This
preliminary pricing supplement relates to an effective registration statement
under the Securities Act of 1933, but is not complete and may be changed. We
may
not sell these securities until we deliver a final pricing supplement. This
preliminary pricing supplement, the accompanying prospectus supplement and
prospectus are not an offer to sell these securities and are not soliciting
an
offer to buy these securities in any state where such an offer or sale would
not
be permitted.
Filed
pursuant to Rule 424(b)(2)
Registration
No. 333-136666
Subject
to Completion, dated March 5, 2008
PRICING
SUPPLEMENT
(To
Prospectus dated August 16, 2006 and
Prospectus
Supplement dated August 16, 2006)
The
Bear Stearns Companies Inc.
$[
l
]
Medium-Term Notes, Series B, Linked to the Standard and Poor’s
500
®
Index
Due
July
[1], 2009
|
|
·
|
The
Notes are fully principal protected if held to maturity and are linked
to
the performance of the Standard and Poor’s 500
®
Index (the “Index”).
|
|
|
·
|
When
we refer to Notes in this pricing supplement, we mean Notes with
a
principal amount of $1,000.
|
|
|
·
|
On
the Maturity Date, you will receive the “Cash Settlement Value,” which is
an amount in cash equal to the principal amount of each Note plus
a
“Variable Return”, where the Variable Return is calculated in the
following manner:
|
|
|
·
|
if,
at all times during the Observation Period, the Index Level is
observed
below the Upper Barrier and above the Lower Barrier, then the Variable
Return will equal the product of (i) the $1,000 principal amount
of the
Notes multiplied by (ii) 11.00%;
|
|
|
·
|
however,
if at any time during the Observation Period the Index Level is
observed
at or above the Upper Barrier or at or below the Lower Barrier,
then the
Variable Return will be equal to zero.
|
|
|
·
|
The
Upper Barrier is [
l
],
the Index Level that is [118.00-120.00]% of the Initial Index
Level.
|
|
|
·
|
The
Lower Barrier is [
l
],
the Index Level that is [80.00-82.00]% of the Initial Index Level.
|
|
|
·
|
The
CUSIP number for the Notes is
0739283B7.
|
|
|
·
|
The
Notes will not pay interest during their
term.
|
|
|
·
|
The
Notes will not be listed on any securities exchange or quotation
system.
|
|
|
·
|
The
Maturity Date for the Notes is expected to be July [1], 2009. If
the Final
Valuation Date is postponed, the Maturity Date will be three Business
Days
following the postponed Final Valuation
Date.
|
|
|
·
|
The
Observation Period will be each day which is an Index Business Day
for the
Index from and including the Pricing Date to and including the Final
Valuation Date.
|
|
|
·
|
The
scheduled Final Valuation Date for the Notes is June [
l
],
2009. The Final Valuation Date is subject to adjustment as described
herein.
|
INVESTMENT
IN THE NOTES INVOLVES CERTAIN RISKS. THERE MAY NOT BE AN ACTIVE SECONDARY MARKET
IN THE NOTES, AND IF THERE WERE TO BE AN ACTIVE SECONDARY MARKET, IT MAY NOT
BE
LIQUID, AND THEREFORE THE NOTES THEMSELVES ARE NOT, AND WOULD NOT BE, LIQUID.
YOU SHOULD REFER TO “RISK FACTORS” BEGINNING ON PAGE
PS-10.
“Standard
& Poor’s
®
”,
“S&P
®
”,
“S&P 500
®
”,
“Standard & Poor’s 500”, and “500” are trademarks of Standard & Poor’s,
a division of The McGraw-Hill Companies, Inc. (“S&P”) and have been, or will
be, licensed for use for certain purposes by The Bear Stearns Companies Inc.
The
Notes are not sponsored, endorsed, sold or promoted by S&P, and S&P
makes no representation regarding the advisability of investing in the
Notes.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of the Notes or determined that this pricing supplement,
or the accompanying prospectus supplement and prospectus, is truthful or
complete. Any representation to the contrary is a criminal
offense.
|
|
Per
Note
|
|
Total
|
|
Initial
public offering price
|
[
l
]%
|
|
$[
l
]
|
|
Agent’s
discount
|
[
l
]%
|
|
$[
l
]
|
|
Proceeds,
before expenses, to us
|
[
l
]%
|
|
$[
l
]
|
Any
additional reissuances will be offered at a price to be determined at the time
of pricing of each offering of Notes, which will be a function of the prevailing
market conditions and the level of the Index at the time of the relevant
sale.
We
expect
that the Notes will be ready for delivery in book-entry form only through the
book-entry facilities of The Depository Trust Company in New York, New York,
on
or about March [
l
],
2008,
against payment in immediately available funds. The distribution of the Notes
will conform to the requirements set forth in
Rule
2720
of the Financial Industry Regulatory Authority, Inc. (“FINRA”) Conduct
Rules.
We
may
grant our affiliate Bear, Stearns & Co. Inc. a 13-day option from the date
of this pricing supplement to purchase from us up to an additional $[
l
]
of Notes
at the public offering price to cover any over-allotments.
_______________
Bear,
Stearns & Co. Inc.
SUMMARY
This
summary highlights selected information from the accompanying prospectus,
prospectus supplement and this pricing supplement to help you understand the
Notes linked to the Index. You should carefully read this entire pricing
supplement and the accompanying prospectus supplement and prospectus to fully
understand the terms of the Notes, as well as certain tax and other
considerations that are important to you in making a decision about whether
to
invest in the Notes. You should carefully review the section “Risk Factors” in
this pricing supplement and “Risk Factors” in the accompanying prospectus
supplement which highlight a number of significant risks, to determine whether
an investment in the Notes is appropriate for you. All of the information set
forth below is qualified in its entirety by the more detailed explanation set
forth elsewhere in this pricing supplement and the accompanying prospectus
supplement and prospectus. If information in this pricing supplement is
inconsistent with the prospectus or prospectus supplement, this pricing
supplement will supersede those documents. In this pricing supplement, the
terms
“we,” “us” and “our” refer only to The Bear Stearns Companies Inc. excluding its
consolidated subsidiaries.
The
Bear
Stearns Companies Inc. Medium-Term Notes, Series B, Linked to the Standard
and
Poor’s 500
®
Index,
due July [1], 2009 (the “Notes”) are Notes whose return is tied or “linked” to
the performance of the Index. When we refer to Note or Notes in this pricing
supplement, we mean $1,000 principal amount of Notes. The Notes are fully
principal protected if held to maturity. On the Maturity Date, you will receive
the “Cash Settlement Value,” which is an amount in cash equal to the $1,000
principal amount of each Note plus a “Variable Return”, where the Variable
Return is calculated in the following manner: (a) if at all times during the
Observation Period the Index Level is observed below the Upper Barrier and
above
the Lower Barrier, then the Variable Return will equal the product of (i) the
$1,000 principal amount of the Notes multiplied by (ii) 11.00%; however, (b)
if
at any time during the Observation Period the Index Level is observed at or
above the Upper Barrier or at or below the Lower Barrier, then the Variable
Return will be equal to zero.
Selected
Investment Considerations
|
|
·
|
Principal
protection—Because the Notes are principal protected if held to maturity,
in no event will you receive a Cash Settlement Value less than $1,000
per
Note, if you hold your Notes to maturity. If, at any time during
the
Observation Period, the Index Level is observed at or above the Upper
Barrier or at or below the Lower Barrier, you will receive the principal
amount of the Notes at maturity.
|
|
|
·
|
Potential
positive Variable Return with positive or negative performance of
the
Index—Provided that the Index Level was never observed at or above the
Upper Barrier or at or below the Lower Barrier during the Observation
Period, the Cash Settlement Value you will receive under the Notes
will be
the sum of (A) the $1,000 principal amount of the Notes plus (B)
the
product of (i) the $1,000 principal amount of the notes multiplied
by (ii)
11.00%.
|
|
|
·
|
Diversification—Because
the Index represents a broad spectrum of the United States equity
market,
the Notes may allow you to diversify an existing
portfolio.
|
|
|
·
|
Taxes—For
U.S. federal income tax purposes, we intend to treat the Notes as
contingent payment debt instruments. As a result, you will be required
to
include original issue discount (“OID”) in income during your ownership of
the Notes even though no cash payments will be made with respect
to the
Notes until maturity. Additionally, you will generally be required
to
recognize ordinary income on the gain, if any, realized on a sale,
upon
maturity, or other disposition of the Notes. You should review the
discussion under the section entitled “Certain U.S. Federal Income Tax
Considerations” in this pricing supplement.
|
Selected
Risk Considerations
|
|
·
|
Non-conventional
return
—The
yield on the Notes may be less than the overall return you would
earn if
you purchased a conventional debt security at the same time and with
the
same maturity.
|
|
|
·
|
No
interest, dividend or other payments—You will not receive any interest,
dividend payments or other distributions on the stocks underlying
the
Index, nor will such payments be included in the calculation of the
Cash
Settlement Value you will receive at
maturity.
|
|
|
·
|
Not
exchange listed—The Notes will not be listed on any securities exchange or
quotation system, and we do not expect a trading market to develop,
which
may affect the price that you receive for your Notes upon any sale
prior
to maturity. If you sell the Notes prior to maturity, you may receive
less, and possibly significantly less, than your initial investment
in the
Notes.
|
|
|
·
|
Liquidity—Because
the Notes will not be listed on any securities exchange or quotation
system, we do not expect a trading market to develop, and, if such
a
market were to develop, it may not be liquid. Our subsidiary, Bear,
Stearns & Co. Inc. has advised us that they intend under ordinary
market conditions to indicate prices for the Notes on request. However,
we
cannot guarantee that bids for outstanding Notes will be made in
the
future; nor can we predict the price at which those bids will be
made. In
any event, Notes will cease trading as of the close of business on
the
Maturity Date.
|
KEY
TERMS
|
Issuer:
|
The
Bear Stearns Companies Inc.
|
|
Index:
|
Standard
& Poor’s 500
®
Index (ticker “SPX”), as published by S&P (the
“Sponsor”).
|
|
Face
amount:
|
The
Notes will be denominated in U.S. dollars. Each Note will be issued
in
minimum denominations of $1,000 and $1,000 multiples thereafter;
provided,
however, that the minimum purchase for any purchaser domiciled in
a Member
state of the European Economic Area shall be $100,000. The aggregate
principal amount of the Notes being offered is $[
l
].
When we refer to “Note” or “Notes” in this pricing supplement, we mean
Notes each with a principal amount of
$1,000.
|
|
Further
issuances:
|
Under
certain limited circumstances, and at our sole discretion, we may
offer
further issuances of the Notes. These further issuances, if any,
will be
consolidated to form a single series with the Notes and will have
the same
CUSIP number and will trade interchangeably with the Notes immediately
upon settlement.
|
|
Cash
Settlement Value:
|
On
the Maturity Date, you will receive the Cash Settlement Value which
is an
amount in cash equal to the $1,000 principal amount of each Note
plus the
Variable Return.
|
|
Variable
Return:
|
An
amount determined by the Calculation Agent and calculated in the
following
manner:
|
|
|
|
(a)
if
at all times during the Observation Period the Index Level is observed
below the Upper Barrier and above the Lower Barrier, then the Variable
Return will equal the product of (i) the $1,000 principal amount
of the
Notes multiplied by (ii) 11.00%
,
|
|
|
|
(b)
however,
if
at any time during the Observation Period the Index Level is observed
at
or above the Upper Barrier or at or below the Lower Barrier, then
the
Variable Return will be equal to zero
.
|
|
|
For
purposes of determining the Variable
Return:
|
|
|
“
Upper
Barrier
”
equals [
l
],
the Index Level that is [118.00-120.00]% of the Initial Index
Level.
|
|
|
“
Lower
Barrier
”
equals [
l
],
the Index Level that is [80.00-82.00]% of the Initial Index Level.
|
|
|
“
Index
Level
”
means, as of any time or date of determination during the Observation
Period, the index level as reported by the Sponsor and displayed
on
Bloomberg Professional
®
service (“Bloomberg”) page SPX <Index>
<GO>.
|
|
|
“
Observation
Period
”
means each day which is an Index Business Day for the Index from
and
including the Pricing Date to and including the Final Valuation
Date.
|
|
|
“
Initial
Index Level
”
equals [
l
],
the Index Level on the Pricing Date.
|
|
Interest:
|
The
Notes will not bear interest.
|
|
Pricing
Date:
|
March
[
l
],
2008.
|
|
Final
Valuation Date:
|
June
[
l
],
2009; provided that (i) if such date is not an Index Business Day
(as
defined herein), then the Final Valuation Date will be the next succeeding
day that is an Index Business Day and (ii) if a Market Disruption
Event
(as defined herein) exists on the Final Valuation Date, the Final
Valuation Date will be the next Index Business Day on which a Market
Disruption Event does not exist for the Index. If the Final Valuation
Date
is postponed for three consecutive Index Business Days due to the
existence of a Market Disruption Event, then, notwithstanding the
existence of a Market Disruption Event on that third Index Business
Day,
that third Index Business Day will be the Final Valuation Date
.
|
|
Maturity
Date:
|
The
Notes are expected to mature on July [1], 2009 unless such date is
not a
Business Day, in which case the Maturity Date shall be the next Business
Day. If the Final Valuation Date is postponed, the Maturity Date
will be
three Business Days following the postponed Final Valuation
Date.
|
|
Exchange
listing:
|
The
Notes will not be listed on any securities exchange or quotation
system.
|
|
Index
Business Day
:
|
Means,
with respect to the Index, any day on which the Primary Exchange
(as
defined herein) and each Related Exchange (as defined herein) are
scheduled to be open for trading.
|
|
Primary
Exchange:
|
The
primary exchange or market of trading of any security then included
in the
Index.
|
|
Related
Exchange:
|
Each
exchange or quotation system where trading has a material effect
(as
determined by the Calculation Agent) on the overall market for futures
or
options contracts relating to the
Index.
|
|
Business
Day:
|
Means
any day other than a Saturday or Sunday, on which banking institutions
in
the cities of New York, New York and London, England are not authorized
or
obligated by law or executive order to be
closed.
|
|
Calculation
Agent:
|
Bear,
Stearns & Co. Inc.
(“Bear
Stearns”). See the section “Description of the Notes - Calculation Agent”
herein.
|
Offers
and sales of the Notes are subject to restrictions in certain jurisdictions.
The
distribution of this pricing supplement, the accompanying prospectus supplement
and prospectus and the offer or sale of the Notes in certain other jurisdictions
may be restricted by law. Persons who come into possession of this pricing
supplement and the accompanying prospectus supplement and prospectus or any
Notes must inform themselves about and observe any applicable restrictions
on
the distribution of this pricing supplement, the accompanying prospectus
supplement and prospectus and the offer and sale of the Notes. Notwithstanding
the minimum denomination of $1,000, the minimum purchase for any purchaser
domiciled in a member state of the European Economic Area shall be $100,000.
QUESTIONS
AND ANSWERS
What
are the Notes?
The
Notes
are a series of our senior debt securities, the value of which is linked to
the
performance of the Index. The Notes will not bear interest, and no other
payments will be made prior to maturity. See the section “Risk Factors” for
selected risk considerations prior to making an investment in the Notes.
The
Notes
are expected to mature on July [1], 2009. The Notes do not provide for earlier
redemption. When we refer to Notes in this pricing supplement, we mean Notes
each with a principal amount of $1,000. You should refer to the section
“Description of Notes” for a detailed description of the Notes prior to making
an investment in the Notes.
What
does
“principal
protected” mean?
“P
rincipal
protected
”
means
that your principal investment in the Notes will not be at risk if you hold
the
Notes to maturity. If,
at
any
time during the Observation Period
the
Index Level is
observed
at or above
the
Upper Barrier or at or below the Lower Barrier, you will receive the principal
amount of the Notes at maturity. You may receive less than the principal amount
of the Notes if you sell your Notes prior to maturity.
Are
there any risks associated with my investment?
Yes.
The
Notes are subject to a number of risks. You should refer to the section “Risk
Factors” in this pricing supplement and the section “Risk Factors” in the
accompanying prospectus supplement.
What
will I receive at maturity of the Notes?
We
have
designed the Notes for investors who want to protect their investment by
receiving at least 100% of the principal amount of their Notes at maturity.
On
the Maturity Date, you will receive the “Cash Settlement Value,” which is an
amount in cash equal to the principal amount of each Note plus a “Variable
Return”, where the Variable Return is calculated in the following manner: (a) if
at all times during the Observation Period the Index Level is observed below
the
Upper Barrier and above the Lower Barrier, then the Variable Return will equal
the product of (i) the $1,000 principal amount of the Notes multiplied by (ii)
11.00%, (b) however, if at any time during the Observation Period the Index
Level is
observed
at or above
the
Upper Barrier or at or below the Lower Barrier, then the Variable Return will
be
equal to zero.
For
more
specific information about the Cash Settlement Value and for illustrative
examples, you should refer to the section “Description of the
Notes.”
Will
there be an additional offering of the Notes?
Under
certain limited circumstances, and at our sole discretion, we may offer further
issuances of the Notes. These further issuances, if any, will be consolidated
to
form a single series with the Notes and will have the same CUSIP number and
will
trade interchangeably with the Notes immediately upon settlement. Any additional
issuance will increase the aggregate principal amount of the outstanding Notes
of this series to include the aggregate principal amount of any Notes bearing
the same CUSIP number that are issued pursuant to (i) any 13-day option we
grant
to Bear, Stearns & Co. Inc., and (ii) any future issuances of Notes bearing
the same CUSIP number. The price of any additional offerings will be determined
at the time of pricing of each offering, which will be a function of the
prevailing market conditions and level of the Index at the time of the relevant
sale.
Will
I receive interest on the Notes?
You
will
not receive any periodic interest payments on the Notes. The only payment you
will receive, if any, will be the Cash Settlement Value upon the maturity of
the
Notes.
What
is the Index?
Unless
otherwise stated, all information on the Index that is provided in this pricing
supplement is derived from the Sponsor or other publicly available sources.
The
Index is a capitalization-weighted index and is intended to provide an
indication of the pattern of common stock price movement. The calculation of
the
level of the Index, discussed below in further detail, is based on the relative
value of the aggregate market value of the common stocks of 500 companies as of
a particular time compared to the aggregate average market value of the common
stocks of 500 similar companies during the base period of the years 1941 through
1943.
As
of
March 3, 2008, the common stocks of 424 companies, or 84.80% of the market
capitalization of the Index, were traded on the New York Stock Exchange
(“NYSE”); the common stocks of 76 companies, or 15.20% of the market
capitalization of the Index, were traded on The NASDAQ Global Select Market
or
the NASDAQ Global Market (collectively, the “NASDAQ”). As of that date, none of
the common stocks included in the Index were companies traded on the American
Stock Exchange (“AMEX”).
For
more
information, see the section “Description of the Index.”
How
has the Index performed historically?
We
have
provided tables and graphs depicting the monthly performance of the Index from
January 1999 through February 2008. You can find these tables and graphs in
the
section “Description of the Index - Historical Data on the Index.” We have
provided this historical information to help you evaluate the behavior of the
Index in various economic environments; however, past performance is not
indicative of the manner in which the Index will perform in the future. You
should refer to the section “Risk Factors - The historical performance of the
Index is not an indication of the future performance of the Index.”
Will
the Notes be listed on a securities exchange?
The
Notes
will not be listed on any securities exchange or quotation system and we do
not
expect a trading market to develop, which may affect the price that you receive
for your Notes upon any sale prior to maturity. Bear Stearns has advised us
that
they intend under ordinary market conditions to indicate prices for the Notes
on
request. However, we cannot guarantee that bids for outstanding Notes will
be
made in the future; nor can we predict the price at which those bids will be
made. In any event, the Notes will cease trading as of the close of business
on
the Maturity Date. You should refer generally to the section “Risk Factors.” If
you sell the Notes prior to maturity, you may receive less, and possibly
significantly less, than your initial investment in the Notes.
What
is the role of Bear
,
Stearns & Co. Inc.?
Bear
Stearns will be our agent for the offering and sale of the Notes. After the
initial offering, Bear Stearns intends to buy and sell the Notes to create
a
secondary market for holders of the Notes, and may stabilize or maintain the
market price of the Notes during the initial distribution of the Notes. However,
Bear Stearns will not be obligated to engage in any of these market activities
or to continue them once they are begun.
Bear
Stearns will also be our Calculation Agent for purposes of calculating the
Cash
Settlement Value. Under certain circumstances, these duties could result in
a
conflict of interest between Bear Stearns’ status as our subsidiary and its
responsibilities as Calculation Agent. You should refer to “Risk Factors - The
Calculation Agent is one of our affiliates, which could result in a conflict
of
interest.”
Can
you tell me more about The Bear Stearns Companies Inc.?
We
are a
holding company that, through our broker-dealer and international bank
subsidiaries, principally Bear Stearns, Bear, Stearns Securities Corp., Bear,
Stearns International Limited (“BSIL”) and Bear Stearns Bank plc, is a leading
investment banking, securities and derivatives trading, clearance and brokerage
firm serving corporations, governments, institutional and individual investors
worldwide. For more information about us, please refer to the section “The Bear
Stearns Companies Inc.” in the accompanying prospectus. You should also read the
other documents we have filed with the Securities and Exchange Commission,
which
you can find by referring to the section “Where You Can Find More Information”
in the accompanying prospectus.
Who
should consider purchasing the Notes?
Because
the Notes are tied to the performance of an underlying equity index, they may
be
appropriate for investors with specific investment horizons who seek to
participate in the Variable Return, if any, at maturity. In particular, the
Notes may be an attractive investment for investors who:
|
|
·
|
want
the potential to receive the Variable Return, if any, at
maturity;
|
|
|
·
|
believe
the Index Level will not be
observed
at or above
the Upper Barrier or at or below the Lower Barrier
at
any time during the Observation
Period;
|
|
|
·
|
do
not want to place their principal at risk and are willing to hold
the
Notes until maturity; and
|
|
|
·
|
are
willing to forgo current income in the form of interest payments
on the
Notes or dividend payments on the stocks underlying the
Index.
|
The
Notes
may not be a suitable investment for investors who:
|
|
·
|
believe
the Index Level will be
observed
at or above
the Upper Barrier or at or below the Lower Barrier
at
any time during the Observation Period
;
|
|
|
·
|
seek
current income or dividend payments from their
investment;
|
|
|
·
|
seek
an investment with an active secondary market;
or
|
|
|
·
|
are
unable or unwilling to hold the Notes until
maturity.
|
What
are the U.S. federal income tax consequences of investing in the
Notes?
We
intend
to treat the Notes as contingent payment debt instruments for federal income
tax
purposes. Therefore, a U.S. Holder of a Note will be required to include OID
in
gross income over the term of the Note even though no cash payments will be
made
with respect to the Notes until maturity. The amount of OID includible in each
year is based on the “comparable yield.” In addition, we will compute a
“projected payment schedule” that reflects a single payment at maturity that
produces the comparable yield. The comparable yield and the projected payment
schedule are neither predictions nor guarantees of the actual yield on the
Notes
or the actual payment at maturity. If the amount we actually pay at maturity
is,
in fact, less than the amount reflected on the projected payment schedule,
then
a U.S. Holder would have recognized taxable income in periods prior to maturity
that exceeds the U.S. Holder’s economic income from holding the Note during such
periods (with an offsetting ordinary loss). If a U.S. Holder disposes of the
Note prior to maturity, the U.S. Holder will be required to treat any gain
recognized upon the disposition of the Note as ordinary income (rather than
capital gain). You should review the discussion under the section entitled
“Certain U.S. Federal Income Tax Considerations” in this pricing
supplement.
Does
ERISA impose any limitations on purchases of the
Notes?
An
employee benefit plan subject to the fiduciary responsibility provisions of
the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan
that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the “Code”), including individual retirement accounts, individual retirement
annuities or Keogh plans, a governmental or other plan subject to any similar
law or any entity the assets of which are deemed to be “plan assets” under
ERISA, Section 4975 of the Code, any applicable regulations or otherwise, will
be permitted to purchase, hold and dispose of the Notes, subject to certain
conditions. Such investors should carefully review the discussion under “Certain
ERISA Considerations” herein before investing in the Notes.
RISK
FACTORS
Your
investment in the Notes involves a degree of risk similar to investing in the
Index. However, your ability to participate in the performance of the Index
is
limited. You will be subject to significant risks not associated with
conventional fixed-rate or floating-rate debt securities. Prospective purchasers
of the Notes should understand the risks of investing in the Notes and should
reach an investment decision only after careful consideration, with their
advisers, of the suitability of the Notes in light of their particular financial
circumstances, the following risk factors and the other information set forth
in
this pricing supplement and the accompanying prospectus supplement and
prospectus. We have no control over a number of matters that may affect the
value of the Notes, including economic, financial, regulatory, geographic,
judicial and political events, and that are important in determining the
existence, magnitude, and longevity of these risks and their influence on the
value of, or the payment made on, the Notes.
Your
Notes are principal protected only if you hold the Notes until
maturity.
If
you
sell your Notes prior to maturity, you may receive less than your initial
investment in the Notes.
You
will not receive any interest payments on the Notes
.
Your yield may be lower than the yield on a conventional debt security of
comparable maturity.
You
will
not receive any periodic payments of interest or any other periodic payments
on
the Notes. On the Maturity Date, you will receive a payment per Note, if any,
equal to the Cash Settlement Value. Thus, the overall return you earn on your
Notes may be less than that you would have earned by investing in a non-indexed
debt security of comparable maturity that bears interest at a prevailing market
rate and is principal protected. For more specific information about the Cash
Settlement Value and for illustrative examples, you should refer to the section
“Description of the Notes.”
You
must rely on your own evaluation of the merits of an investment linked to the
Index.
In
the
ordinary course of our business, we may from time to time express views on
expected movements in the Index and in the stocks underlying the Index. These
views may vary over differing time horizons and are subject to change without
notice. Moreover, other professionals who deal in the equity markets may at
any
time have views that differ significantly from ours. In connection with your
purchase of the Notes, you should investigate the Index and the stocks that
underlie the Index and not rely on our views with respect to future movements
in
these industries and stocks. You should make such investigation as you deem
appropriate as to the merits of an investment linked to the Index.
Your
yield will not reflect dividends on the underlying stocks that comprise the
Index.
The
Index
does not reflect the payment of dividends on the stocks underlying it.
Therefore, the yield based on the Index to the maturity of the Notes will not
produce the same yield as if you had purchased such underlying stocks and held
them for a similar period.
You
should refer to the section “Description of the Notes” for a detailed
description of the Notes prior to making an investment in the Notes.
The
amount you receive at maturity may not be greater than your initial investment
in the Notes.
If
at any
time during the Observation Period the Index Level is observed at or above
the
Upper Barrier or at or below the Lower Barrier, the Variable Return on the
Notes
will be equal to zero and you will only receive the $1,000 principal amount
of
the Notes for each Note you hold to maturity.
Your
return on the Notes is capped.
In
no
event will the Variable Return exceed
$110.00
per Note (with a corresponding Cash Settlement Value of $[1,110.00] per
Note)
because
if the Index Level at any time during the Observation Period is observed at
or
above the Upper Barrier or at or below the Lower Barrier, then the Variable
Return will be equal to zero. See “Description of the Notes—Illustrative
Examples” herein.
If
the Index Level at any time during the Observation Period is observed at or
above the Upper Barrier or at or below the Lower Barrier, the market value
of
the Notes will decrease.
If
the
Index Level at any time during the Observation Period is observed at or above
the Upper Barrier or at or below the Lower Barrier, the market value of the
Notes may decline below the $1,000 principal amount of the Notes and will no
longer be linked to the Index Level. If you try to sell your Notes on the
secondary market prior to maturity in these circumstances, you may receive
less
than your initial investment in the Notes.
The
Index Level is based on intra-day levels of the Index, not only closing levels
of the Index.
The
Index
Level, which is used to determine whether the Upper Barrier and the Lower
Barrier have been breached, is based on intra-day levels of the Index, not
only
closing levels of the Index. Therefore, because the intra-day low levels and
the
intra-day high levels will be less than or equal to, and greater than or equal
to, the closing levels, respectively, it is more likely that the Upper Barrier
or the Lower Barrier will be breached than if the Index Level were based solely
on closing levels of the Index.
Tax
Consequences.
For
U.S.
federal income tax purposes, we intend to treat the Notes as contingent payment
debt instruments. As a result, U.S. Holders will be required to include OID
in
income during their ownership of the Notes even though no cash payments will
be
made with respect to the Notes until maturity. The amount of OID includible
in
each year is based on the “comparable yield.” In addition, we have computed a
“projected payment schedule” that reflects a single payment at maturity that
produces the comparable yield. The comparable yield and the projected payment
schedule are neither predictions nor guarantees of the actual yield on the
Notes
or the actual payment at maturity. If the amount we actually pay at maturity
is,
in fact, less than the amount reflected on the projected payment schedule,
then
a U.S. Holder would have recognized taxable income in periods prior to maturity
that exceeds the U.S. Holder’s economic income from holding the Note during such
periods (with an offsetting ordinary loss). Additionally, U.S. Holders will
generally be required to recognize ordinary income on the gain, if any, realized
on a sale, upon maturity, or other disposition of the Notes. You should review
the discussion under the section entitled “Certain U.S. Federal Income Tax
Considerations” in this pricing supplement.
Equity
market risks may affect the trading value of the Notes and the amount you will
receive at maturity.
We
expect
that the Index Level will fluctuate in accordance with changes in the financial
condition of the companies issuing the common stocks comprising the Index,
the
prices of the underlying common stocks comprising the Index generally and other
factors. The financial condition of the companies issuing the common stocks
comprising the Index may become impaired or the general condition of the equity
market may deteriorate, or the financial condition of the companies issuing
the
common stocks comprising the Index may strengthen or the general condition
of
the equity market may strengthen, either of which may cause the Index Level
at
any time during the Observation Period to be observed at or above the Upper
Barrier or at or below the Lower Barrier and thus cause a decrease in the value
of the Notes. Common stocks are susceptible to general equity market
fluctuations and to volatile increases and decreases in value, as market
confidence in and perceptions regarding the underlying common stocks comprising
the Index change. Investor perceptions regarding the companies issuing the
common stocks comprising the Index are based on various and unpredictable
factors, including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic, and banking crises.
The
Index Level is expected to fluctuate until the Maturity Date.
The
historical performance of the Index is not an indication of the future
performance of the Index.
The
historical performance of the Index, which is included in this pricing
supplement, should not be taken as an indication of the future performance
of
the Index. While the trading prices of the underlying common stocks comprising
the Index will determine the Index Level, it is impossible to predict whether
the Index Level will fall or rise. Trading prices of the underlying common
stocks comprising the Index will be influenced by the complex and interrelated
economic, financial, regulatory, geographic, judicial, political and other
factors that can affect the capital markets generally and the equity trading
markets on which the underlying common stocks are traded, and by various
circumstances that can influence the levels of the underlying common stocks
in a
specific market segment or the level of a particular underlying
stock.
The
price at which you will be able to sell your Notes prior to maturity will depend
on a number of factors, and may be substantially less than the amount you had
originally invested.
If
you
wish to liquidate your investment in the Notes prior to maturity, your only
alternative would be to sell them. At that time, there may be an illiquid market
for Notes or no market at all. Even if you were able to sell your Notes, there
are many factors outside of our control that may affect their trading value.
We
believe that the value of your Notes will be affected by the level and
volatility of the Index, whether the Index Level at any time during the
Observation Period is observed at or above the Upper Barrier or at or below
the
Lower Barrier, changes in U.S. interest rates, the supply of and demand for
the
Notes, the time remaining until maturity and a number of other factors. Some
of
these factors are interrelated in complex ways; as a result, the effect of
any
one factor may be offset or magnified by the effect of another factor. The
price, if any, at which you will be able to sell your Notes prior to maturity
may be substantially less than the amount you originally invested if, at any
time during the Observation Period, the Index Level is observed at or above
the
Upper Barrier or at or below the Lower Barrier. If you sell the Notes prior
to
maturity, you may receive less, and possibly significantly less, than your
initial investment in the Notes. The following paragraphs describe the manner
in
which we expect the trading value of the Notes will be affected in the event
of
a change in a specific factor, assuming all other conditions remain
constant.
|
|
·
|
Index
performance
.
We expect that the value of the Notes prior to maturity will depend
substantially on whether the Index Level at any time during the
Observation Period is observed at or above the Upper Barrier or at
or
below the Lower Barrier. If you decide to sell your Notes when the
Index
Level at all times during the Observation Period has been observed
below
the Upper Barrier and above the Lower Barrier, you may nonetheless
receive
substantially less than the amount that would be payable at maturity
based
on those circumstances because of expectations that the Index Level
will
continue to fluctuate until the Final Valuation Date. Economic, financial,
regulatory, geographic, judicial, political and other developments
that
affect the common stocks in the Index may also affect the Index Level
and,
thus, the value of the Notes.
|
|
|
·
|
Volatility
of the Index
.
Volatility is the term used to describe the size and frequency of
market
fluctuations. If the volatility of the Index increases or decreases,
the
trading value of the Notes may be adversely affected. This volatility
may
increase the risk that the Index Level at any time during the Observation
Period is observed at or above the Upper Barrier or at or below the
Lower
Barrier, which could negatively affect the trading value of Notes.
The
effect of the volatility of the Index on the trading value of the
Notes
may not necessarily decrease over time during the term of the
Notes.
|
|
|
·
|
Interest
rates
.
We expect that the trading value of the Notes will be affected by
changes
in U.S. interest rates. In general, if U.S. interest rates increase,
the
value of the Notes may decrease, and if U.S. interest rates decrease,
the
value of the Notes is expected to increase. Interest rates may also
affect
the economy and, in turn, the Index Level, which would affect the
value of
the Notes.
|
|
|
·
|
Our
credit ratings, financial condition and results of
operations
.
Actual or anticipated changes in our current credit ratings, A2 by
Moody’s
Investor Service, Inc. and A by Standard & Poor’s Rating Services, as
well as our financial condition or results of operations may significantly
affect the trading value of the Notes. However, because the return
on the
Notes is dependent upon factors in addition to our ability to pay
our
obligations under the Notes, such as the Index Level, it is uncertain
whether an improvement in our credit ratings, financial condition
or
results of operations will have a positive effect on the trading
value of
the Notes.
|
|
|
·
|
Time
remaining to maturity
.
As the time remaining to maturity of the Notes decreases, the “time
premium” associated with the Notes will decrease. A “time premium” results
from expectations concerning the Index Level during the period prior
to
the maturity of the Notes. As the time remaining to the maturity
of the
Notes decreases, this time premium will likely decrease, affecting
the
trading value of the Notes.
|
|
|
·
|
Dividend
yield
.
The value of the Notes may also be affected by the dividend yields
on the
stocks in the Index. In general, because the Index does not incorporate
the value of dividend payments, higher dividend yields is expected
to
reduce the value of the Notes and, conversely, lower dividend yields
is
expected to increase the value of the
Notes.
|
|
|
·
|
Events
involving the companies issuing the common stocks comprising the
Index
.
General economic conditions and earnings results of the companies
whose
stocks comprise the Index, and real or anticipated changes in those
conditions or results, may affect the trading value of the Notes.
For
example, some of the stocks included in the Index may be affected
by
mergers and acquisitions, which can contribute to volatility of the
Index.
As a result of a merger or acquisition, one or more stocks in the
Index
may be replaced with a surviving or acquiring entity’s securities. The
surviving or acquiring entity’s securities may not have the same
characteristics as the stock originally included in the
Index.
|
|
|
·
|
Size
and liquidity of the trading market
.
The Notes will not be listed on any securities exchange or quotation
system and we do not expect a trading market to develop. There may
not be
a secondary market in the Notes, which may affect the price that
you
receive for your Notes upon any sale prior to maturity. If a trading
market does develop, there can be no assurance that there will be
liquidity in the trading market. If the trading market for the Notes
is
limited, there may be a limited number of buyers for your Notes if
you do
not wish to hold your investment until maturity. This may affect
the price
you receive upon any sale of the Notes prior to maturity. If you
sell the
Notes prior to maturity, you may receive less, and possibly significantly
less, than your initial investment in the
Notes.
|
Bear
Stearns has advised us that they intend under ordinary market conditions to
indicate prices for the Notes on request. However, we cannot guarantee that
bids
for outstanding Notes will be made in the future, nor can we predict the price
at which any such bids will be made.
We
want
you to understand that the effect of one of the factors specified above, such
as
an increase in interest rates, may offset some or all of any change in the
value
of the Notes attributable to another factor, such as the Index Level being
below
the Upper Barrier and above the Lower Barrier.
You
have no shareholder rights or rights to receive any stock.
Investing
in the Notes will not make you a holder of any of the stocks underlying the
Index. Neither you nor any other holder or owner of the Notes will have any
voting rights, any right to receive dividends or other distributions or any
other rights with respect to the underlying stocks. The Cash Settlement Value,
if any, will be paid in cash, and you will have no right to receive delivery of
any stocks underlying the Index.
The
Calculation Agent is one of our affiliates, which could result in a conflict
of
interest.
Bear
Stearns will act as the Calculation Agent. The Calculation Agent will make
certain determinations and judgments in connection with determining the Index
Level, or deciding whether a Market Disruption Event (as defined herein) has
occurred. You should refer to the sections “Description of the Notes -
Discontinuance of the Index,” “- Adjustments to the Index” and “- Market
Disruption Events.” Because Bear Stearns is our affiliate, conflicts of interest
may arise in connection with Bear Stearns performing its role as Calculation
Agent. Rules and regulations regarding broker-dealers (such as Bear Stearns)
require Bear Stearns to maintain policies and procedures regarding the handling
and use of confidential proprietary information, and such policies and
procedures will be in effect throughout the term of the Notes. Bear Stearns
is
obligated to carry out its duties and functions as Calculation Agent in good
faith, and using its reasonable judgment. See the section “Description of the
Notes - Calculation Agent.”
Our
affiliates, including Bear Stearns, may, at various times, for their proprietary
accounts, and for other accounts under their management, engage in transactions
involving the stocks underlying the Index, exchange-traded and over-the-counter
options on, or other derivative or synthetic instruments related to, the Index,
individual futures contracts on the Index and on stocks included in the Index,
futures contracts on the Index or options on these futures contracts. These
transactions may influence the value of such stocks, and therefore the Index
Level. BSIL, an affiliate of Bear Stearns, or one of its subsidiaries will
also
be the counterparty to the hedge of our obligations under the Notes. You should
refer to the section “Use of Proceeds and Hedging.” Accordingly, under certain
circumstances, conflicts of interest may arise between Bear Stearns’
responsibilities as Calculation Agent with respect to the Notes and its
obligations under our hedge.
Changes
that affect the calculation of the Index will affect the trading value of the
Notes and the amount you will receive at maturity.
The
Sponsor is responsible for calculating and maintaining the Index. The policies
of the Sponsor concerning the calculation of the Index will affect the Index
Level and, therefore, will affect the trading value of the Notes and the Cash
Settlement Value.
If
the
Sponsor discontinues or suspends calculation or publication of the Index, it
may
become difficult to determine the trading value of the Notes or the Cash
Settlement Value. If this occurs, the Calculation Agent will determine the
value
of the Notes. As a result, the Calculation Agent’s determination of the value of
the Notes will affect the amount you will receive at maturity. In addition,
if
the Sponsor discontinues or suspends calculation of the Index at any time prior
to the Maturity Date and a Successor Index (as defined herein) is not available
or is not acceptable to the Calculation Agent, then the Calculation Agent will
determine the amount payable at maturity by reference to a group of stocks
and a
computation methodology that the Calculation Agent determines will (as closely
as reasonably possible) replicate the Index. The Index Level is only one of
the
factors that will affect this determination and the value of the Notes prior
to
maturity. See the sections “Description of the Notes - Discontinuance of the
Index” and “Description of the Index.”
The
Sponsor may change the companies underlying the Index in a way that adversely
affects the Index Level and consequently the value of the
Notes.
The
Sponsor can add, delete or substitute the stocks underlying the Index or make
other methodological changes that could adversely change the Index Level and
the
value of the Notes. You should realize that changes in the companies included
in
the Index may affect the Index, as a newly added company may perform
significantly better or worse than the company or companies it
replaces.
We
cannot control actions by
any
of the other companies whose stocks are included in the
Index.
Our
common stock is a component of the Index. However, we are not affiliated with
any of the other companies whose stock underlies the Index. Actions by any
company whose stock is part of the Index may have an adverse effect on the
price
of its stock, the Index Level and the trading value of the Notes. These
companies are not involved in this offering and have no obligations with respect
to the Notes, including any obligation to take our or your interests into
consideration for any reason. These companies will not receive any of the
proceeds of this offering and are not responsible for, and have not participated
in, the determination of the timing of, prices for, or quantities of, the Notes
to be issued. These companies are not involved with the administration,
marketing or trading of the Notes and have no obligations with respect to the
amount to be paid to you under the Notes on the Maturity Date.
We
are
not affiliated with any of the companies included in the Index and are not
responsible for any disclosure by any such company. However, we may currently,
or in the future, engage in business with such companies. Neither we nor any
of
our affiliates, including Bear Stearns, assumes any responsibility for the
adequacy or accuracy of any publicly available information about the Index
or
any company included in the Index. You should make your own investigation into
the Index and the companies underlying the Index.
We
and our affiliates have no affiliation with the Sponsor and are not responsible
for its public disclosure of information.
We
and
our affiliates are not affiliated in any way with the Sponsor (except for the
licensing arrangements discussed in the section “Description of the
Index—License Agreement”) and have no ability to control or predict the
Sponsor’s actions, including any errors in or discontinuation of disclosure
regarding its methods or policies relating to the calculation of the Index.
Neither we nor any or our affiliates assumes any responsibility for the adequacy
or accuracy of the information about the Index or the Sponsor contained in
this
pricing supplement. You, as an investor in the Notes, should make your own
investigation into the Index and the Sponsor. The Sponsor is not involved in
any
way in the offering of the Notes and has no obligation to consider your
interests as an owner of Notes when it takes any actions that might affect
the
value of the Notes.
Trading
and other transactions by us or our affiliates could affect the prices of the
stocks underlying the Index, the Index Level, the trading value of the Notes
or
the amount you may receive at maturity.
We
and
our affiliates may from time to time buy or sell shares of the stocks underlying
the Index or derivative instruments related to those stocks for our own accounts
in connection with our normal business practices or in connection with hedging
our obligations under the Notes and other instruments. These trading activities
may present a conflict of interest between your interest in the Notes and the
interests we and our affiliates may have in our proprietary accounts, in
facilitating transactions, including block trades, for our other customers
and
in accounts under our management. The transactions could affect the prices
of
those stocks or the Index Level in a manner that would be adverse to your
investment in the Notes. See the section “Use of Proceeds and
Hedging.”
The
original issue price of the Notes includes the cost of hedging our obligations
under the Notes. Such cost includes BSIL’s expected cost of providing such hedge
and the profit BSIL expects to realize in consideration for assuming the risks
inherent in providing such hedge. As a result, assuming no change in market
conditions or any other relevant factors, the price, if any, at which Bear
Stearns will be willing to purchase Notes from you in secondary market
transactions, if at all, will likely be lower than the original issue price.
In
addition, any such prices may differ from values determined by pricing models
used by Bear Stearns as a result of transaction costs. If you sell the Notes
prior to maturity, you may receive less, and possibly significantly less, than
your initial investment in the Notes.
Hedging
activities we or our affiliates may engage in may affect the Index Level and,
accordingly, increase or decrease the trading value of the Notes prior to
maturity and the Cash Settlement Value you would receive at maturity. To the
extent that we or any of our affiliates has a hedge position in any of the
stocks that comprise the Index, or derivative or synthetic instruments related
to those stocks or the Index, we or any of our affiliates may liquidate a
portion of such holdings at or about the time of the maturity of the Notes
or at
or about the time of a change in the stocks that underlie the Index. Depending
on, among other things, future market conditions, the aggregate amount and
the
composition of such hedge positions are likely to vary over time. Profits or
losses from any of those positions cannot be ascertained until the position
is
closed out and any offsetting position or positions are taken into account.
Although we have no reason to believe that any of those activities will have
a
material effect on the Index Level, we cannot assure you that these activities
will not affect such level and the trading value of the Notes prior to maturity
or the Cash Settlement Value payable at maturity.
In
addition, we or any of our affiliates may purchase or otherwise acquire a long
or short position in the Notes. We or any of our affiliates may hold or resell
the Notes. We or any of our affiliates may also take positions in other types
of
appropriate financial instruments that may become available in the
future.
Research
reports and other transactions may create conflicts of interest between you
and
us.
We
or one
or more of our affiliates have published, and may in the future publish,
research reports on the Index or the companies issuing the common stock included
in the Index. This research may be modified from time to time without notice
and
may express opinions or provide recommendations that are inconsistent with
purchasing or holding the Notes. Any of these activities may affect the market
price of common stocks included in the Index and, therefore, the Index Level
and
the value of the Notes.
We
or any
of our affiliates may also issue, underwrite or assist unaffiliated entities
in
the issuance or underwriting of other securities or financial instruments with
returns indexed to the Index. By introducing competing products into the
marketplace in this manner, we or our affiliates could adversely affect the
value of the Notes.
We
and
our affiliates, at present or in the future, may engage in business with the
companies issuing the common stock included in the Index, including making
loans
to, equity investments in, or providing investment banking, asset management
or
other advisory services to those companies.
In
connection with these activities, we may receive information about those
companies that we will not divulge to you or other third parties.
The
Cash Settlement Value you receive on the Notes may be delayed or reduced upon
the occurrence of a Market Disruption Event, or an Event of
Default.
If
the
Calculation Agent determines that, on the Final Valuation Date, a Market
Disruption Event has occurred or is continuing, the Final Valuation Date will
be
the Next Index Business Day on which a Market Disruption Event does not exist
for the Index. If the Final Valuation Date is postponed for three consecutive
Index Business Days due to the existence of a Market Disruption Event, then,
notwithstanding the existence of a Market Disruption Event on that third Index
Business Day, that third Index Business Day will be the Final Valuation Date.
You should refer to the section “Description of the Notes - Market Disruption
Events.”
If
the
Calculation Agent determines that an Event of Default (as defined herein) has
occurred, a holder of the Notes will only receive an amount equal to the trading
value of the Notes on the date of such Event of Default, adjusted by an amount
equal to any losses, expenses and costs to us of unwinding any underlying
hedging or funding arrangements, all as determined by the Calculation Agent.
You
should refer to the section “Description of the Notes—Event of Default and
Acceleration.”
You
should decide to purchase the Notes only after carefully considering the
suitability of the Notes in light of your particular financial circumstances.
You should also carefully consider the tax consequences of investing in the
Notes. You should refer to the section “Certain U.S. Federal Income Tax
Considerations” and discuss the tax implications with your own tax
advisor.
DESCRIPTION
OF THE NOTES
The
following description of the Notes (referred to in the accompanying prospectus
supplement as the “Other Indexed Notes”) supplements the description of the
Notes in the accompanying prospectus supplement and prospectus. This is a
summary and is not complete. You should read the indenture, dated as of May
31,
1991, as amended (the “Indenture”), between us and The Bank of New York as
successor in interest to JPMorgan Chase Bank, N.A., as trustee (the “Trustee”).
A copy of the Indenture is available as set forth under the section of the
prospectus “Where You Can Find More Information.”
General
The
Notes
are part of a single series of debt securities under the Indenture described
in
the accompanying prospectus supplement and prospectus designated as Medium-Term
Notes, Series B. The Notes are unsecured and will rank equally with all of
our
unsecured and unsubordinated debt, including the other debt securities issued
under the Indenture. Because we are a holding company, the Notes will be
structurally subordinated to the claims of creditors of our subsidiaries.
The
aggregate principal amount of the Notes will be $[
l
].
The
Notes are expected to mature on July [1], 2009 and do not provide for earlier
redemption. The Notes will be issued only in fully registered form, and in
minimum denominations of $1,000; provided, however, that the minimum purchase
for any purchaser domiciled in a member state of the European Economic Area
shall be $100,000. Initially, the Notes will be issued in the form of one or
more global securities registered in the name of DTC or its nominee, as
described in the accompanying prospectus supplement and prospectus. When we
refer to Note or Notes in this pricing supplement, we mean $1,000 principal
amount of Notes. The Notes will not be listed on any securities exchange or
quotation system.
You
should refer to the section “Certain U.S. Federal Income Tax Considerations,”
for a discussion of certain federal income tax considerations to you as a holder
of the Notes.
Future
Issuances
Under
certain limited circumstances, and at our sole discretion, we may offer further
issuances of the Notes. These further issuances, if any, will be consolidated
to
form a single series with the Notes and will have the same CUSIP number and
will
trade interchangeably with the Notes immediately upon settlement. Any additional
issuances will increase the aggregate principal amount of the outstanding Notes
of this series, plus the aggregate principal amount of any Notes bearing the
same CUSIP number that are issued pursuant to any 13-day option we grant to
Bear
Stearns. The prices of any additional offerings will be determined at the time
of pricing of each offering, which will be a function of the prevailing market
conditions and levels of the Reference Indices at the time of the relevant
sale.
Interest
We
will
not make any periodic payments of interest on the Notes. The only payment you
will receive, if any, will be the Cash Settlement Value upon the maturity of
the
Notes.
Payment
at Maturity
We
have
designed the Notes for investors who want to protect their investment by
receiving at least 100% of the principal amount of their Notes at maturity.
On
the Maturity Date, you will receive the “Cash Settlement Value,” which is an
amount in cash equal to the $1,000 principal amount of each Note plus a
“Variable Return”, where the Variable Return is calculated in the following
manner: (a) if at all times during the Observation Period the Index Level is
observed below the Upper Barrier and above the Lower Barrier, then the Variable
Return will equal the product of (i) the $1,000 principal amount of the Notes
multiplied by (ii) 11.00%; however, (b) if at any time during the Observation
Period the Index Level is observed at or above the Upper Barrier or at or below
the Lower Barrier, then the Variable Return will be equal to zero.
“Upper
Barrier” equals [
l
],
the
Index Level that is [118.00-120.00]% of the Initial Index Level.
“Lower
Barrier” equals [
l
],
the
Index Level that is [80.00-82.00]% of the Initial Index Level.
“Index
Level” means, as of any time or date of determination during the Observation
Period, the index level as reported by the Sponsor and displayed on Bloomberg
page SPX <Index> <Go>.
“Observation
Period” means each day which is an Index Business Day for the Index from and
including the Pricing Date to and including the Final Valuation
Date.
The
“Initial Index Level” equals [
l
],
the
Index Level on the Pricing Date.
The
“Pricing Date” will be March [
l
],
2008.
The
“Final Valuation Date” will be June [
l
],
2009;
provided that (i) if such date is not an Index Business Day (as defined herein),
then the Final Valuation Date will be the next succeeding day that is an Index
Business Day and (ii) if a Market Disruption Event (as defined herein) exists
on
the Final Valuation Date, the Final Valuation Date will be the next Index
Business Day on which a Market Disruption Event does not exist for the Index.
If
the Final Valuation Date is postponed for three consecutive Index Business
Days
due to the existence of a Market Disruption Event, then, notwithstanding the
existence of a Market Disruption Event on that third Index Business Day, that
third Index Business Day will be the Final Valuation Date.
The
“Maturity Date” is expected to be July [1], 2009 unless such date is not a
Business Day, in which case the Maturity Date shall be the next Business Day.
If
the Final Valuation Date is postponed, the Maturity Date will be three Business
Days following the postponed Final Valuation Date.
“Index
Business Day” means, with respect to the Index, any day on which the Primary
Exchange (as defined below) and each Related Exchange (as defined below) are
scheduled to be open for trading.
“Business
Day” means any day other than a Saturday or Sunday, on which banking
institutions in the cities of New York, New York and London, England are not
authorized or obligated by law or executive order to be closed.
“Primary
Exchange” means the primary exchange or market of trading of any security then
included in the Index.
“Related
Exchange” means each exchange or quotation system where trading has a material
effect (as determined by the Calculation Agent) on the overall market for
futures or options contracts relating to the Index.
Illustrative
Examples
The
following tables and graphs are for illustrative purposes and are not indicative
of the future performance of the Index or the future value of the
Notes.
Because
the Index Level may be subject to significant fluctuation over the term of
the
Notes, it is not possible to present a chart or table illustrating the complete
range of all possible Cash Settlement Values. Therefore, the examples do not
purport to be representative of every possible scenario concerning increases
or
decreases in the Index Level during the term of the Notes or whether, at any
time during the Observation Period, the Index Level is observed at or above
the
Upper Barrier or at or below the Lower Barrier. You should not construe these
examples or the data included in any table or graph below as an indication
or
assurance of the expected performance of the Notes.
You
can
review the historical levels of the Index in the section of this pricing
supplement called “Description of the Index.” The historical performance of the
Index included in this pricing supplement should not be taken as an indication
of the future performance of the Index. It is impossible to predict whether
at
any time during the Observation Period, the Index Level will be observed at
or
above the Upper Barrier or at or below the Lower Barrier during the term of
the
Notes.
The
table
and corresponding examples below demonstrate the hypothetical Cash Settlement
Value of a Note and are based on the following assumptions:
|
|
·
|
Investor
purchases $1,000.00 aggregate principal amount of Notes at the initial
public offering price of $1,000.00.
|
|
|
·
|
Investor
holds the Notes to maturity.
|
|
|
·
|
The
Initial Index Level is equal to
1,400.00.
|
|
|
·
|
The
Lower Barrier is 1,120.00 (representing 80.00% of the Initial Index
Level).
|
|
|
·
|
The
Upper Barrier is 1,680.00 (representing 120.00% of the Initial Index
Level).
|
|
|
·
|
All
returns are based on a 15-month term; pre-tax
basis.
|
|
|
·
|
No
Market Disruption Events occur during the term of the
Notes.
|
|
|
Example
1
|
Example
2
|
Example
3
|
Example
4
|
|
Initial
Level
|
1,400.00
|
1,400.00
|
1,400.00
|
1,400.00
|
|
Lower
Barrier Level
|
1,120.00
|
1,120.00
|
1,120.00
|
1,120.00
|
|
Upper
Barrier Level
|
1,680.00
|
1,680.00
|
1,680.00
|
1,680.00
|
|
Low
point during Note
|
1,162.00
|
980.00
|
1,162.00
|
1,162.00
|
|
High
point during Note
|
1,638.00
|
1,638.00
|
1,820.00
|
1,638.00
|
|
Lower
Barrier breached
|
No
|
Yes
|
No
|
No
|
|
Upper
Barrier breached
|
No
|
No
|
Yes
|
No
|
|
Final
Level
|
1,176.00
|
1,176.00
|
1,428.00
|
1,470.00
|
|
Change
in Index Price
|
-16.00%
|
-16.00%
|
2.00%
|
5.00%
|
|
Variable
Return
|
$110.00
|
$0.00
|
$0.00
|
$110.00
|
|
Note
Value at Maturity
|
$1,110.00
|
$1,000.00
|
$1,000.00
|
$1,110.00
|
Example
1:
In
this
example, the Index Level, at all times during the Observation Period, is
observed below the Upper Barrier and above the Lower Barrier.
Therefore,
the Cash Settlement Value would equal $1,110.00, or the $1,000.00 principal
amount of the Notes plus the Variable Return of $110.00; where the Variable
Return is as calculated below:
Variable
Return = $1,000.00 x 11.00%
Variable
Return = $110.00
In
this
example, your return on investment will be positive (11.00%), because at all
times during the Observation Period, the Index Level was observed below the
Upper Barrier and above the Lower Barrier. Provided that, at all times during
the Observation Period, the Index Level remains below the Upper Barrier and
above the Lower Barrier, both a positive and negative change in the Index Level
(relative to the Initial Index Level) will produce a Variable Return of $110.00.
Example
2:
In
this
example, the Index Level at some time during the Observation Period is observed
below the Lower Barrier. Accordingly, the Variable Return equals zero.
Therefore,
the Cash Settlement Value would equal the $1,000.00 principal amount of the
Notes.
In
this
example, your return on investment would be 0.00%, because at some time during
the Observation Period the Index Level was observed below the Lower
Barrier.
Example
3:
In
this
example, the Index Level at some time during the Observation Period is observed
above the Upper Barrier. Accordingly, the Variable Return equals zero.
Therefore,
the Cash Settlement Value would equal the $1,000.00 principal amount of the
Notes.
In
this
example, your return on investment would be 0.00%, because, at some time during
the Observation Period the Index Level was observed above the Upper
Barrier.
Example
4:
In
this
example, the Index Level, at all times during the Observation Period, is
observed below the Upper Barrier and above the Lower Barrier.
Therefore,
the Cash Settlement Value would equal $1,110.00, or the $1,000.00 principal
amount of the Notes plus the Variable Return of $110.00; where the Variable
Return is as calculated below:
Variable
Return = $1,000.00 x 11.00%
Variable
Return = $110.00
In
this
example, your return on investment will be positive (11.00%), because at all
times during the Observation Period, the Index Level was observed below the
Upper Barrier and above the Lower Barrier. Provided that, at all times during
the Observation Period, the Index Level remains below the Upper Barrier and
above the Lower Barrier, both a positive and negative change in the Index Level
(relative to the Initial Index Level) will produce a Variable Return of
$110.00.
Discontinuance
of the Index
If
the
Sponsor discontinues publication of or otherwise fails to publish the Index
and
the Sponsor or another entity publishes a successor or substitute index that
the
Calculation Agent determines to be comparable to the discontinued Index (such
index being referred to as a “Successor Index”), then the Index Levels for the
Index will be determined by reference to the level of the Successor Index on
the
Relevant Exchanges or markets for the Successor Index on the date and time
of
determination for which the level for such Successor Index is to be
determined.
Upon
any
selection by the Calculation Agent of a Successor Index, the Calculation Agent
will cause notice thereof to be furnished to us and the Trustee. If a Successor
Index is selected by the Calculation Agent, the Successor Index will be used
as
a substitute for the Index for all purposes, including for purposes of
determining whether a Market Disruption Event exists with respect to the
Index.
If
the
Index is discontinued or if the Sponsor fails to publish the Index prior to,
and
such discontinuance is continuing at any time during the Observation Period
and
the Calculation Agent determines that no Successor Index is available at such
time, then the Calculation Agent will determine the level to be used for the
Index Level as of or after such time. The Index Level to be used as of or after
such time will be computed by the Calculation Agent in accordance with the
formula for and method of calculating the Index last in effect prior to the
discontinuance, failure or modification but using only those securities that
comprised the Index immediately prior to such discontinuance, failure or
modification. In such event, the Calculation Agent will cause notice thereof
to
be furnished to us and the Trustee.
Notwithstanding
these alternative arrangements, discontinuance of the publication of the Index
may adversely affect the value of, and trading in, the Notes.
Adjustments
to the Index
If
at any
time the method of calculating the Index or a Successor Index, or the value
thereof, is changed in a material respect, or if the Index or a Successor Index
is in any other way modified so that such index does not, in the opinion of
the
Calculation Agent, fairly represent the Index Level or such Successor Index
had
such changes or modifications not been made, then, for purposes of determining
the Index Levels or the Cash Settlement Value or making any other determinations
as of or after such time, the Calculation Agent will make such calculations
and
adjustments as the Calculation Agent determines may be necessary in order to
arrive at a level of an index comparable to the Index or such Successor Index,
as the case may be, as if such changes or modifications had not been made,
and
calculate the Cash Settlement Value (including the components thereof) with
reference to such Index or such Successor Index, as adjusted. Accordingly,
if
the method of calculating the Index or a Successor Index is modified so that
the
level of such index is a fraction of what it would have been if it had not
been
modified (e.g., due to a split in the index), then the Calculation Agent will
adjust such index in order to arrive at a level for the Index or such Successor
Index as if it had not been modified (e.g., as if such split had not occurred).
In such event, the Calculation Agent will cause notice thereof to be furnished
to us and the Trustee.
Market
Disruption Events
If
there
is a Market Disruption Event with respect to the Index on the Final Valuation
Date, the Final Valuation Date will be the first succeeding Index Business
Day
on which there is no Market Disruption Event with respect to the Index. In
no
event, however, will the Final Valuation Date be a date that is postponed by
more than three Index Business Days following the original date that, but for
the Market Disruption Event, would have been the Final Valuation Date. In that
case, the third Index Business Day will be deemed to be the Final Valuation
Date, notwithstanding the Market Disruption Event, and the Calculation Agent
will determine the Index Level on that third Index Business Day in accordance
with the formula for and method of calculating the Index in effect prior to
the
Market Disruption Event using the price of each security underlying the Index
as
described above (or, if trading in any such security has been materially
suspended or materially limited, the Calculation Agent’s estimate of the price
that would have prevailed but for such suspension or limitation) as of that
third Index Business Day. For the avoidance of doubt, if no Market Disruption
Event exists with respect to the Index, the Index Level on the Final Valuation
Date shall be determined on the scheduled Final Valuation Date. In the event
of
a Market Disruption Event on the Final Valuation Date, the Maturity Date will
be
three Business Days following the Final Valuation Date.
A
“Market
Disruption Event” means the occurrence or existence at any time of a condition
specified below that the Calculation Agent determines to be
material:
(a)
any
suspension of or limitation imposed on trading by any Primary Exchange or
Related Exchange or otherwise, and whether by reason of movements in price
exceeding limits permitted by the Primary Exchanges or Related Exchanges or
otherwise, (A) relating to any security underlying the Index or (B) in futures
or options contracts relating to the Index on any Related Exchange;
(b)
any
event
(other than an event described in (c) below) that disrupts or impairs (as
determined by the Calculation Agent) the ability of market participants in
general (A) to effect transactions in, or obtain market values for or relating
to any security underlying the Index or (B) to effect transactions in, or obtain
market values for, futures or options contracts relating to the Index on any
Related Exchange;
(c)
the
closure on any Index Business Day of any Primary Exchange relating to any
security underlying the Index or any Related Exchange prior to its weekday
closing time, without regard to after hours or any other trading outside of
the
regular trading session hours, unless such earlier closing time is announced
by
such Primary Exchange or Related Exchange at least one hour prior to the earlier
of (i) the actual closing time for the regular trading session on such Primary
Exchange or Related Exchange on such Index Business Day for such Primary
Exchange or Related Exchange and (ii) the submission deadline for orders to
be
entered into the relevant exchange system for execution at the close of trading
on such Index Business Day for such Primary Exchange or Related Exchange;
or
(d)
any
Index
Business Day on which any Primary Exchange or Related Exchange fails to open
for
trading during its regular trading session.
For
purposes of the above definition:
(a)
a
limitation on the hours in a trading day or number of days of trading will
not
constitute a Market Disruption Event if it results from an announced change
in
the regular business hours of the relevant exchange, and
(b)
for
purposes of clause (a) above, any limitations on trading during significant
market fluctuations, under NYSE Rule 80B, Rule 4120 of the FINRA Conduct Rules
or any analogous rule or regulation enacted or promulgated by the NYSE, FINRA
or
any other self regulatory organization or the SEC of similar scope as determined
by the Calculation Agent, will be considered “material.”
Redemption;
Defeasance
The
Notes
are not subject to redemption before maturity, and are not subject to the
defeasance provisions described in the section “Description of Debt Securities -
Defeasance” in the accompanying prospectus.
Events
of Default and Acceleration
If
an
Event of Default (as defined in the accompanying prospectus) with respect to
any
Notes has occurred and is continuing, then the amount payable to you, as a
holder of a Note, upon any acceleration permitted by the Notes will be equal
to
the Cash Settlement Value as though the date of early repayment were the
Maturity Date of the Notes, adjusted by an amount equal to any losses, expenses
and costs to us of unwinding any underlying or related hedging or funding
arrangements, all as determined by the Calculation Agent. If a bankruptcy
proceeding is commenced in respect of us, the claims of the holder of a Note
may
be limited under Title 11 of the United States Code.
Same-Day
Settlement and Payment
Settlement
for the Notes will be made by Bear Stearns in immediately available funds.
Payments of the Cash Settlement Value will be made by us in immediately
available funds, so long as the Notes are maintained in book-entry
form.
Calculation
Agent
The
Calculation Agent for the Notes will be Bear Stearns. All determinations made
by
the Calculation Agent will be at the sole discretion of the Calculation Agent
and will be conclusive for all purposes and binding on us and the holders of
the
Notes, absent manifest error and provided the Calculation Agent shall be
required to act in good faith in making any determination. Manifest error by
the
Calculation Agent, or any failure by it to act in good faith, in making a
determination adversely affecting the payment of the Cash Settlement Value
or
interest or premium on principal to holders of the Notes would entitle the
holders, or the Trustee acting on behalf of the holders, to exercise rights
and
remedies available under the Indenture. If the Calculation Agent uses its
discretion to make any determination, the Calculation Agent will notify us
and
the Trustee, who will provide notice to the registered holders of the
Notes.
DESCRIPTION
OF THE INDEX
The
S&P 500
®
Index
(“SPX”)
We
have
derived all information relating to the SPX, including, without limitation,
its
make-up, performance, method of calculation and changes in its composition,
from
publicly available sources. That information reflects the policies of and is
subject to change by Standard & Poor’s. Standard & Poor’s is under no
obligation to continue to publish, and may discontinue or suspend the
publication of the SPX at any time.
Standard
& Poor’s publishes the SPX. The SPX is a capitalization-weighted index and
is intended to provide an indication of the pattern of common stock price
movement. The calculation of the level of the SPX, discussed below in further
detail, is based on the relative value of the aggregate market value of the
common stocks of 500 companies as of a particular time compared to the aggregate
average market value of the common stocks of 500 similar companies during the
base period of the years 1941 through 1943. As of
March
3, 2008, 424 companies, or 84.8% of the constituents in the
SPX
,
trade on the New York Stock Exchange (the “NYSE”) and 76 companies, or
15.2% of the constituents in the
SPX
,
trade on
The
NASDAQ Global Select Market or the NASDAQ Global Market (collectively, the
“NASDAQ”). Standard & Poor’s chooses companies for inclusion in the SPX with
the aim of achieving a distribution by broad industry groupings that
approximates the distribution of these groupings in the common stock population
of the New York Stock Exchange (the “NYSE”), which Standard & Poor’s uses as
an assumed model for the composition of the total market. Relevant criteria
employed by Standard & Poor’s include the viability of the particular
company, the extent to which that company represents the industry group to
which
it is assigned, the extent to which the market price of that company’s common
stock is generally responsive to changes in the affairs of the respective
industry and the market value and trading activity of the common stock of that
company. Ten main groups of companies comprise the SPX with the number of
companies included in each group, as of March 3, 2008, indicated in parentheses:
Industrials (56), Utilities (31), Telecommunications Services (9), Materials
(28), Information Technology (71), Energy (36), Consumer Staples (39), Consumer
Discretionary (87), Health Care (51) and Financials (92). Changes in the SPX
are
reported daily in the financial pages of many major newspapers, on Bloomberg
under the symbol “SPX” and on the Standard & Poor’s website
(http://www.spglobal.com). Information contained in the Standard & Poor’s
website is not incorporated by reference in, and should not be considered a
part
of, this pricing supplement. The SPX does not reflect the payment of dividends
on the stocks included in the SPX.
Computation
of the SPX
Standard
& Poor’s currently computes the SPX as of a particular time as
follows:
(i)
the
product of the market price per share and the number of then outstanding shares
of each Reference Index stock as determined as of that time (referred to as
the
“market value” of that stock);
(ii)
the
market values of all Reference Index stocks as of that time are
aggregated;
(iii)
the
average of the market values as of each week in the base period of the years
1941 through 1943 of the common stock of each company in a group of 500
substantially similar companies is determined;
(iv)
the
mean
average market values of all these common stocks over the base period are
aggregated (the aggregate amount being referred to as the “Base
Value”);
(v)
the
current aggregate market value of all Reference Index stocks is divided by
the
Base Value; and
(vi)
the
resulting quotient, expressed in decimals, is multiplied by ten.
While
Standard & Poor’s currently employs the above methodology to calculate the
SPX, no assurance can be given that Standard & Poor’s will not modify or
change this methodology in a manner that may affect the performance of the
SPX.
Standard
& Poor’s adjusts the foregoing formula to offset the effects of changes in
the market value of a Reference Index stock that are determined by Standard
& Poor’s to be arbitrary or not due to true market
fluctuations.
These
changes may result from causes such as:
|
|
·
|
the
issuance of stock dividends,
|
|
|
·
|
the
granting to shareholders of rights to purchase additional shares
of
stock,
|
|
|
·
|
the
purchase of shares by employees pursuant to employee benefit
plans,
|
|
|
·
|
consolidations
and acquisitions,
|
|
|
·
|
the
granting to shareholders of rights to purchase other securities of
the
company,
|
|
|
·
|
the
substitution by Standard & Poor’s of particular Reference Index stocks
in the SPX, and
|
In
these
cases, Standard & Poor’s first recalculates the aggregate market value of
all Reference Index stocks, after taking account of the new market price per
share of the particular Reference Index stock or the new number of outstanding
shares of that stock or both, as the case may be, and then determines the new
base value in accordance with the following formula:
The
result is that the base value is adjusted in proportion to any change in the
aggregate market value of all Reference Index stocks resulting from the causes
referred to above to the extent necessary to negate the effects of these causes
upon the SPX.
In
addition, Standard & Poor’s’ standard practice is to remove all closely held
shares and shares held between corporations who are both in the calculations
of
the SPX and an Index Reference Index’s market value.
License
Agreement with Standard and Poor’s
The
Company has entered or expects to enter into a non-exclusive license agreement
with Standard & Poor’s providing for the license to us, in exchange for a
fee, of the right to use the SPX, which is owned and published by Standard
&
Poor’s, in connection with certain securities, including the Notes.
The
license agreement between Standard & Poor’s and us provides that the
following language must be set forth in this pricing supplement.
“The
Notes are not sponsored, endorsed, sold or promoted by Standard & Poor’s.
Standard & Poor’s makes no representation or warranty, express or implied,
to the owners of the Notes or any member of the public regarding the
advisability of investing in securities generally or in the Notes particularly.
Standard & Poor’s only relationship to us is the licensing of certain
trademarks, trade names and service marks of Standard & Poor’s and of the
SPX, which is determined, composed and calculated by Standard & Poor’s
without regard to us or the Notes. Standard & Poor’s has no obligation to
take our needs or the needs of holders of the Notes into consideration in
determining, composing, or calculating the SPX. Standard & Poor’s is not
responsible for and has not participated in the determination of the timing
of,
prices at which Notes are sold, or quantities of the Notes to be issued or
in
the determination or calculation of the amount payable at maturity. Standard
& Poor’s has no obligation or liability in connection with the
administration, marketing, or trading of the Notes.
Standard
& Poor’s does not guarantee the accuracy or the completeness of the SPX or
any data included therein and Standard & Poor’s shall have no liability for
any errors, omissions, or interruptions therein. Standard & Poor’s makes no
warranty, express or implied, as to results to be obtained by us, owners of
the
Notes, or any other person or entity from the use of the SPX or any data
included therein. Standard & Poor’s makes no express or implied warranties,
and expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the SPX or any data included therein.
Without limiting any of the foregoing, in no event shall Standard & Poor’s
have any liability for any lost profits or indirect, punitive, special, or
consequential damages or losses, even if notified of the possibility thereof.
There are no third party beneficiaries or any agreements or arrangements between
Standard & Poor’s and the Company.”
Historical
D
ata
on the
SPX
The
following table sets forth the month-end closing index levels of the
SPX
for each
month in the period from January 1999 through February 2008. The
SPX’s
closing
index levels listed below were obtained from Bloomberg, without independent
verification by the Company.
The
historical values of the
SPX
should not be taken as an indication of future performance, and no assurance
can
be given that the level of the
SPX
will increase relative to its the Initial Index Level during the term of the
Notes.
The
closing index level of the
SPX
on March
3, 2008 was 1,331.34.
Month
End Closing Index Levels: January 1999 -February 2008
|
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|
January
|
1,279.64
|
1,394.46
|
1,366.01
|
1,130.20
|
855.70
|
1,131.13
|
1,181.27
|
1,280.08
|
1,438.24
|
1,378.55
|
|
February
|
1,238.33
|
1,366.42
|
1,239.94
|
1,106.73
|
841.15
|
1,144.94
|
1,203.60
|
1,280.66
|
1,406.82
|
1,330.63
|
|
March
|
1,286.37
|
1,498.58
|
1,160.33
|
1,147.39
|
848.18
|
1,126.21
|
1,180.59
|
1,294.83
|
1,420.86
|
--
|
|
April
|
1,335.18
|
1,452.43
|
1,249.46
|
1,076.92
|
916.92
|
1,107.30
|
1,156.85
|
1,310.61
|
1,482.37
|
--
|
|
May
|
1,301.84
|
1,420.60
|
1,255.82
|
1,067.14
|
963.59
|
1,120.68
|
1,191.50
|
1,270.09
|
1,530.62
|
--
|
|
June
|
1,372.71
|
1,454.60
|
1,224.42
|
989.82
|
974.50
|
1,140.84
|
1,191.33
|
1,270.20
|
1,503.35
|
--
|
|
July
|
1,328.72
|
1,430.83
|
1,211.23
|
911.62
|
990.31
|
1,101.72
|
1,234.18
|
1,276.66
|
1,455.27
|
--
|
|
August
|
1,320.41
|
1,517.68
|
1,133.58
|
916.07
|
1,008.01
|
1,104.24
|
1,220.33
|
1,303.82
|
1,473.99
|
--
|
|
September
|
1,282.71
|
1,436.51
|
1,040.94
|
815.28
|
995.97
|
1,114.58
|
1,228.81
|
1,335.85
|
1,526.75
|
--
|
|
October
|
1,362.93
|
1,429.40
|
1,059.78
|
885.76
|
1,050.71
|
1,130.20
|
1,207.01
|
1,377.94
|
1,549.38
|
--
|
|
November
|
1,388.91
|
1,314.95
|
1,139.45
|
936.31
|
1,058.20
|
1,173.82
|
1,249.48
|
1,400.63
|
1,481.14
|
--
|
|
December
|
1,469.25
|
1,320.28
|
1,148.08
|
879.82
|
1,111.92
|
1,211.92
|
1,248.29
|
1,418.30
|
1,468.36
|
--
|
The
following graph illustrates the historical performance of the SPX based on
the
closing level on the last Index Business Day of each month from January 1999
to
February 2008.
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The
following discussion summarizes certain U.S. federal income tax consequences
of
the purchase, beneficial ownership and disposition of Notes. As used in this
discussion, the term “U.S. Holder” means a beneficial owner of a Note that
is:
•
an
individual who is a citizen or resident of the United States for U.S. federal
income tax purposes;
•
a
corporation (or other entity that is treated as a corporation for U.S. federal
tax purposes) that is created or organized in or under the laws of the United
States or any State thereof (including the District of Columbia);
•
an
estate whose income is subject to U.S. federal income taxation regardless of
its
source; or
•
a
trust
if a court within the United States is able to exercise primary supervision
over
its administration, and one or more United States persons have the authority
to
control all of its substantial decisions.
As
used
in this discussion, the term “Non-U.S. Holder” means a beneficial owner of a
Note that is, for U.S. federal income tax purposes:
•
a
nonresident alien individual,
•
a
foreign corporation,
•
an
estate whose income is not subject to U.S. federal income tax on a net income
basis, or
•
a
trust
if no court within the United States is able to exercise primary jurisdiction
over its administration or if no United States persons have the authority to
control all of its substantial decisions.
An
individual may, subject to certain exceptions, be deemed to be a resident of
the
United States by reason of being present in the United States for at least
31
days in the calendar year and for an aggregate of at least 183 days during
a
three-year period ending in the current calendar year (counting for such
purposes all of the days present in the current year, one-third of the days
present in the immediately preceding year, and one-sixth of the days present
in
the second preceding year).
This
summary is based on interpretations of the Internal Revenue Code of 1986, as
amended (the “Code”), regulations issued there under, and rulings and decisions
currently in effect (or in some cases proposed), all of which are subject to
change. Any such change may be applied retroactively and may adversely affect
the federal income tax consequences described herein. This summary addresses
only U.S. Holders that purchase Notes at initial issuance and beneficially
own
such Notes as capital assets and not as part of a “straddle,” “hedge,”
“synthetic security” or a “conversion transaction” for federal income tax
purposes, or as part of some other integrated investment. This summary does
not
discuss all of the tax consequences that may be relevant to particular investors
or to investors subject to special treatment under the federal income tax laws
(such as banks, thrifts, or other financial institutions; insurance companies;
securities dealers or brokers, or traders in securities electing mark to market
treatment; mutual funds or real estate investment trusts; small business
investment companies; S corporations; investors that hold their Notes through
a
partnership or other entity treated as a partnership for federal tax purposes;
investors whose functional currency is not the U.S. dollar; certain former
citizens or residents of the United States; persons subject to the alternative
minimum tax; retirement plans or other tax-exempt entities, or persons holding
the Notes in tax-deferred or tax-advantaged accounts; or “controlled foreign
corporations” or “passive foreign investment companies” for federal income tax
purposes). This summary also does not address the tax consequences to
shareholders, or other equity holders in, or beneficiaries of, a holder, or
any
state, local or foreign tax consequences of the purchase, ownership or
disposition of the Notes.
Accordingly,
prospective investors are urged to consult their tax advisors with respect
to
the federal, state and local tax consequences of investing in the Notes, as
well
as any consequences arising under the laws of any other taxing jurisdiction
to
which they may be subject.
Prospective
purchasers of Notes should consult their tax advisors as to the federal, state,
local, and other tax consequences to them of the purchase, ownership and
disposition of Notes.
Federal
Income Tax Treatment of U.S. Holders
Accruals
of Original Issue Discount on the Notes
For
U.S.
federal income tax purposes, we intend to treat the Notes as “contingent payment
debt instruments” (“CPDIs”) subject to taxation under the “noncontingent bond
method.” Under the noncontingent bond method, U.S. Holders of the Notes will
accrue OID over the term of the Notes based on the Notes’ “comparable yield.” As
a result, U.S. Holders will be required to include OID over the term of the
Notes even though no cash payments will be made with respect to the Notes until
maturity.
In
general, the comparable yield of a CPDI is equal to the yield at which its
issuer would issue a fixed-rate debt instrument with terms and conditions
similar to those of the CPDI, including the level of subordination, term, timing
of payments, and general market conditions. If a hedge of the CPDI is available
that, if integrated with the CPDI, would produce a synthetic debt instrument
with a determinable yield to maturity, the comparable yield will be equal to
the
yield on the synthetic debt instrument. Alternatively, if such a hedge is not
available, but fixed-rate debt instruments of the issuer trade at a price that
reflects a spread above a benchmark rate, the comparable yield is the sum of
the
value of the benchmark rate on the issue date and the spread. Under the
noncontingent bond method, the issuer’s reasonable determination of a comparable
yield is respected and binding on holders of the CPDI.
Based
on
these factors, we estimate that the comparable yield of the Notes will be an
annual rate of approximately [
l
]%,
compounded annually. U.S. Holders may obtain the actual comparable yield by
contacting The Bear Stearns Companies Inc., Bill Bamber at (212) 272-6635.
U.S.
Holders will accrue OID in respect of the Notes at a rate equal to the
comparable yield. The amount of OID allocable to each annual accrual period
will
be the product of the “adjusted issue price” of the Notes at the beginning of
each such annual accrual period and the comparable yield. The “adjusted issue
price” of the Notes at the beginning of an accrual period will equal the issue
price of the Notes, increased by the OID accrued in all prior periods. The
issue
price of the Notes will be the first price at which a substantial amount of
the
Notes are sold to the public for money (excluding sales to bond houses, brokers
or similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers). U.S. Holders may obtain the issue price of
the
Notes by contacting The Bear Stearns Companies Inc., Bill Bamber at (212)
272-6635. (The accrual of OID by U.S. Holders that purchase their Notes at
a
price other than the issue price of the Notes will be subject to an adjustment
described below.) The amount of OID includible in income of each U.S. Holder
for
each taxable year will equal the sum of the “daily portions” of the total OID on
the Notes allocable to each day during the taxable year in which a U.S. Holder
held the Notes, regardless of the U.S. Holder’s method of accounting. The daily
portion of the OID is determined by allocating to each day in any accrual period
a ratable portion of the OID allocable to such accrual period. Under the
noncontingent bond method, the comparable yield of a CPDI is used to construct
a
projected payment schedule that reflects an estimate of the Cash Settlement
Value upon the maturity of the Notes and which is adjusted to produce the
comparable yield. U.S. Holders may obtain the projected payment schedule by
contacting The Bear Stearns Companies Inc., Bill Bamber at (212)
272-6635.
Except
as
discussed below under “Possible Deduction for Previously-Accrued OID Under
Certain Scenarios,” under the noncontingent bond method, the projected payment
schedule is not revised to account for changes in circumstances that occur
while
the Notes are outstanding.
The
comparable yield and the projected payment amount for the Notes are used to
determine accruals of OID for tax purposes only, and are not assurances by
us or
any of our affiliates with respect to the actual yield or payments on the Notes
and do not represent expectations by any such person regarding a Note’s yield or
the index price return amount.
A
U.S.
Holder will generally be bound by our determination of the comparable yield
and
projected payment schedule for the Notes, unless the U.S. Holder determines
its
own projected payment schedule and comparable yield, explicitly discloses such
schedule to the Internal Revenue Service (the “IRS”), and explains to the IRS
the reason for preparing its own schedule. We believe that the projected payment
schedule and comparable yield that we provide for the Notes will be reasonable
and therefore will be respected by the IRS. Our determination, however, is
not
binding on the IRS, and the IRS could conclude that some other comparable yield
or projected payment schedule should be used for the Notes.
Possible
Deduction for Previously-Accrued OID Under Certain Scenarios.
In
the
event that, at any time during the Observation Period more than six months
prior
to the Maturity Date, the Index Level is observed at or above the Upper Barrier
or at or below the Lower Barrier so that the Variable Return is fixed at zero,
although not free from doubt, under one approach, a U.S. Holder should not
accrue OID for the remainder of the term of the Note, should receive a deduction
for prior accrual of OID included in taxable income, and should adjust the
projected payment schedule to reflect a payment of the principal amount on
the
Maturity Date. Other approaches are possible. U.S. Holders should consult with
their tax advisors regarding their treatment in the event that the Variable
Return is fixed at zero.
A
U.S.
Holder that purchases a Note for an amount other than the issue price of the
Note will be required to adjust its OID inclusions to account for the
difference. These adjustments will affect the U.S. Holder’s basis in the Note.
Reports to U.S. Holders may not include these adjustments. U.S. Holders that
purchase Notes at other than the issue price should consult their tax advisors
regarding these adjustments.
Sale,
Exchange, Retirement, or Other Disposition of the Notes
If
the
payment of the Cash Settlement Value on the Maturity Date exceeds the projected
maturity amount in the projected payment schedule, a U.S. Holder will be
required to include such excess in income as ordinary interest on the Maturity
Date. Alternatively, if the Cash Settlement Value payment is less than the
projected maturity amount, the shortfall will be treated as an offset to any
OID
otherwise includible in income by the U.S. Holder with respect to the Note
for
the taxable year in which the Maturity Date occurs, and any remaining portion
of
such shortfall may be recognized and deducted by the U.S. Holder as an ordinary
loss that will not be subject to the two percent floor limitation imposed on
miscellaneous deductions under section 67 of the Code.
A
U.S.
Holder will generally recognize gain or loss on the sale, exchange, or other
disposition of a Note to the extent that the amount realized is more or less
than its purchase price, increased by the OID previously accrued by the U.S.
Holder on the Note (and decreased by any deductions of previously-accrued OID,
as described above under “Possible Deduction for Previously-Accrued OID Under
Certain Scenarios). In general, any gain realized by a U.S. Holder on the sale,
exchange or other disposition of a Note will be treated as ordinary interest
income, and any loss realized will be treated as an ordinary loss to the extent
of the OID previously accrued by the U.S. Holder on the Note, and the loss
will
not be subject to the two percent floor limitation imposed on miscellaneous
deductions under section 67 of the Code. Any loss in excess of the accrued
OID
will be treated as a capital loss. The deductibility of capital losses by U.S.
Holders is subject to limitations.
Federal
Income Tax Treatment of Non-U.S. Holders
Payments
on the Notes to Non-U.S. Holders will not be subject to U.S. federal income
or
withholding tax if the following conditions are satisfied:
•
the
Non-U.S. Holder does not actually or constructively own 10% or more of the
total
combined voting power of all classes of our stock entitled to vote,
•
the
Non-U.S. Holder is not a controlled foreign corporation for U.S. federal income
tax purposes that is related to us through actual or constructive
ownership,
•
the
Non-U.S. Holder is not a bank receiving interest on a loan made in the ordinary
course of its trade or business,
•
the
stocks included in the Index are actively traded within the meaning of section
871(h)(4)(C)(v) of the Code, and
•
the
payments are not effectively connected with a trade or business conducted by
the
Non-U.S. Holder in the United States and either (a) the Non-U.S. Holder provides
a correct, complete and executed IRS Form W-8BEN, Form W-8EXP or Form W-8IMY
(or
successor form) with all of the attachments required by the IRS, or (b) the
Non-U.S. Holder holds its Note through a qualified intermediary (generally
a
foreign financial institution or clearing organization or a non-U.S. branch
or
office of a U.S. financial institution or clearing organization that is a party
to a withholding agreement with the IRS) which has provided to us an IRS Form
W-8IMY stating that it is a qualified intermediary and has received
documentation upon which it can rely to treat the payment as made to a foreign
person.
We
expect
that the stocks included in the Index will be treated as actively traded within
the meaning of section 871(h)(4)(C)(v). If any of the above conditions are
not
satisfied, payments on the Notes will be subject to a withholding tax equal
to
30% of any income with respect to a Note for which amounts were not previously
withheld, unless an income tax treaty reduces or eliminates the tax or the
income with respect to the Note is effectively connected with the conduct of
a
U.S. trade or business and the Non-U.S. Holder provides a correct, complete
and
executed IRS Form W-8ECI. In the latter case, the Non-U.S. Holder will be
subject to U.S. federal income tax with respect to all income with respect
to
the Note at regular rates applicable to U.S. taxpayers, unless an income tax
treaty reduces or eliminates the tax, and Non-U.S. Holders that are treated
as
corporations for federal income tax purposes may also be subject to a 30% branch
profits tax, unless an income tax treaty reduces or eliminates the branch
profits tax.
Federal
Estate Tax Treatment of Non-U.S. Holders.
A
Note
held by an individual who at death is a Non-U.S. Holder will not be includible
in the Non-U.S. Holder’s gross estate for U.S. federal estate tax purposes if
payments on the Notes to the Non-U.S. Holder would not have been subject to
U.S.
federal income or withholding tax at the time of death under the tests described
above.
Information
Reporting and Backup Withholding
Information
reporting will apply to certain payments on a Note (including interest and
OID)
and proceeds of the sale of a Note held by a U.S. Holder that is not an exempt
recipient (such as a corporation). Backup withholding may apply to payments
made
to a U.S. Holder if (a) the U.S. Holder has failed to provide its correct
taxpayer identification number on IRS Form W-9, (b) we have been notified by
the
IRS of an underreporting by the U.S. Holder (underreporting generally refers
to
a determination by the IRS that a payee has failed to include in income on
its
tax return any reportable dividend and interest payments required to be shown
on
a tax return for a taxable year), or (c) we have been notified by the IRS that
the tax identification number provided to the IRS on an information return
does
not match IRS records or that the number was not on the information
return.
Backup
withholding and nonresident alien withholding will not be required with respect
to interest paid to Non- U.S. Holders, so long as we have received from the
Non-U.S. Holder a correct and complete IRS Form W-8BEN, W-8ECI, W-8EXP or Form
W-8IMY with all of the attachments required by the IRS. Interest paid to a
Non-U.S. Holder will be reported on IRS Form 1042-S which is filed with the
IRS
and sent to Non-U.S. Holders.
Information
reporting and backup withholding may apply to the proceeds of a sale of a Note
by a Non-U.S. Holder made within the United States or conducted through certain
U.S. related financial intermediaries, unless we receive one of the tax forms
described above.
Backup
withholding is not an additional tax and may be refunded (or credited against
your U.S. federal income tax liability, if any). The information reporting
requirements may apply regardless of whether withholding is required. For
Non-U.S. Holders, copies of the information returns reporting such interest
and
withholding also may be made available to the tax authorities in the country
in
which a Non-U.S. Holder is a resident under the provisions of an applicable
income tax treaty or agreement.
THE
PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN OF THE TAX IMPLICATIONS OF
AN
INVESTMENT IN NOTES. PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR
OWN
TAX ADVISORS PRIOR TO INVESTING TO DETERMINE THE TAX IMPLICATIONS OF SUCH
INVESTMENT IN LIGHT OF EACH SUCH INVESTOR’S PARTICULAR
CIRCUMSTANCES.
CERTAIN
ERISA CONSIDERATIONS
Section
4975 of the Code prohibits the borrowing of money, the sale of property and
certain other transactions involving the assets of plans that are qualified
under the Code (“Qualified Plans”) or individual retirement accounts (“IRAs”)
and persons who have certain specified relationships to them. Section 406 of
ERISA prohibits similar transactions involving employee benefit plans that
are
subject to ERISA (“ERISA Plans”). Qualified Plans, IRAs and ERISA Plans are
referred to as “Plans.”
Persons
who have such specified relationships are referred to as “parties in interest”
under ERISA and as “disqualified persons” under the Code. “Parties in interest”
and “disqualified persons” encompass a wide range of persons, including any
fiduciary (for example, an investment manager, trustee or custodian) of a Plan,
any person providing services (for example, a broker) to a Plan, the Plan
sponsor, an employee organization any of whose members are covered by the Plan,
and certain persons related to or affiliated with any of the
foregoing.
The
purchase and/or holding of Notes by a Plan with respect to which we, Bear
Stearns and/or certain of our affiliates is a fiduciary and/or a service
provider (or otherwise is a “party in interest” or “disqualified person”) would
constitute or result in a prohibited transaction under Section 406 of ERISA
or
Section 4975 of the Code, unless such the Notes are acquired or held pursuant
to
and in accordance with an applicable statutory or administrative exemption.
Each
of us, Bear Stearns and Bear Stearns Securities Corp. is considered a
“disqualified person” under the Code or a “party in interest” under ERISA with
respect to many Plans, although neither we nor Bear Stearns can be a “party in
interest” to any IRA other than certain employer-sponsored IRAs, as only
employer-sponsored IRAs are covered by ERISA.
Applicable
administrative exemptions may include certain prohibited transaction class
exemptions (for example, Prohibited Transaction Class Exemption (“PTCE”) 84-14
relating to qualified professional asset managers, PTCE 96-23 relating to
certain in-house asset managers, PTCE 91-38 relating to bank collective
investment funds, PTCE 90-1 relating to insurance company separate accounts
and
PTCE 95-60 relating to insurance company general accounts).
It
should
also be noted that the Pension Protection Act of 2006 contains a statutory
exemption from the prohibited transaction provisions of Section 406 of ERISA
and
Section 4975 of the Code for transactions involving certain parties in interest
or disqualified persons who are such merely because they are a service provider
to a Plan, or because they are related to a service provider. Generally, the
exemption would be applicable if the party to the transaction with the Plan
is a
party in interest or a disqualified person to the Plan but is not (i) an
employer, (ii) a fiduciary who has or exercises any discretionary authority
or
control with respect to the investment of the Plan assets involved in the
transaction, (iii) a fiduciary who renders investment advice (within the meaning
of ERISA and Section 4975 of the Code) with respect to those assets, or (iv)
an
affiliate of (i), (ii) or (iii). Any Plan fiduciary relying on this statutory
exemption (Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code)
and
purchasing Notes on behalf of a Plan will be deemed to represent that (x) the
fiduciary has made a good faith determination that the Plan is paying no more
than, and is receiving no less than, adequate consideration in connection with
the transaction and (y) neither we, Bear Stearns, nor any of our affiliates
directly or indirectly exercises any discretionary authority or control or
renders investment advice (as defined above) with respect to the assets of
the
Plan which such fiduciary is using to purchase the Notes, both of which are
necessary preconditions to utilizing this exemption. Any purchaser that is
a
Plan is encouraged to consult with counsel regarding the application of the
exemption.
A
fiduciary who causes a Plan to engage, directly or indirectly, in a non-exempt
prohibited transaction may be subject to a penalty under ERISA, and may be
liable for any losses to the Plan resulting from such transaction. Code Section
4975 generally imposes an excise tax on disqualified persons who engage,
directly or indirectly, in non-exempt transactions with the assets of Plans
subject to such Section. If an IRA engages in a prohibited transaction, the
assets of the IRA are deemed to have been distributed to the IRA
beneficiaries.
In
accordance with ERISA’s general fiduciary requirements, a fiduciary with respect
to any ERISA Plan who is considering the purchase of Notes on behalf of such
plan should consider the foregoing information and the information set forth
in
the applicable prospectus supplement and any applicable pricing supplement,
and
should determine whether such purchase is permitted under the governing plan
document and is prudent and appropriate for the ERISA Plan in view of its
overall investment policy and the composition and diversification of its
portfolio. Fiduciaries of Plans established with, or for which services are
provided by, us, Bear Stearns, and/or certain of our affiliates should consult
with counsel before making any acquisition. Each purchaser of any Notes, the
assets of which constitute the assets of one or more Plans, and each fiduciary
that directs such purchaser with respect to the purchase or holding of such
Notes, will be deemed to represent that the purchase, holding and disposition
of
the Notes does not and will not constitute a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code for which an exemption is
not
available.
Certain
employee benefit plans, such as governmental plans (as defined in Section 3(32)
of ERISA) and, if no election has been made under Section 410(d) of the Code,
church plans (as defined in Section 3(33) of ERISA), are not subject to Section
406 of ERISA or Section 4975 of the Code. However, such plans may be subject
to
the provisions of applicable federal, state or local law (“Similar Law”) similar
to the foregoing provisions of ERISA or the Code. Fiduciaries of such plans
(“Similar Law Plans”) should consider applicable Similar Law when investing in
the Notes. Each fiduciary of a Similar Law Plan will be deemed to represent
that
the Similar Law Plan’s (direct or indirect) acquisition and holding of the Notes
will not result in a non-exempt violation of applicable Similar Law.
The
sale
of any Note to a Plan or a Similar Law Plan is in no respect a representation
by
us or any of our affiliates that such an investment meets all relevant legal
requirements with respect to investments by Plans or Similar Law Plans generally
or any particular Plan or Similar Law Plan, or that such an investment is
appropriate for a Plan or a Similar Law Plan generally or any particular Plan
or
Similar Law Plan.
USE
OF PROCEEDS AND HEDGING
We
will
use the net proceeds from the sale of the Notes for general corporate purposes.
We or one or more of our subsidiaries (including BSIL) may hedge our obligations
under the Notes by the purchase and sale of the stocks included in the Index,
exchange-traded and over-the-counter options on, or other derivative or
synthetic instruments related to, the Index, individual futures contracts on
the
Index and on stocks underlying the Index, futures contracts on the Index and/or
options on these futures contracts. At various times after the initial offering
and before the maturity of the Notes, depending on market conditions (including
the level of the Index), in connection with hedging with respect to the Notes,
we expect that we and/or one or more of our subsidiaries will increase or
decrease those initial hedging positions using dynamic hedging techniques and
may take long or short positions in any of these instruments. We or one or
more
of our subsidiaries may also take positions in other types of appropriate
financial instruments that may become available in the future. If we or one
or
more of our subsidiaries has a long hedge position in any of these instruments
then we or one or more of our subsidiaries may liquidate a portion of these
instruments at or about the time of the maturity of the Notes. Depending on,
among other things, future market conditions, the total amount and the
composition of such positions are likely to vary over time. We will not be
able
to ascertain our profits or losses from any hedging position until such position
is closed out and any offsetting position or positions are taken into account.
Although we have no reason to believe that such hedging activity will have
a
material effect on the price of any of these instruments or on the level of
the
Index, we cannot guarantee that we and one or more of our subsidiaries will
not
affect such levels as a result of its hedging activities. You should also refer
to “Use of Proceeds” in the accompanying prospectus.
SUPPLEMENTAL
PLAN
OF
DISTRIBUTION
Subject
to the terms and conditions set forth in the Distribution Agreement dated as
of
June 19, 2003, as amended, we have agreed to sell to Bear Stearns, as principal,
and Bear Stearns has agreed to purchase from us, the aggregate principal amount
of Notes set forth opposite its name below.
|
|
|
|
Agent
|
Principal
Amount of Notes
|
|
Bear,
Stearns & Co. Inc.
|
$[
l
]
|
|
Total
|
$[
l
]
|
The
Agent
intends to initially offer $
[
l
]
of the
Notes to the public at the offering price set forth on the cover page of this
pricing supplement, and to subsequently resell the remaining face amount of
the
Notes at prices related to the prevailing market prices at the time of resale.
In the future, the Agent may repurchase and resell the Notes in market-making
transactions, with resales being made at prices related to prevailing market
prices at the time of resale or at negotiated prices. We will offer the Notes
to
Bear Stearns at a discount of
[
l
]
%
of the
price at which the Notes are offered to the public. Bear Stearns may reallow
a
discount to other agents not in excess of
[
l
]
%
of the
public offering price.
In
order
to facilitate the offering of the Notes, we may grant the Agent a 13-day option
from the date of the final pricing supplement, to purchase from us up to an
additional $
[
l
]
at the
public offering price, less the agent’s discount, to cover any over-allotments.
The Agent may over-allot or effect transactions which stabilize or maintain
the
market price of the Notes at a level higher than that which might otherwise
prevail in the open market. Specifically, the Agent may over-allot or otherwise
create a short position in the Notes for its own account by selling more Notes
than have been sold to it by us. If this option is exercised, in whole or in
part, subject to certain conditions, the Agent will become obligated to purchase
from us and we will be obligated to sell to the Agent an amount of Notes equal
to the amount of the over-allotment exercised. The Agent may elect to cover
any
such short position by purchasing Notes in the open market. No representation
is
made as to the magnitude or effect of any such stabilization or other
transactions. Such stabilizing, if commenced, may be discontinued at any time
and in any event shall be discontinued within a limited period. No other party
may engage in stabilization.
Payment
of the purchase price shall be made in funds that are immediately available
in
New York City.
The
agents may be deemed to be “underwriters” within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”). We have agreed to indemnify the
agents against or to make contributions relating to certain civil liabilities,
including liabilities under the Securities Act. We have agreed to reimburse
the
agents for certain expenses.
The
Notes
are a new issue of securities with no established trading market. The Notes
will
not be listed on any securities exchange or quotation system and we do not
expect a trading market will develop. Bear Stearns has advised us that,
following completion of the offering of the Notes, it intends under ordinary
market conditions to indicate prices for the Notes on request, although it
is
under no obligation to do so and may discontinue any market-making activities
at
any time without notice. Accordingly, no guarantees can be given as to whether
an active trading market for the Notes will develop or, if such a trading market
develops, as to the liquidity of such trading market. We cannot guarantee that
bids for outstanding Notes will be made in the future; nor can we predict the
price at which any such bids will be made. The Notes will cease trading as
of
the close of business on the Maturity Date.
Because
Bear Stearns is our wholly-owned subsidiary, each distribution of the Notes
will
conform to the requirements set forth in Rule 2720 of the FINRA Conduct
Rules.
LEGAL
MATTERS
The
validity of the Notes will be passed upon for us by Cadwalader, Wickersham
&
Taft LLP, New York, New York.
|
|
|
|
|
|
You
should only rely on the information contained in this pricing supplement,
the accompanying prospectus supplement and prospectus. We have not
authorized anyone to provide you with information or to make any
representation to you that is not contained in this pricing supplement,
the accompanying prospectus supplement and prospectus. If anyone
provides
you with different or inconsistent information, you should not rely
on it.
This pricing supplement, the accompanying prospectus supplement and
prospectus are not an offer to sell these Notes, and these documents
are
not soliciting an offer to buy these Notes, in any jurisdiction where
the
offer or sale is not permitted. You should not under any circumstances
assume that the information in this pricing supplement, the accompanying
prospectus supplement and prospectus is correct on any date after
their
respective dates.
|
|
The
Bear Stearns
Companies
Inc.
$[
l
]
Medium-Term
Notes, Series B
Linked
to
the
Standard and Poor’s 500
®
Index
Due
July [1], 2009
PRICING
SUPPLEMENT
Bear,
Stearns & Co. Inc.
March
[
l
],
2008
|
|
|
|
|
|
|
|
|
TABLE
OF CONTENTS
|
|
|
|
|
|
|
Pricing
Supplement
|
|
|
|
Page
|
|
|
Summary
|
PS-2
|
|
|
Key
Terms
|
PS-4
|
|
|
Questions
and Answers
|
PS-6
|
|
|
Risk
Factors
|
PS-10
|
|
|
Description
of the Notes
|
PS-17
|
|
|
Description
of the Index
|
PS-23
|
|
|
Certain
U.S. Federal Income Tax Considerations
|
PS-27
|
|
|
Certain
ERISA Considerations
|
PS-31
|
|
|
Use
of Proceeds and Hedging
|
PS-32
|
|
|
Supplemental
Plan of Distribution
|
PS-32
|
|
|
Legal
Matters
|
PS-33
|
|
|
|
|
|
|
Prospectus
Supplement
|
|
|
Risk
Factors
|
S-3
|
|
|
Pricing
Supplement
|
S-8
|
|
|
Description
of Notes
|
S-8
|
|
|
Certain
US Federal Income Tax Considerations
|
S-32
|
|
|
Supplemental
Plan of Distribution
|
S-46
|
|
|
Listing
|
S-47
|
|
|
Validity
of the Notes
|
S-47
|
|
|
Glossary
|
S-47
|
|
|
|
|
|
|
Prospectus
|
|
|
Where
You Can Find More Information
|
1
|
|
|
The
Bear Stearns Companies Inc.
|
2
|
|
|
Use
of Proceeds
|
4
|
|
|
Description
of Debt Securities
|
4
|
|
|
Description
of Warrants
|
16
|
|
|
Description
of Preferred Stock
|
21
|
|
|
Description
of Depositary Shares
|
25
|
|
|
Description
of Depository Contracts
|
28
|
|
|
Description
of Units
|
31
|
|
|
Book-Entry
Procedures and Settlement
|
33
|
|
|
Limitations
on Issuance of Bearer Debt Securities and
Bearer
Warrants
|
43
|
|
|
Plan
of Distribution
|
44
|
|
|
ERISA
Considerations
|
48
|
|
|
Legal
Matters
|
49
|
|
|
Experts
|
49
|
|
|
|
|
|
|
Bear Stearns (NYSE:BSC)
Historical Stock Chart
From Oct 2024 to Nov 2024
Bear Stearns (NYSE:BSC)
Historical Stock Chart
From Nov 2023 to Nov 2024
