-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JdCNbrWSiYp+JrM4XLE9z/8pE86rHebUbITFOSg42fZKICbMH5jJlOFqbocA+MMm eS1wJqJyWEkhn0JzViAZmQ== 0000914121-07-001086.txt : 20070424 0000914121-07-001086.hdr.sgml : 20070424 20070424164705 ACCESSION NUMBER: 0000914121-07-001086 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070418 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070424 DATE AS OF CHANGE: 20070424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEAR STEARNS COMPANIES INC CENTRAL INDEX KEY: 0000777001 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133286161 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08989 FILM NUMBER: 07784956 BUSINESS ADDRESS: STREET 1: ONE METROTECH NORTH STREET 2: 9TH FL CITY: BROOKLYN STATE: NY ZIP: 11201 BUSINESS PHONE: 3476439862 MAIL ADDRESS: STREET 1: ONE METROTECH NORTH STREET 2: 9TH FL. CITY: BROOKLYN STATE: NY ZIP: 11201 8-K 1 be8332303-8k.txt CURRENT REPORT ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 18, 2007 ----------------- THE BEAR STEARNS COMPANIES INC. ------------------------------- (Exact Name of Registrant as Specified in its Charter) ----------------- DELAWARE File No. 1-8989 13-3286161 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification Number) 383 Madison Avenue, New York, New York 10179 -------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (212) 272-2000 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02(e). Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (i) At the Annual Meeting of Stockholders held on April 18, 2007, the stockholders of The Bear Stearns Companies, Inc. (the "Company") approved amendments (the "Amendments") to certain of the Company's equity compensation plans, which Amendments had previously been approved by the Company's Board of Directors. The Amendments are summarized below. The Company's Stock Award Plan was amended to increase the number of authorized shares of Common Stock available for the grant of options under the Stock Award Plan from 40,000,000 shares to 45,000,000 shares (subject to adjustment as provided in the Plan). The Company's Restricted Stock Unit Plan (the "RSU Plan") was amended to: (i) increase the number of authorized shares of Common Stock available for issuance or delivery in connection with awards of Restricted Stock Units ("RSUs") under the RSU Plan from 15,000,000 to 25,000,000 (subject to adjustment as provided in the Plan) and (ii) provide that participants in the RSU Plan will have the right to give voting and tender instructions with respect to any shares of the Company's common stock that may be deposited by the Company in trust to satisfy obligations under the RSU Plan and that such shares may be delivered to participants in settlement of RSUs. The Company's Capital Accumulation Plan for Senior Managing Directors (the "CAP Plan") Plan was amended to: (i) modify the definition of "Income Per Share" to address the effect of transactions by unconsolidated subsidiaries on the Company's pre-tax income, and (ii) provide participants with the right to give voting and tender instructions with respect to any shares of the Company's common stock, including prior to vesting, that that may be deposited by the Company in trust to satisfy obligations under the CAP Plan. Copies of the Amendments are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. Additional information about the Amendments can also be found in the Company's definitive proxy statement on Schedule 14A for the Annual Meeting of Stockholders, as filed with the Securities and Exchange Commission on March 27, 2007 (the "Proxy Statement"). (ii) At the Annual Meeting of Stockholders held on April 18, 2007, the Company's stockholders also approved the 2007 Performance Compensation Plan (the "Plan"). Beginning with fiscal year 2007, the Plan replaces the Company's Performance Compensation Plan that was originally adopted in 1996 and will remain in effect for a term of five years. The Compensation Committee will designate which of the Company's Senior Managing Directors, including executive officers, will participate in the Plan within 90 days after the beginning of each fiscal year. Under the terms of the Plan, each of the participants will receive a base salary of $250,000 per annum and receive an annual bonus which will be based on the individual participant's share of one or more performance-based bonus pools. The formula for calculating the annual bonus pools shall be based upon one or more of the following criteria: (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) firm revenue growth; (f) departmental revenue growth; (g) book value per share; (h) market price per share; (i) relative performance to peer group companies; (j) expense management; and (k) total return to stockholders. A copy of the Plan is attached hereto as Exhibit 10.4 and is incorporated herein by reference. Additional information about the Plan can also be found in the Proxy Statement. Item 9.01. Financial Statements and Exhibits (d) Exhibits Exhibit No. Description ----------- ----------- 10.1 Amendment to the Stock Award Plan. 10.2 Amendments to the Restricted Stock Unit Plan. 10.3 Amendments to the Capital Accumulation Plan for Senior Managing Directors. 10.4 2007 Performance Compensation Plan. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE BEAR STEARNS COMPANIES INC. By: /s/ Jeffrey M. Farber ----------------------------------- Name: Jeffrey M. Farber Title: Senior Vice President-Finance and Controller (Principal Accounting Officer) Dated: April 24, 2007 EXHIBIT INDEX Paper (P) or Exhibit No. Description Electronic (E) - ------------ --------------------------------------------- -------------- 10.1 Amendment to the Stock Award Plan. E 10.2 Amendments to the Restricted Stock Unit Plan. E 10.3 Amendments to the Capital Accumulation Plan E for Senior Managing Directors. 10.4 2007 Performance Compensation Plan. E EX-10.1 2 be8332303-ex10_1.txt AMENDMENT TO THE STOCK AWARD PLAN Exhibit 10.1 Amendment to the Stock Award Plan --------------------------------- The text of Section 3.1 of the Stock Award Plan shall be amended to read as follows: "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." EX-10.2 3 be8332303-ex10_2.txt AMENDMENTS TO THE RESTRICTED STOCK UNIT PLAN Exhibit 10.2 Amendments to the Restricted Stock Unit Plan -------------------------------------------- The text of Sections 3.1, 3.2 and 5.10 of the Restricted Stock Unit Plan shall be amended to read as follows: "3.1 Number of Shares. Subject to the adjustment provisions of Section 3.3, the number of shares of Common Stock that may be issued or delivered in connection with awards of Restricted Stock Units under the Plan shall not exceed 25,000,000 shares. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting and make adjustments if the number of shares actually delivered differs from the number of shares previously counted in connection with an Award. Shares subject to an Award that is cancelled, expired, forfeited, settled in cash or otherwise terminated without a delivery of shares to the participant will again be available for Awards, and shares withheld or surrendered in payment of the taxes relating to an award shall be deemed to constitute shares not delivered to the participant and shall be deemed again to be available for Awards under the Plan." "3.2 Character of Shares; Reservation of Shares. Shares of Common Stock delivered under the Plan shall be issued Common Stock held in the Company's treasury, shares held by any trust or other arrangement established pursuant to Section 5.10 hereof or a combination thereof. At all times, the Company shall have reserved for awards under the Plan or shall have contributed to, or cause to be purchased by, any such trust or other arrangement the number of shares of Common Stock to be issued under this Plan equal to the maximum number of shares set forth in Section 3.1, reduced by such number of shares that have been previously issued or delivered as a result of this Plan." "5.10 Trusts. The Committee may, in its discretion, establish one or more trusts or other arrangements and deposit therein amounts of cash, Common Stock, or other property to meet the obligations created under the Plan to deliver shares of Common Stock to participants; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan. In such case, the amounts of hypothetical income and appreciation and depreciation in value of such account shall be equal to the actual income on, and appreciation and depreciation of, the assets in such trust(s). Other provisions of the Plan notwithstanding, the timing of allocations and other events relating to assets in such account may be varied to reflect the timing of allocations and events relating to actual investments of the assets of such trust(s). To the extent that shares of Common Stock held by a trust or other arrangement established pursuant to this Section 5.10 are allocated to a participant's Restricted Stock Units, the participant shall have the right, subject to applicable law, to instruct the trustee of such trust or similar arrangement with respect to the exercise of voting rights on such allocated shares and as to whether (or not) to tender or exchange any such allocated shares in any tender or exchange offer in accordance with the instruments governing such trust or other arrangement as in effect from time to time." EX-10.3 4 be8332303-ex10_3.txt AMENDMENTS TO THE CAPITAL ACCUMULATION PLAN Exhibit 10.3 Amendments to the Capital Accumulation Plan for Senior Managing Directors ------------------------------------------------------------------------- The definition of "Income Per Share" to be included within Section 2.1 of the Capital Accumulation Plan for Senior Managing Directors ("CAP Plan") has been amended to read as follows: "Income Per Share" for any Fiscal Year means the remainder of (a) adjusted income or loss before income taxes of the Company and its subsidiaries, and less (b) the adjusted net income amount applicable to common shares divided by the sum of (c) the number of shares of Common Stock outstanding during such Fiscal Year which are included in the computation of Earnings Per Share as reported by the Company in its Annual Report during such Fiscal Year, (d) the number of CAP Units credited to the Capital Accumulation Accounts of all Participants included in the computation of Earnings Per Share as reported by the Company in its Annual Report, and (e) the aggregate number of Restricted Stock Units included in the computation of Earnings Per Share as reported by the Company in its Annual Report. For purposes of this Plan, adjusted income or loss before income taxes of the Company and its subsidiaries shall equal the sum of: (i) income or loss before income taxes as reported by the Company in its Annual Report; (ii) any charge or credit to income required in such Fiscal Year by reason of Earnings Adjustments pursuant to Section 5.2; (iii) the amounts of any pre-tax earnings or loss attributable to discontinued operations or extraordinary items; and (iv) pre-tax income or losses from unconsolidated subsidiaries unless such losses have been fully offset by related tax credits and deductions; less (v) the Adjusted Preferred Stock Dividend Requirement during such Fiscal Year; and may be decreased, but not increased, by (vi) an amount determined by the Board Committee in its sole discretion as appropriate to carry out the purposes of the Plan. For purposes of this Plan, adjusted net income applicable to common shares of the Company and its subsidiaries shall equal the sum of: (a) net income applicable to common shares as reported in the Company's Annual Report, (b) the effect of any charge or credit to income by reason of the Earnings Adjustment pursuant to Section 5.2, less (c) the amount recorded as tax credits and deductions related to any losses from unconsolidated subsidiaries which are excluded from the computation of adjusted income or loss before income taxes of the Company and its subsidiaries as provided above. The text for the definition of "Available Shares" to be included within Section 2.1 of the CAP Plan shall be amended to read as follows: "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, (b) shares of Common Stock purchased prior to such Fiscal Year 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, and (c) the number of shares of Common Stock purchased by any trust or other arrangement established pursuant to Section 7 hereof on the open market, in private placement transactions or otherwise during such period. The text of Section 4.3 of the CAP Plan shall be amended to read as follows: "4.3 Voting Rights. Awards, including outstanding Awards, may, at the discretion of the Appropriate Committee, provide a Participant with the right to instruct the voting of shares of Common Stock, including, without limitation, prior to vesting, held through any trust or other arrangement established pursuant to Section 7 hereof." The text of Section 6.6 of the CAP Plan shall be amended to read as follows: "6.6 Form of Payments. Except as otherwise provided herein, all distributions in respect of CAP Units to be made 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 shall be treasury shares, shares of authorized but unissued Common Stock, shares held by any trust or other arrangement established pursuant to Section 7 hereof 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, Beneficiary or Trustee 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) or Trustee 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. Where a payment is made under the Plan, the payment may be made at the discretion of the Company either to the Participant or by way of a contribution to any pension plan established by the Company of which the Participant is a member." The text of Section 6.8 of the CAP Plan shall be amended to read as follows: "6.8 Reservation of Shares. The Company, as soon as practicable after the Appropriate Committee grants Awards to Eligible Employees shall reserve, contribute to a trust or other arrangement established pursuant to Section 7 hereof, or direct any such trust or other arrangement to purchase 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, contributed or purchased hereunder, including shares reserved, contributed or purchased 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 in accordance with the terms of the Plan if the Plan were to be terminated at such time." -2- The title of Section 7 of the CAP Plan shall be renamed "Unfunded Status of the Plan" and the text shall be replaced in its entirety with the following: "7 Unfunded Status of the Plan. The Plan is intended to constitute an "unfunded" plan for long-term incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing herein contained shall give any Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Appropriate Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver shares of Common Stock to Participants; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan." The text of Section 8.3 of the CAP Plan shall be amended to read as follows: "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 and may sell or contribute any such shares to any trust or other arrangement established pursuant to Section 7 hereof. The trustee under any trust or under any other arrangement may also purchase shares of common stock on behalf of the trust or other arrangement in the open market or in private transactions. Shares of Common Stock shall be purchased for purposes of the Plan on a combined or joint basis without identifying shares so purchased as having been purchased for this 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; provided, however, that any shares purchased or held by the Company shall be the sole property of the Company and shares purchased by, sold to or contributed to any trust or other arrangement established pursuant to Section 7 hereof shall be the sole property of the trust or other arrangement and no Participant, Beneficiary or Trustee 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 this Plan. The acquisition of Common Stock as described above by the Company 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 acquired, subject to applicable law." -3- EX-10.4 5 be8332303-ex10_4.txt 2007 PERFORMANCE COMPENSATION PLAN Exhibit 10.4 THE BEAR STEARNS COMPANIES INC. 2007 PERFORMANCE COMPENSATION PLAN Section 1. Purpose. The purposes of The Bear Stearns Companies Inc. 2007 Performance Compensation Plan, (the "Plan") are (i) to compensate certain Senior Managing Directors of The Bear Stearns Companies Inc. (the "Company") and its affiliates on an individual basis for significant contributions to the Company and (ii) to stimulate the efforts of such persons by giving them a direct interest in the performance of the Company. It is intended that certain Bonuses (as defined in Section 5) payable under the Plan be considered performance-based compensation within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations, rulings and other administrative guidance promulgated thereunder, and the Plan shall be administered and interpreted accordingly. Section 2. Effective Date. The Plan was adopted by the Board of Directors of the Company (the "Board") as of March 23, 2007, subject to the approval of the stockholders at the Company's 2007 Annual Meeting of Stockholders and, if so approved, will be effective for fiscal years of the Company commencing after November 30, 2006. Section 3. Coverage. For purposes of the Plan, the term "Participant" shall include for each fiscal year of the Company each Senior Managing Director so designated by the Compensation Committee within 90 days following the first day of such fiscal year. Section 4. Base Salary. 4.1. Each Participant shall receive a salary of $250,000 per annum ("Base Salary"). The Base Salary of the Participants may be increased from time to time by the Compensation Committee of the Board (the "Compensation Committee") by amendment of the Plan pursuant to Section 9. 4.2. Notwithstanding the provisions of Section 4.1 above, in the event a Participant is not a Senior Managing Director for an entire fiscal year, his Base Salary for such fiscal year shall be computed by multiplying such Base Salary as computed under Section 4.1 by a fraction, the numerator of which is the number of days in such fiscal year during which such Participant was a Senior Managing Director and the denominator of which is the number of days in the fiscal year. Any Base Salary shall be in addition to any base salary payable with respect to periods during the fiscal year in which a Participant was not a Senior Managing Director. Section 5. Computation of Annual Bonus Amounts. 5.1. For each fiscal year of the Company, each Participant shall be entitled to receive an award of a bonus (the "Bonus"), payable from one or more annual bonus funds (the "Annual Bonus Pools") in an amount not to exceed the amount provided for in Section 5.3. A Bonus under the Plan shall be the sole bonus payable with respect to a fiscal year to each Participant ("Full Year Participant") who was a Senior Managing Director on the date that proportionate shares of the Annual Bonus Pools for such fiscal year were determined by the Compensation Committee and who remains a Senior Managing Director at all times thereafter during such fiscal year. For each fiscal year, each Participant who was not a Full Year Participant shall be entitled to such a Bonus, if any, for the portion of such fiscal year not covered by the Plan, determined in accordance with the procedures applicable to employees who are not Senior Managing Directors, in addition to the Bonus, if any, payable pursuant to the Plan. 5.2. For each fiscal year, the formula for calculating the Annual Bonus Pools shall be determined by the Compensation Committee in writing, by resolution of the Compensation Committee or other appropriate action, not later than 90 days after the commencement of such fiscal year and in a manner that is not inconsistent with Treasury Regulation Section 1.162-27(e)(2). Such formula shall be based upon one or more of the following criteria, individually or in combination, adjusted in such manner as the Compensation Committee shall determine: (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) firm revenue growth; (f) departmental revenue growth; (g) book value per share; (h) market price per share; (i) relative performance to peer group companies; (j) expense management; and (k) total return to stockholders. 5.3. The maximum amount that can be paid to any Participant can not exceed 2.5% of Consolidated Pre-tax Income for the related fiscal year. For Plan purposes, Consolidated Pre-tax Income for a fiscal year is defined as Consolidated Pre-tax Income as reported in the Company's Annual Report for a fiscal year plus any amounts charged to expense as a result of the Plan with respect to such fiscal year. 5.4 Notwithstanding anything herein to the contrary, the Compensation Committee shall have the right to reduce the Bonus of any Participant in its sole discretion at any time and for any reason prior to the certification of the Bonus otherwise payable to such Participant pursuant to Section 5.5 hereof provided, however, that any such reduction does not result in an increase in the Bonus payable to any other Participant. 5.5. As a condition to the right of a Participant to receive any Bonus under the Plan, the Compensation Committee shall first be required to certify in writing in a manner consistent with Treasury Regulation Section 1.162-27(e)(5), by resolution of the Compensation Committee or other appropriate action, that the Bonus has been accurately determined in accordance with the provisions of the Plan, including that the performance goals and any other material terms under the formula for each Bonus Pool were in fact satisfied. Section 6. Allocations. 6.1. Prior to the commencement of each fiscal year, or not later than 90 days after the commencement of each fiscal year and in a manner that is not inconsistent with Treasury Regulation Section 1.162-27(e)(2), the Compensation Committee shall determine in writing, by resolution of the Compensation Committee or other appropriate action, each Participant's proportionate share of any Annual Bonus Pool, as determined pursuant to Section 5.2, for such fiscal year provided, however, that in no event may the sum of the shares allocated to the Participants under any such Annual Bonus Pool exceed 100% of the Annual Bonus Pool. 6.2. Subject to Sections 5.3 and 5.4, any Participant who ceases to be a Senior Managing Director for any reason prior to the end of such fiscal year shall be entitled to a Bonus computed as follows: A Bonus first shall be computed as if such Participant had been a Senior Managing -2- Director for the full fiscal year, and such Bonus then shall be multiplied by a fraction the numerator of which shall be the number of days in the fiscal year through the date the Participant ceased to be a Senior Managing Director and the denominator of which shall be the number of days in the fiscal year; provided, however, that if the application of the preceding clause would cause the total Bonuses payable under the Plan with respect to an Annual Bonus Pool to exceed such Annual Bonus Pool, the Bonuses payable to each Participant with respect to such Annual Bonus Pool shall be reduced pro rata, so that the total of all Bonuses shall equal such Annual Bonus Pool. Subject to Section 5.4, if a Participant ceases to be a Senior Managing Director after the end of the fiscal year in respect of which such Bonus is payable, the amounts thereof nonetheless shall be payable to him or his estate, as the case may be. 6.3. Subject to Section 6.4, Bonuses for a fiscal year shall be payable as soon as practicable following the certification thereof by the Compensation Committee for such fiscal year, but in no event later than 75 days after the end of such fiscal year. Bonuses may be paid in cash and/or equity-based awards under the Company's Capital Accumulation Plan for Senior Managing Directors, the Company's Stock Award Plan or any other Company equity-based plan in effect from time to time. Any such equity-based award shall be subject to such terms and conditions as the Compensation Committee may determine in accordance with the plan under which award is granted. Solely with respect to Participants who are not executive officers of the Company, the Compensation Committee may, in its discretion, authorize, prior to the final determination of Bonuses for Participants for such fiscal year, payments on account of Bonuses payable hereunder to one or more Participants entitled to such Bonuses at any time during such fiscal year or after the end of such fiscal year to a Participant who ceases to be a Senior Managing Director for any reason prior to the end of such fiscal year. Within the limitations set forth in the preceding sentence, the Compensation Committee may authorize one or more such "on account" payments, but the aggregate amount of any such on account payments shall not exceed the aggregate amount permitted to be paid pursuant to the Plan with respect to the same fiscal year. In connection with any such "on account" payments, the Compensation Committee shall require an undertaking or other assurance by or on behalf of the Participant receiving such payment to repay the Company the amount, if any, by which such "on account" payment exceeds the actual amount determined to be due to such person under the Plan in respect of such fiscal year. Any "on account" payments received prior to the end of a fiscal year shall be discounted to reasonably reflect the time value of money from the date of payment to the date 60 days after the end of the fiscal year. 6.4. To the extent permitted under applicable law, the Compensation Committee may determine that payment of a portion of a Participant's Bonus shall be deferred or may permit Participants to make appropriate elections (in compliance with "Q&A" 19(c) of Notice 2005-1, as extended by the Preamble to the proposed treasury regulations promulgated under Section 409A of the Code and Notice 2006-79) to defer a portion of the Bonus. The periods of such deferrals and any interest, not to exceed a reasonable rate, to be paid in respect of deferred payments will be at the sole discretion of the Compensation Committee. The Compensation Committee may also define such other conditions of payments of Bonuses as it may deem desirable in carrying out the purposes of the Plan. 6.5. In any fiscal year, any balance in the Annual Bonus Pools for any reason, including the limitation contained in Section 5.3, the forfeiture of a Bonus under Section 6.2, the reduction of a Bonus under Section 5.4, or otherwise, shall not be distributed to other Participants and shall -3- not be carried forward or be available for distribution as Bonuses under the Plan in a future year or years. Section 7. Administration and Interpretation. The Plan shall be administered by the Compensation Committee, which shall have the sole authority to interpret and to make rules and regulations for the administration of the Plan. The Compensation Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Compensation Committee deems necessary or desirable to carry it into effect. Any decision of the Compensation Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. No member of the Compensation Committee and no officer of the Company shall be liable for anything done or omitted to be done by him or her, by any other member of the Compensation Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for his or her own willful misconduct or as expressly provided by statute. The Compensation Committee may request advice or assistance or employ such persons (including, without limitation, legal counsel and accountants) as it deems necessary for the proper administration of the Plan. Section 8. Administrative Expenses. Any expense incurred in the administration of the Plan shall be borne by the Company out of its general funds and not charged against the Annual Bonus Pools, except insofar as such expenses shall be taken into account in determining the components of the Annual Bonus Pools hereunder. Section 9. Amendment or Termination. The Compensation Committee may from time to time amend the Plan in any respect or terminate the Plan in whole or in part, provided that no such action shall retroactively impair or otherwise adversely affect the rights of any Participant to benefits under the Plan which have accrued prior to the date of such action. Section 10. No Assignment. The rights hereunder, including without limitation rights to receive a Base Salary or Bonus, shall not be sold, assigned, transferred, encumbered or hypothecated by an employee of the Company (except by testamentary disposition or intestate succession), and, during the lifetime of any recipient, any payment of Base Salary or a Bonus shall be payable only to such recipient. Section 11. The Company. For purposes of the Plan, the "Company" shall include the successors and assigns of the Company, and the Plan shall be binding on any corporation or other person with which the Company is merged or consolidated, or which acquires substantially all of the assets of the Company, or which otherwise succeeds to its business. Section 12. Withholding Tax. The Company shall be entitled to require Participants to remit an amount sufficient to satisfy all federal, state and local withholding tax requirements related to any Bonus Awards -4- made pursuant to the Plan. This includes any awards ultimately distributed under the Capital Accumulation Plan for Senior Managing Directors, the Stock Award Plan or any other deferral plan. Section 13. Stockholder Approval. The Plan is subject to the approval of the stockholders of the Company at the 2007 Annual Meeting of Stockholders in accordance with Section 162(m)(4)(C) of the Code and Treasury Regulation Section 1.162-27(e)(4). No Bonus shall be payable under the Plan absent such stockholder approval. Section 14. Plan Termination. The Plan will terminate on March 22, 2012. -5- -----END PRIVACY-ENHANCED MESSAGE-----