As filed with the Securities and Exchange Commission on November __, 1998
Registration Nos. 333-66861; 333-66861-01; 333-66861-02; 333-66861-03;
33-66861-04
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
The Bear Stearns Companies Inc.
Bear Stearns Capital Trust II
Bear Stearns Capital Trust III
Bear Stearns Capital Trust IV
Bear Stearns Capital Trust V
(Exact name of registrant as specified in its charter)
Delaware 13-3286161
Delaware 13-7171663
Delaware 13-7171664
Delaware 13-7171665
Delaware 13-7171668
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
------------------
William J. Montgoris
Chief Operating Officer
c/o The Bear Stearns Companies Inc.
245 Park Avenue 245 Park Avenue
New York, New York 10167 New York, New York 10167
(212) 272-2000 (212) 272-2000
(Address, including zip code, and telephone (Name, address, including zip
number, including area code, of registrant's code, and telephone number,
principal executive offices) including area code, of agent
for service)
Copies to:
Dennis J. Block, Esq. Thomas E. Constance, Esq.
Cadwalader, Wickersham & Taft Kramer Levin Naftalis & Frankel LLP
100 Maiden Lane 919 Third Avenue
New York, New York 10038 New York, New York 10022
(212) 504-6000 (212) 715-9100
------------------
Approximate date of commencement of proposed sale to the public:
At various times after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
|_| 333-_______________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| 333-_______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
The information in this Prospectus will be amended or completed;
dated November 18, 1998
PROSPECTUS
The Bear Stearns Companies Inc.
By this Prospectus, the Company may offer--
Junior Subordinated Deferrable Interest Debentures Preferred Stock
Bear Stearns Capital Trust II
Bear Stearns Capital Trust III
Bear Stearns Capital Trust IV
Bear Stearns Capital Trust V
By this Prospectus, the Trusts may offer--
Trust Issued Preferred Securities
Fully and Unconditionally Guaranteed by The Bear Stearns Companies Inc.
- --------------------------------------------------------------------------------
The Company and the Trusts will provide the specific terms of these
securities in supplements to this Prospectus. You should read this
Prospectus and the supplements carefully before you invest.
- --------------------------------------------------------------------------------
Investment in the securities being offered involves certain risks. See
"Risk Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is , 1998.
<PAGE>
You should only rely on the information incorporated by reference or
provided in this Prospectus or any supplement to this Prospectus. The Company
and the Trusts have not authorized anyone else to provide you with different
information. These securities are not being offered in any state where the offer
is not permitted. You should not assume that the information in this Prospectus
or any supplement to this Prospectus is accurate as of any date other than the
date on the front of those documents.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information........................................2
Certain Definitions........................................................4
Forward-Looking Statements.................................................4
Risk Factors...............................................................5
The Company................................................................8
The Trusts.................................................................9
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.........................................10
Use of Proceeds...........................................................10
About This Prospectus.....................................................10
Overview of Debentures, Preferred Securities and Guarantees...............11
Description of Debentures.................................................12
Description of Preferred Securities.......................................21
Description of Guarantees.................................................32
Relationship Among Debentures, Preferred Securities and Guarantees........34
Description of Preferred Stock............................................37
Description of Depositary Shares..........................................40
Book-Entry Issuance.......................................................43
ERISA Considerations......................................................46
Plan of Distribution......................................................47
Legal Matters.............................................................48
Experts...................................................................48
The principal executive office of the Company and each Trust is located at
245 Park Avenue, New York, New York 10167; the telephone number of the Company
and each Trust is (212) 272-2000. The Company's Internet address is
http:\\www.bearstearns.com.
WHERE YOU CAN FIND MORE INFORMATION
The Bear Stearns Companies Inc. files annual, quarterly and special
reports, proxy statements and other information required by the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with the Securities and
Exchange Commission (the "SEC"). You may read and copy any document the Company
files at the SEC's public reference rooms located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at Seven World Trade Center, 13th Floor, New York, New
York 10048 and at Northwest Atrium Center, 5000 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The Company's SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov. Copies of
these reports, proxy statements and other information can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company and the Trusts have filed with the SEC a registration statement
on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Debentures, Preferred
Securities and Guarantees and the Preferred Stock. This Prospectus, which
constitutes a part of that Registration Statement, does not contain all the
information contained in that Registration Statement and its exhibits. For
further information with respect to the Company and the Trusts and the
Debentures, Preferred
2
<PAGE>
Securities and Guarantees and the Preferred Stock, you should consult the
Registration Statement and its exhibits. Statements contained in this Prospectus
concerning the provisions of any documents are necessarily summaries of those
documents, and each statement is qualified in its entirety by reference to the
copy of the document filed with the SEC. The Registration Statement and any of
its amendments, including exhibits filed as a part of the Registration Statement
or an amendment to the Registration Statement, are available for inspection and
copying through the entities listed above.
The SEC allows the Company and the Trusts to "incorporate by reference" the
information that we file with them, which means that we can disclose important
information to you by referring you to the other information we have filed with
the SEC. The information that we incorporate by reference is considered to be
part of this Prospectus, and information that we file later with the SEC will
automatically update and supersede this information.
The following documents filed by The Bear Stearns Companies Inc. with the
SEC pursuant to Section 13 of the Exchange Act (File No. 1-8989) and any future
filings under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act made before
the termination of the offering are incorporated by reference:
(i) the Annual Report on Form 10-K (including the portions of the
Company's Annual Report to Stockholders and Proxy Statement
incorporated by reference therein) for the fiscal year ended June 30,
1998;
(ii) the Quarterly Report on Form 10-Q for the quarter ended September 25,
1998; and
(iii) the Current Reports on Form 8-K dated July 21, 1998, August 26, 1998,
October 14, 1998 and October 30, 1998.
The Company and the Trusts will provide to you without charge, a copy of
any or all documents incorporated by reference into this Prospectus except the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). You may request copies by writing or
telephoning the Company at Corporate Communications Department, The Bear Stearns
Companies Inc., 245 Park Avenue, New York, New York 10167; telephone number
(212) 272-2000.
3
<PAGE>
CERTAIN DEFINITIONS
Unless otherwise stated in this Prospectus:
o the "Company" refers to The Bear Stearns Companies Inc. and its
subsidiaries;
o "Bear Stearns" refers to Bear, Stearns & Co. Inc.;
o "BSSC" refers to Bear, Stearns Securities Corp.;
o "BSIL" refers to Bear, Stearns International Limited; and
o the "Trusts" refer to Bear Stearns Capital Trust II, Bear Stearns
Capital Trust III, Bear Stearns Capital Trust IV and Bear Stearns
Capital Trust V, collectively.
Bear Stearns, BSSC and the Trusts are subsidiaries of the Company.
FORWARD-LOOKING STATEMENTS
This Prospectus includes and incorporates by reference "forward-looking
statements" within the meaning of the securities laws. All statements regarding
the Company's and the Trusts' expected financial position, business and
financing plans are forward-looking statements. Forward-looking statements also
include representations of our expectations or beliefs concerning future events
that involve risks and uncertainties, including those associated with the effect
of international, national and regional economic conditions and the performance
of Bear Stearn's and BSSC's products within the prevailing economic environment.
Although we believe that the expectations reflected in such forward-looking
statement are reasonable, such expectations may prove to be incorrect.
Cautionary statements describing important factors that could cause actual
results to differ materially from such expectations are disclosed in this
Prospectus, in conjunction with the forward-looking statements included or
incorporated by reference in this Prospectus. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by such cautionary statements.
4
<PAGE>
RISK FACTORS
You should carefully consider the following factors and other information
in this Prospectus and the applicable Prospectus Supplement before deciding to
invest in the securities being offered.
Ranking of Obligations under the Guarantees and the Debentures
The Company's obligations under the Guarantees and the Debentures will be
unsecured and subordinate and junior in right of payment to all Senior Debt of
the Company. At September 25, 1998, the Company had outstanding on an
unconsolidated basis approximately $28.6 billion of debt, including
approximately $27.0 billion of Senior Debt, none of which is secured, and
subsidiaries of the Company had outstanding on an unconsolidated basis
approximately $2.8 billion of debt (excluding $52.0 billion relating to
securities sold under repurchase agreements). The Indenture, the Guarantees and
the Trust Agreements do not limit the amount of additional secured or unsecured
debt, including Senior Debt, that the Company may incur. See "Description of
Guarantees" and "Description of Debentures--Subordination." Because the Company
is a holding company, the Company's right to participate in any distribution of
assets of any subsidiary, when such subsidiary is liquidated or reorganized, is
subject to the prior claims of creditors of the subsidiary. Accordingly, the
Debentures will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and holders of Debentures should look
only to the assets of the Company for payments on the Debentures. See "The
Company."
The ability of any Trust to pay amounts on its Preferred Securities is
solely dependent upon the Company making payments on the Debentures as and when
required.
Option to Extend Interest Payment Period; Price Consequences
If the applicable Prospectus Supplement provides, the Company will have the
right under the Indenture to periodically defer payment of interest for an
Extension Period of up to the number of consecutive interest payment periods
specified in the applicable Prospectus Supplement. The interest payment
deferment will be subject to the terms, conditions and any covenants specified
in the applicable Prospectus Supplement. The Extension Period may not extend
beyond the maturity of such series of Debentures, as provided in the applicable
Prospectus Supplement. Certain United States federal income tax consequences and
other applicable considerations to any such Debentures will be described in the
applicable Prospectus Supplement. See "Description of Debentures--Option to
Defer Interest Payments" and "Description of Preferred
Securities--Distributions."
The Indenture will also limit the Company's ability to pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock during an Extension Period. In the
event that the Company elects to exercise such right, the market price of the
Preferred Securities is likely to be adversely affected. If you sell Preferred
Securities during an Extension Period, you might not receive the same return on
your investment as holders who continue to hold their Preferred Securities. In
addition, due to the Company's right to defer interest payments, the market
price of the Preferred Securities (which represent preferred undivided
beneficial interests in the assets of a Trust) may be more volatile than the
market prices of other securities that are not subject to such deferrals.
Special Event Prepayment
If a Special Event regarding a series of Debentures occurs and is
continuing, the Company may prepay all (but not a part) of such series of
Debentures at any time within 90 days of the date of such Special Event at the
prepayment price described in the applicable Prospectus Supplement. Such a
prepayment of Debentures would cause a mandatory redemption of the Preferred
Securities. See "Description of Preferred Securities--Redemption or Exchange."
A "Special Event" means an Investment Company Event or a Tax Event.
5
<PAGE>
An "Investment Company Event" means the receipt by a Trust of an opinion of
counsel to the effect that, as a result of a change in the laws (or any
regulations) or in official administrative or judicial interpretation or
application of such laws (or regulations), there is more than an insubstantial
risk that such Trust is or will be required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act") on or
after the date of the issuance of the Preferred Securities of such Trust.
A "Tax Event" means the receipt by a Trust of an opinion of counsel to the
effect that, as a result of a change in the laws (or any regulations) or in
official administrative or judicial interpretation or application of such laws
(or regulations), there is more than an insubstantial risk that (i) such Trust
is, or will be within 90 days, subject to United States federal income tax with
respect to income received or accrued on the corresponding series of Debentures,
(ii) all or a part of the interest payable by the Company on such series of
Debentures is not, or within 90 days will not be, deductible by the Company for
United States federal income tax purposes, or (iii) such Trust is, or will be
within 90 days, subject to more than a minimal amount of taxes, duties or
governmental charges.
Exchange of Preferred Securities for Debentures
The Company will be able to dissolve the Trusts at any time and distribute
(after satisfaction of liabilities to creditors as required by applicable law)
Debentures to you as a holder of Preferred Securities in liquidation of such
Trusts. See "Description of Preferred Securities--Liquidation Distribution on
Dissolution."
Because you may receive Debentures on termination of a Trust and because
Distributions are otherwise limited to payments on the Debentures, you are also
making an investment decision relating to the Debentures when you invest in the
Preferred Securities. You should carefully review all the information regarding
the Debentures contained in this Prospectus and the applicable Prospectus
Supplement. See "Description of Debentures" and "Description of Preferred
Securities."
Prices for Preferred Securities or Debentures
The Company and the Trusts cannot make any guarantees about the market
prices for the Preferred Securities or the Debentures that may be exchanged for
Preferred Securities if a Trust were to be dissolved and liquidated. You should
be aware if you invest that the Preferred Securities or the Debentures may trade
at a lower price than you paid to purchase the Preferred Securities.
Rights Under the Guarantee
The Chase Manhattan Bank will act as the Guarantee Trustee and will hold
the Guarantees for your benefit. The Chase Manhattan Bank will also act as
Debenture Trustee for the Debentures and as Property Trustee under the Trust
Agreements and its affiliate Chase Manhattan Bank Delaware will act as Delaware
Trustee under the Trust Agreements. Unless the applicable Prospectus Supplement
states differently, each Guarantee will guarantee to you as a holder of
Preferred Securities the following payments if they are not paid by the
applicable Trust:
o any accumulated and unpaid Distributions that must be paid on such
Preferred Securities, to the extent
such Trust has funds available at such time;
o the Redemption Price, with respect to any Preferred Securities called
for redemption, to the extent such Trust has funds available at such
time; and
o if a voluntary or involuntary dissolution of such Trust occurs, and a
distribution of Debentures to the holders of such Preferred Securities
is not made, an amount equal to the lesser of either (i) the
Liquidation Distribution or (ii) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Trust has funds
available for that purpose.
The holders of at least a majority of the Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of a
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantees. As a holder of
6
<PAGE>
Preferred Securities, you may institute legal proceedings directly against the
Company to enforce your rights under such Guarantees without first bringing
legal proceedings against the applicable Trust, the Guarantee Trustee, or any
other person or entity. If the Company does not make interest or principal
payments on a series of Debentures purchased by a Trust, that Trust will not be
able to pay any distributions on its Preferred Securities because it will not
have the funds to do so. If such a default occurs, you would not be able to rely
on the Guarantees for payment of these amounts. Instead, if a Debenture Event of
Default relating to the failure to pay interest or principal on a series of
Debentures has occurred and is continuing, you may institute a suit directly
against the Company to enforce payment of the principal or interest on such
Debentures having a principal amount equal to the Liquidation Amount of your
Preferred Securities. Notwithstanding any payments made to you by the Company in
connection with such suit, the Company will remain obligated to pay the
principal of and interest on the Debentures, and the Company will have the right
to set-off any payment made to such holder of Preferred Securities by the
Company in connection with a suit directly against the Company or under the
related Guarantee. You will not be able to directly exercise any other remedies
available to the Trusts as the holders of the Debentures unless there has been
an Event of Default under the applicable Trust Agreement. See "Description of
Debentures--Enforcement of Certain Rights by Holders of Preferred Securities"
and "--Debenture Events of Default" and "Description of Guarantees." Each Trust
Agreement provides that by receiving and accepting Preferred Securities, you
agree to the provisions of the Guarantees and the Indenture.
Limited Voting Rights
As a holder of Preferred Securities, you will generally have limited voting
rights relating only to the modification of the Preferred Securities and the
exercise of the applicable Trust's rights as holder of Debentures. You will have
limited authority to vote to remove or replace the Trustees. The Company (as
holder of the Common Securities), the Property Trustee and the Delaware Trustee
may amend each Trust Agreement without your consent to ensure that each Trust
will be classified for United States federal income tax purposes as a grantor
trust even if doing so adversely affects your interests. See "Description of
Preferred Securities--Voting Rights; Amendment of each Trust Agreement" and
"Description of Preferred Securities--Removal of Trustees."
Absence of Public Market
The Preferred Securities, the Preferred Stock and the Depositary Receipts
will be new issues of securities with no established trading market. Any
election by the Company to file an application for listing of the Preferred
Securities, the Preferred Stock or the Depositary Receipts on any exchange or
quotation system will be specified in the applicable Prospectus Supplement.
However, the Company does not know the extent to which investor interest in the
Preferred Securities, the Preferred Stock or the Depositary Receipts will lead
to the development of a trading market or how liquid that market will be even if
the Preferred Securities, the Preferred Stock or the Depositary Receipts are
listed on an exchange or quotation system. If no active public market develops,
the market price and liquidity of the Preferred Securities, the Preferred Stock
or the Depositary Receipts may be adversely affected.
7
<PAGE>
THE COMPANY
The Bear Stearns Companies Inc. is a holding company that, through its
principal subsidiaries, Bear Stearns, BSSC and BSIL, is a leading United States
investment banking, securities trading and brokerage firm serving corporations,
governments, institutional and individual investors worldwide. The Company's
business includes:
o market-making and trading in corporate, United States government,
government-agency, mortgage-related, asset-backed and municipal
securities;
o trading in equity and debt corporate securities, options, futures,
foreign currencies, interest-rate swaps and other derivative products;
o securities and commodities arbitrage;
o securities, options and commodities brokerage;
o underwriting and distributing securities;
o providing securities clearance services;
o financing customer activities;
o securities lending;
o arranging for the private placement of securities;
o advising clients in mergers, acquisitions, restructurings and
leveraged transactions;
o providing other financial advisory services;
o making principal investments in leveraged acquisitions;
o acting as specialist on the floor of the New York Stock Exchange;
o providing fiduciary and other services, such as real estate brokerage,
investment management and investment advisory; and
o financial market and securities research.
The Company conducts its business from its principal offices in New York
City; from domestic regional offices in Atlanta, Boston, Chicago, Dallas, Los
Angeles and San Francisco; from representative offices in Beijing, Lugano and
Shanghai; through international subsidiaries in Buenos Aires, Dublin, Hong Kong,
London, Paris, Sao Paulo, Singapore and Tokyo; and through joint ventures with
other firms in Belgium, Madrid and the Philippines. The Company's foreign
offices provide services and engage in investment activities involving foreign
clients and international transactions. The Company provides trust-company
services through its subsidiary, Custodial Trust Company, located in Princeton,
New Jersey.
Bear Stearns and BSSC are broker-dealers registered with the SEC. They are
also members of the New York Stock Exchange, all other principal United States
securities and commodities exchanges, the National Association of Securities
Dealers, Inc. and the National Futures Association. Bear Stearns is a "primary
dealer" in United States government securities, as designated by the Federal
Reserve Bank of New York. BSIL is a securities broker dealer based in London.
BSIL is regulated by the Financial Services Authority in the United Kingdom and
is a member of the London International Financial Futures Exchange, the London
Securities & Derivatives Exchange, the International Petroleum Exchange and the
London Commodity Exchange.
8
<PAGE>
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law. As a
Delaware business trust, each Trust will be subject to (i) a trust agreement
executed by the Company, as Depositor, a Delaware Trustee, a Property Trustee
and three Administrators and (ii) a certificate of trust filed with the Delaware
Secretary of State. The trust agreement of each Trust will be amended and
restated in its entirety (as amended and restated, a "Trust Agreement") before
the issuance of any Preferred Securities. Each Trust Agreement will be
substantially in the form filed as an exhibit to the Registration Statement.
Each Trust Agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "TIA"). Each Trust will only have the following
purposes:
o issuing and selling its Common Securities and Preferred Securities
(the "Trust Securities");
o using the proceeds from such sale to acquire a series of Debentures
issued by the Company;
o and engaging in other activities necessary or incidental to the above
purposes (for example, registering the transfer of Trust Securities).
Accordingly, the Debentures will be the only assets of each Trust, and payments
received from the Debentures will be the only revenue of each Trust.
All of the Common Securities of each Trust will be owned by the Company.
The Company will acquire Common Securities with an aggregate Liquidation Amount
of at least 3% of each Trust's total capital.
Each Trust has a term of approximately 55 years unless the applicable
Prospectus Supplement states differently, but may terminate earlier as the Trust
Agreement provides. Each Trust's business and affairs will be conducted by its
trustees, which are appointed by the Company. Each of the Trusts will have the
following Trustees and Administrators:
o Property Trustee: The Chase Manhattan Bank, which will act as sole
trustee under each Trust Agreement for purposes of compliance with the
TIA;
o Delaware Trustee: Chase Manhattan Bank Delaware;
o Administrators: three individual trustees who are employees or
officers of or affiliated with the Company.
The Chase Manhattan Bank will also act as trustee under the Guarantees and the
Indenture governing the Debentures. See "Description of Guarantees" and
"Description of Debentures." The Company (as the holder of the Common
Securities) can appoint, remove or replace the Property Trustee and/or the
Delaware Trustee. Also, if any event of default under a Trust Agreement has
occurred and is continuing, then the holders of a majority of the Liquidation
Amount of the related Preferred Securities will also be able to appoint, remove
or replace the Property Trustee and/or the Delaware Trustee. As a holder of
Preferred Securities, you will not be able to appoint, remove or replace the
Administrators because the Company (as holder of the Common Securities) has that
power exclusively. The duties and obligations of each Trustee are governed by
the applicable Trust Agreement. The Company will pay all ongoing fees and
expenses of each Trust, including those related to the offering of the Preferred
Securities.
9
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges and to combined fixed charges and
preferred stock dividends for each of the periods indicated are as follows:
<TABLE>
<CAPTION>
Three Months Ended
---------------------
September 25, September 26, Fiscal Year Ended June 30,
----------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
------------- ------------ --------- ---------- ---------- ----------- ----------
(Unaudited)
(In thousands, except for ratio)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before taxes on $ 93,309 $ 267,138 $ 1,063,492 $ 1,013,690 $ 834,926 $ 388,082 $ 642,799
income....................
Added fixed charges:
Interest................ 982,703 816,915 3,638,513 2,551,364 1,981,171 1,678,515 1,023,866
Interest factor in rents 7,706 7,231 30,130 26,516 25,672 24,594 21,772
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total fixed charges.......... 990,409 824,146 3,668,643 2,577,880 2,006,843 1,703,109 1,045,638
----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings before fixed
charges and taxes on $ 1,083,718 $ 1,091,284 $ 4,732,135 $ 3,591,570 $ 2,841,769 $ 2,091,191 $ 1,688,437
income.................... =========== =========== =========== =========== =========== =========== ===========
Preferred Stock dividends.... $ 9,778 $ 5,925 $ 31,970 $ 23,890 $ 24,493 $ 25,137 $ 24,667
Ratio of income before
provision for income
taxes to net 146% 165% 161% 165% 170% 161% 166%
income*..................
Preferred dividend
factor on pre-tax basis.... 14,233 9,793 51,481 39,484 41,680 40,543 40,975
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total combined fixed charges
and preferred stock
dividends................. $ 1,004,642 $ 833,939 $ 3,720,124 $ 2,617,364 $ 2,048,523 $ 1,743,652 $ 1,086,613
=========== =========== =========== =========== =========== =========== ===========
Ratio of earnings to
combined fixed charges
and preferred stock 1.1 1.3 1.3 1.4 1.4 1.2 1.6
dividends................ =========== =========== =========== =========== =========== =========== ===========
</TABLE>
* Represents income before provision for income taxes divided by net income;
which adjusts dividends on outstanding series of preferred stock of the
Company to a pre-tax basis.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the securities
for general corporate purposes, which may include additions to working capital,
the repayment of indebtedness and investment in, or extensions of credit to,
subsidiaries. The applicable Prospectus Supplement will describe any different
use of proceeds.
ABOUT THIS PROSPECTUS
This Prospectus is a part of the Registration Statement we filed with the
SEC utilizing the "shelf" registration process. Under this shelf registration
process, we may sell any combination of the securities described in this
Prospectus in one or more offerings up to a total dollar amount of $750,000,000.
This Prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a Prospectus Supplement
that will contain the specific information about the terms of that offering. The
Prospectus Supplement may also add, update or change information contained in
this Prospectus. You should read both this Prospectus and any Prospectus
Supplement, together with the additional information described under the heading
"Where You Can Find More Information." It is important for you to consider all
of this information in making your investment decision. This Prospectus may not
be used to consummate sales of Debentures, Preferred Securities or Preferred
Stock unless accompanied by a Prospectus Supplement about the terms of that
offering.
10
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OVERVIEW OF DEBENTURES, PREFERRED SECURITIES
AND GUARANTEES
The Bear Stearns Companies Inc. may periodically offer its Junior
Subordinated Deferrable Interest Debentures (the "Debentures") in one or more
series or issuances. The Debentures will be unsecured and junior in right of
payment to the Company's Senior Debt. If provided in an applicable Prospectus
Supplement, the Company may defer payments of interest on any series of
Debentures by extending the interest payment period at various times for an
"Extension Period" of up to the number of consecutive interest payment periods
specified in the applicable Prospectus Supplement (but not beyond the maturity
of such series as provided in the applicable Prospectus Supplement). If payments
of interest are deferred, then the Company generally is not permitted to declare
or pay any dividends, distributions or other payments on, or repay, repurchase,
redeem or otherwise acquire, the Company's capital stock or debt securities that
rank equally with or junior to such series of Debentures. See "Risk
Factors--Ranking of Obligations under the Guarantees and the Debentures,"
"Description of Debentures--Option to Defer Interest Payments," "--Restrictions
on Certain Payments" and "--Subordination."
Each of the Trusts may periodically offer Preferred Securities that
represent preferred undivided beneficial interests in the assets of such Trust.
The Company will be the owner of the Common Securities that represent common
undivided beneficial interests in the assets of such Trust. As a holder of
Preferred Securities you will be entitled to a preference over the Common
Securities of such Trust in certain circumstances with respect to (i) cash
distributions ("Distributions") that accumulate from the date of original
issuance and are payable periodically as specified in the applicable Prospectus
Supplement and (ii) amounts payable on redemption or liquidation.
At the same time a Trust issues and sells Preferred Securities, such Trust
will invest the proceeds of the sale of the Preferred Securities and
contributions received for the Common Securities in Debentures. The Debentures
will have terms that correspond to the terms of that Trust's related Preferred
Securities. See "Description of Preferred Securities--Distributions." The
Debentures will be the only assets of each Trust, and payments received from the
Debentures will be the only revenue of each Trust.
The Company will guarantee the payment of Distributions and payments on
liquidation of a Trust or on redemption of Preferred Securities. See
"Description of Guarantees." The Company's obligations under each Guarantee will
be unsecured and junior in right of payment to all Senior Debt of the Company.
Taken together, the Company's obligations under each series of Debentures, the
Indenture, the related Trust Agreement and the related Guarantee will provide a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the related Preferred Securities. See "Relationship Among
Debentures, Preferred Securities and Guarantees--Full and Unconditional
Guarantee."
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DESCRIPTION OF DEBENTURES
The Company will issue the Debentures under an Indenture between the
Company and The Chase Manhattan Bank, as trustee (the "Debenture Trustee"). This
is a summary and is not complete. This summary does not describe certain
exceptions and qualifications contained in the Indenture or the Debentures. You
should read the Indenture, which is filed as an exhibit to the Registration
Statement. The Indenture is qualified under the Trust Indenture Act of 1939, as
amended.
General
The Debentures may be issued in one or more series of Debentures under the
Indenture with terms corresponding to the terms of a series of related Preferred
Securities. In that event, concurrently with the issuance and sale of each
Trust's Preferred Securities, such Trust will invest the proceeds of such sale
and the consideration paid by the Company for the Common Securities of such
Trust in such series of Debentures. Each series of Debentures will be in the
principal amount equal to the aggregate stated Liquidation Amount of the related
Preferred Securities and the Common Securities of such Trust.
Each series of Debentures will be unsecured and subordinate and junior in
right of payment to all Senior Debt of the Company as provided in the Indenture.
See "--Subordination." Because the Company is a holding company, the Company's
right to participate in any distribution of assets of any subsidiary, including
Bear Stearns, BSSC and BSIL, when such subsidiary is liquidated or reorganized
is subject to the prior claims of creditors of the subsidiary. Accordingly, the
Debentures will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries and the applicable Trusts, as holders
of Debentures should look only to the assets of the Company for payments on the
Debentures. The Indenture does not limit the incurrence of additional debt by
the Company, which debt could be Senior Debt. At September 25, 1998, the Company
had outstanding on an unconsolidated basis approximately $28.6 billion of debt,
including approximately $27.0 billion of Senior Debt, none of which is secured,
and subsidiaries of the Company had outstanding on an unconsolidated basis
approximately $2.8 billion of debt (excluding $52.0 billion relating to
securities sold under repurchase agreements). See "--Subordination" and "Risk
Factors--Ranking of Obligations under the Guarantees and the Debentures."
The Debentures may be issued in one or more series pursuant to a
supplemental indenture to the Indenture or a resolution of the Company's Board
of Directors.
The applicable Prospectus Supplement will describe some or all of the
following terms of the Debentures:
o the title;
o any limit on the aggregate principal amount;
o maturity date on which principal is payable or the method of
determining it;
o interest rate(s);
o interest payment dates;
o rights to defer or extend an interest payment date;
o record dates for each corresponding interest payment date;
o the place of payment where (i) principal, premium, and interest are
payable, (ii) Debentures may be presented for registration of transfer
or exchange and (iii) notices and demands to the Company may be made;
o terms and conditions of optional redemption;
o terms and conditions of mandatory redemption;
o issuable denominations;
o currency(ies) in which the principal, any premium and any interest are
payable or the Debentures will be denominated;
o additions, modifications or deletions to the events of default or
covenants of the Company in the Indenture;
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o portion (if less than all) of the principal amount payable upon
acceleration or maturity;
o additions or changes to the Indenture necessary to permit or
facilitate the issuance of Debentures in bearer form;
o index(ices) and applicable calculations used to determine the amount
of principal, premium or interest payments;
o terms and conditions for issuance of a temporary Global Security
representing all such Debentures and the exchange of a temporary
Global Security for definitive Debentures;
o whether issuance will be in the form of one or more Global Securities
and the depositary for Global Securities;
o appointment of any paying agent(s);
o terms and conditions of any optional or mandatory conversion or
exchange of Debentures into the Company's capital stock or Preferred
Securities;
o form of Trust Agreements and Guarantees; and
o any other terms not inconsistent with the Indenture.
Debentures may be sold at a substantial discount below their stated
principal amount and may bear no interest or below market rate interest. Certain
United States federal income tax consequences and special considerations
applicable to any Debentures will be described in the applicable Prospectus
Supplement.
If (i) the purchase price of any of the Debentures is payable in one or
more foreign currencies or currency units, (ii) any Debentures are denominated
in one or more foreign currencies or currency units or (iii) the principal, any
premium or any interest on any Debentures is payable in one or more foreign
currencies or currency units, then the restrictions, elections, certain United
States federal income tax consequences, specific terms and other information
with respect to such series of Debentures and such foreign currency or currency
units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal, any
premium or any interest on any series of Debentures, special United States
federal income tax, accounting and other applicable considerations will be
described in the applicable Prospectus Supplement.
Denominations, Registration and Transfer
Debentures will be issuable only in registered form without coupons, unless
the applicable Prospectus Supplement states differently. Debentures of any
series will be exchangeable for other Debentures of the same issue and series,
in authorized denominations, with the same aggregate principal amount, original
issue date and maturity and bearing the same interest rate.
Debentures may be presented for exchange, and may be presented for
registration of transfer (with the form of transfer endorsed, or a duly executed
satisfactory written instrument of transfer), at the office of the appropriate
securities registrar or at the office of any transfer agent designated by the
Company for such purpose and referred to in the applicable Prospectus
Supplement. There will be no service charge for any exchange or registration of
transfer, although payment of certain taxes and other governmental charges as
described in the Indenture may be required. The Company will appoint the
Debenture Trustee as securities registrar under the Indenture. If the Company
designates any transfer agents (in addition to the securities registrar) with
respect to any series of Debentures in the applicable Prospectus Supplement, the
Company may rescind that designation or approve a change in the location where
such transfer agent acts at any time, provided that the Company maintains a
transfer agent in each place of payment for such series. The Company may
designate additional transfer agents with respect to any series of Debentures at
any time.
If a redemption occurs, neither the Company nor the Debenture Trustee will
be required to (i) exchange or register the transfer of Debentures of any series
during a period beginning at the opening of business 15 days before the mailing
of a notice of redemption of Debentures of that series and ending at the close
of business on the day of such mailing or (ii) exchange or transfer any
Debentures so selected for redemption, except any portion of Debentures not
being redeemed in a partial redemption.
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Global Debentures
Unless the applicable Prospectus Supplement states differently, all or a
part of each series of Debentures may be issued in the form of one or more
Global Debentures that will be deposited with, or on behalf of, a depositary
(the "Depositary") identified in the applicable Prospectus Supplement. Global
Debentures will be issued only in fully registered form, but may be in either
temporary or permanent form. Unless and until it is exchanged for certificated
Debentures, a Global Debenture may be transferred only as a whole. Transfers of
Global Debentures are permitted between the following entities:
o by the Depositary for such Global Debenture to a nominee of such
Depositary;
o by a nominee of such Depositary to such Depositary or another nominee
of such Depositary; or
o by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
While each Prospectus Supplement will describe the terms of the depositary
arrangement with respect to each series of Debentures, the Company expects the
following terms will apply to each of the depositary arrangements.
The Depositary or its nominee will credit on its book-entry registration
and transfer system the respective principal amounts of the individual
Debentures that are represented by the corresponding Global Debenture issued and
deposited with them to the accounts of persons who have accounts
("Participants") with such Depositary. The depositary accounts may include the
accounts of Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear"), and Cedel Bank, societe anonyme
("Cedel"). The dealers, underwriters or agents or the Company (if the Company
offers and sells such Debentures directly) will designate these accounts for the
respective Debentures.
The ownership of the beneficial interests in a Global Debenture will be
limited to Participants or persons that may hold interests through Participants,
including Euroclear and Cedel and their participants. Actual ownership of
beneficial interests in each Global Debenture will only be shown on, and the
transfer of ownership will be completed through, records of the applicable
Depositary or its nominee (for interests of Participants), and the records of
Participants (for interests of persons who hold through Participants). However,
because the laws of some states require that certain purchasers of securities
take physical delivery of such securities in definitive form, rather than
through a Global Debenture, such restrictions may impair the ability to transfer
beneficial interests in a Global Debenture.
For all purposes under the Indenture and as long as either the Depositary
or its nominee is the registered owner of the corresponding Global Debenture,
such Depositary or such nominee will be considered the sole holder and owner of
the Debentures represented by such Global Debenture.
Except as provided below, owners of beneficial interests in a Global
Debenture:
o will not be entitled to have any of the individual Debentures of the
series represented by the corresponding Global Debenture registered in
their names;
o will not receive physical delivery of any such Debentures of such
series in definitive form; and
o will not be considered the holders or owners of such Debentures under
the Indenture.
Payments of principal, any premium and any interest on individual
Debentures represented by a Global Debenture registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be. None of the Company, the Debenture Trustee, any paying agent or the
securities registrar for such Debentures will be responsible or liable for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Debenture representing such Debentures. They
also will not be responsible for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
When it receives any payment of principal, any premium or any interest
regarding a permanent Global Debenture representing any Debentures, the Company
expects the Depositary or its nominee to immediately credit
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each Participant's account with payments in amounts proportionate to its
respective beneficial interest in the principal amount of such Global Debenture
for such Debentures. Each Participant's beneficial interest will be shown on the
records of such Depositary or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in each Global
Debenture will be governed by standing instructions and customary practices as
now apply with securities held for customer accounts in bearer form or
registered in "street name." These Participants will be responsible for such
payments.
If a Depositary for a series of Debentures is at any time unwilling, unable
or ineligible to continue as depositary, and the Company does not appoint a
successor depositary within 90 days, the Company will issue individual
Debentures of such series in exchange for the Global Debenture representing such
series of Debentures, unless the applicable Prospectus Supplement states
differently. The Company may at any time and in its sole discretion, subject to
any limitations described in the applicable Prospectus Supplement, determine not
to have any Debentures of such series represented by one or more Global
Debentures. In such case, the Company will issue certificated Debentures of such
series in exchange for the Global Debenture as described in the applicable
Prospectus Supplement.
An owner of a beneficial interest in a Global Debenture may be permitted to
receive individually certificated Debentures of a series in exchange for the
beneficial interests in the Global Debenture on terms that are acceptable to
each of the Company, the Debenture Trustee and the Depositary and subject to any
limitations in the applicable Prospectus Supplement. In such case, the owner of
a beneficial interest in a Global Debenture will be entitled to physical
delivery of certificated Debentures of the same series that is equal in its
aggregate principal amount to the owner's beneficial interest in the
corresponding Global Debenture. The Company will register such Debenture in the
owner's name in the denominations specified for such series in the applicable
Prospectus Supplement.
Payment and Paying Agents
Payment of principal, any premium and any interest on Debentures will be
made at the office of the Debenture Trustee in the City of New York or at the
office of such paying agent(s) as the Company may periodically designate, unless
the applicable Prospectus Supplement states differently. However, at the option
of the Company, payment of any interest may be made (i) except in the case of
Global Debentures, by check mailed to the address in the securities register of
the person entitled to such payment or (ii) by transfer to an account specified
in the securities register maintained by the person entitled to such payment,
provided that proper transfer instructions have been received by the preceding
record date. Unless the applicable Prospectus Supplement states differently,
payment of any interest on Debentures will be made to the person in whose name
such Debentures are registered at the close of business on the record date for
such interest, except in the case of defaulted interest. The Company may at any
time designate additional paying agents or rescind the designation of any paying
agent; however, the Company will at all times be required to maintain a paying
agent in each place of payment for each series of Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent or then
held by the Company in trust for the payment of principal, any premium or any
interest on any Debenture and remaining unclaimed for two years after such
payment has become due and payable shall, at the request of the Company, be
repaid to the Company. After that time, the holder of such Debenture will be a
general unsecured creditor of the Company and may only look to the Company for
payment of such moneys.
Option to Defer Interest Payments
If provided in the applicable Prospectus Supplement, the Company will have
the right to periodically defer payment of interest for an Extension Period of
up to the number of consecutive interest payment periods specified in the
applicable Prospectus Supplement. The interest payment deferment will be subject
to the terms, conditions and any covenants specified in the applicable
Prospectus Supplement. The Extension Period may not extend beyond the maturity
of such series of Debentures as provided in the applicable Prospectus
Supplement. Certain United States federal income tax consequences and other
applicable considerations to any such Debentures will be described in the
applicable Prospectus Supplement.
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Redemption and Prepayment
Debentures will not be subject to any sinking fund, unless the applicable
Prospectus Supplement states differently.
The Company may redeem all (at any time) or a part (at particular times) of
the Debentures of any series, unless the applicable Prospectus Supplement states
differently. If the Debentures of any series are redeemable beginning on a
specified date or upon the satisfaction of additional conditions, the applicable
Prospectus Supplement will specify such date or describe such conditions. The
redemption price for any Debenture so redeemed will equal any accrued and unpaid
interest to the redemption date, plus 100% of the outstanding principal amount,
unless the applicable Prospectus Supplement states differently.
Unless the applicable Prospectus Supplement states differently, if a
Special Event regarding a Trust occurs and is continuing, the Company has the
option to prepay all (but not a part) of the corresponding series of Debentures
at any time within 90 days of the date of such Special Event, subject to the
provisions of the Indenture and whether or not such Debentures are then
otherwise redeemable at the option of the Company. The prepayment price for any
Debentures will be described in the applicable Prospectus Supplement. For so
long as the applicable Trust is the holder of all the outstanding Debentures of
such series, the proceeds of any such prepayment will be used by such Trust to
redeem the corresponding Trust Securities in accordance with their terms.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Debentures to be redeemed
at its registered address. Unless the Company defaults in payment of the
redemption price and any interest accrued to the redemption date, interest will
stop accruing on such Debentures (or the part called for redemption) as of the
redemption date.
Restrictions on Certain Payments
The Company will covenant that it will not, and will not permit any of its
subsidiaries to:
o declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the
Company's capital stock,
o make any payment of principal, any premium or any interest on or
repay, repurchase or redeem any debt securities of the Company
(including other series of Debentures) that rank equally with or
junior in interest to the Debentures or
o make any guarantee payments on any guarantee by the Company of the
debt securities of any subsidiary if such guarantee ranks equally with
or junior in interest to the Debentures
whenever any of the following payment restriction events occur:
o the Company has actual knowledge of the occurrence of any event (i)
that with the giving of notice or the lapse of time or both would
constitute a Debenture Event of Default under the Indenture with
respect to the Debentures of such series and (ii) that the Company has
not taken reasonable steps to cure,
o if such Debentures are held by a Trust of a series of related Preferred
Securities and the Company has defaulted on the payment of any
obligations under the Guarantee relating to such related Preferred
Securities or
o the Company has given notice of its election of an Extension Period as
provided in the Indenture with respect to the Debentures of such series
and has not rescinded such notice, or such Extension Period, or any
extension thereof, is continuing.
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The Company will be permitted to make:
o dividends or distributions in capital stock of the Company,
o any declaration of a dividend in connection with the implementation of
a stockholders' rights plan, or the issuance of stock under any such
plan in the future, or the redemption or repurchase of any such rights
pursuant to such plan,
o payments under (i) any Guarantee with respect to the series of related
Preferred Securities and (ii) any guarantee for the benefit of holders
of the capital securities of Bear Stearns Capital Trust I,
o purchases of common stock related to the issuance of common stock
under any of the Company's benefit plans for its directors, officers
or employees and
o payments of interest under a loan agreement with Bear Stearns Finance
LLC.
However, the Company will not be able to make payments under any Guarantee if a
payment restriction event occurs with respect to the debentures issued to Bear
Stearns Capital Trust I under the Indenture, dated as of January 29, 1997,
between the Company and The Chase Manhattan Bank, as periodically supplemented.
Modification of Indenture
The Company and the Debenture Trustee may modify the Indenture without the
consent of the applicable Trusts as holders of any series of Debentures to cure
ambiguities, defects or inconsistencies (so long as the interests of such Trusts
or, in the case of Debentures, the holders of the related Preferred Securities
are not materially adversely affected) and qualify, or maintain the
qualification of, the Indenture under the TIA, among other things. The Indenture
permits the Company and the Debenture Trustee to modify the Indenture in a
manner that materially adversely affects the rights of the applicable Trusts as
holders of a series of Debentures so long as the holders of at least a majority
in principal amount of such series of Debentures consents.
The consent of all affected holders of a series of Debentures is required
to, among other things: (i) change the maturity of such series of Debentures;
(ii) reduce the principal amount of, or reduce the rate or extend the time of
payment of interest on, such series of Debentures; or (iii) modify the
provisions regarding subordination of the Debentures in a manner that adversely
affects the rights of holders of such series of Debentures. The consent of all
holders of a series of Debentures is required to reduce the percentage of
principal amount of Debentures of such series, the holders of which are required
to consent to any such modification of the Indenture.
In the case of Debentures, so long as any related Preferred Securities
remain outstanding, unless the principal and any premium of the Debentures and
all accrued and unpaid interest on such Debentures have been paid in full: (i)
no modification may be made that materially adversely affects you as a holder of
such Preferred Securities, and no termination of the Indenture may occur, and no
waiver of any Debenture Event of Default or compliance with any covenant under
the Indenture with respect to such Debentures may be effective, without the
prior consent of the holders of at least a majority of the Liquidation Amount of
all outstanding related Preferred Securities affected; and (ii) no modification
may impair your rights as a holder of Preferred Securities to institute suit
directly against the Company when certain Debenture Events of Default occur,
without the prior consent of the holders of all related Preferred Securities
then outstanding.
The Company and the Debenture Trustee may execute any supplemental
indenture to create any new series of Debentures without the consent of any
Trust as a holder of Debentures.
Debenture Events of Default
A "Debenture Event of Default" will occur under the Indenture if any of the
following events occurs:
o failure for 30 days by the Company to pay any interest when due
(subject to the deferral of any due date in the case of an Extension
Period); or
o failure by the Company to pay any principal when due at maturity, upon
redemption, by declaration or otherwise; or
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o failure by the Company to observe or perform in any material respect
certain covenants contained in the Debentures or the Indenture for 90
days after written notice to the Company from the Debenture Trustee or
the holders of at least 25% in principal amount of such series of
Debentures; or
o certain events of bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority of the outstanding principal amount of Debentures
of each series affected have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee or the holders of at least 25% of the outstanding principal
amount of Debentures of each series affected may declare the principal due and
payable immediately when a Debenture Event of Default occurs. If the Debenture
Trustee or holders of at least 25% of the outstanding principal amount of
Debentures fail to make such declaration, the holders of at least 25% of the
Liquidation Amount of the related Preferred Securities will have such right. If
the Debenture Event of Default has been cured, the holders of a majority of the
outstanding principal amount of Debentures of each series affected may annul
such declaration. If the holders of such Debentures fail to annul such
declaration and waive such default, the holders of a majority of the Liquidation
Amount of the related Preferred Securities affected will have such right.
The holders of a majority of the outstanding principal amount of each
series of the Debentures affected, and the holders of a majority of the
Liquidation Amount of the corresponding Preferred Securities, may, on behalf of
the holders of all the Debentures of such series or the corresponding Preferred
Securities (as applicable), waive any default, except a default in the payment
of principal or interest or a default regarding a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Debenture. The Company is required to file an annual
certificate with the Debenture Trustee stating whether the Company is in
compliance with all the applicable conditions and covenants under the Indenture.
If a Debenture Event of Default occurs and is continuing as to a series of
Debentures, then the Property Trustee may declare the principal and any interest
on such Debentures to be immediately due and payable and to enforce its other
rights as a creditor with respect to such Debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default relating to the failure to pay interest or
principal on a series of Debentures has occurred and is continuing, as a holder
of related Preferred Securities, you may institute a suit directly against the
Company to enforce payment of the principal or interest on such Debentures
having a principal amount equal to the Liquidation Amount of your related
Preferred Securities. The Company may not amend the Indenture to remove your
right to bring such suit without the prior written consent of the holders of all
of the outstanding Preferred Securities. If the right to bring such suit is
removed, the applicable Trust may become subject to the reporting obligations of
the Exchange Act. The Company will have the right under the Indenture to set-off
any payment made to you as a holder of Preferred Securities in connection with a
suit directly against the Company or under the related Guarantee.
You will not be able to directly exercise any remedies other than those
described in the preceding paragraph available to the applicable Trust as
holders of the Debentures unless there has been an Event of Default under the
Trust Agreement. See "Description of Preferred Securities--Events of Default;
Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture permits the Company to consolidate or merge with another
person or to sell or convey all or substantially all its assets to any person
if:
o either (i) the Company is the successor person or (ii) the successor
person is organized under the laws of the United States or any state
or the District of Columbia, and such successor person expressly
assumes the Company's obligations on the Debentures and under the
Indenture;
o immediately after the consolidation, merger, sale or conveyance, no
default in the performance of any covenant or condition under the
Indenture has occurred; and
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o in the case of Debentures, such consolidation, merger, sale or
conveyance is permitted and does not cause a breach or violation under
the related Trust Agreement and Guarantee.
The general provisions of the Indenture do not afford the applicable Trusts
as holders of the Debentures protection in the event of a transaction involving
the Company that may adversely affect holders of the Debentures.
Satisfaction and Discharge
The Indenture will cease to be of further effect when:
o all outstanding Debentures of a series are delivered to the Debenture
Trustee for cancellation or
o all outstanding Debentures are due and payable or will become due and
payable or will be called for redemption within one year, and the
Company deposits with the Debenture Trustee funds in trust in an
amount sufficient to pay at maturity or upon redemption all of such
outstanding Debentures, including principal and any interest to the
date of maturity or redemption (as applicable) and the Company has
paid all other amounts payable under the Indenture.
The following rights will survive such satisfaction and discharge:
o remaining rights of registration of transfer, conversion, substitution
and exchange and the Company's optional redemption right,
o rights of holders to receive principal and interest and other amounts
deposited with the Debenture Trustee and
o the rights, obligations and immunities of the Debenture Trustee under
the Indenture.
Conversion or Exchange
If and to the extent indicated in the applicable Prospectus Supplement, the
Debentures of any series may be convertible into capital stock of the Company.
The specific terms of such conversion will be described in the applicable
Prospectus Supplement. Such conversion may be either mandatory or optional. The
conversion price will be stated in the applicable Prospectus Supplement.
Subordination
In the Indenture, the Company has covenanted and agreed that any Debentures
will be subordinate and junior in right of payment to all Senior Debt as
provided in the Indenture. When any payment or distribution of assets of the
Company is made due to any insolvency event of the Company, the holders of
Senior Debt will first be entitled to receive payment in full of principal, any
premium and any interest on such Senior Debt before any payment of principal or
interest on the Debentures.
If the maturity of any Debentures is accelerated, the holders of all
outstanding Senior Debt will first be entitled to receive payment in full of all
amounts due on such Senior Debt before the holders of Debentures will be
entitled to receive or retain any payment regarding principal or interest on the
Debentures.
No payments on account of principal, any premium or any interest on the
Debentures may be made if a default in any payment with respect to Senior Debt
has occurred and is continuing or an event of default with respect to any Senior
Debt resulting in its acceleration, or if any judicial proceeding is pending
with respect to any such default.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent:
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o every obligation of such person for money borrowed;
o every obligation of such person evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses;
o every reimbursement obligation of such person with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of such person;
o every obligation of such person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business);
o every capital lease obligation of such person;
o every obligation of such person for claims regarding derivative
products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements; and
o every obligation of the type referred to in clauses (i) through (vi)
of another person and all dividends of another person the payment of
which, in either case, such person has guaranteed or is responsible or
liable for, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of, any premium and any interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or before the date of the Indenture or thereafter incurred,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligations are not superior
in right of payment to the Debentures or to other Debt which ranks equally with,
or subordinated to, the Debentures.
Senior Debt will not include:
o any Debt of the Company which, when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy
Code of 1978, as amended, was without recourse to the Company,
o any Debt of the Company to any of its subsidiaries,
o Debt to any employee of the Company,
o Debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the Debt holders by the Debenture holders
as a result of the subordination provisions of the Indenture would be
greater than such payments otherwise would have been as a result of
any obligation of such Debt holders to pay amounts to the obligees on
such trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination provisions to
which such Debt is subject, and
o any other debt securities issued pursuant to the Indenture and the
Indenture, dated as of January 29, 1997, between the Company and The
Chase Manhattan Bank, as periodically supplemented.
Except as described in the next sentence, the Debentures will rank equally
with, and will not be superior in right of payment to, the obligations of the
Company under the Loan Agreement, dated as of March 24, 1994, between the
Company and Bear Stearns Finance LLC in the aggregate principal amount of
$189,875,000. However, the Company will be permitted to make payments of
interest on this loan during an Extension Period.
The Indenture places no limitation on the amount of Senior Debt that the
Company may incur. The Company expects to periodically incur additional
indebtedness and other obligations constituting Senior Debt.
The Indenture provides that the foregoing subordination provisions may be
changed before issuance with respect to the Debentures to be issued. Any such
change would be described in the applicable Prospectus Supplement.
Rights of Holders of Preferred Securities
As a holder of the related Preferred Securities for a series of Debentures,
you will have the rights, in connection with modifications to the Indenture or
when Debenture Events of Default occur, as described under "--Modification of
Indenture", "--Debenture Events of Default" and "--Enforcement of Certain Rights
by Holders of Preferred Securities," unless the applicable Prospectus Supplement
states differently.
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The Company will covenant, as to each series of Debentures:
o to maintain directly or indirectly 100% ownership of the Common
Securities of the Trust to which such Debentures have been issued,
provided that certain successors which are permitted pursuant to the
Indenture may succeed to the Company's ownership of the Common
Securities,
o not to voluntarily terminate, wind up or liquidate any Trust, except
(a) in connection with a distribution of Debentures to you as a holder
of the Preferred Securities in exchange for such Preferred Securities
on liquidation of such Trust, or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the related
Trust Agreement, and
o to use its reasonable efforts, consistent with the terms and
provisions of the related Trust Agreement, to cause such Trust to
remain classified as a grantor trust and not as an association taxable
as a corporation for United States federal income tax purposes.
Trust Expenses
Pursuant to the Indenture, the Company has agreed to pay all debts and
other obligations (other than with respect to the Preferred Securities) and all
costs and expenses of each Trust (including costs and expenses relating to the
organization of each Trust, the fees and expenses of the Trustees and the costs
and expenses relating to the operation of each Trust) and the offering of the
Preferred Securities and to pay any and all taxes and all related costs and
expenses (other than United States federal withholding taxes) to which each
Trust might become subject.
Governing Law
The Indenture is and the Debentures will be governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
The Debenture Trustee will have all the duties and responsibilities
specified with respect to an indenture trustee under the TIA. Subject to the
provisions of the TIA, the Debenture Trustee is not under any obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Debentures, unless it is offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred. The
Debenture Trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
Debenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
DESCRIPTION OF PREFERRED SECURITIES
The Preferred Securities will represent preferred undivided beneficial
interests in the assets of a Trust, and as a holder of Preferred Securities, you
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of such Trust, as well as other benefits as described in the
corresponding Trust Agreement. This is a summary and is not complete. This
summary does not describe certain exceptions and qualifications contained in the
Trust Agreements or the Preferred Securities. You should read the applicable
Trust Agreement, a form of which is filed as an exhibit to the Registration
Statement. Each of the Trusts is a legally separate entity, and the assets of
one Trust are not available to satisfy the obligations of another Trust or other
statutory business trust whose Common Securities are owned by the Company.
General
The Preferred Securities of a Trust will rank equally, and payments will be
made on the Preferred Securities proportionately (based on Liquidation Amounts)
with the Common Securities of that Trust except as described under
"--Subordination of Common Securities." Legal title to the Debentures will be
held by the Property Trustee in trust for the benefit of the holders of the
related Preferred Securities and Common Securities. Each Guarantee
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executed by the Company for the benefit of the holders of a Trust's Trust
Securities will be a subordinated Guarantee of the related Trust Securities. A
Guarantee will not guarantee the payment of Distributions or amounts payable on
redemption or liquidation of such Trust Securities unless the related Trust has
the funds to make such payments. See "Description of Guarantees."
Distributions
Distributions on the Preferred Securities will:
o be cumulative;
o accumulate from the date of original issuance; and
o be payable on the dates specified in the applicable Prospectus
Supplement.
If the date on which Distributions are payable on the Preferred Securities is
not a Business Day, payment of such Distributions will be made on the next
Business Day (without any interest or other payment for such delay), except
that, if such Business Day is in the next calendar year, payment of such
Distribution will be made on the Business Day before (each date on which
Distributions are payable, a "Distribution Date"). A "Business Day" means any
day other than a Saturday, Sunday or legal holiday, or a day on which banking
institutions in The City of New York are authorized or required by law or
regulation to remain closed or a day on which the corporate trust office of the
Property Trustee or the Debenture Trustee is closed.
Each Trust's Preferred Securities represent preferred undivided beneficial
interests in the assets of the applicable Trust, and the Distributions on each
Preferred Security will be payable at the rate specified in the applicable
Prospectus Supplement. The amount of Distributions payable for any period will
be computed on the basis of a 360-day year of twelve 30-day months unless
otherwise specified in the applicable Prospectus Supplement. Distributions will
accumulate additional Distributions at the rate per annum if and as specified in
the applicable Prospectus Supplement. The term "Distributions" includes any such
additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Company has the
right under the Indenture, pursuant to which it will issue the Debentures, to
defer the payment of interest periodically on any series of Debentures for an
Extension Period of up to the number of consecutive interest payment periods
specified in the applicable Prospectus Supplement, so long as no Debenture Event
of Default has occurred and is continuing. The Extension Period may not extend
beyond the maturity of the Debentures. Because of such deferral, Distributions
on the related Preferred Securities would be deferred (but would continue to
accumulate additional Distributions at the rate per annum set forth in the
applicable Prospectus Supplement) by the applicable Trust during any such
Extension Period.
During such Extension Period, the Company will not, and will not permit any
of its subsidiaries to:
o declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the
Company's capital stock,
o make any payment of principal, any premium or any interest on, or
repay, repurchase or redeem any debt securities of, the Company that
rank equally with or junior in interest to the Debentures or
o make any guarantee payments on any guarantee by the Company of debt
securities of any subsidiary if such guarantee ranks equally with or
junior in interest to the Debentures.
The Company may make:
o dividends or distributions in capital stock of the Company,
o any declaration of a dividend in connection with the implementation of
a stockholders' rights plan, the issuance of any capital stock of the
Company under such plan, or the redemption or repurchase of any such
rights pursuant to such plan,
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o payments under (i) any Guarantee with respect to such Preferred
Securities, and (ii) any guarantee for the benefit of holders of the
capital securities of Bear Stearns Capital Trust I.
o 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 and
o payments of interest under a loan agreement with Bear Stearns Finance
LLC.
The revenue of each Trust available for distribution to holders of its
Preferred Securities will be limited to payments under the Debentures in which
each Trust will invest the proceeds from the issuance and sale of its Trust
Securities. See "Description of Debentures--General." If the Company does not
make interest payments on such Debentures, the Property Trustee will not have
funds available to pay Distributions on the related Preferred Securities. The
Company will guarantee the payment of Distributions (provided that a Trust has
legally available funds for the payment of such Distributions and sufficient
cash to make such payments) on the basis described under "Description of
Guarantees."
Distributions on the Preferred Securities will be payable to its holders as
they appear on the securities register of such Trust on the relevant record
dates, which will be approximately two weeks before the relevant Distribution
Date. Unless the applicable Prospectus Supplement states differently, subject to
any applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance."
Redemption or Exchange
Mandatory Redemption
When all or a part of the Debentures is repaid or redeemed, the proceeds
from the repayment or redemption will be applied by the Property Trustee to
redeem a Like Amount of the Trust Securities, with at least 30 days but not more
than 60 days notice, at a redemption price (the "Redemption Price") equal to the
Liquidation Amount of such Trust Securities plus accumulated but unpaid
Distributions to the date of redemption (the "Redemption Date") and the related
amount of any premium paid by the Company on the concurrent redemption of such
Debentures. See "Description of Debentures--Redemption." If only a part of any
series of Debentures are to be repaid or redeemed on a Redemption Date, then the
proceeds from such repayment or redemption will be allocated to the redemption
proportionately (based on Liquidation Amounts) among the Trust Securities. The
amount of any premium paid by the Company on the redemption of all or any part
of any series of any Debentures to be repaid or redeemed on a Redemption Date
will be allocated to the redemption proportionately (based on Liquidation
Amounts) among the Trust Securities.
The Company may redeem any series of Debentures (i) beginning on a date
specified in the applicable Prospectus Supplement (all at any time or a part
periodically), or (ii) when a Special Event occurs (all at any time but not a
part).
Distribution of Debentures
The Company may dissolve any Trust at any time and (after satisfaction of
liabilities to creditors as provided by applicable law) cause the Debentures to
be distributed to the holders of the related Preferred Securities and Common
Securities in exchange for such Trust Securities on the liquidation of such
Trust.
After the liquidation date fixed for any distribution of Debentures for any
series of Preferred Securities (i) such series of Preferred Securities will no
longer be deemed outstanding, (ii) certificates representing a Like Amount of
Debentures will be issued to you as a holder of such series of Preferred
Securities, (iii) the Company will use reasonable efforts to have the Debentures
designated on or with any interdealer quotation system or self-regulatory
organization as the related Preferred Securities are then listed, (iv) any
Preferred Securities certificates that are not surrendered will be deemed to
represent a Like Amount of Debentures and (v) your rights will end (except the
right to receive Debentures).
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The Company and the Trusts cannot make any guarantees about the market
prices for the Preferred Securities or the Debentures that may be distributed in
exchange for Preferred Securities if a Trust were to be dissolved and
liquidated. Accordingly, the Preferred Securities that you may purchase, or the
Debentures that you may receive on dissolution and liquidation of a Trust, may
trade at a lower price than you paid to purchase the Preferred Securities.
Special Event Redemption
If a Special Event regarding a series of Preferred Securities and Common
Securities occurs and is continuing, the Company may prepay all (but not a part)
of the Debentures and thus cause a mandatory redemption of all (but not a part)
of such Preferred Securities and Common Securities at the Redemption Price
within 90 days following the occurrence of such Special Event. If a Special
Event regarding a series of Preferred Securities and Common Securities has
occurred and is continuing and the Company does not elect to prepay the
Debentures and thus cause a mandatory redemption of such Preferred Securities
and Common Securities or to terminate the related Trust and cause the Debentures
to be distributed to holders of such Preferred Securities and Common Securities
in exchange for such Trust Securities on liquidation of the Trust as described
above, such Preferred Securities will remain outstanding.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount equal to
the principal amount of Debentures to be contemporaneously redeemed in
accordance with the Indenture, the proceeds of which will be used to pay the
Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Debentures to holders of any series of Trust Securities in
connection with a dissolution or liquidation of the related Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Debentures would be distributed.
"Liquidation Amount" means the stated amount per Trust Security as set
forth in the applicable Prospectus Supplement.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price using the proceeds from the simultaneous redemption of
Debentures. Redemptions of the Preferred Securities will be made and the
Redemption Price will be payable on each Redemption Date only if the related
Trust has funds available for the payment of such Redemption Price. See
"--Subordination of Common Securities."
If the Property Trustee gives a notice of redemption regarding any
Preferred Securities, then, by 10:00 a.m., New York City time, on the Redemption
Date, the Company will deposit funds with the Property Trustee sufficient to pay
the Redemption Price. If the Company has made this deposit, then, by 12:00 noon,
New York City time on the Redemption Date, to the extent funds are available,
the Property Trustee will irrevocably deposit with the Depositary funds
sufficient to pay the applicable Redemption Price and will give the Depositary
irrevocable instructions and authority to pay the Redemption Price to you as a
holder of such Preferred Securities. See "Book-Entry Issuance." If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to you when you surrender your certificates evidencing
such Preferred Securities. However, Distributions payable on or before the
Redemption Date for any Preferred Securities called for redemption will be
payable to you on the relevant record dates for the related Distribution Dates.
If notice of redemption was given and funds deposited as required, then on the
date of such deposit, all your rights as a holder of such redeemed Preferred
Securities will end, except your right to receive the Redemption Price and any
unpaid Distribution, but without interest, and such Preferred Securities will no
longer be outstanding. If any redemption date is not a Business Day, then
payment of the Redemption Price will be made on the next Business Day (without
any interest or other payment for such delay), except that, if such Business Day
is in the next calendar year, payment of such Redemption Price will be made on
the Business Day before. If payment of the Redemption Price
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is improperly withheld or refused and not paid either by the applicable Trust or
by the Company (under the relevant Guarantee as described under "Description of
Guarantees"), Distributions on such Preferred Securities will continue to accrue
(at the then applicable rate) from the original Redemption Date to the date such
Redemption Price is actually paid. In this case, the actual payment date will be
the redemption date for purposes of calculating the Redemption Price.
Subject to applicable laws (including United States federal securities
laws), the Company or its subsidiaries may periodically purchase outstanding
Preferred Securities by tender in the open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities will be made to
the applicable holders as they appear on the securities register for such
Preferred Securities on the record date established by the Administrators that
will be at least 30 days but no more than 60 days before the relevant Redemption
Date.
If only a part of the outstanding Preferred Securities and Common
Securities issued by a Trust are to be redeemed on a Redemption Date, then the
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed will be allocated proportionately (based on Liquidation Amounts) among
the Preferred Securities and the Common Securities. The particular Preferred
Securities to be redeemed will be selected on a proportionate basis (based on
Liquidation Amounts) at least 30 days but no more than 60 days before the
Redemption Date by the Property Trustee from the outstanding Preferred
Securities by such method as the Property Trustee deems fair and appropriate and
which may provide for the selection for redemption of portions of the
Liquidation Amount of Preferred Securities in such minimum amounts as specified
in the applicable Prospectus Supplement. The Property Trustee will promptly
notify the securities registrar, in writing, of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the Liquidation Amount to be redeemed. For all purposes
of each Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities will relate to the portion of
the Liquidation Amount of Preferred Securities that has been or is to be
redeemed.
Notice of any redemption will be mailed by the Property Trustee at least 30
days but not more than 60 days before the Redemption Date to each holder of
Trust Securities to be redeemed at its registered address.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, each Trust's
Preferred Securities and Common Securities will be made proportionately (based
on Liquidation Amounts) of such Preferred Securities and Common Securities.
However, if any Event of Default under the applicable Trust Agreement resulting
from a Debenture Event of Default has occurred and is continuing on any
Distribution Date or Redemption Date, (a) the Trust will not pay any
Distribution or Redemption Price regarding its Common Securities or make any
other payment for redemption, liquidation or other acquisition of such Common
Securities unless the Trust has (i) made full cash payment of all accumulated
and unpaid Distributions on all outstanding Preferred Securities for all
Distribution periods ending on or before such Distribution Date, or (ii) in the
case of payment of the Redemption Price, made or provided for the full amount of
such Redemption Price on all of the outstanding Preferred Securities then called
for redemption, and (b) all funds available to the Property Trustee will be
applied first to the full cash payment of all due and payable Distributions or
Redemption Price regarding Preferred Securities.
If any Event of Default under the applicable Trust Agreement resulting from
a Debenture Event of Default occurs, the Company (as holder of such Trust's
Common Securities) will waive any right to act with respect to any such Event of
Default until the effect of all such Events of Default with respect to such
Preferred Securities has been eliminated. Until all Events of Default under the
applicable Trust Agreement with respect to the Preferred Securities have been so
eliminated, the Property Trustee will act only on behalf of the holders of such
Preferred Securities and not on behalf of the Company (as holder of the Trust's
Common Securities), and only the holders of such Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
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Liquidation Distribution On Dissolution
Under each Trust Agreement, each Trust will automatically dissolve when its
term expires and will dissolve if any of the following occurs:
o certain events of bankruptcy, dissolution or liquidation of the
Company (as holder of the Common Securities);
o written direction to the Property Trustee by the Company to dissolve
such Trust and distribute (after satisfaction of liabilities to
creditors as provided by applicable law) Debentures to holders of
Trust Securities;
o redemption of all of the Trust's Preferred Securities as described
under "--Redemption or Exchange--Mandatory Redemption"; or
o the entry of an order for the dissolution of the Trust by a competent
court.
If an early dissolution occurs because of the first, second or fourth
points above or a Trust's term expires, such Trust will be liquidated by the
Trustees as quickly as the Trustees determine to be possible by distributing
(after satisfaction of liabilities to creditors as provided by applicable law)
to the holders of such Trust Securities a Like Amount of the Debentures. If such
distribution is determined by the Property Trustee not to be practical, such
holders will be entitled to receive out of the assets of such Trust available
for distribution to holders (after satisfaction of liabilities to creditors as
provided by applicable law) an amount equal to the Liquidation Amount plus
accrued and unpaid Distributions on the Preferred Securities to the date of
payment (such amount being the "Liquidation Distribution"). If only a part of
such Liquidation Distribution can be paid because such Trust has insufficient
assets available to pay the full Liquidation Distribution, then the amounts
payable by such Trust on its Trust Securities will be paid on a proportionate
basis (based on Liquidation Amounts). The Company (as holder of the Common
Securities) will be entitled to receive Liquidation Distributions on any such
liquidation proportionately with you as a holder of Preferred Securities, except
that if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities.
Events of Default; Notice
An "Event of Default" will occur under each Trust Agreement if any of the
following events occurs:
o a Debenture Event of Default under the Indenture (see "Description of
Debentures--Debenture Events of Default"); or
o failure for 30 days by the Trust to pay any Distribution when due; or
o failure by the Trust to pay any Redemption Price of any Trust Security
when due; or
o failure by the Trustees to observe or perform in any material respect
any other covenants or warranties in such Trust Agreement for 90 days
after written notice to the defaulting Trustee(s) by the holders of at
least 25% of the Liquidation Amount of the outstanding Preferred
Securities of the applicable Trust; or
o certain events of bankruptcy or insolvency of the Property Trustee and
the failure by the Company to appoint a successor Property Trustee
within 60 days.
Within five Business Days after the Property Trustee obtains actual
knowledge of any Event of Default occurring, the Property Trustee will send
notice of such Event of Default to the holders of such Trust's Trust Securities,
the Administrators and the Company, unless such Event of Default has been cured
or waived. The Company and the Administrators are required to file an annual
certificate with the Property Trustee stating whether they are in compliance
with all the applicable conditions and covenants under each Trust Agreement.
If a Debenture Event of Default has occurred and is continuing the
Preferred Securities will have a preference over the Common Securities as
described above. See "--Subordination of Common Securities" and "--Liquidation
Distribution On Dissolution." An Event of Default does not entitle the holders
of Preferred Securities to accelerate its maturity.
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Removal of Trustees
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the Company (as holder of the Common
Securities). If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed by the holders of a
majority of the Liquidation Amount of the outstanding Preferred Securities. As a
holder of the Preferred Securities, you do not have the right to vote to
appoint, remove or replace the Administrators; these voting rights are exclusive
to the Company (as the holder of the Common Securities). No resignation or
removal of a Trustee and no appointment of a successor trustee will be effective
until the successor trustee accepts such appointment in accordance with the
provisions of the applicable Trust Agreement.
Co-Trustees and Separate Property Trustee
Unless a Debenture Event of Default has occurred and is continuing, the
Company (as the holder of the Common Securities) and the Administrators may
periodically appoint one or more persons approved by the Property Trustee to act
either as a co-trustee, jointly with the Property Trustee, or as separate
trustee in order to meet the legal requirements of the TIA or of any
jurisdiction in which any part of the property and assets held by the Property
Trustee under the applicable Trust Agreement may be located. In either case,
such trustee will have the powers designated in the instrument of appointment,
and such trustee will be vested in such capacity any property, title, right or
power necessary or desirable, subject to the provisions of the applicable Trust
Agreement. If the Company does not join in such appointment or a Debenture Event
of Default has occurred and is continuing, the Property Trustee alone will have
power to make such appointment.
Merger or Consolidation of Trustees
Any surviving person of a merger, conversion or consolidation of the
Property Trustee or the Delaware Trustee or any successor person to all or
substantially all the corporate trust business of such Trustee will be the
successor of such Trustee under each Trust Agreement, provided such person is
otherwise qualified and eligible.
Consolidations, Mergers, Sale of Assets or Other Transactions
If the Company (as holder of a majority of the Common Securities) requests
(but without the consent of the holders of Preferred Securities, the Property
Trustee or the Delaware Trustee), a Trust may consolidate or merge with another
trust or transfer or lease substantially all its properties and assets to
another trust if:
o the successor trust either (a) expressly assumes all of the
obligations of such Trust with respect to the Preferred Securities or
(b) substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") that rank the same as the Preferred Securities
in priority regarding distributions and payments on liquidation,
redemption and otherwise;
o the Company expressly appoints a trustee of such successor trust
possessing the same powers and duties as the Property Trustee as the
holder of the Debentures;
o such merger, consolidation, transfer or lease does not cause the
Preferred Securities (or Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
o such merger, consolidation, transfer or lease does not materially
adversely affect your rights, preferences and privileges as a holder
of the Preferred Securities (or Successor Securities);
o the successor trust has a purpose substantially identical to that of
such Trust;
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o before such merger, consolidation, transfer or lease, the Company has
received an opinion from independent counsel to the Trust to the
effect that (a) such merger, consolidation, transfer or lease does not
materially adversely affect your rights, preferences and privileges as
a holder of the Preferred Securities (or Successor Securities), and
(b) following such merger, consolidation, transfer or lease, neither
the Trust nor such successor trust will be required to register as an
investment company under the Investment Company Act; and
o the Company (or any permitted successor depositor) owns all of the
common securities of such successor trust and guarantees the
obligations of such successor trust under the Preferred Securities (or
Successor Securities) at least to the extent provided by the
Guarantee.
Unless the consent of holders of 100% of the Liquidation Amount of the Preferred
Securities is obtained, a Trust may not effect such merger, consolidation,
transfer or lease if it would cause such Trust or the successor trust to be
classified as something other than a grantor trust for United States federal
income tax purposes.
Voting Rights; Amendment of Each Trust Agreement
As a holder of Preferred Securities, you will have no voting rights, except
as provided in this Prospectus or the applicable Prospectus Supplement or as
required by law or the applicable Trust Agreement. See "Description of
Guarantees--Modification or Amendment of the Guarantees."
The Company (as holder of the Common Securities), the Property Trustee and
the Delaware Trustee may amend each Trust Agreement periodically without your
consent to:
o cure any ambiguity;
o correct or supplement any provision that is inconsistent with any
other provision;
o make any other provisions which are not inconsistent with the other
provisions of such Trust Agreement; or
o modify, eliminate or add to any provisions that are necessary to
ensure that such Trust (i) will always be classified as a grantor
trust for United States federal income tax purposes; or (ii) will not
be required to register as an "investment company" under the
Investment Company Act.
However, none of the amendments described in the first, second or third points
above can have a material adverse effect on the interests of any holder of
Preferred Securities or Common Securities. Such amendments will become effective
when notice of the amendments is given to the holders of Trust Securities. Each
Trust Agreement may be amended by the Trustees and the Company (as holder of the
Common Securities) with (i) the consent of holders representing at least a
majority (based on Liquidation Amounts) of the outstanding Trust Securities, and
(ii) receipt by the Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
as an "investment company" under the Investment Company Act. The consent of each
holder of Trust Securities will be required to amend a Trust Agreement to:
o change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any
Distribution required to be made regarding the Trust Securities on a
specified date; or
o restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment beginning on such date.
The Property Trustee shall determine the validity of requests or votes in
the event of a dispute among the holders of Trust Securities and the
Administrators or the Trustees.
If any Debentures are held by the Property Trustee, the Property Trustee
will not:
o direct the time, method or place of conducting any proceeding for any
remedy available to the Debenture Trustee, or execute any trust or power
conferred on the Debenture Trustee regarding such Debentures,
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o waive any past default that is waivable under the Indenture,
o exercise any right to rescind or annul a declaration that the
principal of all the Debentures will be due and payable or
o consent to any amendment, modification or termination of the Indenture
or such Debentures, where such consent will be required, without, in
each case, obtaining the prior approval of the holders of a majority
of the Liquidation Amount of all outstanding Preferred Securities.
If a consent under the Indenture would require the consent of each holder
of Debentures affected, no such consent will be given by the Property Trustee
without the prior consent of each holder of the Preferred Securities. The
Property Trustee will not revoke any action previously authorized or approved by
a vote of the holders of the Preferred Securities except by a subsequent vote of
the holders of the Preferred Securities. The Property Trustee will notify you as
a holder of Preferred Securities of any notice of default with respect to the
Debentures. In addition to obtaining the approvals of the holders of the
Preferred Securities described above, before taking any of the actions described
above, the Property Trustee will obtain (at the Company's expense) an opinion of
counsel to the effect that such action would not cause the Trust to be
classified as something other than a grantor trust for United States federal
income tax purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities called for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote to be given to each
holder of record of Preferred Securities in the manner set forth in each Trust
Agreement.
No vote or consent by you as a holder of Preferred Securities will be
required for a Trust to redeem and cancel its Preferred Securities in accordance
with the applicable Trust Agreement.
Any of the Preferred Securities that are owned by the Company, the Trustees
or any affiliate of the Company or any Trustees, will be treated as if they were
not outstanding for purposes of the votes or consents described above.
Global Preferred Securities
All or a part of the Preferred Securities of a series may be issued in the
form of one or more Global Preferred Securities that are to be deposited with
the Depositary or its nominee, unless the applicable Prospectus Supplement
states differently. For each of the series of Preferred Securities, the
Depositary will be DTC, unless the applicable Prospectus Supplement states
differently. Global Preferred Securities will be issued only in fully registered
form but may be in either temporary or permanent form. Unless and until it is
exchanged for the individual Preferred Securities each Global Preferred Security
will be transferred only as a whole. Transfers of Global Preferred Securities
are permitted between the following entities:
o by the Depositary for such Global Preferred Security to a nominee of
such Depositary;
o by a nominee of such Depositary to such Depositary or another nominee
of such Depositary; or
o by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
While each Prospectus Supplement will describe the depositary arrangements
with respect to each series of Preferred Securities, the Company expects the
following terms will apply to all of the depositary arrangements.
The Depositary or its nominee will credit on its book-entry registration
and transfer system, the respective Liquidation Amounts of the individual
Preferred Securities represented by the corresponding Global Preferred
Securities issued and deposited with them to the accounts of Participants, which
may include Euroclear and Cedel. The dealers, underwriters or agents or the
Company (if the Company offers and sells such Preferred Securities directly)
will designate these accounts for the respective Preferred Securities.
The ownership of beneficial interests in a Global Preferred Security is
limited to the Participants or persons that may hold interests through
Participants, including Euroclear and Cedel and their participants. Actual
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ownership of beneficial interests in each Global Preferred Security will only be
shown on, and the transfer of ownership will be completed through, records of
the applicable Depositary or its nominee (for interests of Participants) and the
records of Participants (for interests of persons who hold through
Participants). However, because the laws of some states require certain
purchasers of securities to take physical delivery of such securities in
definitive form, rather than through a Global Preferred Security, such
restrictions may impair the ability to transfer beneficial interests in a Global
Preferred Security.
For all purposes under each Trust Agreement and as long as either the
Depositary or its nominee is the registered owner of the corresponding Global
Preferred Security, such Depositary or such nominee will be considered the sole
owner or holder of the Preferred Securities represented by such Global Preferred
Security.
Except as provided below, owners of beneficial interests in a Global
Preferred Security:
o will not be entitled to have any of the individual Preferred
Securities represented by the corresponding Global Preferred Security
registered in their names;
o will not receive physical delivery of any such Preferred Securities of
such series in a definitive form; and
o will not be considered the owners or holders of such Preferred
Securities under the Trust Agreement.
Payments of principal, any premium and any interest on individual Preferred
Securities represented by a Global Preferred Security registered in the name of
a Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be. None of the Company, the Property Trustee, any paying agent or
the securities registrar for such Preferred Securities will be responsible or
liable for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Global Preferred Security representing
such Preferred Securities. They also will not be responsible for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
When it receives any payment of Liquidation Amount, Redemption Price,
premium or Distributions regarding a permanent Global Preferred Security
representing any of Preferred Securities, the Company expects the Depositary or
its nominee to immediately credit each Participant's account with payments in
amounts proportionate to its respective beneficial interest in the Global
Preferred Security. Each Participant's beneficial interest will be shown on the
records of such Depositary or its nominee.
The Company also expects that payments by Participants to owners of
beneficial interests in such Global Preferred Security will be governed by the
standing instructions and customary practices as now apply to securities held
for customer accounts in bearer form or registered in "street name." These
Participants will be responsible for such payments.
If a Depositary for a series of Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by a Trust within 90 days, such Trust will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security representing such series of Preferred Securities, unless the
applicable Prospectus Supplement states differently. A Trust may at any time and
in its sole discretion, subject to any limitations described in the applicable
Prospectus Supplement, determine not to have any Preferred Securities of such
series represented by one or more Global Preferred Securities. In such case,
such Trust will issue certificated Preferred Securities of such series in
exchange for the Global Preferred Security.
An owner of beneficial interest in a Global Preferred Security may be
permitted to receive individual certificated Preferred Securities of a series in
exchange for the beneficial interests in the Global Preferred Securities, on
terms acceptable to each Trust, the Property Trustee and the Depositary and
subject to any limitations in the applicable Prospectus Supplement. In such
case, the owner of a beneficial interest in a Global Preferred Security will be
entitled to physical delivery of certificated Preferred Securities of the series
that is equal in its aggregate Liquidation Amount to the owner's beneficial
interest in the corresponding Global Preferred Security. The applicable Trust
will register such Preferred Securities in the owner's name in the denominations
specified for such series in the applicable Prospectus Supplement.
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Payment and Paying Agency
Payments on the Preferred Securities will be made to the Depositary, which
will credit the relevant accounts at the Depositary on the applicable
Distribution Dates, or if any Trust's Preferred Securities are not held by the
Depositary, such payments will be made by check mailed to the address appearing
on the register of the holder entitled to such payment. The paying agent will
initially be the Property Trustee and any co-paying agent chosen by the Property
Trustee and acceptable to the Administrators and the Company, unless the
applicable Prospectus Supplement states differently. The paying agent will be
permitted to resign as paying agent with 30 days' written notice to the Property
Trustee and the Company. If the paying agent resigns or its authority to act is
revoked, the Administrators will appoint a successor (which will be a bank or
trust company acceptable to the Administrators and the Company) to act as paying
agent.
Securities Registrar and Transfer Agent
The Property Trustee will initially act as securities registrar and
transfer agent for the Preferred Securities, unless the applicable Prospectus
Supplement states differently.
There will be no service charge for any registration of transfer or
exchange of Preferred Securities, although payment of certain taxes and other
governmental charges may be required. The securities registrar will not be
required to (i) register the transfer or exchange of any Preferred Securities
during a period beginning at the opening of business 15 days before the mailing
of a notice of redemption of Preferred Securities and ending at the close of
business the day of such mailing or (ii) transfer or exchange any Preferred
Securities so selected for redemption, except any portion of any Preferred
Securities not being redeemed in a partial redemption.
Information Concerning the Property Trustee and the Delaware Trustee
The Property Trustee will have all the duties and responsibilities
specified in the applicable Trust Agreement. After the occurrence and
continuation of an Event of Default, the Property Trustee must exercise the same
degree of care and skill as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is not under any obligation to exercise any of
the rights or powers vested in it by the applicable Trust Agreement at the
request of any holder of Trust Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred.
If no Event of Default has occurred and is continuing and the Property Trustee
is required to decide between alternative courses of action, construe ambiguous
or inconsistent provisions in the applicable Trust Agreement or is unsure of the
application of any provision of the applicable Trust Agreement, and the matter
is not one on which you as a holder of Preferred Securities are entitled to vote
under such Trust Agreement, then the Property Trustee will take such action as
is directed by the Company and if not so directed, may take such action as it
deems advisable and in the best interests of the holders of the Trust Securities
and will have no liability except for its own bad faith, negligence or willful
misconduct.
The Delaware Trustee will not have any of the duties and responsibilities
of the Administrators or the Property Trustee under the applicable Trust
Agreement. The Delaware Trustee will not be liable for the payment of any
Trust's debt or expenses and will not be liable for any Trust's breach of its
obligations, except for breaches due to the Delaware Trustee's own gross
negligence or willful misconduct.
Miscellaneous
The Administrators and the Property Trustee will conduct the affairs of the
Trusts in a manner (a) so that (i) no Trust will be deemed to be an "investment
company" required to be registered under the Investment Company Act or (ii)
classified as something other than a grantor trust for United States federal
income tax purposes and (b) so that the Debentures will be treated as
indebtedness of the Company for United States federal income tax purposes. The
Administrators, the Property Trustee and the Company (as holder of the Common
Securities) will take any action they determine in their discretion to be
necessary or desirable to accomplish the objectives described above that is not
inconsistent with applicable law, the certificate of trust or the applicable
Trust
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Agreement, and does not materially adversely affect your interests as a holder
of the related Preferred Securities. Each of the Company, the Administrators and
the Trustees may engage in other businesses, whether or not similar to the
business of the applicable Trust and the holders of Trust Securities will have
no right to participate in such businesses.
You have no preemptive or similar rights as a holder of Preferred
Securities.
No Trust may borrow money or issue debt or pledge any of its assets.
DESCRIPTION OF GUARANTEES
The Company will execute and deliver the Guarantees at various times for
your benefit as a holder of Preferred Securities. This is a summary and is not
complete. This summary does not describe certain exceptions and qualifications
contained in the Guarantees. You should read the Guarantees, a form of which is
filed as an exhibit to the Registration Statement. Each Guarantee will be
qualified as an indenture under the TIA. Unless the applicable Prospectus
Supplement states differently, The Chase Manhattan Bank will act as independent
indenture trustee for TIA purposes under each Guarantee (the "Guarantee
Trustee"). Each Guarantee will be held by the Guarantee Trustee for your benefit
as a holder of the Preferred Securities of the applicable Trust.
General
Unless the applicable Prospectus Supplement states differently, under each
Guarantee, the Company irrevocably agrees to pay in full, and on a subordinated
and junior basis, the following payments regarding the Preferred Securities (the
"Guarantee Payments") if they are not paid by the applicable Trust:
o any accumulated and unpaid Distributions required to be paid on such
Preferred Securities, to the extent such Trust has funds available at
such time;
o the Redemption Price, with respect to any Preferred Securities called
for redemption, to the extent such Trust has funds available at such
time; and,
o if a voluntary or involuntary dissolution, winding up or liquidation
of such Trust occurs, and a distribution of Debentures to you as a
holder of such Preferred Securities is not made, an amount equal to
the lesser of either (i) the Liquidation Distribution or (ii) the
aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions on the Preferred Securities to the date of payment, to
the extent such Trust has funds available for that purpose.
Both the Company's and each Trust's payments to the holders of the applicable
Trust Securities of the amounts required under the Guarantees will satisfy the
obligations to make the Guarantee Payments.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Trust's obligations under the Trust Securities, but will apply only
to the extent that such Trust has funds sufficient to make such payments and
does not guarantee collection.
If the Company does not make interest or principal payments on the
Debentures purchased by such Trust, that Trust will not be able to pay any
distributions on its Preferred Securities because it will not have the funds to
do so. Each Guarantee will rank subordinate and junior in right of payment to
all of the Company's Senior Debt. See "--Status of the Guarantees." Because the
Company is a holding company, its right to participate in any distribution of
assets of any subsidiary, on such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of such subsidiary's creditors.
Accordingly, the Company's obligations under the Guarantees will be effectively
subordinated to all existing and future liabilities of its subsidiaries. Holders
of Preferred Securities should look only to the assets of the Company for
payments under the Guarantees.
Except as otherwise provided in the applicable Prospectus Supplement, the
Guarantees do not limit the amount of other secured or unsecured debt of the
Company, including Senior Debt, whether under the Indenture, any other existing
indenture, or any other indenture that the Company may enter into in the future
or otherwise.
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The Company has, through the execution of the applicable Guarantee, Trust
Agreement, series of Debentures and the Indenture, fully, irrevocably and
unconditionally guaranteed all of each Trust's obligations under the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
through the combined operation of these documents that the full, irrevocable and
unconditional guarantee of each Trust's obligations under the Preferred
Securities is provided. See "Relationship Among Debentures, Preferred Securities
and Guarantees."
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt of the
Company in the same manner as the Debentures. The Guarantees do not place any
limitation on the amount of additional Senior Debt that the Company may incur.
The Company expects to periodically incur additional indebtedness constituting
Senior Debt.
Each Guarantee will rank equally with all other Guarantees to be issued by
the Company and will be held for your benefit as a holder of the related
Preferred Securities. Each Guarantee will constitute a guarantee of payment and
not of collection, and will permit the guaranteed party to bring legal
proceedings directly against the guarantor to enforce its rights under the
Guarantee without first instituting a legal proceeding against any other person
or entity. No Guarantee will be discharged except by payment of the Guarantee
Payments in full (to the extent not paid by the Trust), when the Debentures are
distributed to you as a holder of the Preferred Securities or when the
applicable Trust dissolves and full payment of amounts payable under the
applicable Trust Agreement is made.
Modification or Amendment of the Guarantees
If any changes materially adversely affects your rights as a holder of the
related Preferred Securities, no Guarantee may be amended without the prior
approval of the holders of at least a majority of the Liquidation Amount of such
outstanding Preferred Securities. The manner of obtaining any such approval is
set forth under the section entitled "Description of Preferred
Securities--Voting Rights; Amendment of Each Trust Agreement."
Assignment
All guarantees and agreements contained in each Guarantee will bind the
successors, assigns, receivers, trustees and representatives of the Company and
will inure to the benefit of the holders of the related Preferred Securities
then outstanding. The Company must obtain the prior approval of the holders of
at least a majority of the Liquidation Amount of the Preferred Securities in
order to assign its rights or obligations under the applicable Guarantee.
However, this requirement does not apply if the assignment is in connection with
a merger or consolidation of, or the sale of assets by or to, the Company.
Events of Default
An event of default under each Guarantee will occur if the Company fails to
perform any of its payment or other obligations under such Guarantee. When such
a default occurs, the holders of at least a majority of the Liquidation Amount
of the related Preferred Securities have the right to direct the time, method
and place of a proceeding for any remedy that is available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred on the
Guarantee Trustee under such Guarantee.
As a holder of Preferred Securities, you may institute legal proceedings
directly against the Company to enforce its rights under such Guarantee without
first bringing legal proceedings against the applicable Trust, the Guarantee
Trustee, or any other person or entity.
As guarantor, the Company is required to file an annual certificate with
the Guarantee Trustee stating whether the Company is in compliance with all
applicable conditions and covenants under the Guarantees.
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Information Concerning the Guarantee Trustee
The Guarantee Trustee will have all the duties and responsibilities
specified in the applicable Guarantee. After the occurrence and continuation of
a Guarantee default, the Guarantee Trustee must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the Guarantee Trustee is not under any
obligation to exercise any of the powers vested in it by any Guarantee at the
request of the holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred.
Termination of the Guarantees
Each Guarantee will terminate and be of no further force and effect if any
of the following occurs:
o full payment of the Redemption Price of the related Preferred
Securities;
o full payment of the amounts payable on dissolution of the related
Trust; or
o the distribution of Debentures to the holders of Preferred Securities.
However, if at any time you as a holder of the related Preferred Securities must
pay back any sums paid under such Preferred Securities or such Guarantee, each
such Guarantee will continue to be effective or will be reinstated.
Governing Law
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG DEBENTURES, PREFERRED SECURITIES
AND GUARANTEES
Full and Unconditional Guarantee
The Company irrevocably guarantees the amounts due on the Preferred
Securities, including Distribution payments, as described under "Description of
Guarantees" but only to the extent the related Trust has funds available for
such payments. The documents of each series of Debentures, the Indenture, the
related Trust Agreement and the related Guarantee, together create this full,
irrevocable and unconditional guarantee of all Distribution payments and other
amounts due on the related Preferred Securities on behalf of the Company. All of
the documents are required to enforce a full, irrevocable and unconditional
guarantee against the Company. It is only the combined operation of these
documents that provides for a full, irrevocable and unconditional guarantee of
each Trust's obligations under the related Preferred Securities.
If the Company does not make payments on any series of Debentures, then the
corresponding Trust will not pay Distributions or other amounts due on the
related Preferred Securities. The Guarantees only cover payment of Distributions
to the extent that the related Trust has sufficient funds to pay such
Distributions.
If a Trust does not have sufficient funds to pay, you as a holder of a
series of Preferred Securities may institute a legal proceeding directly against
the Company in order to enforce payment. The Company's obligations under each
Guarantee are subordinate and junior in right of payment to all of the Company's
Senior Debt.
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Sufficiency of Payments
The Company's payment of the interest and other payments when due on each
series of Debentures will be sufficient to cover a Trust's Distributions and
other payments due on the related Preferred Securities. There are four primary
reasons why payments on the Debentures will cover the payments due on the
related Preferred Securities:
o the aggregate principal amount of each series of Debentures will equal
the sum of the aggregate stated Liquidation Amount of the related
Preferred Securities and related Common Securities;
o both the interest rate and the interest and other payment dates on
each series of Debentures will match the Distribution rate and
Distribution and other payment dates for the related Preferred
Securities;
o the Company will pay for all and any costs, expenses and liabilities
of such Trust, except the Trust's obligations to holders of its
Preferred Securities; and
o each Trust Agreement provides that the Trust will not engage in any
activity that is inconsistent with the limited purposes of such Trust.
Except as set forth in the Indenture, the Company may set-off any payment
that it is otherwise required to make under the Indenture with payments it has
made or is making under the related Guarantee.
Enforcement Rights of Holders of Preferred Securities
As a holder of a Preferred Security, you may bring a legal proceeding
directly against the Company to enforce your rights under the related Guarantee.
In order to do so, you do not need to first institute a legal proceeding against
any of the Guarantee Trustee, the related Trust or any other person or entity.
A default or event of default under any of the Company's Senior Debt does
not constitute a default or Debenture Event of Default under the Indenture.
However, if there are any payment defaults under the Company's Senior Debt or it
is accelerated, no payments may be made relating to the Debentures until either
such Senior Debt has been paid in full or any payment default under the Senior
Debt has been cured or waived. Failure to make required payments on any series
of Debentures would constitute a Debenture Event of Default under the Indenture.
Limited Purpose of Trusts
Each Trust's Preferred Securities creates a preferred undivided beneficial
interest in the assets of such Trust, and each Trust exists for the sole purpose
of issuing its Trust Securities and investing the proceeds of such Trust
Securities in Debentures. A principal difference between your rights as a holder
of a Preferred Security and those of the applicable Trust as a holder of a
Debenture is that the holder of a Debenture may receive the principal amount of
and interest accrued on Debentures held from the Company, while the holder of
Preferred Securities may only receive Distributions from such Trust (or from the
Company under the applicable Guarantee) to the extent such Trust has sufficient
funds available to pay such Distributions.
Rights On Dissolution
If a voluntary or involuntary dissolution that involves the liquidation of
Debentures of any Trust occurs, you as a holder of the related Preferred
Securities will be entitled to receive out of the assets of such Trust (after
satisfaction of liabilities to creditors as provided by applicable law) the
Liquidation Distribution in cash. See "Description of Preferred
Securities--Liquidation Distribution On Dissolution."
If a voluntary or involuntary liquidation or bankruptcy of the Company
occurs, the Property Trustee (as holder of the Debentures) would become a
subordinated creditor of the Company and would be subordinated in right of
payment to all Senior Debt. However, the Property Trustee would be entitled to
receive payment in full of principal and interest, before any of the Company's
stockholders receive payments or distributions. The Company is the guarantor
under each Guarantee and has agreed to pay for all costs, expenses and
liabilities of each Trust
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(other than the Trust's obligations to the holders of its Preferred Securities).
As a result, in the event of the Company's liquidation or bankruptcy, the
positions of a holder of such Preferred Securities and a holder of such
Debentures relative to the Company's other creditors and stockholders are
expected to be substantially the same.
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DESCRIPTION OF PREFERRED STOCK
The general terms of the Company's Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), are described in the Company's Certificate of
Incorporation, and the specific terms of each series of Preferred Stock will be
described in the applicable Prospectus Supplement and Certificate of
Designation. This is a summary and is not complete. This summary describes the
dividend, liquidation, redemption and voting rights applicable to all Preferred
Stock. This summary does not include certain exceptions and qualifications
contained in the Certificate of Incorporation and Certificates of Designation.
You should read the Certificate of Incorporation and the applicable Certificate
of Designation, which are either filed as exhibits to or will be incorporated by
reference in the Registration Statement. You should also read the applicable
Prospectus Supplement for information relating to a particular series of
Preferred Stock.
General
The Company is authorized to issue 10,000,000 shares of Preferred Stock.
The Preferred Stock may be issued in one or more series. The Certificate of
Incorporation and the Board of Directors' resolutions providing for such
issuance describe the designations, voting powers, preferences and relative,
participating, optional or other special rights, and corresponding
qualifications, limitations or restrictions.
The Company may issue Depositary Shares which will represent fractional
interests in shares of Preferred Stock. For a description of such Depositary
Shares in the event Depositary Shares are issued, see "Description of Depositary
Shares."
The actual dividend, liquidation, redemption and voting rights of the
Preferred Stock as described in the applicable Prospectus Supplement may be
different from the general description in this summary. You should refer to the
Prospectus Supplement relating to the particular series of Preferred Stock for
specific terms, such as:
o the designation, stated value and liquidation preference;
o the number of shares offered;
o the initial public offering price for the particular series;
o the dividend rate(s) (or method of calculation), the date(s) from
which dividends shall accrue, and whether such dividends shall be
cumulative or noncumulative (and, if cumulative, the date accumulation
begin);
o any redemption or sinking fund provisions;
o the amount of payments on liquidation, dissolution or winding-up of
the Company;
o the terms for exchanging Preferred Stock for other securities of the
Company;
o any additional voting rights;
o any information regarding reissuance or sale of shares which have been
redeemed, purchased or otherwise reacquired, or surrendered to the
Company on conversion or exchange;
o any conditions or restrictions on the Company on dividends or other
distributions on, or acquiring the Company's Common Stock or other
capital stock of the Company that ranks junior to (regarding dividends
and treatment upon liquidation) the Preferred Stock;
o any conditions or restrictions on the Company (or any subsidiary) on
incurring debt or issuing capital stock that ranks equally with or
senior to (regarding dividends and treatment upon liquidation) the
Preferred Stock; and
o any additional dividend, liquidation, redemption, sinking or
retirement fund or other rights, preferences, privileges, limitations
or restrictions of such Preferred Stock.
The Preferred Stock will be fully paid and nonassessable when it is issued.
Unless otherwise specified in the applicable Prospectus Supplement, your
Preferred Stock will rank equally in all respects to the outstanding shares of
Preferred Stock. As of November 16, 1998, there were outstanding 3,729,250
shares of the Company's Preferred Stock. The Preferred Stock will have no
preemptive rights to subscribe for any additional securities that may be issued
by the Company.
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Dividends
Unless the applicable Prospectus Supplement states differently, you will be
entitled to receive dividends on the Preferred Stock before any may be declared
or paid on the Common Stock (or on any other junior capital stock of the Company
junior to the Preferred Stock regarding payment of dividends, liquidation or
other preferences ("junior capital stock"). Dividends will be paid on each
January 15, April 15, July 15 and October 15, at the rates specified in the
applicable Prospectus Supplement. Such rates may be fixed or variable or both.
Any formula used to determine the variable rate will be described in the
applicable Prospectus Agreement. The record date, as fixed by the Board of
Directors, will be at least 15 days but no more than 60 days before a dividend
payment date. Unless the applicable Prospectus Supplement states
differently, dividends will be paid in cash.
The applicable Prospectus Supplement will specify whether dividends are
cumulative or noncumulative. If the Board of Directors does not declare a
dividend for a particular dividend payment date and dividends are noncumulative,
then you will not receive a dividend for that period. If dividends on a
particular series are not paid in full (or declared in full with the payment
amount set apart), then such dividends will not be declared and paid unless
dividends are declared and paid proportionately on all other series of
outstanding Preferred Stock (including any accrued dividends or dividends in
arrears).
Any conditions or restrictions on the Company on dividends or other
distributions on, or purchasing, redeeming or otherwise acquiring Common Stock
(or any other junior capital stock) will be stated in the applicable Prospectus
Supplement.
Liquidation Rights
If the Company is voluntarily or involuntarily liquidated, dissolved or
wound-up, as a holder of Preferred Stock, you will be entitled to receive the
amount specified in the applicable Prospectus Supplement, together with all
accrued and unpaid dividends, before any distribution of the Company's assets
will be made to the holders of Common Stock (or any other junior capital stock).
After such distribution, you will not be entitled to any additional
distribution. If there are not enough assets to pay all holders of a series of
Preferred Stock in full, then such assets will be distributed proportionately
among the holders.
Neither the consolidation, merger or other business combination of the
Company with another entity nor the transfer of all or any part of the Company's
property, assets or business will be considered a liquidation, dissolution or
winding up of the Company.
Redemption
As stated in the applicable Prospectus Supplement, the Company may redeem
all or a part of any series of Preferred Stock at its option or when specified
events occur. If the Company plans to redeem only a part of a series, those
shares will be selected by lot or treated proportionately, as determined by
resolution of the Board of Directors.
The Company must publish notice of any redemption in a newspaper at least
20 but no more than 50 days before the redemption date. The Company will also
mail a similar notice within that same time period. The Board of Directors may
fix a record date at least 20 but no more than 50 days before the redemption
date.
Before the redemption date, the Company will deposit money for the
redemption payment with a bank or trust company. On the redemption date, all
dividends on the series of Preferred Stock called for redemption will stop
accruing and all your rights will end (except your right to receive the
redemption price without interest). Any funds which remain unclaimed by the
holders for six years after the redemption date will become the property of the
Company. After that time, you will be a general unsecured creditor of the
Company and may only look to the Company for payment of such funds.
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Conversion Rights
No series of Preferred Stock will be convertible into Common Stock.
Voting Rights
Unless the applicable Prospectus Supplement states that the Board of
Directors has determined differently, or as required by law, you can vote only
if dividends on your series of Preferred Stock (or any other capital stock
ranking equally with that series) have been in arrears for six calendar quarters
(whether consecutive or not). In that case, you will be entitled to vote for the
election of two of the Company's directors at the annual meetings of
stockholders until all accumulated dividends have been fully paid or set apart
for payment. You will vote with all other holders of other series of Preferred
Stock that are in the same situation as a separate class. Each holder will have
one vote for each share held. Directors elected in this manner will hold office
for so long as these holders are entitled to this voting right.
So long as any series of Preferred Stock remains outstanding, the Company
will need the consent of the holders of at least two-thirds of the shares of
that series (voting separately as a class with all other series of Preferred
Stock with like voting rights) to:
o issue or increase the authorized amount of any class or series of
stock ranking senior to that series regarding dividends or
liquidation; or
o amend or repeal the provisions of the Certificate of Incorporation or
the Certificate of Designation (whether by merger, consolidation or
otherwise), in a way that materially adversely affects any power,
preference or special right of that series.
Any increase in the amount of the authorized Common or Preferred Stock or the
creation and issuance of Common Stock or any other series of Preferred Stock
ranking equally with or junior to a series of Preferred Stock will not be
considered to materially adversely affect the powers, preferences or special
rights of the shares of that series.
Unless the applicable Prospectus Supplement states differently, the
transfer agent, dividend disbursing agent and registrar for each series of
Preferred Stock will be ChaseMellon Shareholder Services L.L.C.
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DESCRIPTION OF DEPOSITARY SHARES
The Depositary Shares will represent fractional interests in shares of
Preferred Stock. As a holder of Depositary Shares, you will be entitled to a
proportionate share of all the rights and preferences of a holder of Preferred
Stock (for example, dividend, voting, redemption and liquidation rights). Your
proportionate rights and preferences will be subject to the applicable Deposit
Agreement. This is a summary and is not complete. This summary does not describe
certain exceptions and qualifications contained in the Deposit Agreement. You
should read the Deposit Agreement, a form of which is filed as an exhibit to the
Registration Statement.
General
The Depositary will issue Depositary Receipts to evidence Depositary
Shares. Each Depositary Receipt will represent a fractional interest (to be
specified in the applicable Prospectus Supplement) in a share of a particular
series of Preferred Stock.
The Depositary Shares will be deposited under a Deposit Agreement among the
Company, a bank or trust company selected by the Company as the Depositary and
the holders of the Depositary Receipts. The Depositary must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000. The name and address of the
Depositary will be specified in the applicable Prospectus Supplement.
Before the definitive engraved Depositary Receipts are available, the
Depositary may issue temporary Depositary Receipts substantially identical to
the definitive Depositary Receipts. Definitive Depositary Receipts will be
prepared within a reasonable time and will be exchanged for the temporary
Depositary Receipts at the Company's expense.
Dividends and Other Distributions
The Depositary will distribute to the holders of Depositary Receipts all
cash dividends or other cash distributions on the fractional shares of Preferred
Stock. These cash dividends and other cash distributions will be distributed
proportionately (based on holdings of the Depositary Shares on the applicable
record date). The Depositary will not distribute amounts less than one cent. The
Depositary will hold any such balances of fractional cents, without liability
for interest on these balances. The Depositary will distribute these balances
with the next sum received for distribution to holders of Depositary Receipts
then outstanding.
If the Company distributes property other than cash, the Depositary will
distribute the property as close to proportionately as possible (based on
holdings of the Depositary Shares on the applicable record date). If the
Depositary determines that it is not feasible to make such a distribution, the
Depositary may (with the approval of the Company) sell the property and
distribute the net proceeds of such sale or use some other fair and practical
method to make the distribution.
Each Deposit Agreement will also explain how holders of Depositary Shares
can participate in any subscription or similar rights offered by the Company to
holders of the Preferred Stock deposited under such Deposit Agreement.
Redemption of Depositary Shares
When all or a part of the shares of corresponding Preferred Stock are
redeemed, the Depositary will redeem the Depositary Shares with the proceeds
received from the redemption of the Preferred Stock. Whenever the Company
redeems shares of Preferred Stock held by a Depositary, the Depositary will
redeem a number of Depositary Shares representing the number of shares of
Preferred Stock redeemed by the Company. The Depositary Shares will be redeemed
on the same redemption date as the corresponding Preferred Stock. The Depositary
will mail any notice of redemption at least 20 days but not more than 50 days
before the redemption
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date. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share of the Preferred Stock. If only a
part of the Depositary Shares are to be redeemed, the Depositary may select by
lot or redeem a proportionate amount of all Depositary Shares.
Beginning on the redemption date, the Depositary Shares called for
redemption will no longer be considered outstanding. All rights of the holders
of such Depositary Shares will cease, except for the right to receive the moneys
payable or rights to which the holders were otherwise entitled on such
redemption.
Voting Rights
As soon as practical after the Depositary receives notice of any meeting at
which the holders of shares of Preferred Stock may vote, the Depositary will
mail the information contained in that notice of meeting (and any accompanying
proxy materials) to the holders of the Depositary Shares on the record date for
such meeting. Each such holder will be able to instruct the Depositary on how to
exercise the voting rights of the corresponding Preferred Stock. The Depositary
will endeavor to vote the Preferred Stock in accordance with such holder's
instructions. The Company will agree to take all action the Depositary considers
necessary to enable it to do so. The Depositary will abstain from voting shares
of Preferred Stock for which it has not received specific instructions from the
holders of the applicable Depositary Shares.
Withdrawal of Stock
An owner of Depositary Shares which have not been called for redemption and
who surrenders the Depositary Receipts at the Depositary's principal office will
be entitled to whole shares of Preferred Stock and all money and any other
property represented by those Depositary Shares. Fractional shares of Preferred
Stock will not be delivered. If the Depositary Receipts surrendered by the
holder are greater than the number of whole shares of Preferred Stock to be
withdrawn, the Depositary will also deliver to such holder a new Depositary
Receipt for the fractional shares. If you withdraw Preferred Stock in this way,
you will not be able to deposit them under a Deposit Agreement or to exchange
them for Depositary Shares. The Company expects that a public trading market
will exist only for Depositary Shares and not for the corresponding Preferred
Stock.
Amendment and Termination of the Deposit Agreement
The Company and the Depositary may agree to change the form of Depositary
Receipt or any provision of a Deposit Agreement. However, any amendment that
materially adversely alters the rights of the existing holders of Depositary
Shares requires the approval by the holders of at least a majority of the
Depositary Shares then outstanding under that Deposit Agreement. Each Deposit
Agreement will provide that each holder of Depositary Shares who continues to
hold those Depositary Shares when an amendment becomes effective will be
considered to have consented to the amendment and will be bound by the
amendment. Except to comply with any mandatory provisions of law or as otherwise
provided in the related Deposit Agreement, no amendment may impair the right of
any holder of any Depositary Shares to surrender the Depositary Receipt to the
Depositary together with instructions to deliver to such holder the whole shares
of Preferred Stock represented by the surrendered Depositary Shares and all
money and any other property represented by such Depositary Shares. A Deposit
Agreement may be terminated by the Company or the Depositary only if:
o all outstanding Depositary Shares issued under the Deposit Agreement
have been redeemed; or
o in connection with the liquidation, dissolution or winding-up of the
Company, there has been a final distribution of the corresponding
Preferred Stock, and the Depositary has distributed the amount it
received to the holders of those Depositary Shares.
Charges of the Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of any Depositary in connection with the initial deposit of
Preferred Stock and the initial issuance of the applicable Depositary Shares and
any redemption of such
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Preferred Stock. Holders of Depositary Shares will pay any other taxes and
charges incurred for their accounts as provided in the applicable Deposit
Agreement.
Miscellaneous
Each Depositary will send to the holders of Depositary Shares all reports
and communications it receives from the Company that the Company is required to
furnish to the holders of the Preferred Stock. Each Depositary will also make
available for inspection by the holders of those Depositary Shares, at the
principal office of such Depositary and at such other places as it considers
advisable, all reports and communications received from the Company that are
received by such Depositary as the holder of Preferred Stock.
The Depositary and the Company assume liability under a Deposit Agreement
to holders of the Depositary Shares only for negligence or willful misconduct.
Neither any Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under a Deposit Agreement. The obligations of the Company and any
Depositary under a Deposit Agreement will be limited to good faith performance
of their duties. Neither the Depositary nor the Company will be obligated to
prosecute or defend any legal proceeding regarding any Depositary Shares or
Preferred Stock unless satisfactory indemnity is provided. The Company and any
Depositary may rely on written advice of counsel or accountants, on information
provided by persons presenting Preferred Stock for deposit, holders of
Depositary Shares or other persons believed in good faith to be competent to
give such information. The Depositary and the Company may also rely on documents
they believe are genuine and signed or presented by the proper party or
party(ies).
Owners of the Depositary Shares will be treated as if they were owners of
the Preferred Stock for United States federal income tax purposes.
Resignation and Removal of Depositary
A Depositary may resign at any time by delivering a notice of resignation
to the Company. The Company may remove any Depositary at any time. Any such
resignation or removal will be effective when a Company-appointed successor
accepts the appointment. The successor Depositary must be appointed within 60
days after delivery of the notice of resignation or removal. The successor
Depositary must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
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BOOK-ENTRY ISSUANCE
Unless otherwise indicated in the applicable Prospectus Supplement, the
Preferred Securities and the Debentures will be issued only in book-entry form.
This means that the Company and the Trusts will not issue certificates to you.
Instead, ownership of the Preferred Securities and the Debentures will be
represented by one or more global certificates that will be registered in the
name of The Depository Trust Corporation, New York, New York ("DTC"), the
securities depositary, or its nominee, Cede & Co. This form will be referred to
as "book-entry only."
One or more fully registered global certificates will be issued for the
Preferred Securities and the Debentures, representing in the aggregate, the
total number of such Trust's Preferred Securities or aggregate principal balance
of Debentures, respectively. These global certificates will be deposited with
the Property Trustee as custodian for DTC.
Any series of Preferred Stock (and the Depositary Shares relating to such
series) may be issued in either certificate or book-entry form, as specified in
the applicable Prospectus Supplement. Ownership of Preferred Stock or Depositary
Shares issued in book-entry form will be represented by one or more global stock
certificates or a global Depositary Receipt registered in the name of DTC, or
its nominee, Cede & Co.
Purchases of Preferred Securities, Debentures, Preferred Stock or
Depositary Shares within the DTC system must be made by or through Participants,
including Euroclear and Cedel, which will receive a credit for the Preferred
Securities, Debentures, Preferred Stock or Depositary Shares on DTC's records.
The ownership interest of the actual purchaser of Preferred Securities,
Debentures, Preferred Stock or Depositary Shares and any transfers of those
interests, are in turn recorded separately on the Participants' records acting
on behalf of the actual owners of the Preferred Securities, Debentures,
Preferred Stock or Depositary Shares. Under book-entry only, none of the
Company, the Trusts or DTC will issue certificates or written confirmations to
individual beneficial holders of their purchases, except if the use of the
book-entry system for the Preferred Securities, Debentures, Preferred Stock or
Depositary Shares is discontinued.
Transfers
Transfers between Participants are completed through the DTC system and are
settled in same-day funds. Transfers between participants in Euroclear and Cedel
will be effected in the ordinary way in accordance with their respective rules
and operating procedures.
Cross-Market Transfers
With respect to cross-market transfers between DTC Participants and
Euroclear or Cedel participants, such transfers will be effected in DTC in
accordance with DTC's rules on behalf of Euroclear or Cedel by its respective
depositary. These cross-market transactions will require the delivery of
instructions to Euroclear or Cedel by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of Euroclear and Cedel. If the transaction meets the respective
system's settlement requirements, Euroclear or Cedel, as applicable, will
deliver instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the Preferred
Securities, Debentures, Preferred Stock or Depositary Shares in DTC. Only then
will Euroclear or Cedel make or receive payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Both Euroclear and
Cedel participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel.
Because of time zone differences involved in cross-market transfers, the
securities account of a Euroclear or Cedel participant purchasing an interest in
a Preferred Security, Debenture, Preferred Stock or Depositary Shares from a DTC
Participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear or Cedel) immediately following the
DTC settlement date, and any such crediting will be reported to the relevant
Euroclear or Cedel participant. Any cash received in Euroclear or Cedel as a
result of
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sales of interests in a Preferred Security, Debenture, Preferred Stock or
Depositary Shares by or through a Euroclear or Cedel participant to a DTC
Participant will be received with value on the DTC settlement date, but will
only be available in the relevant Euroclear or Cedel cash account as of the
business day for Euroclear or Cedel following the DTC settlement date.
Record-Keeping and Notice
DTC will have no knowledge of the actual owners of the beneficial interests
of the Preferred Securities, Debentures, Preferred Stock or Depositary Shares.
Instead, DTC's records reflect only the identity of the Participants to whose
accounts such Preferred Securities, Debentures, Preferred Stock or Depositary
Shares are credited, which may not be the owners of beneficial interests in the
global securities. The Participants will in turn keep account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
and among Participants, and by Participants to the owners of beneficial
interests, and the voting rights of Participants and owners of beneficial
interests will be governed by arrangements among them, subject to any statutory
or regulatory requirements.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities, Debentures, Preferred Stock or Depositary Shares. If
less than all of a Trust's Preferred Securities or Debentures or less than all
of the Preferred Stock or Depositary Shares are being redeemed, DTC's current
practice is to determine by lot the amount of the interest of each Participant
to be redeemed.
Voting Rights
Although voting with respect to the Preferred Securities, Debentures,
Preferred Stock or Depositary Shares is limited to the holders of record of the
Preferred Securities, Debentures, Preferred Stock or Depositary Shares, in those
instances in which a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to the Preferred Securities, Debentures, Preferred
Stock or Depositary Shares. It is DTC's current practice to mail an omnibus
proxy to the relevant Trustee as soon as possible after the specified record
date. This omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those Participants to whose accounts such Preferred Securities or Debentures are
credited on the record date.
Distribution Payments
Distribution payments on the Preferred Securities, Debentures, Preferred
Stock or Depositary Shares will be made by the relevant Trustee to DTC. When any
payment of principal or interest is received, it is DTC's current practice to
credit the respective Participant's account on the payment date according to
their respective holdings of beneficial interests in the global securities as
shown on DTC's records. Payments by Participants to owners of beneficial
interests in the global securities, and voting by Participants, will be governed
by the customary practices between the Participants and owners of beneficial
interests for customer accounts registered in "street name." However, these
payments will be the responsibility of the Participants (not of DTC), the
relevant Trustee, the applicable Trust or the Company. Payment to DTC of
Distributions is the responsibility of the relevant Trustee; payment to DTC of
cash dividends and other distributions is the responsibility of the Company.
Disbursement of such payments to the Participants is the responsibility of DTC,
while disbursements of such payments to the owners of the beneficial interests
is the responsibility of the Participants.
The Company will wire principal and interest payments to DTC's nominee. The
Company and the Trustee will treat DTC's nominee as the owner of the global
securities for all purposes. Accordingly, neither the Company nor the Trustee is
directly responsible or liable for amounts due on the securities to owners of
the beneficial interests in the global securities.
DTC Services
DTC has provided the Company with the following information:
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o DTC is a limited purpose trust company organized under the New York
Banking Law;
o a "banking organization" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC holds securities that its Participants deposit with DTC. Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC also facilitates the
settlement among these Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates.
DTC's book-entry system is also available for use by other organizations
such as securities brokers and dealers, banks and trust companies that work
through a Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the SEC.
DTC is owned by a number of its Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
Discontinuance of DTC Services
DTC may discontinue providing services as securities depositary with
respect to any of the Preferred Securities, Debentures, Preferred Stock or
Depositary Shares at any time by giving reasonable notice to the relevant
Trustee and the Company. Preferred Securities and Debentures represented by a
global security will be exchangeable for Preferred Security or Debenture
certificates with the same terms in authorized denominations only if:
o DTC notifies the Company that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by the
Company within 90 days; or
o the Company instructs the Trustee, at its option, that the global
security is now exchangeable.
In addition, after a Debenture Event of Default, the holders of a majority
of the Liquidation Amount of Preferred Securities or aggregate principal amount
of Debentures may determine to discontinue the system of book-entry transfers
through DTC. In such case, definitive certificates for such Preferred Securities
or Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trusts and the Company believe to be
accurate, but the Trusts and the Company assume no responsibility for the
accuracy of such information. Neither the Trusts nor the Company has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described above or under the rules and procedures
governing their respective operations.
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ERISA CONSIDERATIONS
With the possible exception of any class of Preferred Securities which is
listed on a securities exchange or interdealer quotation system, if Benefit Plan
Investors (defined as (i) employee benefit plans under Section 3(3) of ERISA
(whether or not subject to ERISA), (ii) "plans" as defined in Section 4975(e) of
the Internal Revenue Code or (iii) entities deemed to hold plan assets of either
of such plans under Department of Labor regulation 29 C.F.R. ss.2510.3-101
("Plan Assets Regulation") or applicable law), in the aggregate, acquire 25% or
more of the value of any class of Trust Securities (excluding any Trust
Securities owned by the Property Trustee, Delaware Trustee, Company,
Administrators or any of their affiliates), a portion of the assets owned by any
Trust would likely be treated as if they were "plan assets" of any such Benefit
Plan Investors which are subject to Part 4 of Title I of ERISA or Section 4975
of the Internal Revenue Code (collectively, "ERISA Plans"). The acquisition of
Trust Securities by Benefit Plan Investors will not be monitored, and there can
be no assurance that Benefit Plan Investors will not at any time own less than
25% of the value of a class of Trust Securities.
If a class of Preferred Securities is listed on a securities exchange or
interdealer quotation system, it is expected that such class of Preferred
Securities will be freely transferable, widely-held and registered in a timely
fashion under Sections 12(b) or 12(g) of the Exchange Act, so that such
securities will constitute "publicly offered securities" within the meaning of
the Plan Assets Regulation. Accordingly, the acquisition of such Preferred
Securities by Benefit Plan Investors should not result in the assets owned by
any Trust being treated as "plan assets" of such purchasers. The Common
Securities will be held by the Company.
If the assets of any Trust were treated as plan assets, the fiduciary
standards in ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Internal Revenue Code (which generally prohibit most direct
or indirect transactions between ERISA Plans and persons who are "parties in
interest" or "disqualified persons" with respect to such plans) would likely
apply to the assets owned by and the operations of such Trust. Under such
circumstances, the Property Trustee, Delaware Trustee and Administrators would
likely be treated as "parties in interest" and "disqualified persons" subject to
the prohibited transaction provisions and could be construed as fiduciaries for
purposes of ERISA with respect to each ERISA Plan owning Preferred Securities.
In addition, the loan between such Trust and the Company, as evidenced by the
Debentures, might constitute a non-exempt prohibited transaction unless the
Company is not a party in interest or a disqualified person with respect to any
ERISA Plan which owns a Trust Security. By virtue of the activities of the
Company and its subsidiaries, the Company is a party in interest and
disqualified person with respect to many ERISA Plans from time to time. Because
of this fact, the acquisition or ownership of Preferred Securities by any ERISA
Plan as to which the Company is a party in interest or disqualified person might
also constitute a prohibited transaction in the absence of a prohibited
transaction exemption, whether or not assets of any Trust are treated as plan
assets.
No ERISA Plan should acquire Preferred Securities unless it qualifies for a
prohibited transaction exemption. Prohibited transaction exemptions that may
apply are transactions: (i) negotiated by "qualified professional asset
managers"; (ii) with insurance company pooled separate accounts; (iii) by bank
collective trust funds; (iv) by insurance company accounts; and (v) negotiated
by certain qualified "in-house asset managers". The acquisition of Preferred
Securities by an ERISA Plan shall constitute a representation and warranty by
such ERISA Plan and its fiduciary responsible for such acquisition that such
security is being acquired and held pursuant to an applicable prohibited
transaction exemption and, accordingly, that the acquisition and holding of the
securities will not constitute a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Internal Revenue Code.
This discussion of ERISA Plans and other Benefit Plan Investors is general
and does not cover every situation. Any Benefit Plan Investor considering a
purchase of Preferred Securities should consult with its counsel regarding the
potential consequences of such purchase. In particular, ERISA Plans should
consider the potential consequences if the assets of the Trust were treated as
"plan assets" and the availability and extent of exemptive relief under
applicable prohibited transaction exemptions.
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PLAN OF DISTRIBUTION
The Company and the Trusts may sell the offered securities (a) through
agents; (b) through underwriters; (c) through dealers; (d) directly to one or
more purchasers; or (e) through a combination of any of these methods of sale.
By Agents
Offers to purchase securities may be solicited by agents designated by the
Company. The agents will agree to use their reasonable best efforts to solicit
purchases for the period of their appointment, unless the applicable Prospectus
Supplement states differently.
By Underwriters
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined by the
underwriters at the time of sale. The obligations of the underwriters to
purchase the securities will be subject to certain conditions. The underwriters
will be obligated to purchase all the securities of the series offered if any of
the securities are purchased. Any initial public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers may be
changed.
By Dealers
If a dealer is used to sell the securities the offered securities will be
acquired by the dealer as principal. The dealer may then resell such securities
to the public at varying prices to be determined by the dealer at the time of
resale.
Direct Sales
Offered securities may also be sold directly by the Company or the
applicable Trust. In this case, no other underwriters, agents or dealers would
be involved.
General Information
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act, and
any discounts or commissions received by them from the Company or the applicable
Trust and any profit on the resale of the offered securities by them may be
treated as underwriting discounts and commissions under the Securities Act. Any
underwriters or agents will be identified and their compensation will be
described in the applicable Prospectus Supplement.
The Company or the Trusts may have agreements with the underwriters,
dealers or agents to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments
which the underwriters, dealers or agents may be required to make.
The Company or the applicable Trust may authorize agents, underwriters or
dealers to solicit offers by certain institutions to purchase securities
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. The commission indicated in the applicable
Prospectus Supplement will be paid to underwriters, dealers and agents
soliciting purchases of securities under such delayed delivery contracts
accepted by the Company or the applicable Trust.
Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, the Company or its subsidiaries in
the ordinary course of business.
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LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed on for the Company by Cadwalader, Wickersham &
Taft, New York, New York, counsel to the Company and for the Trusts by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the
Trusts and the Company. The validity of the Debentures, Guarantees and/or
Preferred Stock will be passed on for the underwriters by Kramer Levin Naftalis
& Frankel LLP, New York, New York. Cadwalader, Wickersham & Taft and Kramer
Levin Naftalis & Frankel LLP will rely on the opinion of Richards, Layton &
Finger, P.A. as to matters of Delaware law.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the Company's 1998
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses in connection with the issuance
and distribution of the securities being registered. All amounts shown are
estimated, except the SEC registration fee and the NASD filing fee.
Registration fee under the Securities Act of 1933, as amended. $ 208,500
NASD filing fee............................................... 30,500
Blue Sky fees and expenses (including counsel fees)........... 15,000
Fees of rating agencies....................................... 300,000
Trustees' fee and expenses.................................... 25,000
Printing and engraving........................................ 60,000
Accounting services........................................... 20,000
Legal fees of Registrants' counsel............................ 75,000
Miscellaneous................................................. 16,000
--------
Total............................................. $ 750,000
=========
Item 15. Indemnification of Directors and Officers.
Reference is made to Section 145 of the Delaware General Corporation Law
which provides for indemnification of directors and officers in certain
circumstances.
Article VIII of the Company's Restated Certificate of Incorporation
provides for indemnification of directors and officers of the Company against
certain liabilities incurred as a result of their duties as such and also
provides for the elimination of the monetary liability of directors for certain
actions as such. The Company's Restated Certificate of Incorporation, as
amended, is filed as Exhibit 4(a)(1) to the Registration Statement on Form S-3
(No. 333-57083) filed June 17, 1998.
The registrant has in effect reimbursement insurance for directors' and
officers' liability claims and directors' and officers' liability insurance
indemnifying, respectively, the registrant and its directors and officers within
specific limits for certain liabilities incurred by them, subject to the
conditions and exclusions and deductible provisions of the policies.
Under the applicable Trust Agreement, the Company will agree to indemnify
each of the Trustees of the Trust or any predecessor Trustee of the Trust, and
to hold the Trustees harmless against, any loss, damage, claims, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the applicable Trust
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties under the applicable Trust Agreement.
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
4.1 --Restated Certificate of Incorporation of The Bear Stearns Companies
Inc. (incorporated by reference to Exhibit 4(a)(1) to the Registration
Statement of Form S-3 (File No. 333-57083)).
4.2.1 --Certificate of Stock Designation relating to the Registrant's
Adjustable Rate Cumulative Preferred Stock, Series A (incorporated by
reference to Exhibit 4(a)(6) to the Registration Statement on Form S-8
(File No. 33-49979).
II-1
<PAGE>
4.2.2 --Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series E (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on January
14, 1998).
4.2.3 --Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series F (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on April
20, 1998)
4.2.4 --Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series G (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on June
18, 1998)
4.2.5 --Form of Deposit Agreement (incorporated by reference to Exhibit 4(d)
to the Registration Statement on Form S-3 (File No. 33-59140))
4.2.6 --Specimen Depositary Receipt (included in Exhibit 4.2.5)
4.3 --Form of Indenture, to be entered into between the Company and The
Chase Manhattan Bank, as Debenture Trustee.*
4.4 --Form of Supplemental Indenture, to be entered into between the Company
and The Chase Manhattan Bank, as Debenture Trustee.**
4.5 --Certificate of Trust of Bear Stearns Capital Trust II.*
4.6 --Certificate of Trust of Bear Stearns Capital Trust III.*
4.7 --Certificate of Trust of Bear Stearns Capital Trust IV.*
4.8 --Certificate of Trust of Bear Stearns Capital Trust V.*
4.9 --Form of Amended and Restated Trust Agreement for each of Bear Stearns
Capital Trust II, Bear Stearns Capital Trust III, Bear Stearns Capital
Trust IV and Bear Stearns Capital Trust V among The Bear Stearns
Companies Inc., as Depositor, The Chase Manhattan Bank, as Property
Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee, and the
Administrators named therein.*
4.10 --Form of Preferred Security Certificate for each of Bear Stearns
Capital Trust II, Bear Stearns Capital Trust III, Bear Stearns Capital
Trust IV and Bear Stearns Capital Trust V (included in Exhibit 4.8).
4.11 --Form of Guarantee Agreement for each of Bear Stearns Capital Trust II,
Bear Stearns Capital Trust III, Bear Stearns Capital Trust IV and Bear
Stearns Capital Trust V between The Bear Stearns Companies Inc., as
Guarantor, and The Chase Manhattan Bank, as Trustee.*
5.1 --Opinion of Cadwalader, Wickersham & Taft as to legality of Junior
Subordinated Deferrable Interest Debentures, Guarantees and Preferred
Stock to be issued by The Bear Stearns Companies Inc.*
5.2 --Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust II.*
5.3 --Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust III.*
5.4 --Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust IV.*
5.5 --Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust V.*
12.1 --Statement re: computation of ratio of earnings to fixed charges
(incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended June 30, 1998 (File No. 1-8989)).
23.1 --Consent of Deloitte & Touche LLP.**
23.2 --Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1).
23.3 --Consent of Richards, Layton & Finger, P.A. (included in Exhibits 5.2,
5.3, 5.4 and 5.5).
24.1 --Powers of Attorney (included on the signature page of the Registration
Statement).
25.1 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Indenture.*
25.2 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
II.*
25.3 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
III.*
25.4 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
IV.*
II-2
<PAGE>
25.5 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust V.*
25.6 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of Preferred
Securities of Bear Stearns Capital Trust II.*
25.7 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of Preferred
Securities of Bear Stearns Capital Trust III.*
25.8 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of Preferred
Securities of Bear Stearns Capital Trust IV.*
25.9 --Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of Preferred
Securities of Bear Stearns Capital Trust V.*
- ---------------------
* Previously filed.
** Filed herewith.
Item 17. Undertakings
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of a
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Act of 1934) that is incorporated by reference in the registration
statement will be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
will be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
registrant pursuant to the foregoing provisions or otherwise, each registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. If the a claim for indemnification against such
liabilities (other than the payment by each registrant of expenses incurred or
paid by a director, officer or controlling person of each registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, each registrant will, unless in the opinion of its counsel the
matter has been settled by the controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Each of the undersigned registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
II-3
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment will be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) that, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or
487(h) under the Securities Act will be deemed to be part of this registration
statement as of the time it was declared effective
(5) that, for purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
will be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time will be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment no. 1 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on November 18, 1998.
THE BEAR STEARNS COMPANIES INC.
By: /s/ William J. Montgoris
-----------------------------------------------
William J. Montgoris
Chief Operating Officer
BEAR STEARNS CAPITAL TRUST II
By: The Bear Stearns Companies Inc., as Depositor
By: /s/ William J. Montgoris
----------------------------------------
William J. Montgoris
Chief Operating Officer
BEAR STEARNS CAPITAL TRUST III
By: The Bear Stearns Companies Inc., as Depositor
By: /s/ William J. Montgoris
----------------------------------------
William J. Montgoris
Chief Operating Officer
BEAR STEARNS CAPITAL TRUST IV
By: The Bear Stearns Companies Inc., as Depositor
By: /s/ William J. Montgoris
----------------------------------------
William J. Montgoris
Chief Operating Officer
BEAR STEARNS CAPITAL TRUST V
By: The Bear Stearns Companies Inc., as Depositor
By: /s/ William J. Montgoris
----------------------------------------
William J. Montgoris
Chief Operating Officer
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 1 to the registration statement has been signed by the following persons in
the capacities indicated on November 18, 1998.
<TABLE>
<CAPTION>
Signature Title
- -------------------------------------- -------------------------------------------------
THE BEAR STEARNS COMPANIES INC.
<S> <C>
* Chairman of the Board and Director
- ---------------------------------------
Alan C. Greenberg
* President, Chief Executive Officer and Director
- --------------------------------------- (Principal Executive Officer)
James E. Cayne
* Director
- ---------------------------------------
Carl D. Glickman
* Director
- ---------------------------------------
Donald J. Harrington
Director
- ---------------------------------------
William L. Mack
* Director
- ---------------------------------------
Frank T. Nickell
* Director
- ---------------------------------------
Frederic V. Salerno
* Director
- ---------------------------------------
Vincent Tese
Director
- ---------------------------------------
Fred Wilpon
* Senior Vice President and Chief Financial Officer
- --------------------------------------- (Principal Financial Officer)
Samuel L. Molinaro Jr.
* Controller and Assistant Secretary
- --------------------------------------- (Principal Accounting Officer)
Marshall J Levinson
By: /s/ William J. Montgoris
-------------------------------------
William J. Montgoris
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
4.1 -- Restated Certificate of Incorporation of The Bear Stearns Companies
Inc. (incorporated by reference to Exhibit 4(a)(1) to the
Registration Statement of Form S-3 (File No. 333-57083)).
4.2.1 -- Certificate of Stock Designation relating to the Registrant's
Adjustable Rate Cumulative Preferred Stock, Series A (incorporated
by reference to Exhibit 4(a)(6) to the Registration Statement on
Form S-8 (File No. 33-49979).
4.2.2 -- Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series E (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on
January 14, 1998).
4.2.3 -- Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series F (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on April
20, 1998)
4.2.4 -- Certificate of Stock Designation relating to the Registrant's
Cumulative Preferred Stock, Series G (incorporated by reference to
Exhibit 1.4 to the Registration Statement on Form 8-A filed on June
18, 1998)
4.2.5 -- Form of Deposit Agreement (incorporated by reference to Exhibit 4(d)
to the Registration Statement on Form S-3 (File No. 33-59140))
4.2.6 -- Specimen Depositary Receipt (included in Exhibit 4.2.5)
4.3 -- Form of Indenture, to be entered into between the Company and The
Chase Manhattan Bank, as Debenture Trustee.*
4.4 -- Form of Supplemental Indenture, to be entered into between the
Company and The Chase Manhattan Bank, as Debenture Trustee.**
4.5 -- Certificate of Trust of Bear Stearns Capital Trust II.*
4.6 -- Certificate of Trust of Bear Stearns Capital Trust III.*
4.7 -- Certificate of Trust of Bear Stearns Capital Trust IV.*
4.8 -- Certificate of Trust of Bear Stearns Capital Trust V.*
4.9 -- Form of Amended and Restated Trust Agreement for each of Bear
Stearns Capital Trust II, Bear Stearns Capital Trust III, Bear
Stearns Capital Trust IV and Bear Stearns Capital Trust V among The
Bear Stearns Companies Inc., as Depositor, The Chase Manhattan Bank,
as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and the Administrators named therein.*
4.10 -- Form of Preferred Security Certificate for each of Bear Stearns
Capital Trust II, Bear Stearns Capital Trust III, Bear Stearns
Capital Trust IV and Bear Stearns Capital Trust V (included in
Exhibit 4.8).
4.11 -- Form of Guarantee Agreement for each of Bear Stearns Capital Trust
II, Bear Stearns Capital Trust III, Bear Stearns Capital Trust IV
and Bear Stearns Capital Trust V between The Bear Stearns Companies
Inc., as Guarantor, and The Chase Manhattan Bank, as Trustee.*
5.1 -- Opinion of Cadwalader, Wickersham & Taft as to legality of Junior
Subordinated Deferrable Interest Debentures, Guarantees and
Preferred Stock to be issued by The Bear Stearns Companies Inc.*
5.2 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust II.*
5.3 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust
III.*
5.4 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust IV.*
5.5 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Securities to be issued by Bear Stearns Capital Trust V.*
12.1 -- Statement re: computation of ratio of earnings to fixed charges
(incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended June 30, 1998 (File No. 1-8989)).
23.1 -- Consent of Deloitte & Touche LLP.**
23.2 -- Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1).
23.3 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibits
5.2, 5.3, 5.4 and 5.5).
<PAGE>
24.1 -- Powers of Attorney (included on the signature page of the
Registration Statement).
25.1 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Indenture.*
25.2 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
II.*
25.3 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
III.*
25.4 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
IV.*
25.5 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Trust Agreement of Bear Stearns Capital Trust
V.*
25.6 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of
Preferred Securities of Bear Stearns Capital Trust II.*
25.7 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of
Preferred Securities of Bear Stearns Capital Trust III.*
25.8 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of
Preferred Securities of Bear Stearns Capital Trust IV.*
25.9 -- Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Guarantee for the benefit of holders of
Preferred Securities of Bear Stearns Capital Trust V.*
- ---------------------
* Previously filed.
** Filed herewith.
-2-
================================================================================
____________ SUPPLEMENTAL INDENTURE
between
THE BEAR STEARNS COMPANIES INC.
and
THE CHASE MANHATTAN BANK
Dated as of _______________, ____
_____________________ JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURES
DUE ________________, ____
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Definition of Terms...........................................2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.01 Designation and Principal Amount..............................6
SECTION 2.02 Stated Maturity ..............................................7
SECTION 2.03 Form and Payment; Minimum Transfer Restriction ...............7
SECTION 2.04 Exchange and Registration of Transfer of
Debentures; Depositary .......................................7
SECTION 2.05 Interest .....................................................9
ARTICLE III
REDEMPTION AND PREPAYMENT OF THE DEBENTURES
SECTION 3.01 Optional Redemption by Company...............................10
SECTION 3.02 Special Event Prepayment.....................................10
SECTION 3.03 Notice of Prepayment.........................................11
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.01 Extension of Interest Payment Period.........................11
SECTION 4.02 Notice of Extension..........................................12
ARTICLE V
EXPENSES
SECTION 5.01 Payment of Expenses..........................................12
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.01 Form of Debenture............................................13
-i-
<PAGE>
ARTICLE VII
ISSUE OF DEBENTURES
SECTION 7.01 Issue of Debentures..........................................14
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Ratification of Base Indenture; Supplemental Indenture
Controls ....................................................14
SECTION 8.02 Trustee Not Responsible for Recitals.........................14
SECTION 8.03 Governing Law................................................14
SECTION 8.04 Separability.................................................14
SECTION 8.05 Counterparts.................................................15
-ii-
<PAGE>
__________ SUPPLEMENTAL INDENTURE, dated as of __________, ____ (the
"Supplemental Indenture"), between The Bear Stearns Companies Inc., a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, as trustee (the
"Trustee") under the Indenture dated as of ________ _, ____ between the Company
and the Trustee (the "Base Indenture" and together with all supplements thereto,
the "Indenture").
WHEREAS, the Company executed and delivered the Base Indenture to the
Trustee to provide for the future issuance of the Company's unsecured
subordinated debentures to be issued from time to time in one or more series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered as provided
in the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company desires
to provide for the establishment of a new series of its unsecured subordinated
debentures to be known as its _________________ Junior Subordinated Deferrable
Interest Debentures due __________, 20__ (the "Debentures"), the form and
substance of such Debentures and the terms, provisions and conditions thereof to
be set forth as provided in the Base Indenture and this Supplemental Indenture;
WHEREAS, Bear Stearns Capital Trust __, a Delaware statutory business trust
(the "Trust"), has offered to the underwriters (the "Underwriters") named in
Schedule I to the Underwriting Agreement, dated __________, ____ (the
"Underwriting Agreement"), among the Underwriters, the Trust and the Company
$__________ aggregate liquidation amount of its __________________ Preferred
Securities (the "Preferred Securities"), representing undivided beneficial
interests in the assets of the Trust and proposes to invest the proceeds from
such offering in $______________ aggregate principal amount of the Debentures;
WHEREAS, the Company has requested that the Trustee execute and deliver
this Supplemental Indenture; all requirements necessary to make this
Supplemental Indenture a valid instrument in accordance with its terms, and to
make the Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed; and the execution and delivery of this Supplemental Indenture has
been duly authorized in all respects.
NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Base Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definition of Terms.
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms which are defined in the Base Indenture have the same
meanings when used in this Supplemental Indenture;
(b) the terms defined in this Article have the meaning assigned to them in
this Article and include the plural as well as the singular;
(c) all other terms used herein which are defined in the Trust Indenture
Act, whether directly or by reference therein, have the meanings assigned to
them therein;
(d) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States of America, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States of America at the date
of such computation;
(e) a reference to a Section or Article is to a Section or Article of this
Supplemental Indenture;
(f) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Supplemental Indenture as a whole and not to any particular
Article, Section or other subdivision;
(g) headings are for convenience of reference only and do not affect
interpretation; and
(h) the following terms have the meanings given to them in the Trust
Agreement: (i) Affiliate; (ii) Administrators; (iii) Business Day; (iv) Clearing
Agency; (v) Closing Date; (vi) Common Securities; (vii) Delaware Trustee; (viii)
Distribution; (ix) Exchange Act; (x) Guarantee; (xi) Like Amount; (xii) Opinion
of Counsel; (xiii) Preferred Securities; (xiv) Preferred Securities Certificate;
(xv) Property Trustee; and (xvi) Trust Securities.
(i) References herein to the prepayment of the Debentures shall be deemed
to be references to the redemption of the Debentures for the purposes of Article
III of the Base Indenture.
-2-
<PAGE>
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Preferred Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Special Event.
"Adjusted CMT Rate" means, with respect to any prepayment date, the CMT
Rate plus ___%.
"Applicable Rate" with respect to interest on the Debentures shall be the
rate determined by the Calculation Agent on any Applicable Rate Determination
Date to be a rate equal to three-month LIBOR plus ___%. For this purpose, LIBOR
shall be calculated in accordance with the following provisions:
(i) With respect to an Applicable Rate Determination Date, LIBOR
will be determined on the basis of the offered rate for three-month
deposits in U.S. dollars, commencing on the second London Banking Day
immediately following such Applicable Rate Determination Date, which
appears on Telerate page 3750 (or such other page as may replace such
Telerate page 3750 for the purpose of displaying London interbank rates
of major banks), as of 11:00 a.m., London time, on such Applicable Rate
Determination Date. If no rate appears on Telerate page 3750 (or such
other page as may replace such page), LIBOR in respect of that
Applicable Rate Determination Date will be determined as if the parties
had specified the rate described in (ii) below.
(ii) With respect to an Applicable Rate Determination Date on
which no offered rate appears on Telerate page 3750 (or such other
page), as applicable, as described in (i) above, LIBOR will be
determined on the basis of the rates at approximately 11:00 a.m.,
London time, on such Applicable Rate Determination Date at which
three-month deposits in U.S. dollars are offered to prime banks in the
London interbank market by four major banks in the London interbank
market selected by the Calculation Agent commencing on the second
London Banking Day immediately following such Applicable Rate
Determination Date and in a principal amount equal to an amount of not
less than $1,000,000 that is representative of a single transaction in
such market at such time. The Calculation Agent will request the
principal London office of each of such banks to provide a quotation of
its rate. If at least two such quotations are provided, LIBOR for such
Applicable Rate Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for such
Applicable Rate Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., New York City time, on such
Applicable Rate Determination Date by three major banks in the City of
New York, selected by the Calculation Agent for loans in U.S. dollars
to leading European banks, having a maturity of three months and
commencing on the second London Banking Day immediately following such
Applicable Rate Determination Date and in a principal amount equal to
an amount of not less than $1,000,000 that is representative of a
single
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<PAGE>
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR will be LIBOR in effect on such
Applicable Rate Determination Date, provided further, however, that if
the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence and such Applicable Rate
Determination Date is prior to _____________, 20__ or prior to the
first Applicable Rate Determination Date on which LIBOR can be
determined as aforesaid, the Applicable Rate for the following
Applicable Rate Reset Date shall be the Coupon Rate.
"Applicable Rate Determination Date" shall mean the second London Banking
Day preceding each Applicable Rate Reset Date.
"Applicable Rate Reset Date" shall mean _____________, 20__ and the ____ of
each _____________, _____________, _____________ and __________ thereafter until
_____________, 20__.
"Calculation Agent" means ____________________.
"CMT Rate" will be determined by the Calculation Agent in accordance with
the following provisions:
(i) the CMT Rate will be determined on the basis of the latest
rate displayed at the close of business 10 Business Days before the
date of a Special Event Prepayment on (x) Telerate page 7055 for
"Yields on Treasury Constant Maturities -- Federal Reserve Board
Statistical Release H.15(519) -- Mondays approximately 3:45 p.m. EST"
(or "EDT" as the case may be) for U.S. Treasury Securities with a
maturity corresponding to the Remaining Life (or if no maturity is
within three months before or after the Remaining Life, yields for the
two published maturities most closely corresponding to the Remaining
Life shall be determined and the CMT Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounded to the
nearest month), or (y) such other page as may replace page 7055, as
provided by the Telerate News Service, for the purpose of displaying
rates or prices that are comparable, as determined by the Calculation
Agent (after consultation with the Company), to the Constant Maturity
Treasury rates formerly displayed on Telerate page 7055;
(ii)if the information specified in subparagraph (i) above is not
available at the date 10 Business Days before such Special Event
Prepayment, then the CMT Rate shall be determined on the basis of the
Treasury Constant Maturity rate with a maturity corresponding to the
Remaining Life (adjusted as aforesaid) (or other United States Treasury
rate, with a maturity that is closest to ____________, 20__) published
as of that date by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the
Calculation Agent (after consultation with the Company) determines to
be comparable to the rate formerly displayed on Telerate page 7055 and
published in the Federal Reserve Board Statistical Release H.15 (519);
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(iii) if the information specified in subparagraphs (i) and (ii)
is not available at the date 10 Business Days before the date of such
Special Event Prepayment then the CMT Rate shall be the yield to
maturity of the then most recently issued direct non-callable fixed
rate United States Treasury Note with an original maturity
corresponding to the Remaining Life (adjusted as aforesaid) (the
"Reference Treasury Note"), such yield to maturity to be calculated by
the Calculation Agent on the basis of the arithmetic mean of the
secondary market bid side prices for such Reference Treasury Note
quoted as of 3:00 p.m., New York City time (or the closing of the
market, if earlier), on the date 10 Business Days before the date of
such Special Event Prepayment, by (and appearing in the written records
of) three leading primary United States government securities dealers
in New York City selected by the Calculation Agent; and
(iv) if the information specified in subparagraphs (i) and (ii)
above is not available at the date 10 Business Days before such Special
Event Prepayment and at least three price quotations for the Reference
Treasury Note are not available at that date from leading primary
dealers in New York City as provided in subparagraph (iii) above, then
the CMT Rate shall be the yield to maturity of the Reference Treasury
Note, as calculated by the Calculation Agent on the basis of the
arithmetic mean of the secondary market bid side prices for such
Reference Treasury Note quoted as of 3:00 p.m., New York City time (or
the closing of the market, if earlier), on that date, by (and appearing
in the written records of) any three primary United States government
securities dealers selected by the Calculation Agent (irrespective of
where such dealers may be located).
"Compounded Interest" shall have the meaning specified in Section 4.01.
"Coupon Rate" has the meaning specified in Section 2.05.
"Deferred Interest" has the meaning specified in Section 4.01.
"Extension Period" has the meaning specified in Section 4.01.
"Global Debenture" has the meaning specified in Section 2.04.
"Investment Company Event" means the receipt by the Trust of an Opinion of
Counsel to the effect that, as a result of the occurrence of a change in law or
regulation or a change (including any announced proposed change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change or proposed change becomes effective or would become effective, as
the case may be, on or after the date of the issuance of the Preferred
Securities of the Trust.
"Liquidation Amount" means the stated amount of $_____ per Preferred
Security.
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"London Banking Day" shall mean any day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
"Optional Redemption Price" has the meaning specified in Section 3.01.
"Prepayment Date" has the meaning specified in Section 3.01.
"Remaining Life" has the meaning specified in Section 3.02.
"Special Event" means an Investment Company Event or a Tax Event.
"Special Event Prepayment" means the prepayment of the Debentures upon the
occurrence and continuation of a Special Event.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the
Closing Date, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Debentures,
(ii) interest payable by the Company on the Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Company, in whole or
in part, for United States federal income tax purposes, or (iii) the Trust is,
or will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of taxes, duties or other governmental charges.
"Trust Agreement" means the Amended and Restated Trust Agreement of the
Trust, dated as of ________________, ____.
"Underwriters" has the meaning specified in the third recital to this
Supplemental Indenture.
"Underwriting Agreement" has the meaning specified in the third recital to
this Supplemental Indenture.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.01 Designation and Principal Amount.
The aggregate principal amount of Debentures outstanding at any time shall
not exceed $__________ (except as set forth in Section 2.01(2) of the Base
Indenture). Upon receipt of a written order of the Company (executed as required
by Section 2.01 of the Base Indenture) for the authentication and delivery of a
series of Debentures and satisfaction of the
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requirements of the fifth paragraph of Section 2.01 of the Base Indenture, the
Trustee shall authenticate Debentures for original issuance in an aggregate
principal amount not to exceed $__________ (except as set forth in Section
2.01(2) of the Base Indenture).
SECTION 2.02 Stated Maturity.
The Stated Maturity of the Debentures is __________, 20__ and shall not be
subject to extension.
SECTION 2.03 Form and Payment; Minimum Transfer Restriction.
(a) Except as provided in Section 2.04, the Debentures shall be issued to
the Trust and held by the Property Trustee in fully registered certificated form
without coupons in minimum denominations of $_____ and integral multiples of
$_____ in excess thereof. Principal and interest on the Debentures issued in
certificated form will be payable, the transfer of such Debentures will be
registrable and such Debentures will be exchangeable for Debentures bearing
identical terms and provisions at the principal office of the Trustee; provided,
however, that payment of interest may be made at the option of the Company (i)
by check mailed to the registered holder at such address as shall appear in the
Register or (ii) by transfer to an account maintained by such Person as
specified in such Register, provided that proper transfer instructions have been
received by the preceding record date. Notwithstanding the foregoing, so long as
the registered holder of any Debentures is the Property Trustee, the payment of
the principal of and interest (including Additional Sums, Additional Interest
and Compounded Interest, if any) on such Debentures held by the Property Trustee
will be made at such place and to such account as may be designated by the
Property Trustee.
(b) The Debentures may be transferred or exchanged only in minimum
denominations of $_____ and integral multiples of $_____ in excess thereof; and
any attempted transfer, sale or other disposition of Debentures in a
denomination of less than $_____ shall be deemed to be void and of no legal
effect whatsoever (the foregoing restriction being the "Minimum Transfer
Restriction").
SECTION 2.04 Exchange and Registration of Transfer of Debentures;
Depositary.
If an early dissolution of the Trust occurs as described in the Trust
Agreement and Debentures are to be distributed to the holders of the Preferred
Securities, a Like Amount of the Debentures will be issued to holders of the
Trust Securities in the same form as the Trust Securities that such Debentures
replace in accordance with the following procedures:
(a) So long as Debentures are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, all Debentures that are so
eligible may be represented by one or more Debentures in global form registered
in the name of Cede & Co. the nominee of the Depositary, except as otherwise
specified below. The transfer and exchange of beneficial interests in any such
Debenture in global form shall be shown on, and
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transfers thereof will be effected only through, records maintained by
participants in the Depositary.
Debentures that are distributed in replacement of Preferred Securities
represented by a global Preferred Security will be represented by a global
Debenture (the "Global Debenture").
Except as provided below, beneficial owners of a Debenture in global form
shall not be entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered registered holders of such Debentures
in global form.
(b) Trust Securities held in certificated form, except for certificates
representing Preferred Securities held by Cede & Co. as nominee of the
Depositary (or any successor Clearing Agency or its nominee), shall upon
presentation to the Trustee by the Property Trustee or by the holder thereof or
by the Property Trustee on behalf of such holders be exchanged for a Like Amount
of Debentures in fully registered certificated form.
(c) Any Global Debenture may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of the Indenture as may be required by the Depositary or required to
comply with the rules and regulations of any exchange, interdealer quotation
system or self-regulatory organization upon which the Debentures may be listed
or traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Debentures are
subject.
(d) Notwithstanding any other provisions of the Indenture (other than the
provisions set forth in this Section 2.04(d)), a Debenture in global form may
not be exchanged in whole or in part for Debentures registered, and no transfer
of a Debenture in global form may be registered, in the name of any person other
than Cede & Co. unless (i) the Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Debenture or
(B) has ceased to be a clearing agency registered as such under the Exchange
Act, (ii) there shall have occurred and be continuing an Event of Default, or
any event which after notice or lapse of time or both would be an Event of
Default under the Indenture, with respect to such Global Debenture, or (iii) the
Company in its sole discretion instructs the Trustee to exchange such Global
Debenture for a Debenture that is not a Global Debenture (in which case such
exchange shall be effected by the Trustee).
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Debentures in global form. Initially, the Global
Debentures shall be issued to the Depositary, registered in the name of Cede &
Co., as the nominee of the Depositary, and deposited with the Trustee as
custodian for Cede & Co.
If at any time the Depositary for the Global Debentures notifies the
Company that it is unwilling or unable to continue as Depositary for such
Debentures or has ceased to be
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a Clearing Agency registered as such under the Exchange Act, the Company may
appoint a successor Depositary with respect to such Debentures. If a successor
Depositary for the Debentures is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate for authentication and delivery of Debentures, will authenticate and
deliver, Debentures in definitive form, in an aggregate principal amount equal
to the principal amount of the Global Debentures, in exchange for the such
Global Debentures.
Definitive Debentures issued in exchange for all or a part of a Global
Debenture pursuant to this Section 2.04(d) shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such
definitive Debentures to the person in whose names such definitive Debentures
are so registered.
At such time as all interests in a Global Debenture have been redeemed,
exchanged, repurchased or canceled, such Global Debenture shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions of the Depositary. At any time prior to such cancellation, if any
interest in a Global Debenture is exchanged for definitive Debentures, redeemed,
exchanged, or canceled, or transferred for part of a Global Debenture, the
principal amount of such Global Debenture shall, in accordance with the standing
procedures and instructions of the Depositary be reduced, and an endorsement
shall be made on such Global Debenture by, or at the direction of, the Trustee
to reflect such reduction.
SECTION 2.05 Interest.
(a) Each Debenture will bear interest at the rate (the "Coupon Rate") of
___% per annum until ____________, 20__, and at the Applicable Rate thereafter,
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate or the
Applicable Rate, as the case may be, compounded semiannually, payable (subject
to the provisions of Article 4) semiannually in arrears on the __________ day of
__________ and __________ of each year (each, an "Interest Payment Date"),
commencing on _________, ____ to the Person in whose name such Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. If the Debentures are
issued in certificated form (other than to the Property Trustee), the record
dates for payment of interest will be the _____ day of the month [immediately
prior to the month] in which the relevant Interest Payment Date occurs. Until
liquidation, if any, of the Trust, each Debenture will be held in the name of
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Company shall notify the Trustee of the Applicable Rate, as soon
as practicable after each calculation thereof.
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(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months until ____________, 20__ and
thereafter on the basis of a 360-day year and the actual number of days elapsed.
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, except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable. Until ____________,
20__, in the event that any Interest Payment Date is not a Business Day,
interest will be paid on the next succeeding Business Day (subject as
aforesaid), without any interest or other payment with respect to any such
delay. After ___________, 20__, interest shall be the amount of interest accrued
from, and including, the last date on which interest has previously been paid,
to, but excluding, the Interest Payment Date (or if such date is not a Business
Day, the next succeeding Business Day (subject as aforesaid)).
ARTICLE III
REDEMPTION AND PREPAYMENT OF THE DEBENTURES
SECTION 3.01 Optional Redemption by Company.
Subject to the provisions of Article III of the Base Indenture, except as
otherwise may be specified in Section 3.02 or elsewhere in this Supplemental
Indenture, the Company shall have the right to prepay the Debentures, in whole
or in part, from time to time, on or after ____________, 20__, at a prepayment
price (the "Optional Redemption Price") equal to the outstanding principal
amount of the Debentures plus, in each case, accrued and unpaid interest,
including Additional Sums, Additional Interest and Compounded Interest thereon
to the date of prepayment (the "Prepayment Date"):
If the Debentures are only partially prepaid pursuant to this Section 3.01,
the Debentures will be selected for prepayment by any method utilized by the
Trustee. The Optional Redemption Price, together with any required interest
payment, shall be paid prior to 12:00 Noon, New York City time, on the
Prepayment Date or at such earlier time as the Company determines provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price, together with any required interest payment, by 10:00
a.m., New York City time, on the date such amounts are to be paid.
SECTION 3.02 Special Event Prepayment.
If a Special Event shall occur and be continuing, the Company may, at its
option, prepay the Debentures in whole (but not in part) at any time within 90
days of the occurrence of such Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the greater of (i) 100% of the
principal amount of such Debentures or (ii) as determined by a Calculation
Agent, the sum of the present values of the principal amount that would be
payable as part of the Optional Redemption Price pursuant to Section 3.01 with
respect to an optional prepayment of such Debentures on _____________, 20__,
together with
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the present values of scheduled payments of interest from the Prepayment Date to
_____________, 20__ (the "Remaining Life"), in each case discounted to the
Prepayment Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted CMT Rate, plus, in each case, accrued and
unpaid interest including Additional Sums, Additional Interest and Compounded
Interest thereon to but excluding the Prepayment Date, provided that with
respect to any prepayment under this Section 3.02 of Debentures as a result of a
Special Event that occurs on or after _____________, 20__ the Special Event
Prepayment Price shall be an amount equal to the Optional Redemption Price that
would be payable on optional redemption of the Debentures on the Prepayment Date
(including accrued and unpaid interest, Additional Sums, Additional Interest and
Compounded Interest to the Prepayment Date). The Company shall notify the
Trustee of the Special Event Prepayment Price, as soon as practicable after the
calculation thereof.
SECTION 3.03 Notice of Prepayment.
Subject to Article III of the Base Indenture, notice of any prepayment will
be mailed at least 30 days but not more than 60 days before the redemption date
to each holder of Debentures to be prepaid at its registered address. Unless the
Company defaults in payment of the Prepayment Price, on and after the Prepayment
Date interest ceases to accrue on such Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Special Event, the Company will also pay
any Additional Sums on the Debentures.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.01 Extension of Interest Payment Period.
So long as an Event of Default under Section 6.01 of the Base Indenture
shall not have occurred and be continuing, the Company shall have the right,
subject to the provisions of Section 2.10 of the Base Indenture, at any time and
from time to time during the term of the Debentures, to defer payments of
interest by extending the interest payment period of such Debentures for a
period not exceeding ____ consecutive semi-annual periods (the "Extension
Period"), during which Extension Period no interest shall be due and payable;
provided that no Extension Period shall end on a date other than an Interest
Payment Date or extend beyond the Stated Maturity or any earlier redemption
date. To the extent permitted by applicable law, interest, the payment of which
has been deferred because of the extension of the interest payment period
pursuant to this Section 4.01, will bear interest thereon at the Coupon Rate
compounded semiannually ("Compounded Interest"). At the end of the Extension
Period, the Company shall pay all interest accrued and unpaid on the Debentures,
including any Additional Sums, Additional Interest and Compounded Interest
(together, "Deferred Interest") to the holders of the Debentures in whose names
the Debentures are registered in the Register on the first record date preceding
the end of the Extension Period.
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Before the termination of any Extension Period, the Company may further extend
such period, provided that such period together with all such further extensions
thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond
the Stated Maturity or any earlier redemption date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest then due, the
Company may commence a new Extension Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extension Period.
SECTION 4.02 Notice of Extension.
(a) If the Property Trustee is the only registered holder of the Debentures
at the time the Company selects (or extends) an Extension Period, the Company
shall give written notice to the Administrators, the Property Trustee and the
Trustee of its selection (or extension) of such Extension Period at least five
Business Days before the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities issued by the Trust are payable, or
(ii) the date the Trust is required to give notice of the record date, or the
date such Distributions are payable, to any applicable exchange, interdealer
quotation system or self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event not less than five Business
Days before such record date. The Property Trustee shall give notice of the
Company's election to begin or extend a new Extension Period to the holders of
the Preferred Securities.
(b) If the Property Trustee is not the only holder of the Debentures at the
time the Company selects (or extends) an Extension Period, the Company shall
give the holders of the Debentures and the Trustee written notice of its
selection (or extension) of such Extension Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date or (ii) the
date the Company is required to give notice of the record or payment date of
such interest payment to any applicable self-regulatory organization or to
holders of the Debentures.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.02 shall be counted as one of the ____
consecutive semi-annual periods permitted in the maximum Extension Period
permitted under Section 4.01.
ARTICLE V
EXPENSES
SECTION 5.01 Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures to the
Property Trustee and in connection with the sale of the Preferred Securities by
the Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall:
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(a) pay all costs and expenses relating to the offering, sale and issuance
of the Debentures, including commissions to the Underwriters payable pursuant to
the Underwriting Agreement and compensation of the Trustee under the Indenture
in accordance with the provisions of Section 7.06 of the Base Indenture;
(b) pay all costs and expenses of the Trust (including, without limitation,
costs and expenses relating to the organization of the Trust, the fees and
expenses of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of the Trust, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of Trust
assets);
(c) pay all costs and expenses related to the enforcement by the Property
Trustee of the rights of the registered holders of the Preferred Securities;
(d) be primarily liable for any indemnification obligations arising with
respect to the Trust Agreement or the Underwriting Agreement; and
(e) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
SECTION 5.02 Payment upon Resignation or Removal.
Upon termination of this Supplemental Indenture or the Base Indenture or
the removal or resignation of the Trustee pursuant to Section 7.10 of the Base
Indenture, the Company shall pay to the Trustee all amounts accrued to the date
of such termination, removal or resignation. Upon termination of the Trust
Agreement or the removal or resignation of the Delaware Trustee or the Property
Trustee, as the case may be, pursuant to Section 8.10 of the Trust Agreement,
the Company shall pay to the Delaware Trustee or the Property Trustee, and their
respective counsel, as the case may be, all amounts accrued to the date of such
termination, removal or resignation.
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.01 Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the form attached hereto as Exhibit
A.
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ARTICLE VII
ISSUE OF DEBENTURES
SECTION 7.01 Issue of Debentures.
Debentures in the aggregate principal amount of up to $__________ may, upon
execution of this Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Debentures to or upon the
written order of the Company, signed 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 without any further action by the Company, except as otherwise
provided in Section 2.01 of the Base Indenture.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Ratification of Base Indenture; Supplemental Indenture
Controls.
The Base Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Base Indenture in the manner and to the extent herein and
therein provided. The provisions of this Supplemental Indenture shall supersede
the provisions of the Base Indenture to the extent the Indenture is inconsistent
herewith.
SECTION 8.02 Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Supplemental Indenture.
SECTION 8.03 Governing Law.
THIS SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE INTERNAL 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.
SECTION 8.04 Separability.
In case any one or more of the provisions contained in this Supplemental
Indenture or in the Debentures shall for any reason be held to be invalid,
illegal or
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unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Supplemental Indenture or of the
Debentures, but this Supplemental Indenture and the Debentures shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 8.05 Counterparts.
This Supplemental Indenture may be executed in any number of counterparts
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
THE BEAR STEARNS COMPANIES INC.
By:
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
_____________________ JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE _____________, 20__
Registered No. __________
Dated: ____________ CUSIP __________
Registered Holder: [The Chase Manhattan Bank, as Property Trustee of Bear
Stearns Capital Trust __]*
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 __________ Dollars ($_____)]**
[specified in the Schedule annexed hereto]***, on __________, 20__ 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 ___%
per annum, until _____________, 20__ (the "Coupon Rate") and thereafter at the
Applicable Rate (as defined in the Indenture referred to below) per annum
(determined as provided in the Indenture), in like coin or currency,
semiannually in arrears on the __________ day of _________ and _________ (each
an "Interest Payment Date") commencing __________, ____ 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 or the Applicable Rate, as
the case may be, compounded semiannually. 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
A-1
<PAGE>
the Property Trustee or a nominee of The Depository Trust Company, in which case
the Record Date will be the _____ day of the _____ month [immediately prior to
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 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 until _____________, 20__ and thereafter on
the basis of a 360-day year and the actual number of days elapsed. 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, except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable. Until _____________, 20__, in
the event that any Interest Payment Date is not a Business Day, interest will be
paid on the next succeeding Business Day (subject as aforesaid), without any
interest or other payment with respect to any such delay. After _____________,
20__, interest shall be the amount of interest accrued from, and including, the
last date on which interest has previously been paid, to, but excluding, the
Interest Payment Date (or if such date is not a Business Day, the next
succeeding Business Day (subject as aforesaid)).
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 ___ consecutive semi-annual 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 ____________, 20__
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
A-2
<PAGE>
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); (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; and (e) payments of interest pursuant to the EPICS Loan
Agreement). 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 ___ consecutive semi-annual periods or extend beyond
_____________, 20__ 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 __ 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.
This Debenture is issued pursuant to an Indenture, dated as of ________ _,
____ 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
__________________________________ Dollars ($_________).
The Debentures evidenced by this Certificate may be transferred or
exchanged only in minimum denominations of $_____ and integral multiples of
$_____ in excess thereof, and any attempted transfer, sale or other disposition
of Debentures in a denomination of less than $_____ 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.
A-3
<PAGE>
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.
- -------------
* Insert in Debenture held by Property Trustee only.
** Insert in definitive Debenture only.
*** Insert in global Debenture only.
A-4
<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:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
[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:
------------------------------------
Authorized Officer
A-5
<PAGE>
[REVERSE OF DEBENTURE]
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
A-6
<PAGE>
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 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
Additional Sums, Additional Interest and Compounded Interest) thereon shall have
been paid in full and (ii) no amendment shall be
A-7
<PAGE>
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 _____________, 20__, 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
the greater of (i) 100% of the principal amount hereof; or (ii) as determined by
a Calculation Agent, the sum of the present value of the principal amount that
would be payable with respect to an optional redemption of a Debenture on
_____________, 20__, together with the present values of scheduled payments of
interest from the prepayment date to _____________, 20__, in each case
discounted to the prepayment date on a semi-annual basis at the Adjusted CMT
Rate, plus, in each case, accrued and unpaid interest to but excluding the date
of prepayment. However, if the Company redeems the Debenture as a result of a
Special Event which occurs on or after _____________, 20__, then the Special
Event Prepayment Price shall be the Optional Redemption Price that would be
payable on optional redemption of the Debentures on the date of such prepayment,
which includes accrued and unpaid interest to 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
A-8
<PAGE>
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.
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.
A-9
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
within _____________________ 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 ______________________ Junior
Subordinated Deferrable Interest Debenture in every particular,
without alteration or enlargement or any change whatever.
A-10
<PAGE>
FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL DEBENTURE
TO REFLECT CHANGES IN PRINCIPAL AMOUNT
The initial principal amount evidenced by this Global Debenture is $________.
<TABLE>
<CAPTION>
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Principal Amount by which this
Global Debenture is to be Reduced Remaining Principal Amount
Date and Reason for Reduction of this Global Debenture Notation Made by
- ------------------------ ------------------------------------- ------------------------------ ------------------------
<S> <C> <C> <C>
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</TABLE>
A-11
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Bear Stearns Companies Inc. on Form S-3 of our reports dated August 21,
1998, appearing in and incorporated by reference in the Annual Report on Form
10-K of The Bear Stearns Companies Inc. for the year ended June 30, 1998, and to
the reference to us under the heading "Experts" in the Prospectus, which is part
of the Registration Statement.
/s/ Deloitte & Touche LLP
November 17, 1998
New York, New York
