Exhibit 10(a)(2)

                         THE BEAR STEARNS COMPANIES INC.
                          CAPITAL ACCUMULATION PLAN FOR
                            SENIOR MANAGING DIRECTORS
                     (Amended and Restated November 29, 2000
                for Plan Years beginning on or after July 1,1999,
                    and Further Amended as of March 31, 2004)

                                    SECTION 1

                          Purpose and Restatement Date

            The purpose of the Plan is to promote the interests of the Company
and its stockholders by providing long-term incentives for the benefit of
certain key executives of the Company and Bear Stearns who contribute
significantly to the long-term performance and growth of the Company. This
restatement of the Plan is adopted November 29, 2000, and provides for two
versions of the Plan. This version of the Plan applies with respect to Plan
Years (as defined below) beginning on or after July 1, 1999; deferrals made with
respect to Plan Years beginning prior to that date remain subject to the terms
of the Plan as in effect on June 30, 1999. This version of the Plan for Plan
Years beginning on or after July 1, 1999 and the version of the Plan for Plan
Years beginning prior to that date shall constitute a single Plan. All deferrals
made with respect to Plan Years beginning on or after July 1, 1999 are cancelled
by action of the Board Committee as hereinafter defined in adopting this version
of the Plan, and the terms of the Plan, as set forth in this restatement and as
may subsequently be amended from time to time, shall apply with respect to such
Plan Year.


                                    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.

            "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



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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 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.

            "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.



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            "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 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 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.

            "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 Fiscal Year and (b) in respect of Available Shares purchased
by the Company prior to such Fiscal Year 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.

            "Award" shall mean an award of CAP Units granted by the Board
Committee, in its sole discretion.

            "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 the product of (a) the sum of (i)
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 (ii)
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 (iii) 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
corresponding Fiscal Year, less (iv) 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 (b) 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.



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            "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) there is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other than a merger or
consolidation with respect to which the requirements of clauses (i) and (ii)
below are satisfied: (i) the voting securities of the Company outstanding
immediately prior to such merger or consolidation continue to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) more than 50% of the combined voting
power of the securities of the Company or such surviving entity or any parent
thereof (as the case may be) outstanding immediately after such merger or
consolidation; and (ii) individuals who constitute the Board of Directors
immediately prior to the execution of the definitive agreement pertaining to
such merger or consolidation continue immediately following such merger or
consolidation to represent at least a majority of the membership of the board of
directors of the Company or such surviving entity or any parent thereof as the
case may be; 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 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



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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 an Award
was granted or such greater or lesser number of whole Fiscal Years as the
Appropriate Committee may approve pursuant to Section 4.2 or 4.3.

            "Deferral Year" means any Fiscal Year during a Deferral Period.

            "Deferred Tax Benefit" means, for each Plan Year, with respect to a
Participant, the sum of (a) the amounts obtained by multiplying the value of
such Participant's Award as of the end of the Plan Year for which such Award was
granted 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 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 (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), (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 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 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



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were so credited (each such weighted average amount to be determined in the
manner described in the preceding clause (i)(B)), and by multiplying the product
so obtained by (z) the Average Federal Funds Rate for such Fiscal Year;

            "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" of this Amended and Restated Plan means July 1,
1999.

            "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.

            "Eligible Employee" means any individual who is employed by Bear
Stearns as a Senior Managing Director and is an Accredited Investor.

            "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



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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, 1999 and ending on November 30, 2000, and thereafter beginning December
1 and ending on the succeeding November 30 (or, as the context, requires, any
Fiscal Year of the Company commencing prior to July 1, 1999). If after November
30, 2000, the Company shall change its Fiscal Year so as to end on a date other
than November 30 ("Year End Date") then, if such new Year End Date falls after
November 30 and on or prior to April 30, 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 December 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 May 1 and prior to November 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



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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.

            "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.

            "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).



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            "Participant" means any Eligible Employee (including a Performance
Plan Participant) on whose behalf an Award is made hereunder for a Plan Year.

            "Performance Plan Participant" means an Eligible Employee who, for
the Plan Year ending November 30, 2000, is a participant in the Company's
Performance Compensation Plan.

            "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 (including the version
applicable to Plan Years commencing prior to July 1, 1999) and as amended and
restated from time to time.

            "Plan Year" means the period beginning July 1, 1999 and ending
November 30, 2000, and each Fiscal Year thereafter.

            "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.



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            "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.

            "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 the Plan Year beginning on
July 1, 1999 and ending November 30, 2000, the following percentages of that
portion of a Performance Plan Participant's current compensation for such Plan
Year (prior to giving effect to any Award hereunder, which exceeds $283,333:

            25% of the first                      $  425,000
            30% of the next                       $  708,333
            40% of the next                       $1,416,667
            50% of compensation exceeding         $2,833,333


            Notwithstanding the foregoing, the Required Deferral Amount for any
Performance Plan Participant who will attain age 55 prior to November 30, 2000
and who elects to be governed by this sentence in the manner specified by the
Appropriate Committee shall be 25% of such compensation of such Performance Plan
Participant for the Plan Year ended November 30, 2000.

            "Retirement" means termination of a Participant's employment with
the Company and its Affiliates, provided that the sum of the Participant's
attained age (in whole years) plus completed years of service to the Company and
its Affiliates equals 45 or more with at least 5 years of service.

            "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 4.3.

            "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.



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<PAGE>


             "Trustee" means the Trustee of any pension plan of which a
participant is a member.

            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 Eligible Employees shall be eligible to receive Awards
hereunder, at the discretion of the Board Committee. Subject to the provisions
of the Plan, the Board Committee shall have the complete discretion to determine
the number of CAP Units to which an Award relates.

            3.2 Notwithstanding Section 3.1, no individual shall 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.


                                    SECTION 4

                                     Awards

            4.1 General. With respect to the Plan Year commencing on July 1,
1999 and ending on November 30, 2000, (a) an Eligible Employee who is a
Performance Plan Participant shall receive an Award consisting of that number of
CAP Units equal to the quotient obtained by dividing (i) the Performance Plan
Participant's Required Deferral Amount less the value of the stock options
granted in or for such Plan Year to the Performance Plan Participant (such value
to be determined by the Board Committee) by (ii) the Average Cost Per Share; and
(b) each other eligible Employee shall be eligible to be granted an Award in the
discretion of the Board Committee. In determining the amount of the Award, the
Board committee may use several factors including but not limited to both future
and past services provided by the participant. With respect to each Plan Year
beginning on or after December 1, 2000, each Eligible Employee shall be eligible
to be granted an Award in the discretion of the Board Committee.

            4.2 Terms and Conditions. (a) Each Award shall be evidenced by an
agreement which shall set forth the terms and conditions of the Award, including
without limitation, the date or dates upon which and/or the other conditions
upon satisfaction of which such Award shall vest and the circumstances under
which such Award shall be cancelled in whole or part,



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             (b) Any credit made to the Participant's Cash Balance Account or
            Capital Accumulation Account pursuant to Section 5 hereof in respect
            of a previously granted Award shall, unless otherwise provided in
            the agreement evidencing the Award, be subject to the same terms and
            conditions (including, but not limited to, conditions for vesting
            and cancellation) as the underlying Award.

            4.3 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, an election (a "Special Plan Election")
in form provided by the Company, electing to extend the Deferral Period
previously established with respect to any Award 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. The Earnings Adjustment with respect to each Plan Year in any such
additional Deferral Period shall include a charge equal to the Cost of Carry for
such Participant with respect to such Plan Year.


                                    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"), that
number of CAP Units equal to the quotient obtained by dividing (i) An amount
determined by the Board Committee with respect to such Participant, by (ii) for
the Plan Year ended November 30, 2000, the Average Cost Per Share and, for all
subsequent Fiscal Years, the fair market value on the date of the grant action
by the Board Committee granting the Award. Notwithstanding the foregoing, if
with respect to the Plan Year ended November 30, 2000 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 number of CAP
Units Awarded to 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 the Plan Year ended
November 30, 2000 is limited by the second sentence of Section 5.1, then the
Company shall also credit to each Participant an amount equal to (a) the Award
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



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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 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



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<PAGE>



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 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) Solely with respect to the Plan ended November 30,2000, 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

            (e) 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 subparagraph (d),
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 subparagraph (d) 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 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.



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            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 become vested in the CAP
Units credited to his Capital Accumulation Account and in the Cash Balance
credited to his Cash Balance Account in accordance with the vesting schedule and
other conditions prescribed by the Appropriate Committee and reflected in the
agreement evidencing the Award. If a Participant's employment with the Company
and its Affiliates terminates prior to the time an Award has become fully
vested, then unless otherwise provided in the Agreement evidencing the Award,
(i) the CAP Units and Cash Balances (if any) credited to the Participant's
Accounts and attributable to such Award shall, to the extent not then vested, be
cancelled, (ii) such Cash Balances shall be restored to the Company. The
establishment and maintenance of, or credits to, such Capital Accumulation
Account and Cash Balance Account shall not vest in any Participant Trustee or
his Beneficiary any right, title or interest in or to any specific asset of the
Company.

            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



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<PAGE>



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.

            5.11 Certification of the Board Committee. As a condition to the
right of any Participant, Beneficiary or Trustee 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,
Beneficiary or Trustee 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



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Participant, Beneficiary or Trustee 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, there shall be paid, in respect of the Award for the related Plan Year, a
number of shares of Common Stock equal to the number of CAP Units credited to
the Capital Accumulation Account in respect of such Plan Year and an amount in
cash equal to the Cash Balance, if any, in respect of such Plan Year, each
determined as of such Termination Date, to the extent that such CAP Units and
Cash Balance have not been cancelled pursuant to the agreement evidencing the
Award.

            6.2 Accelerated Distributions. Notwithstanding the provisions of
Section 6.1 and in lieu of any distribution on a Termination Date, a
distribution may be paid 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) or at the discretion of the Company the Trustee 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 CAP Units credited to the 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 the 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) or the Trustee 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 (b) and (c) 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 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



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<PAGE>



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
     (with or without accelerating the vesting of the Participant's Total CAP
     Units and Cash Balance) 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 or without accelerating vesting) with respect to any
     such Plan Year of such Participant. If the Appropriate Committee takes such
     action, the distribution from the Plan in respect of the Participant for
     any Plan Year the Termination Date of which is so accelerated shall be
     based on all or a portion of the Total CAP Units and 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



                                      116
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     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 otherwise determined
     hereunder) 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
     (d) 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; provided,
however, that each of the applicable vesting periods shall be extended by the
number of months that such Participant was on 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 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 (and may
accelerate the vesting of such Participant's



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Total CAP Units and Cash Account) 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.

            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, the Board Committee in its sole discretion may provide that
(a) payment shall be made in respect of each Participant of that number of
shares of Common Stock which is equal to all or any portion of 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 all or a portion of the Cash Balance,
if any, as of such date, and/or (b) the Total CAP Units and Cash Account in
respect of each Participant shall be fully vested by reason of such Change in
Control; 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 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, 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 by which such Participant's Cash
Balance Account or Capital Accumulation Account was so reduced. Notwithstanding
the foregoing, no Participant shall be entitled to require that any payment from
the Company is made 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 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



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date. Shares of Common Stock distributed hereunder shall 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, 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.

            6.7 Registration and Listing of Common Stock. Prior to the date on
which any shares of Common Stock are required to be issued 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 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



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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 accepting an Award hereunder, each Participant or Trustee 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 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 or the Trustee 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, or the crediting of Cash Balances or CAP
Units to the Accounts of Participants, shall create or be construed to create a
trust of any kind between the Company and any Participant, Beneficiary or
Trustee, or to create any right, title or interest on the part of any
Participant or Beneficiary in or to any asset of the Company. To the extent that
any Participant, Beneficiary or Trustee 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



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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, 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 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 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



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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
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 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, spin-off, split up, dividend in kind or other change in the
corporate structure or distribution to the 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, Beneficiaries or Trustees of any or all shares of Common Stock
representing vested CAP Units previously credited to Capital Accumulation
Accounts with respect to any Plan Year and distributed on or



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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) the Company shall credit the Capital
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 (ii) as soon as
practicable following the end of the Fiscal Year in which such termination
occurs, the Company shall deliver to each Participant, Beneficiary or Trustee
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, Beneficiary or Trustee 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



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<PAGE>


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 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;

            Upon termination of the Plan in its entirety or with respect to one
or more Plan Years, the Board Committee, in its sole and absolute discretion,
may accelerate the vesting of all or any portion of the Total CAP Units credited
to a Participant's Capital Accumulation Account, or the Cash Balance credited to
a Participant's Cash Account, which would not then be vested.


                                   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



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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 or Trustee.

            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 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, his Beneficiary or Trustee 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, Trustee or any other person or persons deemed to be the natural



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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, Beneficiary or Trustee 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, such Beneficiary, in the case of payment to a
Beneficiary or to a Trustee in the case of payment to a Trustee, 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 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, Beneficiary or Trustee 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, Trustee
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



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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. This amendment and restatement of the Plan
shall be effective as of July 1, 1999, and shall apply to Awards granted for
Plan Years beginning on or after that date. CAP Units credited and attributable
to deferrals of compensation made for prior Plan Years shall be subject to the
terms of this Plan as in effect on June 30, 1999.

            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 Award 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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