  which  such
distribution  is to be made or commence,  or (b) the Member consents in writing,
to have such distribution made or commence.
     For purposes of clause (b) of the preceding paragraph,  the Committee shall
furnish  the  Member  with an  explanation  of the  Member's  right to defer his
distribution until he has attained age 65 and the effect of such deferral.  Such
explanation  shall be  furnished  no less  than 30 days and no more than 90 days
before  the  date on  which  the  distribution  to the  Member  is to be made or
commence.  The Member may  provide his  consent to the  distribution  only after
receiving such  explanation.  If the  distribution to a Member of the balance of
his Account  cannot  immediately be made or commence by reason of his failure to
consent  to  such  distribution  as  provided  in  clause  (b) of the  preceding
paragraph, distribution with respect to his Account shall be made or commence as
soon as practicable  after the earliest to occur of the  following:  the date on
which the Member attains age 65, the date of the Member's  death, or the date on
which the Committee receives in accordance with such procedures as the Committee
may  establish  notice  from the  Member  requesting,  and  consenting  to,  the
immediate  making or commencement  of the  distribution of the entire balance of
the Member's  Account.
     During the period that the Member's  Account balance remains in the Plan by
reason of his  failure to  consent to an  immediate  distribution  thereof,  the
Member may direct the investment of his Account, pursuant to Article 7, as if he
were an  active  employee,  but he may not  borrow  against,  obtain a  hardship
withdrawal from or take a partial withdrawal from his Account.
     If the  distribution  of a Member's  Account  balance is deferred under the
above rules,  then, no more than 90 days,  and no less than 30 days,  before the
distribution  to him of his  Accounts  balance  is made or  commences  under the
second  preceding  paragraph,  such Member may make the election  under  Section
12.3(a) as to the form of payment for the  distribution,  and the election under
Section 12.4 as to whether a  distribution  from the Schwab  Stock Fund,  and/or
from the ESOP Stock Fund, is to be made in cash or in stock; provided,  however,
that if the Member had  terminated  employment  prior to  becoming  eligible  to
retire under Article 11, and if he requests,  and consents to, the  distribution
of his Account prior to attaining age 65, he may not make the election contained
in Section 12.3(a),  and his Account balance shall  automatically be distributed
to him in the form of a single lump-sum payment.
     12.6 Death Benefits.
     (a) Distribution at Death. If any person ceases to be a Member by reason of
his death,  or if any Former  Member  dies having an interest in the Trust Fund,
then,  notwithstanding  any of the foregoing  provisions of this Article 12, the
Committee  shall direct the Trustee to distribute to the  Beneficiaries  of such
Member or Former  Member,  at  Beneficiary's  election,  in the form of (1) ESOP
Stock  representing  the Member's or Former  Member's  then interest in the ESOP
Stock Fund and Matching Contribution Account, (2) Capital Stock representing the
Member's or Former Member's then interest in the Schwab Stock Fund, and (3) cash
representing  the Member's or Former Member's then interest in each of the other
Investment  Funds.  The  distribution  shall  be made  as  soon  as  practicable
following  the death of the  Member or Former  Member,  and shall be made in the
form of a single lump-sum payment. The amounts included in such payment shall be
based on the Member's interest in each of the Investment Funds under the Plan as
of the Valuation Date coinciding with or immediately preceding the date on which
the payment is to be made.
     (b) Designation of  Beneficiary.  A Member or Former Member may designate a
Beneficiary or  Beneficiaries  by submitting to the Committee in accordance with
such procedures as it may establish notice of such designation at any time prior
to his death, and may revoke or change the  Beneficiaries so designated  without
their consent by similar notices submitted to the Committee at any time and from
time to time prior to his death. Notwithstanding the foregoing, if the Member or
Former Member is married,  his spouse must consent,  in a notarized writing,  to
such designation or any revocation or change thereof (unless the Committee makes
a determination  in accordance  with the Code and the  Regulations  that no such
consent is  required).  If the Member or Former  Member fails to  designate  any
Beneficiary,  or is  deemed  to have  so  failed  because  spousal  consent,  if
required,  was not obtained, or if no designated Beneficiary survives the Member
or Former Member, then the Member's or Former Member's  Beneficiary shall be his
surviving spouse, or, if none, his estate.
     12.7 Distribution Requirements.  Notwithstanding any other provision of the
Plan to the contrary,  all  distributions  to be made with respect to a Member's
benefit  under the Plan  shall be  subject to the  following  provisions  unless
otherwise provided by law:
     (a) The  distribution  of any benefit  payable to a Member shall be made or
commence no later than by the earlier of (1) the 60th day after the close of the
Plan Year in which occurs the latest of the following: (i) the date on which the
Member attains age 65, (ii) the 10th anniversary of the date on which the Member
began to  participate  in the Plan or (iii) the date on which the Member retires
under  Article  11  or  otherwise  terminates  employment  with  all  Affiliated
Companies; or (2) (i) in the case of a Member who is a "5% owner" (as defined in
Code section  416),  the April 1 following the calendar year in which he attains
age 70 1/2.  Notwithstanding  the foregoing,  a Member other than a 5% owner may
elect to defer  distribution  of benefits  until the  calendar  year in which he
retires under Article 11 or otherwise terminates  employment with all Affiliated
Companies or may elect to commence to receive  distributions  commencing April 1
following the calendar year in which he attains age 70 1/2. If the  distribution
of a Member's  benefit is required to be made to commence under this  subsection
(a),  then the Member shall elect the form and manner in which his benefit is to
be  distributed  under the  provisions  of Sections  12.3 and 12.4, as if he had
retired  under  Article 11, or had  terminated  employment  with all  Affiliated
Companies, as applicable,  as of the date on which the payment of his benefit is
required to be made or commence under the preceding sentence; provided, however,
that the  Member's  benefit  shall be paid over a period  which  does not extend
beyond the life expectancy of such Member or the joint life expectancies of such
Member and his  Beneficiary.  Notwithstanding  any  provision in the Plan to the
contrary,  all benefit payments shall comply with section 401(a)(9) of the Code,
including   the   incidental   death  benefit   requirements   of  Code  section
401(a)(9)(G),  and the  Regulations  or  Internal  Revenue  Service  rulings and
notices issued thereunder.
     (b) With  respect to any Capital  Stock or ESOP Stock held in the  Member's
Account,  unless the Member  withholds  consent  thereto under Section 12.5, the
distribution  of the  portion of his Account  invested in Capital  Stock or ESOP
Stock shall be made or  commence  not later than one year after the close of the
Plan  Year  in  which  he  retires  under  Article  11 or  otherwise  terminates
employment with all Affiliated  Companies.  The  distribution of such portion of
the Member's Account shall be made in the form of a single lump-sum payment,  or
in the form of substantially  equal periodic  payments (not less frequently than
annually) over a period not exceeding five years.
     (c) If distribution of a Member's benefit has commenced prior to a Member's
death,  and such Member dies before his entire  benefit is  distributed  to him,
distribution  of the remaining  portion of the Member's  benefit to the Member's
Beneficiary  or  Beneficiaries  shall be made at least as  rapidly  as under the
method of distribution in effect as of the date of the Member's death.
     (d) If a Member dies  before  distribution  of his  benefit has  commenced,
distributions to his Beneficiary or Beneficiaries shall be made on or before the
December 31 of the calendar  year which  contains the fifth  anniversary  of the
date of such Member's death.
     12.8 Tax  Withholding.  Notwithstanding  the provisions of this Article 12,
the  Committee  shall take such  action as may be  required  to comply  with the
tax-withholding provisions of the Code.
     12.9 Direct  Rollovers.  This Section 12.9 applies to any distribution made
under the Plan which is an "Eligible Rollover Distribution". Notwithstanding any
provision  of the Plan to the  contrary,  the "Payee" of any  Eligible  Rollover
Distribution  made  under  the Plan  may  elect,  at the time and in the  manner
prescribed  by the  Committee,  to have all or any portion of such  distribution
paid as a "Direct  Rollover" to an "Eligible  Retirement  Plan" specified by the
Payee.
     12.10  Unclaimed  Distribution.  If the  Committee  cannot  locate a person
entitled  to receive a benefit  under the Plan  within a  reasonable  period (as
determined by the Committee in its discretion, but prior to the date the benefit
would otherwise escheat under applicable state laws), the amount of benefit will
be treated as a forfeiture  during the Plan Year in which the period ends. If at
any time  before  final  distributions  are made from the Trust  Fund  following
termination  of the Plan, a person who was entitled to a benefit  which has been
forfeited  under this Section  makes a claim to the Committee or the Trustee for
his  benefit,  he will  be  entitled  to  receive,  as soon as  administratively
feasible,  a benefit in an amount equal to the value of the forfeited benefit on
the date of  forfeiture.  This benefit  will be  reinstated  from  Participating
Company contributions made to the Plan for this purpose.

                                    ARTICLE 13

                         CERTAIN RIGHTS AND LIMITATIONS

     13.1 Benefits  Payable Solely from Trust Fund.  All benefits  payable under
this Plan shall be paid or  provided  for  solely  from the Trust  Fund,  and no
Participating  Company in the Plan shall have any  liability  or  responsibility
therefor.
     13.2  Prohibition  Against  Alienation of Benefits.  Except  insofar as may
otherwise  be required  by law or pursuant to the terms of a Qualified  Domestic
Relations Order (as defined  below),  no benefit under the Plan shall be subject
in any manner to anticipation,  alienation, sale, transfer,  assignment, pledge,
encumbrance  or  charge,  and any  attempt  so to  anticipate,  alienate,  sell,
transfer,  assign, pledge,  encumber or charge the same shall be void; nor shall
any  such  benefit  be in any  manner  liable  for or  subject  to  garnishment,
attachment, execution or levy, or liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such benefit; and in
the event that the Committee  shall find that any Former  Member or  Beneficiary
has become bankrupt or has attempted to anticipate,  alienate,  sell,  transfer,
assign, pledge,  encumber or charge any benefits under the Plan, then payment of
such benefit shall, in the discretion of the Committee, cease and terminate, and
in that event the  Committee  shall hold or apply the same to or for the benefit
of such Former Member or Beneficiary or the children or other  dependents of the
same,  in such manner and in such  proportion  as the Committee may deem proper,
and any such application shall be a complete discharge of all liabilities of the
Plan and the Trustee  therefor.  For purposes of this Section 13.2, a "Qualified
Domestic  Relations  Order"  means any  judgment,  decree,  or order  (including
approval of a property  settlement  agreement)  which has been determined by the
Committee,  in  accordance  with  procedures  established  under  the  Plan,  to
constitute  a  qualified  domestic  relations  order with the meaning of section
414(p)(1)  of the Code.  To the  extent  provided  by the  terms of a  Qualified
Domestic   Relations   Order,  an  alternate  payee  may  at  any  time  request
distribution  from  the  Plan in the  form  of a lump  sum,  payable  as soon as
practicable  after such domestic  relations order is determined by the Committee
to be so "qualified" and upon completion of the valuation and accounting process
in order to determine  the amount of the  distribution;  provided  that, if such
alternate  payee's  interest in the Plan does not exceed  $5,000,  such  amounts
shall be distributed as soon as practicable  regardless of whether the alternate
payee makes such a request.
     The prohibition  against  assignment or alienation of benefits contained in
this  Section  13.2 shall not apply to any loan to a Member made under this Plan
if such loan is secured by the Member's interest in the Trust Fund and is exempt
from the tax imposed by section 4975 of the Code by reason of section 4975(d)(1)
thereof.
     Notwithstanding  any provision in the Plan to the contrary,  the Plan shall
honor a judgment, order, decree or settlement providing for the offset of all or
a part of a Member's or Former  Member's  benefit  under the Plan, to the extent
permitted under Code Section  401(a)(13)(C);  provided that the  requirements of
Code  Section  401(a)(13)(C)(iii)  relating to the  protection  of the  Member's
spouse (if any) are satisfied.
     13.3 Incompetency. In the event that the Committee shall find that a Member
or other person  entitled to a benefit  under the Plan is unable to care for his
affairs  because of illness or accident or because he is a minor,  the Committee
may direct that any benefit  payment due him,  unless claim shall have been made
therefor by a duly appointed guardian,  committee or other legal representative,
be paid to a spouse,  child, parent or other blood relative of such person or to
anyone  found by the  Committee  to have  incurred  expense  for the support and
maintenance  of such  person,  and any such  payment so made shall be a complete
discharge of all liabilities of the Plan and Trustee therefor.
     13.4 No Right to Continued  Employment.  The establishment and continuation
of the Plan shall not confer any legal  rights  upon any Member or any person to
continued  employment,  nor shall such  establishment or continuation  interfere
with the  rights of a  Participating  Company  to  discharge  any  Member and to
otherwise treat him without regard to the effect which such discharge might have
upon him as a Member.
     13.5  Payment  of Taxes.  The  Trustee  shall  have the right to deduct and
withhold  from any amount which it is otherwise  obligated to pay under the Plan
that which it may be required to deduct or withhold  pursuant to any  applicable
statute,  law, regulation or order of any jurisdiction  whatsoever.  The Trustee
shall not be  required  to pay any  amount to any  Beneficiary  of any  deceased
Member  pursuant to the  provisions  of the Plan until such  Beneficiary  or the
legal  representatives  of the deceased  Member shall have furnished the Trustee
with  evidence  satisfactory  to the Trustee of the payment or the provision for
the payment of any  estate,  transfer,  inheritance  or death taxes which may be
payable with respect thereto.
     13.6 Merger or Consolidations  with Other Plans. In the event that the Plan
is merged or  consolidated  with any other plan, or in the event of any transfer
of assets or  liabilities  of the Plan to any other plan, the benefit which each
Member or Former  Member  would be  entitled  to receive if the Plan  terminated
immediately after such merger, consolidation or transfer shall be at least equal
to the benefit  which such Member or Former  Member would have been  entitled to
receive if the Plan had terminated immediately before the merger,  consolidation
or transfer.
     Moreover, the Company reserves the right, in its capacity as sponsor of the
Plan, to direct that Members'  Accounts in the Plan be spun off and  transferred
to a qualified  plan  maintained by the buyer in any  transaction  involving the
sale  of  assets  of the  Company,  an  Affiliated  Company,  or the  sale  of a
subsidiary  of the  Company,  or an  Affiliated  Company,  if such  Members  are
employed in the  subsidiary  that is being sold or in the  division or operating
unit from which the assets are being sold. If such transfer of Members' Accounts
occurs,  any Member who  becomes  employed by the buyer or an  affiliate  of the
buyer  shall not be deemed to have  incurred a  termination  of  employment  for
purposes of Section 12.1 of the Plan,  and any future rights to  withdrawals  or
distributions of transferred  Accounts shall be determined solely under the term
of the plan to which the Accounts are transferred.
     13.7 Non-Diversion.  It shall be impossible at any time for any part of the
Trust Fund to be used or diverted to purposes other than the exclusive  purposes
of  providing  benefits  to  Members  and their  Beneficiaries,  and  paying the
reasonable  expenses of the Plan and the Trust as determined  by the  Committee,
except under the following circumstances:
     (a) In the case of a contribution which is made by a Participating  Company
by mistake of fact, such contribution shall revert to the Participating  Company
within one year after the payment of the contribution.
     (b) Each contribution which a Participating Company makes under the Plan is
so made subject to the condition  that such  contribution  is  deductible  under
section 404 of the Code. To the extent a deduction under section 404 of the Code
for a contribution  by a Participating  Company to the Plan is disallowed,  such
contribution  shall revert to such  Participating  Company within one year after
the disallowance of the deduction.
     13.8 Use of Electronic  Media.  Notwithstanding  any other provision of the
Plan, including any provision which requires the use of a written instrument, to
the extent  permitted by applicable law, the Committee may establish  procedures
for the use of electronic media in communications  and transactions  between the
Plan or the  Committee  and  Members  and  Beneficiaries.  Electronic  media may
include but are not limited  to,  e-mail,  the  Internet,  intranet  systems and
automated   telephonic  response  systems.
     13.9 Administrative Conversions. Notwithstanding any other provision of the
Plan,  during  any  period  designated  by the  Committee  for  the  purpose  of
implementing  or converting  the Plan's  administrative  or other  systems,  the
Committee may temporarily  suspend,  in whole or in part,  certain provisions of
the Plan, which may include,  but are not limited to, a Member's right to change
contribution  elections,  investment elections and a Member's right to borrow or
withdraw from his Account or obtain a distribution from his Account.

                                    ARTICLE 14

                           ADMINISTRATION OF THE PLAN

     14.1  Appointment of the Committee.  The Board of Directors shall appoint a
Committee,  which  shall  consist of five  Members  who shall be officers of the
Company or any  Participating  Companies,  all to be  appointed  by the Board of
Directors and to serve at the pleasure of the Board of Directors. Any vacancy in
the Committee arising by death,  resignation or otherwise shall be filled by the
Board of Directors.
     14.2 Duties and Powers of Committee. Except for such duties as are assigned
under the terms of the Plan to the Trustee, the Investment Committee,  or to any
investment  manager or adviser appointed under Section 15.4, the Committee shall
have sole  responsibility  for operation and administration of the Plan, and for
the  proper  execution  of its  provisions.  The  Committee  shall also have the
discretionary  authority to construe and interpret the Plan,  supply  omissions,
resolve ambiguities and inconsistencies and correct deficiencies in the language
of the Plan and to determine  all questions  arising  under the Plan  (including
without limitation factual questions).  It shall maintain all necessary books of
accounts and records. In furtherance of the foregoing,  the Committee shall have
the sole power and responsibility, in its discretion,
     (a) to establish,  interpret,  enforce,  amend and revoke from time to time
such rules and regulations for the administration of the Plan and the conduct of
its business as it deems  appropriate,  provided such rules and  regulations are
uniformly applicable to all persons similarly situated;
     (b) to determine the  eligibility of persons for membership in the Plan, to
receive and approve or  disapprove  (where  approval is  required)  elections of
Members to accept optional methods of distributions  and to direct the manner in
which  distributions  shall be made (where such  direction  is  applicable),  to
otherwise  determine  the  entitlement  of  Members,  Former  Members  and their
Beneficiaries  to benefits  under the Plan and to decide any disputes  which may
arise  relative  to  the  rights  of  the  Members,  Former  Members  and  their
Beneficiaries, with respect to such benefits;
     (c) to settle periodically the accounts of the Trustee;
     (d) to keep all appropriate records and data pertaining to the interests of
the Members, Former Members and their Beneficiaries in the Plan;
     (e) to retain such counsel and employ such accounting, actuarial, clerical,
recordkeeping,  and such other  assistance  as in its  judgment may from time to
time be required for the proper performance of its duties hereunder;
     (f) to file all such reports with the appropriate  governmental departments
and agencies and to disclose such information to the Members, Former Members and
their  Beneficiaries  with  respect  to the Plan as may be  required  under  the
provisions of ERISA as the same may apply to plan administrators;
     (g) to establish procedures to safeguard the confidentiality of information
relating to:
          (1) the  acquisition,  holding,  and disposition of Plan Shares in the
     Schwab  Stock  Fund  for  the  Accounts  of  Members,  Former  Members  and
     Beneficiaries,  and the holding and  disposition of shares of ESOP Stock in
     the ESOP  Stock  Fund for the  Accounts  of  Members,  Former  Members  and
     Beneficiaries, and
          (2) the exercise of voting,  tender and similar rights with respect to
     the Capital Stock and the ESOP Stock  attributable to Members' interests in
     the Trust  Fund that are  invested  in the  Schwab  Stock Fund and the ESOP
     Stock Fund; and to monitor compliance with such procedures; and
     (h) to appoint  as a  fiduciary  of the Plan any  person or entity  that is
unaffiliated with the Company,  and assign to such fiduciary  responsibility for
carrying out activities with respect to the Members' interests in the Trust Fund
that are  invested in the Schwab Stock Fund,  the ESOP Stock Fund,  or any other
Investment  Funds  in  any  situation  determined  by  the  Committee,   in  its
discretion,  to involve a potential for undue  employer  influence  upon Members
with  regard to the direct or  indirect  exercise  of  shareholder  rights  with
respect to such Stock or any other material conflict or interest.
     (i)  to  establish  rules,   regulations  or  administrative  practices  or
procedures deemed necessary by the Committee, in its sole discretion,  to ensure
compliance  with the applicable  provisions of the federal and state  securities
law,  including,  without  limitation,  the authority to suspend for a period of
time a Member's election under Section 7.5 to transfer all or any portion of his
interest  from one or more  Investment  Funds to any  other  Investment  Fund or
Funds.
     Any action which the Committee is required or authorized to take shall,  to
the extent permitted by applicable law, be final and binding upon each and every
person who is or may become  interested in the Plan or Trust Fund. The Committee
shall be deemed to be the  "Administrator"  of the Plan for  purposes of section
3(16)(A) of ERISA and, except as otherwise specifically provided in Sections 7.7
and 14.5, is also designated a "Named Fiduciary" of the Plan pursuant to section
402(a) of ERISA.
     14.3  Conduct  of  Affairs  of  Committee.  The  Committee  shall hold such
meetings  upon such  notice at such  place or places and at such times as it may
from time to time deem  appropriate.  The Committee may act by a majority of its
members in office from time to time. The action of such majority may be taken at
a meeting of the  Committee  or  pursuant  to written  consent of such  majority
without a meeting.  The Board of Directors  shall  appoint one of the  Committee
members to act as Chairman,  and a different  person,  who may but need not be a
member of the Committee, shall be appointed by the Board of Directors, or may be
elected or appointed by the  Committee,  to act as Secretary.  The Committee may
authorize any one or more of its members to execute and deliver any documents on
behalf of the  Committee.  The Committee  shall maintain a record of all actions
taken and determinations made by it in carrying out its  responsibilities  under
the Plan.
     14.4  Appointment  of Investment  Committee.  The Board of Directors  shall
appoint an Investment Committee, which shall consist of five or more Members who
shall be  officers  of the  Company or any  Participating  Companies,  all to be
appointed by the Board of Directors and to serve at the pleasure of the Board of
Directors.  Any  vacancy  in the  Committee  arising  by death,  resignation  or
otherwise shall be filled by the Board of Directors.
     14.5 Duties and Powers of the Investment Committee.  Except for such duties
as are assigned under the terms of the Plan to the Committee, the Trustee; or to
any  investment  manager or adviser  appointed  under  Section  15.4;  or to any
Member, Former Member or Beneficiary under Section 7.4; the Investment Committee
shall have the sole discretion and  responsibility to (a) establish for the Plan
a funding  policy,  within  the  meaning of  section  402(b)(1)  of ERISA and to
communicate  the  same  to the  Trustee;  (b)  establish,  modify  or  eliminate
Investment Funds available to Members,  Former Members and  Beneficiaries  under
Section 7.2; (c) establish investment performance guidelines for such Investment
Funds, and (d) monitor and evaluate the performance of the Investment Funds.
     In furtherance of the foregoing,  the Investment  Committee  shall have the
sole discretion and  responsibility in its discretion to retain such counsel and
investment advisers,  and employ such accounting,  actuarial,  clerical and such
other  assistance  as in its  judgment may from time to time be required for the
performance of its duties  hereunder;  and to appoint as a fiduciary of the Plan
any person or entity that is unaffiliated  with the Company,  and assign to such
fiduciary  responsibility  for  carrying  out  activities  with  respect  to the
Members' interests in the Trust Fund that are invested in the Schwab Stock Fund,
the ESOP Stock Fund, or any other Investment  Funds in any situation  determined
by the Investment Committee, in its discretion, to involve a potential for undue
employer  influence upon Members with regard to the direct or indirect  exercise
of shareholder  rights with respect to such Stock or any other material conflict
or interest.
     Notwithstanding  anything in Articles 7 through 12 to the contrary,  in the
event the Investment  Committee,  in its sole discretion,  determines that (i) a
request for a transfer from or to any Investment Fund (including a transfer of a
loan repayment amount), (ii) a hardship or discretionary withdrawal application,
(iii) a loan  application,  or (iv) a distribution  upon a Member's  separation,
retirement or death, cannot be effected within the period prescribed by the Plan
without jeopardizing the integrity of any Investment Fund or the Trust Fund, the
orderly  liquidation  of any  assets  of the  Trust  Fund,  or the  value of the
Members'  interests in any  Investment  Fund or the Trust Fund,  the  Investment
Committee,  on a  uniform  and  nondiscriminatory  basis,  may  delay all or any
portion of such transfer,  withdrawal,  loan, or  distribution,  and any related
valuations,  and  may  take  such  other  action  as it  may  deem  appropriate,
including,  without  limitation,  the  segregation  of all or any portion of any
Investment  Fund or  Members'  Accounts  into a separate  fund or  sub-accounts,
respectively,  until such time or times that it considers practicable consistent
with the  maintenance of the integrity of such Investment Fund or the Trust Fund
or the value of such Plan Shares,  or the orderly  liquidation  of assets of the
Trust Fund.
     The Investment  Committee shall be a "Named  Fiduciary" of the Plan, within
the meaning of section 402(a)(2) of ERISA, in the exercise of such duties.
     14.6  Conduct  of  Affairs  of the  Investment  Committee.  The  Investment
Committee  shall hold such meetings upon such notice at such place or places and
at such  times as it may from  time to time  deem  appropriate.  The  Investment
Committee may act by a majority of its members in office from time to time.  The
action of such majority may be taken at a meeting of the Investment Committee or
pursuant to written  consent of such  majority  without a meeting.  The Board of
Directors  shall  appoint  one of the  Investment  Committee  members  to act as
Chairman,  and a  different  person,  who may but need  not be a  member  of the
Investment  Committee,  shall be appointed by the Board of Directors,  or may be
elected or appointed  by the  Investment  Committee,  to act as  Secretary.  The
Investment Committee may authorize any one or more of its members to execute and
deliver any  documents on behalf of the  Investment  Committee.  The  Investment
Committee   shall   maintain  a  written   record  of  all  actions   taken  and
determinations made by it in carrying out its responsibilities under the Plan.
     14.7 Reports to Company.  Within a reasonable  time after the close of each
Plan Year, the Investment Committee shall prepare a report showing in reasonable
detail the assets of the Plan held by the  Trustee  and the  liabilities  of the
Plan and giving a brief  account of the operation of the Plan for the prior Plan
Year, which report shall be submitted to the Board of Directors and the Board of
Directors of each Participating Company.
     14.8  Delegation  of  Responsibilities.  The  Committee  may, by  unanimous
consent,  delegate  the  following  duties and  responsibilities  to one or more
Employees:
     (a)  authority  to  make  initial  determinations  as  to  eligibility  for
membership or benefits under the applicable plan provisions,
     (b)  preparation  and  distribution of  communications  to Members,  Former
Members and their Beneficiaries,
     (c) maintenance of compensation and employment records,
     (d)  preparation  of reports  and  applications  required  by  governmental
agencies,
     (e) initial calculations of service, compensation, credit and benefits,
     (f) orientation of new Members,  advising Members, Former Members and their
Beneficiaries  of their  rights  and  options  under  the  Plan  and  monitoring
completion of application, election and benefit forms by Members, Former Members
and their Beneficiaries,
     (g) monitoring  collection of contributions  and proper  application of the
contributions to effectuate the purposes of the Plan,
     (h) preparation of reports concerning benefits,
     (i) initial processing of claims and of loan applications,
     (j) making  recommendations  to the Committee with respect to the merits of
claims and the administration of the Plan, and
     (k)  any  other   responsibilities   which  the  Committee  determines  are
administrative  or ministerial in nature and are designed to implement a policy,
interpretation, system, practice or procedure established by the Committee.
     If any duties or responsibilities are delegated to any Employee pursuant to
this Section,  the Committee shall  periodically  review the performance of such
Employee. Depending upon the circumstances, this requirement may be satisfied by
a formal  review by the  Committee at such time or times as the Committee in its
discretion may determine,  through  day-to-day  contact and evaluation or in any
other manner determined to be appropriate by the Committee.
     14.9 Duties and Powers  Relating to the ESOP. In addition to the duties and
powers  set  forth  above,   the  Investment   Committee  shall  also  have  the
responsibility   for   making   all   determinations   as  to   the   continuing
appropriateness,  under the applicable provisions of ERISA, of retaining Capital
Stock as an investment  for the ESOP,  including the power to direct the Trustee
to dispose of any Capital Stock held in the ESOP whenever it determines,  in its
discretion,  that the  retention  of such stock is no longer  appropriate  under
applicable ERISA standards.
     14.10 Expenses and Liability.  The expenses of administering the Plan shall
be paid from the Trust Fund  unless  paid by the  Participating  Companies.  The
members  of  the  Committee  and  Investment   Committee   shall  serve  without
compensation  for their services as such, but shall be reimbursed by the Company
for any expenses they may individually or collectively  incur in the performance
of their duties  hereunder.  No bond or other  security shall be required of any
member of the Committee or the  Investment  Committee  unless the member handles
funds or  other  property  of the Plan or the  trust  established  hereunder  as
provided in section 412 of ERISA.
     The  Committee,  Investment  Committee and the respective  members  thereof
shall  perform  their  respective  duties with respect to the Plan solely in the
interest  of the  Members,  Former  Members  and  their  Beneficiaries  for  the
exclusive purpose of providing benefits under the Plan to the same and defraying
the  reasonable  expenses  of  administering  the Plan,  with the  care,  skill,
prudence and diligence under the circumstances  then prevailing that prudent men
acting  in a like  capacity  and  familiar  with such  matters  would use in the
conduct  of an  enterprise  of a like  character  and  with  like  aims,  and in
accordance  with the  provisions of this Plan. No member of the Committee or the
Investment  Committee shall be personally liable for anything done or omitted to
be done by him unless it shall have been judicially  determined that such member
failed to perform his duties under the Plan in the manner described hereinabove.
     No member of the  Committee or  Investment  Committee  shall be  personally
liable for any act or omission of any other person that  constitutes a breach of
the latter's duties  hereunder  unless it shall have been judicially  determined
that such  member (a)  knowingly  participated  in, or  knowingly  undertook  to
conceal, such act or omission, knowing such act or omission constituted a breach
of the  latter's  duties  hereunder,  (b)  enabled  such act or  omission  to be
committed  by failing to exercise  the  above-described  degree of care,  skill,
prudence and diligence,  or (c) had knowledge of such act or omission and failed
to take reasonable efforts under the circumstances to remedy the breach.
     No member of any Committee established pursuant to the Plan shall be liable
for any act or  omission  of such  committee,  or of any other  member  thereof,
occurring before such member became, or after such member ceased to be, a member
of the Committee.  No member of the Committee shall be personally liable for any
act or omission of an Employee to whom any duty or responsibility  was delegated
by the  Committee  in  accordance  with  Section  14.5 unless it shall have been
judicially   determined   that  (1)  the  Committee   failed  to  act  with  the
above-described  degree of care, skill, prudence and diligence in selecting such
Employee or in continuing such delegation to such Employee, or (2) the Committee
or a member  thereof  knowingly  participated  in,  or  knowingly  undertook  to
conceal, such act or omission, knowing such act or omission constituted a breach
of the Employee's duties.
     14.11  Indemnification of Committee and Investment  Committee Members.  The
Company shall, to the maximum extent permitted under  applicable law,  indemnify
each member of the Committee and  Investment  Committee from and against any and
all claims, actions,  demands, losses, damages, expenses and liabilities arising
from any act or omission of the member with  respect to the  performance  of his
duties  hereunder and for which the member is not  reimbursed or otherwise  made
whole under any contract or contracts of insurance.  Such indemnification  shall
include attorneys' fees and all other costs and expenses  reasonably incurred by
the member in defense of any claim or action  brought or  asserted  against  him
arising from such act or omission.  Notwithstanding  the foregoing,  the Company
shall not indemnify any member of the  Committee or  Investment  Committee  with
respect  to  any  claims,  actions,   demands,  losses,  damages,  expenses  and
liabilities  arising  from any act or omission of the member with respect to the
performance  of his duties  hereunder  if such act or  omission is deemed by the
Company to constitute gross negligence, willful misconduct,  criminal conduct or
dealing with the Plan or the trust established  hereunder for his own benefit or
for his own account.
     14.12 Claims  Procedure.  A Member,  Former Member or Beneficiary may claim
any  benefits  under this Plan which such person  believes  is properly  payable
pursuant to the provisions of the Plan by filing an application  therefor.  Such
claim shall be filed,  on a form approved by the  Committee,  with the Company's
Vice President,  Personnel. A copy of the claim shall promptly be transmitted to
the  Secretary  of the  Committee,  and  shall be  considered  by the  Company's
Vice-President,  Personnel,  within 90 days of the date on which he received the
claim.  If the claim is denied in full or in part,  the claimant  shall be given
written  notice setting  forth,  in a manner  calculated to be understood by the
claimant,
     (a) the specific reason or reasons for such denial,
     (b) specific reference to the pertinent provision or provisions of the Plan
upon which such denial was based,
     (c) a description of any  additional  information,  documentation  or other
material  necessary for the claimant to perfect his claim and an  explanation as
to why such information, documentation or material is required, and
     (d) an explanation of the procedure for obtaining a review of the denial of
the claim.
     The claimant or his duly authorized  representative may request a review of
the denial of the claim by filing with the  Secretary of the Committee a written
request for review  within,  and only within,  the period of 60 days  commencing
with the date the denial of the claim was received by the claimant. The claimant
and his duly authorized  representative shall be given a reasonable  opportunity
to review the documents of the Plan and trust agreement executed  thereunder and
to submit their  written  issues and comments to the Committee at any time prior
to the expiration of the aforesaid 60-day period.
     Within the period of 60 days starting on the date a request for review of a
denial of claim is received by the Committee,  the Committee  shall consider the
request and post its final  decision to the claimant by  registered or certified
mail. In the event that the Committee in its sole discretion determines that the
case presents special circumstances, such as the need for a hearing requiring an
extension of time for  processing  the request for review,  the Committee  shall
notify the claimant in writing,  prior to the end of the initial  60-day  review
period, of the need for such extension, and shall post its final decision to the
claimant by registered or certified  mail not later than 120 days after the date
the request for review was received by the Committee.  Such decision shall be in
writing,  shall  be  written  in a manner  calculated  to be  understood  by the
claimant, and shall fully set forth the reason or reasons for the decision, with
specific  references  to the  pertinent  provisions  of the Plan upon  which the
decision was based.
     To the extent that a named  fiduciary other than the Committee is appointed
to conduct the review procedure described above, such named fiduciary shall have
the same powers to  interpret  the Plan and make factual  findings  with respect
thereto as are granted to the Committee under Section 14.2 hereof.

                                    ARTICLE 15

                          MANAGEMENT OF THE TRUST FUND

     15.1 The Trustee.  The Trust Fund shall be  administered  by United  States
Trust  Company of New York,  as Trustee,  under a trust  agreement,  and by such
additional  or successor  Trustee as may be designated by the Board of Directors
or pursuant to said trust agreement.
     15.2 The Trust  Agreement.  The Company  shall  establish a trust under the
Plan  pursuant  to which the assets of the Plan shall be held and  administered.
The terms and conditions of the trust agreement shall be determined by the Board
of  Directors  and may be  amended  by the same  from time to time  pursuant  to
Article 17; provided that, except as otherwise  provided in Section 13.7, at all
times it must be  impossible  under the terms of said  agreement for any part of
the trust corpus or income to be used for, or diverted to,  purposes  other than
for the exclusive benefit of the Members, Former Members and their Beneficiaries
and for defraying the reasonable  expenses of administering the Trust Fund. Said
trust  agreement  shall be  deemed to form  part of this  Plan,  and any and all
rights or  benefits  which  may inure to any  person  under  this Plan  shall be
subject  to all the terms  and  conditions  of said  agreement.  Except  for any
responsibilities  specifically  assigned  hereunder  to the  Committee or to the
Investment Committee,  or assigned by the Investment Committee to an independent
fiduciary  pursuant to Section 14.2(i),  or assigned hereunder to any investment
manager or adviser  appointed by the  Investment  Committee  pursuant to Section
15.4,  the Trustee shall have the exclusive  authority and  discretion to manage
and control the assets of the trust, and shall exercise in its absolute and sole
discretion  the  powers  and  duties  provided  under  the  terms  of the  trust
agreement, including the investment and reinvestment of the principal and income
of the trust,  without the prior  authorization  or consent of the  Committee or
Investment Committee, any court or any other person or persons.
     15.3  Compensation  and Expenses.  The  compensation of the Trustee and all
expenses  incurred  in the  administration  of the  trust  shall  be paid by the
Participating Companies.
     15.4  Appointment  of  Investment  Manager  or  Investment   Adviser.   The
Investment  Committee shall have the power to appoint,  remove or replace one or
more  investment  managers,  investment  advisers or  independent  agents and to
delegate to such  manager,  adviser or agent the  authority  and  discretion  to
manage  (including  the power to acquire  and dispose of) the assets of the Plan
held in the Schwab Stock Fund, the ESOP Stock Fund or any other Investment Fund,
provided  that (a) any such  manager,  adviser or agent with such  authority  or
discretion shall be either a bank or a registered  investment  adviser under the
Investment  Advisers  Act of 1940 and shall  acknowledge  that it is a fiduciary
with respect to the Plan and (b) the  Investment  Committee  shall  periodically
review and evaluate the investment performance and methods of each such manager,
adviser or agent with such authority and discretion.

                                    ARTICLE 16

                          OTHER PARTICIPATING COMPANIES

     16.1 Additional  Participating  Companies.  With the written consent of the
Committee,  any  Affiliated  Company  may  become  a  Participating  Company  by
delivering  to the  Committee  and the Trustee a certified  copy of a resolution
duly adopted by its board of directors to the effect that it (a) adopts the Plan
as then in effect and as it may  thereafter be amended by the Board of Directors
and (b) agrees to become a party to the trust under which the assets of the Plan
are held in  accordance  with Article 15. If any  Affiliated  Company  becomes a
Participating Company in accordance with the provisions of this Section 16.1, to
the extent determined by the Committee,  all prior and  contemporaneous  service
performed as an Employee of such  Participating  Company  shall be credited on a
cumulative basis for all purposes of the Plan, and the prior service of a Member
whose employment is transferred from one Participating  Company to another shall
be credited for all purposes of the Plan. All such grants of service as of April
1, 1999, are listed in Appendix A.
     16.2 Withdrawal of Participating  Company. Any Participating Company, other
than the Company,  may withdraw  from  participation  in the Plan at any time by
delivering  to the  Committee  and the Trustee a certified  copy of a resolution
duly  adopted by its board of directors  terminating  its  participation  in the
Plan.  If the result of any  merger,  consolidation,  sale of property or stock,
separation,  reorganization or liquidation of any Participating  Company,  other
than the Company, is that such Participating  Company ceases to be an Affiliated
Company, such Company shall be treated as having withdrawn from participation in
the Plan.
     In the  event  of any  withdrawal  from  participation  in  the  Plan  by a
Participating  Company  hereunder,  the  Committee  shall  direct the Trustee to
segregate  and hold in further  trust  that  portion of the Trust Fund which the
Committee, in its discretion,  determines to be attributable to the interests in
the Plan of the Members employed by such withdrawing  Participating  Company and
their Beneficiaries, subject to the following conditions:
     (a) If such withdrawing  Participating Company elects to continue the Plan,
as adopted by it, on an independent  basis,  then the Committee shall direct the
Trustee to hold such  segregated  portion of the Trust Fund in a separate  trust
under the same terms and conditions as the trust agreement  executed pursuant to
Article 15. The Plan,  as then in effect,  shall be continued as a separate plan
for  the  exclusive   benefit  of  the  Members  employed  by  such  withdrawing
Participating  Company and their  Beneficiaries,  and the board of  directors of
such  withdrawing  Participating  Company  shall  succeed  to all the powers and
duties of the Board of  Directors,  including  the  appointment  of a  Committee
thereunder.
     (b) If the Plan, as adopted by such withdrawing  Participating  Company, is
merged  into,  or  consolidated  with,  another  employee  benefit plan which is
qualified  under  section  401(a) of the Code,  the  Committee  shall direct the
Trustee to transfer the  above-described  segregated  portion of the Trust Fund,
either in cash or kind, to the trust established or to be established under such
plan, and such transfer shall be a complete  discharge of the  responsibility of
the Trustee and the Committee therefor.
     (c) If the Plan, as adopted by such withdrawing  Participating  Company, is
terminated,  then the above-described segregated portion of the Trust Fund shall
be  applied  to  the  benefit  of  the  Members  employed  by  such  withdrawing
Participating  Company  and their  Beneficiaries  in the  manner  prescribed  in
Section 17.4.
     For  purposes  of the  foregoing,  the  portion  of the Trust  Fund that is
attributable  to the  interests  in the  Plan  of the  Members  employed  by any
withdrawing  Participating Company and their Beneficiaries shall not include any
ESOP Stock held in the ESOP Suspense  Subfund at the time of such  Participating
Company s withdrawal from participation in the Plan.
     16.3 Successor Companies. Any corporation which succeeds to the business or
assets of the Company shall,  upon such succession and without any action by any
person, (a) be treated as having adopted this Plan and (b) have the same rights,
and have the same duties,  responsibilities and obligations, as are conferred or
assigned to the Company hereunder.  Any corporation which succeeds to all or any
part of the business  and assets of any  Participating  Company,  other than the
Company, may become a Participating  Company hereunder only if it is eligible to
do so under Section 16.1 and then only in the manner described therein.

                                    ARTICLE 17

                            AMENDMENT AND TERMINATION

     17.1 Right to Amend Plan and Trust.  Subject to the provisions  hereinafter
set forth,  the Company  reserves the right at any time and from time to time by
action of its Board of  Directors  to modify or amend in whole or in part any or
all of the provisions of this Plan and the trust agreement  executed pursuant to
Article 15 and  delegates to the  Committee the authority to modify or amend the
Plan where such modification or amendment is either
     (a) necessary or appropriate to facilitate the  administration,  management
and interpretation of the Plan or to conform the Plan thereto, or
     (b)  necessary  or  appropriate  to qualify or maintain  the Plan as a plan
meeting the  requirements  of sections  401(a) and 401(k) of the Code, and, with
respect to the ESOP provisions,  section  4975(e)(7) of the Code, and to qualify
or maintain the Trust as a trust exempt from taxation  under  section  501(a) of
the Code, respectively,  or any other applicable section of law and Regulations;
provided that, in either case, any such modification or amendment adopted by the
Committee  shall not materially  increase the cost to the Company and Affiliated
Companies of maintaining the Plan.
     No modification or amendment may be made which by reason thereof shall
          (1) deprive any Member, Former Member or Beneficiary thereof receiving
     any benefits under the Plan, without his consent, of any benefits under the
     Plan to which he would otherwise be entitled or
          (2)  adversely  affect the right of any Member,  in the event that the
     Plan is terminated, to participate in the assets of the Plan at termination
     to the  extent and in the  manner  provided  in this  Article  without  his
     consent,  and provided that no such modification or amendment shall make it
     possible for any part of the assets of the Plan to be used for, or diverted
     to, purposes other than for the exclusive purposes of providing benefits of
     the  Members,  Former  Members  and  their  Beneficiaries  and  paying  the
     reasonable expenses of the Plan and Trust as determined by the Committee.
     17.2 Right to  Suspend or  Discontinue  Contributions.  Each  Participating
Company  intends to continue  this Plan and to make  recurrent  and  substantial
contributions hereunder.  Nevertheless,  each Participating Company reserves the
right to suspend such  contributions or to discontinue  them altogether.  In the
event  of a  complete  discontinuance  of  contributions  under  the Plan by any
Participating Company, the Plan, as adopted by such Participating Company, shall
be deemed to have been  terminated  by it in accordance  with the  provisions of
Section 17.3.
     17.3 Right to Terminate  Plan. The Company  reserves the right to terminate
this  Plan in whole or in part at any  time  and  from  time to time;  provided,
however, that in the event of such termination the rights of all Members, Former
Members or Beneficiaries affected by such termination to benefits accrued to the
date of such termination shall be  nonforfeitable.  Each  Participating  Company
reserves  the right to  terminate  this Plan at any time as to the  Members  and
Former Members employed by it and their Beneficiaries;  provided,  however, that
in the event of such termination, the rights of all such Members, Former Members
and  Beneficiaries to benefits accrued to the date of such termination  shall be
nonforfeitable.  In the event of any such  termination,  the assets of the Trust
Fund attributable to the interest in the Plan of the Members, Former Members and
Beneficiaries  affected by such  termination  shall be distributed in the manner
prescribed in Section 17.4.
     17.4  Effect  of  Termination.  Upon  the  termination  of the  Plan by any
Participating Company pursuant to Section 17.3 or the complete discontinuance of
contributions  to the  Plan by any  Participating  Company  in  accordance  with
Section 17.2,  the Committee  shall direct the Trustee to pay or provide for the
payment of all proper expenses of the Trustee in  administering  and closing out
that portion of the Trust Fund attributable to the participation  herein of such
Participating  Company,  including any  commissions  to which the Trustee may be
entitled.  The  Committee  shall then compute the  respective  interests of each
Member and Former Member who is or was employed by such  Participating  Company,
and of each Beneficiary of a Member or Former Member who was so employed, in the
remaining  assets of such portion of the Trust Fund and shall direct the Trustee
to  distribute  such  remaining  assets  to such  Members,  Former  Members  and
Beneficiaries,  in the proportions of their respective  interests,  in the form,
time and manner as the Committee  shall  determine in accordance with applicable
law, in complete  discharge of all liability of such  Participating  Company and
the Trustee therefor.
     For purposes of the foregoing,  if any Participating Company other than the
Company  terminates  the Plan  pursuant  to Section  17.3,  or is treated  under
Section 17.2 as having  terminated the Plan due to a complete  discontinuance of
contributions  to the Plan,  the portion of the Trust Fund  attributable  to the
participation of such  Participating  Company (the "Terminating  Company") shall
include  only  those  assets  of  the  Trust  Fund  that  are   attributable  to
contributions to the Plan made on behalf of the Terminating  Company's employees
prior to such termination of the Plan.

                                    ARTICLE 18

                                  CONSTRUCTION

     18.1 Plan  Intended  to Qualify.  The Plan,  as amended  and  restated,  is
intended to continue to qualify  under  sections  401(a) and 401(k) of the Code,
and the ESOP  provisions are intended to qualify as an employee stock  ownership
plan  within  the  meaning of section  4975(e)(7)  of the Code.  Notwithstanding
Section 17.1, the Company reserves the right to further amend the Plan by action
of the Board of Directors,  retroactively if necessary,  to the extent necessary
to retain such qualified  status without regard to the effect such amendment may
have upon the Vested interest of any Member.
     18.2  Governing  Law.  The  Plan  shall be  governed  by and  construed  in
accordance  with the  provisions  of ERISA and,  to the extent that ERISA is not
applicable, with the laws of the State of New York.
     18.3 Words and  Headings.  As used herein,  the  masculine  gender shall be
deemed to refer to the  feminine,  and the  singular  person  shall be deemed to
refer to the plural, wherever appropriate.  The subject headings and subheadings
appearing in the Plan are inserted for  convenience  and reference  only, and in
the event of any conflict  between the text of any provision of the Plan and the
heading thereof, the text shall control.

                                    ARTICLE 19

                              TOP HEAVY PROVISIONS

     19.1 Top Heavy Plan.  The Plan will be  considered a Top Heavy Plan for any
Plan Year if it is  determined  to be a Top Heavy Plan as of the last day of the
preceding  Plan Year.  Notwithstanding  any other  provisions  in the Plan,  the
provisions of this Article 19 shall apply and supersede all other  provisions in
the Plan during each Plan Year with respect to which the Plan is  determined  to
be a Top Heavy Plan. In the event that any  provisions of this Article 19 are no
longer  required  to maintain  the  qualified  status of the Plan under  section
401(a) of the Code, then such provisions shall be and become ineffective without
the necessity of further amendment of the Plan.
     19.2 Special Definitions.  For purposes of this Article 19 and as otherwise
used in this Plan, the following terms shall have the meanings set forth below:
     (a)  "Aggregation  Group" shall mean the group  composed of each  qualified
retirement  plan of the  Company  or another  Affiliated  Company in which a Key
Employee is a participant whether or not such plan was terminated and each other
qualified  retirement  plan of the Company or another  Affiliated  Company which
enables a plan of the  Company  or  another  Affiliated  Company  in which a Key
Employee is a participant  to satisfy  section  401(a)(4) or 410 of the Code. In
addition, the Company may choose to treat any other qualified retirement plan of
the Company or another  Affiliated  Company as a member of the Aggregation Group
if such Aggregation Group will continue to satisfy sections 401(a)(4) and 410 of
the Code with such plan being taken into account.
     (b) "Key Employee" shall mean a "key employee" as defined in section 416(i)
of the Code and the Regulations issued thereunder.
     (c)  "Section  415  Compensation"  shall  mean  compensation  as defined in
Section 6.5(a).
     (d) "Top Heavy  Plan"  shall mean a "top heavy  plan" as defined in section
416(g) of the Code and the Regulations.  The accrued benefit of a Member who has
not performed any service for the Company or another  Affiliated  Company at any
time  during the  five-year  period  ending on the  determination  date shall be
excluded from the calculation to determine top-heaviness.
     19.3 Minimum Contributions.  Subject to the provisions of Section 19.4, for
each Plan Year that the Plan is a Top Heavy  Plan,  the  employer  contributions
(other  than   contributions   attributable  to  salary   reduction  or  similar
arrangements)  allocable  to the  Account  of each  Employee  (other  than a Key
Employee) who has satisfied the  eligibility  requirements  to be a Member under
Article 2, is employed by a  Participating  Company at the end of the Plan Year,
and is not a Key Employee shall not be less than the lesser of (a) three percent
of such Member's Section 415 Compensation as limited by Section 19.3 hereof,  or
(b) the percentage of Section 415  Compensation at which employer  contributions
(including   contributions   attributable   to  salary   reduction   or  similar
arrangements)  for such  Plan Year are made and  allocated  on behalf of the Key
Employee for whom such percentage is the highest. For the purpose of determining
the  appropriate  percentage  under clause (b), all defined  contribution  plans
required to be included  in an  Aggregation  Group shall be treated as one plan.
Clause  (b)  shall  not  apply  if the Plan is  required  to be  included  in an
Aggregation  Group  which  enables a defined  benefit  plan also  required to be
included in said  Aggregation  Group to satisfy section  401(a)(4) or 410 of the
Code.
     19.4 Adjustment to Maximum  Benefits.  For each Plan Year beginning  before
January 1, 2000, that the Plan is a Top Heavy Plan, 1.0 shall be substituted for
1.25 as the multiplicand of the dollar limitation in determining the denominator
of the  defined  benefit  plan  fraction  and of the defined  contribution  plan
fraction for purposes of section 415(e) of the Code. If, after  substituting  90
percent  for 60 percent  wherever  the latter  appears in section  416(g) of the
Code, the Plan is not determined to be a Top Heavy Plan, the preceding  sentence
shall not be applicable if the minimum  employer  contribution  allocable to the
Account of any Member who is not a Key  Employee as  specified  in clause (b) of
Section 19.1 is determined by substituting "four percent" for "three percent".
     19.5 Special Rule. The Committee  shall, to the maximum extent permitted by
the Code and in accordance  with the  Regulations,  apply the provisions of this
Article 19 by taking into  account the  benefits  payable and the  contributions
made under the Retirement  Plan to prevent  inappropriate  omissions or required
duplication of minimum benefits or contributions.

<PAGE>

   Executed this 7th day of November, 2001.
                 --------------------------

                              U.S. TRUST CORPORATION

                            By:           /s/ John Kirby
                                    ----------------------------
                            Title:  Executive Vice President
                                    ----------------------------

<PAGE>

                                   APPENDIX A

                              Installment Payments

     (a) The following  rules shall apply with respect to any Member who,  prior
to the Elimination Date, elects the installment form of payment:
          (1) Time of Payments. Installment payments shall be made annually. The
     first installment  payment shall be made on a date determined in accordance
     with Section 12.2, and the remaining  installment payments shall be made on
     the anniversaries thereof.
          (2) Number of Payments. The number of installment payments which shall
     be made from each Investment Fund in which the Member's Account is invested
     shall be the following:
               (i) Any Investment  Fund other than the Schwab Stock Fund and the
          ESOP Stock Fund - 10 or 15 installment payments, as the Member selects
          on the election form described in subsection (a) above.
               (ii) The Schwab Stock Fund - 10 installment payments.
               (iii) The ESOP Stock Fund - five installment payments.
          (3) Amount of the  Payments.  The amount of the  installment  payments
     shall be determined as follows:
               (i) In the  case of  installment  payments  to be made  from  any
          Investment  Fund other  than the Schwab  Stock Fund and the ESOP Stock
          Fund,  each  installment  payment from such fund shall be in an amount
          equal to the balance of the Member's  Account invested in such fund as
          of the Valuation Date  coinciding  with or  immediately  preceding the
          date  on  which  such  payment  is to be  made,  divided  by the  then
          remaining  number of  installment  payments  to be made from such fund
          (including the current installment payment).
               (ii) In the  case of  installment  payments  to be made  from the
          Schwab Stock Fund, the Committee  shall direct the Trustee to transfer
          shares  of  Capital  Stock  to  the  Member  in  a  series  of  annual
          installments,  all but the last of which shall  consist of that number
          of whole shares of such Capital  Stock  obtained by dividing by 10 the
          number of such  shares  which is being held by the Trustee for payment
          to the Member under Section 9.3 (but in no event less than 10 shares),
          and the last of which shall  consist of the remainder of the shares of
          Capital Stock being so held, (y) transfer to the Member the cash which
          is being held by the Trustee for payment to him under Section 9.3 with
          the first installment payment of Capital Stock and (z) transfer to the
          Member the amount of any dividends or other distributions  received by
          the  Trustee  with  respect  to the  Capital  Stock the  Trustee is so
          holding for payment to the Member  with the first  annual  installment
          payment of Capital  Stock the  Trustee  makes to the Member  after the
          Trustee's receipt of such amount.
               (iii) In the case of  installment  payments  to be made  from the
          ESOP Stock Fund,  the  Committee  shall direct the Trustee to transfer
          shares of ESOP Stock to the Member in a series of annual installments,
          all but the last of which shall consist of that number of whole shares
          of ESOP Stock  obtained  by dividing by five the number of such shares
          which is being held for payment to the Member  under  Section 9.3 (but
          in no event less than 5 shares),  and the last of which shall  consist
          of the  remainder  of the  shares  of ESOP  stock  being so held,  (y)
          transfer to the Member the cash which is being held by the Trustee for
          payment to him under Section 9.3 with the first installment payment of
          ESOP Stock and (z) transfer to the Member the amount of any  dividends
          or other  distributions  received by the Trustee  with  respect to the
          ESOP Stock the  Trustee is so holding  for  payment to the Member with
          the first annual  installment  payment of ESOP Stock the Trustee makes
          to the  Member  after the  Trustee's  receipt  of such  amount.  It is
          provided,  however,  that  distributions of ESOP Stock with a value of
          less than the  "Applicable  Amount" may be paid at the election of the
          Member  in  a  single  lump-sum   payment.   For  these  purposes  the
          "Applicable  Amount"  shall be the amount,  if any,  established  in a
          uniform and nondiscriminatory  manner by the Committee. The Applicable
          Amount,  once established,  may be changed only in conformity with the
          requirements  of  section  411(d)(6)  of the Code and the  Regulations
          promulgated thereunder.

<PAGE>
<TABLE>

                                                                                 APPENDIX B

                                           SUMMARY OF PROVISIONS RELATING TO
                                               MERGERS AND ACQUISITIONS

     Acquisition         Acquisition       Prior Service       Prior Service     Prior Service Counts      Prior Service
                             Date            Counts as           Counts as          as Eligibility       Counts as Vesting
                                        Eligibility Service     Eligibility      Service for Matching         Service?
                                            for Elective      Service for AIP?      Contributions?
                                              Payroll
                                           Contributions?
<S>                      <C>            <C>                   <C>                <C>                    <C>
McMurrey                   10/16/98             Yes                  No                   No                     No
Maier & Siebel              8/3/98              Yes                  No                  Yes                     No
Wood Island                 8/3/98              Yes                  No                  Yes                     No
Radnor                      2/1/99              Yes                  No                  Yes                     No
North Carolina Trust        9/1/99              Yes                  No                  Yes                    Yes
Resource Companies,         5/1/01              Yes                 Yes                  Yes                    Yes
Inc.

</TABLE>

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