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Sample Business Contracts

Severance Pay Plan - Charles Schwab & Co. Inc.

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                               THE CHARLES SCHWAB

                               SEVERANCE PAY PLAN

                           Restated As of May 1, 2003



                           ARTICLE 1 - PURPOSE OF PLAN
                           ---------------------------

     The  purpose  of this Plan is to set forth the terms and  conditions  under
which  severance  pay and other  severance  benefits will be provided to certain
employees  of the  Company  and/or  its  Affiliates.  This Plan is  intended  to
constitute an employee  welfare  benefit plan within the meaning of Section 3(1)
of ERISA,  and is  intended  to  memorialize  the  provisions  of the  Company's
severance pay program.

                             ARTICLE 2 - DEFINITIONS
                             -----------------------

     A.  "Administrator"  means  Schwab or such  person or  committee  as may be
appointed  from time to time by Schwab to supervise  the  administration  of the
Plan.

     B. "Affiliate" means any company which is a member of a controlled group of
corporations (within the meaning of Code Section 414(b)) or a group of trades or
businesses under common control (within the meaning of Code Section 414(c)) that
includes the Company.  As of the Restated Effective Date,  "affiliates"  include
the following:

Affiliates:
-----------

         Schwab Holdings, Inc.

         Charles Schwab & Co., Inc.

         Charles Schwab Investment Management, Inc.

         Schwab Capital Markets, LP

         Mayer & Schweitzer, Inc.

         The Charles Schwab Trust Company

         Performance Technologies, Inc.

         TrustMark, Inc.

         Schwab Retirement Plan Services, Inc.

         Charles Schwab International Holdings, Inc.

         Schwab (SIS) Holdings, Inc. I

         Charles Schwab, Cayman, Ltd.

         CyberTrader, Inc.

         CyBerCorp Holdings, Inc.

         U.S. Trust Company National Association

         U.S. Trust Company of Delaware

         U.S. Trust Company of Florida Savings Bank

         U.S. Trust Company of New Jersey

         U.S. Trust Company of North Carolina

         U.S. Trust Company of Texas National Association

         U.S. Trust Mortgage Services Company

         UST Financial Services Corporation

         UST Fiduciary Services LTD

         UST LPO Corp.

         UST Securities Corporation

         United States Trust Company of New York

     C. "Base Salary" means the  Participant's  rate of regular annual base pay,
determined as of the date of  Participant's  Notice of Eligibility.  Base Salary
excludes amounts such as bonuses,  overtime,  commissions,  shift  differential,
incentive pay, and the value of any employee benefits.

     D. "Code" means the Internal Revenue Code of 1986, as amended.

     E. "Company" means The Charles Schwab Corporation,  a Delaware corporation,
and (unless the context requires otherwise) any Participating Company.

     F. "Eligible  Employee" means any Employee who is classified by the Company
as  a  "regular"  full time  or  "regular"  part-time  employee,  or  "seasonal"
employee,  other  than  any  individuals  employed  pursuant  to the  terms of a
collective  bargaining  agreement  between  the  Company or an  Affiliate  and a
bargaining unit representing such Employee;  provided that an Employee shall not
be  considered  an Eligible  Employee if the  Employee is on an unpaid  leave of
absence and is not guaranteed a job upon  completion of the leave.  In addition,
an Employee will not be eligible to  participate in the Plan if the Employee has
entered into a written  employment  or service  agreement  with the Company that
sets forth terms and  conditions  of  employment  and  specifies the payments to
which that Employee may be entitled in the event of  termination  of employment,
or who is otherwise not entitled to Severance  Benefits pursuant to the terms of
this Plan.

     G. "Employee"  means any individual  directly  employed by the Company or a
Participating  Company and on whose behalf the Company withholds income tax from
his or her compensation.  "Employee" does not include independent contractors or
consultants,  persons who have signed  independent  contractor  agreement(s)  or
vendor or  consultant  agreement(s)  or have been  performing  services  for the
Company as an  independent  contractor,  consultant  or vendor or pursuant to an
independent  contractor,  consultant  or vendor  agreement  or any type of third
party agreement;  irrespective of whether any such individuals are determined by
any  third  party  (including  without  limitation  any  court,   arbitrator  or
governmental  or regulatory  agency) to constitute  employees of the Company any
kind, including but not limited to, a common law employee,  an agency temporary,
a joint employee or a leased employee.

     H. "Job  Elimination"  means an  involuntary  termination  of employment on
account of changes in the Company's operations or organization, as determined by
the   Company   in  its  sole   discretion,   including,   without   limitation,
reorganizations,  staffing  changes,  job elimination,  or job force reductions.
Circumstances  that result in Job Elimination may include,  without  limitation,
(i) a  relocation  or  dissolution  of a portion of the business of the Company,
(ii) a  withdrawal  by the  Company  from a  segment  of a market  served by the
Company;  (iii) the  elimination of one or more Company  product lines;  (iv) an
elimination,  reduction,  or  change  in the  Company's  need  for  one or  more
specialized skills provided by the Employee; (v) an organizational change in the
Company,  including without  limitation a business  redesign,  reorganization or
consolidation; (vi) a significant change in the Company's systems or technology;
(vii) a reduction in the Company's staffing levels; (viii) a sale of any portion
of a  business,  following  which an  Employee  is not offered a position by the
acquiring   organization  at  substantially   the  same  salary  level;  (ix)  a
significant  involuntary  decrease  by the Company in the number of hours in the
Employee's regularly scheduled workweek;  and (x) an involuntary decrease by the
Company in the  Employee's  regularly  scheduled  workweek or in the  Employee's
employment  classification  which causes the Employee's  loss of eligibility for
medical benefits.  Notwithstanding  anything to the contrary contained herein, a
Job  Elimination  shall  not  result  (i)  from  an  Employee's  termination  of
employment  on account of voluntary  resignation,  retirement  or death prior to
notice  to  the  Employee  of  eligibility  for  Severance  Benefits  due to Job
Elimination;  (ii)  if  the  Company  has  offered  the  Employee  a  comparable
replacement  position (which  determination will be made by the Company,  within
its sole discretion, taking into account, for example, the similarity of duties,
similarity of exempt or nonexempt  status and salary range;  provided that a new
position  will not be  considered  "comparable"  if it is not within  reasonable
commuting  distance  from the  employee's  home,  offers a salary  less than the
employee's  former  position,  or is of a grade  more than one  grade  below the
employee's  former  position);  (iii)  from  a  termination  on  account  of the
Employee's  substandard  performance or failure of condition of employment prior
to or after Notice of  Eligibility;  (iv) from a termination  resulting  from an
Employee's  violation  of  law  or of  Company  policy(ies),  including  without
limitation, the failure to obtain a required license, absenteeism, fraud, theft,
conflict of interest, or misconduct  (including,  but not limited to, dishonesty
or harassment); (v) where, following the sale or outsourcing of any portion of a
business,  an Employee is offered by the successor  organization a position at a
base salary rate not  significantly  lower than that for the  Employee's  former
position, or of a grade not more than one grade lower than the Employee's former
position; (vi) the Employee's failure to return to work within the time required
following an approved leave of absence (vii) a change in employment that results
from a natural disaster, unforeseeable governmental action, act of war, or other
similar  unanticipated  business  disaster;  or (viii) a  transfer of employment
among the Company and any of its Affiliates.

     I. "Non-Officer" means an Eligible Employee who is not an Officer.

     J. "Notice of Eligibility"  means a written  notice,  in a form approved by
the  Company,  provided  to an  Eligible  Employee  that (1) there will be a Job
Elimination and that the employee is eligible to obtain Severance Benefits under
the Plan or (2) the employee's participation in the Voluntary Separation Program
has been  approved by the  Company  and that the  employee is eligible to obtain
Severance  Benefits under the Plan. An Eligible Employee who has been provided a
Notice of Eligibility is considered a Participant.

     K.  "Notice  Period"  means a sixty  (60)  calendar  day  period  typically
commencing on the next day following the date of the Notice of  Eligibility,  or
on such  later  date as the  Company  shall  determine  in its sole  discretion.
Participants are relieved from job responsibilities during the Notice Period and
generally  are not  required  to report work unless  notified  otherwise  by the
Company.  Also during the Notice Period,  all  Compliance,  Human  Resources and
Information Security policies and procedures that applied to Participants before
receiving  Notice  of  Eligibility   continue  in  full  force  and  effect  and
Participants  remain subject to those policies and procedure.  Participants will
continue to receive Base Salary,  participate in certain employee  benefits,  be
eligible  for  consideration  for bonus and other  incentive  compensation  etc.
during the Notice Period as though  working  pursuant to their regular  schedule
(except with regard to any period that would  otherwise  be a "furlough"  period
for a Participant who is a seasonal Employee, for which period seasonal Employee
Participants  will not receive pay or the other benefits but will continue to be
considered  Employees until the end of the furlough period),  in accordance with
normal Company policy and the terms of the applicable plans.

     L. "Notice Period Date" means the first day of the Notice Period.

     M. "Officer" means an Eligible  Employee who has been elected an Officer of
the  Company  or Schwab or who has a job  grade/designation  level "E1" or above
with a Participating Company.

     N. "Participant" means any Eligible Employee who has been provided a Notice
of Eligibility.

     O.  "Participating  Company"  means  the  Company  and any  Affiliate  that
participates in the Plan, as determined by the Company in its sole discretion.

     P. "Plan" means The Charles Schwab Severance Pay Plan.

     Q. "Plan Year" means the calendar year.

     R.  "Regular  Employee"  means  any  Employee  with  regular  full-time  or
part-time  employment or seasonal employment with the Company, who is considered
and classified by the Company as a "regular" or "seasonal"  employee."  "Regular
Employee" does not include, without limitation, any of the following:

          (i)  Schwab Temps or floaters;

          (ii) Agency Temporaries or other temporary workers

          (iii)Employees  on an unpaid  leave of  absence  who do not have a job
               guarantee upon completion of the leave;

          (iv) Consultants/Independent  contractors,  persons  who  have  signed
               Independent  Contractor,  consultant  or vendor  Agreement(s)  or
               provide  services  to  the  Company  pursuant  to an  Independent
               Contractor,  consultant  or vendor  Agreement,  or pursuant to an
               agreement with any third party,  irrespective of whether any such
               individuals are determined by any third party (including  without
               limitation any court,  arbitrator or  governmental  or regulatory
               agency) to constitute an employee of the Company or any Affiliate
               (including  but not  limited to, a common law  employee,  a joint
               employee or a lease employee); and

          (v)  Persons  (including  but  not  limited  to  those  identified  in
               subparagraphs  (i) through (iv)) not otherwise  considered by the
               Company to be a "regular  employee,"  irrespective of whether any
               such individuals are deemed by a court.  arbitrator or government
               agency  to be  an  employee  of  the  Company  or  any  Affiliate
               (including  but not  limited to, a common law  employee,  a joint
               employee or a lease employee).

     S. "Restated Effective Date" means May 1, 2003.

     T. "Return Date" means the date by which a Participant must sign and return
a  Severance  Agreement  where  required  to do so in order to obtain  Severance
Benefits in addition to participation in and payment for the Notice Period under
this Plan. Except as otherwise determined by the Company in its sole discretion,
the Return Date is the date twenty one (21) calendar days following the date the
Participant is provided with Notice of Eligibility; provided however that:

     1) the Return  Date will be on the next  business  day if the  twenty-first
calendar day is not a business day; and

     2) if the  Participant is at least forty years old, and the Job Elimination
and/or the Voluntary  Separation  Program  affects two or more  Participants  at
least forty years old, the Return Date will be on the forty-fifth  (45) calendar
day following the date the  Participant  is provided with Notice of  Eligibility
(or the next  business  day if the  forty-fifth  calendar  day is not a business
day); and

     3) if the  Participant is under forty years old and is otherwise  entitled,
under  applicable  state or local fair  employment  practice  law,  to more than
twenty-one  (21)  calendar  days in which to  consider  whether to  execute  the
Severance  Agreement,  the Return Date will be a date determined by reference to
applicable state or local fair employment practices law.

     A Severance Agreement returned to the Company that is signed and physically
received by the Return Date, or, if mailed, is addressed  properly for delivery,
postmarked by the United State Postal Service no later than the Return Date, and
actually  received by the Company no later than 10 calendar days from the Return
Date,  will be  considered  timely.  Severance  Agreements  which are not signed
and/or returned as provided here will not be accepted by the Company, unless the
Company decides to accept it on a case-by-case basis, in its sole discretion.

     U.  "Revocation  Period"  means the  seven  calendar  day (or other  longer
legally  required  calendar  day)  period  immediately  following  the  date the
Participant  signs the  Severance  Agreement,  as  defined  in Article 2W below,
during which a Participant who is either:  (i) at least forty (40) years old; or
(ii) is under forty (40) years old and is  employed  in a state that  requires a
specific Revocation Period, may revoke his or her signed Severance Agreement. To
be  effective,  a written  request to revoke must be received by the Company (as
defined by applicable  law) no later than 5:00 p.m. PST on the seventh  calendar
day (or other  longer  period  required  by law)  from the date the  Participant
signed the Severance  Agreement  or, if mailed,  be postmarked no later than the
seventh  calendar day (or other longer period required by law) from the date the
Participant signed the Severance Agreement.

     V. "Schwab" means Charles Schwab & Co., Inc., a California corporation.

     W. "Severance  Agreement" means a written  agreement in a form satisfactory
to the Company,  in its sole discretion,  by which a Participant agrees to waive
and release the Company  from legal  claims in exchange for payment of Severance
Benefits as provided in Article 6. To be effective,  a Severance  Agreement must
be signed and returned by the Return Date (and not revoked during any applicable
Revocation Period).  Severance Agreements are not required to be identical among
Participants.

     X.  "Severance  Benefits"  means all payments and benefits  provided for in
this Plan,  including  but not  limited to all salary and  benefits  for periods
during which a Participant  remains an Employee after being provided a Notice of
Eligibility  (such as the Notice Period and/or Severance  Period),  all forms of
compensation and/or benefits of any kind for or in connection with such periods,
and all other amounts paid or payable to  Participants  in  accordance  with the
Plan.  The  Severance  Benefits a  Participant  may receive are net amounts from
which applicable taxes,  withholding and appropriate deductions have been taken,
including  but not limited to  deduction of any  outstanding  amount owed to the
Company by the Participant  regardless of the reason for or source of the amount
due. In order to receive Severance  Benefits under Article 6, a Participant must
timely sign and return (and not revoke,  where a  Revocation  Period  applies) a
Severance  Agreement as defined in Article 2W. All Severance  Benefits  shall be
applied toward satisfaction of the Company's WARN obligations, if any, and shall
constitute WARN notice and/or WARN benefits where WARN applies.

     Y. "Severance  Period" means the period of time following the Notice Period
during which an Officer Participant is eligible to receive salary in installment
payments  pursuant  to Section  6.3 in exchange  for  entering  into a Severance
Agreement.  Officer Participants must be available to perform services as may be
required. Compliance, Human Resources and Information Security policies continue
to apply during the Severance Period.

     Z.  "Termination  Date" means the last day that the Employee is employed by
the Company. For Non-Officer  Participants,  the Termination Date is the day the
Notice Period ends (as it may be  accelerated  under  Articles 5 and/or 6)). For
Officer Participants,  the Termination Date is the last day of the Notice Period
(as it may be  accelerated  under  Articles  5  and/or  6),  or,  if an  Officer
Participant  signs,  returns  and does not revoke a Severance  Agreement  in the
required time, the Termination  Date is the last day of the Severance Period (as
it may be accelerated under Articles 5 and/or 6).

     AA. "Voluntary Separation Program" means a program of limited time duration
under which an eligible  employee is  permitted  to  voluntarily  separate  from
employment with the Company,  thereby  receiving  certain  associated  benefits,
including participation in this Plan. In the absolute discretion of the Company,
employees in certain job groups,  job  descriptions or job categories may not be
considered  eligible  to  request  participation  in  the  Voluntary  Separation
Program.  Even for employees eligible to participate in the Voluntary Separation
Program,  their actual  participation is not guaranteed and the Company may deny
an eligible employee's request for participation, in its absolute discretion.

     BB. "WARN" means the Federal Worker Adjustment  Retraining and Notification
Act,  as amended,  and any  applicable  state plant or facility  closing or mass
layoff law. In the event WARN applies to a Participant, any Notice Period and/or
Severance Period,  and all compensation and all benefits of any kind due or paid
with  respect to either are also deemed to  constitute  WARN notice  and/or WARN
benefits,  and will be applied toward satisfying the Company's obligations under
WARN.

     CC.  "Year of Service"  means a  continuous  complete  twelve-month  period
commencing  on a  Participant's  date of hire with the  Company or an  Affiliate
(and,  in the case of an Employee who is rehired  after  terminating  employment
with the Company or an Affiliate,  including service prior to a break in service
for  other  than  a  Severance),  and  anniversaries  thereof,  during  which  a
Participant  is  employed  by the  Company  or an  Affiliate,  and ending on the
Participant's  Notice Period Date. For purposes of the foregoing,  a Participant
will receive credit for any time on a paid leave of absence, but not for time on
an unpaid leave of absence.  Also for purposes of the  foregoing,  a Participant
who was a seasonal  employee at the time of receiving Notice of Eligibility will
receive credit for any time on furlough,  assuming the  Participant  returned to
Schwab or an Affiliate at the end of the furlough  period.  A  Participant  will
also receive credit for Service with BankAmerica  Corporation and its affiliates
during the time it was an affiliated company of the Company,  if the Participant
was  employed  by the  Company  before  November  24,  1993,  and  service  with
BankAmerica  Corporation  and its  affiliates  prior  to the date it  became  an
affiliated  company of the  Company,  if the  Participant  was  employed  by the
Company  prior to April 1, 1987.  A  Participant  will also  receive  credit for
service  with any  Affiliate  prior to the time it  became an  Affiliate  if the
Participant was employed by such Affiliate on the date it became an Affiliate.


                             ARTICLE 3 - ELIGIBILITY
                             -----------------------

     3.1. Eligible  Employees will become eligible to participate in the Plan as
of the date the Eligible Employee is provided with a Notice of Eligibility.

                      ARTICLE 4 - EFFECT ON OTHER BENEFITS
                      ------------------------------------

     4.1.  Eligibility  for other employee  benefits (such  as medical,  dental,
vision insurance) will cease in accordance with the terms of any respective plan
no later than the last day of the month that includes the Termination Date.

     4.2 A Participant  will continue  accruing paid time off benefits until the
Termination  Date,  but in any event no later than the end of the Notice Period.
The rate of accrual  during the  Notice  Period  will be the same as the rate of
accrual prior to Notice of Eligibility.

                    ARTICLE 5 - NOTICE AND SEVERANCE PeriodS
                    ----------------------------------------

     5.1 Notice Period.  Following an Eligible Employee's Notice of Eligibility,
the  Participant  will enter a Notice Period for a period of sixty (60) calendar
days. During the Notice Period,  Participants are not required to report to work
unless notified  otherwise and  Participants  remain subject to Company policies
and  procedures.  If WARN is applicable to a Participant,  the Notice Period and
all  compensation  (including  but not  limited to  salary/wages,  benefits  and
benefit plan  participation)  attributable to the Notice Period shall constitute
WARN notice and the payment of WARN benefits,  respectively, and will be applied
against  any notice  period or other  payments  that would  otherwise  be due to
satisfy the Company's  obligations  under WARN. The Termination  Date,  which is
originally  established  as  the  end  of the 60  day  Notice  Period,  will  be
accelerated or otherwise changed if any of the following events occur:

     a. If,  prior to the end of the Notice  Period,  a  Participant  resigns or
otherwise  obtains an external  position or acts as an employee,  consultant  or
independent  contractor  or as a sole  proprietor  of a  business  or acts as an
officer,  director,  or partner in another public or privately held company.  In
that case, the  Participant is required to notify the Company  immediately,  the
end of the  Notice  Period  and the  Termination  Date  will be  accelerated  to
coincide with the next day after the Participant  resigned or otherwise obtained
that position.  The Participant will receive a payment reflecting the balance of
the Base  Salary  attributable  to the  unused  portion of the  original  Notice
Period,  provided however that no payment will be made for the value of bonuses,
or other  incentive  compensation  or the value of other employee  benefits that
might  otherwise  have  been  received  if the  Termination  Date  had not  been
accelerated.  The Participant remains eligible to sign and return the applicable
Severance  Agreement by the Return Date in order to obtain additional  Severance
Benefits under Article 6, provided however that:

          (i) Officer  Participants  who resign or otherwise  obtain an external
     position or act as an employee,  consultant or independent contractor or as
     a sole proprietor of a business or act as an officer,  director, or partner
     in another  public or privately held company prior to the end of the Notice
     Period, who so notify the Company, and who sign, return (and do not revoke)
     a  Severance  Agreement  within  the  required  time,  shall  not enter the
     Severance  Period.  Such  Officer  Participants  shall  receive  a lump sum
     payment for Base Salary that  otherwise  would have been  payable  during a
     Severance Period in accordance with section 6.3. Also, Officer Participants
     will  receive a lump sum payment  for COBRA  premiums  in  accordance  with
     section 6.3. Other than as provided here, no lump sum payment shall be made
     for the value of any bonuses,  incentives  or other  employee  benefits the
     Officer  Participant  would  have  received  during  the  Notice  Period or
     Severance Period.

     b. If a Participant is permitted by the Company to obtain, and does obtain,
another regular full time or part time position or seasonal  position within the
Company before the end of the Notice Period  (without  regard to whether the end
of the Notice Period has been accelerated  pursuant to section 5.1(a)),  his/her
Termination  Date under the Plan will be  cancelled  and the  Participant  is no
longer eligible to receive any Severance Benefits or any payment of any kind for
compensation  (including benefits) otherwise  attributable to the unused portion
of the Notice  Period.  If a Participant  already  received  payment of lump sum
Severance  Pay under  sections  6.1 and/or 6.2, the  Participant  is required to
repay the lump sum Severance  Pay,  including the COBRA  premium,  in full, as a
condition of the employment.  In addition,  if a Participant  already received a
lump sum  payment  for the unused  portion of the Notice  period  under  section
5.1(a),  the  Participant is required to repay the amount by which this lump sum
payment  exceeds the amount the  Participant  would have received if the payment
has been calculated  based on the number of business days that actually  elapsed
between the  beginning of the Notice Period and the date of the re-hire with the
Company, as a condition of the employment.

     5.2 Severance Period. For Officer  Participants who sign and return (and do
not revoke, if a Revocation Period applies) the Severance Agreement as required,
the Notice  Period is  followed  by a  Severance  Period.  Officer  Participants
receive  installment  payments in the form of Base Salary  during the  Severance
Period and continue to be eligible for certain employee  benefits (as determined
by the Company in accordance with the terms of the respective plans) in exchange
for agreeing to remain  available to perform services for the Company during the
Severance  Period.  The  length of the  Severance  Period is  determined  by the
officer level and Years of Service,  in accordance  with section 6.3. During the
Severance Period, Compliance,  Human Resources and Information Security policies
and procedures continue in full force and effect and Officer Participants remain
subject to those  policies and  procedures.  If WARN is applicable to an Officer
Participant,  the  Severance  Period  and all  compensation  (including  but not
limited to salary/wages,  benefits and benefit plan participation)  attributable
to the  Severance  Period shall  constitute  WARN notice and the payment of WARN
benefits,  respectively,  and will be applied against any notice period or other
payments that would otherwise be due to satisfy the Company's  obligations under
WARN. In addition:

     a. During the Severance Period,  Officer  Participants are not eligible for
bonuses or any other incentive compensation.

     b. The Termination  Date for Officer  Participants who sign and return (and
do not revoke, where applicable) the Severance Agreement in the required time is
reset to the end of the Severance Period under section 6.3. The Termination Date
will be accelerated or otherwise changed:

          (i)  if,  prior  to the  end  of  the  Severance  Period,  an  Officer
     Participant resigns or otherwise obtains an external position or acts as an
     employee, consultant or independent contractor or as a sole proprietor of a
     business or acts as an officer,  director,  or partner in another public or
     privately held company.  In that case, an Officer  Participant  must notify
     the  Company  immediately  and  the  end of the  Severance  Period  and the
     Termination  Date will be  accelerated  to coincide with the next day after
     the Officer Participant  resigned or otherwise obtained that position.  The
     Officer Participant will receive a lump sum payment for the balance of Base
     Salary for the unused portion of the original  Severance  Period,  provided
     however  that no payment  will be made for the value of bonuses,  incentive
     compensation or other employee benefits. In addition,  Officer Participants
     will  receive a lump sum payment for COBRA  premiums as provided in section
     6.3.

          (ii) if an Officer  Participant is permitted by the Company to obtain,
     and  does  obtain,  another  regular  full  time or part  time or  seasonal
     position  within the Company after the  Severance  Period begins and before
     the date it is scheduled to end. In that case, the  Termination  Date under
     the  Plan  will be  cancelled  and the  Officer  Participant  is no  longer
     eligible to receive any  Severance  Benefits or any payment of any kind for
     compensation  (including  but not  limited to  benefits or the value of any
     benefits)  otherwise  attributable  to the unused  portion of the Severance
     Period.

                              ARTICLE 6 - BENEFITS
                              --------------------

     Upon being  provided with a Notice of  Eligibility,  a Participant  becomes
entitled to receive the Severance  Benefits  described in sections 6.1, 6.2, and
6.3 (as  applicable)  only if the  Participant  returns to the  Company a signed
Severance  Agreement  no later  than the Return  Date.  If a  Revocation  Period
applies,  a  Participant's  entitlement  to  these  Severance  Benefits  also is
conditioned  upon the  Participant  not revoking (or  attempting  to revoke) the
Severance  Agreement during the Revocation Period.  Subject to those conditions,
the  Participant  will be  entitled to receive the amounts set forth in Sections
6.1 and 6.2, or 6.3 (as applicable).

     6.1 Non-Officer  Severance Pay. Non-Officer  Participants who experience an
involuntary  termination will receive a lump sum severance pay benefit hereunder
equal to the greater of the amount determined under (a) or (b) below:

          a.   The  amount of Base  Salary  that  would  have been  payable  for
               one-half  month of active  employment  (i.e.,  11 business  days)
               multiplied by the Non-Officer Participant's full Years of Service
               (but in no event to exceed the maximum  amount  equivalent to 176
               business days).

               The  Non-Officer  Participant  also  will  receive  credit  for a
               partial Year of Service  (after  aggregation  of partial  years),
               based on the following table:

          Length of Partial Year                      No. of Days
          ----------------------                      -----------

          Not more than 3 months                      3 Business Days

          More than 3 but not more than 6 months      6 Business Days

          More than 6 but not more than 9 months      9 Business Days

          More than 9 but less than 12 months         11 Business Days

                                       OR

          b. The amount of Base  Salary  that would  have been  payable  for the
     number of business days determined under the following table:

          Base Salary                                 No. of Days
          -----------                                 -----------
          $29,999 or less                             22 Business Days

          $30,000 to $39,999                          44 Business Days

          $40,000 to $54,999                          66 Business Days

          $55,000 to $74,999                          88 Business Days

          $75,000 and over                            110 Business Days

     The length of service under Formula A will be used in the event application
of A and B result in the same amount.

          c. Non-Officer Participants who experience a voluntary separation will
     receive a lump sum severance pay benefit equal to the greater of the amount
     determined  under (a) or (b) plus an amount  equal to three  months of Base
     Salary.  The three months of Base Salary will be calculated by  multiplying
     the amount of the  Non-Officer  Participant's  semimonthly  paycheck by six
     (6).

     6.2 COBRA Payment - Non-Officers

          A Non-Officer  Participant who becomes  entitled to receive  Severance
     Benefits  under section 6.1 will also receive  payment for a portion of the
     Non-Officer   Participant's   COBRA  health  care  coverage  premium.   The
     Non-Officer  Participant  shall  receive a single  lump sum  payment  in an
     amount equal to the amount the Non-Officer  Participant will be charged for
     the COBRA premiums for the employee and his/her  enrolled  dependents for a
     number  of days  equal to the  number  of days for  which  the  Non-Officer
     Participant is eligible to receive Severance Pay under Section 6.1.

          The payment for a portion of COBRA premiums is based on group medical,
     dental,  vision,  and employee  assistance  program ("EAP") coverage at the
     same  benefits  levels in effect for the  Non-Officer  Participant  and any
     enrolled dependents at the time the Non-Officer Participant is given Notice
     of Eligibility.  The single lump sum payment representing COBRA premiums is
     based on COBRA premium levels in effect at the  Termination  Date and in no
     event  is a  Participant  entitled  to  receive  payment  for a  subsequent
     increase,  if any, in COBRA premium levels. If the Non-Officer  Participant
     or his/her  dependents  were not enrolled for group health  coverage at the
     time the Company gave Notice of Eligibility,  the  Non-Officer  Participant
     will not receive any payments under this Section 6.2.

     6.3 Officer Severance Pay Benefit.  Officer Participants shall receive Base
Salary  (paid  in  installment   payments  in  accordance  with  normal  payroll
practices)  for a Severance  Period  based on the  applicable  provision  below,
taking  into  account  officer  level,  Years  of  Service  and the  reason  for
termination of employment (involuntary termination or voluntary separation):

          a.   Officer (Vice President) - Involuntary Termination:

     Base Salary:  An Officer (Vice  President)  Participant  who experiences an
     involuntary termination shall receive Base Salary for a Severance Period as
     follows:

     Years of Service                                Severance Period
     ----------------                                ----------------
     Less than 2 years                               9 months

     At least 2 years but no more than 5 years       11 months

     More than 5 years                               12 months

               Officer  (Vice  President)  - Voluntary  Termination:  An Officer
          (Vice  President)  Participant who experiences a voluntary  separation
          shall receive the benefit determined under (a) above and, in addition,
          will receive a lump sum payment  equal to three months of Base Salary.
          The three months of Base Salary will be calculated by multiplying  the
          amount of the Officer Participant's semimonthly paycheck by six (6).

          b. Officer  (Senior Vice  President  and Executive  Vice  President) -
     Involuntary Termination:

          Base Salary:  An Officer  (Senior Vice  President and  Executive  Vice
          President)  Participant  who  experiences an  involuntary  termination
          shall receive Base Salary for a Severance Period as follows:

          Years of Service                                    Severance Period
          ----------------                                    ----------------
          Less than 2 years                                   12 months

          At least 2 years but no more than 5 years           14 months

          More than 5 years                                   16 months

               Officer  (Senior Vice President and Executive  Vice  President) -
          Voluntary Separation:  An Officer (Senior Vice President and Executive
          Vice President)  Participant  who  experiences a voluntary  separation
          shall receive the benefit determined under (b) above and, in addition,
          will receive a lump sum payment  equal to three months of Base Salary.
          The three months of Base Salary will be calculated by multiplying  the
          amount of the Officer Participant's semimonthly paycheck by six (6).

     For purposes of determining  the Severance  Period above under section 6.3a
and 6.3b, a "month" is considered 30 calendar days.

     An  Officer  Participant  whose  Termination  Date  is  accelerated  and is
entitled to receive a lump sum payment for the installment payments contained in
section  6.3a or 6.3b,  also will  receive a lump sum payment  calculated  in an
amount  equal to the amount the  Officer  Participant  will be charged for COBRA
premiums  for  him/herself  and his/her  enrolled  dependents  for the number of
months for which the Officer  Participant  would otherwise have been eligible to
receive installment payments during a Severance Period.

     The  payment  for a portion of COBRA  premiums  is based on group  medical,
dental, vision and EAP coverage at the same benefits level that is in effect for
the Officer  Participant  and any  enrolled  dependents  at the time the Officer
Participant  enters the Severance Period or the Termination  Date,  whichever is
earlier.  The single lump sum payment  representing  COBRA  premiums is based on
COBRA  premium  levels in effect  at the  Termination  Date and in no event is a
Participant  entitled to receive payment for a subsequent  increase,  if any, in
COBRA premium levels. If the Officer  Participant or his/her dependents were not
enrolled  for group  health  coverage  at the time the  Company  gave  Notice of
Eligibility,  the Officer Participant will not receive any payments representing
COBRA premiums.

     6.4 Additional Provisions Related to Severance Benefits

          a) If a Participant  who either has incurred a Job  Elimination or has
     voluntarily  separated under the Voluntary Separation Program, and then has
     terminated  employment  is  subsequently  rehired  by  the  Company  (or an
     Affiliate), any subsequent Severance Benefit that may become payable to the
     Participant  under this Plan  following  the date of rehire on account of a
     Job  Elimination  or voluntary  separation  under the Voluntary  Separation
     Program  shall be  calculated  based solely on the  Participant's  Years of
     Service following his date of rehire after Severance.

          b)  Notwithstanding  anything to the contrary contained herein, (i) an
     Employee or Participant whose employment with the Company (or an Affiliate)
     is  terminated  before or after  receipt of Notice of  Eligibility  for any
     reason  other  than Job  Elimination  within  the  meaning of Article 2H or
     voluntary  separation under the Voluntary  Separation  Program shall not be
     entitled to receive any Severance  Benefits  hereunder,  (ii) a Participant
     may lose eligibility to receive  Severance  Benefits if the Company becomes
     aware of  circumstances  which could or would have  caused a  Participant's
     termination from  employment,  such as engaging in violations of the law or
     of  Company  polic(ies),   including  without  limitation,   fraud,  theft,
     inappropriate use of confidential  information,  or misconduct  (including,
     but not limited to, dishonesty or harassment),  and (iii) in the case of an
     Employee who has entered into an employment  agreement  with the Company or
     an Affiliate  which contains a provision for the payment (or nonpayment) of
     severance  benefits (or  payments  upon  termination  of  employment),  the
     calculation of any payment of such Eligible Employee upon a Severance shall
     be  governed  by the terms of such  employment  agreement,  and not by this
     Article 6.

          c) Any lump sum benefit payable  pursuant to Sections 6.1 or 6.2 shall
     be paid during the next Payroll  processing cycle that follows the later of
     (i) the date the Severance Agreement is received, assuming it is signed and
     returned  to the  Company  in the  required  time  and  is not  revoked  in
     accordance with any applicable  Revocation  Period; or (ii) the Termination
     Date, as it may be accelerated  under Article 5 or 6. Generally,  the close
     date for a payroll cycle is the 2nd business day of that cycle.

          d)  Except  for any lump sum  payment  equal to three  months  of Base
     Salary,  any lump sum benefit payable pursuant to section 6.3 shall be paid
     during the Payroll  processing cycle that follows the later of (i) the date
     the signed  Severance  Agreement  is  received,  assuming  it is signed and
     returned  to the  Company  in the  required  time  and  is not  revoked  in
     accordance with any applicable  Revocation  Period; or (ii) the Termination
     Date, as it may be  accelerated  under Article 5 or 6. The lump sum payment
     equal  to  three  months  of  Base  Salary  shall  be  payable  as  soon as
     practicable  following the end of the Notice Period  provided that, by that
     date, the Severance  Agreement is signed and returned to the Company in the
     required  time  and was not  revoked  in  accordance  with  any  applicable
     Revocation Period.

          e) (i) If a Non-Officer  Participant receives payment of any or all of
     his/her  Severance  Benefit  under  sections  6.1  and 6.2  and  after  his
     Termination Date subsequently accepts  re-employment by the Company or with
     an  Affiliate,  the  Participant  will be  required,  except as the Company
     otherwise   determines   in  its  sole   discretion,   as  a  condition  of
     reemployment,  to repay the amount  (if any) by which the lump sum  payment
     (including  COBRA payments)  exceeds the amount the Participant  would have
     received  if such  payment  had  been  calculated  based on the  number  of
     business days that have actually  elapsed between  Termination Date and the
     date of the subsequent  employment.  The repayment obligation is applicable
     regardless  of whether the  Participant's  severance pay was paid under 6.1
     and/or 6.2 above.  Repayment of a pro rata share of Severance Benefits does
     not affect the validity of the Severance Agreement.

           (ii) If an Officer Participant receives a lump sum payment for any or
     all of his/her Severance  Benefits under section 6.3 due to acceleration of
     the   Termination   Date,   and  the   Participant   subsequently   accepts
     re-employment by the Company or with an Affiliate,  the Participant will be
     required,   except  as  the  Company  otherwise   determines  in  its  sole
     discretion, as a condition of reemployment, to repay the amount (if any) by
     which the lump sum payment  (including  COBRA payments)  exceeds the amount
     the  Participant  would have  received if such payment had been  calculated
     based on the number of business  days that have  actually  elapsed  between
     Termination Date and the date of the subsequent employment.  Repayment of a
     pro rata share of  Severance  Benefits  does not affect the validity of the
     Severance Agreement.

          f) Notwithstanding anything to the contrary contained in this Plan, in
     the event WARN is applicable to a Participant: (1) any Notice Period and/or
     Severance  Benefits  paid or payable to the  Participant  will be deemed to
     constitute and shall be attributed to WARN notice and/or WARN benefits; (2)
     all Severance Benefits under this Plan will be reduced and/or offset by any
     notice, payments or benefits to which the Participant may be entitled under
     WARN; and (3) all Severance Benefits under this Plan will be reduced and/or
     offset by any amount of paid days  and/or  paid  benefits in lieu of notice
     the  Participant  is given or is  required  to be given by the  Company  to
     satisfy its obligations  under WARN. A Severance  Agreement is not required
     for receipt of WARN benefits.

          g)  Notwithstanding  anything to the contrary  contained  herein,  the
     Company  may  revoke  a  Participant's   Severance   Agreement  during  any
     applicable Revocation Period.

                               ARTICLE 7 - FUNDING
                               -------------------

     The amount  required to be paid as Severance  Benefit under this Plan shall
be paid from the  general  assets  of the  Company  at the time  such  Severance
Benefits are to be paid.

                           ARTICLE 8 - ADMINISTRATION
                           --------------------------

     The  administration  of the  Plan  shall be under  the  supervision  of the
Administrator.  It shall be the  responsibility  of the  Administrator to assure
that the Plan is carried out in  accordance  with its terms,  for the  exclusive
benefit of Participants  without  discrimination  among them. The  Administrator
shall have full power and discretionary  authority to administer,  interpret and
construe the Plan,  and to  determine  all claims for  benefits,  subject to the
requirements  of ERISA.  For this  purpose,  the  Administrator's  powers  shall
include,  but shall not be limited to, the following  authority,  in addition to
all other powers provided by this Plan.

          (a)  To make  and  enforce  such  rules  and  regulations  as it deems
               necessary or proper for the efficient administration of the Plan;
          (b)  To  interpret  and  construe  the plan,  its  interpretation  and
               construction  thereof in good faith to be final and conclusive on
               all persons claiming benefits under the Plan;
          (c)  To decide all questions  concerning the Plan and the  eligibility
               of any person to participate in the Plan;
          (d)  To compute  the amount of  benefits  which will be payable to any
               Participant  accordance  with the  provisions of the Plan, and to
               determine  the person or persons  to whom such  benefits  will be
               paid;
          (e)  To authorize the payment of benefits;
          (f)  To appoint such agents,  counsel,  accountants,  consultants  and
               actuaries as may be required to assist in administering the Plan;
               and
          (g)  To allocate and delegate its responsibilities  under the Plan and
               to   designate   other   persons   to   carry   out  any  of  its
               responsibilities under the Plan, and such allocation,  delegation
               or designation to be by written instrument and in accordance with
               Section 405 of ERISA.

     The  interpretations and determinations of the Administrator shall be final
and binding  unless  lawfully  determined  to be arbitrary and  capricious.  The
Administrator  also reserves the right to provide  additional  benefits,  in the
Administrator's sole discretion.  Determinations to be made in the discretion of
the Company are made by the Company in its non-fiduciary  capacity,  with regard
to the best  interests of the Company,  and are not required to be uniform among
similarly situated individuals.

     In  administering  the Plan, the  Administrator  shall be entitled,  to the
extent  permitted  by  law,  to rely  conclusively  on all  tables,  valuations,
certificates,  opinions  and  reports  which are  furnished  by any  accountant,
counsel or other expert who is employed or engaged by the Administrator.

     Schwab shall be the "named  fiduciary" for purposes of Section 402(a)(1) of
ERISA with authority to control and manage the operation and  administration  of
the Plan, and shall be  responsible  for complying with all of the reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA.

     8.1 Claims Procedure

     If any person  believes  he or she is being  denied any rights or  benefits
under the Plan or disagrees with the  calculation  of Severance  Benefits as set
forth in the Notice of  Eligibility,  such  person  must file a claim in writing
with the  Administrator.  If any such claim is wholly or partially  denied,  the
Administrator  shall  notify  such  person  of its  decision  in  writing.  Such
notification  shall be written in a manner  calculated  to be understood by such
person and shall  contain (i)  specific  reasons for the denial,  (ii)  specific
reference to pertinent  Plan  provisions,  (iii) a description of any additional
material or  information  necessary for such person to perfect such claim and an
explanation  of  why  such  material  or  information  is  necessary,  and  (iv)
information as to the steps to be taken if the person wishes to submit a request
for review.  Such  notification  shall be given within ninety (90) calendar days
after the claim is received by the  Administrator  (or within one hundred eighty
(180) calendar days, if special  circumstances  require an extension of time for
processing the claim, and if written notice of such extension and  circumstances
is given to such person  within the initial  ninety  (90) day  period).  If such
notification  is not given  within such  period,  the claim shall be  considered
denied as of the last day of such period and such person may request a review of
his or her claim.

     8.2 Review Procedure

     Within sixty (60) calendar days after the date on which a person receives a
written notice of a denied claim (or, if applicable,  within sixty (60) calendar
days after the date on which such denial is  considered to have  occurred)  such
person (or his duly  authorized  representative)  may (i) file a written request
with the  Administrator  for a  review  of his  denied  claim  and of  pertinent
documents and (ii) submit written issues and comments to the Administrator.  The
Administrator  shall  notify  such  person  of its  decision  in  writing.  Such
notification  shall be written in a manner  calculated  to be understood by such
person and shall contain  specific  reasons for the decision as well as specific
references to pertinent  Plan  provisions.  The decision on review shall be made
within sixty (60)  calendar days after the request for review is received by the
Administrator  (or within one hundred  twenty (120)  calendar  days,  if special
circumstances  require an extension of time for processing the request,  such as
an election by the  Administrator  to hold a hearing,  and if written  notice of
such  extension  and  circumstances  is given to such person  within the initial
sixty  (60) day  period).  If the  decision  on review is not made  within  such
period, the claim shall be considered denied.

     The Company  agrees to  indemnify,  defend and hold harmless to the fullest
extent   permitted  by  law  any  Employee  serving  as  or  on  behalf  of  the
Administrator  or  as  a  member  of a  committee  designated  as  Administrator
(including any Employee or former Employee who formerly served as  Administrator
or as a member of such committee)  against all liabilities,  damages,  costs and
expenses (including attorneys' fees and amounts paid in settlement of any claims
approved by the Company)  occasioned by any act or omission to act in connection
with the Plan, if such act or omission is in good faith.

                      ARTICLE 9 - AMENDMENT AND TERMINATION
                      -------------------------------------

     The Plan and/or any of its terms may be amended at any time with or without
prior notice by action of the Board of Directors of Schwab or its delegee.

     The Plan  and/or  any of its  terms may be  terminated  at any time with or
without prior notice by the Board of Directors of the Company or its delegee.


                           ARTICLE 10 - MISCELLANEOUS
                           --------------------------

     Except where otherwise indicated by the context, any masculine  terminology
used herein shall also include the feminine and vice versa,  and the  definition
of any term herein in the  singular  shall also  include  the  plural,  and vice
versa.

     This Plan shall not be deemed to constitute a contract  between the Company
and any Eligible  Employee or to be a  consideration  or an  inducement  for the
employment  of any Eligible  Employee.  Nothing  contained in this Plan shall be
deemed to give any Eligible  Employee the right to be retained in the service of
the  Company or to  interfere  with the right of the  Company to  discharge  any
Eligible  Employee at any time,  irrespective of the effect which such discharge
shall have upon such individual as a Eligible Employee of this Plan.

     This Plan shall be construed and enforced  according to federal law, except
where not preempted,  by the laws of the State of California other than its laws
respecting choice of law.