EXECUTIVE EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE


                  This Employment Agreement (the "Agreement") is entered into as
of January 12, 2000,  by and among The Charles  Schwab  Corporation,  a Delaware
corporation ("Schwab"),  U.S. Trust Corporation, a New York corporation ("UST"),
and H. Marshall Schwarz, an individual ("Executive").

                                 R E C I T A L S

      a.                Executive is Chairman and Chief Executive Officer of UST

      b.                UST  has  been  engaged  in  the  business  of providing
               a broad array of financial  services,  including private banking,
               fiduciary services, and tax, estate and financial planning. UST's
               business is currently national in scope.

      c.                As  of  the  date  hereof,  Schwab  has  entered into an
               Agreement  and Plan of Merger (the "Merger  Agreement")  with UST
               for UST to become a wholly owned subsidiary of Schwab. Terms used
               herein and not defined  herein shall have the meanings given them
               in the Merger Agreement.

      d.                Schwab, UST and Executive wish to assure the continuance
               of the good will  developed  by Executive on behalf of UST during
               Executive's  employment and secure Executive's unique services in
               connection  with the  business of UST, and Schwab and UST wish to
               secure Executive's  agreement not to compete with Schwab and UST,
               or to infringe upon the protectible  interests of Schwab and UST,
               upon the terms and conditions set forth in this Agreement.



                                    AGREEMENT

                  1. Employment.  UST  hereby  employs  Executive  and Executive
hereby agrees to serve UST as Chairman and Chief Executive  Officer of UST or in
such other comparable or more senior executive  management  position to which he
may be elected  or  appointed  by the Board of  Directors  of UST (the  "Board")
during  the  Employment  Term (as  defined  below).  Executive  shall  report to
Schwab's  President  and  Co-Chief  Executive  Officer.  The parties  agree that
Executive will be appointed to the Board of Directors and  Management  Committee
of  Schwab  at the  Effective  Date of  this  Agreement.  Executive's  continued
appointment or removal from Schwab's Board of Directors  during the term of this
Agreement is subject to the rules,  by-laws or other  provisions  applicable  to
such Board.

                  2. Employment Term.  The  term of Executive's employment under
this  Agreement  shall be for a period  of three  (3)  years  commencing  on the
effective date of the  consummation  of the Merger of UST and Schwab pursuant to
the  Merger  Agreement  (the  "Effective  Date")  and  terminating  on the third
anniversary of the Effective Date, unless earlier terminated pursuant to Section
12 of this Agreement (the "Employment Term").

                  3.  Responsibilities.

                        (a)  Regular  Duties.    During   the  Employment  Term,
Executive shall have responsibilities,  duties and authority reasonably accorded
to and expected of a Chairman and Chief Executive Officer, as determined in good
faith by Schwab's President and Co-Chief Executive Officer.

                        (b)  Devotion of Full Time.  During the Employment Term,
Executive will devote all of  Executive's  business  time,  ability,  attention,
energy,  knowledge  and  skill to  performing  Executive's  duties  and all such
executive   management  duties  as  are  reasonably  assigned  or  delegated  to
Executive.  Executive will not,  without  written  consent of Schwab,  render to
others  services of any kind for  compensation,  or engage in any other business
activity;  provided  that  Executive  will be  entitled  to sit on the boards of
directors of non-profit  educational,  charitable or religious  organizations so
long as the  extent  of such  service  does not  violate  any  Schwab  policy or
policies  applicable  to  such  practices  or  materially   interfere  with  the
performance of Executive's  responsibilities under this Agreement,  and provided
further that Executive may continue to serve on the boards of directors on which
Executive presently is serving, as specifically identified on Exhibit A hereto.

                        (c)  Compliance with Employee Policies. Executive agrees
to comply with all Schwab and UST employee  policies of which  Executive is made
aware that relate to  employee  conduct,  including  but not limited to policies
prohibiting discrimination and harassment.

                        (d)  Payments or Benefits from Other Sources.  Executive
will comply with all Schwab policies of which Executive is made aware applicable
to any payments,  gifts,  entertainment,  services or other benefits provided to
Executive  from any person,  organization  or other entity as an  inducement  or
reward related to his performance as a representative of UST or Schwab.

                        (e)  Place of Performance.  During  the Employment Term,
Executive shall be based at the principal  executive  offices of UST in the City
of New York, except for reasonably required travel consistent with Schwab policy
on UST's business. In connection with such reasonably required travel, Executive
shall not be required to make more than twelve (12) short-term trips to Schwab's
headquarters  during each twelve-month  period (beginning on the Effective Date)
of the Employment Term.

                  4.  Compensation.

                        (a)  Salary.  In consideration for Executive's  services
to UST during the Employment Term, Executive shall receive an annual base salary
equal to the annual base salary  then being paid to  Executive  by UST as of the
Effective  Date ("Annual  Base  Salary"),  which shall be paid in  substantially
equal  installments  biweekly,  from  which UST shall  withhold  and  deduct all
applicable federal,  state and city income, social security and disability taxes
as required by applicable laws. In no event shall Executive's Annual Base Salary
be reduced during the Employment Term.

                        (b)  Short Term Incentive Compensation.  Pursuant to the
terms  of the UST  Executive  Incentive  Plan,  a  current  version  of which is
attached  as  Exhibit  B  hereto,   Executive   shall  receive,   as  additional
compensation,  an annual bonus with a target of 165% of Executive's  Annual Base
Salary  ("Targeted  Bonus").  After December 31, 2001, the specific terms of the
UST Executive  Incentive Plan may be modified from time to time in Schwab's sole
discretion. For calendar year 2000, Executive's bonus shall not be less than the
short term incentive bonus  Executive  received from UST for calendar year 1999,
provided, however, that the portion of Executive's bonus converted to equity for
calendar year 2000 shall be calculated by Schwab using the  methodology  that is
utilized  to value  equity or option  grants  for  Schwab  Management  Committee
members. For calendar year 2001, Executive's bonus shall not be less than eighty
percent (80%) of the short term incentive bonus Executive  received from UST for
calendar year 1999,  provided,  however,  that the portion of Executive's  bonus
converted to equity for calendar  year 2001 shall be  calculated by Schwab using
the  methodology  that is utilized to value  equity or option  grants for Schwab
Management Committee members.

                        (c)  Long  Term  Incentive  Compensation.    Subject  to
approval  by  Schwab's  Compensation  Committee  (which  approval  shall  not be
unreasonably  withheld),  as soon  as  practicable  after  the  Effective  Date,
Executive  shall  receive an initial  grant of  options  to  purchase  25,000 of
Schwab's common shares subject to vesting and other provisions  specified in the
grant,  the key terms of which are  attached  as Exhibit C hereto.  The value of
such grant is an amount that will put  Executive's  Targeted Total  Compensation
within  the range of the  Targeted  Total  Compensation  for  Schwab  Management
Committee  members.  "Targeted  Total  Compensation"  is  defined  as the sum of
Executive's  Annual Base Salary,  Executive's  Targeted Bonus,  and the targeted
value of any options and/or restricted shares granted to Executive.

                        (d)  Reimbursement   of  Expenses/Travel.    During  the
Employment Term, Executive shall be entitled to receive prompt reimbursement for
all travel, entertainment and other expenses properly incurred and documented by
Executive in connection  with  Executive's  employment by UST in accordance with
Schwab policies applicable to senior management executives.

                        (e)  Key  Employee  Retention  Program.   Executive   is
scheduled to participate in the Key Employee Retention Program to be established
by UST and Schwab immediately prior to the Effective Date ("Retention Program"),
the key terms of which are attached as Exhibit D hereto,  at a payment  equal to
$2.8  million,  five-sixths  in cash and  one-sixth  in a grant of Schwab  stock
options in accordance with the terms of Exhibit D.

                  5. Change In Executive's Mix of Total Compensation. Schwab and
the Executive  agree that  commencing  January 1, 2002,  the mix of  Executive's
Targeted  Total  Compensation  may be  altered  to reflect  the  Targeted  Total
Compensation  mix afforded Schwab  Management  Committee  members.  Such changes
could encompass changes to some or all of the components of Executive's Targeted
Total  Compensation,  but in  any  case  would  not  represent  a  reduction  in
Executive's  Targeted Total Compensation and, in any event,  neither Executive's
Annual Base Salary nor Executive's  Targeted Total Compensation shall be reduced
at any time during the Employment Term.

                  6.  Benefits.

                        (a)  Executive  Benefits.   Up  through  and   including
December 31, 2001,  Executive  shall be eligible to  participate in all of UST's
applicable  employee  benefits  and  executive   compensation  plans,  programs,
policies  and  arrangements  in  which  Executive  is  eligible  to  participate
immediately prior to the Effective Date (collectively, "UST Plans").

                        (b)  Schwab Employee Benefits.  At the option of Schwab,
after  December  31,  2001,  or sooner if agreed by both  Executive  and Schwab,
Executive  will be eligible to  participate  in Schwab's  employee  benefits and
executive  compensation  plans,  programs,  policies and  arrangements as may be
applicable to Schwab Management  Committee members,  as such benefits may change
from  time to time  (collectively,  "Schwab  Plans"),  instead  of the  benefits
described in Section 6(a);  except that through the Employment  Term,  Executive
will not be eligible to participate in any such plans that provide for severance
pay or other benefits for which  Executive would otherwise be eligible by virtue
of Executive's termination under the policies or practices of UST, Schwab or any
of its other affiliates or subsidiaries.

                        (c)  Vacation  and  Sick  Leave.   During the Employment
Term,  Executive  shall be entitled to paid  vacation and sick leave  consistent
with the  vacation  and sick  leave  provided  to  employees  of  Schwab  at the
Management  Committee member level;  provided,  however,  that in no event shall
Executive  be entitled to less than five (5) weeks of vacation per each 12 month
period during the Employment Term.

                        (d)  Credit for Service.   Executive will receive credit
for prior  service  with UST to the extent  length of service is relevant  under
those UST Plans or Schwab plans for which Executive is eligible to participate.

                        (e)  Relinquishment  and  waiver  of  all other employee
benefits  or  rights.  Except  as  specifically  set  forth  in this  Agreement,
Executive  hereby  relinquishes and waives any rights in any other Schwab or UST
Plans,  policies,  or  perquisites,  including  but not  limited  to any  Plans,
policies or perquisites  of any  subsidiaries  of UST. In particular,  Executive
waives  and  relinquishes  his  right  to  severance  benefits  in the  event of
voluntary  termination under the 1990 Change in Control and Severance Policy for
Top Tier Officers Plan of UST.

                  7. Executive Change in Status. The amounts of compensation and
benefits  (including any guarantees  thereof) to be provided to Executive during
the Employment Term pursuant to Sections 4, 5, and 6 of this Agreement,  as well
as the amounts of any Severance Payments to be provided to Executive pursuant to
Section 12 of this Agreement,  are based on Executive's  continuing  status as a
full-time  senior  executive with UST throughout the Employment Term. Any change
in Executive's status as a full-time senior executive with UST to a status which
is less  than  that of a  full-time  senior  executive  with UST  shall  require
Schwab's  express written consent.  If Executive's  status should change for any
reason  during  the  Employment  Term to a status  which is less  than that of a
full-time  senior  executive  with UST,  the  amounts  of the  compensation  and
benefits (including any guarantees thereof) to be provided to Executive pursuant
to  Sections  4, 5,  and 6 of this  Agreement,  as  well  as the  amount  of any
Severance  Payments to be provided to  Executive  pursuant to Section 12 of this
Agreement,  will be prorated accordingly.  If Executive is promoted or otherwise
assumes duties,  responsibilities  and authority greater than those set forth in
Section 3(a),  above,  the amounts of compensation  and benefits  (including any
guarantees  thereof) to be provided to Executive pursuant to Sections 4, 5 and 6
of this  Agreement,  as well  as the  amount  of any  severance  payments  to be
provided to Executive pursuant to Section 12 will be adjusted as appropriate.

                  8.  Covenant Not to Compete.

                        (a)  Until  two  years  following  any  termination   of
Executive's  employment  prior to or on the second  anniversary of the Effective
Date, or until one year  following any  termination  of  Executive's  employment
after the second  anniversary of the Effective  Date, for any reason  whatsoever
pursuant  to Section 12,  including,  without  limitation,  any  termination  of
Executive's  employment pursuant to Section 12(f) or 12(g),  Executive shall not
in, or  directed  to,  the  geographical  areas  set forth in  Exhibit E hereto,
directly or indirectly:

                                    (i) enter  the  employ  of  or  render   any
services to any person, joint venture,  partnership,  firm, corporation or other
entity (other than UST,  Schwab or Schwab's  other  affiliates or  subsidiaries)
engaged  in  providing  private  banking,  fiduciary  services,  tax,  estate or
financial planning services (any "Competitive Business");

                                    (ii) engage  in  private  banking, fiduciary
services,  tax,  estate  or  financial  planning  services,  including,  without
limitation, consultation or start-up activities in connection with such services
for Executive's own business, any third party or any Competitive Business; or

                                    (iii) become  interested  in any Competitive
Business,  directly or indirectly,  in any capacity or in any relationship  with
any other  person or  entity  (other  than  with  Schwab  or its  affiliates  or
subsidiaries),   whether  as  an  individual,  partner,  shareholder,  director,
officer, principal, agent, employee, trustee, or consultant;  provided, however,
that nothing  contained in this Agreement  will be deemed to prohibit  Executive
from  acquiring,  solely  as an  investment,  shares  of  capital  stock  of any
corporation  which are publicly traded so long as Executive does not thereby own
more than five percent (5%) of the outstanding shares of such corporation.

                        (b)  Until  two  years  following  any  termination   of
Executive's  employment  prior to or on the second  anniversary of the Effective
Date, or until one year  following any  termination  of  Executive's  employment
after the second  anniversary of the Effective  Date, for any reason  whatsoever
pursuant to Section 12 including,  without limitation,  any termination pursuant
to Section 12(f) or 12(g),  and unless such  activities are performed as part of
Executive's  employment and in the best  interests of UST and Schwab,  Executive
shall not, directly or indirectly:

                                    (i)   discourage   any   employee   of,   or
consultant  under  contract  with,  UST from becoming an employee of, or working
with, UST, Schwab or any of Schwab's other affiliates or subsidiaries;

                                    (ii) hire  any  employee  who  has  left the
employment of UST,  Schwab or any of Schwab's other  affiliates or  subsidiaries
within one year of such  employee's  termination,  or solicit or  encourage  any
employee  to leave  the  employment  of UST,  Schwab  or any of  Schwab's  other
affiliates or subsidiaries; or
                                    (iii) hire, solicit or encourage to cease to
work with UST, Schwab or any of Schwab's other affiliates or  subsidiaries,  any
consultant  then  under  contract  with  UST,  Schwab or any of  Schwab's  other
affiliates or subsidiaries.
                        (c)  Notwithstanding  the  foregoing,  in  the event the
Executive  voluntarily  terminates  his  employment  prior  to  the  end  of the
Employment  Term without Good Reason (as defined in Section  12(g)  below),  the
covenants set forth in subsections  (a) and (b) of this Section 8 shall continue
until the third  anniversary  of the Effective Date of this Agreement or for one
year after the effective date of Executive's termination, whichever is later.

                        (d)  During,  and  following  the  termination  of,  his
employment,  Executive shall keep secret and retain in the strictest  confidence
all  confidential  matters  relating  to UST,  Schwab and other  affiliates  and
subsidiaries of Schwab including, without limitation, trade "know how", secrets,
customer  lists,  pricing  policies,  operational  methods,  marketing  plans or
strategies, product development techniques or plans, designs or design projects,
technical processes,  formulae,  source codes, inventions and research projects,
learned  by him prior to and  during  the Term,  and  shall  not  disclose  such
confidential  matters to anyone outside of UST,  Schwab or any other  affiliates
and  subsidiaries of Schwab,  except as required in the course of performing his
duties as an employee of UST or as  required by law, or if such  matters  become
generally  available to the public otherwise than by (x) disclosure by Executive
or anyone else owing a duty of  confidentiality  to UST, Schwab or any affiliate
or  subsidiary  of Schwab or (y)  Executive's  failure to put in place  adequate
protections to prevent disclosure of confidential  information  relating to UST,
Schwab or any other affiliate or subsidiary of Schwab. As a further condition of
employment    under   this   Agreement,    Executive   will   execute   Schwab's
Confidentiality,  Nonsolicitation  and Assignment  Agreement  attached hereto as
Exhibit F.

                  9. Certain Remedies.   If Executive breaches,  or threatens to
commit a breach of, any of the  provisions  of Section 8 herein,  Schwab and UST
shall have the following rights and remedies,  each of which rights and remedies
shall be  independent of the other and severally  enforceable,  and all of which
rights  and  remedies  shall be in  addition  to,  and not in lieu of, any other
rights and remedies available to Schwab and/or UST under law or in equity:

                        (a)  The  right  and  remedy  to  have the provisions of
Section 8 of this  Agreement  specifically  enforced by any court having  equity
jurisdiction,  it being  acknowledged and agreed that any such breach will cause
irreparable  injury to Schwab and/or UST and that money damages will not provide
an adequate remedy to Schwab or UST; and

                        (b)  The  right  and remedy against Executive to require
Executive  to account  for and pay over to Schwab  and/or UST the  compensation,
profits, monies, accruals, increments or other benefits (collectively, "Benefits
from  Breach"),  if any,  derived or received by  Executive as the result of any
transaction  constituting a breach of any of the provisions in Section 8 of this
Agreement, and Executive hereby agrees to account for and pay over such Benefits
from Breach to Schwab and/or UST.

                  10. Intellectual  Property  Rights  Granted.  Executive hereby
grants  and  assigns  to UST and  Schwab  all  rights  (including  all rights in
copyright,  patent rights and or other  proprietary  rights) to all deliverables
and the other  results of the  services  Executive  performs  for UST or Schwab,
including all original  works of  authorship  and valuable  information,  ideas,
improvements,   processes,  developments,   designs,  know-how,  data,  computer
programs  and  formulae,   inventions  and  expression  created,   developed  or
discovered in connection with such services (collectively,  the "Results"),  for
any and all purposes,  in any and all  languages and any and all media,  whether
now existing or later  devised,  throughout the world.  This  includes,  without
limitation,  on-line services, computer bulletin boards, Internet and World Wide
Web servers, publications,  products utilizing CD-ROM, magnetic or other storage
media, microform and microfiche, databases, portable document formats, facsimile
transmission, and electronic mail or transmission.  UST's and Schwab's rights to
the  Results  shall  extend to all or any part of the  Results,  and to any work
derived  from it or  compiled  from parts of it.  Schwab or UST may  publish the
Results in any version or translation,  separately or with other works,  and may
authorize  others to do so. Executive also grants to Schwab and UST the right to
use  Executive's  name,  photograph,  likeness and  biographical  information in
connection  with the  exercise of any right  Executive  has  granted  under this
Contract,  including  for  promotional  purposes.  To the  extent  permitted  by
applicable law,  Executive  waives all artist's or moral rights  associated with
the Results.  Schwab and UST may (but neither is obligated  to) take any actions
and file any documents  necessary to register  copyright (and otherwise  protect
their rights) in the Results in any and all  countries,  and Executive will sign
and deliver any documents  Schwab or UST  reasonably  asks Executive to for this
purpose.

                  11.  Media  Communication  and  Non-Disparagement.   Executive
agrees  to  comply  with  the   policies   of  Schwab  with   respect  to  media
communication,  and  will  cause  UST  to  submit  proposed  press  releases  to
designated  Schwab  management  for review and approval  prior to their release.
Executive acknowledges that as a high level officer,  Executive will have access
to confidential and extremely sensitive information regarding Schwab, UST, their
executives and officers,  and that any  statements  Executive may make regarding
Schwab,  UST,  their  subsidiaries  or  executives  or  officers   (collectively
"Schwab-related  entities"),  whether  made during  Executive's  employment,  or
thereafter, may be accorded substantial weight by Executive's audience simply by
virtue of Executive's high level officer status.  Accordingly,  Executive agrees
to make no public  or  voluntary  statement  disparaging  of any  Schwab-related
entities,  or reasonably  likely to damage the reputation of any  Schwab-related
entities,  or to cause other damage to any Schwab-related  entities.  Nothing in
this Section is intended to require  Executive to testify other than  truthfully
when testifying as required by law.

                  12.  Termination of Employment.

                        (a)  Expiration of the Employment Term.   The Employment
Term shall  automatically  terminate on the third  anniversary  of the Effective
Date.

                        (b)  Death. The Employment Term shall terminate upon the
death of  Executive.  UST's  liability in such event shall be limited to payment
of: (i)  Executive's  salary and  benefits  through the last day of the month in
which the death of Executive occurs;  (ii) any bonus due Executive under Section
4(b)  above in respect  of  Schwab's  fiscal  year  ended  prior to  Executive's
termination and any prorated bonus consistent with Schwab policies applicable to
Management  Committee  members;  (iii) all unreimbursed  out-of-pocket  business
expenses of the type described in Section 4(d) above incurred by Executive; (iv)
all unused vacation days accrued to the date of Executive's  death; (v) full and
immediate vesting of all then outstanding  stock options and other  equity-based
awards,  which,  in the case of stock options,  shall remain  exercisable by the
legal  representative  of Executive's  estate for one year following the date of
Executive's death (but not beyond their original term) or as otherwise specified
in the applicable plan document;  and (vi) all other vested accrued  benefits to
which Executive is entitled under applicable UST or Schwab Plans.

                        (c) Incapacity or Disability.  If Executive is prevented
for (x) a  continuous  period of 120  days,  or (y) a period of 180 days or more
during  any  one-year  period,   from  properly   performing,   with  reasonable
accommodation,  Executive's duties or fulfilling Executive's responsibilities to
UST by reason of any physical or mental incapacity, disability or illness, then,
to the extent permitted by law, UST may consider such disability,  incapacity or
illness permanent and may terminate  Executive's  employment  hereunder.  UST or
Schwab will give Executive notice of its intent to terminate  Executive at least
seven (7) days before the effective  date of such  termination.  In the event of
such  incapacity,  disability or illness,  UST's  liability  shall be limited to
payment of: (i) Executive's salary and benefits through the date of termination;
(ii) any bonus due  Executive  under  Section  4(b) above in respect of Schwab's
fiscal  year ended  prior to  Executive's  termination  and any  prorated  bonus
consistent  with Schwab  policies  applicable to Management  Committee  members;
(iii) all unreimbursed  out-of-pocket business expenses of the type described in
Section 4(d) above incurred by Executive prior to Executive's termination;  (iv)
all unused  vacation days accrued to the date of  Executive's  termination;  (v)
full and  immediate  vesting of all then  outstanding  stock  options  and other
equity-based  awards,  which,  in  the  case  of  stock  options,  shall  remain
exercisable  by Executive (or  Executive's  legal  representative)  for one year
following the date of Executive's date of employment termination (but not beyond
their original term) or as otherwise  specified in the applicable plan document;
and (vi) all other vested accrued  benefits to which Executive is entitled under
applicable UST or Schwab Plans.

                        (d)  Termination  by  UST  for  Cause  or Termination by
Executive  Without  Good  Reason.  UST will  have the  right  to  terminate  the
Executive's employment hereunder for Cause (as defined below) and Executive will
have the right to terminate  his  employment  hereunder  without Good Reason (as
defined in Section 12(g), below). In the event of such a termination,  UST shall
pay to Executive:  (i) Executive's salary through the date of termination;  (ii)
any bonus due under Section 4(b) above in respect of Schwab's  fiscal year ended
prior  to   Executive's   termination;   (iii)   payment  of  all   unreimbursed
out-of-pocket  business  expenses of the type described in Section 4(d) incurred
by Executive  prior to Executive's  termination;  (iv) all unused  vacation days
accrued to the date of Executive's termination; and (v) all other vested accrued
benefits  and to which  Executive  is entitled  under  applicable  UST or Schwab
employee benefit plans.  For purposes of this Agreement,  an event or occurrence
constituting "Cause" shall be limited to any one of the following:

                                    (i) Executive's  failure   or   refusal   to
substantially  perform  Executive's  duties or Executive's  continued neglect to
perform  such duties to the full  extent of  Executive's  abilities  for reasons
other than death, physical or mental incapacity;

                                    (ii) Executive's gross negligence or willful
misconduct in the performance of Executive's duties hereunder,  or conduct which
is materially adverse, monetarily or otherwise, to UST or its shareholders;

                                    (iii)   A  finding  by  a  court  or   other
governmental  body that an act or acts of the Executive  constituted a felony or
other crime  involving theft or fraud under the laws of the United States or any
state thereof;

                                    (iv) Executive's  violation  of  federal  or
state laws and  regulations  and a good faith  determination  by UST's  board of
directors  that  the  continued  employment  of the  Executive  by UST  would be
seriously detrimental to UST and its business; or

                                    (v) A  material  breach by Executive of this
Agreement.

                                    In  the case of one or more events described
in clause (i), (ii) or (v) of this Section 12(d),  Executive  shall be given (i)
written notice describing the event or events constituting such Cause and (ii) a
reasonable  opportunity  (which is not less than ten business days) to cure such
event or events.

                        (e)  Mutual  Consent.  The  employment  of the Executive
hereunder may be terminated upon mutual written consent of UST and Executive.

                        (f)  Termination by UST Without Cause. UST may terminate
the employment of Executive  hereunder  without Cause,  in which event UST shall
continue to pay to Executive:  (i) Executive's salary for each year remaining in
the  Employment  Term (but not less than three  times  Executive's  Annual  Base
Salary if Executive is terminated  prior to or on the second  anniversary of the
Effective  Date,  or not less than two times  Executive's  Annual Base Salary if
Executive is terminated  after the second  anniversary  of the Effective  Date),
payable at Schwab's  option in a discounted lump sum or in  substantially  equal
installments  biweekly,  from which Schwab  shall  withhold and deduct in either
event  all  applicable  federal,  state and city  income,  social  security  and
disability taxes as required by applicable law; (ii) any bonus due under Section
4(b)  above in respect  of  Schwab's  fiscal  year  ended  prior to  Executive's
termination and a bonus for each year remaining in the Employment Term, (but not
less than three years of bonuses if Executive is  terminated  prior to or on the
second  anniversary of the Effective Date, or not less than two years of bonuses
if Executive is terminated  after the second  anniversary of the Effective Date)
based on  Executive's  then current  Targeted  Bonus;  (iii) full and  immediate
vesting of any outstanding stock options and other equity based awards; (iv) all
unreimbursed  out-of-pocket  business  expenses of the type described in Section
4(d) above  incurred by  Executive  prior to  Executive's  termination,  (v) all
unused  vacation  days  accrued  to the date of  Executive's  termination,  (vi)
continuation  of the medical,  dental and life  insurance  coverage  provided to
Executive immediately prior to the date of Executive's termination as determined
by Schwab  consistent  with the period during which Executive may receive Annual
Base Salary  payments  pursuant to this  Section  12(f)(i),  at the end of which
period  Executive  shall be entitled to group  health  continuation  coverage in
accordance  with  Section  4980B of the Code;  (vii) three  additional  years of
deemed age and service credit from the effective date of Executive's termination
if  Executive  is  terminated  prior  to or on  the  second  anniversary  of the
Effective  Date, or two additional  years of deemed age and under service credit
from the effective  date of  Executive's  termination if Executive is terminated
after the  second  anniversary  of the  Effective  Date,  under  UST's  (or,  if
applicable,  Schwab's)  tax-qualified  and  nonqualified  pension plans in which
Executive is then a participant;  (viii) outplacement assistance services for up
to one year; and (ix) all other vested accrued  benefits and to which  Executive
is  entitled  under  applicable  UST or Schwab  employee  benefit  plans.  These
payments  shall be given to Executive in lieu of any  severance pay or any other
benefits  for  which   Executive  would  otherwise  be  eligible  by  virtue  of
Executive's termination under the policies or practices of UST, Schwab or any of
their other affiliates or subsidiaries.

                        (g)  Termination  by  Executive  with  Good  Reason. The
Executive may terminate his employment with UST with Good Reason, in which event
UST shall  continue to pay to Executive:  (i)  Executive's  salary for each year
remaining  in the  Employment  Term (but not less than three  times  Executive's
Annual  Base  Salary  if  Executive  is  terminated  prior  to or on the  second
anniversary of the Effective Date, or not less than two times Executive's Annual
Base Salary if  Executive  is  terminated  after the second  anniversary  of the
Effective  Date),  payable at  Schwab's  option in a  discounted  lump sum or in
substantially equal installments biweekly,  from which Schwab shall withhold and
deduct in either event all  applicable  federal,  state and city income,  social
security and disability  taxes as required by applicable law; (ii) any bonus due
under  Section  4(b) above in respect of  Schwab's  fiscal  year ended  prior to
Executive's  termination  and a bonus for each year  remaining in the Employment
Term, (but not less than three years of bonuses if Executive is terminated prior
to or on the second  anniversary  of the  Effective  Date,  or not less than two
years of bonuses if Executive is terminated after the second  anniversary of the
Effective Date) based on Executive's then current Targeted Bonus; (iii) full and
immediate  vesting of any  outstanding  stock  options  and other  equity  based
awards;  (iv)  all  unreimbursed  out-of-pocket  business  expenses  of the type
described  in Section  4(d) above  incurred by  Executive  prior to  Executive's
termination;  (v) all unused  vacation  days accrued to the date of  Executive's
termination;  (vi)  continuation  of the  medical,  dental  and  life  insurance
coverage  provided to  Executive  immediately  prior to the date of  Executive's
termination  as  determined  by Schwab  consistent  with the period during which
Executive  may  receive  Annual Base Salary  payments  pursuant to this  Section
12(g)(i), at the end of which period Executive shall be entitled to group health
continuation  coverage in accordance with Section 4980B of the Code; (vii) three
additional  years of deemed age and service  credit from the  effective  date of
Executive's  termination  if Executive is  terminated  prior to or on the second
anniversary  of the Effective  Date, or two  additional  years of deemed age and
under  service  credit from the effective  date of  Executive's  termination  if
Executive is terminated  after the second  anniversary  of the  Effective  Date,
under UST's (or, if applicable, Schwab's) tax-qualified and nonqualified pension
plans in which Executive is then a participant;  (viii) outplacement  assistance
services for up to one year; and (ix) all other vested  accrued  benefits and to
which  Executive is entitled  under  applicable UST or Schwab  employee  benefit
plans.  These  payments shall be given to Executive in lieu of any severance pay
or any other benefits for which  Executive would otherwise be eligible by virtue
of Executive's termination under the policies or practices of UST, Schwab or any
of their other affiliates or  subsidiaries.  For purposes of this Section 12(g),
an event or occurrence constituting "Good Reason" shall be limited to any one of
the following:
                                    (i) a material breach of this  Agreement  by
Schwab;

                                    (ii) a substantial diminution in the duties,
titles,  positions or  responsibilities  of Executive as contemplated by Section
3(a) above;

                                    (iii) the required relocation of Executive's
place of employment outside of New York City, New York;

                                    (iv) a  reduction in Executive's Annual Base
Salary or Executive's Targeted Total Compensation; or

                                    (v)  the  failure by Schwab or UST to obtain
the express  written  assumption of this Agreement by any successor to Schwab or
UST.
                        (h)  Resignation  of  Positions.   Upon  termination  of
Executive's  employment for any reason whatsoever,  Executive shall be deemed to
have resigned from all offices and directorships then held with Schwab, UST, and
any of their other affiliates or subsidiaries.

                        (i)  Unvested  Schwab  Options.  Except  as specifically
provided  herein,  unvested  Schwab options held by Executive at the time of any
termination of his employment pursuant to this Section 12 will be subject to the
terms of the grant of those options.

                        (j)  Excise Tax Gross-Up.  In  the  event that Executive
becomes entitled to any payments  provided under this Section 12 (the "Severance
Payments"),  if any of the Severance  Payments or any other payments or benefits
to which Executive is then entitled ("Other  Payments"),  will be subject to the
excise tax imposed under Section 4999 of the Internal  Revenue Code (the "Excise
Tax"), UST shall pay to Executive an additional amount (the "Gross-Up  Payment")
such that the net amount  retained by Executive,  after  deduction of any Excise
Tax on the  Severance  Payments and Other  Payments  and any Federal,  state and
local income and employment tax and Excise Tax upon the payment  provided for by
this  Section  12(j),  shall be equal to the  Severance  Payments  and the Other
Payments.

                        (k)  Expiration/Non-Renewal.  Following  the  expiration
or non-renewal of the Employment Term and for so long as the covenants set forth
in Section 8, above, remain in effect as otherwise provided hereunder, Executive
shall receive such severance  payments and benefits as may be provided  pursuant
to policies or practices applicable to Management Committee members.

                  13. Effect of Termination of Employment.  Upon the termination
of Executive's employment pursuant to Section 12, the parties' obligations under
this Agreement shall terminate,  except those obligations  expressly  indicating
survival after termination in Sections 4, 8, 9, 10, 11, 12, 14 and 17; provided,
however,  that rights and remedies accruing prior to such termination or arising
out of the breach of this Agreement shall survive.

                  14. Set-Off/Mitigation. Executive grants to UST the right,  at
any time and from  time to  time,  to set off from any and all  amounts  owed to
Executive,  dollar for dollar, the amounts owed to UST resulting from damages to
UST for any  breach  by  Executive  of  Sections  8, 10,  or 11. In the event of
Executive's  termination  without Cause or with Good Reason  pursuant to Section
12(f) or Section 12(g),  respectively,  Executive shall have no duty to mitigate
by seeking other employment.

                  15.  Representations and Warranties.

                        (a)  UST and Schwab represent and warrant that they have
the  requisite  corporate  power to enter into this  Agreement  and to carry out
their  obligations  hereunder.  The execution and delivery of this Agreement and
the  consummation  of  the  transactions  contemplated  hereby  have  been  duly
authorized by all necessary corporate action on the part of UST and Schwab.

                        (b)  Executive represents and warrants that Executive is
under no employment contract, bond,  confidentiality  agreement,  noncompetition
agreement, or any other obligation that would violate or be in conflict with the
terms and  conditions of this Agreement or encumber  Executive's  performance of
duties assigned to him by UST.  Executive  further  represents and warrants that
Executive has not signed or committed to any employment or consultant  duties or
other  obligations that would divert  Executive's full attention from the duties
assigned to Executive by UST under this Agreement.

                  16.  Governing Law.  This  agreement  shall be governed by the
laws of the state of New York.

                  17. Arbitration. Any dispute or controversy arising between or
among the parties  hereto  regarding  any of the terms of this  Agreement or the
breach thereof, the determination of which is not otherwise provided for in this
Agreement,  shall be submitted to and  determined in  arbitration in the City of
New York in accordance with the rules then in effect of the American Arbitration
Association.  The arbitrators are hereby instructed to enforce this Agreement as
written.  In any arbitration,  all services and notices shall be served or given
in  accordance  with Section 26. Any award or decision  made by the  arbitrators
shall be  conclusive  in the absence of fraud,  and judgment  upon said award or
decision may be entered in any court  having  jurisdiction  thereof.  Each party
shall bear his or its own costs  (including  attorneys' fees) in connection with
the  arbitration  of any dispute or  controversy  under this  Agreement,  unless
otherwise  ordered by the arbitrator in accordance  with law. The parties hereto
agree that for purposes of this Agreement all disputes hereunder shall be deemed
to be between  Schwab and  Executive and that it is the intention of the parties
that disputes be resolved outside of any securities industry arbitration.

                  18. Nonwaiver of Rights of Parties.  No  right or power of any
party  under this  Agreement  shall be deemed to have been  waived by any act or
conduct on the part of such party,  or by any neglect to exercise  that right or
power, or by any delay in so doing;  and, except as otherwise  provided  herein,
every right or power shall continue in full force and effect until  specifically
waived or released by an instrument in writing executed by such party.

                  19.  Headings.  The  headings  of the several sections of this
Agreement are inserted for reference only and not intended to affect the meaning
or interpretation of this Agreement.

                  20. Assignment.  This  Agreement  is  a personal contract and,
except as specifically  set forth herein,  the rights and interests of Executive
herein may not be sold,  transferred,  assigned,  pledged or  hypothecated.  The
rights and obligations of UST and Schwab hereunder shall be binding upon and run
in favor  of the  successors  and  permitted  assigns  of UST and  Schwab.  This
Agreement may not be assigned by any party without the prior written  consent of
the other parties  hereto,  except that without prior written consent Schwab and
UST may assign their rights and obligations hereunder to any person or entity to
which Schwab or UST transfers all or  substantially  all of their  properties or
assets or to any  person or entity  with  which  Schwab or UST  consolidates  or
merges.

                  21.  Entire  Agreement.  This  Agreement,  together  with  its
exhibits, constitutes the entire agreement among the parties hereto with respect
to  the   subject   matter   hereof  and   supersedes   all  prior   agreements,
understandings,  negotiations and discussions,  whether oral or written,  of the
parties with respect thereto. In particular, this Agreement supercedes any prior
employment  agreements  between  Executive  and UST, or any other  agreements or
policies  pursuant to which  Executive  would be entitled to rights or benefits,
except  as  specifically   stated  in  this  Agreement,   and  Executive  hereby
relinquishes  any  such  rights  under  any  such  agreements  or  policies.  No
amendment, modification or rescission of this Agreement will be effective unless
set forth in writing  signed by Executive and a duly  authorized  officer of UST
and of Schwab.

                  22. Further Assurances.  Each party hereto shall, whenever and
as often as  reasonably  requested to do so by any party  hereto,  do,  execute,
acknowledge,  and  deliver,  or  cause  to  be  done,  executed,   acknowledged,
delivered,  filed  or  recorded,  all such  further  acts,  deeds,  assignments,
transfers,  conveyances, powers of attorney, instruments, and assurances as such
other  party may  reasonably  request  in order to carry out fully the terms and
provisions of this Agreement.

                  23. Severability and Enforceability. If any one or more of the
provisions   contained  in  this  Agreement   should  be  invalid,   illegal  or
unenforceable  as to any party or in any  jurisdiction,  then such  provision or
provisions  shall be invalid,  illegal or  unenforceable  without  affecting  or
otherwise  impairing the  enforceability of the remaining  provisions  contained
herein and without  affecting or otherwise  impairing the  enforceability of the
same  provisions  in this  Agreement  with  respect to any other party or in any
other jurisdiction. If any of the covenants contained in Sections 8 or 9 of this
Agreement  are  unenforceable  because of the duration of such  provision or the
area or scope  covered  thereby,  the parties  agree that the court  making such
determination shall have the power to reduce the duration, area or scope of such
provision  to  the  minimum  extent  necessary  to  allow  such  section  to  be
enforceable  under applicable law and, in its reduced form, such provision shall
then be enforceable and shall be enforced.

                  24. Separate  Agreements.  Executive's  agreements  in Section
8(a)  shall  be  deemed  to  be  a  separate  agreement  with  respect  to  each
jurisdiction  contained  within the area set forth in  Exhibit E hereto.  If any
such agreement with respect to any such geographical area shall be determined to
be invalid or unenforceable,  the remaining agreement with respect to such other
geographical areas shall not be affected by such invalidity or unenforceability.

                  25.  Counterparts.  This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.

                  26.  Notices.  Any  notice  or other communication to be given
hereunder  by any party to another  shall be in  writing  and  delivered  to the
following addresses personally,  by facsimile  transmission,  by postage prepaid
registered or certified mail, or by a national overnight carrier:

               Schwab or UST:

                                     Christopher V. Dodds
                                     Executive Vice President and Chief
                                       Financial Officer
                                     The Charles Schwab Corporation
                                     120 Kearney Street, 29th Floor
                                     San Francisco, California 94108
                                     Facsimile No.:  (415) 663-5877
                                     Telephone No.:  (415) 627-7000

                                     with copies to:

                                     Carrie Dwyer
                                     Executive Vice President Corporate
                                       Oversight
                                     The Charles Schwab Corporation
                                     120 Kearney Street, 29th Floor
                                     San Francisco, California 94108
                                     Facsimile No.:  (415) 667-3596
                                     Telephone No.:  (415) 627-7000

                                     and to:

                                     Lawrence B. Rabkin, Esq.
                                     Howard, Rice, Nemerovski, Canady, Falk &
                                       Rabkin,
                                     A Professional Corporation
                                     Three Embarcadero Center
                                     Seventh Floor
                                     San Francisco, CA  94111
                                     Facsimile No.:  (415) 399-3041
                                     Telephone No.:  (415) 434-1600



      Executive:
                                     H. Marshall Schwarz
                                     U.S. Trust Corporation
                                     114 West 47th Street
                                     New York, New York  10036
                                     Facsimile No.:  (212) 852-3030
                                     Telephone No.:  (212) 852-3021


         or such other persons or such other addresses as may be designated in
         writing by the parties, by a notice given as aforesaid.



                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

<PAGE>

                      Executed and effective as of the date first written above.

                                    THE CHARLES SCHWAB CORPORATION


                                    By:  /s/ David S. Pottruck
                                       -----------------------------

                                    Name:    David S. Pottruck
                                         ---------------------------

                                    Title:   President & Co-CEO
                                          --------------------------


                                    U.S. TRUST CORPORATION


                                    By:  /s/ Jeffrey S. Maurer
                                       -----------------------------

                                    Name:    Jeffrey S. Maurer
                                         ---------------------------

                                    Title:   President
                                          --------------------------


                                    /s/ H. Marshall Schwarz
                                    --------------------------------
                                    H. MARSHALL SCHWARZ


























<PAGE>




                                    EXHIBIT A

         Board(s) of Directors on which Executive currently is serving.



<PAGE>


                               H. MARSHALL SCHWARZ
                               Chairman - New York

AFFILIATIONS

Atlantic Mutual Companies
          Director

Bowne & Co., Inc.
          Director

American Red Cross to Greater New York
          Trustee

The Camille and Henry Dreyfus Foundation, Inc.
          Trustee

Milton Academy
          President - Board of Trustees

Teachers College Columbia University
          Trustee

The Committee to Encourage Corporate Philanthropy
          Member





<PAGE>




                                    EXHIBIT B

                          UST Executive Incentive Plan


<PAGE>


                                    EXHIBIT B




     I, Carol A. Strickland, Secretary and a Senior Vice President of U.S. Trust
Corporation,  do hereby certify that the following is a true copy of resolutions
adopted at a regular  meeting of the Board of Directors,  duly convened and held
on February 23, 1999  pursuant to law at which a quorum was  present,  that said
resolutions were adopted by at least a majority of the entire Board of Directors
of this Corporation and that the following  resolutions have not been amended or
repealed since their adoption:

          RESOLVED,  that the Executive  Incentive Plan ("EIP") shall be amended
     effective  January  1,  1999 to  increase  the  maximum  percentage  of the
     Restricted  Units Portion of a  Participant's  Award from 33-1/3% to 50% as
     follows.

               Section 6(b) of the EIP is hereby amended by replacing each
               reference to "33 1/3%" contained therein to "50%."

          FURTHER RESOLVED, that the appropriate officers of the Corporation be,
     and each of them hereby is, authorized to execute any documents and to take
     any and all other  action as may be  necessary or desirable in the judgment
     of any of them and  pursuant to advice of counsel,  in order to  effectuate
     the intent and purpose of the foregoing resolution; and

          FURTHER  RESOLVED,  that any and all action  heretofore  or  hereafter
     taken by such  officer or officers  pursuant to, or in  furtherance  of the
     intent and purposes of the  foregoing  resolutions  be, and each hereby is,
     ratified and confirmed as the act and deed of the Corporation.

          IN WITNESS WHEREOF, I have hereunto,  set my hand as Secretary of said
     Corporation and affixed the corporate seal as of February 23, 1999.



                                                 /s/ Carol A. Strickland
                                                 -------------------------------
                                                 Secretary





<PAGE>


                  Amendments to the Executive Incentive Plan of
                         United States Trust Corporation
                 As Amended and Restated through January 1, 1997


     RESOLVED  that the  Executive  Incentive  Plan  ("EIP")  shall  be  amended
effective January 1, 1999 as follows:

     1.   The definition of the term "ESOP  Contribution"  in Section 2 shall be
          deleted;

     2.   Section 6(a) is hereby amended to read as follows:

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

     3.   Section 6 is hereby amended by the addition of a new Section 6(i):

     "Notwithstanding  the foregoing provisions of this Section 6, a Participant
     who is a Managing Director (or more senior executive); who has attained age
     60; and holds more than twice his or her US. Trust stock ownership  target,
     may elect to receive  the  Restricted  Unit  Portion of his or her grant in
     cash by filing a written  notice with the  Committee.  Such election  shall
     provide for the deferral of payment of such cash  amount.  Such cash amount
     shall become vested on the fifth  anniversary  of the date of grant,  or if
     earlier, on the date of the Participant's death,  permanent disability,  or
     retirement  on or after the date on which the  Participant  attains age 65,
     and shall be forfeited in the event the Participant's employment terminates
     prior to the vesting,  except to the extent the Committee in its discretion
     otherwise determines."

     4.   Section 9(c) is hereby amended to read as follows:

     "As soon as practicable  following the Change in Control,  all Awards which
     are  deemed to have been  earned to the full and  maximum  extent  upon the
     occurrence of the Change in Control shall be payable in full in single cash
     lump sums, reduced by any taxes withheld pursuant to Section 10."










<PAGE>


                            Executive Incentive Plan
                                       of
                             U.S. Trust Corporation



     Pursuant to  resolutions  adopted by the Board of Directors  of U.S.  Trust
Corporation  on December  10,  1996,  the  provisions  set forth in the document
annexed  hereto  are  hereby  adopted as the final  language  for the  Executive
Incentive  Plan of U.S.  Trust  Corporation,  as amended and restated  effective
January 1, 1997.

      Executed by the undersigned this 20th day of December, 1996.




                                      /s/ Patricia W. McGuire
                                      ------------------------------------------
                                      Patricia W. McGuire, Senior Vice President
                                                U.S. Trust Corporation





<PAGE>


                            Executive Incentive Plan
                                       of
                             U.S. Trust Corporation


                As Amended and Restated effective January 1, 1997


1.       Purpose

                  The  purpose  of  the  Executive  Incentive Plan of U.S. Trust
Corporation  is to (i)  encourage  greater  focus on  performance  among the key
executives of U.S. Trust Corporation and its Affiliated  Companies by relating a
significant  portion of their total  compensation  to the  achievement of annual
financial  and  strategic  objectives,  and  (ii)  promote  on the  part of such
executives  an  increased  level  of  ownership  of  the  Common  Shares  of the
Corporation  by providing  for a  significant  portion of their awards under the
Plan to be paid in the form of the Corporation's Common Shares.

2.       Definitions

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

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

                  "Average Market Value"  shall mean, with respect to one Common
Share  as of any date or with  respect  to any  period,  the  mean  between  the
per-share high and low prices for the Corporation's  Common Shares on such date,
or the average of the mean  between  such prices on each day during such period,
as quoted on the NASDAQ National Market System, or, if the Corporation's  Common
Shares  are not  traded  on such  system,  on such  other  securities  market or
securities  exchange  on which such  shares are  traded as the  Committee  shall
determine.

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

                  "Beneficiary"  shall mean the person or person designated by a
Participant in accordance with Section 11 to receive any amount, or  any  Common
Shares, payable under the Plan upon the Participant's death.

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

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

                  (i) 20%  or  more  of the Corporation's Common Shares 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;

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

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

provided, however, that notwithstanding anything in the Plan to the contrary, no
Change in Control shall be deemed to have occurred, and no rights arising upon a
Change in Control as provided in Section 9 shall  exist,  to the extent that the
Board of  Directors  so 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 (i) or (iii) of the
foregoing  definition  of Change in Control  shall be at least 20% but less than
25%. Any  resolution of the Board of Directors  adopted in  accordance  with the
provisions of this definition directing that a Change in Control shall be deemed
not to have  occurred  for  purposes  of the Plan and that  Section  9 shall not
become  effective may be rescinded or  countermanded at any time with or without
retroactive effect.

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

                  "Committee" shall mean the Compensation and Benefits Committee
of the Board of Directors.

                  "Common Shares"  shall mean the common shares ($1.00 par value
per share) of the Corporation.

                  "Corporation" shall mean U.S. Trust Corporation.

                  "Determined Value" shall mean (i) the highest price per Common
Share  paid in  connection  with  any  Change  in  Control  (including,  without
limitation,  prices paid in any subsequent merger or combination with any entity
that acquires  control of the  Corporation),  or (ii) in the case of a Change in
Control  occurring  as a result of an event  described  in  clause  (iii) of the
definition of Change in Control  contained in this Section 2, the Average Market
Value of a Common Share during the 30-day period ending on the day preceding the
occurrence of such Change in Control.

                  "ESOP  Contribution"  shall  mean  the  ESOP  Contribution  as
defined under the 401(k) Plan.

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

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

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

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

                  "Plan Year"  shall  mean, initially, the  period  beginning on
September 1, 1995 and ending on December 31, 1995, and thereafter, each calendar
year.

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

                  "Vesting  Date"  shall  mean,  with  respect to any Restricted
Units  granted  to  a  Participant  hereunder, the date on which such Restricted
Units become vested, as provided in Section 6(d) or Section 9(e).

3.       Maximum Number of Common Shares of Stock Available for Awards

                  Notwithstanding any other provision of the Plan, the number of
Common Shares that may be distributed  with respect to Restricted  Units granted
under the Plan after January 1,1997 (whether distributed under the Plan or under
the Deferred Restricted Unit Plan of U.S. Trust Corporation) shall be limited to
the sum of (i) 150,000  Common  Shares,  plus (ii) that number of Common Shares,
out of the total number of Common  Shares  approved  prior to January 1, 1997 by
the Corporation's  shareholders for the grant of Restricted Units hereunder that
were not covered by Restricted Units granted hereunder prior to January 1, 1997,
plus (iii) a number of Common  Shares  equal to the total  number of  additional
Restricted  Units  credited to  Participants  with respect to dividends  paid on
Common Shares, as provided in Section 6(d)ii). If any Restricted Units initially
granted or thereafter  credited to a Participant shall be forfeited,  the number
of Common  Shares no longer  payable  with  respect to the  Restricted  Units so
forfeited shall thereupon be released and shall  thereafter be available for new
grants of Restricted  Units under the Plan. The  limitation  provided under this
Section 3 shall be subject to adjustment as provided in Section 7.

                  The Common Shares distributed under the Plan may be authorized
and unissued shares,  shares held in the treasury of the Corporation,  or shares
purchased  on the open  market by the  Corporation  at such time or times and in
such manner as it may determine. The Corporation shall be under no obligation to
acquire Common Shares for distribution to Participants  before payment in Common
Shares is due.

4.       Participation

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

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

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

5.       Awards

                  Awards for any Plan Year beginning on or after January 1, 1997
shall be made in accordance with the following provisions:

         (a)      Within such period  of time after the start of the year as may
be permitted by the  regulations  issued under Section  162(m) of the Code,  the
Committee  shall  establish in writing (i) the corporate  performance  goal (the
"Performance Goal") that will apply in determining the Awards for the year, (ii)
the  aggregate  amount  that will be  available  for  Awards for the year if the
Performance  Goal  is  achieved  (the  "Target  Awards  Pool"),  and  (iii)  the
percentages  of the Target Awards Pool that will in fact be available for Awards
for the year based on the level of achievement of the  Performance  Goal,  which
percentages  may be greater  than 100% if the  Performance  Goal is exceeded and
less than 100% if the Performance  Goal has not been fully achieved (the "Actual
Awards Pool").

         (b)      The  Performance  Goal to be established for the year shall be
the achievement of such level of Adjusted  Earnings Per Share of the Corporation
as the Committee  shall  determine.  The  Corporation's  "Adjusted  Earnings Per
Share" for any year shall mean the Corporation's reported earnings per share for
the year as determined on a fully diluted basis, adjusted so as to eliminate the
effects  of any (i)  charges to  earnings  for any  acquisitions,  divestitures,
discontinuance  of  business  operations,  restructuring  or any  other  special
charges that are separately disclosed in the Corporation's Annual Report for the
year,  (ii)  charges to earnings  for the  cumulative  effect of any  accounting
changes,  and  (iii)  charges  to  earnings  for any  "extraordinary  items"  as
determined under generally accepted accounting principles.

         (c)      The Target Awards Pool to be established for the year shall be
determined by the Committee as a percentage or percentages of the aggregate base
salary earned for the year,  while a Participant,  of all  Participants,  either
individually or by categories of Participants,  provided that the Committee may,
in its discretion, also apply such percentage or percentages to other current or
deferred   compensation   and   determine  the  year  for  which  such  deferred
compensation shall be counted.

         (d)      As of the end of the Plan Year,  the Committee shall determine
the extent to which the  Performance  Goal for the year has been met and,  based
thereon,  the amount of the Actual Awards Pool. The Committee shall not have any
discretion  to  increase  the Actual  Awards  Pool,  as so  determined;  but the
Committee may, in its  discretion,  reduce the amount of the Actual Awards Pool,
as so  determined,  to reflect any charges to earnings  that were not taken into
account in determining  the  Corporation's  Adjusted  Earnings Per Share for the
year pursuant to Section 5(b)i),  (ii) or (iii), or to reflect any other events,
circumstances  or factors  which the  Committee  believes to be  appropriate  in
determining the total amount to be made available for Awards to Participants for
the year.

         (e)      After  determining  the  Actual Awards Pool in accordance with
Section 5(d),  the Committee  shall  determine the amount of the Award,  if any,
earned for the year by each Participant, in accordance with the following rules:

                  (i)   In the case of any Participant who, on the last  day  of
          the year, is the Chief Executive  Officer of the Corporation or one of
          the four highest  compensated  officers of the Corporation  other than
          its Chief  Executive  Officer  (each such  Participant  is referred to
          hereinafter  as a  "Covered  Executive"),  the  Award  payable  to the
          Covered  Executive  for the year shall be equal to (A) the  portion of
          his or her base salary  taken into account in  determining  the Target
          Awards Pool for the year,  multiplied by (B) the percentage determined
          by dividing  (1) the amount of the Actual  Awards Pool for the year as
          finally  determined under Section 5(d) by (2) the amount of the Target
          Awards Pool for the year. The Committee  shall not have any discretion
          to  increase  the  amount  of any  Covered  Executive's  Award,  as so
          determined;  but the  Committee  may,  in its  discretion,  reduce the
          amount of any Covered Executive's Award, as so determined,  to reflect
          the  Committee's  evaluation  of the  Covered  Executive's  individual
          performance  or to  reflect  any other  factors  the  Committee  deems
          appropriate in determining the amount of the Covered Executive's Award
          for the year.

                  (ii)  In  the  case  of  each Participant who is nor a Covered
          Executive, the amount of the Award, if any, earned by such Participant
          for the year shall be determined by the Committee,  in its discretion,
          based on the level of such Participant's  achievement of the goals and
          objectives  established  for the  Participant at the start of the year
          and on such other  factors as the  Committee  deems  appropriate.  The
          individual goals for each such Participant for each Plan Year shall be
          set, and such Participant's  performance  relative to such goals shall
          be measured,  by the Committee based upon the  recommendations  of the
          Chief Executive Officer.

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

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

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

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

6.       Payment of Awards

                  The  amount payable hereunder to a Participant with respect to
an  Award  earned  for  any Plan Year shall be determined in accordance with the
following provisions:

         (a)      The  amount  payable with respect to a Participant's Award for
any Plan Year  beginning on or after January 1, 1996,  shall be the total amount
of the  Award  earned  by the  Participant,  reduced  by the  amount of any ESOP
Contribution to be made on behalf of the  Participant  under the 401(k) Plan for
the "Plan  Year") (as  defined in the 401(k)  Plan)  corresponding  to such Plan
Year,  with respect to the base salary of such  Participant  that was taken into
account in determining the Target Awards Pool for that Plan Year.

         (b)      The  amount  payable with respect to a Participant's Award, as
determined  under (a) above,  shall be payable  partly in cash and partly in the
form of Restricted  Units (the portions so payable are hereinafter  referred to,
respectively,  as the "Cash Portion", and the "Restricted Units Portion", of the
Participant's  Award),  in such  percentages  as the Committee in its discretion
shall determine;  provided,  however, that the Restricted Units Portion shall be
equal to at least 25%,  and shall not  exceed  33-1/3%,  of the total  amount so
payable with respect to the Participant's Award.  Notwithstanding the foregoing,
the aggregate  number of Restricted Units granted with respect to Awards made to
Participants  hereunder  for any Plan Year  shall not exceed  80,000  Restricted
Units. The 25% minimum and 33-1/3% maximum for the Restricted Units Portion of a
Participant's  Award  referred  to in the  second  preceding  sentence  shall be
reduced in such manner as the Committee shall determine,  in its discretion,  to
the extent necessary to comply with the foregoing limitation.

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

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

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

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

                  (iii) If  the  Restricted  Units  covered by such grant become
          vested,  payment  with  respect  to such  Restricted  Units,  and with
          respect to the additional Restricted Units credited to the Participant
          under (ii) above in respect of such Restricted Units, shall be made as
          soon as practicable after the Vesting Date for the Restricted Units so
          granted,  except as  otherwise  provided  in (iv)  below.  Subject  to
          provisions  of Section  6(f),  payment  shall be made in the form of a
          single lump sum payment  consisting  of (A) a number of Common  Shares
          equal to the total number of whole Restricted Units that become vested
          on such Vesting Date,  and (B) a cash payment in an amount  determined
          by  multiplying  (1) the  fractional  part of a  Restricted  Unit that
          becomes  vested on such Vesting Date, by (2) the Average  Market Value
          of one Common Share on such Vesting Date.

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

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

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

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

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

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

7.       Certain Adjustments to Plan Shares

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

8.       Listing and Qualification of Common Shares

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

9.       Change in Control

                  Notwithstanding  any  other  provision  in  the  Plan  to  the
contrary (but subject to the proviso  contained in the  definition of "Change in
Control"  in  Section  2),  upon the  occurrence  of a Change  in  Control,  the
following provisions shall apply.

         (a)      All Performance Goals and individual goals and objectives with
respect  to the Plan Year in which the Change in  Control  occurs  (the "Year of
Change")  shall be deemed to have been attained to the full and maximum  extent,
and the  Actual  Awards  Pool for the Year of  Change  shall  be  determined  by
multiplying  the  Target  Awards  Pool for such year by the  highest  percentage
thereof established by the Committee under Section 5(a)(iii) for determining the
amount of the Actual Awards Pool for such year.

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

         (c)      As  soon  as  practicable following the Change in Control, all
Awards  which  under (a) above  are  deemed to have been  earned to the full and
maximum  extent upon the occurrence of the Change in Control shall be payable in
full in single cash lump sums, reduced by any taxes withheld pursuant to Section
10 and by the  amount  of  any  ESOP  Contributions  to be  made  on  behalf  of
Participants under the 401(k) Plan for the Year of Change.

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

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

         (f)      The  Corporation  shall  make payment to each Participant with
respect to all of the  Restricted  Units standing to his or her credit under the
Plan at the time of the Change in Control.  Payment to each Participant shall be
made in the form of a single  lump  sum  payment,  in an  amount  determined  by
multiplying  the  aggregate  number of  Restricted  Units then  standing  to the
Participant's  credit by the Determined  Value of one Common Share.  All amounts
payable to  Participants  pursuant to this  Section  9(f),  reduced by any taxes
withheld  pursuant to Section 10, shall be paid to such  Participants as soon as
practicable following the Change in Control.

10.      Taxes

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

11.      Designation and Change of Beneficiary

                  Each  Participant  shall  file  with  the  Committee a written
designation of one or more persons as the  Beneficiary  who shall be entitled so
receive any amount, or any Common Shares, payable under the Plan upon his or her
death.  A  Participant  may,  from time to time,  revoke  or  change  his or her
Beneficiary  designation  without  the  consent  of  any  previously  designated
Beneficiary  by  filing a new  designation  with the  Committee.  The last  such
designation received by the Committee shall be controlling;  provided,  however,
that no designation,  or change or revocation thereof, shall be effective unless
received by the  Committee  prior to the  Participant's  death,  and in no event
shall it be  effective as of a date prior to such  receipt.  If at the date of a
Participant's  death, there is no designation of a Beneficiary in effect for the
Participant  pursuant so the provisions of this Section 11, or if no Beneficiary
designated by the Participant in accordance with the provisions  hereof survives
to receive any amount, or any Common Shares, payable under the Plan by reason of
the  Participant's  death,  the  Participant's  estate  shall be  treated as the
Participant's Beneficiary for purposes of the Plan.

12.      Payments to Persons Other Than Participant

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

13.      Rights of Participants

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

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

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

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

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

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

14.      Administration

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

                  All  decisions,  actions  or  interpretations of the Committee
under the Plan shall be final, conclusive and binding upon all parties

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

15.      Amendment or Termination

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

16.      Successor Corporation

                  The  obligations  of  the  Corporation under the Plan shall be
binding  upon any  successor  corporation  or  organization  resulting  from the
merger,  consolidation or other  reorganization of the Corporation,  or upon any
successor  corporation or organization  succeeding to  substantially  all of the
assets and business of the Corporation. The Corporation agrees that it will make
appropriate  provision for the  preservation of  Participants'  rights under the
Plan in any  agreement  or plan  which it may enter  into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.

17.      Governing Law

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

18.      Effective Date

                  The  Plan  was adopted effective as of September 1, 1995.  The
amendments  reflected in this  restatement  of the Plan shall be effective as of
January 1, 1997,  subject,  however, in the case of the amendments to Sections 3
and 5, to approval by the  shareholders  of the Corporation by a majority of the
votes  cast in person or by proxy at the  annual  meeting  of the  Corporation's
shareholders  to be held on April 22, 1997.  The Committee may grant  Restricted
Units as provided  herein prior to such  shareholder  approval,  subject to such
approval being obtained at such meeting.



<PAGE>



                                    EXHIBIT C

                        TERM SHEET - SCHWAB STOCK GRANTS
                            1992 STOCK INCENTIVE PLAN

BACKGROUND

The exercise  price for all stock option  grants is set as the closing  price of
Schwab's stock on the date of grant. All stock grants to officers,  both options
and  restricted   shares,  are  subject  to  the  review  and  approval  of  the
Compensation Committee of the Schwab Board of Directors, and are only granted at
the Committee's meetings.

GRANT TYPES

o        Non Qualified Stock Options
o        Incentive Stock Options (Subject to $100,000 IRS Limits)
o        Restricted Shares

VESTING SCHEDULES

o        STOCK OPTIONS

        Time         Annual         Cumulative
       Period       Vesting %       Vesting %
      1st year         25%             25%
      2nd year         25%             50%
      3rd year         25%             75%
      4th year         25%             100%

Stock option grants  currently have a ten year term and any options vested as of
an  employee's  termination  are  exercisable  for a  period  of 90  days  after
termination.

o        RESTRICTED SHARES

         Time           Annual        Cumulative
         Period        Vesting %      Vesting %
        1st year          0%              0%
        2nd year          0%              0%
        3rd year          50%            50%
        4th year          50%            100%

All stock  grants are  governed  by the terms and  conditions  of the 1992 Stock
Incentive Plan Document, and are subject to change in Schwab sole discretion.






<PAGE>



                                    EXHIBIT D

                   Key Terms of KEY EMPLOYEE RETENTION PROGRAM

I.       Purpose
To  encourage  U.S.  Trust  Corporation  ("UST")  employees  to  continue  their
employment  with  The  Charles  Schwab  Corporation  or one of its  subsidiaries
(collectively, "Schwab").

II.      Eligibility
All UST  employees  employed on January  12,  2000 and who remain in  continuous
employment  throughout the close of the  acquisition  are eligible for retention
bonuses,  provided  such  employees  meet the  vesting  and  continuous  service
employment requirements specified in the "Timing of Awards" section below.

Amount of Bonus
Eligible  employees  will  receive  retention  bonuses  in  accordance  with the
following:


         Level                      Approximate Target Bonus Percentage/Amount

Non-Officer                       25% of base salary as of date of announcement

Officer Below VP                  50% of base salary as of date of announcement

VP or SVP                         100% of base salary as of date of announcement

Managing Directors and            100 - 150% of base salary and target bonus as
Operating Committee                  of date of announcement

Office of Chairman                $2.8 million for each of the four persons in
                                     the Office of Chairman


The retention bonus will be based on the employee's title and base salary as  of
the date of the announcement.

III.     Form of Payment
The retention bonus of approximately  $150 million in the aggregate will consist
of two components:  five-sixths in cash and one-sixth in a grant of Schwab stock
options. The stock options granted will have a ten (10) year term and the number
of  options  granted  will be  calculated  using  Schwab  valuation  methodology
assuming a fifteen  percent (15%) annual growth rate in Schwab common stock over
two  years.  By way of  example,  if the  price  of  Schwab  stock is $40 on the
effective  date of the close of the  acquisition,  the  price of this  stock two
years  later is assumed to be $52.90  (based on the 15% annual  growth rate over
two years); accordingly, Schwab would divide $25 million (which is the one-sixth
of the $150 million  retention  bonus amount to be paid in stock options) by the
$12.90  difference  in stock  price to  arrive  at  1,937,984.50  options  to be
granted.

The  exercise  price of the stock  options  will be the closing  price of Schwab
stock on the date of the grant (which will be on the effective date of the close
of the acquisition).

IV.      Timing of Awards
The cash award will be payable two years after the  effective  date of the close
of the acquisition, provided the eligible employee is continuously employed with
Schwab  from the  effective  date of the close of the  acquisition  through  the
second anniversary of the effective date of the close of the acquisition.

Stock  options  will be  granted  as of the  effective  date of the close of the
acquisition.  Fifty percent (50%) of the stock options  granted will vest on the
third  anniversary of the effective date of the close of the acquisition and the
remaining  fifty  percent  (50%)  will  vest on the  fourth  anniversary  of the
effective  date of the close of the  acquisition.  An eligible  employee who has
vested shares at the time he/she terminates  his/her employment with Schwab will
have three months from his/her termination date to exercise the vested options.

V.  TERMINATION OF EMPLOYMENT
o    An  otherwise   eligible  employee  who  voluntarily   terminates   his/her
     employment  with Schwab will forfeit any retention  bonus that has not been
     paid or which has not vested as of the last day worked.
o    An otherwise  eligible employee who is terminated by Schwab with cause will
     forfeit any retention  bonus that has not been paid or which has not vested
     as of the last day worked.
o    An otherwise  eligible  employee who is terminated by Schwab  without cause
     (including a termination  with good reason) and who otherwise has severance
     benefits of 200% of base salary or more will  receive a prorated  retention
     bonus.  The last day worked  will be used to  calculate  the amount of this
     bonus.
o    An otherwise eligible employee who is terminated without cause (including a
     termination  with good reason) by Schwab and who  otherwise  has  severance
     benefits of less than 200% of base  salary or more will  receive his or her
     full retention bonus.
o    For purposes of this Key Employee Retention Program, the meaning of "cause"
     and "good reason" shall be mutually agreed upon by Schwab and UST no  later
     than the effective date of the close of the acquisition.

VI. DEATH OR DISABILITY
o    An  employee  who  dies or becomes disabled will be eligible for a prorated
     retention bonus. The last day worked will be used in calculating the amount
     of this bonus.


<PAGE>



                                    EXHIBIT E

                         NONCOMPETITION GEOGRAPHIC AREAS

      STATE OR COUNTY

      Alabama
      Alaska
      Arizona
      Arkansas
      Alameda County, CA
      Alpine County, CA
      Amador County, CA
      Butte County, CA
      Calaveras County, CA
      Colusa County, CA
      Contra Costa County, CA
      Del Norte County, CA
      El Dorado County, CA
      Fresno County, CA
      Glenn County, CA
      Humboldt County, CA
      Imperial County, CA
      Inyo County, CA
      Kern County, CA
      Kings County, CA
      Lake County, CA
      Lassen County, CA
      Los Angeles County, CA
      Madera County, CA
      Marin County, CA
      Mariposa County, CA
      Mendocino County, CA
      Merced County, CA
      Modoc County, CA
      Mono County, CA
      Monterey County, CA
      Napa County, CA
      Nevada County, CA
      Orange County, CA
      Placer County, CA
      Plumas County, CA
      Riverside County, CA
      Sacramento County, CA
      San Benito County, CA
      San Bernardino County, CA
      San Diego County, CA
      San Francisco County, CA
      San Joaquin County, CA
      San Louis Obispo County, CA
      San Mateo County, CA
      Santa Barbara County, CA
      Santa Clara County, CA
      Santa Cruz County, CA
      Shasta County, CA
      Sierra County, CA
      Siskiyou County, CA
      Solano County, CA
      Sonoma County, CA
      Stanislaus County, CA
      Sutter County, CA
      Tehama County, CA
      Trinity County, CA
      Tulare County, CA
      Tuolumne County, CA
      Ventura County, CA
      Yolo County, CA
      Yuba County, CA
      Colorado
      Connecticut
      Delaware
      District of Columbia
      Florida
      Georgia
      Hawaii
      Idaho
      Illinois
      Indiana
      Iowa
      Kansas
      Kentucky
      Louisiana
      Maine
      Maryland
      Massachusetts
      Michigan
      Minnesota
      Mississippi
      Missouri
      Montana
      Nebraska
      Nevada
      New Hampshire
      New Jersey
      New Mexico
      New York
      North Carolina
      North Dakota
      Ohio
      Oklahoma
      Oregon
      Pennsylvania
      Rhode Island
      South Carolina
      South Dakota
      Tennessee
      Texas
      Utah
      Vermont
      Virginia
      Washington
      West Virginia
      Wisconsin
      Wyoming



<PAGE>




                                    EXHIBIT F



                                    EXHIBIT F

       Schwab's Confidentiality, Nonsolicitation and Assignment Agreement



<PAGE>


            Confidentiality, Nonsolicitation and Assignment Agreement

In  consideration  of my  employment,  receipt of  employment  benefits,  and/or
continued employment by Charles Schwab & Co., Inc. and/or its parent company and
its/their subsidiaries,  affiliates or successors ("Schwab"), and other valuable
consideration, the adequacy and receipt of which I acknowledge, I agree to abide
by this Agreement during and after my employment with Schwab.

1. I understand and agree that, during and related to my employment with Schwab,
I may  obtain,  or have access to,  certain  information  which is  confidential
and/or  proprietary to Schwab  ("Confidential  Information").  I understand that
Confidential Information Includes, but is not limited to:

     a.   trade secrets,  information about products and services (past, current
          or  future),  know-how,   techniques,   computer  passwords,  computer
          software designs,  hardware  configurations,  policies and procedures,
          and research projects;

     b.   market,  financial,  trade, and sales information and data,  financial
          models or formulae,  business plans,  financial and business forecasts
          and estimates, and information about costs and profits;

     c.   the  Identities  of  Schwab   customers  and   prospective   customers
          (including but not limited,  to names,  addresses,  telephone  numbers
          and/or  modal  security  numbers),  any account,  personal,  business,
          financial  and other  information  pertaining to such  customers,  and
          prospective customers,  and customer and prospective customer lists in
          any form;

     d.   account,  personal or financial information  pertaining to current and
          former employees of Schwab, business, financial, and other information
          pertaining to Schwab's  vendors and independent  contractors,  and any
          lists of employees, vendor, and/or independent contractors;

     e.   all developments, as defined in Paragraph 3 below, and all information
          which relates to Developments; and/or

     f.   all  information  which  Schwab  has a legal  obligation  to  treat as
          confidential,  or which Schwab treats as  proprietary or designates as
          confidential  or for  internal  use  only,  whether  or not  owned  or
          developed by Schwab.

                  2.    I  understand  and  agree  that  Schwab  owns  all  such
Confidential Information and desires (or is under legal obligations, in the case
of  information  owned by others) to protect its  confidential  and  proprietary
nature.  I  will  not,  for  any  purpose,  directly  or  indirectly,  disclose,
reproduce,  use, or disseminate in any manner during or after my employment with
Schwab, any Confidential  Information unless: (a) such disclosure is required in
the ordinary  course of my duties at Schwab and  necessary  for me to perform my
duties;  or (b) I have  received  advance  written  consent  from an  authorized
officer of Schwab. I will promptly notify Schwab if I become aware of or suspect
any  unauthorized  (whether  intentional  or  accidental)  use or  disclosure of
Confidential Information.

                  3.    I  will  promptly  disclose  in confidence to Schwab all
inventions,  improvements,  designs,  original  works of  authorship,  formulas,
processes,   computer   software   programs,   databases   and   trade   secrets
("Developments")  that I make,  conceive,  first reduce to practice,  or create,
either alone or jointly with others while I am employed by Schwab, and that: (a)
result from any work  performed  by me for Schwab,  whether or not in the normal
course of my employment or during normal business hours;  (b) reasonably  relate
to  the  actual  or  anticipated  business,   services,  products,  research  or
development  of  Schwab;  or (c) are  developed  with  the use of  Schwab  time,
equipment,  supplies,  Confidential  Information or facilities.  I must promptly
disclose   Developments   whether  or  not  such  Developments  are  patentable,
copyrightable  or protectible as trade secrets.  I understand and agree that all
Developments  shall be the sole and exclusive  property of Schwab,  and I hereby
irrevocably assign, transfer and convey to Schwab,  exclusively and perpetually,
all  right,  title  and  interest  which I may  have or  acquire  in and to such
Developments  throughout the world,  including without limitation any copyrights
and patents,  and the right to secure  registrations,  renewals,  reissues,  and
extensions  thereof.  I  agree  to  sign  any  documents  and to do  all  things
necessary,  without  additional  compensation,  whether  during my employment or
after,  to assist  Schwab to register,  perfect,  maintain and enforce  Schwab's
rights in any Development,  including without limitation any patent,  copyright,
trade  secret  or  other  right or  interest.  I  understand  that if I am now a
California  resident,  or if I become a California  resident  while  employed by
Schwab,  then this  paragraph  will not apply to any  Developments  which  fully
qualify under Section 2870 of the  California  Labor Code,  which section is set
forth in the accompanying Exhibit A.

                  4.    I  agree  that during  my employment with Schwab, I will
not,  directly or  indirectly,  for my benefit or on behalf of any third  party,
solicit,  induce,  or attempt to solicit or induce (a) any customer of Schwab to
divert,  transfer or take away any of Schwab's  existing business or prospective
business;  or  (b)  any  employee,  vendor  or  independent  contractor  of,  or
consultant to, Schwab to leave their employment or assignment with Schwab.

                  5.    I agree that I will promptly return to Schwab,  upon its
request or, in any event, immediately upon separation from my employment for any
reason, all documents and materials that contain, refer to, or relate in any way
to any  Confidential  Information  as well as any other  Schwab  property  in my
possession or control  including but not limited to  electronic  and  telephonic
equipment, credit cards, security badges, and passwords.

                  6.    I  further  agree  that  for  a  period of eighteen (18)
months  after  my  employment  with  Schwab  ceases,  I will  not,  directly  or
indirectly,  or on behalf of any third party: (a) solicit,  induce or attempt to
solicit or induce any existing and/or prospective customers I serviced (directly
or indirectly)  or whose identity I learned during my employment  with Schwab to
divert,  transfer or otherwise take away business from Schwab: (b) sell or offer
to sell any  security,  retirement,  insurance  or  annuity  product  or related
service to any customer or prospective  customer of Schwab I serviced  (directly
or indirectly) or whose identity I learned during my employment with Schwab;  or
(c)  solicit,  induce or attempt to  solicit or induce any  employee,  vendor or
independent  contractor  of,  or  consultant  to,  Schwab,  to leave  his or her
employment or assignment.  Nothing in Paragraph 6 is intended to prevent me from
discussing possible  employment with any employee or independent  contractor who
contacts me  directly  of his or her own  volition  without my  solicitation  or
attempted  solicitation  of him or her.  Also,  I  understand  that  nothing  in
Paragraph  6 limits  my  absolute  obligation  under  Paragraph  2 to never  use
Confidential  information to solicit Schwab customers or prospective  customers,
or for any other purpose, at any time after my employment with Schwab ceases.

                  7.    I  represent  and  warrant  that  I  do  not  have   any
agreement(s)  with any  former  employer  or other  third  party  that  would be
breached by my performance of my duties at Schwab or that would limit, impair or
otherwise  adversely  affect my performance of such duties,  and that I will not
take any action to breach any such agreement  while I am employed by Schwab.  In
any event,  I will not use or  disclose to Schwab any  confidential  information
that  belongs to others.  I have listed on Exhibit B to this  Agreement  all the
confidential, proprietary, trade secret, non-solicitation and/or non-competition
agreements to which I am subject.  I agree that I will  disclose my  obligations
under  this  Agreement  to any  prospective  or  future  employer  and  that  my
obligations  under this Agreement will survive the separation from my employment
with Schwab regardless of the reason for the separation.

                  8.    I understand and agree that any breach of this Agreement
may subject me to  disciplinary  action,  up to and including  termination of my
employment (if I am still employed at Schwab),  and may cause irreparable injury
to Schwab that  cannot be  adequately  compensated  by money  damages  and/or is
incapable  of precise  calculation.  If I breach  this  Agreement,  I agree that
Schwab has the right to seek equitable relief  (including  injunctive relief and
specific  performance)  in  addition  to  monetary  damages  and any other legal
remedies  which may be  available.  I consent to  Schwab's  obtaining  equitable
relief  in the most  expeditious  forum  to  preserve  the  status  quo  pending
resolution of any dispute relating to this Agreement.

                  9.    If  any  provision  of  this  Agreement  is f ound to be
invalid or unenforceable,  that provision will be enforced to the maximum extent
permissible, and the remaining provisions shall remain in full force and effect.
I agree that the terms of this  Agreement  and any  disputes  arising  out of it
shall be governed by, and construed in accordance with, the laws of the state in
which I was last  employed  by Schwab,  without  giving  effect to such  state's
conflict  of law  principles.  I  understand  and  agree  that  nothing  in this
Agreement  changes  "at will"  employment  status with  Schwab,  and that either
Schwab or I may end the employment  relationship  at any time, for any reason or
no reason at all.

                               Printed
Signed:___________________     Name:___________________     Date:_______________



<PAGE>




                                    EXHIBIT A



                       California Labor Code Section 2870

(a) Any provision in an  employment  agreement  which  provides that an employee
shall  assign,  or offer to assign,  any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee  developed
entirely  on his  or her  own  time  without  using  the  employer's  equipment,
supplies,  facilities,  or trade secret  information except for those inventions
that either:

     (1)  relate at the time of  conception  or  reduction  to  practice  of the
          invention  to the  employer's  business,  or actually or  demonstrably
          anticipated research or development of the employer; or

     (2)  result from any work performed by the employee for the employer.

(b) To the extent  that a  provision  in an  employment  agreement  purports  to
require  an  employee  to assign an  invention  otherwise  excluded  from  being
requited to be assigned  under  subdivision  (a),  the  provision is against the
public policy of this state and is unenforceable.




<PAGE>




                                    Exhibit B

                            List of Prior Agreements


Source: OneCLE Business Contracts.