Document:

Exhibit 10.232

                U.S. TRUST CORPORATION EMPLOYEES' RETIREMENT PLAN

                              Amended and Restated
                            Effective January 1, 2001

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1         HISTORY AND PURPOSE OF PLAN.................................1

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

ARTICLE 3         MEMBERSHIP..................................................8

   3.1        Commencement of Membership......................................8
   3.2        Termination of Membership.......................................9
   3.3        Resumption of Membership after Severance Date...................9

ARTICLE 4         CREDITED SERVICE............................................9

   4.1        Service Credited as of December 31, 1975........................9
   4.2        Service Credited after December 31, 1975........................9
   4.3        Effect of Breaks in Service on Credited Service.................9
   4.4        Veterans' Rights...............................................10

ARTICLE 5         VESTING....................................................10

   5.1        Eligibility for Vested Deferred Pension........................10
   5.2        Amount and Payment of Vested Deferred Pension..................10
   5.3        Effect of Breaks in Service after December 31, 1975............11
   5.4        Restoration to Service of Vested Member........................11
   5.5        Separation of Members Without Vested Rights....................12
   5.6        Death of Vested Member.........................................12

ARTICLE 6         RETIREMENT.................................................12

   6.1        Normal Retirement..............................................12
   6.2        Early Retirement...............................................12
   6.3        Postponed Retirement...........................................13
   6.4        Disability Retirement..........................................13
   6.5        Nonforfeitability of Pensions..................................13
   6.6        Restoration to Employment......................................13

ARTICLE 7         RETIREMENT PENSIONS........................................13

   7.1        Normal Retirement Pension......................................13
   7.2        Early Retirement Pension.......................................14
   7.3        Postponed Retirement Pension...................................15
   7.4        Disability Retirement Pension..................................15
   7.5        Restoration of Retired Members to Employment...................15
   7.6        Payment of Pensions............................................15
   7.7        Maximum Pension Limitations....................................16
   7.8        Post-Retirement Increase of Benefits of Members
              Retiring before January 1, 1976................................18
   7.9        Supplemental Benefit for Certain Retired Members...............18
   7.10       Benefit Enhancement for Certain Employees......................20

ARTICLE 8         SURVIVORSHIP AND OPTIONAL PENSIONS.........................22

   8.1        Form of Payment of Pensions....................................22
   8.2        Election of Form of Payment of Pension.........................22
   8.3        Notice to Members of Election of a Form of Payment
              of Pension.....................................................22
   8.4        Optional Forms of Pensions.....................................23
   8.5        Death of Member's Spouse or Beneficiary........................24
   8.6        Level Income Option............................................24
   8.7        Spouse's Preretirement Survivorship Pension....................25
   8.8        Distribution requirements......................................26
   8.9        Early Distributions............................................26
   8.10       Direct Rollovers...............................................27

ARTICLE 9         CERTAIN RIGHTS AND LIMITATIONS.............................27

   9.1        Benefits Payable Solely from Trust Fund........................27
   9.2        Prohibition against Alienation of Benefits.....................27
   9.3        Incompetency...................................................28
   9.4        No Right to Continued Employment...............................28
   9.5        Payment of Taxes...............................................28
   9.6        Merger or Consolidations with Other Plans......................28
   9.7        Purchase of Annuities..........................................29
   9.8        Periods of Liquidity Shortfall.................................29

ARTICLE 10        CONTRIBUTIONS..............................................29

   10.1       Manner of Funding..............................................29
   10.2       Nature of Obligation...........................................30
   10.3       Minimum Funding Standard.......................................30
   10.4       Effect of Forfeitures..........................................30
   10.5       Non-Diversion..................................................30

ARTICLE 11        ADMINISTRATION OF THE PLAN.................................30

   11.1       Appointment of the Committee...................................30
   11.2       Duties and Powers of Committee.................................31
   11.3       Appointment of Investment Committee............................31
   11.4       Conduct of Affairs of Investment Committee.....................31
   11.5       Duties and Powers of Investment Committee......................31
   11.6       Reports to Company.............................................31
   11.7       Conduct of Affairs of Committee................................32
   11.8       Actuarial Valuations...........................................32
   11.9       Appointment of the Plan Administrator..........................32
   11.10      Duties and Powers of the Plan Administrator....................32
   11.11      Delegation of Responsibilities by the Plan Administrator.......33
   11.12      Conduct of Affairs of the Plan Administrator...................34
   11.13      Expenses and Liability.........................................34
   11.14      Indemnification of Committee and Investment Committee
              Members and Persons Serving as Plan Administrator..............36
   11.15      Claims Procedure...............................................36

ARTICLE 12        MANAGEMENT OF THE TRUST FUND...............................37

   12.1       The Trustee....................................................37
   12.2       The Trust Agreement............................................37
   12.3       Compensation and Expenses......................................37

ARTICLE 13        AMENDMENT AND TERMINATION..................................37

   13.1       Amendment of Plan and Trust....................................37
   13.2       Termination of Plan............................................38
   13.3       Special Limitation for Highly Compensated Employees............39

ARTICLE 14        OTHER PARTICIPATING COMPANIES..............................40

   14.1       Additional Participating Companies.............................40
   14.2       Withdrawal of Participating Company............................40
   14.3       Successor Companies............................................41

ARTICLE 15        TOP HEAVY PROVISIONS.......................................41

   15.1       Top Heavy Plan Requirements....................................41
   15.2       Determination of Top Heavy Status..............................41
   15.3       Minimum Vesting Requirement....................................43
   15.4       Minimum Benefit Requirement....................................43
   15.5       Limitation on Compensation and Section 415 Compensation........44
   15.6       Other Definitions..............................................44
   15.7       Applicability..................................................45

ARTICLE 16        CONSTRUCTION...............................................45

   16.1       Plan Intended to Qualify.......................................45
   16.2       Governing Law..................................................45
   16.3       Words and Headings.............................................45

<PAGE>

                U.S. TRUST CORPORATION EMPLOYEES' RETIREMENT PLAN

                                   ARTICLE 1
                           HISTORY AND PURPOSE OF PLAN

   This Plan is intended to provide  retirement  benefits to  employees  of U.S.
Trust Corporation and any affiliated company which chooses to participate in the
Plan upon their being retired after rendering productive and faithful service.

   A retirement  program was initially adopted on June 2, 1939,  effective as of
the same date, and was amended and formally adopted by the Board of Directors of
the  United  States  Trust  Company of New York on August  23,  1945,  effective
January 1, 1945.  Under the  Eighteenth  Amendment and  Restatement of the Plan,
adopted on November 22, 1997,  the name of the Plan was formally  changed to the
Employees'  Retirement  Plan of  United  States  Trust  Company  of New York and
Affiliated Companies.

   The Plan was most  recently  amended  and  restated  on  December  30,  1999,
effective  January 1, 1997.  The Plan is hereby  amended and restated  effective
January 1, 2001,  unless otherwise  provided herein, to (a) reflect the transfer
of the Plan  sponsorship  from United  States Trust  Company of New York to U.S.
Trust  Corporation,  (b) formally change the name of the Plan to the "U.S. Trust
Corporation  Employees'  Retirement  Plan," (c) reflect the merger of U.S. Trust
Corporation  with  Charles  Schwab  (as  hereinafter  defined),  (d)  limit  the
eligibility  for benefits under the formula in effect as of December 31, 2001 to
individuals who become  Employees of a  Participating  Company on or before such
date,  (e) embody  operational  changes  adopted to comply with  recent  changes
required by law, and (e) make certain other changes to the Plan.

   The rights of any  person  who  terminated  employment  or who  retired on or
before the effective date of a particular  amendment,  including his 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 his termination of employment or retirement, unless such person is thereafter
reemployed and again becomes a Member.

                                   ARTICLE 2
                                   DEFINITIONS

   As used in this Plan, the following  terms shall have the meanings  described
in this Article 2:

   2.1 "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 7.7 with respect to
the  limitations  on  benefits,  section  415(h)  of the  Code  shall  apply  in
conjunction with the preceding sentence.

   2.2 "Average Final Compensation"  means the average  Compensation of a Member
for  those  five  consecutive  Plan  Years,  falling  within  the  period of ten
consecutive  Plan Years which ends with the Plan Year in which he separates from
service  under  Article 5 or retires under Article 6, that result in the highest
such  average.  If the  number  of Plan  Years  during  which a Member  received
Compensation  is  less  than  five  Plan  Years,   the  Member's  Average  Final
Compensation  shall be his average  Compensation for all Plan Years during which
he received Compensation.

   2.3 "Beneficiary" means any person who will receive any benefits which become
payable  under  the Plan  upon the  Member's  death in the case of a Member  who
elects to have his Pension paid under Option 2 of Section 8.4.

   2.4 "Board of Directors" means the Board of Directors of the Company and such
committees thereof as it may from time to time appoint to act on its behalf with
respect to the Plan.

   2.5 "Break in Service" means any Computation  Period during which an Employee
is credited with not more than 500 Hours of Service.

   2.6 "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 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.

   2.7 "Code" means the Internal  Revenue Code of 1986,  as amended from time to
time.

   2.8 "Committee" means the administrative  committee appointed by the Board of
Directors to have the powers, and to carry out the duties and  responsibilities,
set forth in Section 11.2.

   2.9 "Company" means U.S. Trust Corporation, and any corporation succeeding to
its rights and assuming its obligations hereunder as provided in Section 14.3.

   2.10  "Compensation"  for a Plan  Year  means  the  annual  rate of base pay,
including  a  shift  differential,  that  the  Employee  was  receiving  from  a
Participating  Company,  for personal services rendered,  as of the final day of
such Plan Year,  except that for the Plan Year in which the  Employee  separates
from service under Article 5 or retires  under Article 6,  "Compensation"  shall
mean  the  annual  rate of base  pay  that the  Employee  was  receiving  from a
Participating Company, for personal services rendered, as of the day immediately
preceding  the  date  on  which  he  so  separated   from  service  or  retired.
Compensation  shall be determined before reduction for any contributions made on
behalf of the Employee in accordance with the Employee's  election pursuant to a
cash or deferred  arrangement  qualified under section 401(k) of the Code, or in
accordance  with the  Employee's  election  relating  to the payment of medical,
dental,  or dependant  care coverage  pursuant to a cafeteria  plan described in
section 125 of the Code, or in accordance with the Employee's  election relating
to amounts that are not includable in the gross income of the Employee by reason
of Code Section 132(f)(4),  and before reduction for any deductions for taxes or
other items withheld.  Compensation  shall not include any overtime pay, bonuses
or special pay, but shall include shift differentials,  except that for purposes
of determining Average Final Compensation,  the definition of Compensation for a
prior Plan Year shall include a shift  differential  only if the Participant was
entitled to a shift differential on the last day of such Plan Year.

   Notwithstanding  the above,  in the case of an  Employee  who has  incurred a
Total  Disability,  for Plan  Years  ending  after the date on which  such Total
Disability arose (the "Total Disability  Date"),  the Employee's  "Compensation"
shall  be his  Compensation,  as  determined  above,  as of the day  immediately
preceding his Total Disability Date.

   For each Plan Year, the amount of  Compensation  taken into account under the
Plan for any Employee  shall not exceed the limitation on such amount imposed by
section  401(a)(17) of the Code in effect for such Plan Year  ($170,000 for 2001
and effective for Plan Years beginning on or after January 1, 2002, $200,000, as
adjusted for increases in the  cost-of-living  in  accordance  with Code Section
401(a)(17)(B) as in effect for the applicable Plan Year).

   Notwithstanding  the above,  effective for Plan Years  beginning on and after
January 1,  1994,  the  section  401(a)(17)  limitation  shall not be applied to
reduce the amount of the Pension  payable  under the Plan to a Member  below the
amount  equal to the sum of (a) the amount of the Pension  that would be payable
to such  Member  under the Plan as of  December  31,  1993,  computed as if such
Member had separated from service under Article 5 or retired under Article 6, as
applicable,  on December  31, 1993 and (b) the amount of the Pension  payable to
such Member  computed under Article 5 or Article 7, as  applicable,  taking into
account only Compensation  received,  and Years of Service and units of Credited
Service  earned,  for Plan Years  beginning  on and after  January  1, 1994.  In
applying the preceding  sentence,  the amount in clause (a) thereof shall not be
less than the amount of the  Pension  that would be payable to the Member  under
the Plan as of  December  31,  1988,  computed  without  regard  to the  section
401(a)(17) limitation, and computed as if such Member had separated from service
under Article 5 or retired under Article 6, as applicable, on December 31, 1988.

   2.11  "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 after  incurring a Severance  Date,  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.

   2.12  "Covered  Compensation"  means,  for any Member in any Plan  Year,  the
average of the Taxable  Wage Bases (as  hereinafter  defined) in effect for each
calendar year during the 35 year period ending with the last day of the calendar
year in which the Member attains or will attain his Social  Security  Retirement
Age. In determining a Member's Covered Compensation for a Plan Year, the Taxable
Wage Base for such Plan Year and any subsequent  Plan Year shall be equal to the
Taxable  Wage Base in effect at the  beginning  of such Plan  Year.  A  Member's
Covered Compensation for a Plan Year after the 35 year period described above is
the  Covered  Compensation  for the Plan Year in which the Member  attained  his
Social  Security  Retirement  Age.  A  Member's  Covered  Compensation  shall be
redetermined  each Plan Year, as described  above,  to reflect any change in the
Taxable Wage Base. For purposes of this  definition,  the Taxable Wage Base in a
given  calendar  year  is  the  maximum  amount  of  compensation  which  may be
considered wages for such year under section 3121(a)(1) of the Code.

   2.13 "Credited Service" means that period of employment for which a Member is
entitled to receive  units of credit under the Plan as provided in Article 4 for
the purpose of computing the Member's accrued benefits under the Plan.

   2.14  "Earliest  Payment  Date" means the first date as of which a Member who
has  separated  from service  under Article 5 or who has retired under Article 6
may elect to have the payment of his Pension commence under the Plan.

   2.15 "Effective  Date" of the Plan means January 1, 1945. The Plan as amended
and  restated  herein is  effective  as of January 1, 1997,  except as otherwise
provided herein.

   2.16  "Employee"  means any person who is employed by an Affiliated  Company;
provided,  however,  that the term Employee  shall not include any person who is
treated as a "leased employee" of any Affiliated Company under section 414(n)(2)
of the Code.

   2.17 "Equivalent Actuarial Value" means, except as otherwise specified below,
equivalent value determined on the basis of the conversion  factors contained in
Appendix A attached hereto.

   For  purposes of Sections  5.4,  7.3,  7.5 and 8.7(c),  the term  "Equivalent
Actuarial Value" means equivalent value determined on the basis of the following
assumptions, and for purposes of Section 15.2(e) the actuarial assumptions to be
utilized  in  computing  the  Present  Value of  Accrued  Benefits  shall be the
following:  (1) life expectancy  based on the UP-84 mortality  table; and (2) an
interest rate of seven percent (7%) per year.

   For purposes of Section 7.7(c),  the term "Equivalent  Actuarial Value" means
equivalent value determined on the basis of the following assumptions:  (a) life
expectancy based on the mortality table described in section  415(b)(2)(E)(v) of
the Code;  and (b) an interest rate of five percent (5%) per year in the case of
any adjustment of a benefit, or the limitation of any form of benefit,  which is
a non-decreasing  annuity, or the "applicable  interest rate", as defined below,
in any other case.

   For  purposes  of  Sections  7.6 and 8.7(d)  and,  to the extent  applicable,
Section  8.6,  and for  valuing  the  lump  sum  payment  described  in  Section
7.10(a)(3),   the  term  Equivalent   Actuarial  Value  means  equivalent  value
determined on the basis of the following assumptions:  (i) life expectancy based
on the mortality table described in section 417(e)(3)(A)(ii)(I) of the Code; and
(ii) the  "applicable  interest  rate".  For purposes of this Section 2.17,  the
"applicable  interest  rate"  shall  mean the  interest  rate  specified  by the
Internal Revenue Service under section  417(e)(3)(A)(ii)(II) of the Code for the
month of August preceding the Plan Year in which the Equivalent  Actuarial Value
in question is being determined.

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

   2.19  "Executive/Policy-Making  Member"  means any Member who (a) for the two
year period  immediately  preceding his Normal Retirement Date has been employed
in a bona fide executive or high policy-making  position and (b) is entitled, as
of his Normal  Retirement Date, to immediate  nonforfeitable  annual  retirement
benefits  aggregating  at least  $44,000 (or such other dollar  amount as may be
prescribed by law) from the Plan, the U.S. Trust Corporation 401(k) Plan and any
other deferred  compensation plan of a Participating Company (other than amounts
attributable to his voluntary contributions).

   2.20 "Former  Member" means a person who at the time he ceased to be a Member
was entitled to a Pension under Article 5 or Article 6.

   2.21 "Hour of Service",  with respect to any Computation Period or Plan Year,
as the case may be, 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, as the same may be amended from time
   to time.

      (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  Plan
   Administrator.  In  the  case  of any  Employee  who  has  incurred  a  Total
   Disability, the Employee shall be credited, for the period during which he is
   Totally  Disabled,  with the number of Hours of  Service  with which he would
   normally  have been  credited  during such period  under the Plan but for his
   absence from active employment due to such Total Disability, as determined by
   the Plan Administrator.  It is provided, however, that the Employee shall not
   be credited with any Hours of Service under the preceding  sentence which are
   otherwise credited to such Employee under subsection (b) above for the period
   during which he is Totally Disabled.

      (f)  Notwithstanding  the foregoing,  for the purposes of determining  the
   number of Hours of Service  with which the  Employee is to be credited in any
   Computation Period or Plan Year, as applicable, an Employee shall be credited
   with a number of Hours of Service  computed  (i) for purposes of Section 3.1,
   by crediting  the Employee  with 190 Hours of Service for each month in which
   he would be required to be credited with an Hour of Service under subsections
   (a) through (e) above, and (ii) for all other purposes,  by dividing by seven
   the number of days in such  Computation  Period or Plan Year, as  applicable,
   for which the Employee would  otherwise be credited with at least one Hour of
   Service under subsections (a) through (e) above and multiplying the result by
   45.

   2.22 "Investment  Committee" means the Retirement and 401(k)/ESOP  Investment
Committee appointed under Section 11.3.

   2.23 "Joint and Survivor  Pension" means a Pension payable to a Former Member
during his lifetime, with a survivorship Pension payable after the death of such
Former  Member to his spouse on his Pension  Starting  Date who survives him for
such spouse's life  (regardless of such spouse's  remarriage after his death) in
the amount of 50% of the Pension paid to the Former Member prior to his death.

   2.24  "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.

   2.25  "Member"  means  any  person  included  in the  membership  of the Plan
pursuant to Article 3.

   2.26 "Normal  Retirement  Date" means,  for any Member,  the first day of the
calendar month  coinciding  with or  immediately  following the later of (a) the
65th anniversary of his birth or (b) the fifth  anniversary of the date on which
he became a Member.

   2.27  "Participating  Company"  means the  Company  and any other  Affiliated
Company  participating  in this Plan  pursuant  to Article 14 until such time as
such  Affiliated  Company  ceases to participate in the Plan pursuant to Article
14.  Appendix B provides a list of  Participating  Companies as of the date this
amended and restated Plan is executed.

   2.28  "Pension"  and  "Normal  Retirement   Pension"  means  a  level  annual
retirement  income payable under this Plan in monthly  installments  to a Former
Member,  or his spouse,  only during the  lifetime of the same,  with no minimum
number of monthly payments guaranteed.

   2.29  "Pension  Starting  Date"  means the date as of which the  payment of a
Member's Pension is to commence, as determined under Section 7.6.

   2.30 "Plan" means the U.S. Trust Corporation  Employees'  Retirement Plan, as
described herein and as may hereafter be amended.

   2.31  "Plan  Administrator"  means the  person or  persons  appointed  by the
Committee to have the powers, and to carry out the duties and  responsibilities,
set forth in Section 11.10.

   2.32 "Plan Year" means the calendar year.

   2.33 "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.

   2.34  "Severance  Date"  means the first date as of which the  Employee is no
longer in the employ of any Affiliated Company. An Employee shall not be treated
as having  incurred a Severance Date as a result of his absence from work unless
such  absence  is due to  his  resignation,  discharge,  retirement,  or  death.
However,  an Employee  who is on a Leave  shall be treated as having  incurred a
Severance Date (and as having ceased to be an Employee) (a) as of the expiration
of such Leave,  unless prior to such expiration he resumes his active employment
with an  Affiliated  Company,  or (b) at such earlier  time as he  notifies,  in
writing, 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.

   2.35  "Social  Security  Retirement  Age" shall  have the same  meaning as is
assigned to such term under section 415(b)(8) of the Code.

   2.36 "Spouse's  Preretirement  Survivorship  Pension" means a Pension payable
after  the  death  of a  Member  to  the  Member's  surviving  spouse  for  life
(regardless of the spouse's  remarriage  after the Member's death) in the amount
hereinafter  determined,  based upon the Member's units of Credited  Service and
Final Average Compensation as of the date of his death.

      (a) Death After  Becoming  Entitled to Retire Under Article 6. In the case
   of a Member who dies after becoming entitled to retire under Article 6, other
   than  Section  6.2(b)  thereof,  but before the  payment of his  Pension  has
   commenced, the Spouse's Preretirement  Survivorship Pension shall be based on
   the Pension which would have been payable to such surviving  spouse if (1) on
   the day immediately  preceding the date of his death,  the Member had retired
   and the payment of his Pension had commenced in the form  described in Option
   1 in Section 8.4, with a 100% survivor annuity,  and (2) the Member's Pension
   referred to in clause (1) had been computed without the reductions  described
   in Section 7.2(a)(2), if otherwise applicable.

      (b) Death Prior to Becoming  Entitled  to Retire  Under  Article 6. In the
   case of a Member who dies before becoming entitled to retire under Article 6,
   other than Section 6.2(b) thereof,  and before the payment of his Pension has
   commenced,  but after his Earliest  Payment Date, the Spouse's  Preretirement
   Survivorship  Pension shall be based on the Joint and Survivor  Pension which
   would  have been  payable if the Member  had  incurred a  Severance  Date and
   payments  under the Joint and  Survivor  Pension  had  commenced  immediately
   preceding  the date of his  death.  In the case of a Member  who dies  before
   becoming  entitled to retire  under  Article 6 and on or before his  Earliest
   Payment Date, the Spouse's Preretirement  Survivorship Pension shall be based
   on the Joint and Survivor Pension which would have been payable if the Member
   had incurred a Severance  Date on the earlier of the date of his death or his
   actual  Severance  Date,  survived  until his Earliest  Payment  Date,  begun
   receiving  payments  under the Joint and  Survivor  Pension  on his  Earliest
   Payment Date, and died on the following day. This  subsection (b) shall apply
   in the case of a Member  who dies after  becoming  entitled  to retire  under
   Section  6.2(b)  but  before  becoming  entitled  to  retire  under any other
   provision of Article 6.

   2.37 "Total Disability" means a mental or physical  disability which entitles
a Member to receive a benefit under the long-term  disability plan maintained by
the Affiliated Companies.

   2.38 "Trustee" means the 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 12.

   2.39 "Trust  Fund"  means the  contributions  deposited  with and held by the
Trustee  pursuant  to Article 12, any  property  into which the same or any part
thereof may be converted, and any appreciation therein and interest thereon.

   2.40 "Year of Service" means any Computation  Period during which an Employee
is credited with 1,000 or more Hours of Service.

                                   ARTICLE 3
                                   MEMBERSHIP

   3.1  Commencement  of Membership.  Each Employee who was a Member on December
31, 1986 shall  continue as a Member.  Each other Employee shall become a Member
on the  January  1 or July 1  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,  (b) he has  completed,  or is  scheduled  to
complete, at least one Year of Service, and (c) he has attained age 21.

   An Employee who receives credit for Prior Service for purposes of eligibility
to  participate  in the Plan shall become a Member on the first day of the month
coincident  with or next  following  the  later  of (i) the date he  becomes  an
Employee  or (ii) the date he meets the  conditions  in (a),  (b) and (c) above,
taking into account Prior Service.

   Notwithstanding  the  foregoing,  no individual who becomes an Employee after
December  31, 2001 shall become a Member  unless the Company  amends the Plan in
accordance  with Section 13.1 to provide for such  Employee's  membership in the
Plan on such  terms and  condition  as the  Company in its sole  discretion  may
establish.

   3.2  Termination  of Membership.  An Employee's  membership in the Plan shall
terminate:

      (a) on the Employee's Severance Date;

      (b) Subject to Section 5.1, on the date an Employee  transfers  employment
   from a Participating Company directly to Charles Schwab.

   3.3  Resumption  of  Membership   after  Severance  Date.  If  an  Employee's
membership  in the Plan is  terminated  in  accordance  with  Section  3.2(a) on
account of his incurring a Severance  Date, or Section  3.2(b) on account of his
transferring  employment  directly to Charles  Schwab,  and he again  becomes an
Employee of a Participating  Company, his membership in the Plan shall resume as
of the date on which he again becomes such an Employee.

                                   ARTICLE 4
                                CREDITED SERVICE

   4.1 Service Credited as of December 31, 1975. Each person who was a Member on
or prior to December 31, 1975 shall,  for purposes of this Article,  be credited
with one unit (or  fraction  thereof to the next higher  one-tenth)  of Credited
Service with respect to service  performed  prior to January 1, 1976 for each 12
month period of employment with a  Participating  Company (or part thereof) with
which each such Member was  credited as of December  31, 1975 under the terms of
the Plan as in effect on that date.

   4.2  Service   Credited  after   December  31,  1975.   Each  Employee  of  a
Participating  Company who is a Member at any time during a Plan Year commencing
after  December  31,  1975  shall be  credited  with a unit or part  thereof  of
Credited  Service  for each such Plan Year,  computed  by  dividing by 2,000 the
number of Hours of Service  credited to him as an  Employee  of a  Participating
Company for only the days  falling in such Plan Year during which he is a Member
(not in excess of 2,000 Hours of Service), and increasing the resulting fraction
to the next higher one-tenth.

   It is provided,  however,  that each person who ceased to be a Member for any
reason at any time  prior to  January  1,  1988  shall  not be  entitled  to any
Credited  Service he had otherwise  earned for periods after he had attained his
Normal  Retirement  Date unless he was  thereafter  employed by a  Participating
Company  on or after  January  1, 1988 and has at least one Hour of Service in a
Plan Year  beginning  on or after  January  1,  1988,  in which case he shall be
credited with units of Credited  Service in accordance  with the above paragraph
of this Section 4.2 with respect to all periods  (including  periods  after such
Member's Normal Retirement Date).

   4.3 Effect of Breaks in Service on  Credited  Service.  If a Member  incurs a
Severance Date after  December 31, 1975 and thereby  ceases to be a Member,  and
subsequent  to such  Severance  Date he again  becomes  a  Member,  all units of
Credited Service with which the Member was credited prior to such Severance Date
shall be taken into account  under the Plan.  It is provided,  however,  that if
upon his again  becoming  an  Employee  after such  Severance  Date the Years of
Service he performed prior to such Severance Date are not taken into account for
purposes  of Section  5.1 by reason of Section  5.3 (as in effect on the date he
again became an Employee),  the units of Credited  Service earned by such Member
prior to such Severance Date shall not be taken into account under the Plan.

   4.4  Veterans'  Rights.  Notwithstanding  any  provision  of this Plan to the
contrary, benefits and service credit with respect to qualified military service
will be provided in accordance with Code section 414(u).

                                    ARTICLE 5
                                     VESTING

   5.1  Eligibility for Vested  Deferred  Pension.  A Member who ceases to be an
Employee for any reason other than his death and is not entitled to retire under
Article 6 shall be  entitled  to  receive  a vested  deferred  Pension  if he is
credited with five or more Years of Service for Computation Periods during which
he was at least age 18.

   For  purposes of this  Section  5.1,  Years of Service  shall  include  Prior
Service.  With respect to an Employee of Charles Schwab who transfers employment
directly to a Participating Company, Years of Service shall include service with
Charles Schwab.

   5.2  Amount and  Payment  of Vested  Deferred  Pension.  The vested  deferred
Pension  payable  under  Section  5.1 shall be a deferred  Pension  equal to the
Pension a Member would have been entitled to receive had he remained a Member in
the Plan at all times through his Normal Retirement Date, computed in accordance
with  Section 7.1 (based on his  Average  Final  Compensation  as of the date on
which he ceased to be an Employee and the number of units of Credited Service he
would have  earned to his  Normal  Retirement  Date,  not in excess of 35 units,
including all units of Credited  Service he had earned as of his Severance  Date
and  determined  by assuming  that the Member had remained both an Employee of a
Participating Company and a Member in the Plan during the period which begins on
the Member's Severance Date and ends on his Normal Retirement Date),  multiplied
by a  fraction  (x) the  numerator  of which is the  number of Years of  Service
credited to the Member as of his Severance Date and (y) the denominator of which
is the number of Years of Service that would have been credited to the Member to
his Normal  Retirement  Date (including all Years of Service he had earned as of
his Severance  Date, and determined by assuming that he had remained an Employee
of an Affiliated  Company for the period which begins on his Severance  Date and
ends on his Normal Retirement Date).

   Notwithstanding the foregoing, Prior Service credited to a Member pursuant to
Section 5.1 and Appendix B, including service with Charles Schwab,  shall not be
taken into account for  purposes of  determining  the amount of vested  deferred
Pension under this Section 5.2.

      (a) Vested Members with less than 20 Years of Service.  A Member  eligible
   for a vested  deferred  Pension under Section 5.1 who has completed less than
   20 Years of  Service  as of the date he  ceased  to be an  Employee  shall be
   entitled to receive a vested deferred Pension, commencing on the first day of
   the month  immediately  following his Normal  Retirement  Date, in the amount
   prescribed in this Section 5.2.

      (b) Vested  Members  with 20 or more but less than 25 Years of Service.  A
   Member  eligible  for a vested  deferred  Pension  under  Section 5.1 who has
   completed  20 or more but less  than 25  Years of  Service  as of the date he
   ceased to be an  Employee  shall be  entitled  to  receive a vested  deferred
   Pension,  commencing  on the  first  day  of the  month  coinciding  with  or
   immediately  following  the date on which he  attains  age 60 (or such  later
   date, but not later than the first day of the month immediately following the
   Member's Normal Retirement Date, as he may elect) in the amount prescribed in
   this  Section  5.2,  but  actuarially  reduced  to an  amount  of  Equivalent
   Actuarial  Value to the  payments  he would have  received  if payment of his
   vested deferred Pension had started on his Normal Retirement Date.

      (c) Vested Members with 25 or more Years of Service. A Member eligible for
   a vested deferred Pension under Section 5.1 of this Article who has completed
   25 or more Years of Service as of the date he ceased to be an Employee  shall
   be entitled to receive a vested deferred Pension, commencing on the first day
   of the month  coinciding  with or immediately  following the date on which he
   attains age 55 (or such later  date,  but not later than the first day of the
   month  immediately  following the Member's Normal  Retirement Date, as he may
   elect), in the amount prescribed in this Section 5.2, but actuarially reduced
   to an amount of  Equivalent  Actuarial  Value to the  payments  he would have
   received if payment of his vested deferred  Pension had started on his Normal
   Retirement Date.

The Plan  Administrator  shall  advise the Member in writing as to the  earliest
date on which payment of his deferred vested Pension may commence.

   5.3 Effect of Breaks in Service  after  December  31,  1975.  In  computing a
Member's Years of Service for purposes of Sections 5.1 and 5.2, in the case of a
Member who incurs a Severance Date after December 31, 1975, the Years of Service
he completed  prior to such  Severance  Date shall,  upon his again  becoming an
Employee, be taken into account under such Sections, except as follows:

      (a) If the Member has resumed  employment with an Affiliated Company after
   incurring a Break in Service  following  such  Severance  Date,  the Years of
   Service he completed  before such  Severance  Date shall not be so taken into
   account  until  he has  completed  one  Year of  Service  after  so  resuming
   employment.

      (b) If the Member was not entitled to a vested deferred  Pension  pursuant
   to Section 5.1 as of such Severance Date, and he has resumed  employment with
   an  Affiliated  Company  after  incurring a number of  consecutive  Breaks in
   Service  following such Severance Date which equals or exceeds the greater of
   five years or the  aggregate  number of Years of Service he completed  before
   such  Severance  Date,  the Years of Service  he had  completed  before  such
   Severance  Date  shall not be so taken into  account.  The number of Years of
   Service  before any  Severance  Date shall not  include  any Years of Service
   which are not taken into  account  under  Sections 5.1 and 5.2 because of the
   application  of  this  provision  (or  because  of the  application  of  this
   provision  as in effect on  December  31,  1984)  with  respect to an earlier
   Severance Date.

   5.4 Restoration to Service of Vested Member. If a Member who is entitled to a
vested  deferred  Pension  pursuant  to Section 5.1 is restored to service as an
Employee,  his right to such vested deferred  Pension shall be cancelled and his
subsequent retirement and any Pension payable thereupon shall be governed by the
provisions of this Plan then  applicable to him, taking into  consideration  his
Credited  Service and, where  appropriate,  his  Compensation,  prior as well as
subsequent  to the date he ceased to be an Employee,  but such Pension  shall be
actuarially  reduced by the Equivalent  Actuarial Value of the Pension  payments
(if any)  previously  made to the Member under this Article.  The application of
this Section 5.4 shall not result in a suspension of benefits within the meaning
of section 411(a)(3)(B) of the Code or section 203(a)(3)(B) of ERISA, unless the
requirements of the Code and ERISA which pertain to suspensions of benefits have
been satisfied.

   5.5 Separation of Members  Without Vested Rights.  No Pension or other amount
shall be paid  under  this Plan in respect of a person who ceases to be a Member
before becoming eligible to receive a deferred vested Pension under this Article
5, or before he is eligible  to retire  under  Article 6. Such  person  shall be
treated as if the entire  amount of the  benefit  under the Plan in which he was
vested has been distributed to him, in a lump sum payment of zero amount,  as of
his  Severance  Date.  Thereafter,  notwithstanding  Section  4.3,  the Credited
Service  that such  person  had  earned  prior to his  Severance  Date  shall be
disregarded  for  all  purposes  under  the  Plan.   However,   if  such  person
subsequently returns to employment with any Participating  Company,  such person
shall be treated as if he has  repaid  the entire  such lump sum  payment to the
Plan,  as of the date on which he so returns  to  employment,  and his  Credited
Service  earned prior to such  Severance  Date shall be taken into account under
the Plan, except as otherwise provided in Section 4.3.

   5.6 Death of Vested Member. Subject to Section 8.7, in the event of the death
of a person entitled to a vested deferred Pension pursuant to Section 5.1 either
(a) prior to the date such Pension was to  commence,  as provided in Section 5.2
or (b) after such Pension was to commence  and the Former  Member was to receive
such Pension in the form of a straight life annuity,  no Pension or other amount
shall be payable on the Former  Member's  behalf under this Article or any other
provision of this Plan.

                                   ARTICLE 6
                                   RETIREMENT

   6.1 Normal  Retirement.  Each Member,  other than an  Executive/Policy-Making
Member,  may retire on his Normal Retirement Date unless he has retired prior to
such date  pursuant to Section 6.2 or 6.4. Each  Executive/Policy-Making  Member
shall retire on his Normal  Retirement  Date unless he has retired prior to such
date  pursuant  to  Section  6.2 or 6.4 or unless he  continues  as an  Employee
thereafter pursuant to Section 6.3.

   6.2 Early Retirement.

      (a) Rule of 80. A Member  whose  combined  (a)  attained  age (in complete
   years from the  anniversary of the Member's  birth),  and (b) either Years of
   Service  (as  computed  for  purposes  of Section  5.1) or units of  Credited
   Service (as computed  under Article 4), totals 80 or more shall be retired on
   the first day of the calendar month immediately following receipt by the Plan
   Administrator of written application for his retirement by such Member.

      (b) Age 60.  Effective  January 1, 1999, a Member who is an Employee of an
   Affiliated Company on the date he has attained age 60 and is credited with at
   least ten (10)  Years of  Service  shall be  retired  on the first day of the
   calendar month  immediately  following  receipt by the Plan  Administrator of
   written application for his retirement by such Member.

      (c) Commencement.  The Pension of a Member who retires under either of the
   preceding  paragraphs ("early retirement") shall commence on the first day of
   the month  immediately  following  the date on which he had retired,  or such
   later  date,  but not  later  than the  first  day of the  month  immediately
   following the Member's  Normal  Retirement  Date,  as he may elect.  The Plan
   Administrator  shall advise the Member in writing as to the earliest  date on
   which payment of his early retirement Pension may commence.

   6.3 Postponed Retirement.  Each Member, other than an Executive/Policy-Making
Member, who continues as an Employee after his Normal Retirement Date may retire
on the first day of any calendar month  thereafter on which the Member elects to
retire.  An   Executive/Policy-Making   Member  may  upon  the  request  of  the
Participating  Company  by which he is  employed  and with the  consent  of such
Executive/Policy-Making  Member be  continued  as an  Employee  after his Normal
Retirement  Date,  in each  case for a period  of one year,  and,  upon  further
requests  and  consents,   for  successive  one  year  periods  thereafter.   An
Executive/Policy- Making Member whose retirement is postponed under this Section
6.3 shall be retired at the end of the last of such one year periods,  or at any
earlier  date not less than  thirty  nor more than  ninety  days after a written
request for his retirement has been filed with the Plan  Administrator by either
the  Executive/Policy-Making  Member or the Participating Company by which he is
employed.

   6.4 Disability  Retirement.  Any Member who has incurred a Total  Disability,
and who otherwise meets the  requirements  for retirement under Section 6.1, 6.2
or 6.3,  may retire  under the  applicable  such Section on the first day of any
calendar  month after he has satisfied such  requirements  on which he elects to
retire.

   6.5  Nonforfeitability  of Pensions.  A Member who becomes entitled to retire
under this Article 6 shall have a  nonforfeitable  right to a Pension  under the
Plan.  A Member who retires  under this Article 6 shall be entitled to receive a
Pension, computed as under Article 7.

   6.6 Restoration to Employment.  Upon the request of any Participating Company
and with the  consent of the  Member,  a Member  retired  pursuant to any of the
preceding  Sections of this Article 6 may be restored to service as an Employee.
In this event his subsequent  retirement  shall be governed by whichever of such
Sections, if any, is then applicable.

                                   ARTICLE 7
                               RETIREMENT PENSIONS

   7.1 Normal Retirement  Pension.  Each Member retiring after December 31, 1988
pursuant to the  provisions  of Section 6.1 shall receive a Pension equal to the
sum of

      (a) two and  one-quarter  percent (2 1/4%) of the Member's  Average  Final
   Compensation,  multiplied  by the number of the  Member's  units of  Credited
   Service not in excess of 20 units, plus

      (b)  one  percent  (1%)  of  such  Member's  Average  Final  Compensation,
   multiplied by the number of the Member's units of Credited  Service in excess
   of 20 units but not in excess of 35 units, reduced by

      (c) one-half of one percent (.5%) of the lesser of (1) a Member's  Average
   Final  Compensation  and  (2)  100%  of  a  Member's  Covered   Compensation,
   multiplied  by the number of units of Credited  Service  earned by the Member
   for up to the first 35 units of Credited  Service so earned less any units of
   Credited  Service earned prior to January 1, 1976, and further  multiplied by
   the factor indicated below for such Member's year of birth:

                           Year of Birth             Adjustment

                           1937 and earlier          1.00
                           1938 through 1954          .95
                           1955 and later   .         .90

   provided,   however,  that  the  Normal  Retirement  Pension  of  any  Member
   calculated  in accordance  with the foregoing  provisions of this Section 7.1
   shall not be less than the Normal  Retirement  Pension of such Member accrued
   pursuant to the terms of Article VII, Paragraph A of the Plan as in effect as
   of December 31, 1988.

   7.2 Early Retirement Pension.

      (a) Rule of 80. Each Member  retiring  after December 31, 1975 pursuant to
   the provisions of Section 6.2(a) shall receive a Pension equal,

         (1) if the Member has attained age 60 at the time of his retirement, or
      if he  retired  prior to  attaining  age 60 but does not elect to have the
      payment  of his  early  retirement  Pension  commence  prior  to his  60th
      birthday,  to an amount  computed in  accordance  with  Section 7.1 on the
      basis of the Member's  Average  Final  Compensation  and units of Credited
      Service at the time of his early retirement, or

         (2) if the Member has not attained age 60 at the time of his retirement
      and elects to have the payment of his early  retirement  Pension  commence
      prior to his 60th  birthday,  to an amount  equal to the Pension  which he
      would have been entitled to receive under  subsection  (a) above if he had
      attained  age 60 at the time of his  retirement,  but computed by reducing
      the  amounts  described  in  subsections  (a)  and (b) of  Section  7.1 by
      one-twelfth  (1/12) of five  percent  (5%) for each month or part  thereof
      that the  commencement  of such  early  retirement  Pension  precedes  the
      Member's 60th birthday, and by reducing the amount described in subsection
      (c) of Section  7.1 by  one-twelfth  (1/12) of six  percent  (6%) for each
      month or part  thereof  that the  commencement  of such  early  retirement
      Pension precedes the Member's 60th birthday.

      (b) Age 60. Each Member  retiring  pursuant to the  provisions  of Section
   6.2(b) shall  receive a Pension to which the Member  would be entitled  under
   Section 5.2, but  actuarially  reduced to an amount of  Equivalent  Actuarial
   Value to the  payments  he would  have  received  if  payment  of his  vested
   deferred Pension had started on his Normal Retirement Date.

   7.3  Postponed  Retirement  Pension.  A Member who is an Employee on or after
January 1, 1988, and whose retirement has been postponed pursuant to Section 6.3
for a period  subsequent to his Normal Retirement Date, shall receive no Pension
during such  period of  postponement.  Upon his  retirement,  such Member  shall
receive a Pension  computed in  accordance  with Section 7.1 on the basis of the
Member's Average Final Compensation and units of Credited Service at the time of
his  postponed  retirement.  Notwithstanding  the above,  unless the  applicable
requirements relating to a suspension of benefits under sections 411(a)(3)(B) of
the Code and  203(a)(3)(B)  of ERISA  have been  satisfied  with  respect to the
Member,  including  any  requirement  that  notification  of such  suspension be
provided to the Member,  the Pension payable under this Section 7.3 shall not be
less than the  Equivalent  Actuarial  Value of the Pension that the Member would
have received if (a) the Member had retired on his Normal  Retirement  Date, (b)
the  payment  of such  Pension  had  commenced  on the  first  day of the  month
immediately  following his Normal  Retirement  Date,  and (c) the amount of such
Pension had been based on his Average Final  Compensation  and the number of his
units of  Credited  Service  as of his  Normal  Retirement  Date.  The amount of
Pension  payable under this Section shall be determined in accordance  with Code
Section 411(b)(1)(H) and regulations promulgated thereunder.

   7.4 Disability  Retirement  Pension.  Each Member retiring after December 31,
1975 pursuant to the provisions of Section 6.4 shall receive a Pension, computed
in accordance  with Section 7.1, 7.2 or 7.3, as applicable,  on the basis of his
Average  Final  Compensation  and units of  Credited  Service at the time of his
retirement.

   7.5 Restoration of Retired Members to Employment. If any retired Member again
becomes an  Employee,  his  Pension  (if any was being paid) shall cease and any
prior  election  under Article 8 as to the form of Pension in effect  thereunder
shall become void. Any Credited Service to which he was entitled when he retired
shall be restored to him, and his subsequent  retirement and any Pension payable
thereupon  shall be governed by the  provisions of this Plan then  applicable to
him, taking into consideration his Credited Service and, where appropriate,  his
Compensation,  prior as well as subsequent to his  retirement,  but such Pension
shall be actuarially  reduced by the Equivalent  Actuarial  Value of the Pension
payments (if any) previously made to the Member. The application of this Section
7.5 shall not result in a suspension  of benefits  within the meaning of section
411(a)(3)(B)  of  the  Code  or  section   203(a)(3)(B)  of  ERISA,  unless  the
requirements  of the Code and ERISA which pertain to suspension of benefits have
been satisfied.

   7.6  Payment of  Pensions.  All  Pensions  payable  pursuant  to Article 5 or
Article  6  shall,  upon  direction  by the Plan  Administrator,  be paid by the
Trustee. All Pensions payable under the Plan shall, except as otherwise provided
under the Plan, be payable in level monthly installments, as of the first day of
each month.  The payment of a Pension shall commence (a) in the case of a Member
who is  entitled  to a  deferred  vested  Pension  under  Article 5, on the date
provided in subsection  (a), (b) or (c), as  applicable,  of Section 5.2, (b) in
the case of a Member who takes early  retirement  under Section 6.2 (including a
Member  with a Total  Disability  who  takes an early  retirement),  on the date
provided in Section 6.2 or (c) in all other cases, on the first day of the month
immediately following the date on which the Member retires. Payment of a Pension
shall cease with the monthly payment immediately following the Member's death.

   If the  Equivalent  Actuarial  Value of any  Pension  payable  to a Member as
computed  under  Article 5 or this Article 7 does not exceed $5,000 ($3500 prior
to  January  1,  1998)  as  of  the  Member's  Severance  Date,  then  the  Plan
Administrator  shall  direct that an amount equal to such  Equivalent  Actuarial
Value be paid by the Trustee to such  Member in a single lump sum cash  payment.
Such  payment  shall  be  made as soon as  practicable  following  the  Member's
Severance Date.

   Unless a Member elects otherwise,  notwithstanding  the above, the payment of
the Member's Pension shall commence not later than by the 60th day after the end
of the Plan  Year  during  which  occurs  the  latest of (a) the  Member's  65th
birthday,  (b) the 10th  anniversary  of the  year in  which  he first  became a
Member,  or (c) the  Member's  termination  of  employment  with all  Affiliated
Companies.

   Before any Pension shall be paid to a Member or to the surviving  spouse of a
deceased Member, such Member, or his surviving spouse, as applicable, shall file
with the Plan  Administrator  such information as the Plan  Administrator  shall
require to establish his or her rights to benefits under the Plan.

   7.7 Maximum Pension Limitations.  Notwithstanding any other provision of this
Plan to the  contrary,  no Pension shall be payable under this Plan in excess of
the limitations prescribed in this Section 7.7.

      (a)  Basic  Limitation.  No  Pension  shall be paid to or on behalf of any
   Member which would, as of the last day of the Plan Year,  annually exceed the
   lesser of:

         (1) 100% of the  Member's  average  total  compensation  (as defined in
      Treas.  Reg.  Sec.  1.415-2(d)(1),  (2),  (3) and (4)) but  including  any
      elective  deferrals  (as defined in Code  Section  402(g)(3)),  any amount
      which  is  contributed  or  deferred  by a  Participating  Company  at the
      election of the Employee and which is not  includable  in the gross income
      of the  Employee by reason of Code  Section  125 or 457, or in  accordance
      with the Employee's  election  relating to amounts that are not includible
      in the gross income of the  Employee by reason of Code  Section  132(f)(4)
      from the  Participating  Company or Companies by which he was employed for
      the three consecutive Plan Years for which the Member's total compensation
      (as so defined) was the highest (the "Compensation Limitation") and during
      which he was a Member in the Plan, or

         (2) $90,000 (the "Dollar Limitation").

   If the  Member  has fewer  than 10 years of Plan  participation,  the  Dollar
Limitation  shall be  multiplied  by a fraction,  the  numerator of which is the
number of years (computed to fractional parts of a year) of participation in the
Plan, and the  denominator of which is 10. If the Member has fewer than 10 Years
of Service, the Compensation  Limitation shall be multiplied by a fraction,  the
numerator of which is the number of the Member's  Years of Service  (computed to
fractional parts of a year), and the denominator of which is 10.

   The Dollar  Limitation shall be adjusted  annually,  for Plan Years beginning
after  December 31, 1987,  for  increases in the cost of living after October 1,
1986 in accordance with the Code and applicable  regulations or rulings, and, in
the case of Members who have ceased to be employed by a  Participating  Company,
the Compensation Limitation shall be adjusted annually for increases in the cost
of living in accordance with the Code and applicable regulations and rulings. No
such adjustment  shall be taken into account  hereunder before the Plan Year for
which such  adjustment  first  takes  effect  pursuant  to such  regulations  or
rulings.

      (b) Combined Plan  Limitation.  Notwithstanding  subsection (a) above, for
   any Plan Year  commencing  prior to January 1, 2000, if a Member in this Plan
   is also a member in 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) (as in effect for the Plan Year in question or for any
   prior  Plan  Year)  (the  "Profit-Sharing  Plan"),  the  sum of the  Member's
   Retirement  Plan Fraction (as defined below) and the Member's  Profit-Sharing
   Plan Fraction (as defined  below) shall not exceed 1.0 for any Plan Year, and
   in the event that in any Plan Year the sum of the  Member's  Retirement  Plan
   Fraction and the Member's  Profit-Sharing Plan Fraction exceeds 1.0, then the
   Pension  payable  under  this Plan  shall be  reduced so that the sum of such
   fractions in respect of that Member will not exceed 1.0 for such Plan Year.

         (1)  Retirement  Plan  Fraction.   For  purposes  of  this  subsection,
      "Retirement  Plan  Fraction" for any Plan Year shall mean a fraction,  (i)
      the  numerator  of which is the  projected  annual  Pension  the Member is
      expected to receive  under the Plan  determined  as of the end of the Plan
      Year  and  in  accordance  with   applicable   regulations  and  (ii)  the
      denominator of which is the lesser of: (A) the product of 1.25  multiplied
      by the Dollar Limitation in effect under subsection (a)(2) of this Section
      7.7 for the Plan Year, or (B) the product of 1.4  multiplied by the amount
      which may be taken into account  under  subsection  (a)(1) of this Section
      7.7 for the Plan Year.

         (2)  Profit-Sharing  Plan  Fraction.  For purposes of this  subsection,
      "Profit-Sharing  Plan  Fraction"  for any Plan Year shall mean a fraction,
      (i) the numerator of which is the sum of the annual  additions (as defined
      in  section  415(c)(2)  of the Code;  provided,  however,  that the annual
      additions for any Plan Year beginning  before January 1, 1987 shall not be
      recomputed to treat all  contributions  made on an after-tax  basis by the
      Member as annual  additions)  credited to the account of the Member  under
      the Profit-Sharing Plan for the Plan Year and for all prior Plan Years and
      (ii) the  denominator  of which is the sum of the lesser of the  following
      amounts,  determined for the Plan Year and for each prior Plan Year during
      which such Member was an Employee  (regardless of whether the Member was a
      member in the  Profit-Sharing  Plan during any such prior Plan Year):  (A)
      the product of 1.25  multiplied  by the dollar  limitation in effect under
      section  415(c)(1)(A) of the Code for such Plan Year  (determined  without
      regard to  section  415(c)(6)  of the  Code),  or (B) the  product  of 1.4
      multiplied  by the amount  which may be taken into account  under  section
      415(c)(1)(B)  of the Code with  respect  to the  Member for the Plan Year;
      provided, however, that for Plan Years ending prior to January 1, 1976 the
      numerator  of such  fraction  shall in no event be deemed  to  exceed  the
      denominator of such fraction, and provided further that, for any Plan Year
      ending  after  December  31,  1982,  the Plan  Administrator  may elect to
      compute the  Profit-Sharing  Plan Fraction for each Member by applying the
      transitional rule set forth in section 415(e)(6) of the Code.

The Retirement Plan Fraction and Profit-Sharing Plan Fraction shall be  computed
with regard to the limitation described in section 415(b)(5) of the Code.

      (c) Special  Rules.  For  purposes  of this  Section  7.7, in  determining
   whether  an  expected  Pension  is within the  aforesaid  limitations,  (1) a
   Pension  which is paid in a form  other  than a  straight  life  annuity or a
   qualified  joint and survivor  annuity  (within the meaning of section 417 of
   the Code)  shall be adjusted to a benefit  which is of  Equivalent  Actuarial
   Value to such  Pension,  and which is payable in the form of a straight  life
   annuity (with no ancillary benefits),  (2) in the case of a Pension beginning
   prior to a Member's  Social Security  Retirement  Age, the Dollar  Limitation
   applicable  to such Pension shall be reduced in  accordance  with  applicable
   regulations to an amount which is equal to an annual benefit which  commences
   at the same time as such Pension,  and which is of Equivalent Actuarial Value
   to an annual benefit in the amount of the Dollar Limitation that commences at
   the Member's Social Security  Retirement Age. The adjustment  provided for in
   the  preceding  sentence  shall  be  made in such  manner  as the  applicable
   regulations  may prescribe which is consistent with the reduction for old age
   insurance benefits commencing before the Social Security Retirement Age under
   the Social Security Act and (3) in the case of a Pension  beginning after the
   Member's Social Security Retirement Age, the Dollar Limitation  applicable to
   such Pension shall be increased in accordance with the applicable regulations
   to an amount which is equal to an annual benefit which  commences at the same
   time as such Pension, and which is of Equivalent Actuarial Value to an annual
   benefit in the  amount of the  Dollar  Limitation  that  commences  at Social
   Security Retirement Age.

      (d) Special  Transitional Rule for Certain Members. The limitations on the
   amount  of any  Member's  Pension  prescribed  in this  Section  7.7 shall be
   computed by applying the transitional  rules set forth in section  1106(i)(3)
   and (4) of P.L. 99-514 and in section 235(g)(3) and (4) of P.L. 97-248.

   In the case of a person who was a Member in this Plan prior to  September  2,
1974 and was also a Member in the Profit-Sharing Plan as of such prior date, the
sum of such  Member's  Retirement  Plan  Fraction  and his  Profit-Sharing  Plan
Fraction may exceed 1.4 (as described in subparagraph  (2) of Paragraph G of the
Plan, as in effect on December 31, 1982),  if (1) the Member's  Retirement  Plan
Fraction is not increased,  by amendment or otherwise,  after  September 2, 1974
and (2) no Profit-Sharing  Amounts (as defined in the  Profit-Sharing  Plan) are
contributed to or for the benefit of such Member under the  Profit-Sharing  Plan
after September 2, 1974.

   7.8  Post-Retirement  Increase of Benefits of Members Retiring before January
1, 1976.  Effective  April 1, 1977,  the  monthly  installments  of the  benefit
payable to each retired Member  (including a disabled retiree) who retired on or
before January 1, 1976, or to the spouse or  beneficiary of such Member,  as the
case may be, shall be  increased,  as of the April 1 of each year,  by an amount
equal to two  percent  (2%) of the  amount  of the  monthly  installment  of the
benefit which preceded the first monthly installment of the benefit to which the
increase applies.

   7.9 Supplemental Benefit for Certain Retired Members.

      (a) Retired Members (including disabled retirees) who retired on or before
   January 1, 1979,  or the spouses or  beneficiaries  receiving a benefit under
   the Plan on account of such  retired  Members,  shall be entitled to receive,
   for each monthly installment of the benefit payable to them under the Plan on
   or after November 1, 1980, an additional monthly  supplemental  benefit in an
   amount equal to (1) such monthly  installment  of the benefit,  including any
   post-retirement  increase  described  in Section 7.8,  multiplied  by (2) the
   applicable percentage set forth in the following table in accordance with the
   Member's  last year of employment  with the Company or an Affiliated  Company
   prior to his retirement:

                  Year of employment
                  preceding the year
                  in which he retired                Applicable Percentage

                  1970 and earlier                              11%
                  1971                                          10%
                  1972                                           9%
                  1973                                           8%
                  1974                                           7%
                  1975                                           6%
                  1976                                           8%
                  1977                                           6%
                  1978                                           4%

      (b) Retired Members (including disabled retirees) who retired on or before
   January 1, 1984,  or the spouses or  beneficiaries  receiving a benefit under
   the Plan on account of such  retired  Members,  shall be entitled to receive,
   for each monthly installment of the benefit payable to them under the Plan on
   or after January 1, 1986, an additional  monthly  supplemental  benefit in an
   amount equal to (1) such monthly  installment  of the benefit,  including any
   post-retirement increases described in Section 7.8 and subsection (a) of this
   Section 7.9,  multiplied by (2) the  applicable  percentage  set forth in the
   following  table in accordance with the Member's last year of employment with
   the Company or an Affiliated Company prior to his retirement:

                  Year of employment
                  preceding the year
                  in which he retired                Applicable Percentage

                  1979 and earlier                               5%
                  1980                                           4%
                  1981                                           3%
                  1982                                           2%
                  1983                                           2%

      (c) Retired Members (including disabled retirees) who retired on or before
   January 1, 1990,  or the spouses or  beneficiaries  receiving a benefit under
   the Plan on account of such  retired  Members,  shall be entitled to receive,
   for each monthly installment of the benefit payable to them under the Plan on
   or after January 1, 1990, an additional  monthly  supplemental  benefit in an
   amount equal to (1) such monthly  installment  of the benefit,  including any
   post-retirement  increases  described in Section 7.8 and  subsections (a) and
   (b) of this Section 7.9,  multiplied  by (2) the  applicable  percentage  set
   forth in the  following  table in  accordance  with the Member's last year of
   employment with the Company or an Affiliated Company prior to his retirement.

                  Year of employment
                  preceding the year
                  in which he retired                Applicable Percentage

                  1983 and earlier                               8.84%
                  1984                                          10.69%
                  1985                                           8.84%
                  1986                                           8.27%
                  1987                                           6.22%
                  1988                                           4.31%
                  1989                                           2.34%

      (d) Retired  Members  (including  disabled  retirees)  who retired  before
   January 1, 1995,  or the spouses or  beneficiaries  receiving a benefit under
   the Plan on account of such  retired  Members,  shall be entitled to receive,
   for each monthly installment of the benefit payable to them under the Plan on
   or after January 1, 1997, an additional  monthly  supplemental  benefit in an
   amount equal to (1) such monthly  installment  of the benefit,  including any
   post-retirement  increases  described in Section 7.8 and subsections (a), (b)
   and (c) of this Section 7.9, multiplied by (2) the applicable  percentage set
   forth in the  following  table in  accordance  with the Member's last year of
   employment  with the  Company  or an  Affiliated  Company  prior  to  his/her
   retirement.

                  Year of employment
                  preceding the year
                  in which s/he retired              Applicable Percentage

                  Before   1990                                  7.3%
                           1990                                  7.3%
                           1991                                  5.9%
                           1992                                  4.6%
                           1993                                  3.4%
                           1994                                  2.2%
                  After    1994                                  0%

      (e) The minimum monthly supplemental benefit payable under subsection (a),
   (b), (c) or (d) of this Section 7.9 shall be $10.00.

      (f) A surviving  spouse  receiving a Spouse's  Survivorship  Pension under
   Paragraph F of Article  VIII of the Plan (as in effect on December  31, 1984)
   shall  receive the  supplemental  pension  provided  for in this  Section 7.9
   computed as though the year in which the member's death occurred was the year
   in which retirement occurred.

   7.10 Benefit Enhancement for Certain Employees.

      (a) The following definitions shall apply for purposes of this Section:

         (1) "Age and Service" shall mean, for any Member,  the total of (i) his
      number  of Years of  Service,  or,  if  greater,  his  number  of units of
      Credited Service and (ii) his attained age.

         (2)  "Eligible  Member"  shall mean a Member who is employed in the Tax
      Compliance Department of the Company.

         (3) "Enhanced  Pension Benefit" shall mean, for any Member, an increase
      in the Pension  payable under the Plan to the Member by an amount equal to
      the excess of (i) the amount by which his Pension  would be  increased  if
      five years or units,  as  applicable,  were added to each of his age,  his
      number of Years of Service  and his number of units of  Credited  Service,
      over (ii) the amount by which his Pension  would be  increased  if he were
      entitled to have his Pension increased by an amount which is of Equivalent
      Actuarial  Value to a  lump-sum  payment  equal to  three  and  two-tenths
      percent  (3.2%) of his annual base salary for each year of service with an
      Affiliated  Company.   The  Enhanced  Pension  Benefit,   the  "Equivalent
      Actuarial  Value," and "lump-sum  payment" in clause (ii) of the preceding
      sentence,  shall be determined as if payment of the Member's  Pension were
      to  commence  as of, and shall be based upon the  Member's  Average  Final
      Compensation,  Years of Service  and units of  Credited  Service as of the
      date  of  the  Member's  Involuntary  Termination.  The  Enhanced  Pension
      Benefit,  as so  determined,  shall not be reduced  to  reflect  the early
      commencement  of payment of the Eligible  Member's  Pension  under Section
      7.10(c).

         (4)  "Involuntary  Termination"  shall  mean  the  termination  of  the
      Eligible Member's  employment by an Affiliated  Company in connection with
      the elimination of the Tax Compliance Department.

      (b) The Pension  payable to any Eligible  Member shall be increased by the
   Enhanced  Pension  Benefit if (i) the Eligible  Member incurs an  Involuntary
   Termination  during  the period  which  begins on January 1, 2000 and ends on
   June 30, 2000,  (ii) his Age and Service  equals or exceeds 70 on the date of
   his Involuntary  Termination,  and (iii) he is employed in the Tax Compliance
   Department  on  a  full-time  basis  immediately  prior  to  his  Involuntary
   Termination.

      (c) The  Eligible  Member  may  elect  to  begin  payment  of the  Pension
   otherwise  payable under the Plan and the Enhanced  Pension Benefit as of the
   first  day of any  month  that  coincides  with or  follows  the  date of his
   Involuntary  Termination.  Based on actual Age and  Service,  if the Eligible
   Member  qualifies for "early  retirement"  under Section  7.2(a),  his or her
   Pension  shall be  calculated  in  accordance  with  Section  7.2(a).  If the
   Eligible Member does not qualify for "early  retirement" under Section 7.2(a)
   of the Plan,  the Pension  payable to the Eligible  Member will be calculated
   pursuant  to Section  5.2,  actuarially  reduced  to an amount of  Equivalent
   Actuarial  Value based on the Eligible  Member's actual age as of the Pension
   Starting Date.

                                   ARTICLE 8
                       SURVIVORSHIP AND OPTIONAL PENSIONS

   8.1 Form of Payment of Pensions.  Every Pension  payable under Article 5 or 6
to a Member who is not married on his Pension  Starting  Date shall,  unless the
Member  elects  otherwise in accordance  with the  provisions of Section 8.2, be
payable in the form of a straight-life annuity payable to the Member only during
his  lifetime.  Every  Pension  payable  under Article 5 or 6 to a Member who is
married on his Pension  Starting Date shall,  unless the Member elects otherwise
in  accordance  with the  provisions of Section 8.2, be payable in the form of a
Joint and Survivor  Pension which shall be of Equivalent  Actuarial Value to the
Pension otherwise payable to the Member computed under the applicable  provision
of Article 5 or Article 7.

   8.2 Election of Form of Payment of Pension.

      (a) Election Period.  During the election period  commencing on the date a
   Member  referred  to in Section  8.3(a)  receives  the Notice  referred to in
   Section  8.3(a) and  ending on the  Member's  Pension  Starting  Date,  (1) a
   married  Member  may,  with  the  consent  of his  spouse  (unless  the  Plan
   Administrator  makes a written  determination in accordance with the Code and
   the  applicable  regulations  that no such consent is  required),  elect,  in
   writing on a form furnished by the Plan Administrator, to receive his Pension
   in one of the optional forms  described in Section 8.4 in lieu of a Joint and
   Survivor Pension, and (2) an unmarried Member may elect, in writing on a form
   furnished  by the Plan  Administrator,  to receive  his Pension in one of the
   optional forms of Pension  available under Section 8.4, in lieu of payment in
   the form of a straight-life  annuity.  No election shall be effective  unless
   such form has been  executed by the Member and  delivered  by him to the Plan
   Administrator  during the election  period.  During such election  period,  a
   Member may revoke his election,  without spousal consent, and such revocation
   shall not  affect  the  right of the  Member  to  execute  and file a further
   election with the Plan Administrator  within such election period.  After the
   expiration of such election  period,  any election timely filed with the Plan
   Administrator  within such election period shall become irrevocable,  and any
   election filed thereafter by the Member shall not be given effect.

      (b) Spousal  Consent.  Any consent  that must be provided by the  Member's
   spouse to the Member's election to receive his Pension in any form other than
   the Joint and Survivor Pension must satisfy the following requirements.  Such
   consent  shall be in writing.  Such consent shall  acknowledge  the effect of
   such election on the spouse's rights to benefits under the Plan, and shall be
   witnessed  by a notary  public.  In addition,  such  consent  shall state and
   acknowledge (1) the specific  optional form of payment selected by the Member
   and (2)  where  applicable,  any  non-spouse  Beneficiary  designated  by the
   Member. A spouse's consent so furnished shall be irrevocable, but it shall be
   effective  only with respect to such spouse,  such specific  optional form of
   payment and, where applicable, such non-spouse Beneficiary.

   8.3 Notice to Members of Election of a Form of Payment of Pension.

      (a) Notice to Members.  No more than 90 days prior to the Member's Pension
   Starting Date, the Plan Administrator shall provide such Member with a notice
   (the  "Notice").  The Notice shall advise the Member as to the  circumstances
   under which his Pension will become payable,  as to the forms in which it may
   be paid, as to the material  features and relative values of, and the amounts
   payable  under,  such forms and as to all elections that may be available for
   the Member to make with  respect to the  payment  of his  Pension,  including
   information as to the eligibility conditions for, and the time and method of,
   making such elections. In the case of a married Member, the notice shall also
   contain  an  explanation  of (1) the  terms and  conditions  of the Joint and
   Survivor  Pension,  (2) the  Member's  right to make,  and the  effect of, an
   election to have his Pension paid in a form other than the Joint and Survivor
   Pension,  (3) the  rights  of the  Member's  spouse in  connection  with such
   election, and (4) the Member's right to make, and the effect of, a revocation
   of such election. A Member is entitled to a period of no less than 30 days to
   consider this  information,  but the Committee may permit the Member to waive
   this right in favor of a period of seven days,  provided the waiver satisfies
   the requirement of applicable Treasury regulations.

      (b) Member's Request for Further Information. At any time after receipt of
   the Notice  described above, and no less than 30 days prior to the expiration
   of the election period prescribed in Section 8.2, a Member may file a written
   request  for  further  information  with  the  Plan  Administrator.  The Plan
   Administrator  shall,  within 30 days  after it has  received  such  request,
   provide the Member  requesting  further  information  with a detailed written
   description  of each of the forms in which the Member's  Pension may be paid,
   and a detailed  explanation of the financial  effect of receiving his Pension
   in each such form,  including the monthly  payments which the Member,  or his
   surviving spouse or Beneficiary, would receive under each such form. A Member
   shall be  entitled  to make only one such  request.  If a Member  has filed a
   timely  request  for  further  information  hereunder,  the  election  period
   specified in Section 8.2 shall be extended for a period  ending 90 days after
   the date on which the Plan  Administrator  has furnished such Member with the
   additional information requested.  If the election period is so extended, the
   actual  payment of a Member's  Pension shall not commence  until the election
   period, as so extended, has expired. However, such extension shall not change
   the Member's  Pension  Starting Date. Any installment of the Member's Pension
   that was otherwise due during such extension,  based on the Member's  Pension
   Starting Date, shall be paid,  after the expiration of the extended  election
   period,  retroactive to the date on which such installment was otherwise due,
   and the amount of such payment  shall be  determined on the basis of the form
   in which the  Member's  Pension  is to be paid  under the Plan,  taking  into
   account  any  election  made by the Member  during the  election  period,  as
   extended, as to the form of his Pension payments.

   8.4  Optional  Forms of  Pensions.  Any Member  may, in  accordance  with the
provisions  of Section 8.2,  elect to receive his Pension in one of the optional
forms of Pension described below:

      OPTION 1. A reduced  Pension  payable  to the Member  during the  Member's
   life,  and after his death a Pension  of 50%,  66-2/3%,  75%,  or 100% of the
   amount of the Member's  reduced  Pension  payable during the life of, and to,
   the Member's spouse on his Pension Starting Date who survives him.

      OPTION 2. A reduced  Pension  payable  to the Member  during the  Member's
   life,  with  payment  thereof  guaranteed  to  be  made  to  the  Beneficiary
   designated by him for a period of 60 or 120 months.

      OPTION 3. A  straight-life  annuity  payable to the Member only during his
   lifetime.

   A Member who elects  Option 1 or Option 2 shall  specify in his election made
under Section 8.2 the  percentage  of his reduced  annuity that is to be paid to
his surviving  spouse under Option 2 or the number of months for which  payments
are to be guaranteed under Option 1, as applicable.  If the Member elects Option
2, he shall designate on his election form filed under Section 8.2 a Beneficiary
to receive  any amounts  payable  under  Option 2 upon his death.  If the Member
fails to  designate  a  Beneficiary  for  such  purpose,  or if the  Beneficiary
designated  by the Member for such  purpose  does not survive  him, the Member's
Beneficiary  for such  purpose  shall be his  surviving  spouse or, if he has no
surviving spouse, his estate.

   In the case of a Member who elects to have his  Pension  paid under  Option 2
providing for payments  guaranteed for a period certain,  and whose death occurs
after such  payments  have  commenced  but before he receives the full number of
payments  guaranteed  under Option 2, the  remaining  number of such  guaranteed
payments  shall be paid to his  Beneficiary  at the same  times  and in the same
amounts as they were payable to the Member  prior to his death.  It is provided,
however, that if the Member's estate is his Beneficiary,  an amount equal to the
lump sum Equivalent  Actuarial Value of any such remaining  guaranteed  payments
shall be paid to his  estate,  in a single  lump  sum cash  payment,  in lieu of
making any monthly  payments to the estate.  Such lump sum payment shall be made
as soon as practicable  after the Member's death, but no later than by the final
day of the Plan Year  immediately  following  the Plan Year in which the  Member
died.

   Each such optional form of Pension shall be of Equivalent  Actuarial Value to
the  Pension  to which  the  Member is  otherwise  entitled  computed  under the
applicable provision of Article 5 or Article 7.

   8.5  Death of  Member's  Spouse  or  Beneficiary.  If a  Member's  spouse  or
Beneficiary  shall die prior to the date a Member's  election  under Section 8.2
becomes irrevocable, the Member shall be entitled to revoke such election and to
make  such  other  election  under  Section  8.2  or  to  designate  such  other
Beneficiary  as the  Member  may  deem  appropriate  by  filing  with  the  Plan
Administrator  a further  election or designation  of  Beneficiary  prior to the
expiration date of the election  period  prescribed in Section 8.2 (as extended,
if  applicable,  pursuant to Section 8.3). If a Member's  spouse or  Beneficiary
shall die after the  Member has  received  the first  payment  under a Joint and
Survivor  Pension or other  optional form of Pension  elected under Section 8.2,
such  Pension  shall  continue  in  accordance  with its terms and the  Member's
Pension shall not be increased thereby.

   8.6  Level  Income  Option.  In the  case of any  Member  who  takes an early
retirement  under Section 6.2  (including a Member with a Total  Disability  who
takes an early retirement  under such Section),  and whose Pension Starting Date
precedes his 62nd  birthday,  the Member may elect,  by filing a written  notice
with the Plan Administrator  during the election period described in Section 8.2
with respect to his Pension Starting Date, to have the benefit payments he is to
receive prior to his 62nd birthday  increased,  and to have the benefit payments
he is to receive  after his 62nd  birthday  reduced,  by the amounts  determined
under the  applicable  table in  Appendix  A hereto,  or, if it would  produce a
greater benefit,  under the interest rate and mortality  assumptions provided in
Code Section 417(e).  The difference  between the amount of the Member's benefit
payments as so increased and the amount of the Member's  benefit  payments as so
decreased,  as determined under such table, shall be approximately  equal to the
amount of the  old-age  Social  Security  benefit  that  would be payable to the
Member if payment thereof were to commence as of his 62nd birthday.

   8.7 Spouse's Preretirement Survivorship Pension.

      (a) In  General.  If a Member  or a Former  Member  who,  after  earning a
   nonforfeitable right to a Pension, dies before his Pension Starting Date, his
   surviving  spouse  shall be  entitled  to  receive a  Spouse's  Preretirement
   Survivorship Pension.

      (b)  Commencement  of  Payments.   Payment  of  a  Spouse's  Preretirement
   Survivorship  Pension  shall  commence  (1) in the case of a Member  who dies
   after his Earliest  Payment Date,  on the first day of the month  immediately
   following the month in which the Member died or (2) in any other case, on the
   date which would have been the Member's  Earliest  Payment Date if he had not
   died. It is provided,  however,  that prior to the Member's Normal Retirement
   Date (or the date which would have been the Member's  Normal  Retirement Date
   if he had not died),  payment may not commence without the written consent of
   the Member's surviving spouse,  obtained within 90 days of such commencement.
   Notwithstanding  the  foregoing,  the payment of the  Spouse's  Preretirement
   Survivorship  Pension  shall,  in all  events,  commence no later than by the
   later of (i) the final day of the Plan Year in which the  Member  would  have
   attained  age 70 1/2 if he had not  died,  or (ii) the  final day of the Plan
   Year  following the Plan Year in which he died. If the surviving  spouse dies
   before payment of the Spouse's Preretirement  Survivorship Pension commences,
   no such pension shall be payable under this Section 8.7.

      (c) Actuarial  Adjustments.  In the event that the payment of the Spouse's
   Preretirement  Survivorship  Pension  is  delayed  because  of the  surviving
   spouse's failure to consent to the commencement  thereof under subsection (b)
   above, the amount of the Spouse's Preretirement  Survivorship Pension payable
   under this  Section 8.7 shall be  adjusted  so that,  as of the date on which
   payment  of  such  pension  actually  commences,  it  will  be of  Equivalent
   Actuarial  Value to the  Pension  that  would  have been  payable  if payment
   thereof  had  commenced  on the  earliest  date  on  which  commencement  was
   permitted under subsection (b) above.

      (d) Lump sum payments.  Notwithstanding  the above,  if, as of the date of
   the Member's death,  the lump sum Equivalent  Actuarial Value of the Spouse's
   Preretirement  Survivorship  Pension does not exceed  $5,000  ($3500 prior to
   January 1, 1998), an amount equal to such lump sum Equivalent Actuarial Value
   shall be distributed to the Member's  surviving  spouse, in a single lump sum
   cash payment,  in lieu of any Spouse's  Preretirement  Survivorship  Pension.
   Such distribution shall be made as soon as practicable following the Member's
   death,  but no  later  than by the  final  day of the Plan  Year  immediately
   following the Plan Year in which the Member died.

   8.8 Distribution requirements.

      (a) Notwithstanding  any other provision of the Plan,  distributions under
   the Plan shall comply with the  provisions  of Section  401(a)(9) of the Code
   and Treasury  Regulations  issued  thereunder,  including Treas. Reg. Section
   1.401(a)(9)-2,  which provisions are hereby incorporated herein by reference,
   provided  that  such  provisions   shall  override  the  other   distribution
   provisions  of the Plan only to the extent  that such  other Plan  provisions
   provide  for  distribution  that is  less  rapid  than  required  under  such
   provisions of the Code and Regulations.  Nothing contained in this Subsection
   shall be  construed as  providing  any  optional  form of payment that is not
   available under the other distribution provision provisions of the Plan.

      (b) Effective January 1, 1997 through December 30, 1999, any Member who is
   still  employed  on  December 31 of the year in which he turns age 70 1/2 may
   elect to begin  receiving  retirement  benefits in the amount that would have
   been  required  under Code  Section  401(a)(9),  as in effect on December 31,
   1996.

      (c) If the Member  remains  employed by an  Affiliated  Company  after the
   calendar  year in  which he turns  70 1/2 and has not  begun to  receive  his
   benefit under the Plan, the Pension payable to a Member upon retirement shall
   not be less  than the  Equivalent  Actuarial  Value of the  Pension  that the
   Member  would  have  received  if the  Member  had  retired on April 1 of the
   calendar year in which he attained age 70 1/2, plus the Equivalent  Actuarial
   Value of any benefits  accrued after such date, and reduced by the Equivalent
   Actuarial  Value of any Pension  distributions  made to the Member after such
   date. The actuarial  adjustment required under Section  411(b)(1)(H)(iii)(II)
   of the Code,  or any successor  provision,  shall be reduced by the amount of
   the actuarial  adjustment under this Section 8.8(c),  as permitted under Code
   Section 401(a)(9)(C)(iii) and any other applicable IRS guidance.

   8.9 Early  Distributions.  A Member  who is  entitled  to a  deferred  vested
Pension  under  Article 5, or to an early  retirement  Pension under Section 6.2
(including a Member with a Total Disability who takes an early retirement),  and
wishes to elect to have  payment  of his  Pension  commence  prior to his Normal
Retirement Date may, at any time, notify the Plan  Administrator  that he wishes
to  make  such  an  election.   Upon  receiving  such  notification,   the  Plan
Administrator  shall  furnish  the  Member  with a  written  explanation  of the
Member's right to elect to have payments commence prior to his Normal Retirement
Date,  and the effect of any such election.  After receipt of such  explanation,
the Member may make the election to have the payment of his Pension  commence by
filing with the Plan Administrator a written notification specifying the date on
which the Member wishes to have the payments commence.  The payment commencement
date specified by the Member must be the first day of any month which is no more
than 90 days after the date on which the Plan Administrator furnishes the Member
with the written  explanation  described above. A Member is entitled to a period
of at least 30 days to consider this  information,  but the Committee may permit
the  Member to waive  this  right in favor of a period of 7 days,  provided  the
waiver satisfies the  requirements of applicable  Treasury  regulations.  If the
Member is married on such payment  commencement  date,  and his Pension is to be
paid in a form other than the Joint and Survivor Pension,  the Member's election
to have Pension payments  commence prior to his Normal  Retirement Date shall be
accompanied  by the  written,  notarized  consent of his spouse to such  payment
commencement date (unless the Plan Administrator  makes a written  determination
in accordance with the Code and  regulations  that no such consent is required).
Any election so made shall be irrevocable.

   8.10 Direct Rollovers.  This Section 8.10 applies to any distribution made by
the Plan on or after January 1, 1993, to the extent that such distribution is an
"Eligible Rollover  Distribution".  Notwithstanding any provision of the Plan to
the contrary,  the "Payee" of any Eligible  Rollover  Distribution may elect, at
the time and in the manner prescribed by the Plan Administrator,  to have all or
any portion of such  distribution  paid as a "Direct  Rollover"  to an "Eligible
Retirement Plan" specified by the Payee.

   For the purpose of this Section 8.10, the following  definitions shall apply.
The term "Eligible  Rollover  Distribution"  shall have the same meaning as such
term  has  under  section  402(c)(4)  of the Code  and the  applicable  Treasury
regulations,  and, in general, shall mean any lump sum distribution of a benefit
under the Plan, other than the portion,  if any, of such  distribution  which is
required to be made under  section  401(a)(9)  of the Code.  The term  "Eligible
Retirement  Plan"  shall mean an  individual  retirement  account  described  in
section  408(a) of the Code,  an  individual  retirement  annuity  described  in
section 408(b) of the Code, a qualified annuity plan described in section 403(a)
of the Code, or a qualified  trust described in section 401(a) of the Code, that
will accept a Direct Rollover of the Payee's distribution. However, if the Payee
is the surviving spouse of a Member,  only an individual  retirement  account or
individual  retirement  annuity  described above shall be treated as an Eligible
Retirement  Plan.  The term  "Payee"  shall mean any person who is  entitled  to
receive a distribution from the Plan, and who is a Member,  the surviving spouse
of a Member,  or the  spouse or former  spouse of a Member  who is  entitled  to
receive the  distribution  as the  alternate  payee  under a qualified  domestic
relations  order,  as defined in section  414(p) of the Code.  The term  "Direct
Rollover"  shall  mean a direct  payment  of a  distribution  by the Plan to the
Eligible Retirement Plan specified by the Payee, made in accordance with section
401(a)(31) of the Code and the Treasury regulations and Internal Revenue Service
rulings and notices  thereunder,  and made in such manner as  prescribed  by the
Plan Administrator.

                                   ARTICLE 9
                         CERTAIN RIGHTS AND LIMITATIONS

   9.1 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.

   9.2  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 Plan Administrator shall find that any Former Member,  spouse
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 Plan Administrator,
cease and  terminate,  and in that  event the Plan  Administrator  shall hold or
apply  the  same to or for  the  benefit  of  such  Former  Member,  spouse,  or
Beneficiary or the children or other  dependents of the same, in such manner and
in such  proportions  as the Plan  Administrator  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  9.2, a  "Qualified  Domestic
Relations Order" means any judgment,  decree, or order (including  approval of a
property   settlement   agreement)   which  has  been  determined  by  the  Plan
Administrator,  in accordance  with  procedures  established  under the Plan, to
constitute a qualified  domestic  relations  order within the meaning of section
414(p)(1) of the Code.

   Notwithstanding  any  provision of the Plan to the  contrary,  the Plan shall
honor a judgment, order, decree or settlement providing for the offset of all or
part of a  Participant'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  Participant's  spouse (if
any) are satisfied.

   9.3 Incompetency.  In the event that the Plan Administrator 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
Plan  Administrator  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 Plan  Administrator  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.

   9.4 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.

   9.5 Payment of Taxes. The Trustee shall have the right to deduct and withhold
from any  benefit  which it is  otherwise  obligated  to pay under  Article 5 or
Article 6 any amount 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  benefit  to  the  spouse  or
Beneficiary  of any deceased  Member  pursuant to Article 8 until such spouse or
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.

   9.6 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  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 he  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'  accrued  benefits  under 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'  accrued
benefits occurs, any Member who becomes employed by the buyer or an affiliate of
the  buyer  shall  not be  deemed  to  have  retired  or  otherwise  incurred  a
termination  of employment for purposes of Article 7 of the Plan, and any future
rights to  distributions  of  transferred  accrued  benefits shall be determined
solely under the term of the plan to which the accrued benefits are transferred.

   9.7  Purchase  of  Annuities.  The  Committee  is  authorized,  in  its  sole
discretion,  to direct the  Trustee to provide for the payment of any Pension or
other  benefit  under the Plan  through the  purchase of one or more  annuity or
other contracts from any established  legal reserve life insurance company doing
business in the State of New York.  The proceeds of any such  contract  shall be
paid  directly  to the  Member,  spouse or  Beneficiary  entitled  thereto.  The
ownership of the contract shall,  however,  be vested exclusively in the Trustee
who  shall  hold the same in trust for the  benefit  of the  designated  Member,
spouse or  Beneficiary  and the  Trustee  shall have the power to  exercise  all
rights, privileges and options contained therein and to agree with the insurance
company to any release, reduction, modification or amendment thereof.

   9.8 Periods of Liquidity Shortfall.  During any period for which the Plan has
a "liquidity  shortfall",  as defined in sections 401(a)(32)(C) and 412(m)(5) of
the Code,  the Plan  shall not make the  following  benefit  payments:  (a) with
respect to any benefit  payable  under the Plan for which the "annuity  starting
date",  as defined in Code section  417(f)(2),  occurs  during such period,  any
benefit  payment in excess of the monthly  amount of the payment of such benefit
that would  have been made if such  benefit  were  being paid as an  actuarially
equivalent  single life annuity (plus the monthly amount of any Social  Security
supplement  described in the last sentence of Code section  411(a)(9));  (b) any
payment out of the Trust Fund for the purchase of an irrevocable commitment from
an insurer to pay a benefit under the Plan; and (c) any other payment  specified
by  the   Secretary   of  the   Treasury  by   regulation   under  Code  section
401(a)(32)(B)(iii).

                                   ARTICLE 10
                                  CONTRIBUTIONS

   10.1 Manner of Funding. The benefits provided by this Plan shall be paid from
the Trust Fund  managed by the  Trustee,  to which the  Participating  Companies
shall contribute in accordance with the provisions of this Article 10. No Member
shall be required or permitted to make any contributions to the Trust Fund. Each
Participating  Company's  contribution  to the Trust Fund for each Plan Year (a)
shall be accrued during the taxable year of the Participating Company which ends
coincident with such Plan Year, (b) except to the extent that earlier payment is
required under Section 10.3, shall be paid by the  Participating  Company to the
Trustee not later than by the date it is required to file its Federal income tax
return for such taxable year or by the last day of any extension thereof and (c)
is conditioned on its deductibility for Federal income tax purposes.

   10.2 Nature of Obligation.  It is the intention of each Participating Company
to continue the Plan  indefinitely  and to  contribute  to the Trust Fund over a
period of time such amounts as are  sufficient  to satisfy the full  actuarially
computed cost of providing the Pensions payable under the Plan in respect of the
Members  employed by the  Participating  Company in  accordance  with  generally
accepted  actuarial  principles  adopted by the Committee with the advice of its
actuaries.  Nevertheless,  subject to Section  10.3  below,  each  Participating
Company reserves the right to suspend such contributions from time to time or to
discontinue them altogether.

   10.3  Minimum  Funding  Standard.  During the  continuance  of this Plan with
respect to a Participating  Company,  the  Participating  Company shall, at such
times  as  shall  be  prescribed  by  the   Investment   Committee,   make  such
contributions  to the  Plan as  shall be  required  to  satisfy  its  share,  as
determined by the Investment  Committee,  of the contributions  required to meet
the  minimum  funding  standards  prescribed  under  section  412 of  the  Code,
provided,  however,  that a  Participating  Company shall not  contribute to the
Trust Fund any amounts  which are or may not be  deductible  from  income  under
section 404(a) of the Code.

   10.4 Effect of  Forfeitures.  Any excess funds resulting from the termination
of any Member's  employment under  circumstances that do not entitle the Member,
or his  spouse or  Beneficiary,  to a Pension or other  benefit  under the Plan,
shall not be applied  to  increase  the  benefits  payable to any other  Member,
spouse or  Beneficiary,  but shall  remain in the Trust  Fund and shall have the
effect of reducing the amount of any subsequent contributions to be made by each
Participating Company by which such Member was employed.

   10.5 Non-Diversion. Prior to the satisfaction of all liabilities with respect
to Members  and their  spouses  and  Beneficiaries  under the Plan,  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 spouses and Beneficiaries,  and paying the reasonable expenses of the Plan
and the  Trust as  determined  by the  Investment  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.

                                   ARTICLE 11
                           ADMINISTRATION OF THE PLAN

   11.1  Appointment  of the Committee.  The Board of Directors  shall appoint a
Committee, which shall consist of not less than three nor more than six 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.

   11.2 Duties and Powers of Committee.  The Committee  shall be responsible for
the control and management of the operation and  administration  of the Plan and
the proper  execution of its provisions,  except as to those powers,  duties and
responsibilities  hereinafter assigned to the Plan Administrator,  and except as
to those  powers and  responsibilities  hereinafter  reserved  or granted to the
Investment  Committee,  the Trustee or to the Board of Directors.  The Committee
shall be a "named fiduciary" of the Plan within the meaning of section 402(a) of
ERISA.

   The   Committee   shall  appoint  a  person  or  persons  to  serve  as  Plan
Administrator  in  accordance  with Section 11.9 below,  and shall  periodically
review  the  performance  of  any  such  persons.   It  shall  also  (a)  settle
periodically  the  accounts of the  Trustee;  (b) perform  such other duties and
responsibilities  as are specifically  assigned to the Committee under the Plan;
and (c) retain such counsel and employ such accounting,  actuarial, clerical and
other such  assistants  as in its judgment may from time to time be required for
the proper  performance  of its duties and the duties of the plan  Administrator
hereunder.

   11.3  Appointment  of  Investment  Committee.  The Board of  Directors  shall
appoint an Investment  Committee,  which shall consist of not less than five nor
more than seven 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  Investment  Committee  arising  by  death,
resignation or otherwise shall be filled by the Board of Directors.

   11.4 Conduct of Affairs of 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. It may authorize any one or more
of its members to execute and deliver any documents on behalf of the  Investment
Committee.

   11.5 Duties and Powers of  Investment  Committee.  The  Investment  Committee
shall  establish  for the Plan a funding  policy,  within the meaning of section
402(b)(1) of ERISA, and shall communicate the same to the Trustee. It shall also
(a) review and suggest  revisions from time to time to the actuarial  tables and
rates of  interest  to be used in all  actuarial  calculations  which are or may
hereafter be required in connection with the Plan; (b) perform such other duties
and responsibilities as are assigned to the Investment Committee under the Plan:
and (c) retain such counsel and investment  advisers and employ such accounting,
actuarial,  clerical and other such  assistants as in its judgment may from time
to time be required for the proper performance of its duties.

   11.6  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.

   11.7 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.  It may authorize any one or
more of its  members to  execute  and  deliver  any  documents  on behalf of the
Committee.

   11.8 Actuarial  Valuations.  As an aid to the Investment  Committee in fixing
the rates of contributions payable under the Plan, the actuary designated by the
Investment  Committee shall make annual  actuarial  valuations of the assets and
liabilities of the Plan, and shall submit to the Investment  Committee the rates
of  contribution  which he recommends  for use. The Investment  Committee  shall
maintain  accounts  showing the financial  status of the Plan, and shall keep in
convenient  form such data as may be necessary for  actuarial  valuations of the
Plan.

   11.9  Appointment of the Plan  Administrator.  The Committee  shall appoint a
person or persons to serve as Plan Administrator.  The Committee shall determine
the number of persons who shall serve as Plan  Administrator,  and it may remove
and replace any persons it has appointed to so serve in its sole discretion.

   11.10  Duties and Powers of the Plan  Administrator.  The Plan  Administrator
shall have the powers,  duties and responsibilities set forth below with respect
to the Plan. The Plan Administrator shall be deemed to be the "administrator" of
the Plan for purposes of section  3(16)(A) of ERISA,  and is also designated the
"plan  administrator"  of the Plan within the  meaning of section  414(g) of the
Code.

   The Plan  Administrator  shall be  responsible,  and have full  discretionary
authority,  for  the  construction  of the  Plan  and the  determination  of all
questions arising hereunder,  including, without limitation,  questions of fact.
It shall maintain all necessary books of accounts and records. In furtherance of
the  foregoing,   the  Plan   Administrator   shall  have  the  sole  power  and
responsibility:

      (a)  to  interpret  the  provisions  of  the  Plan   (including,   without
   limitation,  by supplying  omissions  from,  correcting  deficiencies  in, or
   resolving inconsistencies or ambiguities in, the language of the Plan),

      (b) 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,

      (c) to determine the  eligibility  of persons for  membership in the Plan,
   and to effect the retirement of Members,

      (d) to  receive  elections  by  Members  as to  optional  forms of benefit
   payments,

      (e) to determine  the  entitlement  of Members,  Former  Members and their
   spouses and their  Beneficiaries to benefits under the Plan and the amount of
   such  benefits  (including,  to the  extent  necessary,  making  any  factual
   findings with respect thereto),  and, in accordance with the claims procedure
   set forth in Section  11.15,  to decide any disputes which may arise relative
   to the  rights  of  the  Members,  Former  Members,  and  their  spouses  and
   Beneficiaries, with respect to such benefits,

      (f) to direct the Trustee to pay out of the Trust Fund all  amounts  which
   are payable  hereunder to Members,  Former Members or their surviving spouses
   or Beneficiaries,

      (g) to keep all  appropriate  records and data pertaining to the interests
   of the Members,  Former  Members and their spouses and  Beneficiaries  in the
   Plan,

      (h) to file all such reports with the appropriate governmental departments
   and agencies and to disclose such information to the Members,  Former Members
   and  their  spouses  and  Beneficiaries  with  respect  to the Plan as may be
   required  under the provisions of the Code and ERISA as the same may apply to
   plan administrators, and

      (i) to perform such other duties and  responsibilities as are specifically
   assigned to the Plan Administrator under the Plan.

Any action which the Plan Administrator 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.

   11.11  Delegation of  Responsibilities  by the Plan  Administrator.  The Plan
Administrator may delegate the following duties and  responsibilities  to one or
more Employees:

      (a) application of Plan provisions to determine eligibility for membership
   or benefits,

      (b) preparation  and  distribution of  communications  to Members,  Former
   Members and their spouses and Beneficiaries,

      (c) maintenance of compensation and employment records,

      (d)  preparation  of reports and  applications  required  by  governmental
   agencies,

      (e) calculations of service, compensation, credit and benefits,

      (f) orientation of new Members, advising Members, Former Members and their
   spouses and  Beneficiaries  of their  rights and  options  under the Plan and
   monitoring completion of application,  election and benefit forms by Members,
   Former Members and their spouses and 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,

      (j) making  recommendations  to the Plan Administrator with respect to the
   merits of claims and the administration of the Plan, and

      (k)  any  other  of  its  duties  or   responsibilities   which  the  Plan
   Administrator  determines are administrative or ministerial in nature and are
   designed to implement a policy, interpretation, system, practice or procedure
   established by the Plan Administrator.

If any duties or responsibilities are delegated to any Employee pursuant to this
Section 11.11, the Plan Administrator  shall periodically review the performance
of such Employee.  Depending upon the  circumstances,  this  requirement  may be
satisfied by a formal review by the Plan  Administrator at such time or times as
the Plan  Administrator  in its  discretion may  determine,  through  day-to-day
contact and  evaluation or in any other manner  determined to be  appropriate by
the Plan Administrator.

   11.12 Conduct of Affairs of the Plan  Administrator.  The Plan  Administrator
shall meet periodically at such place or places and at such times as it may from
time to time deem appropriate.  The Plan  Administrator may act by a majority of
the persons serving as Plan  Administrator from time to time. The action of such
majority  may be taken at a meeting of the Plan  Administrator  or  pursuant  to
written consent of such majority without a meeting.  It shall elect from time to
time one of the persons serving as Plan  Administrator  to act as Chairman and a
different   person,   who  may  but  need  not  be  a  person  serving  as  Plan
Administrator,  to act as  Secretary.  It may  authorize  any one or more of the
persons  serving as Plan  Administrator  to execute and deliver any documents on
behalf of the Plan Administrator.

   11.13 Expenses and Liability.  Expenses incurred in the administration of the
Plan  and  Trust  Fund,  including  fees for  legal,  accounting  and  actuarial
services,  all  taxes  levied  or  assessed  against  the Plan and  Trust  Fund,
insurance premiums payable to the Pension Benefit Guaranty  Corporation and such
other expenses  incurred in the  administration of the plan and Trust Fund shall
be paid from the Trust Fund,  unless  paid by the Company or by a  Participating
Company.  The members of the Committee  and the  Investment  Committee,  and the
persons  serving as Plan  Administrator,  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  Investment   Committee,   or  of  any  person   serving  as  Plan
Administrator,  unless such member or person handles the funds or other property
of the Plan or trust established hereunder as provided in section 412 of ERISA.

   The Committee,  the Investment  Committee and every member  thereof,  and the
Plan  Administrator and all persons serving as such, shall perform its and their
duties with respect to the Plan solely in the  interest of the  Members,  Former
Members,  their spouses and 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,  and no person
serving as Plan  Administrator,  shall be personally liable for anything done or
omitted to be done by him unless it shall have been  judicially  determined that
such member or person  failed to perform his duties under the Plan in the manner
described herein above.

   No  member  of the  Committee  or the  Investment  Committee,,  and no person
serving  as  Plan  Administrator,  shall  be  personally  liable  for any act or
omission of any other individual that constitutes a breach of such  individual's
duties  hereunder  unless it shall  have been  judicially  determined  that such
member or person  (a)  knowingly  participated  in, or  knowingly  undertook  to
conceal, such act or omission, knowing such act or omission constituted a breach
of such individual'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 the  Committee  shall be liable for any act or  omission  of the
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
Investment  Committee  shall be liable for any act or omission of the Investment
Committee, or of any other member thereof occurring before such member became or
after such member ceased to be, a member of the Investment Committee.  No person
serving as Plan  Administrator  shall be liable for any act or  omission  of the
Plan  Administrator,  or of any  other  person  serving  as Plan  Administrator,
occurring  before such person began,  or after such person  ceased,  to serve as
Plan Administrator.

   No member of the Committee shall be personally liable for any act or omission
of any  person  appointed  to serve as Plan  Administrator  in  accordance  with
Section  11.9  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  appointing  such person to serve as Plan  Administrator  or in
continuing  such  appointment,  or  (2)  the  Committee  or any  member  thereof
knowingly  participated  in, or  knowingly  undertook  to  conceal,  such act or
omission  knowing  such act or  omission  constituted  a breach  of duty by such
person. No person serving as Plan  Administrator  shall be personally liable for
any act or  omission  of an  Employee  to whom  any duty or  responsibility  was
delegated by the Plan  Administrator  in accordance with Section 11.11 unless it
shall have been judicially  determined that (i) the Plan Administrator 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
(ii) the Plan Administrator or any person serving as such 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.

   11.14  Indemnification  of Committee  and  Investment  Committee  Members and
Persons  Serving as Plan  Administrator.  The Company may, to the maximum extent
permitted under  applicable law,  indemnify each member of the Committee and the
Investment  Committee,  and each person serving as Plan Administrator,  from and
against any and all claims,  actions,  demands,  losses,  damages,  expenses and
liabilities  arising  from any act or  omission  of such  member or person  with
respect to the performance of his duties  hereunder and for which such member or
person 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 such member or person 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 the  Investment  Committee,  or any person serving as
Plan  Administrator,  with  respect to any  claims,  actions,  demands,  losses,
damages,  expenses  and  liabilities  arising  from any act or  omission of such
member or person 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.

   11.15  Claims  Procedure.  A  Member,  Former  Member,   Member's  spouse  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  Plan
Administrator, with the Company's Vice President, Personnel. A copy of the claim
shall promptly be transmitted  to the Secretary of the Plan  Administrator,  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 Plan Administrator 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  Plan
Administrator  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 Plan  Administrator,  the Plan  Administrator
shall  consider  the  request  and post its final  decision  to the  claimant by
registered or certified  mail. In the event that the Plan  Administrator  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 Plan Administrator 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 on which the  request for
review was received by the Plan  Administrator.  Such final 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,  as this term is defined  under ERISA
Section 402(a)(2), 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 Plan  Administrator
under Article 11 hereof.

                                   ARTICLE 12
                          MANAGEMENT OF THE TRUST FUND

   12.1 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.

   12.2 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
13,  provided  that 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 spouses and 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.  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 power to invest and reinvest the principal and income
of the trust,  without the prior authorization or consent of the Committee,  the
Investment Committee,  the Plan Administrator,  any court or any other person or
persons.

   12.3  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.

                                   ARTICLE 13
                            AMENDMENT AND TERMINATION

   13.1 Amendment of 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 12 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 and Trust as a plan and trust  meeting  the  requirements  of
sections 401(a) and 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 Participating Companies of maintaining the Plan. Notwithstanding
the  previous  sentence,  if a change in control  occurs (as  defined in Section
13.2) the provisions in Section 13.2 relative to the disposition of any balances
remaining  in the Trust Fund and the  definition  of change in  control  therein
shall  not be  subject  to any  amendment,  change,  substitution,  deletion  or
revocation  (except as may be  necessary  pursuant to clause (b) of this Section
13.1) in any respect whatsoever.  No modification or amendment may be made which
by reason thereof shall (1) deprive any Former Member or other person  receiving
a Pension, 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,  except amounts  resulting from
erroneous actuarial computations, to be used for, or diverted to, purposes other
than for the  exclusive  purposes  of  providing  benefits  to  Members,  Former
Members,  their spouses or Beneficiaries,  and paying the reasonable expenses of
the Plan and the Trust as determined by the Committee, prior to the satisfaction
of all liabilities with respect to such persons under the Plan.

   13.2  Termination  of Plan. The Board of Directors may terminate the Plan for
any reason at any time  (subject to the  requirements  of section 4041 of ERISA)
and any  Participating  Company may withdraw from  participation in the Plan and
discontinue contributions under the Plan for any reason at any time. If the Plan
is  terminated,  the  Trust  Fund  shall be used for  defraying  the  reasonable
expenses of the Trust Fund and for the exclusive benefit of the Members,  Former
Members and their spouses and  Beneficiaries as of the date of such termination.
In the event of the complete or partial  termination  of the Plan, the rights of
all Members,  if the Plan is  completely  terminated,  and the rights of Members
affected  by a partial  termination,  if the Plan is  partially  terminated,  to
benefits accrued to the date of such termination or partial termination,  to the
extent then funded, shall be nonforfeitable,  and that portion of the Trust Fund
which is  attributable  to the  interests of such Members and their  spouses and
Beneficiaries,  as determined by the Committee  with the advice of the actuaries
of the Plan, shall be held for the benefit of such Members and shall be used for
the exclusive benefit of such Members, their spouses and Beneficiaries and shall
be applied in accordance with the provisions of this Article.

   A complete  termination  of the Plan shall be made in accordance  with either
the  requirements  and  procedures  for a  "standard  termination"  set forth in
section  4041(b) of ERISA or the  requirements  and  procedures  for a "distress
termination" set forth in section 4041(c) of ERISA.

   In  the  event  of  the  complete  termination  of  the  Plan,  all  expenses
attributable to the liquidation and distribution of the Trust Fund shall be paid
or provided  for out of the assets of the Trust  Fund.  After the payment or the
provision  for the payment of such  expenses has been  completed,  the remaining
assets of the Trust Fund (subject to the limitations  prescribed in Section 13.3
below, if applicable) shall be converted into cash and shall be allocated to and
among  and  paid  over  to  the  Members,  Former  Members,  their  spouses  and
Beneficiaries  in accordance with the  requirements of sections 4041 and 4044 of
ERISA and the regulations  thereunder in complete  discharge of all liability of
such Participating Company or Companies and the Trustee for the benefits payable
under this Plan.  After the complete  satisfaction  of all  liabilities  to such
Members, Former Members, their spouses and Beneficiaries, any balances remaining
in the Trust Fund because of erroneous actuarial  computations shall be returned
to the  Participating  Company  or  Companies  in  proportion  to  its or  their
aggregate contributions to the Trust Fund; provided,  however, that in the event
the Plan is  terminated  within four years  following a "change in control"  (as
such term is defined  below) any surplus  balances  remaining  in the Trust Fund
shall not be returned to the  Participating  Company or  Companies  but shall be
immediately  contributed  to the  United  States  Trust  Company of New York and
Affiliated Companies Executive  Compensation Trust to be used for the benefit of
employees participating in the Retirement Plan.

   For purpose of this Section  13.2  "change in control"  means that any of the
following  events has occurred after the "Closing  Date",  as defined in Section
1.2 of the Merger Agreement:

      (a) twenty percent (20%) or more of the common shares of the  Corporation,
   as  hereinafter  defined,  has been  acquired  by any person  (as  defined by
   Section  3(a)(9) of the Securities  Exchange Act of 1934) other than directly
   from the Corporation;

      (b) there has been a merger or equivalent  combination  after which 49% or
   more of the  voting  stock of the  surviving  corporation  is held by persons
   other than former shareholders of the Corporation; or

      (c) twenty percent (20%) or more of the directors  elected by shareholders
   to the  Board  of  Directors  of the  Corporation  are  persons  who were not
   nominated  by  management   in  the  most  recent  proxy   statement  of  the
   Corporation;

provided,  however,  that  notwithstanding  anything  herein to the  contrary no
change in control  shall be deemed to have occurred to the extent that the Board
of Directors  otherwise  directs by  resolution  adopted  prior to the change in
control,  or not  later  than  45 days  after  the  change  in  control  (if the
percentage  of common shares  acquired or directors  elected under clause (a) or
(c) of the  definition  of change in control  shall be at least  twenty  percent
(20%) but less than  twenty-five  percent (25%)).  For these purposes,  the term
"Corporation" shall mean U.S. Trust Corporation.

   In the event of a partial termination of the Plan, the benefits payable to or
on behalf of all affected  Members shall be computed and paid in accordance with
the  provisions  of  Articles  5,  6, 7 and 8,  except  that,  if  such  partial
termination is attributable to a withdrawal from  participation in the Plan by a
Participating  Company under  Section  14.2,  then the interests of the affected
Members employed by such Company, and their spouses and Beneficiaries,  shall be
provided for as described in Section 14.2.

   13.3 Special Limitation for Highly Compensated Employees. The benefit payable
under the Plan to, or with respect to, any Highly Compensated  Employee,  or any
Highly  Compensated  Former  Employee,  as such terms are defined  under section
414(q)  of the  Code and the  regulations  thereunder  (referred  to below as an
"HCE"), shall be limited as set forth below:

      (a) Each Plan Year,  the benefit  payments made under the Plan to, or with
   respect  to,  any  HCE,  if not  being  paid in the form of a  straight  life
   annuity,  shall  be  limited  to the  payments  that  would be so made if the
   benefit was being paid as an  actuarially  equivalent  straight life annuity.
   However, the preceding sentence shall not apply in any Plan Year with respect
   to which at least  one of the  requirements  set forth in  Treas.  Reg.  Sec.
   1.401(a)(4)-5(b)(3)(iv) is satisfied.

      (b) The  limitation  in  subsection  (a) above shall not apply to, or with
   respect  to, an HCE for any Plan  Year  during  which  such HCE is not in the
   group consisting of the top 25  nonexcludable  Employees and former Employees
   when ranked on the basis of compensation  for such Plan Year or for any prior
   Plan Year.  The terms  "nonexcludable"  and  "compensation"  appearing in the
   preceding  sentence  shall  have the same  meaning  as such  terms have under
   section 401(a)(4) of the Code and the Treasury regulations thereunder.

      (c) Upon the  termination of the Plan, the benefit  payable under the Plan
   to, or with  respect  to, any HCE shall be  limited to a benefit  that is not
   discriminatory   under  section  401(a)(4)  of  the  Code  and  the  Treasury
   regulations thereunder.

                                   ARTICLE 14
                          OTHER PARTICIPATING COMPANIES

   14.1  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  agreement  under which the assets
of the Plan are held in accordance  with Article 12. If any  Affiliated  Company
becomes a  Participating  Company  in  accordance  with the  provisions  of this
Section  14.1,  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.

   14.2 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,  as
determined by the Committee with the advice of the actuaries of the Plan,  which
is  attributable  to the interests in the Plan of the Members and Former Members
employed  by such  withdrawing  Participating  Company  and  their  spouses  and
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 12. The Plan, as then in effect,  shall be continued as a
   separate  plan for the  exclusive  benefit of the Members and Former  Members
   employed by such  withdrawing  Participating  Company  and their  spouses and
   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 and Former Members employed by
   such withdrawing Participating Company and their spouses and Beneficiaries in
   the manner prescribed in Sections 13.2 to 13.5.

   14.3 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  or assets of any  Participating  Company,  other than the
Company,  may become a  participant  hereunder  only if it is  eligible to do so
under Section 14.1 and then only in the manner described therein.

                                   ARTICLE 15
                              TOP HEAVY PROVISIONS

   15.1 Top Heavy Plan  Requirements.  If the Plan  becomes a Top Heavy Plan for
any Plan Year, the following  provisions shall apply,  notwithstanding any other
provision of this Plan to the contrary:  the minimum vesting  requirement  under
Section 15.3,  the minimum  benefit  requirement  under  Section  15.4,  and the
limitation on compensation under Section 15.5.

   15.2 Determination of Top Heavy Status. The Plan's status as a Top Heavy Plan
shall be determined in accordance with the following rules and definitions:

      (a) The Plan shall be a "Top Heavy Plan" for any Plan Year in which, as of
   the Determination Date for that year, the sum of the Present Value of Accrued
   Benefits and the Aggregate  Accounts of all Key Employees under this Plan and
   all other plans of an Aggregation Group exceeds 60% of the sum of the Present
   Value of Accrued  Benefits and the Aggregate  Accounts of all Key and Non-Key
   Employees under this Plan and all such other plans.

      (b) The Plan shall be a "Super Top Heavy  Plan" for any Plan Year in which
   it would be treated as a Top Heavy  Plan under  subsection  (a) if "90%" were
   substituted for "60%" therein.

      (c) The "Determination Date" for any Plan Year shall mean (1) the last day
   of the preceding  Plan Year,  or (2) in the case of the first Plan Year,  the
   last day of such Plan Year. When  aggregating this Plan with any other plans,
   the Present Value of Accrued Benefits and Aggregate Accounts under such other
   plans as of the Determination  Date in question shall be calculated as of the
   determination dates (within the meaning of section  416(g)(4)(C) of the Code)
   for those plans that fall within the same calendar year as the  Determination
   Date in question.

      (d)  "Aggregate  Account" shall mean,  with respect to each Employee,  the
   value of all individual  accounts maintained on the Employee's behalf under a
   defined   contribution  plan  maintained  by  the  Employer,   calculated  in
   accordance with the requirements of Treas. Reg. Sec. 1.416-1, T-24.

      (e) "Present  Value of Accrued  Benefit"  shall mean,  in the case of this
   Plan or another defined benefit plan maintained by the Employer,  the present
   value of an Employee's accrued benefit under this Plan or such other plan, as
   determined in accordance with the requirements of Treas.  Reg. Sec.  1.416-1,
   T-25 to T-28 and as hereinafter provided. The actuarial assumptions set forth
   in  Section  2.17  shall be used in  determining  benefit  values  for  these
   purposes,  and the same  actuarial  assumptions  shall  apply in  determining
   benefit values under this Plan and each other defined benefit plan taken into
   consideration for top heavy purposes. The Present Value of Accrued Benefit as
   of a  Determination  Date in the case of this Plan, or as of a  determination
   date (within the meaning of section  416(g)(4)(C) of the Code) in the case of
   another plan,  shall be determined as of the most recent  valuation  date for
   this Plan,  or such other  plan,  within  the 12 month  period  ending on the
   Determination Date or determination date, as applicable.  Such valuation date
   shall be the same date used by this Plan,  or such other plan,  for computing
   Plan costs for minimum funding, regardless of whether a valuation is actually
   performed.  The Present Value of Accrued Benefit shall be determined for each
   Non-Key  Employee  under the uniform  method of benefit  accrual  used by all
   qualified  defined  benefit  plans of the  Employer,  or, if there is no such
   method,  as if  benefits  accrued  not more  rapidly  than under the  slowest
   accrual rate permitted under section 411(b)(1)(C) of the Code.

      (f) "Aggregation Group" shall mean either a Required Aggregation Group or,
   if the  Employer so elects,  a  Permissive  Aggregation  Group as  determined
   below:

         (1) A "Required  Aggregation Group" consists of (i) each qualified plan
      maintained  by the Employer in which,  during the 5 year period  ending on
      the  Determination  Date, at least one participant is a Key Employee,  and
      (ii) each other  qualified plan of the Employer  which,  during the period
      described  in  (i),  enables  any  plan  described  in  (i)  to  meet  the
      requirements of section 401(a)(4) or 410 of the Code.

      Each plan in the  Required  Aggregation  Group shall be  considered  a Top
   Heavy Plan if the Required Aggregation Group is a Top Heavy Group. No plan in
   the  Required  Aggregation  Group will be  considered a Top Heavy Plan if the
   Required Aggregation Group is not a Top Heavy Group.

         (2) A  "Permissive  Aggregation  Group"  consists  of (i) the  Required
      Aggregation Group and (ii) any other qualified plan the Employer elects to
      include, provided the resulting group, taken as a whole, would continue to
      satisfy the provisions of sections 401(a)(4) and 410 of the Code.

      In the case of a Permissive Aggregation Group, only a plan that is part of
   the Required  Aggregation  Group shall be  considered a Top Heavy Plan if the
   Permissive  Aggregation Group is a Top Heavy Group. No plan in the Permissive
   Aggregation  Group  shall be  considered  a Top Heavy Plan if the  Permissive
   Aggregation Group is not a Top Heavy Group.

         (3) A plan that has been terminated  during the 5 year period ending on
      the  Determination  Date for the Plan Year shall not be  excluded  from an
      Aggregation Group solely on account of the termination.

      (g) "Top  Heavy  Group"  means an  Aggregation  Group in which,  as of the
   Determination Date, the sum of:

         (1) the Present Value of Accrued  Benefits of Key  Employees  under all
      defined benefit plans included in the group, and

         (2)  the  Aggregate   Accounts  of  Key  Employees  under  all  defined
      contribution  plans  included  in the group  exceeds  60% of a similar sum
      determined for all Key and Non-Key Employees.

      (h) For  purposes  of this  Section  15.2,  the  Present  Value of Accrued
   Benefits and/or Aggregate  Accounts of any individual shall be disregarded if
   such  individual  (1) has not performed any services for the Employer  during
   the 5 year period ending on the Determination  Date for the Plan Year, or (2)
   had been a Key Employee for any Plan Year but  subsequently  became a Non-Key
   Employee for any Plan Year.  Further,  the Present  Value of Accrued  Benefit
   and/or  Aggregate  Account of any Employee  under any plan taken into account
   for top  heavy  purposes  shall  be  increased  by the  aggregate  amount  of
   distributions  made with  respect to such  Employee by such plan during the 5
   year period  ending on the  Determination  Date for the Plan Year.  Rollovers
   shall be taken  into  account  in  computing  the  Present  Value of  Accrued
   Benefits and Aggregate Accounts as required under section 416(g)(4)(A) of the
   Code and the Treasury regulations thereunder.

      (i) For purposes of this Section 15.2, wherever required by section 416 of
   the  Code  and the  Treasury  regulations  thereunder,  the  term  "Employer"
   includes all entities aggregated with the Employer under section 414(b), (c),
   (m) or (o) of the Code and the regulations thereunder.

   15.3 Minimum Vesting  Requirement.  Any Member who earns at least one Hour of
Service during a Top Heavy Plan Year, or during any Plan Year thereafter,  shall
have a nonforfeitable right to his Pension upon the completion of three Years of
Service.

   15.4 Minimum Benefit  Requirement.  If the Plan becomes a Top Heavy Plan, the
following minimum benefit requirement shall be met:

      (a) For any Plan  Year  which is or  follows a Top Heavy  Plan  Year,  the
   accrued  benefit of each  Non-Key  Employee who is a Member shall not be less
   than a minimum accrued benefit determined under section 416(c)(1) of the Code
   and the Treasury  regulations  thereunder.  Generally,  such minimum  accrued
   benefit shall be derived from Employer contributions and, when expressed as a
   straight  life annuity which is payable  annually and which  commences at the
   Non-Key  Employee's  Normal Retirement Date, shall be equal to the product of
   (1) the Non-Key Employee's annual Section 415 Compensation  averaged over the
   consecutive  Plan Years (not  exceeding  five (5) years)  which  produce  the
   highest  average and (2) the lesser of (i) two percent (2%) multiplied by the
   number of the Non-Key Employee's Years of Service or (ii) 20%.

      (b) For purposes of this Section,  a Non-Key  Employee who is not a Member
   solely because (1) his  Compensation  or Section 415  Compensation is below a
   stated  amount  or (2)  he was  not  employed  on a  specific  date  will  be
   considered to be a Member.

      (c) For  purposes  of this  Section,  Years of  Service  and  Section  415
   Compensation shall be disregarded to the maximum extent permitted by law.

      (d)  If a  Non-Key  Employee  participates  in  this  Plan  and a  defined
   contribution  plan  included in a Required  Aggregation  Group which is a Top
   Heavy Group, the minimum benefit requirement shall be met by this Plan unless
   an amount  equal to or greater  than the minimum  contribution  described  in
   Treas. Reg. Sec. 1.416-1,  Section M-12 has been contributed for such Non-Key
   Employee under said defined contribution plan.

      (e) In applying the limitation  described in section 415(e) of the Code to
   the Plan, in each Super Top Heavy Plan Year beginning before January 1, 2000,
   "1.0" shall be substituted for "1.25" in applying  sections  415(e)(2)(B) and
   415(e)(3)(B) of the Code.  Further,  in each Top Heavy Plan Year, "1.0" shall
   be  substituted  for "1.25" as  provided  in the  preceding  sentence  unless
   benefits or  contributions  at least equal to those described in Treas.  Reg.
   Sec. 1.416-1, Section M-14 are provided for the Non-Key Employee by this Plan
   or by any defined  contribution  plan which is  included  with this Plan in a
   Required Aggregation Group which is a Top Heavy Group.

   15.5 Limitation on Compensation  and Section 415  Compensation.  For each Top
Heavy Plan Year beginning  before January 1, 1989,  Compensation and Section 415
Compensation in excess of $200,000 shall be disregarded.  In addition,  for each
Plan Year,  Section 415 Compensation  shall be subject to the section 401(a)(17)
limitation described in Section 2.10.

   15.6 Other Definitions.  As used in this Article 15 the following terms shall
have the following meanings:

      (a) "Key Employee" shall mean an Employee  treated as a key employee under
   section 416(i) of the Code and the Treasury regulations thereunder.

      (b) "Non-Key Employee" shall mean any Employee who is not a Key Employee.

      (c)  "Section  415  Compensation"  shall mean  compensation  as defined in
   section  415(c)(3) of the Code and Treas. Reg. Sec.  1.415-2(d)(1),  (2), (3)
   and (4).

      (d) "Top Heavy  Plan  Year"  shall mean any Plan Year in which the Plan is
   Top Heavy under Section 15.2(a).

      (e) "Super Top Heavy Plan Year" shall mean any Plan Year in which the Plan
   is Top Heavy under Section 15.2(b).

   15.7 Applicability.  In the event that Congress should provide by statute, or
the  Treasury  Department  or the Internal  Revenue  Service  should  provide by
regulation  or  ruling,  that  the  provisions  of this  Article  are no  longer
necessary to meet the qualification  requirements of section 401(a) of the Code,
this Article shall become void, and shall no longer apply, without the necessity
of any amendment to the Plan.

                                   ARTICLE 16
                                  CONSTRUCTION

   16.1 Plan Intended to Qualify. The Plan, as amended and restated, is intended
to continue to qualify under section 401(a) of the Code. Notwithstanding Section
13.1, 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.

   16.2 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.

   16.3 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.

   Executed this 7th day of November, 2001, but effective as provided herein.

                                              U.S. TRUST CORPORATION

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

<PAGE>

                                   APPENDIX A

                U.S. TRUST CORPORATION EMPLOYEES' RETIREMENT PLAN

                REDUCTION FACTORS FOR JOINT AND SURVIVOR OPTIONS

                    DESCRIPTION OF JOINT AND SURVIVOR FACTORS

If a member  elects a Joint and 100%  Survivor  Pension,  the pension  otherwise
payable as a life annuity will be multiplied by a factor of .840.  The reduction
factor will increase  (decrease) for each year that the Beneficiary is older (or
younger) than the Annuitant.  For each of the first 10 years of age  difference,
the factor will change by .007. For each of the next 10 years of age difference,
the factor  will  change by .003.  For any years in excess of 30 the factor will
change by .001 for each such year. In no event may the factor exceed .980.

If a member  elects a Joint and 75%  Survivor  Pension,  the  pension  otherwise
payable as a life annuity will be multiplied by a factor of .875.  The reduction
factor will increase  (decrease) for each year that the Beneficiary is older (or
younger) than the Annuitant.  For each of the first 10 years of age  difference,
the  factor  will  change  by  .0055.  For  each  of the  next 10  years  of age
difference, the factor will change by .004. For each of the next 10 years of age
difference,  the factor will  change by .003.  For any years in excess of 30 the
factor will change by .001 for each such year. In no event may the factor exceed
 .980.

If a member  elects a Joint and 66?%  Survivor  Pension,  the pension  otherwise
payable as a life annuity will be multiplied by a factor of .885.  The reduction
factor will increase  (decrease) for each year that the Beneficiary is older (or
younger) than the Annuitant.  For each of the first 10 years of age  difference,
the factor will change by .005. For each of the next 10 years of age difference,
the factor will change by .004. For each of the next 10 years of age difference,
the factor  will  change by .003.  For any years in excess of 30 the factor will
change by .001 for each such year. In no event may the factor exceed .980.

If a member  elects a Joint and 50%  Survivor  Pension,  the  pension  otherwise
payable as a life annuity will be multiplied by a factor of .910.  The reduction
factor will increase  (decrease) for each year that the Beneficiary is older (or
younger) than the Annuitant.  For each of the first 10 years of age  difference,
the factor will change by .004. For each of the next 10 years of age difference,
the factor will change by .003. For each of the next 10 years of age difference,
the factor  will  change by .002.  For any years in excess of 30 the factor will
change by .001 for each such year. In no event may the factor exceed .980.

<PAGE>

                REDUCTION FACTORS FOR JOINT AND SURVIVOR OPTIONS

Number of Years the
Beneficiary is
Younger than the
Member
                100%                75%               66-2/3%              50%
--------------------------------------------------------------------------------

   0            .8400              .8750               .8850              .9100
   1            .8330              .8695               .8800              .9060
   2            .8260              .8640               .8750              .9020
   3            .8190              .8585               .8700              .8980
   4            .8120              .8530               .8650              .8940
   5            .8050              .8475               .8600              .8900
   6            .7980              .8420               .8550              .8860
   7            .7910              .8365               .8500              .8820
   8            .7840              .8310               .8450              .8780
   9            .7770              .8255               .8400              .8740
   10           .7700              .8200               .8350              .8700
   11           .7650              .8160               .8310              .8670
   12           .7600              .8120               .8270              .8640
   13           .7550              .8080               .8230              .8610
   14           .7500              .8040               .8190              .8580
   15           .7450              .8000               .8150              .8550
   16           .7400              .7960               .8110              .8520
   17           .7350              .7920               .8070              .8490
   18           .7300              .7880               .8030              .8460
   19           .7250              .7840               .7990              .8430
   20           .7200              .7800               .7950              .8400
   21           .7170              .7770               .7920              .8380
   22           .7140              .7740               .7890              .8360
   23           .7110              .7710               .7860              .8340
   24           .7080              .7680               .7830              .8320
   25           .7050              .7650               .7800              .8300
   26           .7020              .7620               .7770              .8280
   27           .6990              .7590               .7740              .8260
   28           .6960              .7560               .7710              .8240
   29           .6930              .7530               .7680              .8220
   30           .6900              .7500               .7650              .8200
   31           .6890              .7490               .7640              .8190
   32           .6880              .7480               .7630              .8180
   33           .6870              .7470               .7620              .8170
   34           .6860              .7460               .7610              .8160
   35           .6850              .7450               .7600              .8150
   36           .6840              .7440               .7590              .8140
   37           .6830              .7430               .7580              .8130
   38           .6820              .7420               .7570              .8120
   39           .6810              .7410               .7560              .8110
   40           .6800              .7400               .7550              .8100

<PAGE>

                REDUCTION FACTORS FOR JOINT AND SURVIVOR OPTIONS

Number of Years The
Beneficiary is
Older than the
Member
                100%                75%               66-2/3%              50%
--------------------------------------------------------------------------------

   0            .8400              .8750               .8850              .9100
   1            .8470              .8805               .8900              .9140
   2            .8540              .8860               .8950              .9180
   3            .8610              .8915               .9000              .9220
   4            .8680              .8970               .9050              .9260
   5            .8750              .9025               .9100              .9300
   6            .8820              .9080               .9150              .9340
   7            .8890              .9135               .9200              .9380
   8            .8960              .9190               .9250              .9420
   9            .9030              .9245               .9300              .9460
   10           .9100              .9300               .9350              .9500
   11           .9150              .9340               .9390              .9530
   12           .9200              .9380               .9430              .9560
   13           .9250              .9420               .9470              .9590
   14           .9300              .9460               .9510              .9620
   15           .9350              .9500               .9550              .9650
   16           .9400              .9540               .9590              .9680
   17           .9450              .9580               .9630              .9710
   18           .9500              .9620               .9670              .9740
   19           .9550              .9660               .9710              .9770
   20           .9600              .9700               .9750              .9800
   21           .9630              .9730               .9780              .9800
   22           .9660              .9760               .9800              .9800
   23           .9690              .9790               .9800              .9800
   24           .9720              .9800               .9800              .9800
   25           .9750              .9800               .9800              .9800
   26           .9780              .9800               .9800              .9800
   27           .9800              .9800               .9800              .9800
   28           .9800              .9800               .9800              .9800
   29           .9800              .9800               .9800              .9800
   30           .9800              .9800               .9800              .9800

<PAGE>

                 REDUCTION FACTORS FOR CONVERTING A LIFE PENSION
                          TO A CERTAIN AND LIFE PENSION

       5 Year Certain      10 Year                  5 Year Certain     10 Year
          and Life       Certain and                   and Life      Certain and
 Age                        Life           Age                          Life
--------------------------------------------------------------------------------

 49         .996            .988            68           .969           .890
 50         .995            .985            69           .967           .880
 51         .994            .982            70           .965           .870
 52         .993            .979            71           .960           .855
 53         .992            .976            72           .955           .840
 54         .991            .973            73           .950           .825
 55         .990            .970            74           .945           .810
 56         .989            .965            75           .940           .795
 57         .988            .960            76           .930           .775
 58         .987            .955            77           .920           .755
 59         .986            .950            78           .910           .735
 60         .985            .945            79           .900           .715
 61         .983            .940            80           .890           .695
 62         .981            .935            81           .875           .673
 63         .979            .930            82           .860           .651
 64         .977            .925            83           .845           .629
 65         .975            .920            84           .830           .607
 66         .973            .910            85           .815           .585
 67         .971            .900

Description of Factors:

   If a member  elects the 5 year certain and life pension at age 65, the amount
otherwise  payable as a life pension will be multiplied by a factor of .975. The
reduction factor will increase  (decrease) by .002 for each year that the member
is between age 60 and 65 (or 65 and 70) and increase by an  additional  .001 for
each year prior to age 60. The factor  will be further  reduced  after age 70 as
follows: .005 for each year from 70 to 75, .010 for each year from 75 to 80, and
 .015 for each year after 80. The factor may not exceed 1.000.

   If a member elects the 10 year certain and life pension at age 65, the amount
otherwise  payable as a life pension will be multiplied by a factor of .920. The
reduction factor will increase by .005 (decrease by .010) for each year that the
member is between  age 55 and 65 (or 65 and 70) and  increase  by an  additional
 .003 for each year prior to age 55. The factor will be further reduced after age
70 as  follows:  .015 for each year from 70 to 75, .020 for each year from 75 to
80, and .022 for each year after 80. The factor may not exceed 1.000.

<PAGE>

         FACTORS TO BE APPLIED TO THE ESTIMATED SOCIAL SECURITY BENEFIT
           PAYABLE AT AGE 62 TO DETERMINE EQUIVALENT TEMPORARY ANNUITY
           PAYABLE FROM THE PLAN FROM EARLY RETIREMENT DATE TO AGE 62

 Years
 Benefit                           Months
 Commences
 before
 age 62

          0      1    2     3      4     5     6     7      8    9     10    11
 -------------------------------------------------------------------------------

  0     1.0000 .9925 .9850 .9775 .9700 .9625 .9550 .9475 .9400 .9325 .9250 .9175
  1      .9100 .9025 .8950 .8875 .8800 .8725 .8650 .8575 .8500 .8425 .8350 .8275
  2      .8200 .8150 .8100 .8050 .8000 .7950 .7900 .7850 .7800 .7750 .7700 .7650
  3      .7600 .7550 .7500 .7450 .7400 .7350 .7300 .7250 .7200 .7150 .7100 .7050
  4      .7000 .6950 .6900 .6850 .6800 .6750 .6700 .6650 .6600 .6550 .6500 .6450
  5      .6400 .6350 .6300 .6250 .6200 .6150 .6100 .6050 .6000 .5950 .5900 .5850
  6      .5800 .5750 .5700 .5650 .5600 .5550 .5500 .5450 .5400 .5350 .5300 .5250
  7      .5200 .5167 .5133 .5100 .5067 .5033 .5000 .4967 .4933 .4900 .4867 .4834
  8      .4800 .4767 .4733 .4700 .4667 .4633 .4600 .4567 .4533 .4500 .4467 .4434
  9      .4400 .4367 .4333 .4300 .4267 .4233 .4200 .4167 .4133 .4100 .4067 .4035
  10     .4000 .3967 .3933 .3900 .3867 .3833 .3800 .3767 .3733 .3700 .3667 .3635
  11     .3600 .3567 .3533 .3500 .3467 .3433 .3400 .3367 .3333 .3300 .3267 .3235
  12     .3200

<PAGE>

              FACTORS TO BE APPLIED TO THE ACCRUED PENSION PAYABLE
              AT NORMAL RETIREMENT TO DETERMINE AMOUNT OF DEFERRED
          VESTED PENSION BENEFIT PAYABLE BEFORE NORMAL RETIREMENT DATE

Years
Benefit                                 Months
Commences
before
Normal
Retirement
Date

          0      1     2     3     4     5     6     7     8     9    10    11
--------------------------------------------------------------------------------

 0     1.0000 .9933 .9867 .9800 .9733 .9667  .9600 .9533 .9467 .9400 .9333 .9267
 1     .9200  .9133 .9067 .9000 .8933 .8867  .8800 .8733 .8667 .8600 .8533 .8467
 2     .8400  .8333 .8267 .8200 .8133 .8067  .8000 .7933 .7867 .7800 .7733 .7667
 3     .7600  .7533 .7467 .7400 .7333 .7267  .7200 .7133 .7067 .7000 .6933 .6867
 4     .6800  .6733 .6667 .6600 .6533 .6467  .6400 .6333 .6267 .6200 .6133 .6067
 5     .6000  .5967 .5933 .5900 .5867 .5833  .5800 .5767 .5733 .5700 .5667 .5633
 6     .5600  .5567 .5533 .5500 .5467 .5433  .5400 .5367 .5333 .5300 .5267 .5233
 7     .5200  .5167 .5133 .5100 .5067 .5033  .5000 .4967 .4933 .4900 .4867 .4833
 8     .4800  .4767 .4733 .4700 .4667 .4633  .4600 .4567 .4533 .4500 .4467 .4433
 9     .4400  .4367 .4333 .4300 .4267 .4233  .4200 .4167 .4133 .4100 .4067 .4033
10     .4000

<PAGE>

                U.S. Trust Corporation Employees' Retirement Plan
    Extended Early Retirement Reduction Factors For Terminated Vested Members

       Age               Factor            Age              Factor
        20               0.0232             38              0.0866
        21               0.0249             39              0.0935
        22               0.0268             40              0.1010
        23               0.0287             41              0.1092
        24               0.0309             42              0.1182
        25               0.0332             43              0.1280
        26               0.0356             44              0.1386
        27               0.0383             45              0.1503
        28               0.0412             46              0.1631
        29               0.0443             47              0.1772
        30               0.0476             48              0.1927
        31               0.0513             49              0.2097
        32               0.0552             50              0.2285
        33               0.0594             51              0.2492
        34               0.0640             52              0.2722
        35               0.0690             53              0.2977
        36               0.0744             54              0.3260
        37               0.0802             55              0.4000

<PAGE>

                                   APPENDIX B

                U.S. TRUST CORPORATION EMPLOYEES' RETIREMENT PLAN

                   PARTICIPATING COMPANIES AS OF NOVEMBER 2001

                  U.S. Trust Corporation
                  United States Trust Co. International Corp.
                  United States Trust Company of New York
                  U.S. Trust Mortgage Service Company
                  U.S. Trust Company of Delaware
                  U.S. Trust Company, National Association
                  U.S. Trust Company of New Jersey
                  UST Fiduciary Services Ltd.
                  UST Financial Services Corp.
                  UST Securities Corporation
                  U.S. Trust Company of Texas, National Association
                  U.S. Trust Company of Florida Savings Bank
                  U.S. Trust Company
                  U.S. Trust Technology and Support Services, Inc.
                  CTC Consulting, Inc.
                  U.S. Trust Company of North Carolina

                    SUMMARY OF BENEFIT PROVISIONS RELATING TO
                            MERGERS AND ACQUISITIONS

                       Prior Service        Prior Service        Prior Service
                        counts as            counts as            counts as
Acquisition          Credited Service?     Vesting Service?  Eligibility Service

Capital Trust Company           No             Yes(c)
McMurrey                        No               No                     No
Maier & Siebel                  No          Yes(a); (c)               Yes(a)
Wood Island                     No          Yes(a); (c)               Yes(a)
Radnor                          No          Yes(a); (c)               Yes(a)
North Carolina Trust            No               No                     No
Charles Schwab (as defined in   No          Yes(b); (c)               Yes(b)
Section 2.6)
Resource Companies, Inc.        No             Yes(c)                  Yes

   (a)This  provision is not contained in the purchase  agreement but was agreed
      to during final negotiations.
   (b)This provision applies only to Employees who transfer  employment directly
      to a Participating Company.
   (c)Vesting Service is used in the calculation of the Rule of 80.Exhibit 10.233

                        U.S. TRUST corporation 401(k) PLAN

                             As Amended and Restated
                                 Effective as of
                                 January 1, 2001

<PAGE>

                                 Table of Contents

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

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

ARTICLE 3       MATCHING CONTRIBUTIONS AND ESOP DIVIDENDS.....................14

ARTICLE 4       401(k) CONTRIBUTIONS..........................................17

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

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

ARTICLE 7       INVESTMENT OF ACCOUNTS........................................36

ARTICLE 8       NATURE OF INTEREST............................................45

ARTICLE 9       ACCOUNTS......................................................46

ARTICLE 10      WITHDRAWALS AND LOANS.........................................50

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..................................................92

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

<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>

                                   APPENDIX B

                        SUMMARY OF PROVISIONS RELATING TO
                             MERGERS AND ACQUISITIONS

Acquisition Acquisition Prior Service  Prior Service Prior Service Prior Service
               Date      Counts as       Counts as    Counts as        Counts as
                        Eligibility     Eligibility   Eligibility        Vesting
                        Service  for    Service for   Service for       Service?
                       Elective Payroll     AIP?      Matching
                       Contributions?                 Contributions?

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 9/1/99       Yes             No            Yes                Yes
Trust
Resource
Companies,     5/1/01       Yes             Yes           Yes                Yes
Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]