Document:

PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT

                  This Professional Branch Manager Phantom Stock Agreement (this
"Agreement") is made this _________ day of __________________________, 19___, by
and   between    Legg   Mason   Wood   Walker,    Incorporated    ("Legg")   and
________________________________ ("Employee").

                           WHEREAS,  Employee has  accepted  employment  by
                           Legg as a  Professional Branch Manager; and

         WHEREAS,  Legg and Employee  believe it to be mutually  advantageous to
provide for the payment of certain  compensation  to Employee upon the terms and
conditions hereafter set forth,

                  Now, therefore, Legg and Employee agree as follows:

                       1. CERTAIN  MONETARY  COMPENSATION.  In  consideration of
Employee's employment with Legg, Legg shall be obligated to pay Employee certain
compensation  which Employee may elect to be deferred  pursuant to the terms and
conditions of this Agreement.

                       2. PHANTOM SHARE UNITS.  Legg and Employee agree that the
certain  compensation to be paid by Legg to Employee shall not be paid currently
but shall be deferred,  and as deferred,  shall be deemed  converted  into units
that are economically  equivalent to, but are not actual,  shares of Legg Mason,
Inc.  ("LMI")  Common  Stock.  These  "phantom"  shares of LMI Common  Stock are
referred to as "Share Units."

                       3. COMPENSATION  DEFERRAL ELECTIONS.  Simultaneously with
the execution of this Agreement,  Employee must direct Legg on a form prescribed
by Legg (hereafter the "Compensation  Deferral Election" and attached as Exhibit
A) to defer a portion not to exceed  $12,000.00 of Employee's  compensation  for
the calendar year, on a before tax basis,  from Employee's  annual bonus or from
Employee's  compensation,  in any  whole  percentage  Employee  chooses,  from a
minimum of 1% to a maximum of 15% (not to exceed  $12,000.00 in the  aggregate);
or from  Employee's  compensation  in any monthly whole dollar  amount  Employee
chooses,  from a minimum of $250.00 to a maximum of $1,000.00.

                         When electing to make deferrals of  compensation  under
this  Agreement,  Employee  must  make an  irrevocable  election  for an  entire
calendar year.  Once a calendar year has begun,  a deferral  election may not be
changed or revoked during the calendar year (except with respect to deferrals in
future calendar years).  Notwithstanding the foregoing, however, in the event of
Employee's financial hardship,  the Employee may apply to Legg for permission to
reduce or suspend deferral  contributions for the remainder of the calendar year
or any part thereof.  Legg has the sole  discretion as to the extent (if at all)

                                                                  Exhibit 4.1

<PAGE>

it shall  grant the  Employee's  request.  "Financial  hardship"  is  defined as
financial  need  arising  as a result  of a sudden  and  unexpected  illness  or
accident of the Employee or a dependent,  loss of the Employee's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events  beyond  the  control  of  Employee,  but only  where such
financial  need is not and may not be  relieved  (i)  through  reimbursement  or
compensation  by insurance or otherwise or (ii) by liquidation of the Employee's
assets,  to the extent the  liquidation  of such assets  would not itself  cause
severe financial hardship.

                          Employee  may  make  changes  in his  or her  deferral
election  (including  a  revocation  of further  deferrals),  effective  for any
calendar  year  after the year in which he or she  initially  entered  into this
Agreement  by filing  prior to  January  1 of the  subsequent  year a  completed
compensation  deferral  amendment in the form  prescribed by Legg (hereafter the
"Compensation  Deferral Amendment" and attached as Exhibit B). If Employee fails
to file a completed  Compensation Deferral Amendment prior to the beginning of a
calendar year,  Employee will be deemed to have elected to keep Employee's prior
election in force for the new calendar year.

                       4. PROFESSIONAL  BRANCH MANAGER PHANTOM STOCK ACCOUNT. In
lieu of paying the deferred  portion of Employee's  compensation to the Employee
as earned,  Legg will  establish a  Professional  Branch  Manager  Phantom Stock
Account  (the  "Account")  on its books and  records for the benefit of Employee
wherein  Legg  will  credit  to  such  Account   dollar  amounts  equal  to  the
compensation  deferred  by the  Employee  under this  Agreement  (hereafter  the
"Compensation  Credit") to be  converted  into Share  Units.  Each  Compensation
Credit will be made as of a date not later than ten (10) business days after the
last day of the  month  during  which  the  Compensation  Credit  was  earned by
Employee. The number of Share Units into which such Compensation Credit shall be
converted (calculated to four decimal places) will be determined as of the fifth
trading day after the date the Compensation  Credit is made and will be equal to
the amount of the  Compensation  Credit  divided by the fair  market  value of a
share of LMI Common  Stock,  determined as set forth below.  Additionally,  Legg
will "match" the  Compensation  Credit on a monthly basis by contributing to the
Employee's Account a dollar amount equal to the Compensation Credit (hereinafter
the "Matched  Credit") with the Matched Credit converted into Share Units in the
same manner as the Compensation  Credit (hereinafter the "Matched Share Units").

                          Fair market  value of a share of LMI Common Stock will
equal the five day average of the closing  prices on the  principal  exchange on
which LMI Common Stock is traded for the four trading days immediately preceding
the  applicable  valuation date and the valuation date (where the valuation date
is the fifth trading day after the date on which the Account is  credited),  or,
if LMI  Common  Stock is not then  traded  on an  exchange,  such  amount  as is
determined  by Legg  using any  reasonable  method of  valuation  ("Fair  Market
Value").

                       5.  ADJUSTMENT TO ACCOUNT UPON DIVIDEND BY LMI. If, prior
to the date Employee  receives a payment from Legg pursuant to this Agreement (a
"Payment Date"), LMI pays any dividend (other than in LMI Common Stock) upon its
Common Stock,  or makes any  distribution  (other than in LMI Common Stock) with

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respect thereto, Employee's Account will be credited with additional Share Units
and Matched  Share  Units,  equivalent  to that number of phantom  shares of LMI
Common  Stock  determined  by  dividing  the  amount  of the  dividend  or other
distribution  allocable  to the Share  Units and  Matched  Share  Units  already
credited to the Account as of the record date for the dividend or  distribution,
by 95% of the Fair  Market  Value of a share of LMI  Common  Stock on the  fifth
business  day after the payment date for the  dividend or  distribution.

                          In the event that, prior to a Payment Date, the number
of outstanding shares of LMI Common Stock is changed by reason of a stock split,
stock dividend,  combination of shares or recapitalization,  or LMI Common Stock
is  converted  into or  exchanged  for  other  shares  as a result  of a merger,
consolidation,  sale of assets or other reorganization or recapitalization,  the
number of Share  Units and  Matched  Share  Units then  credited  to  Employee's
Account will be appropriately  adjusted so as to reflect such change (based upon
the best  estimate of Legg as to relative  values).

                          Nothing contained in this Agreement shall confer or be
construed as conferring  upon Employee any rights as a stockholder of LMI or any
right to have access to the books and records of LMI or any subsidiary.

                       6.  VESTING  SCHEDULE OF SHARE UNITS.  Employee  shall be
fully and  immediately  vested in all Share Units  attributable  to or resulting
from Employee's  Compensation Credit.

                          Employee  shall  vest in  Matched  Share  Units  as of
December 31 of the sixth (6th)  calendar  year  following  the calendar year for
which  Matched  Share Units were  credited  to  Employee's  Account,  as long as
Employee is continuously employed in good standing by Legg through and including
December  31 of such sixth  (6th) year,  but such  Matched  Share Units shall be
subject to  forfeiture  as  described  in  Paragraph  11 if Employee  engages in
competition.  For example, if Matched Share Units were credited to an Employee's
Account for the calendar  year 2002,  such Matched  Share Units would vest as of
December 31, 2008.

                          For purposes of determining  Employee's vested portion
of Matched Share Units, Employee shall not be entitled to receive any partial or
pro-rated  credit for having been  employed by Legg for any partial  time period
which ends before the last day of the sixth (6th)  calendar  year  following the
calendar year for which Matched Share units were credited to Employee's Account,
unless Employee's employment with Legg terminates prior to such last day of such
sixth (6th)  calendar year by reason of disability or retirement  (as such terms
are  defined  below),  or  death.  In the  event  of any  other  termination  of
employment, whether involuntary or voluntary and for whatever cause or no cause,
Employee  shall have no right or claim to any Matched Share Units which have not
vested  to  Employee  and such  non-vested  Matched  Share  Units  shall  belong
exclusively to Legg.

                          In  the   event   Employee's   employment   with  Legg
terminates  as a result of  Employee's  death,  all Matched Share Units shall be

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immediately  deemed vested and  belonging to Employee's  estate or to Employee's
beneficiary if Employee has named a beneficiary as described in Paragraph 10.

                          In  the   event   Employee's   employment   with  Legg
terminates as a result of Employee's  disability,  all Matched Share Units shall
be  immediately  deemed vested and  belonging to Employee.  For purposes of this
Agreement,  "disability"  (hereinafter  "Disability")  shall  mean  a  medically
determinable  physical or mental  impairment  which,  as  determined by the Legg
Deferred  Compensation  Committee  using such criteria as it  establishes in its
sole and absolute  discretion,  will prevent  Employee from performing his usual
duties or any other similar duties in connection with his employment by Legg.

                          Unless  distribution of benefits is forfeited pursuant
to Paragraph 11 due to Employee  engaging in  competition,  vesting  pursuant to
this Paragraph  shall  continue  after Employee  retires from Legg provided that
such retirement  (hereinafter  "Retirement")  occurs (i) on or after Employee is
age 65;  (ii) on or after  Employee  is age 55 if the sum of  Employee's  age at
retirement  and his or her years of  service  with  Legg  equals at least 75; or
(iii) on or after  Employee is age 60 if the Employee has a minimum of ten years
of service with Legg.

                       7. ASSIGNMENT OF BENEFITS.  No amount  payable,  or other
right or benefit,  under this Agreement,  will, except as otherwise specifically
provided by this Agreement or by applicable law, be subject to sale, assignment,
transfer,  pledge,  encumbrance,   attachment,  garnishment  or  levy  prior  to
distribution   to   Employee.   Since  this   Agreement  is  intended  to  be  a
non-qualified,  unfunded plan not subject to the  Employment  Retirement  Income
Security Act of 1974,  as amended,  payments  under this  Agreement  will not be
subject to the provisions of any qualified  domestic relations order (as defined
under  the  Internal  Revenue  Code)   applicable  to  an  Employee's   deferred
compensation  benefit.

                          Notwithstanding  any provision herein to the contrary,
Employee  acknowledges  and  agrees  that any  distribution  payable  under this
Agreement  may be used at the  discretion  of Legg to  offset  any debt  owed by
Employee to Legg at the date such distribution would otherwise be paid. Employee
expressly authorizes Legg to withhold distributions payable under this Agreement
to offset any debts or other  liabilities  owed by Employee to Legg.  If Legg is
aware of any errors,  loans  outstanding or  liabilities  of Employee,  Legg may
withhold  distributions  under this Agreement until such time as the liabilities
are satisfied or Legg has determined that a liability no longer exists.

                       8.  UNFUNDED  NATURE OF THE  AGREEMENT.  Legg will not be
required to  purchase,  hold or dispose of any  investments  with respect to the
Compensation Credits or Share Units.  Employee has no interest in the Account or
in any  investments  Legg may purchase with such  amounts,  except as a general,
unsecured  creditor of Legg.

                          Should  Legg  elect to make  contributions  to a trust
(hereinafter  referred to as the  "Trust") to assist Legg in paying the benefits
which may accrue  hereunder,  the amounts  contributed shall be used to purchase

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the  deemed  investments  under  Paragraph  4,  subject  to  application  of the
provisions of this Paragraph 8 to the actual investments. However, contributions
to the Trust  shall not  reduce or  otherwise  affect  Legg's  liability  to pay
benefits under this Agreement (which benefits may be paid from the Trust or from
Legg's general assets, in Legg's discretion), except that Legg's liability shall
be reduced by actual  benefit  payments from the Trust (and the Account shall be
appropriately  adjusted to reflect such payments).  If any such investments,  or
any  contributions to the Trust,  are made by Legg, such investments  shall have
been made solely for the purpose of aiding Legg in meeting its obligations under
this Agreement,  and, except for actual  contributions to the Trust, no trust or
trust  fund is  intended.  To the  extent  that Legg  does,  in its  discretion,
purchase or hold any such investments  (other than through  contributions to the
Trust),  Legg will be named sole owner of all such investments and of all rights
and  privileges  conferred  by the  terms  of the  instruments  or  certificates
evidencing such investments.  Nothing stated herein will cause such investments,
or the Trust, to form part of the Account,  or to be treated as anything but the
general assets of Legg, subject to the claims of its general creditors, nor will
anything  stated herein cause such  investments,  or the Trust, to represent the
vested, secured or preferred interest of the Employee or his beneficiaries. Legg
shall have the right at any time to use such  investments  not held in the Trust
in the  ordinary  course of its  business.  Neither the  Employee nor any of his
beneficiaries shall at any time have any interest in the Account or the Trust or
in any such investments,  except as a general, unsecured creditor of Legg to the
extent of the  deferred  compensation  arrangement  which is the subject of this
Agreement.

                       9. MODE OF DISTRIBUTION. Legg will make all distributions
under this Agreement in shares of LMI Common Stock.

                          Employee  acknowledges that, because Fair Market Value
will be  measured  by taking into  account  stock  prices over a five day period
preceding  the date a  distribution  is due,  Employee  will be  subject to some
market risk if the trading  price of LMI Common Stock  declines  during the five
day period.  After the date of  distribution,  Employee must make his or her own
decision  as to  whether  to sell or  retain  the  shares  received  under  this
Agreement.  Any brokerage  commissions  or other  charges  incurred in the event
Employee  decides to sell such  shares  will be the sole  responsibility  of the
Employee, not Legg.

                  10.  TIMING  OF  DISTRIBUTION.

                       10.1 In General.  Simultaneously  with the execution
of this  Agreement,  Employee must make an election on a form prescribed by Legg
(hereafter the "Payment  Option  Election" and attached as Exhibit C) to receive
the benefits payable under this Agreement either:

                            (a) with  respect to Share  Units and  corresponding
Matched Share Units, as soon as practicable following the date, but in any event
not later than  sixty  (60) days  following  the date,  on which the  respective
Matched  Share Units have fully  vested  pursuant to  Paragraph 6; or

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<PAGE>

                            (b) in the event an Employee's employment with Legg
terminates as a result of Retirement, with respect to Share Units resulting from
Employee's  Compensation  Credits,  either  (i) in a single  lump sum as soon as
practicable  following  the last day, but in any event not later than sixty (60)
days  following the last day, of the calendar  year during which the  Employee's
Retirement occurred or (ii) in three (3) annual installment distributions of the
balance of the  Account,  the first of which shall occur as soon as  practicable
following  the last  day,  but in any  event  not  later  than  sixty  (60) days
following  the last day,  of the  calendar  year  during  which  the  Employee's
Retirement  occurred  and (iii)  with  respect to Matched  Share  Units,  unless
distribution  of Matched Share Units are forfeited  pursuant to Paragraph 11 due
to the Employee  engaging in competition,  as soon as practicable  following the
last day, but in any event not later than sixty (60) days following the last day
of each  calendar  year during  which such Matched  Share Units vest;  provided,
however, that if the balance in the Employee's Account at the time of Retirement
is less than $20,000, the Employee may not elect option (ii).

                       10.2   Termination   of   Employment.   For  purposes  of
determining the amount of any distribution  with respect to Matched Share Units,
an Employee shall not be entitled to receive any partial or pro-rated credit for
Matched Share Units allocated to his Account for calendar years ending after the
date which is six (6) years prior to the date of  termination.  If an Employee's
employment with Legg  terminates for any reason other than death,  Disability or
Retirement (as such terms are defined herein),  whether involuntary or voluntary
and for  whatever  cause or for no cause,  the  Employee  shall have no right or
claim to any such  Matched  Share  Units and such  Matched  Share Units shall be
forfeited in their entirety. Forfeited amounts shall revert to Legg and will not
be allocated to other  Employees.  Shares Units  attributable  to the Employee's
Compensation  Credit  shall be paid to Employee in  accordance  with  Employee's
Payment  Option  Election.

                        10.3  Death.

                              (i) In the  event an  Employee's  employment  with
Legg terminates as a result of death, all Share Units and Matched Share Units in
his Account shall be paid,  in accordance  with the  Employee's  Payment  Option
Election,  to the  Employee's  estate or to the Employee's  beneficiary  (if the
Employee has named a beneficiary on a form  prescribed by Legg  (hereafter,  the
"Designation of Beneficiary") by executing and completing a form attached hereto
as Exhibit D naming a person or persons to receive  distributions  payable under
this Agreement (the  "Beneficiary"))  as soon as practicable  following the last
day, but in any event not later than sixty (60) days  following  the last day of
the calendar year during which the Employee's death occurred.

                              (ii)  In  the   event  of  an   Employee's   death
subsequent to the date of the  Employee's  Retirement and at a time during which
the Employee is receiving  distributions  under this Agreement,  all Share Units
and Matched Share Units then remaining in the Employee's  Account shall be paid,
notwithstanding  the Employee's  Payment Option Election,  in a lump sum, to the
Employee's  estate  or to the  Employee's  beneficiary  as soon  as  practicable
following the date of death of the Employee.

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                       10.4  Disability.  In the event an Employee's  employment
with Legg  terminates  as a result of  Disability,  all Share  Units and Matched
Share Units in his Account shall be paid, in accordance with Employee's  Payment
Option Election, as soon as practicable following the last day, but in any event
not later than sixty (60) days  following  the last day,  of the  calendar  year
during  which  Disability  occurred.

                       10.5 The amount of any  distribution  with  respect to an
Account will be  determined on the date  Employee or his or her  Beneficiary  is
entitled to receive a distribution  and, to the extent an Account includes Share
Units or vested  Matched Share Units,  will be based on the Fair Market Value of
LMI Common Stock as of the date Employee or his or her  Beneficiary  is entitled
to receive a distribution.

                  11. NON-COMPETE  REQUIREMENT.  If  Employee  "engages in
competition"  with Legg prior to one year  after the  Matched  Share  Units have
fully  vested  pursuant to  Paragraph  6,  Employee's  claim to such  respective
Matched  Share  Units,  both vested and  non-vested,  shall be  forfeited in its
entirety.  Forfeited  amounts  shall  revert to Legg.

                      11.1 For  purposes of this  Agreement,  Employee  shall be
deemed to have "engaged in competition" with Legg if he or she:

                           11.1.1 discloses the names of or otherwise identifies
any of Legg's customers to any person, firm, corporation,  association, or other
entity for any reason or purpose whatsoever;

                           11.1.2  discloses to any person,  firm,  corporation,
association,  or other entity any information  regarding Legg's general business
practices  or  procedures,   methods  of  sale,  list  of  products,   personnel
information or any other information concerning Legg's business;

                           11.1.3 owns, manages, operates, controls, is employed
by, acts as an agent for, participates in or is connected in any manner with the
ownership,   management,   operation  or  control  of  any  firm,   corporation,
association  or other entity which is engaged in businesses  which are or may be
competitive  to the business of Legg;  provided  further  that this  restrictive
covenant  shall  encompass the State of Maryland and any other states where Legg
is engaged in business,  and every city, county, and other political subdivision
of such states; or

                           11.1.4 solicits or calls, either by himself or at his
or her  direction  has any other  person  or firm  solicit  or call,  any of the
customers of Legg on whom Employee called, with whom Employee became acquainted,
or of whom Employee learned during his employment by Legg.

                      11.2 It is the  intention  of Legg that this  Paragraph be
given the  broadest  protection  allowed by law with regard to the  restrictions
herein  contained.  Each  restriction  set  forth  in this  Paragraph  shall  be

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<PAGE>

construed  as a  condition  separate  and apart  from any other  restriction  or
condition.  To the extent that any  restriction  contained  in the  Paragraph is
determined by any court of competent  jurisdiction to be unenforceable by reason
of it being  extended  for too great a period of time,  or as  encompassing  too
large  a  geographic  area,  or over  too  great a  range  of  activity,  or any
combination of these  elements,  then such  restriction  shall be interpreted to
extend  only over the  maximum  period of time,  geographic  area,  and range of
activities which the court deems reasonable and enforceable.

                   12. FICA OR PAYROLL TAX. Any FICA or other  payroll tax which
may be imposed on Employee with respect to the deferred  compensation under this
Agreement  will be,  unless  otherwise  determined  by Legg,  deducted  from the
non-deferred  remainder of  compensation of Employee.

                   13. DISPUTES SUBJECT TO ARBITRATION. Employee agrees that any
controversy or dispute  arising under this Agreement which cannot be resolved by
the Legg Deferred  Compensation  Committee,  or out of Employee's  employment by
Legg  (including,  but not limited to, claims arising under the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Age  Discrimination in Employment Act
of 1967, and analogous state statutes),  shall be submitted for arbitration upon
demand of either party in accordance with the rules of the National  Association
of Securities  Dealers,  Inc. or the New York Stock  Exchange,  Inc.,  provided,
however, that in the event of termination of Employee's  employment,  Legg shall
be entitled  to seek  injunctive  relief or confess  judgment  against  Employee
pursuant to the terms of any other  applicable  agreement and that Legg shall be
entitled  to apply for and obtain  from any state or federal  court such  relief
before or after the commencement of any arbitration  proceeding,  such relief to
be  afforded   to  Legg   pending  the   decision   of  the   arbitrators.

                   14.   EMPLOYMENT-AT-WILL.   Employee   and  Legg   agree  and
acknowledge  that  this  Agreement  shall  not be  construed  as a  contract  of
employment.  Legg maintains an employment-at-will policy. As Employee is free to
end his or her  employment  with Legg at any time for any  reason or no  reason,
Legg is free to end the  employment  with Employee at any time for any reason or
no reason.

                         Furthermore,  Legg  may  end  at  any  time  Employee's
employment as a Professional  Branch Manager. In the event Employee is no longer
employed as a Professional  Branch Manager,  Employee will no longer be entitled
to defer compensation  pursuant to this Agreement.  However, as long as Employee
continues to be employed in good standing by Legg, Employee shall continue to be
entitled to the benefits due Employee under this Agreement.

                   15.   GOVERNING  LAW.  This  Agreement   shall  be  governed,
construed,  and enforced in  accordance  with the laws of the State of Maryland.

                   16.  EFFECTIVENESS  OF THIS  AGREEMENT.  If any  part of this
Agreement  shall be held  invalid  or  unenforceable,  that part shall be deemed

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modified as necessary to make it effective, and the remaining provisions of this
Agreement  shall remain in effect.

                   17.  ENTIRE   UNDERSTANDING   OF  PARTIES.   This   Agreement
incorporates the entire  understanding  between Employee and Legg on the subject
matter  herein  and may be not  changed  except  by a  writing  signed by a duly
authorized  officer of Legg and Employee.

                   18.  ASSISTANCE  OF  COUNSEL.   Employee   acknowledges  that
Employee  was  given the  opportunity  to read  this  Agreement  and to seek the
assistance  of  counsel  before  Employee  decided  to accept  the terms of this
Agreement or sign this Agreement.

                  IN WITNESS WHEREOF,  the parties have caused this Agreement to
be executed as of the date first hereinabove written.

                                            EMPLOYEE:

                                            -----------------------------------
                                            Signature

                                            -----------------------------------
                                            Print Full Name

                                            LEGG MASON WOOD WALKER,
                                            INCORPORATED

                                            BY:________________________________

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                                    EXHIBIT A

               PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT

                         Compensation Deferral Election

         Pursuant to the Agreement, I agree to the following deferral of amounts
that would  otherwise be payable to me as current  compensation  (pick a., b. or
c.):

(a)      Annual Bonus Whole
         Dollar Deferral                    $_______ (not to exceed $12,000.00)

(b)      Percentage of
         Compensation Deferral:             _______% of compensation (1% to 15%
                                                     and    not    to     exceed
                                                     $12,000.00 in the aggregate
                                                     in  combination   with  the
                                                     above deferral)

                  or

(c)      Monthly Whole Dollar Deferral    $_______ ($250.00 to $1,000.00)

         Having read and  understood  the  Agreement  provided to me by Legg,  I
understand and agree that:

                  1.       My deferrals will be made from  compensation  payable
                           to  me  in  the  calendar  year  and  all  subsequent
                           calendar  years until I submit to Legg a Compensation
                           Deferral  Amendment in  accordance  with the terms of
                           the  Agreement and which is received by Legg prior to
                           the first day of the calendar year for which it is to
                           be effective.

                  2.       Elections may not be changed or revoked except at the
                           end of a calendar year (except in the event of severe
                           financial  hardship,  in which  case,  I may apply to
                           Legg for its consent to a suspension of deferrals).

<PAGE>

                  3.       Any  deferral  is  subject  to all of the  terms  and
                           conditions of the Agreement,  including  particularly
                           that:  (i) deferrals are  irrevocable  until one year
                           after  vesting of Matched  Share  Units,  retirement,
                           termination,  disability,  or death, whichever occurs
                           earliest,  (ii)  compensation  which I  defer  is not
                           invested directly in common stock (therefore,  I have
                           no  rights  as  a  stockholder   by  virtue  of  this
                           Agreement),  and (iii) my only  claim in the event of
                           financial  difficulty  of  Legg  is as  an  unsecured
                           general creditor for the benefits due to me under the
                           Agreement.

                                                    Employee:

                                                    ---------------------------
                                                    Signature              Date

                                                    ---------------------------
                                                    Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:----------------------------------
         Signature

                                       2

<PAGE>

                                    EXHIBIT B

               PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT

                         Compensation Deferral Amendment

The purpose of this form is to change a previously-filed  election. I understand
that:

                  1.       The  election  made  in  this  Compensation  Deferral
                           Amendment  applies  only to the portion of my Account
                           under the  Agreement  attributable  to  contributions
                           credited  after the first  day of the  calendar  year
                           following receipt of this form by Legg.

                  2.       The  election  made  in  this  Compensation  Deferral
                           Amendment  will  remain  in  effect  for  all  future
                           calendar  years  unless  I  file  a new  Compensation
                           Deferral  Amendment  with Legg prior to the first day
                           of the calendar year for which it is to be effective.

ELECTION CHANGE:  (Check as applicable)

         __       I elect to cease further deferrals of my compensation.

         __       Having previously  suspended  deferrals of my compensation,  I
                  elect to resume such  deferrals,  at the  percentage set forth
                  below.

         __       I elect that further deferrals of my compensation shall be
                  equal to:

         (a)       _________        of my annual bonus (not to exceed
                                    $12,000.00);
         (b)       _________%       of compensation  (1% to 15% and not to
                                    exceed  $12,000.00 in combination with the
                                    above deferral); or
         (c)      $_________        per month ($250.00 to $1,000.00).

                                          Employee:

                                          --------------------------------
                                          Signature                   Date

                                          ---------------------------------
                                          Print full name

<PAGE>

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:  --------------------------------
         Signature

<PAGE>

                                    EXHIBIT C

               PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT

                             Payment Option Election

         I hereby elect to receive the benefits  attributable to the Share Units
and any  corresponding  Matched Share Units of my Account under the Agreement in
the following manner: (check one)

         a. ______ as soon as practicable  following the last day, but in any
                   event not later than sixty (60) days  following the last day,
                   of the sixth  calendar  year  following the calendar year for
                   which such amounts were credited or allocated to my Account.

         b. ______ in a lump sum as soon as practicable  following the last day,
                   but in any event not later than sixty (60) days following the
                   last day, of the calendar  year in which my  employment  with
                   Legg  terminates  as a result  of my death,  "Disability"  or
                   "Retirement,"  as defined in the Agreement,  or other reasons
                   resulting  in  my  right  to  receive   benefits   under  the
                   Agreement.

         c.  _____ in  three  annual   installments  with  the  first  of  such
                   installments  occurring as soon as practicable  following the
                   last day,  but in any event not later  than  sixty  (60) days
                   following  the last  day,  of the  calendar  year in which my
                   employment  with  Legg  terminates  as a result  of my death,
                   "Disability" or  "Retirement," as defined in the Agreement or
                   other reasons resulting in my right to receive benefits under
                   the Agreement.

         I understand that if I elect to receive  distributions in installments,
each  installment will be determined by dividing the then value of the amount to
be distributed by the number of installments remaining to be paid (including the
installment  then  due).  If the amount of the total  distribution  is less than
$20,000.00, I understand installment option c. above will not be available and I
will receive a single lump sum payment.  I understand that if I elect options a.
or c. above and am receiving  installments as a result of my "Retirement",  then

<PAGE>

Professional Branch Manager Phantom Stock Agreement
Payment Option Election
Page 2

if I die  before  receiving  all  amounts  to  which  I am  entitled  under  the
Agreement, the balance in my Account at the time of my death will be distributed
to my estate or Beneficiary in a lump sum as soon as practicable after my death.

                                          Employee:

                                          -------------------------------
                                          Signature                  Date

                                          -------------------------------
                                          Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By: ---------------------------------
         Signature

<PAGE>

                                    EXHIBIT D

               PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT

                         Designation of Beneficiary(ies)

By virtue of my right under the Agreement to designate the  beneficiary(ies)  of
any death  benefits  payable  under the  Agreement,  and  subject  to any future
exercise  of said  right  by me,  I hereby  direct  that any and all such  death
benefits shall be paid, in accordance  with the terms of the  Agreement,  to the
person(s)  named  below who are  living at the time of each such  payment,  and,
unless otherwise  expressly  indicated,  in equal shares among them if more than
one such person shall be living at the time of each such payment:

         PRIMARY BENEFICIARY(IES)

                ---------------------------------------------------------
                  Name/Relationship                  Address

                ---------------------------------------------------------
                  Name/Relationship                  Address

                --------------------------------------------------------
                 Name/Relationship              Address

In the  event  that no  primary  beneficiary  shall be living at the time of any
death benefit payment,  I hereby direct that such remaining  payment(s) shall be
made to those  person(s)  named  below  who are  living at the time of each such
remaining payment,  and, unless otherwise expressly  indicated,  in equal shares
among them if more than one such person shall be living at the time of each such
remaining payment:

         CONTINGENT BENEFICIARY(IES)

           --------------------------------------------------------------
                  Name/Relationship                  Address

           --------------------------------------------------------------
                  Name/Relationship                  Address

           --------------------------------------------------------------
                 Name/Relationship                  Address

<PAGE>

Professional Branch Manager Phantom Stock Agreement
Payment Option Election
Page Two

Professional Branch Manager Phantom Stock Agreement
Designation of Beneficiary(ies)

In the further event that none of the persons named above,  either as primary or
contingent  beneficiary(ies),  shall be living at the time of any death  benefit
payment,  all remaining  payment(s)  shall be made to my estate  pursuant to the
Agreement.

         NOTE:  If so specified in the above designations, "person" includes a
                trust or corporation.

                        Employee:
                                  ---------------------------------------------
                                  Signature                               Date

                                  ---------------------------------------------
                                  Print full name

                                                   ----------------------------
                                                           Witness

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By: -----------------------------------
                                  DateLEGG MASON WOOD WALKER, INCORPORATED
                      ------------------------------------

                 PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN
                 -----------------------------------------------
                      (December, 1999 Amending Restatement)

                  This  document   constitutes   the  Legg  Mason  Wood  Walker,
Incorporated  Private  Client Group  Deferred  Compensation  Plan (the  "Plan"),
formerly known as the Legg Mason Wood Walker, Incorporated Retail Deferred Bonus
Compensation Plan.

                  1. PURPOSE.  The purpose of the Plan is to enhance the ability
of Legg Mason Wood Walker,  Incorporated  (the  "Company") to attract and retain
full-time financial advisors.

                  2.  DEFINITIONS.  As used herein,  the  following  definitions
shall apply:

                      (a) "Account" means a Financial  Advisor's combined Credit
Interest Account and Phantom Stock Account.

                      (b)   "Committee"   means  the  Legg  Mason  Wood  Walker,
Incorporated Private Client Group Deferred Compensation Plan Committee consist-
ing of such members as the Company's President shall select from time to time.

                      (c) "Company" shall have the meaning set forth in Section
1 of this Plan.

                      (d) "Compensation Credit" shall have the meaning set forth
in Section 4(b) of this Plan.

                      (e)   "Credit   Interest   Account"   means   a   deferred
compensation account established pursuant to Section 4(a) of this Plan.

                      (f) "Credit Interest Rate" means the average of the twelve
month end rates of the Company's credit interest rate paid during a Plan Year to
the Company's cash reinvestment accounts.

                      (g)  "Disability" shall  have the  meaning  set  forth in
Section 9(h) of this Plan.

                      (h) "Eligible Gross Production" means gross commission and
fee revenues  generated  from sales of all products and services in the capacity
of a  Financial  Advisor of the  Company,  excluding  production  as  determined
annually by the PCG Legg Mason Financial Advisor compensation schedule.

                                                                Exhibit 4.1
<PAGE>

                      (i) "Fair  Market  Value" shall have the meaning set forth
in Section 4(b)(i) of this Plan.

                      (j)  "Financial  Advisor"  or "FA" means an  employee  who
devotes full time to the generation of commission  and fee revenues  through the
sale of investment  products and services to the public and is  compensated on a
commission  basis.  This definition  excludes any executive  office/departmental
personnel unless specifically  included by separate agreement.  A Branch Manager
who receives some  compensation in addition to commissions  shall be eligible to
participate in the Plan solely on the basis of personal Gross Production.

                      (k) "Gross  Production"  means  gross  commission  and fee
revenues  generated from sales of all products and services in the capacity of a
Financial Advisor of the Company.

                      (l) "Interest Credits" shall have the meaning set forth in
Section 5 of this Plan.

                      (m) "LMI" shall have the meaning set forth in Section 4(b)
of this Plan.

                      (n) "Phantom Stock Account" means a deferred  compensation
account established pursuant to Section 4(b) of this Plan.

                      (o)  "Payment  Date" shall have the  meaning set forth in
Section 4(b)(ii) of this Plan.

                      (p) "Plan Year" means the calendar year.

                      (q)  "Retirement" shall  have the  meaning  set  forth in
Section 9(b) of the Plan.

                      (r)  "Share  Units"  shall have the  meaning  set forth in
Section 4(b) of this Plan.

                  3.  ELIGIBILITY.  All FA's are eligible to  participate in
the  Plan  commencing  on  their  date of  employment  and  remain  eligible  to
participate in the Plan until the calendar year during which their 60th birthday
occurs. For the calendar year during which an FA's 60th birthday occurs and each
subsequent  calendar  year during  which the FA is employed as an FA, the FA may
elect  annually,  on a form  prescribed  by the Company and  attached  hereto as
Exhibit D, whether or not to participate in the Plan,  provided,  however,  that
once an FA elects to not participate in the Plan, the FA shall not thereafter be
eligible to participate in the Plan in any subsequent calendar year. In order to
receive  a  Compensation  Credit  for any  Plan  Year  during  which  the FA was

                                       2

<PAGE>

employed,  the FA must have been  employed for the entire Plan Year, except,
however, that if the employment of an FA terminates during a Plan Year by reason
of the FA's death or  Disability,  the FA shall,  for purposes of receiving  a
Compensation  Credit  for such Plan  Year,  be deemed to have been employed  for
the  entire  Plan  Year  during  which  such  death or  Disability occurred.

                  4.  DEFERRED  COMPENSATION.  As of the end of each  Plan  Year
commencing  with the year 1994,  the Company will defer the payment of, and will
credit or allocate to the Account of each FA who is eligible to  participate  in
the  Plan,  an  amount  determined  by  applying  the rate  schedule  for  Gross
Production  applicable for such year to the FA's Eligible  Gross  Production for
the Plan Year. The FA shall elect  annually on a form  prescribed by the Company
and  attached  as  Exhibit  A hereto  prior to the  beginning  of each Plan Year
whether  such  deferred  compensation  amount  for any such Plan  Year  shall be
allocated  to,  and  accrue in, a Credit  Interest  Account  or a Phantom  Stock
Account,  as set forth  below.  For the 1999 Plan  Year,  each FA shall have the
ability to make a special  election  prior to the end of the 1999 Plan Year,  in
the form attached hereto as Exhibit A (1999),  for the purposes (i) of selecting
whether deferred  compensation for the 1999 Plan Year shall be allocated to, and
accrue  in, a Credit  Interest  Account  or a Phantom  Stock  Account,  and (ii)
described in Section 4(c).

                      (a)  Credit  Interest  Account.  As of the last day of
each Plan Year,  all  deferred  bonus  amounts  allocated  to a Credit  Interest
Account  for prior  Plan Years  shall be  credited  with an amount  equal to one
year's interest based on the Credit Interest Rate; and

                      (b)  Phantom Stock  Account.  As of the last day of each
Plan Year, all deferred  bonus amounts  allocated to a Phantom Stock Account for
prior  Plan Years  shall be deemed  converted  into units that are  economically
equivalent  to, but are not actual,  shares of Legg Mason,  Inc.  ("LMI") Common
Stock (but only to the  extent  not  previously  converted  into Share  Units or
credited  with  Interest  Credits,  except as set forth in Section  4(c) below).
These "phantom" shares of LMI Common Stock are referred to as "Share Units." The
Company will  establish a Phantom Stock Account on its books and records for the
benefit of the FA wherein the Company will credit to such Phantom  Stock Account
Share Units based on the conversion of the compensation deferred by the FA under
this Plan (hereafter the "Compensation  Credit").  Each Compensation Credit will
be made by the Committee as soon as  practicable  after the last day of the Plan
Year during  which the  Compensation  Credit was  deferred.  The number of Share
Units into which such Compensation Credit shall be converted (calculated to four
decimal  places) will be  determined  as of the fifth trading day after the date
the  Compensation  Credit  is  made  and  will be  equal  to the  amount  of the
Compensation  Credit  divided by the fair market  value of a share of LMI Common
Stock, determined as set forth below.

                           (i)   Fair  Market  Value.  Fair  market  value of a
share of LMI Common Stock will equal the five day average of the closing  prices
on the  principal  exchange  on which LMI  Common  Stock is traded  for the four
trading  days  immediately  preceding  the  applicable  valuation  date  and the
valuation date (where the valuation date is the fifth trading day after the date

                                       3

<PAGE>

on which the Phantom Stock Account is credited),  or, if LMI Common Stock is not
then traded on an exchange,  such amount as is  determined  by the Company using
any reasonable method of valuation ("Fair Market Value").

                           (ii) Adjustment to Phantom Stock Account upon
Dividend by LMI. If, prior to the date an FA receives a payment from the Company
pursuant to this Plan (a "Payment  Date"),  LMI pays any dividend (other than in
LMI Common Stock) upon its Common Stock, or makes any  distribution  (other than
in LMI Common Stock) with respect  thereto,  the FA's Phantom Stock Account will
be credited  with  additional  Share Units  equivalent to that number of phantom
shares of LMI Common Stock  determined by dividing the amount of the dividend or
other distribution  allocable to the Share Units already credited to the Phantom
Stock Account as of the record date for the dividend or distribution,  by 95% of
the Fair Market Value of a share of LMI Common  Stock on the fifth  business day
after the payment date for the dividend or distribution.

                          (iii) Adjustment  to Phantom Stock  Account upon
Certain  Events.  In the event  that,  prior to a Payment  Date,  the  number of
outstanding  shares of LMI Common  Stock is changed by reason of a stock  split,
stock dividend,  combination of shares or recapitalization,  or LMI Common Stock
is  converted  into or  exchanged  for  other  shares  as a result  of a merger,
consolidation,  sale of assets or other reorganization or recapitalization,  the
number of Share Units then  credited to an FA's  Phantom  Stock  Account will be
appropriately  adjusted  so as to  reflect  such  change  (based  upon  the best
estimate of the Company as to relative values).

                           (iv)  Rights as LMI  Stockholder.  Nothing  contained
in this Plan shall confer or be construed as conferring upon Employee any rights
as a stockholder  of LMI or any right to have access to the books and records of
LMI or any subsidiary.

                       (c) Elective  Transfer to Phantom  Stock.  Prior to the
conclusion  of Plan Year  1999,  an FA may make a one time  election,  on a form
prescribed by the Company and attached as Exhibit A (1999),  to transfer (i) his
entire  Credit  Interest  Account,  or (ii) that  portion of his  entire  Credit
Interest  Account  representing  Interest  Credits accrued during an entire Plan
Year, to a Phantom Stock Account in accordance with Section 4(b) hereof

                  5.  INTEREST  CREDITS.  In the event that an FA elects to have
his or her Account  accrue income based on the Credit  Interest Rate pursuant to
Section  4(a) of this Plan,  any such  accrued  credits  (hereinafter  "Interest
Credits")  that are  based on the  Credit  Interest  Rate will be  computed  and
compounded  annually and  immediately  prior to distribution to the FA or his or
her beneficiary. Interest Credits shall be distributed to an FA at the same time
as the  deferred  bonus  amount  to which it  relates.  The  aggregate  total of
deferred bonus amounts and Interest Credits accrued thereon shall be referred to
herein as "Interest Units".

                   6. ASSIGNMENT OF BENEFITS.  No amount payable, or other right
or benefit,  under this Plan will, except as otherwise  specifically provided by
this Plan or by  applicable  law,  be  subject  to sale,  assignment,  transfer,
pledge, encumbrance, attachment, garnishment or levy prior to distribution to an

                                       4
<PAGE>

FA. Since this Plan is intended to be a non-qualified, unfunded plan not subject
to the Employment  Retirement Income Security Act of 1974, as amended,  payments
under this Plan will not be subject to the provisions of any qualified  domestic
relations order (as defined under the Internal Revenue Code of 1986, as amended)
applicable to an FA's deferred compensation benefit.

                   7. RIGHT TO OFFSET.  Notwithstanding  any provision herein to
the  contrary,  any  distribution  payable  under this Plan may be used,  at the
discretion of the Committee and subject to compliance  with  applicable  law, to
offset any debt owed by an FA to the Company at the date such distribution would
otherwise be paid.  The Company may withhold  distributions  payable  under this
Plan to offset any debts or other  liabilities owed by an FA to the Company.  If
the Company is aware of any errors, loans outstanding, or outstanding or pending
liabilities  of an FA, the Company may  withhold  distributions  under this Plan
until such time as the  liabilities  are satisfied or the Company has determined
that an outstanding or pending liability no longer exists,

                   8.  UNFUNDED  NATURE OF THE  PLAN.  The  Company  will not be
required to purchase, hold or dispose of any investments with respect to amounts
credited  to the  Account  of any FA  participating  in the  Plan.  An FA has no
interest in the Account or in any investments the Company may purchase with such
amounts, except as a general, unsecured creditor of the Company.

                   The Plan at all times  shall be entirely  unfunded.  The FA's
Account is merely a record for measuring and  determining the amount of deferred
compensation  benefits to be paid by the Company to, or with  respect to, the FA
under  this  Plan,  and  such  Account  shall  be  established  solely  for such
bookkeeping  purposes.  The Company shall not be required to segregate any funds
or other  assets to be used for  payment of benefits  under this Plan.  The FA's
Account  shall not be, or be  considered as evidence of the creation of, a trust
fund, an escrow or any other  segregation of assets for the benefit of the FA or
any beneficiary of the FA. There is no guaranty of benefit payments to the FA.

                   The obligation of the Company to make the payments  described
in the Plan is an unsecured contractual  obligation only, and neither the FA nor
any beneficiary of the FA shall have any beneficial or preferred interest by way
of trust,  escrow, lien or otherwise in and to any specific assets or funds. The
FA and each beneficiary of the FA shall look solely to the general credit of the
Company  for  satisfaction  of any  obligations  due or to become due under this
Plan.

                   Should the  Company  elect to make  contributions  to a trust
(hereinafter  referred  to as the  "Trust")  to assist the Company in paying the
benefits which may accrue  hereunder,  the amounts  contributed shall be used to
purchase the deemed  investments  under Section 4(b),  subject to application of
the  provisions  of  this  Section  8  to  the  actual   investments.   However,
contributions  to the Trust shall not reduce or otherwise  affect the  Company's
liability to pay benefits  under this Plan (which  benefits may be paid from the
Trust or from the Company's  general assets,  in the discretion of the Company),

                                       5
<PAGE>

except that the Company's  liability shall be reduced by actual benefit payments
from the Trust (and the Account shall be appropriately  adjusted to reflect such
payments). If any such investments,  or any contributions to the Trust, are made
by the Company,  such investments shall have been made solely for the purpose of
aiding the Company in meeting its  obligations  under the Plan,  and, except for
actual  contributions  to the Trust, no trust or trust fund is intended.  To the
extent  that the  Company  does,  in its  discretion,  purchase or hold any such
investments (other than through contributions to the Trust), the Company will be
named  sole  owner of all such  investments  and of all  rights  and  privileges
conferred  by the  terms of the  instruments  or  certificates  evidencing  such
investments. Nothing stated herein will cause such investments, or the Trust, to
form part of the Account, or to be treated as anything but the general assets of
the Company,  subject to the claims of its general creditors,  nor will anything
stated  herein cause such  investments,  or the Trust,  to represent the vested,
secured or preferred interest of the FA. The Company shall have the right at any
time to use such investments not held in the Trust in the ordinary course of its
business. Neither the FA nor any of his beneficiaries shall at any time have any
interest  in the  Account or the Trust or in any such  investments,  except as a
general,  unsecured  creditor  of the  Company  to the  extent  of the  deferred
compensation arrangement which is the subject of the Plan.

                   9.  DISTRIBUTIONS.  Except as otherwise  provided in Sections
9(f),  9(g),  9(h) and 10 below,  distributions  of Share Units and/or  Interest
Units in an FA's Account shall be made in accordance  with the FA's  irrevocable
election on a form provided by the Company and attached hereto as Exhibit B (the
"Payment Option Election") to receive distributions under the Plan:

                      (a) as soon as practicable  following the last day, but in
any event not later than sixty (60) days  following  the last day,  of the sixth
Plan  Year  following  the Plan Year for  which  such  amount  was  credited  or
allocated to the Account of the FA; or

                      (b) in the  event  an FA's  employment  with  the  Company
terminates  as a result  of  Retirement,  unless  distribution  of  benefits  is
forfeited  pursuant to Section 10 due to the FA engaging in competition,  either
(i) in a single lump sum as soon as  practicable  following the last day, but in
any event not later  than sixty (60) days  following  the last day,  of the Plan
Year  during  which the FA's  Retirement  occurred  or (ii) in three (3)  annual
installment  distributions  of the  balance of the  Account,  the first of which
shall occur as soon as practicable  following the last day, but in any event not
later than sixty (60) days following the last day, of the Plan year during which
the FA's Retirement occurred; provided, however, that if the balance in the FA's
Account at the time of  Retirement  is less than  $20,000,  the FA may not elect
this  option  (ii).  For  purposes  of this  Plan,  "Retirement"  means  an FA's
termination of employment with the Company provided that such termination occurs
(i) on or after  the FA is age 65;  (ii) on or after the FA is age 55 if the sum
of the FA's age at  termination  of  employment  and his or her years of service
with the  Company  equals  at least 75; or (iii) on or after the FA is age 60 if
the FA has a minimum of ten years of service with the Company.

                      (c) Interest Unit  Distributions.  In  connection  with an
FA's Credit  Interest Account,  the Company will make all distributions in cash.

                                       6

<PAGE>

                      (d) Phantom Stock  Distributions.  In  connection  with an
FA's Phantom Stock Account, the Company will make all distributions in shares of
LMI Common Stock.  There is no limit on the total number of shares of LMI Common
Stock that may be distributed under this Section.

                      (e) Market Risk. When the Company distributes stock, an FA
will be subject to some  market risk if the  trading  price of LMI Common  Stock
declines  during the five day period since Fair Market Value will be measured by
taking into  account  stock prices over a five day period  preceding  the date a
distribution is due. After the date of distribution,  an FA must make his or her
own  decision  as to whether to sell or retain  the shares  received  under this
Section. Any brokerage commissions or other charges incurred in the event the FA
decides to sell such shares will be the sole  responsibility  of the FA, not the
Company.

                      (f)  Termination of Employment.  Except as provided below,
for purposes of determining the amount of any distribution payable to an FA, the
FA shall not be entitled to receive any partial or pro-rated  credit for amounts
allocated  to the FA's Account for Plan Years ending after the date which is six
(6)  years  prior to the date of  termination.  If an FA's  employment  with the
Company terminates for any reason other than death, Disability or Retirement (as
such  terms are  defined  herein),  whether  involuntary  or  voluntary  and for
whatever cause or for no cause,  the FA shall have no right or claim to any such
Share Units or Interest Units,  and such Share Units and Interest Units shall be
forfeited in their entirety.  Forfeited  amounts shall revert to the Company and
will not be allocated to other FA's.  In the event any FA desires a ruling as to
the  potential  application  of this  Section,  he may request a ruling from the
Committee in accordance with Section 15.

                      (g) Death of FA.

                          (i)   In the event an FA's employment  with the
Company  terminates as a result of the FA's death,  all Share Units and Interest
Units in his Account  shall be paid, in accordance with the FA's Payment Option
Election, to the FA's estate or to the FA's  beneficiary  (if the FA has named a
beneficiary  as  described  in Section 12) as soon as practicable  following the
last day, but in any event not later than sixty (60) days  following the last
day of the Plan Year during which the FA's death occurred.

                          (ii)  In the  event  of an  FA's  death  subsequent
to the  date  of the  FA's Retirement  and at a time during which the FA is
receiving  distributions  under the Plan,  all Share Units and Interest Units
then remaining in the FA's Account shall be paid,  notwithstanding the FA's
Payment Option Election, in a lump sum, to the FA's estate or to the FA's
beneficiary (if the FA has named a beneficiary as described in Section 12) as
soon as  practicable  following the date of death of the FA.

                      (h) Disability of FA. In the event an FA's employment with
the Company  terminates as a result of the FA's Disability,  all Share Units and
Interest Units in his Account shall be paid, in accordance with the FA's Payment
Option Election, as soon as practicable following the last day, but in any event
not later than sixty (60) days following the last day, of the

                                       7

<PAGE>

Plan Year during which the FA's Disability occurred.  For purposes of this Plan,
"Disability" shall mean a medically  determinable  physical or mental impairment
which,  as determined by the Committee  using such criteria as it establishes in
its sole and absolute discretion,  will prevent the FA from performing his usual
duties or any other similar duties available in the Company's employ.

                   10. NON-COMPETE.  If a Retired FA engages in competition with
the  Company  prior to the date of a  distribution,  the FA's  Account  shall be
forfeited in its  entirety.  Forfeited  amounts  shall revert to the Company and
will not be allocated to other FAs.

                       (a) For  purpose  of  this  Section,  an FA  shall  be
deemed  to have  "engaged  in competition" with the Company if he or she:

                           (i)  discloses  the names of or otherwise  identifies
any of the Company's customers to any person, firm, corporation, association, or
other entity for any reason or purpose whatsoever;

                           (ii)  discloses  to any  person,  firm,  corporation,
association,  or other entity any  information  regarding the Company's  general
business practices or procedures,  methods of sale, list of products,  personnel
information or any other information concerning the Company's business;

                           (iii) owns, manages, operates,  controls, is employed
by, acts as an agent for, participates in or is connected in any manner with the
ownership,   management,   operation  or  control  of  any  firm,   corporation,
association  or other entity which is engaged in businesses  which are or may be
competitive  to  the  business  of  the  Company;  provided  further  that  this
restrictive  covenant shall encompass the State of Maryland and any other states
where the  Company is engaged in  business,  and every city,  county,  and other
political subdivision of such states; or

                           (iv)  solicits or calls,  either by himself or at his
direction has any other person or firm solicit or call,  any of the customers of
the  Company on whom the FA called,  with whom the FA became  acquainted,  or of
whom the FA learned of during his employment by the Company.

                       (b) It is the  intention of the Company that this Section
be given the broadest  protection allowed by law with regard to the restrictions
herein contained.  Each restriction set forth in this Section shall be construed
as a condition  separate and apart from any other  restriction or condition.  To
the extent that any  restriction  contained in this Section is determined by any
court of  competent  jurisdiction  to be  unenforceable  by  reason  of it being
extended  for too  great a  period  of  time,  or as  encompassing  too  large a
geographic  area, or over too great a range of activity,  or any  combination of
these elements,  then such  restriction-shall be interpreted to extend only over
the maximum period of time,  geographic  area, and range of activities which the
court deems reasonable and enforceable.

                                       8

<PAGE>

                       (c) In  the  event  any FA  desires  a  ruling  as to the
potential  application  of this  Section,  he may  request  a  ruling  from  the
Committee in accordance with Section 15.

                       (d) If the Committee in its discretion determines that an
activity  otherwise  described herein would not be injurious to the Company,  it
may waive the  application of this Section to such activity,  which waiver shall
be  binding  upon  the FA and the  Company.  The  Company  shall  exercise  such
discretion in a uniform, nondiscriminatory manner.

                   11. REPORTS. After the close of each Plan Year, the Committee
shall provide reports to the FA (or, in the event of the FA's death, to the FA's
beneficiary)  showing the status of the FA's  Accounts as of the end of the Plan
Year.

                   12. BENEFICIARY. The FA may designate, upon the form attached
as  Exhibit C hereto  and to be filed with the  Committee,  one or more  primary
beneficiaries  or  contingent  beneficiaries  under the Plan to receive all or a
specified  part of any deferred  compensation  benefits which at the time of the
FA's death remain  unpaid  under this Plan.  An FA may change or revoke any such
designation from time to time. No such  designation,  change or revocation shall
be effective  unless executed by the FA and received by the Committee during the
FA's lifetime.  Each such designation,  change or revocation shall be applicable
to all balances in the FA's  Account,  specifically  including  all such amounts
subsequently  credited,  and any such  beneficiary  designation  under  the Plan
presently on file with the  Committee  shall be effective  under this Plan until
changed or revoked in the manner specified  herein. No such change or revocation
shall require the consent of any beneficiary  theretofore  designated by the FA.
If the FA fails  to  designate  a  beneficiary,  or  subsequent  facts  render a
designation  invalid or  inoperative,  then the  benefits  shall be payable to a
personal  representative  of the  FA's  estate.  Unless  the  FA  has  otherwise
specified in the  beneficiary  designation,  the  beneficiary  or  beneficiaries
designated  by the FA  shall  become  fixed  as of the  FA's  death so that if a
beneficiary survives the FA but dies before the receipt of all payments due such
beneficiary such remaining  payments shall be payable to the  representative  of
such  beneficiary's  estate.  In the  event  of the  death  of an FA who  has an
undistributed  balance in his or her Account,  then the FA's Beneficiary will be
entitled  to receive  the  balance of the  Account in  accordance  with the FA's
Payment Option Election.

                   13. WITHHOLDING  TAXES.  Amounts payable under the Plan shall
be subject to such  deductions or  withholding as may be required by law. In the
event a deduction or withholding is required prior to  distribution  of benefits
hereunder,  the Company shall have the right to deduct any required  withholding
from any other  compensation or amount  otherwise  payable by the Company to the
FA.

                   14. EFFECT ON EMPLOYMENT  RIGHTS AND OTHER BENEFIT  PROGRAMS.
Neither participation in nor any of the provisions of the Plan shall give the FA
any right to be retained in the  employment of the Company.  This Plan shall not
be  construed   as  a  contract  of   employment.   The  Company   maintains  an

                                       9

<PAGE>

employment-at-will  policy.  As an FA is free to end his or her employment  with
the Company at any time for any reason or no reason,  the Company is free to end
the employment with an FA at any time for any reason or no reason.  Furthermore,
the Company may end at any time an FA's  employment as a Financial  Advisor.  In
the event an FA is no longer  employed  as a Financial  Advisor,  the FA will no
longer be entitled to defer compensation pursuant to this Agreement. However, as
long as an FA continues to be employed in good  standing by the Company,  the FA
shall  continue to be entitled to the benefits due the FA under this  Agreement.
This Plan is in addition to, and not in lieu of, any other employee benefit plan
or program in which the FA may be or become eligible to participate by reason of
employment  with the  Company,  and the timing of receipt of benefits  hereunder
shall have no effect on  contributions  to or benefits under such other plans or
programs  except as the  provisions  hereof and of each such plan or program may
specify.

                   15. ADMINISTRATION.  The Committee,  as constituted from time
to time, shall have full power to interpret,  construe and administer this Plan,
including authority to determine any dispute or claim with respect thereto.  The
determination  of the Committee in any matter  within the powers and  discretion
granted  to it  under  this  Plan,  made in good  faith,  shall be  binding  and
conclusive  upon the Company,  the FA and all other persons  having any right or
benefit  hereunder.  If the FA is a member of the Committee at any time,  the FA
shall have no authority  as such member with respect to any matter  specifically
affecting the FA's interest hereunder (such as determination of the amount, form
or time of benefit payments to the FA), all such authority being reserved to the
other Committee  members,  to the exclusion of the FA, and the FA shall act only
in his or her individual capacity in connection with any such matter.

                   16.  ARBITRATION  FA agrees that any  controversy  or dispute
arising  under this Plan which  cannot be resolved by the  Committee,  or out of
FA's  employment by the Company  (including,  but not limited to, claims arising
under the  Civil  Rights  Act of 1964,  the Civil  Rights  Act of 1991,  the Age
Discrimination  in Employment Act of 1967, and analogous state statutes),  shall
be submitted for arbitration  upon demand of either party in accordance with the
rules of the National  Association of Securities  Dealers,  Inc. or the New York
Stock Exchange,  Inc.,  provided,  however,  that in the event of termination of
FA's  employment,  the Company  shall be entitled to seek  injunctive  relief or
confess  judgment  against  FA  pursuant  to the terms of any  other  applicable
agreement  and that the  Company  shall be entitled to apply for and obtain from
any state or federal court such relief before or after the  commencement  of any
arbitration  proceeding,  such relief to be afforded to the Company  pending the
decision of the arbitrators.

                   17.  CONTROLLING  LAW. This Plan shall be construed,  and the
legal relations  between the parties in connection with any dispute  relating to
the Plan  shall  be  determined,  in  accordance  with the laws of the  State of
Maryland.

                   18. AMENDMENT OR TERMINATION.  The Company reserves the right
to amend or terminate the Plan at any time.  Any such  amendment or  termination
shall be by action of the Board of  Directors  of the  Company or the  Executive
Committee thereof.

                                       10

<PAGE>

                   19.  EFFECT OF  AMENDMENT  OR  TERMINATION.  No  amendment or
termination of the Plan shall directly or indirectly affect the rights of any FA
(or the FA's designated beneficiary) to payment of the amount in his Account, to
the extent that such amount was payable under the terms of the Plan prior to the
effective date of such amendment or termination.

                                       11

<PAGE>
                                EXHIBIT A (1999)

                  PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                  Special Compensation Deferral Election

                  FOR PLAN YEAR 1999 ELECTION ONLY

     I. Pursuant to the Plan, I agree to the following method of deferral of
amounts that would otherwise be payable to me as current  compensation  for Plan
Year 1999 (specify percentages below):

                  (a)      Credit Interest                ---------------%

                                or

                  (b)      "Phantom" Share Units of Legg
                           Mason, Inc. Common Stock       ---------------%
                                                                      100%
                                                          ================

     II. I hereby make a one-time  election  to  transfer my entire  account
balance under the Plan from the Credit Interest option to the Phantom Share Unit
option for any one or more of the following Plan Years checked below:

           Plan Year 1994            Plan Year 1995             Plan Year 1996
           Plan Year 1997            Plan Year 1998

        Having read and understood  the Plan and  prospectus  provided to me by
the Company, I understand and agree that:

         1.       My deferrals will be made from  compensation  payable to me in
                  the Plan  Year  1999 and all  subsequent  Plan  Years  until I
                  submit to the Company a new Compensation  Deferral Election in
                  accordance with the terms of the Plan and which is received by
                  the Company  prior to the first day of the Plan Year for which
                  it is to be effective.

         2.       Elections may not be changed or revoked except at the end of a
                  Plan  Year.  Any  such  change  or  revocation  shall  only be
                  effective for subsequent Plan Years.

         3.       Any deferral is subject to all of the terms and  conditions of
                  the Plan, including  particularly that: (i) compensation which
                  I defer is not invested directly in common stock (therefore, I
                  have no rights as a stockholder by virtue of this Plan),  (ii)
                  Phantom  Share Units may not be  converted  to an  alternative

<PAGE>

                  investment  mode  except as written in the Plan,  and (iii) my
                  only claim in the event of financial difficulty of the Company
                  is as an unsecured general creditor for the benefits due to me
                  under the Plan.

                                       Financial Advisor:

                                       ---------------------------------------
                                       Signature                          Date

                                       ----------------------------------------
                                       Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:__________________________________________
     Signature

                                       2
<PAGE>

                                    EXHIBIT A
                                   -----------

                  PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                  Compensation Deferral Election

                  Pursuant  to the  Plan,  I agree to the  following  method  of
deferral  of  amounts  that  would   otherwise  be  payable  to  me  as  current
compensation for Plan Year __________ (specify percentages below):

                           (i) Credit Interest                ---------------%

                                    or

                           (ii) "Phantom" Share Units of Legg
                                Mason, Inc. Common Stock      ---------------%
                                                                          100%
                                                              ================

                  Having read and understood the Plan and prospectus provided to
me by the Company, I understand and agree that:

         1.       My deferrals will be made from  compensation  payable to me in
                  the Plan Year specified  above and all  subsequent  Plan Years
                  until I submit  to the  Company  a new  Compensation  Deferral
                  Election in accordance with the terms of the Plan and which is
                  received  by the  Company  prior to the  first day of the Plan
                  Year for which it is to be effective.

         2.       Elections may not be changed or revoked except at the end of a
                  Plan  Year.  Any  such  change  or  revocation  shall  only be
                  effective for subsequent Plan Years.

<PAGE>

         3.       Any deferral is subject to all of the terms and  conditions of
                  the Plan, including  particularly that: (i) compensation which
                  I defer is not invested directly in common stock (therefore, I
                  have no rights as a stockholder by virtue of this Plan),  (ii)
                  Phantom  Share Units may not be  converted  to an  alternative
                  investment  mode  except as written in the Plan,  and (iii) my
                  only claim in the event of financial difficulty of the Company
                  is as an unsecured general creditor for the benefits due to me
                  under the Plan.

                                      Financial Advisor:

                                      ----------------------------------------
                                      Signature                           Date

                                      ----------------------------------------
                                      Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:__________________________________________
     Signature

                                       2

<PAGE>

                                    EXHIBIT B
                                    ---------

                 PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

Payment Option Election

I hereby elect to receive Share Units and Interest Units in my Account under the
Plan in the following manner: (check one)

             a.     ______ as soon as practicable following the last day, but in
                    any event not later than sixty (60) days  following the last
                    day,  of the  sixth  Plan Year  following  the Plan Year for
                    which such amounts were credited or allocated to my Account.

             b.     ______ in a lump sum as soon as  practicable  following  the
                    last day,  but in any event not later  than  sixty (60) days
                    following  the  last  day,  of the  Plan  Year in  which  my
                    employment  with  Legg  terminates  as a result of my death,
                    "Disability" or "Retirement," as defined in the Plan.

             c.     _____ in three  annual  installments  with the first of such
                    installments  occurring as soon as practicable following the
                    last day,  but in any event not later  than  sixty (60) days
                    following  the  last  day,  of the  Plan  Year in  which  my
                    employment  with  Legg  terminates  as a result of my death,
                    "Disability" or "Retirement," as defined in the Plan.

I understand  that if I elect to receive  distributions  in  installments,  each
installment  will be  determined  by dividing the then value of the amount to be
distributed by the number of  installments  remaining to be paid  (including the
installment  then  due).  If the amount of the total  distribution  is less than
$20,000.00, I understand installment option c. above will not be available and I
will receive a single lump sum payment.  I understand that if I elect options a.
or c. above and am receiving  installments as a result of my "Retirement,"  then
if I die before receiving all amounts to which I am entitled under the Plan, the

<PAGE>

balance in my Account at the time of my death will be  distributed  to my estate
or beneficiary in a lump sum as soon as practicable after my death.

                                 Financial Advisor:

                                 ------------------------------------------
                                 Signature                             Date

                                 ------------------------------------------
                                 Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:_________________________________________
     Signature

<PAGE>

                                    EXHIBIT C
                                    ---------

                 PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

Designation of Beneficiary(ies)

By virtue of my right under the Agreement to designate the  beneficiary(ies)  of
any death  benefits  payable  under the  Agreement,  and  subject  to any future
exercise  of said  right  by me,  I hereby  direct  that any and all such  death
benefits shall be paid, in accordance  with the terms of the  Agreement,  to the
person(s)  named  below who are  living at the time of each such  payment,  and,
unless otherwise  expressly  indicated,  in equal shares among them if more than
one such person shall be living at the time of each such payment:

         PRIMARY BENEFICIARY(IES)

         ------------------------------------------------------------------
         Name/Relationship                                    Address

         ------------------------------------------------------------------
         Name/Relationship                                    Address

         ------------------------------------------------------------------
         Name/Relationship                                    Address

In the  event  that no  primary  beneficiary  shall be living at the time of any
death benefit payment,  I hereby direct that such remaining  payment(s) shall be
made to those  person(s)  named  below  who are  living at the time of each such
remaining payment,  and, unless otherwise expressly  indicated,  in equal shares
among them if more than one such person shall be living at the time of each such
remaining payment:

         CONTINGENT BENEFICIARY(IES)

         ------------------------------------------------------------------
         Name/Relationship                                    Address

         ------------------------------------------------------------------
         Name/Relationship                                    Address

         ------------------------------------------------------------------
         Name/Relationship                                    Address

<PAGE>

Private Client Group Deferred Compensation Plan
Designation of Beneficiary(ies)
Page Two

In the further event that none of the persons named above,  either as primary or
contingent  beneficiary(ies),  shall be living at the time of any death  benefit
payment,  all remaining  payment(s)  shall be made to my estate  pursuant to the
Agreement.

NOTE:    If so specified in the above designations, "person" includes a trust or
         corporation.

            Financial Advisor:        _________________________________________
                                      Signature                           Date

                                      -----------------------------------------
                                                  Print full name

                                      -----------------------------------------
                                                      Witness

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED

By:_________________________________________
                                       Date

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