Capital Accumulation Plan for Senior Managing Directors - Bear Stearns Companies Inc.
THE BEAR STEARNS COMPANIES INC.
CAPITAL ACCUMULATION PLAN FOR
SENIOR MANAGING DIRECTORS
(Amended and Restated as of October 28, 1999,
and Further Amended as of March 31, 2004)
SECTION 1
Purpose
The purpose of the Plan is to promote the interests of the Company
and its stockholders by providing long-term incentives to certain key executives
of the Company and Bear Stearns who contribute significantly to the long-term
performance and growth of the Company.
SECTION 2
Definitions
2.1 Terms Defined. When used herein, the following terms shall
have the following meanings:
"Account" means a Capital Accumulation Account or a Cash Balance
Account, as the context may require.
"Accredited Investor" means an "accredited investor" as defined in
Rule 501 under the Securities Act, or any successor rule or regulation.
"Additional Deferral Amount" has the meaning assigned to such term
in Section 4.1.
"Additional Plan Election" has the meaning assigned to such term in
Section 4.1.
"Adjusted Book Value Per Share" means the amount determined as of
the end of any Fiscal Year by dividing Adjusted Common Stockholders' Equity by
the sum of (a) the number of shares of Common Stock outstanding on such date,
(b) the number of CAP Units credited to the Capital Accumulation Accounts of all
Participants as of such date and the number of Earnings Units credited to the
Earnings Unit Accounts of all participants in the PUP Plan as of such date, (c)
the number of CAP Units to be credited to all such Accounts as a result of
making any adjustment to such Accounts required by Sections 5.1 and 5.10 in
respect of all Fiscal Years ending on or prior to the date of determination and
the number of Earnings Units credited to the Earnings Unit Accounts of all
participants in the PUP Plan as a result of making any adjustment to such
accounts required by Section 4.2 of the PUP Plan in respect of all Fiscal Years
ending on or prior to the date of such determination, and (d) the number of
shares of Common Stock purchased by the Company for purposes other than for the
Plan and the PUP Plan during all Fiscal Years ending on or prior to the date of
such determination, less (e) the number of shares of
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Common Stock issued by the Company (whether from Treasury shares or otherwise)
other than pursuant to the Plan or the PUP Plan during all Fiscal Years ending
on or prior to the date of such determination.
"Adjusted Common Stockholders' Equity" means, for the first Fiscal
Year of any Deferral Period, Consolidated Common Stockholders' Equity as of the
last day of the preceding Fiscal Year and for Fiscal Years following the first
Fiscal Year of such Deferral Period, means Adjusted Common Stockholders' Equity
determined for the prior Fiscal Year of such Deferral Period, plus all increases
(or less any decreases) in retained earnings of the Company and its subsidiaries
attributable to net income (or loss), determined on a consolidated basis, minus
all amounts accrued in respect of cash dividends declared with respect to any
capital stock of the Company during such Fiscal Year plus the effect of the
after-tax cost of the CAP Plan.
"Adjusted Earnings Per Share" means, for any Fiscal Year, (a) the
Company's consolidated net income or loss for such Fiscal Year, less the amount
of the Preferred Stock Dividend Requirement for such Fiscal Year, plus the
product obtained by multiplying the product of the Net Earnings Adjustment
multiplied by the Average Cost Per Share for such Fiscal Year by the fraction
which is 1 minus the Marginal Tax Rate, divided by (b) the sum of (i) the number
of shares of Common Stock outstanding during such Fiscal Year, computed on a
weighted average basis based on the number of days outstanding during such
Fiscal Year, (ii) the aggregate number of CAP Units credited to the Accounts of
all Participants computed on a weighted average basis based on the number of
days outstanding during such Fiscal Year but not including in such computation
the day that CAP Units are credited, increased or decreased pursuant to Section
5.1, 5.3 or 5.10 of the Plan, and (iii) the aggregate number of Earnings Units
credited to the Earnings Unit Accounts of all participants in the PUP Plan
computed on a weighted average basis based on the number of days outstanding
during such Fiscal Year but not including in such computation the day that
Earnings Units are credited, increased or decreased pursuant to Section 4.2 or
4.5 of the PUP Plan.
"Adjusted Preferred Stock Dividend Requirement" means, for any
Fiscal Year, the quotient obtained by dividing (i) the aggregate amount of all
dividends actually declared by the Company on, or, if no such dividends are
actually declared, required to be declared by the Company in accordance with the
terms of, any Preferred Stock, in such Fiscal Year, by (ii) the fraction which
is one minus the Marginal Tax Rate for such Fiscal Year.
"Advisory Committee" means a committee of five Participants, of
which two shall be appointed by the President of the Company, two by the
President's Advisory Council of Bear Stearns and one by the Management and
Compensation Committee.
"Affiliate" means (a) Bear Stearns, (b) any other subsidiary of the
Company and (c) any other corporation or other entity which is controlled,
directly or indirectly, by, or under common control with, the Company and which
the Board Committee designates as an "Affiliate" for purposes of the Plan.
"Aggregate Imputed Cost" means, with respect to any Fiscal Year, the
sum of (a) the aggregate of the Cost of Carry for such Fiscal Year for all
Participants in the Plan plus (b) the
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Capital Reduction Charge for such Fiscal Year plus (c) the product of (i) the
sum of the Net Earnings Adjustments for such Fiscal Year for all Participants in
the Plan multiplied by (ii) the Average Cost Per Share for such Fiscal Year,
minus (d) the Dividend Savings for such Fiscal Year.
"Appropriate Committee" means the Management and Compensation
Committee or, in the case of Participants who are Reporting Persons, the Board
Committee.
"Associate" of a Person means (a) any corporation or organization of
which such Person is an officer or partner or is, directly or indirectly, the
Beneficial Owner of 10% or more of any class of equity securities, (b) any trust
or other estate in which such Person has a substantial beneficial interest or as
to which such Person serves as trustee or in a similar fiduciary capacity and
(c) any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person or who is a director or officer of such Person
or any of its parents or subsidiaries.
"Available Shares" means, with respect to any Fiscal Year or portion
thereof, the sum of (a) the number of shares of Common Stock purchased by the
Company in the open market or in private transactions or otherwise during such
period that have not been previously allocated under the Plan and designated by
the Board Committee at the time of purchase as having been purchased for
issuance under the Plan with respect to the Fiscal Year or portion thereof
specified by the Board Committee and (b) shares of Common Stock purchased prior
to such period that were designated as Available Shares but were not allocated
under the Plan which the Company makes available to the Plan subsequent to the
period in which such shares were purchased and the Board Committee thereafter
designates as Available Shares for issuance under the Plan with respect to the
Fiscal Year or portion thereof specified by the Board Committee.
"Average Cost Per Share" means with respect to any period the
weighted average of the sum of (a) the average price paid (including
commissions) by the Company in respect of Available Shares purchased by the
Company during such period and (b) in respect of Available Shares purchased by
the Company prior to such period that the Company makes available to the Plan
and that are accepted by the Board Committee, the Fair Market Value as of the
last trading day of such period.
"Average Federal Funds Rate" means, with respect to any Fiscal Year,
the percentage (expressed as a decimal fraction) obtained by taking the sum of
the Federal Funds Rates for each day during the Fiscal Year and dividing such
amount by the number of days in such Fiscal Year.
"Base Year" means the first Fiscal Year of a Required Deferral
Period.
"Bear Stearns" means Bear, Stearns & Co. Inc., a Delaware
corporation, and its successors and assigns.
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"Beneficial Owner" has the meaning ascribed thereto in Rule 13d-3
under the Exchange Act, except that, in any case, a Person shall be deemed the
Beneficial Owner of any securities owned, directly or indirectly, by the
Affiliates and Associates of such Person.
"Beneficiary" of a Participant means the beneficiary or
beneficiaries designated by such Participant in accordance with Section 10 to
receive the amount, if any, payable hereunder upon the death of such
Participant.
"Board Committee" means the Compensation Committee of the Board of
Directors or another committee of the Board of Directors designated by the Board
of Directors to perform the functions of the Board Committee hereunder. To the
extent required by Rule 16b-3, the Board Committee shall be composed solely of
directors who are not Participants in the Plan and are in other respects
"Non-Employee Directors" within the meaning of Rule 16b-3.
"Board of Directors" means the Board of Directors of the Company.
"Book Value Adjustment" has the meaning assigned to such term in
Section 5.5.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or permitted by
law to be closed.
"CAP Units" means the units, each such unit corresponding to one
share of Common Stock, credited to a Participant's Capital Accumulation Account
pursuant to Section 5. All calculations and determinations of the number of CAP
Units hereunder shall be made in whole and fractional units, with such
fractional units rounded to the nearest one-thousandth of a unit.
"Capital Accumulation Account" has the meaning assigned to such term
in Section 5.1.
"Capital Reduction Charge" means (a) for Fiscal Years 1991 and 1992,
zero; (b) for Fiscal Year 1993, the product of (i) the excess of (A) the amount
determined by multiplying the Aggregate Imputed Cost of the Plan for Fiscal Year
1992 by the fraction which is one minus the Marginal Tax Rate for Fiscal Year
1992, over (B) the aggregate amount of all cash dividends that would have been
paid by the Company during Fiscal Year 1992 on the aggregate number of shares of
Common Stock purchased by the Company and taken into account for purposes of the
Plan in respect of Fiscal Year 1991, if all such shares had remained
outstanding, and (ii) the Average Federal Funds Rate for Fiscal Year 1993; and
(c) for each Fiscal Year thereafter, the product of (x) the sum of (A) the
amount determined by multiplying the Aggregate Imputed Cost of the Plan for the
Fiscal Year preceding the year for which the determination is being made by the
fraction which is one minus the Marginal Tax Rate for such preceding Fiscal Year
(the "Tax-Effected Aggregate Imputed Cost" for such Fiscal Year), plus (B) the
aggregate Tax-Effected Aggregate Imputed Cost of the Plan for all preceding
Fiscal Years, other than the Fiscal Year immediately preceding the year for
which the determination is being made, plus (C) the sum of the respective
amounts obtained by multiplying the Capital Reduction Charge for each preceding
Fiscal Year by the fraction which is one minus the Marginal Tax Rate for the
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corresponding Fiscal Year, less (D) the aggregate amount of all cash dividends
that would have been paid by the Company on the aggregate number of shares of
Common Stock purchased by the Company for purposes of the Plan and taken into
account pursuant to Section 5.1, 5.3 or 5.10(a) prior to the end of the Fiscal
Year preceding the year for which the determination is being made, measured from
the date the corresponding CAP Units were first credited to such Accounts, if
all such shares had remained outstanding and (y) the Average Federal Funds Rate
for such Fiscal Year.
"Cash Balance" means the amount from time to time credited to a
Participant's Cash Balance Account.
"Cash Balance Account" has the meaning assigned to such term in
Section 5.2.
"Change in Control" means (a) a majority of the Board of Directors
ceases to consist of Continuing Directors; (b) any Person becomes the Beneficial
Owner of 50% or more of the outstanding voting power of the Company unless such
acquisition is approved by a majority of the Continuing Directors; (c) the
stockholders of the Company approve an agreement to merge or consolidate into
any other entity, unless such merger or consolidation is approved by a majority
of the Continuing Directors; or (d) the stockholders of the Company approve an
agreement to dispose of all or substantially all of the assets of the Company,
unless such disposition is approved by a majority of the Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes.
"Committee" means each of the Advisory Committee, the Board
Committee and the Management and Compensation Committee.
"Common Stock" means the common stock, par value $1.00 per share, of
the Company.
"Company" means The Bear Stearns Companies Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated Common Stockholders' Equity" means, as of any date of
determination, the consolidated stockholders' equity of the Company and its
subsidiaries applicable to Common Stock.
"Continuing Director" means any member of the Board of Directors who
is a member on the Effective Date or who is elected to the Board of Directors
after the Effective Date upon the recommendation or with the approval of a
majority of the Continuing Directors at the time of such recommendation or
approval.
"Cost of Carry" means, with respect to a Participant, the sum of (a)
the amount obtained by multiplying the Deferred Tax Benefit for each Plan Year
by the Average Federal Funds Rate in the Fiscal Year for which the determination
is being made, and (b) the amounts obtained by compounding the amounts so
obtained for each preceding Fiscal Year for which a
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Cost of Carry was calculated less the tax benefits associated with the amounts
so determined, calculated on the basis of the Marginal Tax Rate in each such
Fiscal Year, on an annual basis, at the Average Federal Funds Rate in effect
during each succeeding Fiscal Year; and, with respect to the Plan as a whole,
means the aggregate Cost of Carry of all Participants in any Fiscal Year.
"Deferral Period" means the period of five Fiscal Years commencing
on the first day of the Fiscal Year following the Plan Year for which a
Participant's compensation being deferred pursuant to this Plan was payable, or
such greater or lesser number of whole Fiscal Years as the Appropriate Committee
may approve pursuant to Section 4.1, 4.3, 4.5 or 4.6. Notwithstanding the
foregoing, the Deferral Period applicable to compensation being deferred for a
particular Plan Year for any Participant who will attain age 56 prior to the
last day of any such Plan Year and who elects in any Plan Election to be
governed by this sentence in the manner specified by the Company shall be, (i)
in the case of Participants who attain the age of 56 in such Plan Year, four
Fiscal Years, (ii) in the case of Participants who attain the age of 57 in such
Plan Year, either three or four Fiscal Years, (iii) in the case of Participants
who attain the age of 58 in such Plan Year, either two, three or four Fiscal
Years, or (iv) in the case of Participants who attain the age of 59 or older in
such Plan Year, either one, two, three or four Fiscal Years, in each such case
as the Participant may so elect for each such Plan Year.
"Deferral Year" means any Fiscal Year during a Deferral Period.
"Deferred Tax Benefit" means, for each Plan Year of a Participant,
the sum of (a) the amounts obtained by multiplying such Participant's Total
Deferral Amount, if any, for such Plan Year by the Marginal Tax Rate for such
Plan Year and (b) the respective amounts obtained by multiplying the dollar
amount of all Net Earnings Adjustments made with respect to the subaccount of
such Participant's Capital Accumulation Account corresponding to such Plan Year
by the respective Marginal Tax Rates for each Deferral Year for which such
adjustments are made. The Deferred Tax Benefit shall be computed and recorded
separately for each Plan Year.
"Disability" means the complete and permanent inability of an
individual to perform his duties due to his physical or mental incapacity, all
as determined by the Appropriate Committee upon the basis of such evidence,
including independent medical reports and data, as the Appropriate Committee
deems necessary or appropriate.
"Dividend Savings" means (a) for Fiscal Year 1991, zero; (b) for
Fiscal Year 1992, the sum of (i) the amount obtained by multiplying (A) the
aggregate number of CAP Units credited to the Capital Accumulation Accounts of
all Participants pursuant to Section 5.1 in respect of Fiscal Year 1991 by (B)
the weighted average per share amount of all cash dividends paid by the Company
on its Common Stock in such Fiscal Year (such weighted average amount to be
determined by multiplying the amount of each such dividend by the number of days
in the Fiscal Year on and after the date on which such dividend is paid, adding
all the amounts so obtained and dividing the total by the number of days in such
Fiscal Year) and by multiplying the product so obtained by (C) the Average
Federal Funds Rate for such Fiscal Year, and (ii) the amounts (the "Partial Year
Dividend Savings") obtained by multiplying (x) for each fiscal quarter in such
Fiscal Year, the aggregate number of CAP Units credited to the Capital
Accumulation Accounts of all Participants pursuant to Section 5.3 during such
Fiscal Year by (y) the respective
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weighted average per share amounts of all cash dividends paid by the Company on
its Common Stock in fiscal quarters of such Fiscal Year beginning after the date
on which such CAP Units were so credited (each such weighted average amount to
be determined in the manner described in the preceding clause (b)(i)(B)), and by
multiplying the product so obtained by (z) the Average Federal Funds Rate for
such Fiscal Year; and (c) for Fiscal Year 1993 and each succeeding Fiscal Year
of the Plan, means the amount obtained by first (i) multiplying the sum of (A)
all CAP Units credited to the Capital Accumulation Accounts of all Participants
pursuant to Section 5.1 in respect of all preceding Fiscal Years of the Plan and
all CAP Units credited to such Accounts pursuant to Section 5.10(a) in respect
of Net Earnings Adjustments, if any, for such Fiscal Years by (B) the weighted
average per share amount of all cash dividends paid by the Company on its Common
Stock in the Fiscal Year for which the determination is being made (determined
in the manner described in the preceding clause (b)(i)(B)), (ii) calculating the
amount of cash dividends that would have been paid by the Company in all
preceding Fiscal Years on the aggregate number of shares of Common Stock
purchased by the Company and taken into account for purposes of this Plan
pursuant to Section 5.1, 5.3 or 5.10(a), measured from the date on which the
corresponding CAP Units were credited to Participants' Accounts, if all such
shares had remained outstanding and (iii) multiplying the respective Dividend
Savings determined as provided herein for each preceding Fiscal Year by the
fraction which is one minus the Marginal Tax Rate for the corresponding
preceding Fiscal Year, and then multiplying the sum of the amounts so determined
in clauses (i), (ii) and (iii) by the Average Federal Funds Rate for such Fiscal
Year, and finally adding to such sum the Partial Year Dividend Savings for such
Fiscal Year determined in the manner provided in the preceding clause (b)(ii).
"Earnings Adjustment" has the meaning assigned to such term in
Section 5.4(a).
"Earnings Unit Account" has the meaning specified in the PUP Plan.
"Earnings Units" has the meaning specified in the PUP Plan.
"Effective Date" means September 6, 1990.
"Effective Tax Rate" means, for any Fiscal Year, the fraction the
numerator of which is the consolidated tax expense of the Company and its
subsidiaries for such Fiscal Year and the denominator of which is the
consolidated income or loss before income taxes of the Company and its
subsidiaries for such Fiscal Year. For this purpose, consolidated income or loss
of the Company and its subsidiaries shall be calculated by including
extraordinary items and the income or loss of discontinued operations, and
income tax expense shall be calculated by including the income tax expense
attributable to such extraordinary items or discontinued operations.
"Elective Plan Year" has the meaning assigned to such term in
Section 4.3.
"Eligible Employee" means any individual who is employed by Bear
Stearns as a Senior Managing Director and is an Accredited Investor.
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"Enrollment Period" in respect of a Plan Year means the period
commencing with the first day of the fiscal quarter immediately preceding such
Plan Year and ending on December 31 of such Plan Year, or such shorter period
contained therein designated by the Board Committee, provided that, unless
otherwise determined by the Board Committee, the Enrollment Period with respect
to an individual who becomes an Eligible Employee after December 31 of a Plan
Year shall be the period commencing on the date such individual becomes an
Eligible Employee and ending on the earliest of (a) the 30th day thereafter, (b)
March 31 of the Plan Year in the case of an individual who was an employee prior
to becoming an Eligible Employee or (c) the end of the Plan Year. Without
limiting the generality of the foregoing, the Board Committee may designate one
Enrollment Period for individuals who are Eligible Employees on the first day of
a Base Year and one or more Enrollment Periods for individuals who become
Eligible Employees after the first day of a Base Year; provided, however, with
respect to participants in The Bear Stearns Companies Inc. Management
Compensation Plan in no event shall any Enrollment Period in respect of any Plan
Year extend more than 90 days into such Plan Year so as to allow a Participant
to make an election to increase or decrease the deferral amount or Deferral
Period relating to such Plan Year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes.
"Executive Committee" means the Executive Committee of the Board of
Directors.
"Fair Market Value" of a share of Common Stock as of any date means
the closing sales price of a share of Common Stock on the composite tape for New
York Stock Exchange listed securities on such date or, if the Common Stock is
not quoted on the composite tape or is not listed on the New York Stock
Exchange, on the principal United States securities exchange registered under
the Exchange Act on which the Common Stock is listed or, if the Common Stock is
not listed on any such exchange, on the National Association of Securities
Dealers, Inc. Automated Quotation National Market System ("NASDAQ-NMS") or, if
the Common Stock is not quoted on NASDAQ-NMS, the average closing bid quotation
of a share on the National Association of Securities Dealers, Inc. Automated
Quotation System or any similar system then in use or, if the Common Stock is
not listed or quoted, the fair value thereof as of such date as determined by
the Appropriate Committee.
"Federal Funds Rate" means, for any day which is a Business Day, the
rate for U.S. dollar funds settled through the Federal Reserve System or other
immediately available U.S. dollar funds, as quoted by an independent broker of
such funds selected by the Company, for the last transaction completed prior to
9:30 A.M. (Eastern time) on the Business Day on which such rate is determined,
rounded up or down on a daily alternating basis to the nearest whole multiple of
one-eighth of one percent, and for any day which is not a Business Day means
such rate as determined for the next preceding day which was a Business Day.
"Fiscal Year" means the fiscal year of the Company commencing on
July 1 and ending on June 30. "Fiscal Year 1991" shall mean the Fiscal Year
ending on June 30, 1991; "Fiscal Year 1992" shall mean the Fiscal Year ending on
June 30, 1992; and "Fiscal Year 1993"
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shall mean the Fiscal Year ending on June 30, 1993. If the Company shall change
its Fiscal Year after the Effective Date so as to end on a date other than June
30 ("Year-end Date") then, if such new Year-end Date falls after June 30 and on
or prior to December 31, the Fiscal Year in which such change occurs shall be
deemed to consist, for purposes of this Plan, of the period of not more than 18
months beginning on the July 1 following the last Fiscal Year preceding such
change and ending such new Year-end Date or, if such new Year-end Date falls on
or after January 1 and prior to June 30, the Fiscal Year in which such change
occurs shall be deemed to consist, for purposes of this Plan, of the period of
less than 12 months beginning on the first day of the Fiscal Year in which such
change occurs and ending on such new Year-end Date.
"Full Year Units" has the meaning assigned to such term in Section
5.4.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"Historical Book Value" means, with respect to a CAP Unit credited
to a Participant's Account pursuant to Section 5.1 or 5.10(a), an amount
determined by dividing (a) Consolidated Common Stockholders' Equity as of the
end of the Fiscal Year for which such CAP Unit was credited by (b) the sum of
(i) the aggregate number of shares of Common Stock outstanding on the last day
of such Fiscal Year, (ii) the aggregate number of CAP Units credited to the
Capital Accumulation Accounts of all Participants as of the end of such Fiscal
Year, and, with respect to a CAP Unit credited to a Participant's Account
pursuant to Section 5.3, an amount determined by dividing (x)(i) Consolidated
Common Stockholders' Equity, as of the last day of the Fiscal quarter for which
such CAP Unit was credited, and (iii) the aggregate number of Earnings Units
credited to the Earnings Unit Accounts of all Participants in the PUP Plan as of
the end of such Fiscal Year, less (ii) all increases (or plus any decreases) in
retained earnings of the Company and its subsidiaries attributable to net income
(or loss), determined on a consolidated basis for all fiscal quarters of the
Fiscal Year prior to and including the fiscal quarter during which such CAP Unit
was credited, plus (iii) the amount determined by multiplying (A) a fraction,
the numerator of which is the number of fiscal quarters in the Fiscal Year prior
to and including the fiscal quarter during which such CAP Unit was credited, and
the denominator of which is 4, by (B) the increase (or decrease) in retained
earnings of the Company and its subsidiaries, attributable to net income (or
loss), determined on a consolidated basis for the Fiscal Year during which such
CAP Unit was credited, less (iv) the amount determined by multiplying (C) a
fraction, the numerator of which is the number of fiscal quarters in the Fiscal
Year prior to and including the fiscal quarter during which such CAP Unit was
credited, and the denominator of which is 4, by (D) the total amount accrued in
respect of cash dividends with respect to any capital stock of the Company for
the Fiscal Year during which such CAP Unit was credited, plus (v) the total
amount accrued in respect of cash dividends with respect to any capital stock of
the Company for all fiscal quarters of the Fiscal Year prior to and including
the fiscal quarter during which such CAP Unit was credited by (y) the sum of (i)
the aggregate number of shares of Common Stock outstanding on the last day of
such fiscal quarter, (ii) the aggregate number of CAP Units credited to the
Capital Accumulation Accounts of all Participants as of the end of such date and
(iii) the aggregate number of Earnings Units credited to the Earnings Unit
Accounts of all Participants in the PUP Plan as of the end of such Fiscal Year.
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"Income Per Share" for any Fiscal Year means the consolidated income
or loss before income taxes of the Company and its subsidiaries, adjusted as
hereinafter provided, divided by the sum of (a) the number of shares of Common
Stock outstanding during such Fiscal Year, computed on a weighted average basis
based on the number of days outstanding during such Fiscal Year, (b) the number
of CAP Units credited to the Capital Accumulation Accounts of all Participants
computed on a weighted average basis based on the number of days outstanding
during such Fiscal Year but not including in such computation the day that CAP
Units are credited, increased or decreased pursuant to Section 5.1, 5.3 or 5.10
of the Plan and (c) the aggregate number of Earnings Units credited to the
Earnings Unit Accounts of all Participants in the PUP Plan computed on a
weighted average basis based on the number of days outstanding during such
Fiscal Year but not including in such computation the day that Earnings Units
are credited, increased or decreased pursuant to Section 4.2 or 4.5 of the PUP
Plan. For purposes of this Plan, consolidated income or loss before income taxes
of the Company and its subsidiaries (i) shall be determined prior to any charge
or credit to income required in such Fiscal Year by reason of Net Earnings
Adjustments pursuant to Section 5.10(a), (ii) shall include the amounts of any
pre-tax earnings or loss attributable to discontinued operations or
extraordinary items and (iii) shall be reduced by the Adjusted Preferred Stock
Dividend Requirement during such Fiscal Year, and may be decreased, but not
increased, by such amount determined by the Board Committee in its sole
discretion as appropriate to carry out the purposes of the Plan.
"Initial Plan Election" has the meaning assigned to such term in
Section 4.1.
"Investment Letter" means a letter, in a form to be approved by the
Appropriate Committee, by which a Participant represents that he is an
accredited Investor and that he is acquiring his interest in the Plan and any
shares of Common Stock that may be acquired hereunder for investment and without
a view to any distribution thereof.
"Management and Compensation Committee" means the Management and
Compensation Committee of the Company or another committee of the Company or the
Board of Directors designated by the Board of Directors to perform the functions
of the Management and Compensation Committee hereunder.
"Marginal Tax Rate" means the maximum combined marginal rate of tax
expressed as a fraction to which the Company is subject for the applicable
Fiscal Year, including Federal, New York State and New York City income taxes
(including any minimum or alternative tax), net of any tax benefit resulting
from the deductibility of state and local taxes for federal income tax purposes.
"Net Earnings Adjustment" has the meaning assigned to such term in
Section 5.10(a).
"Part Year Units" has the meaning assigned to such term in Section
5.4(a).
"Participant" means any Eligible Employee who has validly elected to
participate in the Plan pursuant to Section 4.l.
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"Person" means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, any unincorporated organization or
a government or a political subdivision thereof.
"Personal Leave of Absence" means the absence from the Company by a
Participant, with the consent of the Company, for an extended period of time
without salary under circumstances in which a return to full-time employment by
the Participant is contemplated.
"Plan" means The Bear Stearns Companies Inc. Capital Accumulation
Plan for Senior Managing Directors as set forth herein and as amended and
restated from time to time.
"Plan Election" means the election to defer compensation made by a
participant pursuant to Section 4.
"Plan Year" means Fiscal Year 1991, Fiscal Year 1992, Fiscal Year
1993 and any other Fiscal Year with respect to which the Board Committee makes
the determination provided for in Section 3.1.
"Preferred Stock" means any capital stock of the Company that has a
right to dividends or distributions in liquidation (or both) prior to the
holders of the Common Stock.
"Preferred Stock Dividend Requirement" means, for any Fiscal Year,
the amount of all dividends actually declared by the Company on, or required to
be declared by the Company in accordance with the terms of, any Preferred Stock,
in such Fiscal Year.
"Pre-Plan Earnings Per Share" means, for any Fiscal Year, (a) the
sum of (i) the Company's consolidated net income or loss for such Fiscal Year
less (ii) the amount of the Preferred Stock Dividend Requirement for such Fiscal
Year, plus (iii) the amount obtained by multiplying the Aggregate Imputed Costs
of the Plan deducted in the calculation of consolidated net income or loss for
such Fiscal Year by the fraction which is one minus the Marginal Tax Rate for
such Fiscal Year, divided by (b) the sum of (x) the number of shares of Common
Stock outstanding during such Fiscal Year, computed on a weighted average basis
based on the number of days outstanding during such Fiscal Year, (y) the
aggregate number of CAP Units credited to the Accounts of all Participants
computed on a weighted average basis based on the number of days outstanding
during such Fiscal Year but not including in such computation the day that CAP
Units are credited, increased or decreased pursuant to Section 5.1, 5.3 or 5.10
of the Plan, and (z) the aggregate number of Earnings Units credited to the
Earnings Unit Accounts of all participants in the PUP Plan computed on a
weighted average basis based on the number of days outstanding during such
Fiscal Year but not including in such computation the day that Earnings Units
are credited, increased or decreased pursuant to Section 4.2 or 4.5 of the PUP
Plan.
"PUP Plan" means The Bear Stearns Companies Inc. Performance Unit
Plan for Senior Managing Directors, as the same shall be amended, supplemented
or modified from time to time.
"Quarter End Date" has the meaning assigned to such term in Section
5.3.
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"Registration Statement" has the meaning assigned to such term in
Section 6.7.
"Reporting Person" means a director or officer of the Company who is
subject to the reporting requirements of Section 16(a) of the Exchange Act.
"Required Deferral Amount" means, for any Plan Year, the following
percentages of that portion of a Participant's current compensation for such
Plan Year (prior to giving effect to any effective election hereunder to defer
receipt of a portion of such amount but after giving effect to any effective
election to defer compensation under any other plan sponsored by the Company or
any Affiliate) which exceeds $200,000 (or the then prevailing annual base salary
for Senior Managing Directors of Bear Stearns for such Plan Year):
25% of the first $ 300,000
30% of the next $ 500,000
40% of the next $1,000,000
50% of compensation exceeding $2,000,000
Notwithstanding the foregoing, (a) the Required Deferral Amount for any
Participant who will attain age 55 prior to the last day of any Plan Year and
who elects in his Plan Election to be governed by this sentence in the manner
specified by the Appropriate Committee shall be 25% of such compensation of such
Participant for each Plan Year in which he attains age 55 or older and (b) no
Participant shall be required or entitled to defer any portion of his
compensation for any Plan Year for which he was entitled to receive payment
prior to the date of his Plan Election. The Required Deferral Amount in his
initial Plan Year for any Participant who first becomes an Eligible Employee
after the first day of any Plan Year shall be determined by multiplying each of
the foregoing amounts in this paragraph by a fraction, the numerator of which is
the number of whole months remaining in the Plan Year following his date of
employment and the denominator of which is 12.
"Required Deferral Period" has the meaning assigned to such term in
Section 3.1.
"Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Exchange Act, as the same may be modified or
amended from time to time, and any successor rule.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute or statutes.
"Special Plan Election" has the meaning assigned to such term in
Section 4.6.
"Stock Award Amount" means, for a Plan Year, a dollar amount equal
to the sum of (a) a Participant's Required Deferral Amount for the Plan Year,
multiplied by the related Stock Award Percentage, plus (b) a Participant's
Additional Deferral Amount, if any, multiplied by the related Stock Award
Percentage.
"Stock Award Percentage" means, for any Plan Year, the percentage
determined by the Compensation Committee, which will be applied to either the
Required
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Deferral Amount or the Additional Deferral Amount to determine the amount which
will be awarded pursuant to the Stock Award Plan. The Compensation Committee has
the right to select different percentages for determining each of these amounts.
"Termination Date" means the last day of any Deferral Period.
"Total CAP Units" means the aggregate number of CAP Units, adjusted
through any date of determination thereof, theretofore credited to a
Participant's Capital Accumulation Account.
"Total Deferral Amount" for any Participant means, for each Plan
Year, the sum of the Required Deferral Amount and the Additional Deferral
Amount, reduced by the Stock Award Amount.
2.2 Accounting Terms. Whenever any accounting term is used herein,
or the character or amount of any asset or liability or item of income or
expense is required to be determined, or any consolidation or other accounting
computation is required to be made, for the purposes of this Plan, such
accounting term shall have the meaning assigned to such term or such
determination or computation shall be made (as the case may be), to the extent
applicable and except as otherwise specified herein, in accordance with GAAP.
SECTION 3
Eligibility
3.1 Not later than 90 days after the commencement of any Fiscal
Year, the Board Committee shall determine whether Eligible Employees who are not
then Participants shall be entitled to defer a portion of their compensation for
such Fiscal Year and the two Fiscal Years next succeeding such Fiscal Year (such
three Fiscal Years being referred to collectively as a "Required Deferral
Period"); provided, however, that in the case of the Required Deferral Period of
which the Base Year is the Fiscal Year ending June 30, 1992, such determination
may be made not later than October 30, 1991.
3.2 Each individual who is an Eligible Employee at any time during
the Enrollment Period in respect of a Plan Year and is not then a Participant
shall be eligible to participate in the Plan by deferring compensation as
provided in Section 4.1; provided, however, that an Eligible Employee who does
not elect to participate in the Plan during the Enrollment Period for the first
Plan Year in which he is an Eligible Employee shall not be entitled to
participate in the Plan in respect of subsequent Plan Years unless such
participation is approved by the Appropriate Committee not later than the last
day of the Enrollment Period for such Plan Year; and provided, further, that no
individual shall be eligible to participate in the Plan unless such individual
agrees to execute such documents or agrees to such restrictions, including but
not limited to the execution of an Investment Letter, as the Appropriate
Committee in its sole discretion may require.
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SECTION 4
Deferrals of Compensation
4.1 Plan Election. Each Eligible Employee who satisfies the
eligibility requirements of Section 3.2 during a Plan Year may, during the
applicable Enrollment Period, execute and file with the Appropriate Committee a
Plan Election (an "Initial Plan Election"), in the form provided by the Company,
(a) electing to defer (i) the Required Deferral Amount of his current
compensation for each of the three Fiscal Years in the Required Deferral Period
and (ii) subject to the approval of the Appropriate Committee, any amount of his
current compensation in excess of the Required Deferral Amount for his Base Year
(the "Additional Deferral Amount") and (b) electing, subject to the approval of
the Appropriate Committee, a Deferral Period (in whole Fiscal Years) in respect
of the Required Deferral Amount and any Additional Deferral Amount for such Base
Year of more than Five Fiscal Years. During the Enrollment Period occurring
during the second and third Fiscal Years of a Required Deferral Period (or if
there is no Enrollment Period for such Fiscal Year, the period commencing on the
anniversary of the first day of the most recent preceding Enrollment Period and
ending on the anniversary of the last day of such Enrollment Period), a
Participant may execute and file with the Appropriate Committee an additional
Plan Election (an "Additional Plan Election"), in the form provided by the
Company electing, if applicable, a shorter Deferral Period or, subject to the
approval of the Appropriate Committee, an Additional Deferral Amount for such
Fiscal Year or a Deferral Period in respect of the Required Deferral Amount and
any Additional Deferral Amount for such Fiscal Year of more than five Fiscal
Years. The Appropriate Committee may approve any election of an Additional
Deferral Amount and any election of a Deferral Period in excess of five Fiscal
Years, or may deny any such request, in its sole discretion. If the Appropriate
Committee shall deny any election of any Additional Deferral Amount, then the
Additional Plan Election shall be deemed to relate only to the Participant's
Required Deferral Amount for the Fiscal Year involved and, if the Appropriate
Committee shall deny any election of a Deferral Period in excess of five Fiscal
Years, then the Deferral Period applicable to the Required Deferral Amount and
any Additional Deferral Amount for the Fiscal Year involved shall be five Fiscal
Years.
4.2 Effect of Initial Plan Election. An Initial Plan Election filed
during the Enrollment Period in respect of a Plan Year in accordance with
Section 4.1 shall constitute an election (a) to become a Participant in this
Plan with respect to such Fiscal Year and the two succeeding Fiscal Years, (b)
to defer for Deferral Period receipt of the Required Deferral Amount and the
Additional Deferral Amount (if any) approved by the Appropriate Committee for
such Fiscal Year and (c) to defer receipt of the Required Deferral Amount for
the second and third Fiscal Years of the Required Deferral Period beginning with
such Fiscal Year for the Deferral Period or such other period as may be approved
by the Appropriate Committee pursuant to Section 4.1, unless, in the case of
such second and third Fiscal Years, such Participant is excluded from
participation in respect of subsequent Fiscal Years of a Required Deferral
Period upon approval of the Appropriate Committee pursuant to Section 4.5(a).
4.3 Elective Deferrals. For each Plan Year occurring after the third
Fiscal Year of a Participant's Required Deferral Period as to which such
Participant has not theretofore
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had the opportunity to elect to defer compensation (each such Plan Year being
referred to as an "Elective Plan Year"), such Participant may, subject as
provided below, during the Enrollment Period in respect of any Plan Year during
which the Board Committee has determined pursuant to Section 3.1 to allow any
Eligible Employees to defer compensation for such Elective Plan Year, execute
and file with the Appropriate Committee an Additional Plan Election electing to
defer for the applicable Deferral Period the Required Deferral Amount of his
current compensation for such Elective Plan Year. Thereafter, during the
Enrollment Period occurring during each such Elective Plan Year (or if there is
no Enrollment Period for such Fiscal Year, the period commencing on the
anniversary of the first day of the most recent preceding Enrollment Period and
ending on the anniversary of the last day of such Enrollment Period) a
Participant may execute and file an Additional Plan Election, electing, subject
to the approval of the Appropriate Committee, an Additional Deferral Amount for
such Elective Plan Year and a Deferral Period (in whole Fiscal Years) in respect
of the Required Deferral Amount and any Additional Deferral Amount for such
Elective Plan Year of more than five Fiscal Years or, if applicable, a shorter
Deferral Period. The Appropriate Committee may approve any election under this
Section 4.3 to defer an Additional Deferral Amount and any election of a
Deferral Period in excess of five Fiscal Years, or may deny any such request, in
its sole discretion. If the Appropriate Committee shall deny any election of an
Additional Deferral Amount, then the additional Plan Election shall be deemed to
relate only to the Participant's Required Deferral Amount for the Elective Plan
Year involved and, if the Appropriate Committee shall deny any election of a
Deferral Period in excess of five Fiscal Years, then the Deferral Period
applicable to the Required Deferral Amount and any Additional Deferral Amount
for the Elective Plan Year involved shall be five Fiscal Years. If at any time
there is more than one Elective Plan Year as to any Participant, then the
Appropriate Committee shall determine whether or not the additional Plan
Election which may be submitted in respect of such Elective Plan Years by such
Participant shall relate to one or more than one of such Elective Plan Years. If
the Appropriate Committee determines that such Plan Election shall relate to
more than one Elective Plan Year, then the additional Plan Election to be filed
by such Participant shall constitute an election to defer the Required Deferral
Amount of his current compensation for each of such Elective Plan Years.
Notwithstanding the foregoing, however, if an Eligible Employee does not elect
to defer at least the Required Deferral Amount in respect of any Elective Plan
Year, such Eligible Employee shall be ineligible to submit an additional Plan
Election in respect of any succeeding Elective Plan Year unless the Appropriate
Committee, in its sole discretion, shall determine (including, without
limitation, by reason of hardship as contemplated by Section 4.5(a)) that such
Eligible Employee shall once again be eligible to elect to defer compensation
under this Section 4.3. In the event that the Appropriate Committee shall make
the determination contemplated by the preceding sentence in respect of any
Elective Plan Year for which the Enrollment Period has already expired, then the
Appropriate Committee, may, in its discretion, establish a supplementary
enrollment period for the Eligible Employee involved, in which case such
supplementary enrollment period shall be deemed the Enrollment Period for such
Eligible Employee for purposes of this Plan in respect of the Elective Plan Year
involved.
4.4 Election Irrevocable. The election to defer compensation
pursuant to a Plan Election or Additional Plan Election, once made for the
first, second and third Fiscal Years of a Required Deferral Period or for any
Elective Plan Year, shall be irrevocable and shall not be
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subject to cancellation by the Participant or, except as expressly provided
herein, by the Appropriate Committee or the Company. Without limiting the
generality of the foregoing, such an election for the first, second and third
Fiscal Years of a Required Deferral Period or for any Elective Plan Year shall
not be subject to cancellation by a Participant by reason of termination of his
employment with the Company or an Affiliate.
4.5 Hardship Exceptions.
(a) A Participant may request to be excluded from participating in
the Plan in respect of any Plan Year other than his Base Year by filing with the
Appropriate Committee during the Enrollment Period occurring during such Fiscal
Year (or if there is no Enrollment Period for such Fiscal Year, the period
commencing on the anniversary of the first day of the most recent preceding
Enrollment Period and ending on the anniversary of the last day of such
Enrollment Period) a written request for non-participation, which request shall
set forth the circumstances that have arisen since the Enrollment Period in
respect of such Plan Year that would make continued participation in the Plan an
unanticipated financial hardship for such Participant. The Appropriate
Committee, in its sole discretion, shall determine whether or not to grant any
such request. A Participant who requests and is granted such an exclusion shall
not be eligible to participate in the Plan in respect of the Plan Year for which
such request is granted, but shall continue to participate in the Plan in
respect of any other Plan Years for which an election has previously been made
hereunder and shall be eligible to participate in the Plan for future Plan
Years.
(b) A Participant may request a reduction in any Deferral Period by
one or more Fiscal Years at any time by filing with the Appropriate Committee a
written request setting forth the circumstances that have arisen since the
Enrollment Period for the related Plan Year that would make the failure to
reduce the Deferral Period an unanticipated financial hardship for such
Participant. The Appropriate Committee, in its sole discretion, shall determine
whether or not to grant any such request and, if so, the number of whole Fiscal
Years by which the Deferral Period shall be so reduced.
4.6 Special Elections. The Appropriate Committee shall have the
right in its sole discretion to permit a Participant to execute and file with
the Appropriate Committee, at such times and on such terms and conditions as the
Appropriate Committee shall determine, a Plan Election (a "Special Plan
Election") in form provided by the Company, electing to extend the Deferral
Period previously selected with respect to any Required Deferral Amount and/or
Additional Deferral Amount for such periods and in such proportions as shall be
determined by the Appropriate Committee, provided that the Deferral Period being
extended shall terminate no earlier than the end of the Fiscal Year following
the Fiscal Year in which the Special Plan Election is made, except that any
election with respect to the Deferral Period ending on June 30, 1997 shall be
made on or before December 31, 1996. The Earnings Adjustment with respect to
each Plan Year in any such additional Deferral Period shall be calculated in
accordance with Section 5.4(e).
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SECTION 5
Capital Accumulation Accounts;
Cash Balance Accounts
5.1 Annual Credits to Capital Accumulation Accounts. For each Plan
Year, the Company shall credit to each Participant, as of the last day of such
Plan Year, by means of a bookkeeping entry established and maintained by the
Company for each such Participant (a "Capital Accumulation Account"), a number
of CAP Units equal to the quotient obtained by dividing the Total Deferral
Amount for such Plan Year by the Average Cost Per Share of the Available Shares
for such Plan Year. The Available Shares for this purpose shall be the total
number of Available Shares for such Plan Year less a number of shares equal to
any CAP Units credited to Participants in respect of any fiscal quarter during
such Plan Year pursuant to Section 5.3 and less a number of shares equal to the
number of CAP Units to be credited to Participants as a Net Earnings Adjustment
pursuant to Section 5.10(a) for such Plan Year. Notwithstanding the foregoing,
if the aggregate number of CAP Units that otherwise would be credited to the
Capital Accumulation Accounts of all Participants pursuant to the first sentence
of this Section 5.1 would exceed the number of Available Shares, then the
aggregate number of CAP Units to be credited to the Capital Accumulation
Accounts of all Participants shall be limited to the number of Available Shares
and such aggregate number of CAP Units shall be allocated on a pro rata basis,
based on the respective Total Deferral Amounts of each Participant in respect of
such Plan Year. The Company shall record CAP Units credited in respect of each
Plan Year in a separate subaccount of each Participant's Capital Accumulation
Account and any credits or adjustments hereunder to such CAP Units shall be made
separately with respect to the CAP Units credited to each such subaccount.
5.2 Cash Balance Account. If the number of CAP Units which the
Company is able to credit to Participants in respect of any Plan Year is limited
by the third sentence of Section 5.1, then the Company shall also credit to each
Participant an amount equal to (a) the Total Deferral Amount for such Plan Year
for such Participant, less (b) the product of (i) the number of CAP Units
credited to such Participant in respect of such Plan Year and (ii) the Average
Cost per Share of the Available Shares taken into account in such determination.
Such amounts shall be credited as of the last day of such Plan Year by means of
a bookkeeping entry established and maintained by the Company for each
Participant (a "Cash Balance Account"). The Company shall record Cash Balances
credited in respect of each Plan Year in a separate subaccount of each
Participant's Cash Balance Account and any credits or adjustments hereunder to
such Cash Balances shall be made separately with respect to each such
subaccount.
5.3 Quarterly Credits in Respect of Cash Balances. If there shall
exist a Cash Balance in the Cash Balance Account of any Participant on the last
day of any fiscal quarter of the Company, including the last day of a Plan Year
(a "Quarter End Date"), the Company shall credit the Capital Accumulation
Account of each such Participant, as of such Quarter End Date, with a number of
additional CAP Units determined by dividing such Cash Balance by the Average
Cost Per Share of the Available Shares acquired by the Company and designated by
the Board Committee as being allocated to such period. If the aggregate number
of CAP Units required to be credited to the Capital Accumulation Accounts of all
such Participants pursuant to
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the preceding sentence would exceed the number of Available Shares, then the
aggregate number of CAP Units to be credited shall be limited to the number of
Available Shares and such CAP Units shall be allocated on a pro rata basis,
based on the respective Cash Balances of each Participant. In connection with
any crediting of CAP Units pursuant to this Section 5.3, the Cash Balance of
each such Participant shall be reduced by debiting to his Cash Balance Account
an amount equal to the product of the number of CAP Units credited to his
Capital Accumulation Account and the Average Cost Per Share of the Available
Shares acquired by the Company during the annual or quarterly period specified
by the Board Committee.
5.4 Earnings Adjustments. For purposes of calculating the Net
Earnings Adjustment with respect to any Deferral Year pursuant to Section 5.10,
the Earnings Adjustment shall be calculated with respect to such Deferral Year,
after making any credits to the Capital Accumulation Accounts of the
Participants in respect of the fourth fiscal quarter of such Deferral Year
pursuant to Section 5.3, as follows:
(a) first, the Company shall determine a dollar amount of interest
to be credited to each Participant who had a positive Cash Balance at any time
during the Deferral Year by multiplying the daily weighted average amount of
each such Participant's Cash Balance (such weighted average to be determined by
adding the amounts of the Participant's Cash Balance on each day during such
Deferral Year and dividing the total so obtained by the number of days in such
Deferral Year) by a percentage equal to the daily average of the highest rates
of interest paid by Bear Stearns to its employees from time to time during such
Deferral Year on free credit balances;
(b) the Company next shall determine a dollar amount to be credited
or debited to each Participant in respect of CAP Units credited to such
Participant's Capital Accumulation Account as of the first day of the Deferral
Year and at all times throughout such Deferral Year ("Full Year Units") by
multiplying such number of Full Year Units by the Income Per Share for the
Deferral Year; provided, however, that the amount to be credited or debited
pursuant to this clause (b) to a Participant whose employment with the Company
and its Affiliates was terminated during such Deferral Year shall be the amount
determined as aforesaid multiplied by a fraction, the numerator of which shall
be the number of whole months in such Deferral Year prior to the month in which
his employment terminated and the denominator of which shall be 12;
(c) the Company then shall determine a dollar amount to be credited
to each Participant in respect of CAP Units credited or debited to his Capital
Accumulation Account as of any date subsequent to the first day of the Deferral
Year ("Part Year Units") by multiplying such number of Part Year Units by the
Income Per Share for the Deferral Year and multiplying the product so obtained
by a fraction, the numerator of which shall be the number of whole months in
such Deferral Year during which such Part Year Units were so credited (less, in
the case of a Participant whose employment by the Company and its Affiliates is
terminated in such Deferral Year, the number of whole months following the
effective date of such termination, plus one) and the denominator of which shall
be 12 (if a Participant's Capital Accumulation Account has been credited with
Part Year Units which initially were credited to such Account as of
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different dates during the Deferral Year, then the calculation required by this
clause (c) shall be made separately for each such group of Part Year Units);
(d) the Company then shall calculate a dollar amount to be charged
to each Participant who has any Additional Deferral Amount by determining the
Cost of Carry for such Participant with respect to each Plan Year for which he
has any such Additional Deferral Amount and multiplying each such amount by a
fraction, the numerator of which shall be the Participant's Additional Deferral
Amount for such Plan Year and the denominator of which shall be his Total
Deferral Amount for such Plan Year; provided that the charge computed pursuant
to this subparagraph (d) resulting from an Additional Deferral Amount in Plan
Year 1993 or Plan Year 1994 shall be taken into account only with respect to a
Participant who has elected to defer such Additional Deferral Amount for more
than five Fiscal Years and then only with respect to Deferral Years after the
fifth Deferral Year;
(e) the Company then shall calculate a dollar amount to be charged
to each Participant who elected to defer any Required Deferral Amount in respect
of any Plan Year for more than five Fiscal Years by determining the Cost of
Carry for such Participant with respect to each such Plan Year and multiplying
each such amount by a fraction, the numerator of which shall be the
Participant's Required Deferral Amount for such Plan Year and the denominator of
which shall be his Total Deferral Amount for such Plan Year; provided that the
charge computed pursuant to this subparagraph (e) shall be taken into account
only with respect to Deferral Years after the fifth Deferral Year;
(f) the Company shall then calculate an amount to be charged to each
Participant whose employment with the Company and its Affiliates has terminated
equal to the Cost of Carry for such Participant for such Deferral Year or, if
his employment terminated in such Deferral Year, for the portion thereof
beginning with the month in which his employment terminated; and
(g) finally, (i) if the sum (or net amount) of the amounts
determined for a Participant in subparagraphs (a), (b) and (c) above is a
positive number and such sum (or net amount) exceeds the aggregate of the
charges, if any, determined for such Participant pursuant to subparagraphs (d),
(e) and (f) above, then the Earnings Adjustment shall equal such sum (or net
amount), as determined for purposes of this Section 5.4, or (ii) if the net
amount of the amounts determined for a Participant in subparagraphs (a), (b) and
(c) less the aggregate of the charges, if any, determined pursuant to
subparagraphs (d), (e) and (f) is a negative number (an "Earnings Charge") and
such Participant has a positive Cash Balance, then (A) such Cash Balance first
shall be reduced by an amount equal to such Earnings Charge (provided that no
such reduction shall be made to the extent the Earnings Charge relates to a
negative result from sub-paragraph (b) or (c)) and (B) if, after reducing such
Cash Balance to zero, any amount determined in accordance with the preceding
clause (ii)(A) remains unapplied, or if such Participant has no Cash Balance,
then the Earnings Adjustment shall be zero.
5.5 Book Value Adjustment. For purposes of calculating the Net
Earnings Adjustment with respect to any Deferral Year pursuant to Section 5.10,
the Book Value Adjustment shall equal the sum of (1) the amount maintained in
the Book Value Adjustment
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Carry Forward Account pursuant to Section 5.10(a), if any, and (2) the product
of (a) the total number of CAP Units credited to the Capital Accumulation
Account of each Participant as of the last day of such Deferral Year but without
including any CAP Units credited on such date pursuant to Sections 5.1, 5.3 and
5.10 multiplied by (b) the difference between Adjusted Book Value Per Share as
of the last day of the Deferral Year and Adjusted Book Value Per Share as of the
last day of the preceding Deferral Year.
5.6 Overall Cost Limitation. Notwithstanding the provisions of
Section 5.10, if the operation of the Plan (without giving effect to this
Section 5.6) would result in Adjusted Earnings Per Share for any Fiscal Year
being less than 98.5% of Pre-Plan Earnings Per Share for such Fiscal Year, then,
after making the other credits and adjustments required by Section 5.3, (a) the
Net Earnings Adjustments required by Section 5.10(a) first shall be reduced or
eliminated, and (b) if necessary after eliminating all such Net Earnings
Adjustments, the Cash Balance Accounts of all Participants shall be reduced or
eliminated so that to the extent possible, after giving effect to all such
reductions and eliminations, Adjusted Earnings Per Share for such Fiscal Year
will be 98.5% of Pre-Plan Earnings Per Share.
5.7 Antidilution Adjustments. In the event of a stock split or if
the Company makes any distribution (other than a cash dividend) with respect to
Common Stock after the date CAP Units initially are credited to a Participant's
Capital Accumulation Account in accordance with this Section 5, the number of
CAP Units held in each Participant's Capital Accumulation Account shall be
equitably adjusted (as determined by the Appropriate Committee in its sole
discretion) to reflect such event. If there shall be any other change in the
number or kind of outstanding shares of Common Stock as a result of a
recapitalization, combination of shares, merger, consolidation or otherwise, the
number of CAP Units credited to each Participant's Capital Accumulation Account
shall be equitably adjusted (as determined by the Appropriate Committee in its
sole discretion) to reflect such event.
5.8 Apportionment of Credits. Whenever CAP Units are credited to a
Participant's Capital Accumulation Account pursuant to Section 5.3 or 5.10 in
respect of any Deferral Year, they shall be apportioned among the CAP Units
originally credited to such Account in respect of each Plan Year on a pro rata
basis, based on the respective number of the CAP Units originally credited in
respect of each such Plan Year, and such additional CAP Units shall have the
same Termination Date as the original CAP Units to which they are so
apportioned.
5.9 Amounts Vested. A Participant shall be fully vested at all times
in the CAP Units credited to his Capital Accumulation Account and in the Cash
Balance credited to his Cash Balance Account; provided, however, that the
establishment and maintenance of, or credits to, such Capital Accumulation
Account and Cash Balance Account shall not vest in any Participant or his
Beneficiary any right, title or interest in or to any specific asset of the
Company.
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5.10 Net Earnings Adjustments.
(a) After making any credits to the Capital Accumulation Accounts of
the Participants in respect of the fourth fiscal quarter of such Deferral Year
pursuant to Section 5.3, each Participant's Account shall be adjusted, effective
as of the last day of such Deferral Year, as provided in this Section 5.10(a).
The Company shall credit the Capital Accumulation Account of each Participant
with an additional number of CAP Units (a "Net Earnings Adjustment") equal to
the quotient of (i) the difference between the Earnings Adjustment calculated in
accordance with Section 5.4 and the Book Value Adjustment calculated in
accordance with Section 5.5 for such Deferral Year, divided by (ii) the Average
Cost Per Share of the Available Shares acquired by the Company and designated by
the Board Committee as being allocated to such period. Notwithstanding the
foregoing, however, if (i) the Earnings Adjustment is a negative number or (ii)
the Book Value Adjustment exceeds the Earnings Adjustment then no CAP Units
shall be credited to the Accounts of any Participants and the amounts of each of
such Book Value Adjustment and Earnings Adjustment shall be disregarded and
shall not be taken into account for purposes of the Plan in any subsequent
Deferral Year.
If the aggregate number of CAP Units required to be credited to the
Accounts of all Participants pursuant to this Section 5.10(a) shall exceed the
number of Available Shares in respect of such Plan Year, then the Company shall
credit to each Participant only that number of CAP Units as shall equal the
number of Available Shares, on a pro rata basis, based on the number of CAP
Units which each Participant otherwise would have been entitled to be credited.
In such event, the Company shall also carry forward to subsequent Deferral Years
the respective amounts obtained by multiplying each of the Earnings Adjustment
and the Book Value Adjustment applicable for each Participant by the fraction
which is one minus the quotient obtained by dividing (a) the number of Available
Shares by (b) the aggregate number of CAP Units required to be credited pursuant
to this Section 5.10(a). Such respective amount shall be credited (or debited)
by means of separate bookkeeping entries established and maintained by the
Company to the Cash Balance Account in respect of the Earnings Adjustment and a
"Book Value Adjustment Carryforward Account" in respect of the applicable Book
Value Adjustment of each Participant. The amounts credited to the Cash Balance
Account in respect of the Earnings Adjustment shall equal the product of (a) the
applicable amount carried forward in respect of Earnings Adjustment and (b) the
Average Cost Per Share for the Plan Year involved.
(b) Notwithstanding anything in the Plan to the contrary, for
purposes of determining Historical Book Value Per Share and Adjusted Book Value
Per Share, the Net Earnings Adjustments credited to each Participants' Capital
Accumulation Account pursuant to Section 5.10(a) shall be disregarded and in
lieu thereof the Earnings Adjustments provided for in Section 5.4 and the Book
Value Adjustments provided for in Section 5.5 shall be deemed made without
giving effect to Section 5.10(a). In addition, for purposes of calculating the
Earnings Adjustment and the Book Value Adjustment (except as required by Section
5.2 any amounts credited to a Book Value Adjustment Carryforward Account in a
prior Deferral Year shall be deemed made as a Book Value Adjustment in the year
so credited and not carried forward to subsequent Deferral Years.
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5.11 Certification of the Board Committee. As a condition to the
right of any Participant to receive any shares payable in respect of CAP Units
credited to such Participant's Capital Accumulation Account or cash in respect
of such Participant's Cash Account, in respect of fractional CAP Units credited
to such Participant's Capital Accumulation Account or payable pursuant to
Section 6.6, prior to the time CAP Units or cash is credited to the appropriate
Accounts of such Participant or a Participant receives cash pursuant to Section
6.6, the Board Committee shall be required to certify, by resolution of the
Board Committee or other appropriate action, that the amounts to which such
Participant is entitled have been accurately determined in accordance with the
provisions of the Plan.
SECTION 6
Payment of Benefits
6.1 Distributions. As soon as practicable following each Termination
Date, each Participant shall be entitled to receive from the Company, in respect
of the Total Deferral Amount for the related Plan Year, a number of shares of
Common Stock equal to the Total CAP Units credited to his Capital Accumulation
Account in respect of such Plan Year and an amount in cash equal to his Cash
Balance, if any, in respect of such Plan Year, each determined as of such
Termination Date.
6.2 Accelerated Distributions. Notwithstanding the provisions of
Section 6.1 and in lieu of any distribution on a Termination Date selected by a
Participant, a Participant may receive a distribution prior to a Termination
Date as follows:
(a) If a Participant shall die during any Fiscal Year prior to the
end of all of his Deferral Periods, the Participant's estate (or his
Beneficiary) shall be entitled to receive from the Company, as soon as
practicable after the end of the Fiscal Year in which such Participant's death
occurs, a number of shares of Common Stock equal to the Total CAP Units credited
to his Capital Accumulation Account, as adjusted pursuant to Sections 5.6 and
5.10 as of the end of the Fiscal Year in which such Participant's death occurs,
and an amount in cash equal to his Cash Balance, if any, as of the end of the
Fiscal Year in which such Participant's death occurs.
(b) If a Participant's employment with the Company and its
Affiliates shall be terminated for any reason prior to the end of all of his
Deferral Periods (other than by reason of death), or if such Participant shall
suffer a Disability or shall become a Managing Director Emeritus of Bear
Stearns, then such Participant (or his Beneficiary) shall, unless otherwise
determined by the Appropriate Committee as hereinafter provided, continue to be
bound by, and to be subject to, all the terms and provisions of this Plan,
except that (i) in lieu of making any calculations pursuant to subparagraphs
(ii) and (iii) of Section 5.4 in respect of the portion of the Deferral Year
beginning with the month in which his employment terminates and for any
subsequent Deferral Year prior to any Termination Date, the Company shall credit
to the Cash Balance Account of such Participant, on an annual basis as of the
last day of each Fiscal Year, a dollar amount equal to the cash dividends
declared by the Company, in the fiscal quarter of the Company following the
fiscal quarter in which his employment terminated or in any subsequent fiscal
quarter ending on or prior to a Termination Date, on that number of shares of
Common
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Stock corresponding to the number of CAP Units credited to his Capital
Accumulation Account (A) as of the last day of the month before his employment
terminates in respect of the Fiscal Year in which his employment terminated and
(B) as of the first day of the Fiscal Year after which his employment terminated
in respect of all subsequent Fiscal Years, and (ii) notwithstanding the
provisions of Section 5.5, the Book Value Adjustment for any Fiscal Year
following the Fiscal Year in which his employment terminated shall be zero. For
purposes of calculating the Book Value Adjustment for the Fiscal Year in which
the employment of a Participant is terminated, the denominator of the fraction
referred to in Section 5.5 of the Plan shall be (in lieu of the Adjusted Book
Value Per Share on the last day of the Deferral Year for which the adjustment is
being made) the Adjusted Book Value Per Share calculated by including in the
definition of Adjusted Common Stockholder Equity (in lieu of all increases (or
decreases) in retained earnings attributable to net income (or loss) minus all
amounts accrued in respect of cash dividends declared with respect to any
capital stock of the Company) the amount determined by multiplying (A) the
increase (or decrease) in retained earnings in such Fiscal Year attributable to
net income (or loss) minus all amounts accrued in respect of cash dividends
declared with respect to any capital stock of the Company by (B) a fraction, the
numerator of which is the number of months in the Fiscal Year prior to but not
including the month in which his employment terminates, and the denominator of
which is 12.
Notwithstanding the foregoing:
(i) the Appropriate Committee shall have the right in
its sole discretion (A) to treat a Participant who has suffered a
Disability or who has become a Managing Director Emeritus of Bear
Stearns as a Participant (1) in all respects under this Plan, (2) to
whom the provisions of Section 5.4 but not the provisions of Section
4.1 shall apply or (3) whose employment with the Company and its
Affiliates has terminated and to whom the foregoing provisions of
this paragraph (b) shall apply, and (B) at any time or from time to
time, to change any such treatment with respect to any such
Participant to any other such treatment;
(ii) the Appropriate Committee shall have the right in
its sole discretion to accelerate any Termination Date with respect
to any Plan Year of a Participant whose employment with the Company
and its Affiliates terminates to the last day of the Fiscal Year in
which such employment terminates or to the last day of any
subsequent Fiscal Year, in which case the date so determined by the
Appropriate Committee with respect to each such Plan Year shall be
the Participant's Termination Date for all purposes of this Plan
with respect to each such Plan Year. The Appropriate Committee shall
give notice of any such determination to the Participant at least
ten days prior to the earliest of such accelerated Termination
Dates. In addition, if a Participant whose employment with the
Company has terminated shall request the Appropriate Committee to
accelerate the Termination Date with respect to any Plan Year of
such Participant to the last day of the Fiscal Year immediately
preceding the Fiscal Year in which such Participant's employment
terminates, the Appropriate Committee may in its sole discretion so
accelerate the Termination Date with respect to any such Plan Year
of such Participant. If the Appropriate Committee takes such action,
such Participant's distribution from the Plan for any Plan Year the
Termination Date of which is so
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accelerated shall be based on the Total CAP Units and his Cash
Balance at the end of such prior Fiscal Year for each such Plan
Year, without giving effect to any adjustments otherwise required to
be made during the Fiscal Year in which his employment terminates,
including, without limitation, for Net Earnings Adjustments,
dividends on the Common Stock, or interest, and the distributions
called for in Section 6.1 of the Plan shall be made as soon as
practicable after such action is taken by the Appropriate Committee;
(iii) Notwithstanding clause (ii) above, the Appropriate
Committee shall have the right in its sole discretion to determine
that, regardless of the Termination Date with respect to any other
Plan Year or Plan Years, the Termination Date with respect to the
Plan Year in which the employment of the Participant with the
Company and its Affiliates terminates, and the Plan Year immediately
preceding such Plan Year if such employment terminates prior to the
date on which the Capital Accumulation Account of such Participant
is credited pursuant to Section 5.1 hereof with respect to such
immediately preceding Plan Year, shall be the last day of the Fiscal
Year immediately preceding the Plan Year in which such employment
terminates or, if applicable, the prior Plan Year; and
(iv) the Appropriate Committee may permit a Participant
whose employment with the Company and its Affiliates terminates more
than five years after the last day of his first Plan Year and who
has elected a Deferral Period of more than five Fiscal Years for any
Plan Year to participate in the Plan with respect to any such Plan
Year for one or more Fiscal Years (but not beyond his Termination
Date as determined in accordance with his applicable Plan Election)
on substantially the same terms as other Participants whose
employment has not terminated, in which case the Capital
Accumulation Account of such Participant shall continue to be
adjusted in the manner provided in Section 5.10 for other
Participants except that subparagraph (f) of Section 5.4 shall apply
to such a Participant, and the Termination Date with respect to each
such Plan Year shall be the last day of such Fiscal Year as shall be
determined by the Appropriate Committee.
(c) If a Participant shall take a Personal Leave of Absence prior to
the end of all his Deferral Periods, the Appropriate Committee shall have the
right in its sole discretion to require the Participant to become subject to the
provisions of paragraph (b) above (to the same extent as a Participant whose
employment had terminated) during the period of such Personal Leave of Absence,
except that in the event the Participant resumes full-time employment after the
first day of a Fiscal Year, all calculations under this Plan with respect to
such Fiscal Year shall be made by treating the Participant in the same manner as
a full-time employee for the number of full months of such employment during
such Fiscal Year and as a Participant whose employment had been terminated for
the balance of such Fiscal Year. If the Appropriate Committee shall not take
such action the Participant shall continue to be treated under this Plan on the
same basis as a Participant who is not on a Personal Leave of Absence.
(d) In addition, in the event of hardship, actual or prospective
change in tax laws, or any other unforeseen or unintended circumstance or event
(including, without limitation, if the tax laws of any foreign jurisdiction do
not provide for tax consequences to Participants or
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the Company that are comparable to those provided under United States tax laws),
or if desirable to preserve the deductibility for federal income taxes of
compensation paid or payable by the Company to any Participant, the Appropriate
Committee, in its sole discretion, may accelerate any Termination Date of any
Participant to the last day of any Fiscal Year, in which case the accelerated
date determined by the Appropriate Committee shall be the Termination Date for
all purposes of this Plan.
(e) Notwithstanding anything else contained in this Plan, upon
determination by the Appropriate Committee to accelerate any Termination Date or
distribution of payment pursuant to this Plan, in consideration of such
decision, the Appropriate Committee shall require the Participant to execute an
agreement, in form and substance satisfactory to the Appropriate Committee,
providing for the Participant's agreement not to solicit any employees of the
Company for a period terminating on the last deferral date when the Participant
would have otherwise received a distribution from the Plan; and the Appropriate
Committee may require, in its sole discretion, the Participant to further agree
to such terms and conditions as determined by the Appropriate Committee in its
sole discretion.
6.3 Change in Control and Parachute Limitation. Notwithstanding the
provisions of Sections 6.1 and 6.2, within sixty (60) days of the occurrence of
a Change in Control, each Participant shall be entitled to receive from the
Company that number of shares of Common Stock which is equal to the Total CAP
Units credited to his Capital Accumulation Account as of the date of such Change
in Control and an amount in cash equal to his Cash Balance, if any, as of such
date; provided, however, no amount shall be immediately distributable or payable
under the Plan if and to the extent that the Appropriate Committee determines
that such distribution or payment (taken together with any other payment
received or to be received by the Participant from the Company or any of its
Affiliates in connection with a Change in Control) would constitute an "excess
parachute payment" under section 280G of the Code, which would cause such amount
to be subject to an excise tax to the recipient or to be nondeductible to the
Company or any of its Affiliates, or would subject a Reporting Person to
liability under Section 16(b) of the Exchange Act or any rule or regulation
thereunder by reason of transactions or events occurring on or prior to the
occurrence of the Change in Control. Payment of amounts not distributed by
reason of this Section 6.3 shall be made as soon as practicable, consistent with
this Section 6.3.
6.4 Additional Distributions in Certain Cases. In addition to the
amounts provided by Section 6.1, 6.2 or 6.3, if (a) upon making any distribution
to any Participant, the Company determines that the Company or Bear Stearns
would realize a tax benefit calculated at its Marginal Tax Rate in the year of
such distribution (without giving effect to any carryovers or carrybacks of
losses, credits or deductions from any prior or succeeding Fiscal Year) in
excess of the amount of Deferred Tax Benefit in respect of its liability to such
Participant on account of such distribution, and (b) such Participant's Cash
Balance Account or the number of CAP Units credited to his Capital Accumulation
Account had been reduced in a prior Fiscal Year as a result of the application
of subparagraphs (d) or (e) of Section 5.4 or Section 5.6, then at the time of
the distribution pursuant to this Section 6 the Company also shall pay to such
Participant, in cash, an additional amount equal to the lesser of (i) the amount
by which the actual tax benefit to be received by the Company or Bear Stearns
exceeds such Deferred Tax Benefit and (ii) the amount
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by which such Participant's Cash Balance Account or Capital Accumulation Account
was so reduced. Notwithstanding the foregoing, a Participant shall not be
entitled to any payment from the Company pursuant to this Section 6.4 in respect
of any reduction in his Cash Balance Account or in the number of CAP Units
credited to his Capital Accumulation Account for any period commencing with the
first day of the month following the month in which his employment by the
Company and its Affiliates was terminated.
6.5 Special Provisions for Reporting Persons. If required by Rule
16b-3, shares of Common Stock distributed to Participants who are Reporting
Persons shall bear an appropriate legend to the effect that such shares of
Common Stock may not be transferred for a period of six (6) months after they
are credited to the Account of such Participant.
6.6 Form of Payments. Except as otherwise provided herein, all
distributions in respect of CAP Units to be made to a Participant (or his
Beneficiary) under the Plan shall be made in whole shares of Common Stock.
Payment in respect of any fractional CAP Unit shall be made in cash based upon
the Fair Market Value of a share of Common Stock on the second Business Day
preceding the payment date. Shares of Common Stock distributed hereunder may be
treasury shares, shares of authorized but unissued Common Stock, or a
combination thereof, and shall be fully paid and nonassessable. If shares of
Common Stock are distributed pursuant to Sections 6.1, 6.2(a) or 6.2(b) to any
Participant after the record date for any cash dividend occurring after the
Termination Date with respect to which such shares are distributed or, in the
cases of Sections 6.2(a) or 6.2(b), after the end of the Fiscal Year in which
the death or Disability of a Participant occurs, then such Participant (or his
estate or Beneficiary) shall be entitled to receive from the Company an amount
of cash equal to the cash dividends per share payable to holders of record on
such record date multiplied by the number of shares of Common Stock so
distributed to such Participant after such record date.
6.7 Registration and Listing of Common Stock. Prior to the date on
which any shares of Common Stock are required to be issued to any Participant
under this Plan without taking into account any acceleration of such
distribution date pursuant to the provisions of Section 6.2 of the Plan, the
Company shall file a registration statement (a "Registration Statement") on Form
S-3 and/or Form S-8 (or any successor form then in effect) under the Securities
Act, with respect to all shares of Common Stock which the Company then estimates
are distributable under the Plan; provided, however, that the Company need not
file a Registration Statement hereunder if, prior to such date, the Company
receives a written opinion of counsel to the effect that such shares of Common
Stock may be sold, transferred or otherwise disposed of under the Securities Act
without registration thereunder. The Company shall use its best efforts to have
any such Registration Statement declared effective as soon as reasonably
practicable after filing and shall use reasonable efforts to keep each such
Registration Statement continuously in effect until all shares of Common Stock
to which such Registration Statement relates have been so issued, and for a
two-year period thereafter. From time to time the Company also shall amend such
Registration Statement to cover any additional shares of Common Stock which
become distributable under the Plan and otherwise would not be covered by such
Registration Statement. In the event that Participants would be precluded from
selling any shares of Common Stock distributable hereunder unless such shares
were registered or qualified under the securities or "blue sky" laws of any
state (or otherwise received the approval of any state
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governmental or regulatory authority), then the Company shall use its best
efforts to cause such shares of Common Stock to be duly registered or qualified
(or to receive such approval) as may be required. If the shares of Common Stock
distributable hereunder satisfy the criteria for listing on any exchange on
which the Common Stock is then listed, then (unless such shares of Common Stock
already are listed on such exchange) the Company shall apply for and use its
best efforts to obtain a listing of all such shares of Common Stock on such
exchange. All costs and expenses incurred by the Company in connection with the
satisfaction of its obligations under this Section 6.7 shall be borne by the
Company. The Company shall immediately notify each Participant in the event that
a Registration Statement which has been filed and remains effective contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
Upon receipt of such notice, no Participant shall sell or agree to sell any
shares of Common Stock pursuant to such Registration Statement unless and until
the Company has notified each Participant that such Registration Statement no
longer contains such misstatement or omission. In the event that shares of
Common Stock are issued to Participants hereunder other than pursuant to a
Registration Statement, then, unless the Company shall have obtained the opinion
of counsel referred to above, each certificate representing such shares shall
bear a legend substantially to the following effect:
The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or applicable state
securities laws, and may not be sold, assigned, transferred, pledged or
otherwise disposed of except in compliance with the requirements of such Act.
By submitting a Plan Election, each Participant shall be deemed to
have agreed to the foregoing provisions of this Section 6.7.
6.8 Reservation of Shares. The Company, as soon as practicable after
the end of each Fiscal Year prior to the termination of this Plan, shall reserve
such number of shares of Common Stock (which may be authorized but unissued
shares or treasury shares) as shall be required so that the total of all shares
reserved hereunder, including shares reserved pursuant to this Section 6.8 in
preceding Fiscal Years, shall be equal to the number of shares of Common Stock
which the Company would be obligated to issue to all Participants in accordance
with the terms of the Plan if the Plan were to be terminated at such time.
SECTION 7
Source of Payments
Notwithstanding any other provision of this Plan, the Company shall
not be required to establish a special or separate fund or otherwise segregate
any assets to assure any payments hereunder. If the Company shall make any
investment to aid it in meeting its obligations hereunder, a Participant and his
Beneficiary shall have no right, title or interest whatsoever in or to any such
investments. Nothing contained in this Plan, and no action taken pursuant to its
provisions, including without limitation the acquisition of any shares of Common
Stock by the Company, shall create or be construed to create a trust of any kind
between the
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Company and any Participant or Beneficiary. To the extent that any Participant
or Beneficiary acquires a right to receive payments from the Company hereunder,
such right shall be no greater than the right of a general unsecured creditor of
the Company.
SECTION 8
Administration of the Plan
8.1 Authority of Committee. The Plan shall be administered by the
Appropriate Committees, which shall have full power and authority as set forth
herein to interpret, to construe and to administer the Plan and to review claims
for benefits under the Plan. Each Appropriate Committee's interpretations and
constructions of the Plan and actions thereunder, including but not limited to
the determination of the amounts to be credited to any Capital Accumulation
Account or Cash Balance Account, shall be binding and conclusive on all persons
and for all purposes.
8.2 Duties of Committee. The Appropriate Committees shall cause the
Company to establish and maintain records of the Plan, of each Capital
Accumulation Account and Cash Balance Account and of each subaccount thereof
established for any Participant hereunder. Either of the Appropriate Committees
may engage such certified public accountants, who may be accountants for the
Company, as it shall require or may deem advisable for purposes of the Plan, may
arrange for the engagement of such legal counsel, who may be counsel for the
Company, and may make use of such agents and clerical or other personnel as it
shall require or may deem advisable for purposes of the Plan. Each such
Committee may rely upon the written opinion of the accountants and counsel
engaged by it. Subject to any limitations imposed by applicable law (including
Rule 16b-3), either Appropriate Committee may delegate to any agent or to any
subcommittee or member of such Committee its authority to perform any act
hereunder, including, without limitation, those matters involving the exercise
of discretion, provided that such delegation of authority shall be subject to
revocation at any time at the discretion of such Committee.
8.3 Purchase of Common Stock. The Company intends to purchase shares
of Common Stock in the open market or in private transactions or otherwise
during the term of the Plan for issuance to Participants in accordance with the
terms hereof. Shares of Common Stock shall be purchased for purposes of the Plan
and for purposes of the PUP Plan on a combined or joint basis without
identifying shares so purchased as having been purchased for this Plan or the
PUP Plan. Notwithstanding the foregoing, the Company will specifically designate
all such shares at the time they are purchased as having been purchased for the
purpose of making determinations under this Plan and the PUP Plan; provided,
however, that any shares so purchased shall be the sole property of the Company
and no Participant or Beneficiary shall have any right, title or interest
whatsoever in or to any such shares. All shares of Common Stock purchased by the
Company on or after July 1, 1992 and designated by the Company as having been
purchased for the CAP Plan shall be considered, notwithstanding such
designation, to have been purchased for purposes of both this Plan and the PUP
Plan. The acquisition of Common Stock as described above will be subject to the
sole discretion of the Board Committee, which shall determine the time and price
at which and the manner in which such shares are to be
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acquired, subject to applicable law. In making any such determination, the Board
Committee may, but shall in no event be obligated to, consider the
recommendations of the Advisory Committee.
8.4 Plan Expenses. The Company shall pay the fees and expenses of
accountants, counsel, agents and other personnel and all other costs of
administration of the Plan.
8.5 Indemnification. To the maximum extent permitted by applicable
law, no member of any Committee shall be personally liable by reason of any
contract or other instrument executed by him or on his behalf in his capacity as
a member of such Committee or for any mistake of judgment made in good faith,
and the Company shall indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums of which are paid
from the Company's own assets), each member of each Committee and each other
director, officer, employee or agent of the Company to whom any duty or power
relating to the administration or interpretation of the Plan or to the
management or control of the assets of the Plan may be delegated or allocated,
against any cost or expense (including fees, disbursements and other charges of
legal counsel) or liability (including any sum paid in settlement of a claim
with the approval of the Company) arising out of any act or omission to act in
connection with the Plan, unless arising out of such person's own fraud, willful
misconduct or bad faith. The foregoing shall not be deemed to limit the
Company's obligation to indemnify any member of any Committee under the
Company's Restated Certificate of Incorporation or Bylaws, or under any other
agreement between the Company and such member.
8.6 Maximum Number of Shares.
(a) The aggregate number of CAP Units that may be credited to
Participants' Capital Accumulation Accounts under the Plan for any Plan Year
shall not exceed the equivalent number of shares of Common Stock equal to the
sum of 15% of the outstanding shares of Common Stock as of the last day of such
Plan Year (the "Base Shares") and the number, if any, by which the sum of the
Base Shares in all prior Fiscal Years beginning on or after July 1, 1993 exceeds
the number of shares credited to Participants' Capital Accumulation Accounts
under this Plan in all such prior Fiscal Years. For purposes of determining the
number of shares of Common Stock outstanding as of the last day of any Plan
Year, such number shall be calculated as the sum of (i) the number of shares of
Common Stock outstanding at such year end, (ii) the number of shares underlying
CAP Units credited to Participants' Capital Accumulation Accounts as of such
date and Earnings Units credited to Participants' Earnings Unit Accounts under
the PUP Plan as of such date and (iii) the number of shares underlying CAP Units
to be credited to all such Accounts as a result of making any adjustment to such
Accounts required by Sections 5.1 and 5.10 in respect of all Fiscal Years ending
on or prior to the date of determination and the number of Earnings Units
credited to the Earnings Unit Accounts of all Participants in the PUP Plan as a
result of making any adjustment to such Accounts required by Section 4.2 of the
PUP Plan in respect of all Fiscal Years ending on or prior to the date of such
determination.
(b) If there shall be any change in the Common Stock of the Company,
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split, spinoff, split up, dividend in kind or other change in the
corporate structure or distribution to the
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stockholders, appropriate adjustments may be made by the Board Committee (or if
the Company is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation) in the aggregate number and kind of
shares subject to the Plan, and the number and kind of shares which may be
issued under the Plan. Appropriate adjustments may also be made by the Board
Committee in the terms of any awards under the Plan to reflect such changes and
to modify any other terms of outstanding awards on an equitable basis as the
Board Committee in its discretion determines.
8.7 Forward Repurchases of Common Stock.
The Company shall have the right, upon authorization of the Board
Committee, to enter into forward contracts for the repurchase from one or more
Participants of any or all shares of Common Stock representing CAP Units
previously credited to the Capital Accumulation Accounts of such Participants
with respect to any Plan Year and distributed on or after the relevant
Termination Date of the Deferral Period ending in the then current Fiscal Year,
having such terms and conditions as shall be determined by the Board Committee,
for a purchase price per share equal to the average of the closing prices of the
Common Stock as reported on the New York Stock Exchange Consolidated Tape for
each day of trading in the Common Stock during the period from the effective
date of the contract to the date of repurchase, provided that such price is
within the range defined by the Board Committee, and provided further that a
contract may not be entered into more than twelve (12) months prior to the
expiration of the applicable Deferral Period and will terminate, and be null and
void, unless the Company satisfies performance goals established by the Board
Committee in writing, by resolution of the Board Committee or other appropriate
action, not later than ninety (90) days after the commencement of the Fiscal
Year to which the performance goals relate, and certified by the Board Committee
in writing as having been satisfied prior to the relevant Termination Date. The
formula for calculating the performance goals shall be based upon one or more of
the following criteria, individually or in combination, adjusted in such manner
as the Board Committee shall determine, for a period of not less than nine (9)
months of the applicable Fiscal Year: (a) pre-tax or after-tax return on equity;
(b) earnings per share; (c) pre-tax or after-tax net income; (d) business unit
or departmental pre-tax or after-tax income; (e) book value per share; (f)
market price per share; (g) relative performance to peer group companies; (h)
expense management; and (i) total return to stockholders.
SECTION 9
Amendment and Termination
The Plan shall terminate in accordance with the provisions of
Section 11.12. The Plan may be amended, suspended or earlier terminated, in
whole or in part as to a particular Plan Year, and at any time and from time to
time, by the Board Committee, but except as provided below no such action shall
retroactively impair or otherwise adversely affect the rights of any person to
benefits under the Plan which have accrued prior to the date of such action.
Except as provided in the following sentence, if the Plan is terminated prior to
the end of any Fiscal Year, (i) Participants' Plan Elections in respect of the
Plan Year in which such termination occurs and any subsequent Plan Year shall be
canceled, (ii) the Company shall credit the Capital
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Accumulation Accounts of all Participants (other than those whose employment
with the Company and its Affiliates had terminated prior to the date the Plan
terminates, except a Participant referred to in subparagraph (iii) of Section
6.2(b)) in the manner provided in Section 5.10 in respect of the portion of the
Company's Fiscal Year ended on the date of such termination, and (iii) as soon
as practicable following the end of the Fiscal Year in which such termination
occurs, the Company shall deliver to each Participant the number of shares of
Common Stock corresponding to the number of CAP Units credited to his Capital
Accumulation Account and an amount in cash equal to his Cash Balance which the
Participant otherwise would be entitled to receive pursuant to Section 6 as of
the designated Termination Date in respect of the Plan Year or Plan Years
involved. Notwithstanding the foregoing, if the Company shall determine that the
Plan should be terminated immediately, either in its entirety or in part in
respect of any Plan Year, no adjustments or credits shall be made to the Capital
Accumulation Accounts of the Participants pursuant to Section 5 in respect of
the Fiscal Year in which such termination occurs and each Participant shall be
entitled to receive from the Company, as soon as practicable following the date
of such termination, shares of Common Stock and/or amounts in cash determined in
accordance with Section 6 hereof as if the Termination Date in respect of the
Plan Year or Plan Years involved were the last day of the Fiscal Year preceding
the Fiscal Year in which such termination occurs.
In such event, however, the Capital Accumulation Account of each
Participant who is an employee of the Company and/or its Affiliates (or who is a
Participant who has suffered a Disability or who has become a Managing Director
Emeritus of Bear Stearns and whom the Appropriate Committee shall have
determined to treat in the manner specified in clause (1) or (2) of subparagraph
(i) of Section 6.2(b)) on the date of such termination shall be adjusted in
respect of the Fiscal Year in which such termination occurs as follows: Each
such Account shall be credited with a Net Earnings Adjustment for the Fiscal
Year in which such termination occurs except that, for purposes of computing
such Net Earnings Adjustment, Income Per Share for purposes of calculating the
Earnings Adjustment shall be computed for each terminated Plan Year based only
on the consolidated income or loss before taxes of the Company and its
subsidiaries accrued from the beginning of such Fiscal Year through and
including the end of the month in which such termination occurred, and the Book
Value Adjustment for the Fiscal Year in which such termination occurs shall be
calculated on the basis of the shares distributed pursuant to the preceding
sentence in respect of each terminated Plan Year, provided that for purposes of
computing such Book Value Adjustment, the definition of Adjusted Common
Stockholders' Equity used in the computation of Adjusted Book Value Per Share
shall be modified by deleting the adjustments to Adjusted Common Stockholders'
Equity specified therein and substituting in lieu thereof the following: "plus
all increases (or less any decreases) in retained earnings of the Company and
its subsidiaries attributable to net income (or loss), determined on a
consolidated basis, minus all amounts accrued in respect of cash dividends
declared with respect to any capital stock of the Company during such Fiscal
Year, for the period from the beginning of such Fiscal Year through and
including the month in which such termination occurred." If the Plan is not
terminated in its entirety but one or more Plan Years are terminated, then any
amounts credited to Participants' Accounts pursuant to the preceding sentence
shall continue to be subject to the provisions of the Plan for the balance of
the original Deferral Period with respect to the terminated Plan Year or Plan
Years, as if such Plan Year or
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Plan Years had not been terminated. If the Plan is terminated in its entirety,
then as soon as may be practicable thereafter, the Company shall deliver to each
Participant (in addition to amounts distributable pursuant to the fourth
sentence of this paragraph) a number of shares of Common Stock equal to the
number of CAP Units credited to each such Participant's Account pursuant to the
second preceding sentence, provided that if the aggregate number of such CAP
Units exceeds the number of Available Shares for such Fiscal Year as of the date
of determination, then the Company shall deliver to each such Participant only
that number of shares of Common Stock as shall equal the number of Available
Shares on a pro rata basis, based on the number of shares which each Participant
otherwise would have been entitled to receive, and shall distribute to each
Participant an amount in cash equal to the number of additional shares of Common
Stock that would have been distributed to such Participant but for the
limitation contained in this sentence, multiplied by the Average Cost Per Share
of the Available Shares in respect of such Fiscal Year.
SECTION 10
Designation of Beneficiaries
10.1 General. Each Participant may file with the Appropriate
Committee a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the amount, if any, which the Participant is
entitled to receive under the Plan upon his death. A Participant, from time to
time, may revoke or change his Beneficiary designation without the consent of
any prior Beneficiary by filing a new such designation with the Appropriate
Committee. The most recent such designation received by the Appropriate
Committee shall be controlling; provided, however, that no designation, or
change of revocation thereof, shall be effective unless received by the
Appropriate Committee prior to the Participant's death, and in no event shall
any such designation be effective as of a date prior to such receipt.
10.2 Lack of Designated Beneficiary. If no such Beneficiary
designation is in effect at the time of a Participant's death, or if no
designated Beneficiary survives the Participant, or if such designation
conflicts with law, the Participant's estate shall be deemed to have been
designated as his Beneficiary and shall receive the payment of the amount, if
any, payable under the Plan upon his death. If the Appropriate Committee is in
doubt as to the right of any person to receive such amount, the Committee may
cause the Company to retain such amount, without liability for any interest
thereon, until the rights thereto are determined, or the Appropriate Committee
may pay and deliver such amount into any court of appropriate jurisdiction, and
such payment shall be a complete discharge of the liability of the Plan and the
Company therefor.
SECTION 11
General Provisions
11.1 Successors. The Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and each Participant and his
Beneficiary.
11.2 No Continued Employment. Neither the Plan nor any action taken
thereunder shall be construed as giving to a Participant the right to be
retained in the employ of
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the Company or any of its Affiliates or as affecting the right of the Company or
any of its Affiliates to dismiss any Participant.
11.3 Withholding. As a condition to receiving any distribution or
payment of amounts hereunder, the Company may require the Participant to make a
cash payment to the Company or, in its sole discretion, upon the request of a
Participant, may withhold from any amount or amounts payable under the Plan, in
either case, in an amount equal to all federal, state, city or other taxes as
may be required to be withheld in respect of such payments pursuant to any law
or governmental regulation or ruling.
11.4 Non-alienation of Benefits. No right to any amount payable at
any time under the Plan may be assigned, transferred, pledged or encumbered,
either voluntarily or by operation of law, except as expressly provided herein
or as may otherwise be required by law. If, by reason of any attempted
assignment, transfer, pledge or encumbrance, or any bankruptcy or other event
happening at any time, any amount payable under the Plan would be made subject
to the debts or liabilities of the Participant or his Beneficiary or would
otherwise not be enjoyed by him, then the Appropriate Committee, if it so
elects, may terminate such person's interest in any such payment and direct that
the same be held and applied to or for the benefit of the Participant, his
Beneficiary or any other person or persons deemed to be the natural objects of
his bounty, taking into account the expressed wishes of the Participant (or, in
the event of his death, his Beneficiary).
11.5 Incompetency. If the Appropriate Committee shall find that any
person to whom any amount is or was distributable or payable hereunder is unable
to care for his affairs because of illness or accident, or has died, then the
Appropriate Committee, if it so elects, may direct that any payment due him or
his estate (unless a prior claim therefor has been made by a duly appointed
legal representative) or any part thereof be paid or applied for the benefit of
such person or to or for the benefit of his spouse, children or other
dependents, an institution maintaining or having custody of such person, any
guardian or any other person deemed by such Appropriate Committee to be a proper
recipient on behalf of such person otherwise entitled to payment, or any of
them, in such manner and proportion as such Appropriate Committee may deem
proper. Any such payment shall be in complete discharge of the liability
therefor of the Company, the Plan, the Committee or any member, officer or
employee thereof.
11.6 Offsets. To the extent permitted by law, the Company or any of
its Affiliates shall have the absolute right to withhold any shares of Common
Stock or any amounts otherwise required to be distributed or paid to any
Participant or Beneficiary under the terms of the Plan, to the extent of any
amount owed or which in the sole judgment of the Appropriate Committee may in
the future be owed for any reason by such Participant, in the case of a payment
to such Participant, or to the extent of any amount owed or which in the sole
judgment of the Appropriate Committee may in the future be owed for any reason
by the Participant or such Beneficiary, in the case of payment to a Beneficiary,
to the Company or any of its Affiliates, and to set off and apply the amounts so
withheld to payment of any such amount ultimately determined by the Appropriate
Committee, in its sole discretion, to be owed to the Company or any of its
Affiliates, whether or not such amounts shall then be immediately due and
payable and in such order or priority as among such amounts owed as the
Appropriate Committee, in its sole
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discretion, shall determine. In determining the amount of a permitted offset
under this Section 11.6, any shares of Common Stock required to be distributed
to a Participant or a Beneficiary shall be valued at the Fair Market Value of
such Shares on the date of offset.
11.7 Notices, etc. All elections, designations, requests, notices,
instructions and other communications from a Participant, Beneficiary or other
person to any Appropriate Committee required or permitted under the Plan shall
be in such form as is prescribed from time to time by the Appropriate Committee,
shall be mailed by first-class mail or delivered to such location as shall be
specified by the Appropriate Committee, and shall be deemed to have been given
and delivered only upon actual receipt thereof at such location.
11.8 Other Benefits. The benefits, if any, payable under the Plan
shall be in addition to any other benefits provided for Participants.
11.9 Interpretation, etc. The captions of the sections and
paragraphs of this Plan have been inserted solely as a matter of convenience and
in no way define or limit the scope or intent of any provisions of the Plan.
References to sections herein are to the specified sections of this Plan unless
another reference is specifically stated. The masculine pronoun wherever used
herein shall include the feminine pronoun, and a singular number shall be deemed
to include the plural unless a different meaning is plainly required by the
context.
11.10 Laws; Severability. The Plan shall be governed by, and
construed in accordance with, the laws of the State of New York, except to the
extent preempted by the Employee Retirement Income Security Act of 1974, as
amended. If any provision of the Plan shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions shall
continue to be effective.
11.11 Effective Date; Board Committee and Stockholder Approval. This
Plan shall be subject to the approval by a vote of the stockholders of the
Company at the 1993 Annual Meeting, and such stockholder approval shall be a
condition to the right of a Participant to receive any benefits hereunder other
than CAP Units and cash credited to Participants' Accounts prior to such
approval.
11.12 Termination of the Plan. Unless earlier terminated by action
of the Board Committee, the Plan will remain in effect until December 31, 2013;
provided, however, that each outstanding grant shall remain in full force and
effect subject to the terms of the applicable grant until the completion of the
applicable Deferral Period in accordance with the provisions of such grant.
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