Stock Award Plan - Bear Stearns Companies Inc.
THE BEAR STEARNS COMPANIES INC.
STOCK AWARD PLAN
(Amended and Restated as of March 31, 2004 and Further Amended as of
April 18, 2007)
1. Purpose. The purpose of The Bear Stearns Companies Inc. Stock Award Plan
(the "Plan") is to secure for The Bear Stearns Companies Inc. and its successors
and assigns (the "Company") and its stockholders the benefits of the additional
incentive, inherent in the ownership of the Company's common stock, par value
$1.00 per share (the "Common Stock"), by selected key employees of the Company
and its subsidiaries who are important to the success and growth of the business
of the Company and its subsidiaries and to help the Company and its subsidiaries
secure and retain the services of such persons. Compensation awarded under the
Plan is intended to qualify for tax deductibility pursuant to the requirements
of Section 162(m) of the Internal Revenue Code of 1986, as amended from time to
time or any successor statute or statutes (the "Code"), to the extent deemed
appropriate by the Committee (as defined in Paragraph 2.1).
Pursuant to the Plan, such employees will be offered the opportunity to
acquire Common Stock through the grant of options and stock appreciation rights
in tandem with such options. Options granted under the Plan will be either
"incentive stock options", intended to qualify as such under the provisions of
Section 422 of the Code, or "nonqualified stock options". For purposes of the
Plan, the terms "parent" and "subsidiary" shall mean "parent corporation" and
"subsidiary corporation", respectively, as such terms are defined in Sections
424(e) and (f) of the Code.
2. Committee.
2.1 Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). Any
vacancy on the Committee, whether due to action of the Board of Directors or due
to any other cause, may be filled, and shall be filled if required to maintain a
Committee of at least two disinterested persons, by resolution adopted by the
Board of Directors. For purposes of the Plan, a person shall be deemed to be a
"disinterested person" if, at the time of reference, such person is not, and has
not been at any time during the preceding one-year period, eligible to
participate in the Plan or any other plan of the Company or any of its
affiliates entitling participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any of its affiliates.
Notwithstanding any of the foregoing, the Board of Directors may designate one
or more persons, who at the time of such designation are not disinterested
persons, to serve on the Committee effective upon the date such person or
persons qualify as disinterested persons.
2.2 Procedures. The Committee shall select one of its members as Chairman
and shall adopt such rules and regulations as it shall deem appropriate
concerning the holding of its meetings and the administration of the Plan. A
majority of the whole Committee shall constitute a quorum, and the acts of a
majority of the members of the Committee present at a meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee,
shall be the acts of the Committee.
2.3 Interpretation. The Committee shall have full power and authority to
interpret the provisions of the Plan and any agreement evidencing options
granted under the Plan, and to determine any and all questions arising under the
Plan, and its decisions shall be final and binding on all participants in the
Plan.
3. Shares Subject to Grants.
3.1 Number of Shares. Subject to the provisions of Paragraph 17 (relating
to adjustments upon changes in capitalization), the number of shares of Common
Stock subject at any one time to options granted under the Plan, plus the number
of shares of Common Stock theretofore issued or delivered pursuant to the
exercise of options granted under the Plan, shall not exceed 45,000,000 shares.
If and to the extent that options granted under the Plan terminate, expire or
are cancelled without having been exercised, new options may be granted under
the Plan with respect to the shares of Common Stock covered by such terminated,
expired or cancelled options; provided, that the granting and terms of such new
options shall in all respects comply with the provisions of the Plan.
3.2 Character of Shares. Shares of Common Stock delivered under the Plan
may be authorized and unissued Common Stock, issued Common Stock held in the
Company's treasury, or both.
1
<PAGE>
3.3 Reservation of Shares. There shall be reserved at all times for sale
or award under the Plan a number of shares of Common Stock (authorized and
unissued Common Stock, issued Common Stock held in the Company's treasury, or
both) equal to the maximum number of shares set forth in Paragraph 3.1.
4. Employees Eligible. Options may be granted under the Plan to any key
employee of the Company or any of its subsidiaries, or to any prospective key
employee of the Company or any of its subsidiaries, conditioned upon, and
effective not earlier than, such person's becoming an employee. Directors and
executive officers shall be eligible to receive grants under the Plan only if
they are also key employees of the Company or any of its subsidiaries.
Notwithstanding the foregoing:
(a) No member of the Committee, while serving as such, shall be
eligible to receive any grants under the Plan and no person designated by
the Board of Directors pursuant to Paragraph 2.1 to serve on the Committee
effective at the time he or she qualifies as a disinterested person shall
be eligible to receive any grants under the Plan during the period from
the date such designation is made to the date such designation becomes
effective.
(b) No incentive stock options may be granted under the Plan to any
person who owns, directly or indirectly (within the meaning of Sections
422(b)(6) and 424(d) of the Code), at the time the incentive stock option
is granted, stock possessing more than 10% of the total combined voting
power of all classes of stock of the employee's employer corporation or of
its parent, if any, or any of its subsidiaries, unless the option price is
at least 110% of the fair market value of the shares subject to the
option, determined on the date of the grant, and the option by its terms
is not exercisable after the expiration of five years from the date such
option is granted.
(c) In each calendar year during any part of which the Plan is in
effect, no Participant (as defined below) may be granted options relating
in the aggregate to more than 1,000,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 17.
An individual receiving any option under the Plan is hereinafter referred to
as a "Participant". Any reference herein to the employment of a Participant by
the Company shall include (i) his or her employment by the Company or any of its
subsidiaries, and (ii) with respect to a Participant who was not an employee of
the Company or any of its subsidiaries at the time of grant of his or her
option, his or her period of service in the capacity for which the option was
granted. For all purposes of this Plan, the time at which an option is granted,
in the case of the grant of an option to a key employee shall be deemed to be
the effective date of such grant.
5. Grant of Options. The Committee shall determine, within the limitations of
the Plan, the persons to whom options are to be granted, the number of shares
that may be purchased under each option, the option price, and shall designate
options at the time of grant as either "incentive stock options" or
"nonqualified stock options"; provided, that the aggregate fair market value
(determined as of the time the option is granted) of the Common Stock with
respect to which incentive stock options become exercisable for the first time
by any Participant (as defined in Paragraph 4) in any calendar year (under all
stock option plans of the employee's employer corporation and its parent, if
any, and its subsidiaries) shall not exceed $100,000 (the provisions of Section
422(d) of the Code are intended to govern). In determining the persons to whom
options shall be granted and the number of shares to be covered by each option,
the Committee shall take into consideration the person's present and potential
contribution to the success of the Company and its subsidiaries and such other
factors as the Committee may deem proper and relevant. Each option granted under
the Plan shall be evidenced by a written agreement between the Company and the
Participant containing such terms and conditions and in such form, not
inconsistent with the provisions of the Plan or, with respect to incentive stock
options, Section 422 of the Code, as the Committee shall provide.
6. Option Price. Subject to Paragraph 17, the option price of each share of
Common Stock purchasable under any incentive stock option or non-qualified stock
option granted under the Plan shall not be less than the fair market value of
such share of Common Stock at the time the option is granted. The option price
of an option issued in a transaction described in Section 424(a) of the Code
shall be an amount which conforms to the requirements of that Section and the
regulations thereunder.
2
<PAGE>
For purposes of this Plan, the "fair market value" of the Common Stock on any
date means (i) if the Common Stock is listed on a national securities exchange
or quotation system, the closing sales price on such exchange or quotation
system on such date or, in the absence of reported sales on such date, the
closing sales price on the immediately preceding date on which sales were
reported, or (ii) if the Common Stock is not listed on a national securities
exchange or quotation system the fair value as determined by such other method
as the Committee determines in good faith to be reasonable.
7. Stock Appreciation Right. The Committee, in its sole discretion, may in
connection with the grant of any option also grant to the Participant a stock
appreciation right. Such stock appreciation right shall be granted by the
Committee simultaneously with the grant of the related stock option. A stock
appreciation right shall be exercised in the manner provided in Paragraph 9, and
shall result in the cancellation of options on shares with respect to which the
Participant exercises a stock appreciation right, and, upon such exercise, the
Company shall pay to the Participant an amount equal to the excess of the fair
market value of such shares with respect to which options are cancelled on the
date of exercise over the option price of such shares. A stock appreciation
right shall be exercisable to the same extent and under the same conditions as
the underlying option, except that a stock appreciation right granted in
connection with an incentive stock option may be exercised only when the fair
market value of the shares subject to the option exceeds the option price of
such shares. Payments on the exercise of stock appreciation rights shall be made
by the Company in cash to the Participant as soon as practicable following
exercise.
8. Exercisability and Duration of Options.
8.1 Determination of Committee; Acceleration. Each option granted under
the Plan shall be exercisable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
agreement evidencing the option. Subsequent to the grant of an option which is
not immediately exercisable in full, the Committee, at any time before complete
termination of such option, may accelerate the time or times at which such
option may be exercised in whole or in part.
8.2 Automatic Termination. The unexercised portion of any option granted
under the Plan shall automatically and without notice terminate and become null
and void at the time of the earliest to occur of the following:
(a) The expiration of ten years from the date on which such option was
granted;
(b) The expiration of 30 days from the date of termination of the
Participant's employment by the Company unless a longer period is provided
by the Committee (other than a termination described in subparagraph (c)
below or in the event of termination as a result of death, in which case
expiration will be at the end of the term set forth in the option
agreement or such other time specified therein);
(c) The termination of the Participant's employment by the Company if
such termination constitutes or is attributable to a breach by the
Participant of an employment or consulting agreement with the Company or
any of its subsidiaries, or if the Participant is discharged or his or her
services are terminated for cause; or
(d) The expiration of such period of time or the occurrence of such
event as the Committee in its discretion may provide upon the granting
thereof.
The Committee or the Board of Directors shall have the right to determine
what constitutes cause for discharge or termination of services, whether the
Participant has been discharged or his or her services terminated for cause and
the date of such discharge or termination of services, and such determination of
the Committee or the Board of Directors shall be final and conclusive.
3
<PAGE>
9. Exercise of Options, Stock Appreciation Rights. Options and stock
appreciation rights granted under the Plan shall be exercised by the Participant
(or by his or her executors or administrators, as provided in Paragraph 10) as
to all or part of the shares covered thereby, by the giving of written notice of
exercise to the Company, specifying the number of shares to be purchased or the
number of shares with respect to which stock appreciation rights are being
exercised, accompanied, in the case of an option, by payment of the full
purchase price for the shares being purchased. Payment of such purchase price
shall be made (a) by check payable to the Company, (b) with the consent of the
Committee, by delivery of shares of Common Stock already owned by the
Participant for at least six months (which may include shares received as the
result of a prior exercise of an option) having a fair market value (determined
as of the date such option is exercised) equal to all or part of the aggregate
purchase price, (c) in accordance with a "cashless exercise" program established
by the Committee in its sole discretion under which if so instructed by the
Participant, shares may be issued directly to the Participant's broker or dealer
upon receipt of the purchase price in cash from the broker or dealer, (d) by any
combination of (a), (b), or (c) above, or (e) by other means that the Committee
deems appropriate. Such notice of exercise, accompanied by such payment, shall
be delivered to the Company at its principal business office or such other
office as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. The date of exercise shall be
the date of the Company's receipt of such notice. The Company shall effect the
transfer of the shares so purchased to the Participant (or such other person
exercising the option pursuant to Paragraph 10 hereof) as soon as practicable.
No Participant or other person exercising an option shall have any of the rights
of a stockholder of the Company with respect to shares subject to an option
granted under the Plan until due exercise and full payment has been made as
provided above. No adjustment shall be made for cash dividends or other rights
for which the record date is prior to the date of such due exercise and full
payment. In no event may any option granted hereunder be exercised for a
fraction of a share.
10. Non-Transferability of Options. Except as provided herein, no option
granted under the Plan or any right evidenced thereby shall be transferable by
the Participant other than by will or by the laws of descent and distribution,
and an option may be exercised, during the lifetime of a Participant, only by
such Participant. Notwithstanding the preceding sentence: (a) in the event of a
Participant's death during his or her employment by the Company, its parent, if
any, or any of its subsidiaries, or during the 30 day period following the date
of termination of such employment, his or her options shall thereafter be
exercisable, during the period set forth in the option agreement, or, if no
period is specifically set forth, during the remaining term of the option, by
his or her executors or administrators; and (b) the Participant, with the
approval of the Committee, may transfer his or her options (other than incentive
stock options) for no consideration to or for the benefit of the Participant's
spouse, parents, children (including stepchildren or adoptive children),
grandchildren, or siblings, or to a trust for the benefit of any of such
persons.
11. Reload Options. At the time an option (the "original option") is granted,
the Committee may also authorize the grant of a "reload option", which shall be
subject to the following terms:
(a) The number of shares of Common Stock subject to the reload option
shall be the number of shares, if any, used by the Participant to pay the
purchase price upon exercise of the original option, plus the number of
shares, if any, delivered by the Participant to satisfy the tax
withholding requirement relating to such exercise.
(b) The reload option shall be a nonqualified stock option.
(c) The grant of the reload option shall be effective upon the date of
exercise of the original option, and the term of the reload option shall
be the period, if any, remaining from that date to the date upon which the
original option would have expired.
(d) The grant of the reload option shall not be effective if, on the
date of exercise of the original option, the Participant is not employed
by the Company.
(e) Except as specified in (a) through (d) above, the terms of the
reload option shall be as prescribed in the preceding Paragraphs of this
Plan.
4
<PAGE>
12. Withholding Tax. Whenever under the Plan shares of stock are to be
delivered upon exercise of a nonqualified stock option, the Company shall be
entitled to require as a condition of delivery that the Participant remit or, in
appropriate cases, agree to remit when due an amount sufficient to satisfy all
federal, state and local withholding tax requirements relating thereto. At the
option of the Company, such amount may be remitted by check payable to the
Company, in shares of Common Stock (which may include shares received as the
result of a prior exercise of an option), by the Company's withholding of shares
of Common Stock issuable upon the exercise of any option or stock appreciation
right pursuant to the Plan, or any combination thereof. Whenever an amount shall
become payable to a Participant in connection with the exercise of a stock
appreciation right, the Company shall be entitled to withhold therefrom an
amount sufficient to satisfy all federal, state and local withholding tax
requirements relating to such amount.
13. Restrictions on Delivery and Sale of Shares. Each option granted under
the Plan is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such option upon any securities exchange or under any
state or federal law is necessary or desirable as a condition of or in
connection with the granting of such option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to exercise of the
option may be withheld unless and until such listing, registration or
qualification shall have been effected. The Committee may require, as a
condition of exercise of any option that the Participant represent, in writing,
that the shares received are being acquired for investment and not with a view
to distribution and agree that the shares will not be disposed of except
pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel satisfactory to the Company that such disposition
is exempt from such requirement under the Securities Act of 1933. The Committee
may require that the sale or other disposition of any shares acquired upon
exercise of an option hereunder shall be subject to a right of first refusal in
favor of the Company, which right shall permit the Company to repurchase such
shares from the Participant or his or her representative prior to their sale or
other disposition at their then current fair market value in accordance with
such terms and conditions as shall be specified in the agreement evidencing the
grant of the option. The Company may endorse on certificates representing shares
issued upon the exercise of an option such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
14. Change in Control.
(a) In the event of a Change in Control of the Company, as defined
below, the Committee may, in its sole discretion, provide that any of the
following applicable actions be taken as a result, or in anticipation, of
any such event to assure fair and equitable treatment of Participants:
(i) accelerate the exercisability of any outstanding options awarded
pursuant to this Plan;
(ii) offer to purchase any outstanding options made pursuant to this
Plan from the holder for its equivalent cash value, as determined by
the Committee, as of the date of the Change in Control; or
(iii) make adjustments or modifications to outstanding options as
the Committee deems appropriate to maintain and protect the rights and
interests of the Participants following such Change in Control.
Any such action approved by the Committee shall be conclusive and binding on
the Company, its subsidiaries and all Participants.
(b) In no event, however, may (i) any option be exercised prior to the
expiration of six (6) months from the date of grant (unless otherwise
provided in the agreement evidencing the option), or (ii) any option be
exercised after ten (10) years from the date it was granted.
(c) To the extent not otherwise defined in this Plan, the following
terms used in this Paragraph 14 shall have the following meanings:
"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
Committee designates as an "Affiliate" for purposes of the Plan.
5
<PAGE>
"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.
"Bear Stearns" means Bear, Stearns & Co. Inc., a Delaware corporation, and
its successors and assigns.
"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.
"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
25% 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.
"Continuing Director" means any member of the Board of Directors who is a
member on the effective date of the Plan as set forth in Paragraph 19 or who is
elected to the Board of Directors after such date upon the recommendation or
with the approval of a majority of the Continuing Directors at the time of such
recommendation or approval.
"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.
15. Right to Terminate Employment. Nothing in the Plan or in any option
granted under the Plan shall confer upon any Participant the right to continue
as an employee of the Company or affect the right of the Company or any of its
subsidiaries, to terminate the Participant's employment at any time, subject,
however, to the provisions of any agreement of employment between the
Participant and the Company, its parent, if any, or any of its subsidiaries.
16. Transfer, Leave of Absence. For purposes of this Plan, neither (i) a
transfer of an employee from the Company to a subsidiary or other affiliate of
the Company, or vice versa, or from one subsidiary or affiliate of the Company
to another, nor (ii) a duly authorized leave of absence, shall be deemed a
termination of employment.
17. Adjustment upon Changes in Capitalization, etc. In the event of any stock
split, stock dividend, reclassification or recapitalization which changes the
character or amount of the Company's outstanding Common Stock while any portion
of any option theretofore granted under the Plan is outstanding but unexercised,
the Committee shall make such adjustments in the character and number of shares
subject to such options and in the option price, as shall be equitable and
appropriate in order to make the option, as nearly as may be practicable,
equivalent to such option immediately prior to such change; provided, however,
that no such adjustment shall give any Participant any additional benefits under
his or her option; and provided further, that, with respect to any outstanding
incentive stock option, if any such adjustment is made by reason of a
transaction described in Section 424(a) of the Code, it shall be made so as to
conform to the requirements of that Section and the regulations thereunder.
If any transaction (other than a change specified in the preceding paragraph)
described in Section 424(a) of the Code affects the Company's Common Stock
subject to any unexercised option theretofore granted under the Plan
(hereinafter for purposes of this Paragraph 17 referred to as the "old option"),
the Board of Directors or any surviving or acquiring corporation may take such
action as it deems appropriate, and in conformity with the requirements of that
Section and the regulations thereunder, to substitute a new option for the old
option, in order to make the new option, as nearly as may be practicable,
equivalent to the old option, or to assume the old option.
If any such change or transaction shall occur, the number and kind of shares
for which options may thereafter be granted under the Plan shall be adjusted to
give effect thereto.
6
<PAGE>
18. Expiration and Termination of the Plan.
18.1 General. Options may be granted under the Plan at any time and from
time to time on or prior to the tenth anniversary of the effective date of the
Plan as set forth in Paragraph 19 (the "Expiration Date"), on which date the
Plan will expire except as to options then outstanding under the Plan. Such
outstanding options shall remain in effect until they have been exercised,
terminated or have expired. The Plan may be terminated, modified or amended by
the Board of Directors at any time on or prior to the Expiration Date, except
with respect to any options then outstanding under the Plan; provided, however,
that the approval of the Company's stockholders will be required for any
amendment which (i) changes the class of employees eligible for grants, as
specified in Paragraph 4, (ii) increases the maximum number of shares subject to
grants, as specified in Paragraph 3 (unless made pursuant to the provisions of
Paragraph 17) or (iii) materially increases the benefits accruing to
participants under the Plan, within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
18.2 Modifications. No modification, extension, renewal or other change in
any option granted under the Plan shall be made after grant, unless the same is
consistent with the provisions of the Plan and does not disqualify an incentive
stock option under the provisions of Section 422 of the Code. In addition, the
option price of an option may not be changed after grant, other than in the case
of an adjustment described in Paragraph 14 or pursuant to Paragraph 17.
19. Effective Date of Plan. The Plan became effective on September 28, 1999.
7