Sample Business Contracts

Employment Agreement - Charles Schwab Corp. and H. Marshall Schwarz

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January 23, 2002

Mr. H. Marshall Schwarz
Apartment 6-A
1220 Park Avenue
New York, New York 10128

Dear Marshall:

As a result of your discussions with Jeff Maurer and me, this letter details the
terms of our agreement  ("Agreement")  relative to your  employment  status with
U.S. Trust  Corporation  and The Charles Schwab  Corporation  (together with any
affiliated  entity,  collectively  the  "Company").  References  in this  letter
agreement to "U.S.  Trust" that do not designate a particular U.S. Trust entity,
mean the appropriate U.S. Trust Corporation subsidiary as the context requires.

1. As of close of business on February 28, 2002, you will  voluntarily step down
from and are relieved of your current responsibilities as Chairman and any other
employment positions you hold (hereafter, "Separation from Employment"). Also on
that same date, you are deemed to have resigned as an Officer and, except as set
forth in 1(a) and 1(b) below, all board positions, committee positions and other
positions you may hold. The date your employment ends is the "Separation Date."

     (a)  Notwithstanding  your  Separation from Employment or the provisions of
          paragraph  12(h) of that certain  Executive  Employment  Agreement and
          Covenant  Not  to  Compete  entered  into  by  and  among  U.S.  Trust
          Corporation,  The  Charles  Schwab  Corporation  and you  ("Employment
          Agreement") you will remain a member of the U.S. Trust Corporation and
          United States Trust Company of New York Boards of Directors  until the
          earlier of (i) your resignation;  (ii) your 72nd birthday;  (iii) your
          death, incapacity or other inability to perform your duties as a board
          member;  or  (iv)  you  are  removed  from  the  board  as  result  of
          appropriate board action due to  unsatisfactory  performance or breach
          of duty.

     (b)  Notwithstanding  the above,  you will  remain a member of The  Charles
          Schwab  Corporation Board of Directors,  subject to the same terms and
          conditions  that  currently  apply to you, until the expiration of the
          current board term. After the expiration of the current board term you
          will not seek  election  for any  subsequent  term  without  the prior
          express  written  consent of the  Co-Chief  Executive  Officers of The
          Charles Schwab Corporation.

2. In consideration  for the promises and other  consideration  provided by you,
U.S.  Trust will provide you with a one-time  lump-sum  payment in the amount of
two million  five hundred  thirty  three  thousand  three  hundred  thirty-three
dollars ($2,533,333) less usual and customary taxes,  withholding and authorized
deductions.  Said payment will be made on or before June 30, 2002. You will also
receive  options  to  purchase  51,233  shares  of stock of The  Charles  Schwab
Corporation  ("Options").  The Options shall  possess the same  exercise  price,
vesting schedule, expiration date and such other particulars as set forth in the
U.S. Trust Retention Bonus Program.

3. For purposes of the Employment  Agreement  your  Separation  from  Employment
shall be treated as a separation by mutual consent  pursuant to paragraph  12(e)
of said Employment Agreement.

4. You acknowledge  that the amounts  referred to in paragraph 2 above are, with
the exception of any accrued and vested benefits,  including without limitation,
those  under  any plan or  agreement  described  in this  Agreement  below or in
Schedule A attached hereto,  in lieu of and in full  satisfaction of any amounts
that might  otherwise be payable under any contract,  agreement,  plan,  policy,
program, practice or otherwise, past or present, of the Company,  including, but
not  limited  to, the  Employment  Agreement,  the 1990  Change in  Control  and
Severance  Policy for Top Tier  Officers of United  States Trust  Company of New
York and Affiliated  Companies,  as amended and restated effective as of October
22, 1996, 1990 Change in Control and Severance Policy for Officers and Employees
of United States Trust Company of New York and Affiliated Companies,  as amended
and restated  effective as of October 22, 1996, the U.S. Trust  Retention  Bonus
Program,  the  Executive  Incentive  Plan  of  U.S.  Trust  Corporation  and any
incentive  compensation  plans. You expressly agree that you are not entitled to
receive  any other  payments  or  benefits  under any  contract,  plan,  policy,
agreement,  program,  practice or otherwise,  including but not limited to those
listed in this  paragraph,  in  exchange  for  receipt  of  benefits  under this
Agreement.  Specifically  excepted from this agreement is a normal and customary
director's fee for any directorship you may hold.

5. 1992 Stock  Incentive  Plan:  You will  continue to vest in any stock options
previously  granted to you until your  Separation  Date, in accordance  with the
terms and conditions of the applicable Plan  documents.  Under the provisions of
The Charles Schwab  Corporation  1992 Stock Incentive Plan, you retain the right
to  exercise  vested  options  plan for a  specific  period of time  after  your
Separation  Date.  Any stock  options that are not vested as of your  Separation
Date are immediately  cancelled.  Please refer to your Stock Option Agreement(s)
and Plan  documents  to  determine  how your  rights  apply to  exercising  your

Restricted Shares: You will continue to vest in any restricted shares granted to
you until your  Separation  Date in accordance  with the terms and conditions of
the  applicable  Plan  documents.  Restricted  shares  not  vested  as  of  your
Separation  Date will be forfeited as provided by the applicable Plan documents.
Please  refer to your  Restricted  Share  Agreement(s)  and Plan  documents  for
further information.

6. In the event of your death prior to your  Separation  Date,  your  Separation
Date will be changed to the date of your death and the Company  will pay to your
estate any amounts due to you under paragraph 2 of this Agreement.

7.  Through  your  Separation  Date,  you will  continue to be eligible  for all
regular  employee  insured  benefits  (excluding Short and Long Term Disability,
except as  otherwise  required by law) on the same terms and  conditions  as the
other plan  participants in accordance  with the terms of each plan.  Commencing
with your  Separation Date you will be entitled to the health and life insurance
benefits provided all qualified retirees of U.S. Trust.

8. A payment  representing  the amount of unused  vacation and floating  holiday
time you accrued through  February 28, 2002 will be included in your last salary

9. Should there be any outstanding  advances,  loans or other  obligations which
you owe the Company,  or any of its parent(s),  and/or  its/their  affiliates or
subsidiaries,  such  amounts must be repaid by your  Separation  Date (except as
provided above regarding 401(k) loans). If you have not repaid such amount,  you
expressly agree that any  outstanding  amount due at your Separation Date may be
deducted from any payment(s)  otherwise due you under this Agreement.  You agree
that  you  nonetheless   remain  responsible  for  repayment  if  an  amount  is
outstanding after the offset.

10. In the  event  you  incur  travel  or other  business  expenses  after  your
Separation  Date  related  to Company  business  or your  duties as a  director,
reimbursement  for such expenses will be approved or  disapproved  in accordance
with the travel and entertainment expense policies then in effect.

11. You acknowledge that by reason of your employment, you had access to and did
receive   knowledge  of  the  Company's   trade  secrets  and   proprietary  and
confidential  information  ("Confidential  Information").  You  acknowledge  and
affirm  your  obligations  to  maintain  the   confidentiality  of  Confidential
Information  and  not to use it or to  disclose  it to any  third  party  in the
future.  You  understand  and  agree  that the term  "Confidential  Information"
includes, but is not limited to, customer identity,  customer account,  personal
or business information,  customer lists, lead information, employee information
(employment,  personal,  financial  or  account  information),  employee  lists,
know-how,  computer hardware or software  configuration or design,  research and
development,  product designs, plans and/or methods (whether currently in use or
in development),  source codes, future  developments,  costs,  profits,  account
valuation,  pricing  and  pricing  structure,  technical,  marketing,  business,
financial,  or other information which constitute trade secret  information,  or
information  not available to competitors of the Company,  the use or disclosure
of which might  reasonably  be construed to be contrary to the  interests of the
Company.  You agree that this  paragraph is not intended to limit any definition
of "Confidential Information" in any prior written confidentiality agreement you
signed as a  condition  of your  employment.  You also agree  that  Confidential
Information is a valuable and unique asset which is actively  protected and that
unauthorized  use and/or  disclosure  of  Confidential  Information  would cause
immediate and irreparable harm.

12. You  expressly  agree that any attempt on your part to induce any  employee,
consultant  or contractor  to leave  his/her  assignment or employment  with the
Company,  or any other effort by you to interfere in those relationships will be
harmful and  damaging to the Company.  Therefore  you agree that for a period of
twelve (12) months after your Separation Date, you will not in any way (directly
or indirectly),  on your own behalf of any other person or entity:  (1) solicit,
induce or attempt to solicit or induce,  any employee,  consultant or contractor
of the  Company to leave his or her  employment  or  assignment;  (2)  otherwise
interfere  with or disrupt  the  employment  or contract  relationship  with the
Company; (3) recruit,  solicit, entice or hire away any employee,  consultant or
contractor  of the Company;  or (4) hire or engage any  employee,  consultant or
contractor  of the  Company,  or  any  former  employee  of  the  Company  whose
employment  ceased  less  than one (1)  year  before  the  date of such  hire or

13. You further acknowledge your continuing  obligations pursuant to paragraph 8
(Covenant  Not to Compete),  paragraph  10  (Intellectual  Property  Rights) and
paragraph  11 (Media  Communication  and  Non-Disparagement)  of the  Employment

14. You also agree that you will return to Therese Kelly, Senior Vice President,
or her designee any and all  originals and copies of documents  (including  hard
copy and electronic  documents,  disks,  and files) that you received,  obtained
and/or created as part of your  employment  (excluding  information you received
about your insured  benefits or other benefit  programs)(collectively  "Files"),
and that you will  return all  Company  property,  including  but not limited to
Company sponsored credit cards and/or calling cards,  telephones,  pagers,  Palm
Pilots,  laptops and other computer software and/or hardware,  keys and identity
badges, by no later than March 15, 2002.  Notwithstanding the foregoing, you may
maintain  Files on U.S. Trust  premises,  sharing access thereto with U.S. Trust
personnel,  as long as you are a director of U.S. Trust or maintain an office at
U.S. Trust.

15. U.S. Trust will provide you with office space, on a space  available  basis,
and administrative support, on an as needed basis, until such time as you notify
U.S. Trust that you no longer require such resources.

16. You  understand  that the benefits you receive  under this  Agreement are in
lieu of and a substitute  for any severance  benefits you may have been eligible
to receive under U.S. Trust Severance Program.

17. RELEASE: In exchange for the promises contained in this Agreement, you, your
heirs,   executors,   representatives,   successors  and  assigns  (referred  to
collectively  as  "You"),   fully  release  and  discharge  The  Charles  Schwab
Corporation,   U.S.  Trust  Corporation,   their  parent(s),   subsidiaries  and
affiliates and/or their directors,  officers,  shareholders,  agents,  servants,
employees,  successors,  and assigns (referred to collectively as "Schwab") from
any and all claims for  monetary or other  damages or any other form of recovery
or  relief,  whether  or not  known,  suspected  or  claimed,  which You have or
hereafter  may have  against  Schwab,  including  but not  limited to claims for
attorneys' fees and costs,  and causes of action with respect to, or arising out
of, your  employment or separation  from  employment  with Schwab.  This release
includes, but is not limited to, claims arising under:

     (1)  any federal, state or local fair employment practice law,
     (2)  any unemployment insurance law,
     (3)  any disability benefits law,
     (4)  any workers' compensation law,
     (5)  any wage law,
     (6)  the Age Discrimination in Employment Act,
     (7)  any  local,   state  or  federal   civil  rights  laws  that  prohibit
          discrimination on the basis of age, color, race, gender,  sex, marital
          status,  national  origin,  mental or physical  disability,  religion,
          ancestry,  or veteran status or any other form of discrimination (and,
          for employees in New Jersey,  the  Conscientious  Employee  Protection
     (8)  the Employment Retirement Income Security Act, or
     (9)  any other statute, law, rule, regulation,  ordinance, executive order,
          contract or tort.

You waive and release the right to  institute a lawsuit,  arbitration,  or other
judicial or  quasi-judicial  action in accordance  with the law. With respect to
any charges,  complaints,  petitions or claims that have been or may be filed by
you concerning  events or actions relating to your employment or separation from
employment,  and which events or actions occurred on or before the date You sign
this  Agreement,  You  expressly  waive  and  release  any right You may have to
recover monetary or other damages (including equitable relief) or any other form
of recovery or relief in any lawsuit,  investigation,  hearing, or proceeding of
any kind brought by You, an  administrative  agency, or any other person on Your
behalf or which  includes You in any class.  If you breach this  paragraph,  You
understand  that  You will be  liable  for all  expenses,  including  costs  and
attorneys'  fees,  incurred  by Schwab (if Schwab  prevails)  in  defending  any
lawsuit, arbitration, charge, complaint, petition or claim. This paragraph 17 is
not  intended  to limit you from  pursuing  an action  for the sole  purpose  of
enforcing  this  Agreement.  You understand  that this  Agreement  constitutes a
release  by You of any and all  claims  and  causes of  action of any  nature or
description  which You have or may have arising up to and including the date You
execute this Agreement,  whether or not You have asserted any or all such claims
or causes of action. However, nothing in this agreement is intended to alter the
agreement between you and US Trust dated August 15, 2001 ("August Agreement") to
provide  the  payment  of legal  fees in the  event  of  pending  or  threatened
litigation addressed in the August Agreement.  Nor is anything in this paragraph
17 intended to limit your right to  reimbursement  for legal fees or other costs
with respect to any actual or threatened  proceeding  to the extent  provided in
the By-laws, certificate of incorporation or any resolution of U.S. Trust or The
Charles Schwab Corporation.

18. Except as specifically set forth herein, you expressly agree that You intend
this Agreement to extend to all claims,  unknown and/or unsuspected,  and to all
unanticipated  injuries and/or damages, as well as to those claims,  injuries or
damages  which are now known to or suspected by You,  that arose before the date
You signed this  Agreement.  This Agreement shall remain in effect as a full and
complete release notwithstanding the discovery or existence of any additional or
different facts.

19. You understand  and agree that the terms and  conditions of this  Agreement,
the  existence of this  Agreement  and the  circumstances  giving rise to it are
confidential  and that you will not discuss,  orally or in writing,  the fact of
this Agreement, any aspect of this Agreement or the circumstances giving rise to
it with anyone other than your  immediate  family,  attorney,  CPA, or financial
advisor  (with  instructions  to them  that  they  are  bound  to  maintain  the
confidentiality  of the terms and conditions of the  Agreement),  unless you are
subpoenaed or otherwise required by law to disclose the terms or conditions.  If
You  or  your  above  referenced   representatives  receive  legal  notice  that
disclosure is being sought,  you will immediately  provide Schwab with notice of
the potential disclosure (which notice must be prior to the disclosure). Nothing
in this provision is intended to undermine obligations you or Schwab may have to
comply with applicable banking or securities laws, rules and/or regulations.

20.  You  further  agree that you will  refrain  from  taking  actions or making
written or oral statements regarding Schwab, which could or would:

-    Disparage or defame the goodwill or reputation,
-    Adversely affect the morale of other employees,
-    Impact the ability to attract qualified candidates, or
-    Affect the relationship  with its analysts,  investors,  rating agencies,
     media representatives, external consultants or any other entity which could
     have influence over its reputation, shareholder value or market share.

You also agree that you will  refrain from acting as a source  (attributable  or
otherwise)  or  engaging  in  any  dialogue  with  the  media,   regarding  your
experiences  with or at Schwab  that in any way would or could be  injurious  or
detrimental  to any  Schwab  entity  or  affiliated  person,  or  regarding  any
information  you may have acquired (first hand or otherwise)  concerning  Schwab
operations, marketing or advertising strategies or plans, financial performance,
recruitment or retention  strategies  and/or internal  policies and procedures.)
Nothing in this paragraph is intended to undermine obligations you or Schwab may
have to comply with  applicable  banking and/or  securities  laws,  rules and/or

21.  You agree  that you will  continue  to  cooperate  (before  and after  your
Separation  Date)  with  the  Company  in all  inquiries  and/or  investigations
(internal, regulatory or otherwise) and on all claims, litigation or arbitration
pertaining to the Company's business or relationships, regardless of whether the
Company is or becomes a named party.  In that event,  the Company will reimburse
you for reasonable  travel  expenses in accordance with the travel policies then
in effect and will  reimburse you for  reasonable  legal fees incurred by you to
the extent you determine, with the approval of the Company (such approval not to
be unreasonably  withheld),  that it is appropriate for you to have  independent
legal advice or representation in connection  therewith.  This  reimbursement is
for your convenience. The Company confirms its expectation that you will provide
truthful information in accordance with this paragraph.

22. In the event that any amounts  payable under  paragraph 2 of this Agreement,
any amounts  referred to in paragraph 4 of this  Agreement,  any amount  payable
under the Employment  Agreement,  or any other payments or benefits to which you
are  entitled  from the  Company  are  subject to the excise tax  imposed  under
Section 4999 of the Internal  Revenue Code (the "Excise Tax"), the Company shall
pay you an additional  amount (the "Gross-Up  Payment") such that the net amount
retained by you,  after  deduction of any Excise Tax and any Federal,  state and
local income and employment tax and Excise Tax upon the payment provided by this
paragraph,  shall be equal to the amount you would have  received had the Excise
Tax not been imposed.

23 All rights and obligations  under the Split Dollar Insurance  Agreement dated
December 21, 1998  between U.S.  Trust  Corporation  and you (the "Split  Dollar
Agreement")  shall survive this Agreement and your  separation from the Company.
The Company agrees that it will report  consistently with any election permitted
by IRS Notice 2002-8,  or the regulations to be issued announced in such Notice,
made by the trustee under your trust  indenture dated March 3, 1998 with respect
to the  income  taxation  of the  insurance  provided  under  the  Split  Dollar
Agreement. The Company further agrees that it will provide such information with
respect to the financial  performance of the insurance policy acquired under the
Split  Dollar  Agreement  as such  trustee  shall  from time to time  reasonably

24. By entering into this Agreement, the Company does not admit any liability to
you or any other person arising out of or attributable to your employment at the
Company or the ending of that employment.  The Company  expressly denies any and
all such liability and denies it has engaged in any wrongful act.

25. You confirm  that you have been  supplied  with and have read a copy of this
Agreement and understand  its terms,  that you have been advised to consult with
an attorney before signing this Agreement, that you fully understand the content
and  effect  of  this  Agreement,   and  that  you  enter  into  this  Agreement
voluntarily.  You also confirm that you have been given at least twenty-one (21)
days in which to  consider  the terms of this  Agreement  (which  21 day  period
begins on the date you were first provided with a copy of the original Agreement
for  review  and  signature),  and that you  approve  and  accept  the terms and
knowingly and voluntarily  agree to be bound by them. This notice is provided in
accordance with the Age Discrimination in Employment Act.

26. For a period of seven (7) calendar days after you sign this  Agreement,  you
are  entitled  to revoke it, and this  Agreement  will not become  effective  or
enforceable until that seven-day period has expired without a revocation by you.
To revoke this Agreement,  please deliver to me a writing requesting revocation.
The writing must be physically received by me within 7 calendar days of the date
of your signature on this Agreement in order to be effective.

27. This  Agreement is severable.  If a provision or a portion of a provision is
found legally unenforceable or invalid, the remaining portions and provisions of
this Agreement  remain  enforceable  and shall be enforced to the full extent of
the law.

28. This Agreement  shall be governed by and  interpreted in accordance with the
laws of the State of New York.

29. This Agreement,  the August Agreement,  and the surviving  provisions of the
Employment  Agreement  constitute  the  complete  understanding  between you and
Schwab as to the  subject  matter  contained  herein  and  supercedes  any other
agreements or  understandings,  whether written or verbal.  No other  subsequent
promises or agreements  shall be binding  unless they are reduced to writing and
are signed by you and an authorized Schwab Officer, except as otherwise provided

Marshall, if the terms of this Agreement are satisfactory, please date, sign and
initial this document in the space  provided  below and on the  following  page.
Please do not make any other marks on the Agreement.  The signed original should
be returned to Charles  Fergusson,  Senior Vice  President,  United States Trust
Company  of New York,  114 West 47th  Street,  New York,  New York  10036 in the
enclosed  envelope on or before March 1, 2002.  I have  included a copy for your
files. Once you return the signed and initialed  original,  I will initial it as
well and provide  you with a copy of the fully  executed  document.  Please feel
free to contact me should you have any questions.

Very truly yours,

/s/ David S. Pottruck
David Pottruck
President and Co-Chief Executive Officer
The Charles Schwab Corporation

AGREED: /s/ H. Marshall Schwarz                        DATE:    2/28/02
        ------------------------                            --------------------
          H. Marshall Schwarz


                                   Schedule A
                               H. Marshall Schwarz
                              A/O January 10, 2002

Account                                                   Balance as of 1/10/02*

Benefit Equalization Plan of U.S. Trust Corp.               $       2,689,528.73
Executive Deferred Compensation Plan of U.S. Trust Corp.            5,846,263.12
Long Term Performance Plan of U.S. Trust Corp                       1,628,943.83
U.S. Trust Corporation 401(k) Plan - 401(k)                         2,335,761.09
U.S. Trust Corporation 401(k) Plan - ESOP                             267,303.94
U.S. Trust Corporation 401(k) Plan - ESOP Diversification             267,492.46
Total                                                          $   13,035,293.17

*Amounts will change with changes in market values, additions and withdrawals.

In addition:

1)   Rights under the Split Dollar Insurance  Agreement dated December 21, 1998,
     between U.S. Trust Corporation and H.M. Schwarz

2)   Rights to a pension pursuant to the terms of the U.S. Trust Retirement Plan