7.80% Junior Subordinated Deferrable Interest Debenture - Bear Stearns Companies Inc. and Chase Manhattan Bank
7.80% JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE May 15, 2031
$270,618,575 Principal Amount
Registered No. 1
Dated: May 10, 2001 CUSIP 073902BY3
Registered Holder: The Chase Manhattan Bank, as Property Trustee of Bear Stearns
Capital Trust III
The Bear Stearns Companies Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to the
Registered Holder named above, the principal sum of Two Hundred Seventy Million,
Six Hundred Eighteen Thousand, Five Hundred and Seventy Five Dollars
($270,618,575), on May 15, 2031 in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debt. The Company further promises to pay to the registered holder
hereof as hereinafter provided (a) interest on said principal sum (subject to
deferral as set forth herein) at the rate of 7.80% per annum (the "Coupon
Rate"), in like coin or currency, quarterly in arrears on the 15th day of May,
August, November and February (each an "Interest Payment Date") commencing
August 15, 2001 from the date next preceding the date hereof to which interest
has been paid or duly provided for (unless (i) no interest has yet been paid or
duly provided for on this debenture (the "Debenture"), in which case from the
date of original issuance, or (ii) the date hereof is before an Interest Payment
Date but after the related Record Date (as defined below), in which case from
such following Interest Payment Date or next succeeding Business Day to which
interest shall have been paid; provided, however, that if the Company shall
default in payment of the interest due on such following Interest Payment Date
or Business Day, then from the next preceding date to which interest has been
paid or duly provided for), until the principal hereof shall become due and
payable, plus (b) interest on overdue principal and, to the extent permitted by
applicable law, on any interest payment that is not made when due at the Coupon
Rate, compounded quarterly. The interest so payable will, subject to certain
exceptions provided in the Indenture hereinafter referred to, be paid to the
person in whose name this Debenture is registered at the close of business on
the Record Date next preceding such Interest Payment Date. The Record Date shall
be the Business Day next preceding the Interest Payment Date, unless this
Certificate is registered to a holder other than the Property Trustee or a
nominee of The Depository Trust Company, in which case the Record Date will be
the 1st day of the month in which the relevant Interest Payment Date occurs.
This Debenture may be presented for payment of principal and interest at the
offices of The Chase Manhattan Bank, as paying agent for the Company, maintained
for that purpose in the Borough of Manhattan, The City of New York, State of New
York; provided, however, that payment of interest may be made at the option of
the Company (i) by check mailed to such address of the person entitled thereto
as the address shall appear on the Register of the Debentures or (ii) by
transfer to an account maintained by the Person entitled thereto as specified in
<PAGE>
the Register, provided that proper transfer instructions have been received by
the Record Date. Interest on the Debenture will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day with the same force and effect as if made on the date such payment
was originally payable, without any interest or other payment with respect to
any such delay.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Debenture to
defer payment of interest on this Debenture, at any time or from time to time,
for up to 20 consecutive quarterly interest payment periods with respect to each
deferral period (each an "Extension Period"), during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date; provided, however, that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond May 15, 2031 or any
earlier redemption date. At the end of each Extension Period, the Company must
pay all interest then accrued and unpaid (together with Additional Sums,
Additional Interest and Compounded Interest thereon, if any, to the extent
permitted by applicable law). During any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company to, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of the Company's capital stock
(which includes common and preferred stock), or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu with or junior in
interest to this Debenture or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any Subsidiary of the Company
that by its terms ranks pari passu with or junior in interest to this Debenture
(other than (a) dividends or distributions in capital stock of the Company; (b)
any declaration of a dividend in connection with the implementation of a Rights
Plan, or the issuance of capital stock of the Company under any Rights Plan, or
the redemption or repurchase of any rights distributed pursuant to a Rights
Plan; (c) payments under any Bear Stearns Guarantee (as defined in the Indenture
and the Existing Indenture); and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans for
its directors, officers or employees. Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period,
provided that no Extension Period shall exceed 20 consecutive quarterly periods
or extend beyond May 15, 2031 or any earlier redemption date. At any time
following the termination of any Extension Period and the payment of all accrued
and unpaid interest (including Additional Sums, Additional Interest and
Compounded Interest, if any) then due, the Company may elect to begin a new
Extension Period, subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Company
shall give the Trustee and the Property Trustee notice of its election to begin
or extend any Extension Period at least five Business Days prior to the earlier
of (i) the next succeeding date on which Distributions on the Preferred
Securities issued by Bear Stearns Capital Trust III would be payable but for
such election to begin or extend a new Extension Period, or (ii) the date the
Property Trustee is required to give notice to any applicable self-regulatory
organization or to holders of such Preferred Securities of the record date or
the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date.
2
<PAGE>
This Debenture is issued pursuant to an Indenture, dated as of May
10, 2001 between the Company, as issuer, and The Chase Manhattan Bank, a banking
corporation duly organized and existing under the laws of the State of New York,
as trustee, as supplemented (as further supplemented or amended from time to
time, the "Indenture"). Reference is made to the Indenture for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the Holders (the word "Holder" or
"Holders" meaning the registered holder or registered holders) of the
Debentures. Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture. By acceptance of this
Debenture, the Holder hereof agrees to be bound by the provisions of the
Indenture.
The Debentures are limited to the aggregate principal amount of Two
Hundred Seventy Million, Six Hundred Eighteen Thousand, Five Hundred and Seventy
Five Dollars ($270,618,575).
The Debentures evidenced by this Certificate may be transferred or
exchanged only in minimum denominations of $25 and integral multiples of $25 in
excess thereof, and any attempted transfer, sale or other disposition of
Debentures in a denomination of less than $25 shall be deemed to be void and of
no legal effect whatsoever.
The indebtedness of the Company evidenced by the Debentures,
including the principal thereof and interest thereon, is, to the extent and in
the manner set forth in the Indenture, subordinate and junior in right of
payment to its obligations to Holders of Senior Indebtedness of the Company and
each Holder of a Debenture, by acceptance thereof, agrees to and shall be bound
by such provisions of the Indenture and all other provisions of the Indenture.
This Debenture shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
or on behalf of the Trustee under the Indenture.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
signed, manually or in facsimile, by its Chairman of the Board, any Vice
Chairman of the Board, the President, any Vice Chairman, any Executive Vice
President, the Chief Operating Officer or the Chief Financial Officer and by its
Treasurer or Assistant Treasurer, Controller or the Secretary or an Assistant
Secretary and a facsimile of its corporate seal to be affixed hereunto.
THE BEAR STEARNS COMPANIES INC.
By: /s/ Samuel L. Molinaro Jr.
--------------------------------------
Name: Samuel L. Molinaro Jr.
Title: Senior Vice President-Finance
and Chief Financial Officer
By: /s/ Jeffrey M. Limpman
--------------------------------------
Name: Jeffrey M. Lipman
Title: Assistant Secretary
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities, of the series designated therein,
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Natalia Rodriguez
------------------------------------
Authorized Officer
4
<PAGE>
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the payment of principal or interest on the
Debentures or with respect to compliance with certain covenants occurs and is
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the then outstanding Debentures may declare the
principal amount of all the Debentures, together with any accrued interest
(including Additional Sums, Additional Interest and Compounded Interest), to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee, if such notice is given by Holders). If the Debentures have been issued
to a Bear Stearns Trust, upon such an Event of Default, if the Trustee or the
Holders of not less than 25% in principal amount of the outstanding Debentures
fails to declare the principal of all the Debentures to be immediately due and
payable, the holders of at least 25% in aggregate Liquidation Amount of the
corresponding Preferred Securities of such Bear Stearns Trust then outstanding
shall have such right by a notice in writing to the Company and the Trustee, and
upon such declaration the principal amount of and the accrued interest
(including any Additional Sums, Additional Interest and Compounded Interest) on
all the Debentures shall become immediately due and payable, provided that the
payment of principal and interest on such Debentures shall remain subordinated
to the extent provided in the Indenture.
If an Event of Default with respect to certain covenants applicable
to all series of securities issued under the Indenture (collectively, the
"Securities"), or with respect to events of bankruptcy, insolvency or
reorganization of the Company occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of all
Securities outstanding under the Indenture (voting as a single class) may
declare the principal amount of all such Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if such
notice is given by Holders), provided that, in the case of Securities of a
series issued under the Indenture to a Bear Stearns Trust, if upon such an Event
of Default the Trustee and the Holders of not less than 25% in principal amount
of all outstanding Securities of that series fail to declare the principal of
all the Securities of that series to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the corresponding Preferred
Securities of such Bear Stearns Trust then outstanding shall have such right by
a notice in writing to the Company and the Trustee; and upon any such
declaration the principal amount of and the accrued interest (including any
Additional Sums, Additional Interest and Compounded Interest) on all the
Securities of that series shall become immediately due and payable, provided
that the payment of principal and interest shall remain subordinated to the
extent provided in the Indenture.
The Indenture provides that in certain events such declaration that
principal and accrued interest are due and payable, and the consequences of such
declaration, may be rescinded and annulled by the holders of a majority in
principal amount of the Securities then outstanding under the Indenture as to
which such an acceleration of the payment of principal has occurred, voting as
one class. In the case of Securities of a series issued under the Indenture to a
Bear Stearns Trust, should the Holders of Securities of that series fail to
rescind and annul such declaration and its consequences, the Holders of a
majority in aggregate Liquidation Amount of the corresponding Preferred
Securities of such Bear Stearns Trust shall have such right. The Indenture also
provides that the Holders of a majority in principal amount of all of the
Securities of all series then outstanding as to which an Event of Default has
occurred may, on behalf of all Holders of such Securities, waive any past
5
<PAGE>
default under the Indenture other than (a) a default in the payment of the
principal of or interest on any of the Securities or (b) a default in respect of
a covenant or provision of the Indenture which under the terms of the Indenture
cannot be modified or amended without the consent of each Holder of Securities
so affected. In the case of Securities of one or more series issued to one or
more Bear Stearns Trusts, the Indenture provides that the Holders of a majority
in aggregate Liquidation Amount of the corresponding Preferred Securities or
Preferred Securities issued by such Bear Stearns Trusts shall also have the
right to waive such defaults.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
principal amount of the outstanding Securities of all affected series (voting as
one class), to modify the Indenture in a manner affecting the rights of the
holders of the Securities of each such series; provided, however, that no such
modification shall (i) change the fixed maturity of any Securities, or reduce
the rate or extend the time of payment of interest thereon or reduce the
principal amount thereof, or change the provisions pursuant to which the rate of
interest on the Securities is determined if such change could reduce the rate of
interest thereon, or reduce the minimum rate of interest thereon, or reduce any
amount payable upon any redemption thereof, or adversely affect any right to
convert the Securities in accordance with the Indenture, or reduce the amount to
be paid at maturity or upon redemption or make the principal thereof or any
interest thereon or on any overdue principal amount payable in any coin or
currency other than that provided in the Securities without the consent of the
holder of each Security so affected, (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any supplemental
indenture, without the consent of the holders of all Securities then
Outstanding, or (iii) modify any of the provisions of Section 4.07, Section 6.06
or Section 10.02 of the Indenture, except to increase any such percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the holder of each Security affected thereby or
(iv) modify the provisions of Article XIV of the Indenture with respect to the
subordination of outstanding Securities of any series in a manner adverse to the
holders thereof, without the consent of the holder of each Security so affected;
provided, further, that, in the case of the Securities of a series issued to a
Bear Stearns Trust, so long as any of the corresponding series of Preferred
Securities issued by such Bear Stearns Trust remains outstanding, (i) no such
amendment shall be made that adversely affects the holders of such Preferred
Securities in any material respect (including any amendment which would result
in a Bear Stearns Trust being classified as other than a grantor trust for
United States federal income tax purposes), and no termination of the Indenture
shall occur, and no waiver of any Event of Default with respect to such series
or compliance with any covenant with respect to such series under the Indenture
shall be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of such Preferred Securities then
outstanding, unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and unpaid interest (including any
6
<PAGE>
Additional Sums, Additional Interest and Compounded Interest) thereon shall have
been paid in full and (ii) no amendment shall be made to Section 6.05 of the
Indenture (regarding the right of holders of Preferred Securities to institute a
suit directly against the Company) that would impair the rights of the holders
of Preferred Securities provided therein without the prior consent of all
holders of Preferred Securities then outstanding, unless and until the principal
(and premium, if any) of the Securities of such series and all accrued and
unpaid interest (including any Additional Sums, Additional Interest and
Compounded Interest) thereon have been paid in full.
The Debenture will be prepayable, in whole or in part, at the option
of the Company at any time on or after May 15, 2006, at a prepayment price (the
"Optional Redemption Price") equal to the outstanding principal amount of the
Debenture plus accrued interest thereon to the date of prepayment.
Upon the occurrence and during the continuation of a Special Event,
in respect of the Trust, the Company may, at its option, at any time within 90
days of the occurrence of such Special Event redeem this Debenture, in whole but
not in part, at a prepayment price (the "Special Event Prepayment Price") equal
to 100% of the principal amount hereof plus accrued and unpaid interest to but
excluding the date of prepayment.
Any consent or waiver by the Holder of this Debenture given as
provided in the Indenture (unless effectively revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders of this Debenture and of any Debenture issued in exchange, registration
of transfer, or otherwise in lieu hereof irrespective of whether any notation of
such consent or waiver is made upon this Debenture or such other Debentures. No
reference herein to the Indenture and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and interest on this Debenture, at
the places, at the respective times, at the rate and in the coin or currency
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Debenture may be registered on the
Register of the Debentures upon surrender of this Debenture for registration of
transfer at the offices maintained by the Company or its agent for such purpose,
duly endorsed by the Holder hereof or his attorney duly authorized in writing,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, but without payment of any charge other
than a sum sufficient to reimburse the Company for any tax or other governmental
charge incident thereto. Upon any such registration of transfer, a new Debenture
or Debentures of authorized denomination or denominations for the same aggregate
principal amount will be issued to the transferee in exchange herefor.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, and any agent of the Company or the Trustee
may deem and treat the person in whose name this Debenture shall be registered
upon the Register of the Debentures of this series as the absolute owner of this
Debenture (whether or not this Debenture shall be overdue and notwithstanding
any notation of ownership or other writing hereon) for the purpose of receiving
payment of or on account of the principal hereof and, subject to the provisions
on the face hereof, interest due hereon and for all other purposes; and neither
the Company nor the Trustee nor any such agent shall be affected by any notice
to the contrary.
7
<PAGE>
No recourse shall be had for the payment of the principal of or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any stockholder, officer, director or employee, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as a part of
the consideration for the issue hereof, expressly waived and released.
The Company, and by acceptance of this Debenture, the Holder hereof,
and any Person that acquires a beneficial interest herein, agree that for United
States federal, state and local tax purposes it is intended that this Debenture
constitute indebtedness.
THIS DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF SAID STATE, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES THEREOF.
8
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers the within 7.80% Junior Subordinated Deferrable Interest Debenture
(the "Debenture") and all rights thereunder, unto
----------------------------------------
Please insert Social Security
or other identifying number of assignee:
------------------------------------------------------------
(Name and Address of Assignee, including Zip Code,
must be printed or typewritten)
and hereby irrevocably constitutes and appoints
Attorney to transfer said Debenture on the Register of the Debentures, with full
power of substitution in the premises.
Date: ____________________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange.
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within 7.80% Junior Subordinated
Deferrable Interest Debenture in every particular, without
alteration or enlargement or any change whatever.
9