Document:

EXHIBIT 10.1

 TERMS AND CONDITIONS OF CAP UNIT AWARD GRANTED TO YOU (THE "PARTICIPANT")UNDER
  THE BEAR STEARNS COMPANIES INC. CAPITAL ACCUMULATION PLAN FOR SENIOR MANAGING
                                    DIRECTORS

            This document contains the Terms and Conditions applicable to an
award, with respect to Fiscal Year       , of CAP Units made to the Participant
by the Compensation Committee (the "Committee") of The Bear Stearns Companies
Inc., a Delaware corporation (the "Company"), under The Bear Stearns Companies
Inc. Capital Accumulation Plan for Senior Managing Directors (the "Plan").

                                    ARTICLE I

                               GRANT OF CAP UNITS
                               ------------------

Section 1.1 Grant of CAP Units.
            -------------------

            The Committee has granted to the Participant, with respect to Fiscal
Year       , the number of units (the "Base Units") set forth as the "Fiscal
Year        CAP Award" in a letter dated January { } from the Management &
Compensation Committee to the Participant (such Base Units, together with
related Earnings Units, Dividend Equivalents Units and/or Replacement Units as
described herein, are collectively referred to hereafter as the "CAP Units").
The number of CAP Units shall be subject to adjustment as provided in Section 8
of the Plan.

Section 1.2 Incorporation by Reference, Etc.
            --------------------------------

            The provisions of the Plan are hereby incorporated herein by
reference. These Terms and Conditions shall be construed in accordance with the
provisions of the Plan and except as otherwise expressly set forth herein, any
capitalized terms not otherwise defined in these Terms and Conditions shall have
the definitions set forth in the Plan. The Appropriate Committee shall have
final authority to interpret and construe the Plan and these Terms and
Conditions and to make any and all determinations thereunder, and its decision
shall be binding and conclusive upon the Participant and his or her legal
representative in respect of any questions arising under the Plan or these Terms
and Conditions. In the event of any inconsistency between these Terms and
Conditions and the terms of the Plan, the terms of the Plan shall govern.

                                   ARTICLE II

                          TERMS AND CONDITIONS OF AWARD
                          -----------------------------

Section 2.1 Deferral Period; Restrictions on Transferability During
            -------------------------------------------------------
            Deferral Period.
            ----------------

            (a) The Deferral Period with respect to the CAP Units shall end on
                 , unless extended by the Participant in accordance with
procedures adopted by the Appropriate Committee and except as otherwise provided
herein.

            (b) During the Deferral Period, the Participant shall not sell,
transfer, pledge, or otherwise encumber the CAP Units.

Section 2.2 Vesting of CAP Units.
            ---------------------

            (a) Base Units

            So long as the Participant is employed by the Company or any
subsidiary of the Company on the applicable vesting dates set forth below (each
such date, as well as the analogous date applicable to Earnings Units, as may be
extended pursuant to the last sentence of Section 2.2(a) (with respect to Base
Units) and the proviso in the third sentence of Section 2.2(b) (with respect to
Earnings Units) being referred to as the "Vesting Date"), the Base Units shall
become vested as follows:

      Percentage of Base Units            Vesting Date
      ------------------------            ------------

As provided in Sections 2.3 and 3.3 hereof, the Base Units may vest at an
earlier date or may continue to vest following Termination of Employment.
Notwithstanding the foregoing, if the Participant is suspended from employment
by the Company or a subsidiary of the Company or is on a personal leave of
absence (in each case with or without pay) in lieu of a suspension prior to the
applicable Vesting Date (determined after application of all such previous
suspensions or leaves of absence from employment following                  ),
then unless otherwise determined by the Appropriate Committee, each applicable
Vesting Date shall be extended by the number of days during which the
Participant was so suspended or on leave of absence from employment.

            (b) Earnings Units.

            Except as provided in Section 2.3 hereof, so long as the Participant
remains employed by the Company or any subsidiary of the Company, the
Participant shall be credited with additional units (the "Earnings Units")
relating to Base Units hereunder and attributable to Net Earnings Adjustments.
The Earnings Units shall be credited, in accordance with Section 5.10 of the
Plan, in the form of additional CAP Units. Subject to Section 2.3 hereof, the
Vesting Date applicable to all Earnings Units shall be                    ;
provided, however, if the Participant is suspended from employment by the
Company or a subsidiary of the Company or is on a personal leave of absence in
lieu of a suspension (in each case with or without pay) prior to such date
(determined after the application of all such previous suspensions from
employment or leaves of absence following                    ), then unless
otherwise determined by the Appropriate Committee, the Vesting Date applicable
to the Earnings Units shall be extended by the number of days during which the
Participant was so suspended from employment or on leave of absence. As provided
in Sections 2.3 and 3.3 hereof, the Earning Units may vest at an earlier date or
may continue to vest following Termination of Employment.

Section 2.3 Termination of Employment.
            --------------------------

            (a) In the event of a Termination of Employment prior to a Vesting
Date applicable to any Base Units or Earnings Units, the following provisions
shall apply:

      (i)   Termination of Employment by the Company with Cause or Termination
            of Employment by Participant Who Competes, etc., or Termination of
            Employment following a suspension of employment or following a
            personal leave of absence in lieu of a suspension (in each case with
            or without pay) in circumstances in which the Participant does not
            return to full time employment following such suspension or leave.
            In the event of (x) a Termination of Employment by the Company with
            Cause (as defined below), (y) a Termination of Employment by the
            Participant in circumstances in which the Participant does not agree
            to be subject to the provisions of Section 3.1, or (z) a Termination
            of Employment following a suspension of employment or following a
            personal leave of absence in lieu of a suspension (in each case with
            or without pay) in circumstances in which the Participant does not
            return to full time employment following such suspension or leave:

            (1) all Base Units and Earnings Units with respect to which the
            Vesting Date had not occurred as of the date of such Termination of
            Employment shall not vest and shall be immediately cancelled for no
            value;

            (2) in lieu of Earnings Units credited to any Base Units in respect
            of which the Vesting Date had occurred as of the date of such
            Termination of Employment, Replacement Units shall be credited to
            the Participant (as of the date of such Termination of Employment
            and in accordance with Section 2.4 (a) hereof) in respect of such
            Base Units;

            (3) all Base Units with respect to which the Vesting Date had
            occurred as of the date of such Termination of Employment, and all
            Replacement Units credited pursuant to paragraph (2) above, shall
            thereafter be credited with Dividend Equivalent Units (in accordance
            with Section 2.4(b) hereof) until the cancellation or settlement of
            such Base Units and Replacement Units, such Dividend Equivalent
            Units to be subject to the same terms and conditions, including the
            provisions of Article III hereof, as are applicable to the
            underlying Base Units and Replacement Units;

            (4) if, at any time during the period from the date of such
            Termination of Employment through the date which is one hundred
            eighty (180) days following the date of such Termination of
            Employment, the Participant fails to comply with the
            Non-Solicitation Requirement specified in Section 3.1(v) hereof,
            then the Company at its election may seek an injunction, including
            an injunction in aid of arbitration, to enforce the provisions of
            Section 3.1(v) from any court of competent jurisdiction; and

            (5) the Deferral Period applicable to all CAP Units which are not
            cancelled shall be unaffected by such Termination of Employment.

      (ii)  Termination of Employment by the Company without Cause and without
            Disability. In the event of a Termination of Employment by the
            Company (other than due to Cause or Disability or under
            circumstances described in clause (a)(i)(z) above) in circumstances
            in which the Participant executes a release of any and all potential
            claims against the Company and its subsidiaries in a form acceptable
            to the Appropriate Committee (the "Release"):

            (1) all outstanding Base Units and Earnings Units with respect to
            which the Vesting Date had not occurred as of the date of such
            Termination of Employment shall become fully vested on the earlier
            of (x) the last applicable Vesting Date or (y) the date which is one
            hundred eighty (180) days following the date of such Termination of
            Employment (in either case, the "Accelerated Vesting Date"), but in
            either such case such Base Units and Earnings Units shall vest if
            and only if, at all times during the period commencing on the date
            of such Termination of Employment through and including the
            Accelerated Vesting Date (such period, the "Employee
            Non-Solicitation Period"), the Participant, acting alone or with
            others, directly or indirectly, whether as employee, employer,
            consultant, advisor, or director, or as an owner, investor, partner,
            stockholder or otherwise, does not solicit or hire any employee or
            person who, within 90 days prior to the Participant's Termination of
            Employment, was an employee of, or any consultant or independent
            contractor to, the Company or any subsidiary or affiliate (the
            "Employee Non-Solicitation Covenant");

            (2) if the Participant complies with the Employee Non-Solicitation
            Covenant at all times during the Employee Non-Solicitation Period,
            then as of the last day of the month prior to the month in which
            such Termination of Employment occurs, the Participant shall be
            entitled to be credited with additional fully vested Earnings Units,
            with respect to the Fiscal Year in which occurs such Termination of
            Employment, such Earnings Units to be equal to the product of (A)
            the number of Earnings Units with which the Participant would have
            been credited had the Participant remained in the employ of the
            Company until the end of such Fiscal Year, and (B) a fraction, the
            numerator of which shall be the number of whole months in such
            Fiscal Year prior to the month in which such Termination of
            Employment occurs and the denominator of which shall be 12;

            (3) if the Participant complies the Employee Non-Solicitation
            Covenant at all times during the Employee Non-Solicitation Period,
            then all Base Units and Earnings Units which are outstanding as of
            the last day of the month prior to the month in which such
            Termination of Employment occurs (after giving effect to the
            crediting of additional Earnings Units under subparagraph (2) above)
            shall thereafter be credited with fully vested Dividend Equivalent
            Units (in accordance with Section 2.4(b) hereof) until the
            settlement of such Base Units and Earnings Units;

            (4) if, at any time during the period from the date of such
            Termination of Employment through the date which is one hundred
            eighty (180) days following the date of such Termination of
            Employment, the Participant fails to comply with the Employee
            Non-Solicitation Covenant, then the Company at its election may seek
            an injunction, including an injunction in aid of arbitration, to
            enforce the Employee Non-Solicitation Covenant from any court of
            competent jurisdiction; and

            (5) the Deferral Period applicable to all CAP Units which are not
            cancelled shall end on the Accelerated Vesting Date.

If (A) the Participant fails to comply with the Employee Non-Solicitation
Covenant at any time during the Employee Non-Solicitation Period or (B) the
Participant does not execute the Release, then the Participant shall be treated
as having terminated employment under the provisions of Section 2.3(a)(i).

      (iii) Termination of Employment by Participant (other than by reason of
            Retirement) Who Does Not Compete, etc. In the event of a Termination
            of Employment by the Participant (other than by reason of
            Retirement) in circumstances in which such Participant is not then
            suspended from employment and is not then on a personal leave of
            absence (in each case with or without pay) in lieu of a suspension
            and agrees to be subject to the provisions of Section 3.1:

            (1) all Base Units with respect to which the Vesting Date had not
            occurred as of the date of such Termination of Employment shall
            continue to vest as if the Participant had remained in the
            employment of the Company; provided, however, if, at any time during
            the period from the date of such Termination of Employment through
            the last applicable Vesting Date, the Participant fails to comply
            with the provisions of Section 3.1, then all Base Units not
            previously cancelled and with respect to which the Vesting Date had
            not occurred as of the initial date of such failure to comply with
            the provisions of Section 3.1 shall not vest and shall be
            immediately cancelled for no value;

            (2) all Earnings Units with respect to which the Vesting Date had
            not occurred as of the date of such Termination of Employment shall
            not vest and shall be immediately cancelled for no value;

            (3) in lieu of Earnings Units cancelled hereunder, Replacement Units
            shall be credited to the Participant (as of the date of such
            Termination of Employment and in accordance with Section 2.4(a)
            hereof) in respect of outstanding Base Units;

            (4) all Base Units which are not cancelled and any Replacement Units
            credited pursuant to paragraph (3) above shall thereafter be
            credited with Dividend Equivalent Units (in accordance with Section
            2.4(b)) until the cancellation or settlement of such Base Units and
            Replacement Units, such Dividend Equivalent Units to be subject to
            the same terms and conditions, including the provisions of Article
            III hereof, as are applicable to the underlying Base Units and
            Replacement Units;

            (5) if, at any time during the period from the date of such
            Termination of Employment through the date which is one hundred
            eighty (180) days following the date of such Termination of
            Employment, the Participant fails to comply with the
            Non-Solicitation Requirement specified in Section 3.1(v) hereof,
            then the Company at its election may seek an injunction, including
            an injunction in aid of arbitration, to enforce the provisions of
            Section 3.1(v) from any court of competent jurisdiction; and

            (6) the Deferral Period applicable to all CAP Units which are not
            cancelled shall be unaffected by such Termination of Employment.

      (iv)  Termination of Employment as a result of Death. In the event of a
            Termination of Employment as a result of death:

            (1) the Participant shall become fully vested in all Base Units and
            Earnings Units (including any Earnings Units credited in respect of
            the Fiscal Year in which occurs such Termination of Employment, as
            if the Participant had remained in the employ of the Company until
            the end of such Fiscal Year); and

            (2) the Deferral Period with respect to all Base Units and Earnings
            Units shall end as of the last day of the Fiscal Year in which such
            Termination of Employment occurs and the Company, in settlement of
            such units, shall, as promptly as practicable following the end of
            such Fiscal Year, make delivery to the Participant's beneficiaries
            or estate of shares of Common Stock equal to the aggregate number of
            such units.

      (v)   Termination of Employment as a result of Disability or Retirement.
            In the event of a Termination of Employment by the Company due to
            Disability or a Termination of Employment by the Participant due to
            Retirement (other than with respect to a Participant who is
            suspended from employment or is on a personal leave of absence in
            lieu of a suspension (in each case with or without pay) immediately
            prior to the date of such Termination of Employment), in either case
            in circumstances in which the Participant agrees to be subject to
            the provisions of Section 3.1:

            (1) all then outstanding Base Units and Earnings Units with respect
            to which the Vesting Date had not occurred as of the date of such
            Termination of Employment shall continue to vest as if the
            Participant had remained in the employment of the Company; provided,
            however, if, at any time during the period from the date of such
            Termination of Employment through the last applicable Vesting Date,
            the Participant fails to comply with provisions of Section 3.1, or,
            in the case of a Termination of Employment due to Retirement,
            commences employment with or provides services to any entity,
            person, business or organization (other than an entity or an
            organization described in section 501(c)(3) of the Code or any
            political organization, including candidacy for public office or
            other activities pre-approved by the Appropriate Committee) or fails
            to comply with provisions of Section 3.1, then (x) all Base Units
            and Earnings Units not previously cancelled and with respect to
            which the Vesting Date had not occurred as of the initial date of
            such failure to comply with the provisions of Section 3.1 or the
            initial time at which the Participant commences employment shall be
            immediately cancelled for no value and (y) in lieu of any Earnings
            Units (and related Dividend Equivalent Units) which are cancelled by
            reason of the Participant's failure to comply with Section 3.1 or
            commencement of employment shall be immediately cancelled for no
            value, Replacement Units shall be credited (in accordance with
            Section 2.4(a) hereof and as of the date of such failure or
            commencement of employment) in respect of the Base Units which have
            not been cancelled or settled;

            (2) as of the last day of the month prior to the month in which such
            Termination of Employment occurs, the Participant shall be entitled
            to be credited with additional Earnings Units with respect to the
            Fiscal Year in which occurs such Termination of Employment, such
            Earnings Units to be equal to the product of (A) the number of
            Earnings Units with which the Participant would have been credited
            had the Participant remained in the employ of the Company until the
            end of such Fiscal Year, and (B) a fraction, the numerator of which
            shall be the number of whole months in such Fiscal Year prior to the
            month in which such Termination of Employment occurs and the
            denominator of which shall be 12; and such additional Earnings Units
            shall be subject to the same terms and conditions, including the
            provisions of Article III hereof, as are applicable to Earnings
            Units generally;

            (3) all Base Units and Earnings Units which are outstanding as of
            the last day of the month prior to the month in which such
            Termination of Employment occurs (after giving effect to the
            crediting of additional Earnings Units under subparagraph (2) above)
            shall thereafter be credited with Dividend Equivalent Units (in
            accordance with Section 2.4(b) hereof) until the cancellation or
            settlement of such Base Units and Earnings Units, such Dividend
            Equivalent Units to be subject to the same terms and conditions,
            including the provisions of Article III hereof, as are applicable to
            the underlying Base Units or Earnings Units, as the case may be;

            (4) if, at any time during the period from the date of such
            Termination of Employment through the date which is one hundred
            eighty (180) days following the date of such Termination of
            Employment, the Participant fails to comply with the
            Non-Solicitation Requirement specified in Section 3.1(v) hereof,
            then the Company at its election may seek an injunction, including
            an injunction in aid of arbitration, to enforce the provisions of
            Section 3.1(v) from any court of competent jurisdiction; and

            (5) the Deferral Period applicable to all CAP Units which are not
            cancelled shall be unaffected by such Termination of Employment,
            except that a Participant can elect (under rules prescribed by the
            Appropriate Committee) to have the Deferral Period end (but only
            with respect to those Base Units and related Dividend Equivalent
            Units for which the Vesting Date had occurred prior to the date of
            such Termination of Employment) on or after the last applicable
            Vesting Date and to have the Company deliver shares of Common Stock,
            in accordance with the Plan and these Terms and Conditions, in
            settlement of all such CAP Units.

            (b) In the event of a Termination of Employment following the last
applicable Vesting Date, but prior to the end of the Deferral Period, the
following provisions shall apply:

      (i)   as of the last day of the month prior to the month in which such
            Termination of Employment (other than by reason of death) occurs,
            the Participant shall be entitled to be credited with additional
            fully vested Earnings Units with respect to the Fiscal Year in which
            occurs such Termination of Employment, such Earnings Units to be
            equal to the product of (A) the number of Earnings Units with which
            the Participant would have been credited had the Participant
            remained in the employ of the Company until the end of such Fiscal
            Year, and (B) a fraction, the numerator of which shall be the number
            of whole months in such Fiscal Year prior to the month in which such
            Termination of Employment occurs (less any number of whole months
            during which the Participant was suspended from employment or was on
            a personal leave of absence in lieu of a suspension (in each case
            with or without pay)) and the denominator of which shall be 12; and
            such additional Earnings Units shall be subject to the same terms
            and conditions, including the provisions of Article III hereof, as
            are applicable to the Earnings Units generally;

      (ii)  in the event of a Termination of Employment (other than by reason of
            death), all Base Units and Earnings Units which are outstanding as
            of the last day of the month prior to the month in which such
            Termination of Employment occurs (after giving effect to the
            crediting of additional Earnings Units under subparagraph (i) above)
            shall thereafter be credited with fully vested Dividend Equivalent
            Units (in accordance with Section 2.4(b) hereof) until the
            cancellation or settlement of such Base Units and Earnings Units,
            such Dividend Equivalent Units to be subject to the same terms and
            conditions, including the provisions of Article III hereof, as are
            applicable to the underlying Base Units or Earnings Units as the
            case may be;

      (iii) the Deferral Period applicable to all CAP Units shall be unaffected
            by such Termination of Employment (other than by reason of death),
            except that (1) a Participant can elect (but only in the event of a
            Termination of Employment by reason of Retirement or Disability and
            under rules prescribed by the Appropriate Committee) to have the
            Deferral Period end with respect to all CAP Units and to have the
            Company deliver shares of Common Stock, in accordance with the Plan
            and these Terms and Conditions, in settlement of all such CAP Units
            and (2) in the event of a Termination of Employment by the Company
            (other than due to Cause or Disability), the Deferral Period
            applicable to all CAP Units shall end on the date of Termination of
            Employment;

      (iv)  in the event such Termination of Employment is by reason of death,
            the Deferral Period with respect to all Base Units and Earnings
            Units shall end as of the last day of the Fiscal Year in which
            occurs such Termination of Employment; the Participant shall be
            entitled to be credited with additional fully vested Earnings Units
            in respect of the Fiscal Year in which occurs such Termination of
            Employment, as if the Participant had remained in the employ of the
            Company until the end of such Fiscal Year; and the Company, in
            settlement of all CAP Units, shall, as promptly as practicable
            following the end of such Fiscal Year, make delivery to the
            Participant's beneficiaries or estate of shares of Common Stock
            equal to the aggregate number of such units;

      (v)   if, at any time during the period from the date of any Termination
            of Employment (except a Termination of Employment by the Company
            other than due to Cause or Disability) through the date which is one
            hundred eighty (180) days following the date of such Termination of
            Employment, the Employee fails to comply with the Non-Solicitation
            Requirement specified in Section 3.1(v) hereof, the Company at its
            election may seek an injunction, including an injunction in aid of
            arbitration, to enforce the provisions of Section 3.1(v) from any
            court of competent jurisdiction; and

      (vi)  if, at any time during the period from the date of any Termination
            of Employment by the Company (other than due to Cause or Disability)
            through the date which is one hundred eighty (180) days following
            the date of such Termination of Employment, the Employee fails to
            comply with the Employee Non-Solicitation Covenant, the Company at
            its election may seek an injunction, including an injunction in aid
            of arbitration, to enforce the Employee Non-Solicitation Covenant
            from any court of competent jurisdiction.

            (c) For purposes of these Terms and Conditions:

            "Cause" means the occurrence of any of the following as reasonably
determined by the Appropriate Committee: (1) any act or omission which
constitutes, or a series of acts or omissions when taken together which
constitute, a material breach by the Participant of the terms of any employment
agreement or other written document setting forth terms of employment, (2)
notice to the Company or the Participant that the Participant is the subject or
target of, or will or may become the subject or target of, any governmental or
regulatory investigation relating to any acts or omissions in connection with
the Participant's securities trading activity or employment with the Company,
(3) any act or omission which constitutes conduct which has resulted in (i) a
notification to an exchange or regulator by the Company or one of its
subsidiaries or affiliates reporting such conduct, or (ii) a governmental or
regulatory investigation related to conduct, (4) the filing of an indictment or
a charge, or the notice to the Company or the Participant that an indictment or
charge will or may be filed alleging the Participant's commission of a felony or
commission of any crime that would constitute (i) any felony or (ii) a lesser
crime or offense relating to any acts or omissions in connection with the
Participant's employment with the Company which would result in a statutory
disqualification of the Participant, (5) the filing of an administrative charge
or the notice to the Company or the Participant that a charge will or may be
filed against the Participant by a regulatory agency in connection with the
Participant's employment activities, (6) the Participant's violation of a
material policy of the Company, (7) the Participant's violation of a specific
lawful direction from a person to whom the Participant reports within the scope
of Participant's employment, (8) the Participant's engagement in a dishonest or
wrongful act involving fraud, misrepresentation or moral turpitude causing
damage or potential damage to the Company or any subsidiaries or affiliates, (9)
the Participant's willful failure to perform a substantial part of his or her
duties, (10) the Participant's breach of any fiduciary duty or duty of loyalty,
(11) any conduct by Participant which violates any federal or state securities
law or other applicable regulation governing the conduct of the Participant and
of the business of the Company or any subsidiary or affiliate in which the
Participant is employed, (12) the issuance of any consent decree, cease and
desist or similar order against the Participant by a governmental or regulatory
agency or entity relating to violations or alleged violations of any federal or
state securities law or other applicable regulation governing the conduct of the
business of the Company or any subsidiary or affiliate, or (13) the
Participant's unauthorized disclosure of any confidential or proprietary
information of the Company or any subsidiary or affiliate or the unauthorized
disclosure of any confidential information of a client of the Company or any
subsidiary or affiliate.

            "Disability" means the complete and permanent inability of the
Participant to perform his or her duties due to 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.

            "Retirement" means Termination of Employment by the Participant,
upon a delivery of the Notice of Termination, if, as of the date of such
Termination of Employment, the Participant had attained the age of forty-five
(45) and had completed a minimum of ten (10) continuous years of service with
the Company and its subsidiaries. For purposes of this definition, "Retirement"
will generally mean that the Participant is not working at all, except for
certain charitable or not-for-profit endeavors. For purposes of this definition,
"Notice of Termination" means a written Notice of Termination delivered to the
Company at least thirty (30) days prior to the Participant's Retirement (unless
a lesser period is permitted by Appropriate Committee) advising the Company of
the Participant's intention to terminate employment and specifying the date of
termination, certifying that the Participant will not be employed by or provide
services to any entity other than a charitable or non-profit organization (and,
if accepting employment or providing services to any such organization,
identifying the organization by name and describing the position, duties and/or
relationships with such entity), and agreeing to provide other information
regarding the Participant's reasons for termination and subsequent business
activity upon request of the Company.

            "Termination of Employment" means the event by which the Participant
ceases to be employed by the Company or any subsidiary of the Company and,
immediately thereafter, is not employed by or providing substantial services to
any of the Company or a subsidiary of the Company. Neither (x) a transfer of the
Participant from the Company to a subsidiary or other affiliate of the Company,
or vice versa, or from one subsidiary or affiliate of the Company to another,
nor (y) a duly authorized leave of absence (other than in connection with a
suspension), agreed to in writing by the Participant, shall be deemed a
Termination of Employment.

Section 2.4 Replacement Units; Dividend Equivalent Units.
            ---------------------------------------------

            (a) In those circumstances described in the applicable provisions of
Section 2.3 hereof, there shall be credited, as of the applicable date set forth
in such provisions, a number of Units ("Replacement Units") equal to (x) the
number of Base Units which are not cancelled as of such applicable date,
multiplied by (y) the aggregate amount of cash dividends paid per share of
Common Stock (and the aggregate fair market value of any property paid per share
of Common Stock, in the case of non-cash dividends) from
through such applicable date, divided by (z) the Fair Market Value (as of such
applicable date) of a share of Common Stock. Any Replacement Units shall be
subject to the same terms and conditions, including the vesting provisions
hereof and the provisions of Article III hereof, as are applicable to the
underlying Base Units.

            (b) In accordance with Sections 2.3 and 3.3 hereof, additional units
("Dividend Equivalent Units") shall be credited on outstanding CAP Units until
cancellation or settlement of such CAP Units, as follows:

      (i)   Cash Dividends. If the Company declares and pays a cash dividend on
            Common Stock, then a number of additional Dividend Equivalent Units
            shall be credited to the Participant as of the payment date for such
            dividend equal to (A) the number of CAP Units credited to the
            Employee as of the record date for such dividend, multiplied by (B)
            the amount of cash actually paid as a dividend on each share of
            Common Stock at such payment date, divided by (C) the Fair Market
            Value of a share of Common Stock at the ex-dividend date.

      (ii)  Non-Stock Dividends. If the Company declares and pays a dividend on
            Common Stock in the form of property other than shares of Common
            Stock, then a number of additional Dividend Equivalent Units shall
            be credited to the Employee as of the payment date for such dividend
            equal to (A) the number of CAP Units credited to the Participant as
            of the record date for such dividend, multiplied by (B) the fair
            market value of any such property actually paid as a dividend on
            each share of Common Stock at such payment date, divided by (C) the
            Fair Market Value of a share of Common Stock at the ex-dividend
            date.

            (c) Modifications to Dividend Equivalents. Other provisions of this
Section 2.4 notwithstanding, the Appropriate Committee may modify the manner of
payment or crediting of Replacement Units or Dividend Equivalent Units.

                                   ARTICLE III

                              ADDITIONAL CONDITIONS
                              ---------------------

Section 3.1 Requirements Relating to Non-Competition, Confidentiality,
            ----------------------------------------------------------
            Non-Disparagement, Cooperation, and Non-Solicitation. As a
            -----------------------------------------------------
            condition to the Participant's Termination of Employment being
            treated under the provisions of Section 2.3(a)(iii) or 2.3(a)(v)
            hereof, as applicable:

      (i)   Non-Competition Requirement: The Participant, acting alone or with
            others, directly or indirectly, shall not engage, either as
            employee, employer, consultant, advisor, or director, or as an
            owner, investor, partner, or stockholder unless the Participant's
            interest is insubstantial, in any business in an area or region in
            which the Company or any subsidiary or affiliate conducts business
            at the date the event occurs, which is directly in competition with
            a business then conducted by the Company or a subsidiary or
            affiliate and which is similar or substantially related to the
            business in which the Participant was engaged, in whole or in part,
            while employed by the Company or a subsidiary or affiliate. For this
            purpose, an entity shall be deemed to be in competition with the
            Company or a subsidiary or affiliate if such entity's business
            involves (A) the sale or trading of securities, futures,
            commodities, off-exchange products or other similar products on
            behalf of others (whether customers are individuals or
            institutions), (B) proprietary trading, including risk arbitrage,
            (C) asset management, (D) investment banking and other financial
            advisory services, (E) banking and insurance products offered by the
            Company and its affiliates or under development to be offered by the
            Company or its affiliates, including but not limited to, bankruptcy,
            debt and credit products, or (F) proprietary analysis and research
            relating to any of the foregoing. The Committee shall, in its
            discretion, determine which lines of business the Company or any
            subsidiary or affiliate conducts on any particular date and which
            third parties may reasonably be deemed to be in competition with the
            Company or any subsidiary or affiliate. For purposes of this Section
            3.1(i), the Participant's interest as a stockholder is insubstantial
            if it represents beneficial ownership of less than one percent of
            the outstanding class of stock, and the Participant's interest as an
            owner, investor, or partner is insubstantial if it represents
            ownership, as determined by the Committee in its discretion, of less
            than one percent of the outstanding equity of the entity;

      (ii)  Confidentiality Requirement: The Participant shall not take,
            disclose, use, sell, or otherwise transfer, except in the course of
            employment with the Company or any subsidiary or affiliate, any
            confidential or proprietary information of the Company or any
            subsidiary or affiliate, including but not limited to information
            regarding current and potential customers, clients, counterparts,
            organization, employees, finances and financial results, methods of
            operation, transactions and investments, financial analysis and
            structuring, price, rates and other similar data, so long as such
            information has not otherwise been disclosed to the public or is not
            otherwise in the public domain, except as required by law or
            pursuant to legal process; and the Participant shall return to the
            Company, promptly following his or her termination of employment or,
            if a demand for such return has been made, at any other time, any
            information, documents, materials, data, inventions, manuals,
            contracts, computer programs or device containing information
            relating to the Company or any subsidiary or affiliate, and each of
            their customers, clients and counterparts, which came into the
            Participant's possession or control in connection with his or her
            employment;

      (iii) Non-Disparagement Requirement: The Participant shall not make
            statements or representations, otherwise communicate, directly or
            indirectly, in writing, orally, or otherwise, or take any action
            which may, directly, or indirectly, disparage or be damaging to the
            Company or any if its subsidiaries or affiliates or their respective
            former or current officers, directors, employees, advisors,
            businesses or reputations, except as required by law or pursuant to
            the legal process;

      (iv)  Cooperation Requirement: The Participant shall cooperate with the
            Company and any subsidiary or affiliate by making himself or herself
            available to testify on behalf of the Company or such subsidiary or
            affiliate in any action, suit or proceeding, whether civil,
            criminal, administrative, regulatory or investigative, and otherwise
            shall assist the Company and any subsidiary or affiliate in any
            action, suit, or proceeding and in preparation of any action, suit,
            or proceeding by providing information and meeting and consulting
            with members of management of, other representatives of, or counsel
            to, the Company or such subsidiary or affiliate, as reasonably
            requested; and

      (v)   Non-Solicitation Requirement: The Participant, acting alone or with
            others, directly or indirectly, whether as employee, employer,
            consultant, advisor, or director, or as an owner, investor, partner,
            stockholder or otherwise (A) shall not solicit or induce any client
            or customer of the Company for whom the Participant has rendered
            services while employed by the Company to curtail, cancel, not
            renew, or not continue his or her or its business with the Company
            or any subsidiary or affiliate, and (B) shall not solicit or hire
            any employee or person who, within 90 days prior to the
            Participant's Termination of Employment, was an employee of, or a
            consultant or independent contractor to, the Company or a subsidiary
            or affiliate.

Section 3.2 Committee Discretion.
            ---------------------

            The Appropriate Committee may, in its discretion, waive in whole or
in part the provisions of Sections 2.3 or 3.5, but no such waiver shall be
effective unless evidenced by a writing signed by a duly authorized officer of
the Company.

Section 3.3 Change in Control.
            ------------------

            Notwithstanding anything herein to the contrary, if within one year
following the occurrence of a Change in Control (x) there occurs a Termination
of Employment by the Company (other than for Cause or Disability) or (y) there
occurs a Termination of Employment by the Participant for "Good Reason" (as
defined below), then (1) all outstanding CAP Units (including any Earnings Units
credited in respect of the Fiscal Year in which occurs such Termination of
Employment, as if the Participant had remained in the employ of the Company
until the end of such Fiscal Year) shall become fully vested, (2) all CAP Units
described in clause (1) above shall thereafter be credited with Dividend
Equivalent Units (as provided for in Section 2.4(b)) until the cancellation or
settlement of all such CAP units, and (3) unless otherwise determined by the
Appropriate Committee, the Deferral Period with respect to all then outstanding
CAP Units shall be unaffected by such vesting.

For purposes of these Terms and Conditions, "Good Reason" shall mean:

      (A)   any material diminution in Participant's authority, duties or
            responsibilities (including reporting relationships) from that which
            existed immediately prior to the Change in Control;

      (B)   a reduction of more than ten percent (10%) in the Participant's base
            compensation from that which existed immediately prior to the Change
            in Control; or

      (C)   the relocation of the Participant's principal place of employment to
            a location more than fifty (50) miles from the Participant's
            principal place of employment immediately prior to the Change in
            Control.

Section 3.4 Delivery of Shares.
            -------------------

            Except as otherwise provided hereunder, as soon as practicable
following the end of the Deferral Period, the Company shall, in accordance with
the procedures set forth in the Plan and in settlement of all then outstanding
CAP Units (including, in the event the Participant has remained in the employ of
the Company through the end of the Deferral Period, any additional Earnings
Units in respect of the Fiscal Year in which the Deferral Period ends), make
delivery of shares of Common Stock equal to the aggregate number of such CAP
Units. In the event of the Participant's death following a Termination of
Employment, but prior to the end of the Deferral Period, the Company shall, in
accordance with the procedures set forth in the Plan and in settlement of all
then outstanding CAP Units, make delivery of shares of Common Stock equal to the
aggregate number of such CAP Units to such Participant's transferee,
beneficiaries or estate (as applicable) as promptly as practicable following the
death of such Participant.

Section 3.5 Release.
            --------

            Notwithstanding anything to the contrary herein, as a condition
 precedent to the delivery of any Common Stock with respect to any CAP Units,
 the Participant or the Participant's beneficiaries or estate (as applicable)
 shall execute a release of any and all potential claims related to such units
 in a form acceptable to the Appropriate Committee.

                                   ARTICLE IV

                                  MISCELLANEOUS

Section 4.1 Bound by the Plan and the Terms and Conditions.
            -----------------------------------------------

            The Participant agrees to be bound by all of the provisions of the
Plan and these Terms and Conditions.

Section 4.2 Successors.
            -----------

            These Terms and Conditions shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and of the Participant and
the beneficiaries, executors, administrators, heirs and successors of the
Participant.

Section 4.3 Invalid Provision.
            ------------------

            In the event that any provision or portion of these Terms and
Conditions shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of these Terms and Conditions shall
be unaffected thereby, and any affected provision shall be construed and
interpreted to apply to the fullest extent that it could apply without being
invalid or unenforceable. These Terms and Conditions, as so construed and
interpreted, shall remain in full force and effect to the fullest extent
permitted by law.

Section 4.4 No Right to Employment.
            -----------------------

            The granting of the CAP Units shall not constitute or be evidence of
any agreement or understanding, express or implied, that Participant has a right
to continue as an officer or employee of the Company or a subsidiary for any
period of time, or at any particular rate of compensation. These Terms and
Conditions, including the provisions of the Plan, shall not in any way alter
Participant's employment at will status with the Company or any subsidiary.

Section 4.5 Entire Agreement.
            -----------------

            These Terms and Conditions and the Plan contain the entire agreement
and understanding of the parties hereto with respect to the subject matter
contained herein and therein and supersede all prior communications,
representations and negotiations in respect thereto.

Section 4.6 Dispute Resolution.
            -------------------

            Except with respect to the Company's right to seek injunctive relief
as set forth in Section 2.3, any dispute arising out of or relating to the Plan
or these Terms and Conditions shall be resolved by final and binding arbitration
before the National Association of Securities Dealers or the New York Stock
Exchange, in accordance with applicable arbitration rules then in effect. Any
such arbitration shall occur in the City of New York. The parties hereto consent
to the jurisdiction of the state and federal courts of New York, located in the
City of New York, for any action arising out of or relating to the enforcement
of this arbitration provision and for any other relief permitted under these
Terms and Conditions.

Section 4.7 Governing Law.
            --------------

            These Terms and Conditions and the rights of the Participant
hereunder shall be construed and determined in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of laws, and
applicable provisions of federal law.

Section 4.8 Headings.
            ---------

            The headings of the Sections hereof are provided for convenience
only and are not to serve as a basis for interpretation or construction of these
Terms and Conditions.EXHIBIT 10.2

         TERMS AND CONDITIONS OF STOCK OPTION AWARD GRANTED TO YOU (THE
        "PARTICIPANT") UNDER THE BEAR STEARNS COMPANIES INC. STOCK AWARD
                          PLAN, AS AMENDED AND RESTATED

            This document contains the Terms and Conditions applicable to an
award, with respect to Fiscal Year       , of a stock option made to the
Participant on             (the "Grant Date") by the Compensation Committee (the
"Committee") of The Bear Stearns Companies Inc., a Delaware corporation (the
"Company"), under The Bear Stearns Companies Inc. Stock Award Plan, as amended
and restated (the "Plan").

            1. Grant of Option. The Committee has granted to the Participant,
with respect to Fiscal Year       , a stock option (the "Option") to purchase
the number of shares of the Company's common stock, par value $1.00 per share
(the "Shares") set forth in the letter dated January { }from the Management &
Compensation Committee of The Bear Stearns Companies Inc., at an exercise price
per share (the "Option Price") of $     . The number and kind of shares
purchasable under the Option and the Option Price are subject to adjustment as
specified in Section 17 of the Plan. The Option is a non-qualified stock option
and not an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code.

            2. Incorporation of Plan By Reference. A copy of the Plan has been
made available to Participant. All of the terms, conditions and other provisions
of the Plan are incorporated by reference herein. Capitalized terms used in
these Terms and Conditions but not defined herein shall have the same meanings
as in the Plan. If there is any conflict between the provisions of these Terms
and Conditions and mandatory provisions of the Plan, the provisions of the Plan
govern. The Participant agrees to be bound by all the terms and provisions of
the Plan (as presently in effect or later amended), rules and regulations under
the Plan adopted from time to time, and decisions and determinations of the
Committee made from time to time.

            3. Exercisability and Expiration of the Option. Subject to Section
5, the Option shall first become exercisable on the third anniversary of the
Grant Date (such anniversary date, as it may be extended pursuant to the
immediately succeeding sentence, being referred to as the "Vesting Date"),
provided that Participant is still employed by the Company, a subsidiary or an
affiliate on such date, and shall expire on the close of business on the tenth
anniversary of the Grant Date (the "Stated Expiration Date"). Notwithstanding
the foregoing, if the Participant is suspended from employment by the Company or
a subsidiary or an affiliate of the Company or is on a personal leave of absence
in lieu of a suspension (in each case with or without pay) prior to the Vesting
Date (determined after the application of all such previous suspensions or
leaves of absences from employment following the Grant Date), the Vesting Date
shall be extended by the number of days during which the Participant is so
suspended or on leave of absence from employment. Notwithstanding the foregoing,
the Participant shall be precluded from exercising the Option during any period
in which the Participant is suspended from employment by the Company or a
subsidiary or an affiliate of the Company or is on a personal leave of absence
in lieu of a suspension (in each case with or without pay) and any attempt to
exercise the Option during such period shall be null and void. The Committee may
accelerate the exercisability of the Option in circumstances which the Committee
deems appropriate.

            4. Method of Exercise; Delivery of Shares. To exercise the Option,
Participant must (a) give written notice of exercise, signed by Participant, to
the Secretary of the Company and (b) pay to the Company in full the Option Price
of the Option for the number of shares of Common Stock being purchased either
(i) in cash (including by check), payable in United States dollars, (ii) by
delivery of Shares already owned by Participant for at least six months having a
fair market value (determined as of the date the Option is exercised) equal to
all or part of the aggregate Option Price being paid in this manner, (iii) in
accordance with a broker-assisted "cashless exercise" program if such program is
at the time of exercise authorized by the Committee, or (iv) in any other manner
then permitted by the Committee.

            Once Participant gives written notice of exercise, such notice may
not be revoked. As soon as practicable after Participant exercises the Option,
or part thereof, the Company will transfer Shares to Participant's brokerage
account at Bear, Stearns Securities Corp. or otherwise deliver Shares to
Participant. Participant shall be required to satisfy tax withholding
obligations in accordance with the terms of the Plan and any requirements the
Committee may impose thereunder. The Company has filed a registration statement
on Form S-8 under the Securities Act of 1933 covering the offer and sale of the
Shares pursuant to the Option, a copy of which is available upon request from
the Secretary of the Company. If for any reason an exercise occurs when no
effective registration statement covers such transaction, the Company will affix
to any certificate representing Option Shares any legend deemed necessary or
advisable by the Company. Participant acknowledges and agrees that sales of
Shares acquired by exercise of the Option will be subject to the Company's
policies regulating trading by employees, including the requirement that
transactions involving Shares be effected through Bear, Stearns Securities
Corp.; requirements may be modified for participants no longer employed by the
Company.

            As a condition precedent to the delivery of any shares of Common
Stock hereunder, the Participant or the Participant's beneficiaries or estate
(as applicable) shall execute a release, in a form acceptable to the Committee,
of any and all potential claims hereunder related to such delivery or to the
underlying Option to which the delivered Shares relate.

            5. Termination Provisions.

                  (a) Death. In the event of Participant's death (whether or not
            death resulted in Termination of Employment), the Option, if still
            outstanding, shall become exercisable immediately in full, and shall
            expire on the Stated Expiration Date.

                  (b) Disability or Retirement. Upon Participant's Termination
            of Employment due to Disability or Retirement:

                        (i) the Option shall become exercisable on the Vesting
                  Date; provided, however, that if, at any time following the
                  date of such Termination of Employment, the Participant fails
                  to comply with the provisions of Section 6(a), or returns to
                  active employment (other than for charitable or public
                  service, teaching or other activities pre-approved by the
                  Committee) with any entity other than the Company or a
                  subsidiary or affiliate of the Company, then all Options not
                  previously exercised shall be immediately cancelled as of the
                  initial time of such failure to comply with the provisions of
                  Section 6(a) or the initial time at which the Participant
                  returns to active employment;

                        (ii) if the Option was exercisable on the date of
                  Participant's Termination of Employment, it shall expire on
                  the Stated Expiration Date; provided, however, that if, at any
                  time following the date of such Termination of Employment, the
                  Participant fails to comply with the provisions of Section
                  6(a), or returns to active employment (other than for
                  charitable or public service, teaching or other activities
                  pre-approved by the Committee) with any entity other than the
                  Company or a subsidiary or affiliate of the Company, then all
                  Options not previously exercised shall be immediately
                  cancelled as of the initial time of such failure to comply
                  with the provisions of Section 6(a) or the initial time at
                  which the Participant returns to active employment, but in no
                  event earlier than the 30th day after the Participant's
                  Termination of Employment;

                        (iii) if the Option becomes exercisable after the date
                  of Participant's Termination of Employment, it shall expire on
                  the second anniversary of the date it becomes exercisable, but
                  in no event later than the Stated Expiration Date; provided,
                  however, that if, at any time following the date of such
                  Termination of Employment, the Participant fails to comply
                  with the provisions of Section 6(a), or returns to active
                  employment (other than for charitable or public service,
                  teaching or other activities pre-approved by the Committee)
                  with any entity other than the Company or a subsidiary or
                  affiliate of the Company, then all Options not previously
                  exercised shall be immediately cancelled as of the initial
                  time of such failure to comply with the provisions of Section
                  6(a) or the initial time at which the Participant returns to
                  active employment, but in no event earlier than the 30th day
                  after the Participant's Termination of Employment; and

                        (iv) if, at any time during the period from the date of
                  such Termination of Employment through the date which is one
                  hundred eighty (180) days following the date of such
                  Termination of Employment, the Participant fails to comply
                  with the Non-Solicitation Requirement specified in Section
                  6(a)(v) hereof, then the Company at its election may seek an
                  injunction, including an injunction in aid of arbitration, to
                  enforce the provisions of Section 6(a)(v) from any court of
                  competent jurisdiction.

The foregoing notwithstanding, Section 5(a) will apply in the event of
Participant's death following such Termination of Employment, but only with
respect to any portion of the Option still outstanding as of the date of death.

            (c) Termination of Employment(1) by the Company with Cause, (2) by
      Participant other than by Retirement, or (3) following a suspension of
      employment or following a personal leave of absence in lieu of a
      suspension (in each case with or without pay) in circumstances in which
      the Participant does not return to full time employment following such
      suspension or leave. In the event of Participant's Termination of
      Employment by the Company with Cause, Termination of Employment by
      Participant other than by Retirement or a Termination of Employment
      following a suspension of employment or following a personal leave of
      absence in lieu of a suspension (in each case with or without pay) in
      circumstances in which the Participant does not return to full time
      employment following such suspension or leave:

                        (i) the Option, if not exercisable, shall expire
                  immediately upon such Termination of Employment;

                        (ii) the Option, to the extent then exercisable, shall
                  expire on the 30th day after the Participant's Termination of
                  Employment; and

                        (iii) if, at any time during the period from the date of
                  such Termination of Employment through the date which is one
                  hundred eighty (180) days following the date of such
                  Termination of Employment, the Participant fails to comply
                  with the Non-Solicitation Requirement specified in Section
                  6(a)(v) hereof, then the Company at its election may seek an
                  injunction, including an injunction in aid of arbitration, to
                  enforce the provisions of Section 6(a)(v) from any court of
                  competent jurisdiction.

            (d) Termination of Employment by the Company without Cause and
      without Disability. In the event of Participant's Termination of
      Employment by the Company (other than for Cause, Disability or under
      circumstances contemplated by clause (c)(3) above):

                        (i) the Option, if not exercisable, shall immediately
                  become exercisable upon such Termination of Employment and the
                  Option shall expire on the later of 30 days from the date of
                  the Participant's Termination of Employment or two years from
                  the Grant Date;

                        (ii) the Option, to the extent then exercisable, shall
                  expire on the 30th day after the Participant's Termination of
                  Employment; provided, however, that if the Option was
                  exercisable on the date of such Termination of Employment and
                  if, at the request of the Company, the Participant enters into
                  a release (which becomes effective) of any and all potential
                  claims against the Company, its Subsidiaries and its
                  affiliates in a form acceptable to the Committee, then the
                  Option shall expire on the second anniversary of the date of
                  such Termination of Employment, but in no event later than the
                  Stated Expiration Date;

                        (iii) if, at any time within two years following the
                  date of such Termination of Employment, the Participant fails
                  to comply with the provisions of Section 6(a)(ii), 6(a)(iii),
                  6(a)(iv) or 6(a)(v), then notwithstanding the proviso in
                  paragraph (ii) above, that portion of the Option not
                  previously exercised shall be immediately cancelled as of the
                  initial date of such failure to comply with the provisions of
                  Section 6(a)(ii), 6(a)(iii), 6(a)(iv) or 6(a)(v), but in no
                  event earlier than the 30th day after the Participant's
                  Termination of Employment; and

                        (iv) if, at any time during the period from the date of
                  such Termination of Employment through the date which is one
                  hundred eighty (180) days following the date of such
                  Termination of Employment, the Participant fails to comply
                  with the Non-Solicitation Requirement specified in Section
                  6(a)(v) hereof, then the Company at its election may seek an
                  injunction, including an injunction in aid of arbitration, to
                  enforce the provisions of Section 6(a)(v) from any court of
                  competent jurisdiction.

The foregoing notwithstanding, Section 5(a) will apply in the event of
Participant's death following such Termination of Employment, but only with
respect to any portion of the Option still outstanding as of the date of death.

            (e) Termination of Employment following a Change in Control.
      Notwithstanding anything herein to the contrary, if within one year
      following the occurrence of a Change in Control there occurs a Termination
      of Employment by the Company (other than for Cause or Disability) or there
      occurs a Termination of Employment by the Participant for Good Reason,
      then (1) the Option shall become fully exercisable and shall remain
      exercisable for a period of two years from the date of such Termination of
      Employment, but in no event later than the Stated Expiration Date, and (2)
      the Option shall no longer be subject to the provisions of Section 6(a)
      hereof.

            (f) Certain Definitions. For purposes of these Terms and Conditions:

                        (i) "Cause" means the occurrence of any of the following
                  as reasonably determined by the Appropriate Committee: (1) any
                  act or omission which constitutes, or a series of acts or
                  omissions when taken together which constitute, a material
                  breach by the Participant of the terms of any employment
                  agreement or other written document setting forth terms of
                  employment, (2) notice to the Company or the Participant that
                  the Participant is the subject or target of, or will or may
                  become the subject or target of, any governmental or
                  regulatory investigation relating to any acts or omissions in
                  connection with the Participant's securities trading activity
                  or employment with the Company, (3) any act or omission which
                  constitutes conduct which has resulted in (i) a notification
                  to an exchange or regulator by the Company or one of its
                  subsidiaries or affiliates reporting such conduct, or (ii) a
                  governmental or regulatory investigation related to conduct,
                  (4) the filing of an indictment or a charge, or the notice to
                  the Company or the Participant that an indictment or charge
                  will or may be filed alleging the Participant's commission of
                  a felony or commission of any crime that would constitute (i)
                  any felony or (ii) a lesser crime or offense relating to any
                  acts or omissions in connection with the Participant's
                  employment with the Company which would result in a statutory
                  disqualification of the Participant (5) the filing of an
                  administrative charge or the notice to the Company or the
                  Participant that a charge will or may be filed against the
                  Participant by a regulatory agency in connection with the
                  Participant's employment activities, (6) the Participant's
                  violation of a material policy of the Company, (7) the
                  Participant's violation of a specific lawful direction from a
                  person to whom the Participant reports within the scope of
                  Participant's employment, (8) the Participant's engagement in
                  a dishonest or wrongful act involving fraud, misrepresentation
                  or moral turpitude causing damage or potential damage to the
                  Company or any subsidiaries or affiliates, (9) the
                  Participant's willful failure to perform a substantial part of
                  his or her duties, (10) the Participant's breach of any
                  fiduciary duty or duty of loyalty, (11) any conduct by
                  Participant which violates any federal or state securities law
                  or other applicable regulation governing the conduct of the
                  Participant and of the business of the Company or any
                  subsidiary or affiliate in which the Participant is employed,
                  (12) the issuance of any consent decree, cease and desist or
                  similar order against the Participant by a governmental or
                  regulatory agency or entity relating to violations or alleged
                  violations of any federal or state securities law or other
                  applicable regulation governing the conduct of the business of
                  the Company or any subsidiary or affiliate, or (13) the
                  Participant's unauthorized disclosure of any confidential or
                  proprietary information of the Company or any subsidiary or
                  affiliate or the unauthorized disclosure of any confidential
                  information of a client of the Company or any subsidiary or
                  affiliate.

                        (ii) "Disability" means the complete and permanent
                  inability of the Participant to perform his or her duties due
                  to physical or mental incapacity, all as determined by the
                  Committee upon the basis of such evidence, including
                  independent medical reports and data, as the Committee deems
                  necessary or appropriate.

                        (iii) "Good Reason" shall mean:

                              (A) any material diminution in Employee's
                        authority, duties or responsibilities from that which
                        existed immediately prior to the Change in Control;

                              (B) a reduction of more than ten percent (10%) in
                        the Employee's base compensation from that which existed
                        immediately prior to the Change in Control; or

                              (C) the relocation of the Employee's principal
                        place of employment to a location more than fifty (50)
                        miles from the Employee's principal place of employment
                        immediately prior to the Change in Control.

                        (iv) "Retirement" means Termination of Employment by the
                  Participant, upon a delivery of the Notice of Termination, if,
                  as of the date of such Termination of Employment, the
                  Participant had attained the age of forty-five (45) and had
                  completed a minimum of ten (10) continuous years of service
                  with the Company and its subsidiaries. For purposes of this
                  definition, "Retirement" will generally mean that the
                  Participant is not working at all, except for certain
                  charitable or not-for-profit endeavors. For purposes of this
                  definition, "Notice of Termination" means a written Notice of
                  Termination delivered to the Company at least thirty (30) days
                  prior to the Participant's Retirement (unless a lesser period
                  is permitted by Appropriate Committee) advising the Company of
                  the Participant's intention to terminate employment and
                  specifying the date of termination, certifying that the
                  Participant will not be employed by or provide services to any
                  entity other than a charitable or non-profit organization
                  (and, if accepting employment or providing services to any
                  such organization, identifying the organization by name and
                  describing the position, duties and/or relationships with such
                  entity), and agreeing to provide other information regarding
                  the Participant's reasons for termination and subsequent
                  business activity upon request of the Company.

                        (v) "Termination of Employment" means the event by which
                  the Participant ceases to be employed by the Company or any
                  subsidiary of the Company and, immediately thereafter, is not
                  employed by or providing substantial services to any of the
                  Company or a subsidiary of the Company. Neither (x) a transfer
                  of the Participant from the Company to a subsidiary or other
                  affiliate of the Company, or vice versa, or from one
                  subsidiary or affiliate of the Company to another, nor (y) a
                  duly authorized leave of absence, agreed to in writing by the
                  Participant, shall be deemed a Termination of Employment.

            6. Additional Conditions.

            (a) Requirements Relating to Non-Competition, Confidentiality,
      Non-Disparagement, Cooperation and Non-Solicitation. For purposes of
      applying the provisions of Section 5:

                        (i) The Participant, acting alone or with others,
                  directly or indirectly, shall not engage, either as employee,
                  employer, consultant, advisor, or director, or as an owner,
                  investor, partner, or stockholder unless the Participant's
                  interest is insubstantial, in any business in an area or
                  region in which the Company or any subsidiary or affiliate
                  conducts business at the date the event occurs, which is
                  directly in competition with a business then conducted by the
                  Company or a subsidiary or affiliate and which is similar or
                  substantially related to the business in which the Participant
                  was engaged, in whole or in part, while employed by the
                  Company or a subsidiary or affiliate. For this purpose, an
                  entity shall be deemed to be in competition with the Company
                  or a subsidiary or affiliate if such entity's business
                  involves (A) the sale or trading of securities, futures,
                  commodities, off-exchange products or other similar products
                  on behalf of others (whether customers are individuals or
                  institutions), (B) proprietary trading, including risk
                  arbitrage, (C) asset management, (D) investment banking and
                  other financial advisory services, (E) banking and insurance
                  products offered by the Company and its affiliates or under
                  development to be offered by the Company or its affiliates,
                  including but not limited to, bankruptcy, debt and credit
                  products, or (F) proprietary analysis and research relating to
                  any of the foregoing. The Committee shall, in its discretion,
                  determine which lines of business the Company or any
                  subsidiary or affiliate conducts on any particular date and
                  which third parties may reasonably be deemed to be in
                  competition with the Company or any subsidiary or affiliate.
                  For purposes of this Section 6(i), the Participant's interest
                  as a stockholder is insubstantial if it represents beneficial
                  ownership of less than one percent of the outstanding class of
                  stock, and the Participant's interest as an owner, investor,
                  or partner is insubstantial if it represents ownership, as
                  determined by the Committee in its discretion, of less than
                  one percent of the outstanding equity of the entity;

                        (ii) Confidentiality Requirement: The Participant shall
                  not take, disclose, use, sell, or otherwise transfer, except
                  in the course of employment with the Company or any subsidiary
                  or affiliate, any confidential or proprietary information of
                  the Company or any subsidiary or affiliate, including but not
                  limited to information regarding current and potential
                  customers, clients, counterparts, organization, employees,
                  finances and financial results, methods of operation,
                  transactions and investments, financial analysis and
                  structuring, price, rates and other similar data, so long as
                  such information has not otherwise been disclosed to the
                  public or is not otherwise in the public domain, except as
                  required by law or pursuant to legal process; and the
                  Participant shall return to the Company, promptly following
                  his or her termination of employment or, if a demand for such
                  return has been made, at any other time, any information,
                  documents, materials, data, inventions, manuals, contracts,
                  computer programs or device containing information relating to
                  the Company or any subsidiary or affiliate, and each of their
                  customers, clients and counterparts, which came into the
                  Participant's possession or control in connection with his or
                  her employment;

                        (iii) Non-Disparagement Requirement: The Participant
                  shall not make statements or representations, otherwise
                  communicate, directly or indirectly, in writing, orally, or
                  otherwise, or take any action which may, directly, or
                  indirectly, disparage or be damaging to the Company or any if
                  its subsidiaries or affiliates or their respective former or
                  current officers, directors, employees, advisors, businesses
                  or reputations, except as required by law or pursuant to the
                  legal process;

                        (iv) Cooperation Requirement: The Participant shall
                  cooperate with the Company and any subsidiary or affiliate by
                  making himself or herself available to testify on behalf of
                  the Company or such subsidiary or affiliate in any action,
                  suit or proceeding, whether civil, criminal, administrative,
                  regulatory or investigative, and otherwise shall assist the
                  Company and any subsidiary or affiliate in any action, suit,
                  or proceeding and in preparation of any action, suit, or
                  proceeding by providing information and meeting and consulting
                  with members of management of, other representatives of, or
                  counsel to, the Company or such subsidiary or affiliate, as
                  reasonably requested; and

                        (v) Non-Solicitation Requirement: The Participant,
                  acting alone or with others, directly or indirectly, whether
                  as employee, employer, consultant, advisor, or director, or as
                  an owner, investor, partner, stockholder or otherwise (A)
                  shall not solicit or induce any client or customer of the
                  Company for whom the Participant has rendered services while
                  employed by the Company to curtail, cancel, not renew, or not
                  continue his or her or its business with the Company or any
                  subsidiary or affiliate, and (B) shall not solicit or hire any
                  employee or person who, within 90 days prior to the
                  Participant's Termination of Employment, was an employee of,
                  or any consultant or independent contractor to, the Company or
                  any subsidiary or affiliate.

            (b) Committee Discretion. The Committee may, in its discretion,
      waive in whole or in part the provisions of this Section 6, but no such
      waiver shall be effective unless evidenced by a writing signed by a duly
      authorized officer of the Company.

            7. Participant Representations and Warranties Upon Exercise. As a
condition to the exercise of the Option, the Company may require Participant to
make any representation or warranty to the Company as may be required under any
applicable law or regulation, and to make a representation and warranty that
Participant has not engaged in conduct which, under Section 5, has resulted in
the immediate expiration of the Option.

            8. Nontransferability. Participant may not transfer the Option or
any rights thereunder to any third party other than by will or the laws of
descent and distribution, and, during Participant's lifetime, only Participant
or his or her duly appointed guardian or legal representative may exercise the
Option; provided, however, that the Committee may approve transfers of the
Option, upon written application of Participant, for estate planning purposes
and; provided, further, that Participant may designate one or more beneficiaries
to exercise rights under the Option upon Participant's death, in the manner and
to the extent permitted by the Committee under rules and regulations adopted by
the Committee under the Plan.

            9. Miscellaneous.

            (a) Right of Setoff. The Company or any subsidiary or affiliate may,
      to the extent permitted by applicable law, deduct from and set off against
      any amounts the Company or a subsidiary or affiliate may owe to
      Participant from time to time pursuant to any award under the Plan, any
      amounts owed by Participant to the Company or any subsidiary or affiliate,
      although Participant shall remain liable for any part of Participant's
      payment obligation not satisfied through such deduction and setoff. By
      accepting the Option granted hereunder, Participant agrees to any
      deduction or setoff under this Section 9(a), and agrees that this
      provision will survive the exercise, cancellation, expiration or other
      termination of the Option.

            (b) Binding Agreement. These Terms and Conditions, including,
      without limitation, Section 6, shall be binding upon the heirs, executors,
      administrators and successors of the parties. These Terms and Conditions,
      including the provisions of the Plan, constitutes the entire agreement
      between the parties with respect to the Option, and supersedes any prior
      representation, statement, agreements or documents with respect to the
      Option, whether written or oral.

            (c) No Promise of Employment. The Option and the granting thereof
      shall not constitute or be evidence of any agreement or understanding,
      express or implied, that Participant has a right to continue as an officer
      or employee of the Company or any subsidiary or affiliate for any period
      of time, or at any particular rate of compensation. These Terms and
      Conditions, including the provisions of the Plan, shall not in any way
      alter Participant's employment at will status with the Company or any
      subsidiary or affiliate.

            (d) Governing Law. THESE TERMS AND CONDITIONS SHALL BE GOVERNED BY
      THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE PRINCIPLES OF
      CONFLICTS OF LAWS.

            (e) Interpretation and Reformation of the Terms and Conditions. In
      the event that any provision or portion of these Terms and Conditions
      shall be determined to be invalid or unenforceable for any reason, in
      whole or in part, the remaining provisions of these Terms and Conditions
      shall be unaffected thereby, and any affected provision shall be construed
      and interpreted to apply to the fullest extent that it could apply without
      being invalid or unenforceable. These Terms and Conditions, as so
      construed and interpreted, shall remain in full force and effect to the
      fullest extent permitted by law.

            (f) Except with respect to the Company's right to seek injunctive
      relief as set forth in Section 5, any dispute arising out of or relating
      to the Plan or these Terms and Conditions shall be resolved by final and
      binding arbitration before the National Association of Securities Dealers
      or the New York Stock Exchange, in accordance with applicable arbitration
      rules then in effect. Any such arbitration shall occur in the City of New
      York. The parties hereto consent to the jurisdiction of the state and
      federal courts of New York, located in the City of New York, for any
      action arising out of or relating to the enforcement of this arbitration
      provision and for any other relief permitted under these Terms and
      Conditions.

            (g) Participant hereby confirms and agrees that he or she has or
      will establish promptly after the date hereof a securities account at
      Bear, Stearns Securities Corp. with a signed customer agreement.

            THE OPTION BEING GRANTED TO YOU HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR THE DISTRICT OF
COLUMBIA OR ANY OTHER FOREIGN OR DOMESTIC JURISDICTION. NO RESALE OR TRANSFER OF
THIS OPTION IS PERMITTED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE STOCK
AWARD PLAN AND THESE TERMS AND CONDITIONS AND ANY APPLICABLE FEDERAL OR STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION THEREFROM.

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