EXHIBIT 4.2

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.



REGISTERED                                                         $[__________]

No.                                                            CUSIP # 073928YH0

                         THE BEAR STEARNS COMPANIES INC.

                           MEDIUM-TERM NOTE, SERIES B

               PRINCIPAL PROTECTED SECTOR SELECTOR NOTES DUE 2008
             LINKED TO A BASKET OF U.S. SECTOR EXCHANGE TRADED FUNDS


Original Issue Date:   [_____ _,] 2003         Redeemable On and After:      N/A

Maturity Date:         [_____ _,] 2008         Optional Repayment Date(s):   N/A

Minimum Denominations:  $1,000, increased in multiples of $1,000













            THE BEAR STEARNS COMPANIES INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal amount stated above on the Maturity Date shown
above plus the Variable Return Amount (as defined below), if any, on the
Maturity Date shown above.

            Payment of the principal on this Note and the Variable Return
Amount, if any, shall be made at the office or agency of the Trustee maintained
for that purpose in the Borough of Manhattan, The City of New York, in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debt.

            The principal hereof and the Variable Return Amount, if any, due at
maturity will be paid upon maturity in immediately available funds against
presentation of this Note at the office or agency of the Trustee maintained for
that purpose in the Borough of Manhattan, The City of New York.

            REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH ON THE FACE HEREOF.

            This Note shall be governed by and construed in accordance with the
laws of the State of New York.

            This Note is one of the series of Medium-Term Notes, Series B, of
the Company.

            Unless the certificate of authentication hereon has been executed by
JPMorgan Chase Bank (formerly, The Chase Manhattan Bank), the Trustee under the
Indenture, or its successor thereunder by the manual signature of one of its
authorized signatories, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.



<PAGE>




            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated:  [_______ _,] 2003


                                       THE BEAR STEARNS COMPANIES INC.


                                       By:______________________________________
                                            Executive Vice President and
                                            Chief Financial Officer



ATTEST:

-------------------------
Secretary

[Corporate Seal]


                          CERTIFICATE OF AUTHENTICATION

            This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.


                                              JPMORGAN CHASE BANK, as Trustee


                                             By:________________________________
                                                   Authorized Signature



<PAGE>




                                [Reverse of Note]

                         THE BEAR STEARNS COMPANIES INC.

                           MEDIUM-TERM NOTE, SERIES B

               PRINCIPAL PROTECTED SECTOR SELECTOR NOTES DUE 2008
             LINKED TO A BASKET OF U.S. SECTOR EXCHANGE TRADED FUNDS


            This Note is one of a duly authorized issue of debentures, notes or
other evidences of indebtedness (hereinafter called the "Securities") of the
Company of the series hereinafter specified, all such Securities issued and to
be issued under the Indenture dated as of May 31, 1991, as amended (herein
called the "Indenture") between the Company and JPMorgan Chase Bank (formerly,
The Chase Manhattan Bank), as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and limitations of rights thereunder of the Company, the
Trustee and the Holders of the Securities, and the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different
repayment provisions, if any, may be subject to different sinking, purchase or
analogous funds, if any, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided or permitted. This
Note is one of the series of the Securities designated as Medium-Term Notes,
Series B (the "Notes"). The Notes of this series may be issued at various times
with different maturity dates, redemption dates and different principal
repayment provisions, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture.

VARIABLE RETURN AMOUNT

            On the Maturity Date, a Variable Return Amount (as defined below),
if any, shall be paid. The Variable Return Amount shall be linked to the
performance of a basket consisting of the following ten U.S. sector exchange
traded funds issued by iShares Trust(R), whose values are based upon ten U.S.
sector equity market indices compiled by Dow Jones & Company, Inc. ("Dow
Jones"): Basic Materials, Consumer Cyclical, Consumer Non-Cyclical, Energy,
Financial, Healthcare, Industrial, Technology, Telecommunications, and Utilities
(collectively, the "Sector ETFs").

            The "Variable Return Amount" with respect to the Notes shall be
calculated as follows:

On each Observation Date (as defined below), the Performance Rate (as defined
below) for each Sector ETF remaining in the basket will be calculated (as
described below).

The individual Sector ETF in the basket which has the most positive or least
negative percentage change since the issue date will be selected and used to
establish the Performance Rate for that Observation Date. Once the performance
of an individual Sector ETF has been used on an Observation Date, such Sector
ETF will then be removed from the basket and will not be utilized in the
calculation of Performance Rates for any subsequent Observation Date.

On the valuation date, which will normally be the third business day prior to
the Maturity Date (the "Valuation Date"), the Variable Return Amount will equal
the average of the ten Sector ETF Performance Rates selected during the
five-year term of the Notes. The Variable Return Amount will then be multiplied
by the principal amount of the relevant Note to determine the amount such
noteholder will receive on the Maturity Date.

The average performance will be calculated on the Valuation Date by adding the
ten selected Performance Rates, dividing the sum by the number of Sector ETFs
that comprised the basket (ten); provided, however, that in no event will the
Variable Return Amount be less than zero. If the Variable Return Amount is zero,
noteholders will be paid only the principal amount of their Notes. The
"Performance Rate" shall equal:

            (Reference Value - Initial Value)
            --------------------------------
                     Initial Value

; the "Reference Value" shall equal the Closing Value (as defined below) of each
of the Sector ETFs that comprise the basket on each Observation Date or, if that
day is not a Business Day (as defined below), on the next Business Day; the
"Observation Date" shall occur semi-annually, commencing with the first
Observation Date on July 30, 2003 and on the 30th of each January and July
thereafter until the last Observation Date, which will be January 30, 2008,
subject to the following Business Day convention; for the first Observation
Date, the "Initial Value" shall equal the Closing Value of each of the Sector
ETFs on January 30, 2003; "Closing Value" shall equal the closing price of each
of the Sector ETFs on the American Stock Exchange ("AMEX") on such Observation
Date; "Business Day" shall mean a day, as determined by Bear, Stearns & Co. Inc.
(the "Calculation Agent", which term includes any successor thereto), on which
the New York Stock Exchange, the AMEX, the Nasdaq National Market, the Chicago
Mercantile Exchange and the Chicago Board Options Exchange are open for trading
(or would have been open for trading, but for the occurrence of a Market
Disruption Event) (as defined below)) and the Sector ETFs' values are calculated
and published; and the Calculation Agent may, in its sole discretion, add to or
delete from the definition of "Business Day" any major U.S. exchange or market
that commences or ceases to serve as a primary exchange or market upon which a
Sector ETF underlying the basket trades, or as an exchange upon which a futures
contract, an option contract, or an option on a futures contract relating to the
Sector ETFs trades. 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 the Company and the beneficial owners of the Notes,
absent manifest error.

MARKET DISRUPTION EVENTS

            If there is a Market Disruption Event on any Observation Date, the
Observation Date will be the first succeeding Business Day on which there is no
Market Disruption Event, unless there is a Market Disruption Event on each of
the five Business Days following the original date that, but for the Market
Disruption Event, would have been the Observation Date. In that case, the fifth
Business Day will be deemed to be the Observation Date, notwithstanding the
Market Disruption Event and the Calculation Agent will determine the Performance
Rate for each of the Sector ETFs as of the close of trading on the AMEX (the
"Valuation Time") on that fifth Business Day in accordance with the formula for
and method of calculating the Performance Rate of the Sector ETFs in effect
prior to the Market Disruption Event using the Performance Rate of each Sector
ETF (or, if trading in such Sector ETFs has been materially suspended or
materially limited, the Calculation Agent's good faith estimate of the
Performance Rate that would have prevailed but for such suspension or
limitation) as of the Valuation Time on that fifth Business Day.

            A "Market Disruption Event" means, as determined by the Calculation
Agent in its sole discretion, the occurrence or existence of any of the
following events with respect to one or more of the Sector ETFs, the
corresponding Dow Jones US Sector Indices (each, a "Dow Jones Index") or any
successor or substitute indices, or the stocks that comprise 20% or more of the
Sector ETFs, the corresponding Dow Jones Indices or any successor or substitute
indices, collectively referred to herein as the "Affected Securities":

            o     a suspension, absence or material limitation of trading in the
                  Affected Securities on their respective primary markets, in
                  each case for more than two hours of trading or during the
                  one-half hour before the close of trading in that market, as
                  determined by the Calculation Agent in its sole discretion, or

            o     a breakdown or failure in the price and trade reporting
                  systems of the respective primary markets on which the
                  Affected Securities are traded, as a result of which the
                  reported trading prices for the Affected Securities, during
                  the last one-half hour before the close of trading in that
                  market, are materially inaccurate, or

            o     a suspension, absence or material limitation of trading in
                  option or futures contracts relating to the Affected
                  Securities, if available, in the respective primary markets
                  for those contracts, in each case for more than two hours of
                  trading or during the one-half hour before the close of
                  trading in that market, as determined by the Calculation Agent
                  in its sole discretion, or

            o     if the Affected Securities or option or futures contracts
                  relating to the Affected Securities, if available, do not
                  trade on what were the respective primary markets for those
                  Affected Securities or contracts, as determined by the
                  Calculation Agent in its sole discretion.

The following events will not be Market Disruption Events with respect to
Affected Securities:

            o     a limitation on the hours or numbers of days of trading, but
                  only if the limitation results from a previously announced
                  change in the regular business hours of the relevant market,
                  and

            o     a decision to permanently discontinue trading in the option or
                  futures contracts relating to the Affected Securities.

Any limitations on trading during significant market fluctuations under the New
York Stock Exchange Rule 80A, or any applicable rule or regulation enacted or
promulgated by the New York Stock Exchange or any other self regulatory
organization or the Commission of similar scope as determined by the Calculation
Agent, will constitute a suspension or material limitation of trading in the
Affected Securities in that primary market. For this purpose, an "absence of
trading" in the primary markets of the Affected Securities, or on which option
or futures contracts relating to any of the Affected Securities, are traded will
not include any time when such primary markets are closed for trading under
ordinary circumstances. In contrast, a suspension or limitation of trading in
the Affected Securities or in option or futures contracts relating to the
Affected Securities, if available, in the primary markets for those Affected
Securities or those contracts, by reason of (i) a price change exceeding limits
set by such markets, (ii) an imbalance of orders relating to the Affected
Securities or those contracts, or (iii) a disparity in bid and ask quotes
relating to the Affected Securities or those contracts, will constitute a
suspension or material limitation of trading in the Affected Securities or those
contracts in that primary market.

DISCONTINUANCE OF THE SECTOR ETFS

            If any of the Sector ETFs is de-listed from the AMEX or ceases to be
issued by iShares Trust(R) prior to removal from the basket, the Calculation
Agent shall, in its sole discretion, substitute a corresponding Dow Jones Index
compiled by Dow Jones or other successor or substitute sector index for the
discontinued Sector ETF, and such corresponding, successor or substitute sector
index will be substituted for the discontinued Sector ETF for purposes of the
definitions set forth above.

            If the corresponding Dow Jones Index ceases to be compiled by Dow
Jones and Dow Jones or another entity compiles a successor or substitute sector
index that the Calculation Agent determines, in its sole discretion, to be
comparable to the discontinued Dow Jones Index, then the Calculation Agent will
substitute the successor or substitute sector index as calculated by Dow Jones
or such other entity for the discontinued Dow Jones Index. Upon any selection by
the Calculation Agent of a corresponding, successor or substitute sector index,
the Calculation Agent will cause notice to be furnished to the Company and the
Trustee, who will provide notice of the selection of the corresponding,
successor or substitute sector index to the registered holders of the Notes. If
the Calculation Agent determines that any successor or substitute sector index
is discontinued and there is no successor or substitute sector index, or that
the level of any successor or substitute sector index is not available on the
Observation Date because of a Market Disruption Event or for any other reason,
the Calculation Agent will determine the Variable Return Amount on the Valuation
Date by a computation methodology that the Calculation Agent determines will as
closely as reasonably possible replicate the Sector ETFs. If the Calculation
Agent determines that any successor or substitute sector index, the stocks
comprising any successor or substitute sector index or the method of calculating
any successor or substitute sector index is changed at any time in any respect,
including any addition, deletion or substitution and any reweighting or
rebalancing of the index stocks and whether the change is made by the index
sponsor under its existing policies or following a modification of those
policies, is due to the publication of a successor index, is due to events
affecting one or more of the index stocks or their issuers or is due to any
other reason, then the Calculation Agent will be permitted (but not required) to
make such adjustments in the applicable index or the method of its calculation
as it believes are appropriate to ensure that the Performance Rates used to
determine the Variable Return Amount payable on the Maturity Date are equitable.
If corresponding, successor or substitute sector indices are selected or the
Calculation Agent calculates a value as a substitute for the Sectors ETFs as
described above, the corresponding, successor or substitute sector indices or
value will be substituted for the Sector ETFs for all purposes, including for
purposes of determining whether a Business Day or Market Disruption Event
occurs.

GENERAL

            If so specified on the face of this Note, this Note may be redeemed
by the Company on and after the date so indicated on the face hereof. If no such
date is set forth on the face hereof, this Note may not be redeemed prior to
maturity. On and after such date, if any, from which this Note may be redeemed,
this Note may be redeemed in whole or in part in increments of $1,000, at the
option of the Company, at a redemption price equal to 100% of the principal
amount to be redeemed, together with interest thereon payable to the Redemption
Date, on notice given not more than 60 nor less than 30 days prior to the
Redemption Date. If less than all the Outstanding Notes having such terms as
specified by the Company are to be redeemed, the particular Notes to be redeemed
shall be selected by the Trustee not more than 60 days prior to the Redemption
Date from the Outstanding Notes having such terms as specified by the Company
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate. The notice of such redemption shall specify which Notes
are to be redeemed. In the event of redemption of this Note, in part only, a new
Note or Notes in authorized denominations for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the surrender hereof.

            If so specified on the face of this Note, this Note will be subject
to repayment at the option of the Holder hereof on the Optional Repayment
Date(s). If no Optional Repayment Date is set forth on the face hereof, this
Note may not be repaid at the option of the Holder prior to maturity. On and
after the Optional Repayment Date, if any, from which this Note may be repaid at
the option of the Holder, this Note shall be repayable in whole or in part in
increments of $1,000 at a repayment price equal to 100% of the principal amount
to be repaid, together with interest thereon payable to the Optional Repayment
Date. For this Note to be repaid in whole or in part at the option of the Holder
hereof, the Trustee must receive not less than 30 nor more than 60 days prior to
the Optional Repayment Date (i) this Note with the form entitled "Option to
Elect Repayment," which appears below, duly completed or (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States of America setting forth the name of
the Holder of this Note, the principal amount of this Note, the certificate
number of this Note or a description of this Note's tenor or terms, the
principal amount of this Note to be repaid, a statement that the option to elect
repayment is being exercised thereby and a guarantee that this Note with the
form entitled "Option to Elect Repayment," which appears below, duly completed,
will be received by the Trustee no later than five Business Days after the date
of such telegram, telex, facsimile transmission or letter and this Note and such
form duly completed are received by the Trustee by such fifth Business Day.
Exercise of the repayment option shall be irrevocable.

            If any Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Notes may declare the principal of all the Notes due and
payable in the manner and with the effect provided in the Indenture.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of each series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.

            Holders of Securities may not enforce their rights pursuant to the
Indenture or the Securities except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of this Note and the Variable Return Amount,
if any, with respect to this Note at the time, place, and rate, and in the coin
or currency, herein prescribed.

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company, and this Note duly executed by,
the Holder hereof or by his attorney duly authorized in writing and thereupon
one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

            Unless otherwise specified on the face hereof, the Notes are
issuable only in registered form without coupons in denominations of $25,000 or
any amount in excess thereof which is an integral multiple of $1,000. As
provided in the Indenture and subject to certain limitations therein set forth,
this Note is exchangeable for a like aggregate principal amount of Notes of
different authorized denomination as requested by the Holder surrendering the
same.

            No service charge will be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

            Prior to the due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice of the contrary.

            All capitalized terms used in this Note and not otherwise defined
herein shall have the meanings assigned to them in the Indenture.


<PAGE>



                      ------------------------------------

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM          -            as tenants in common

TEN ENT          -            as tenants by the entireties

JT TEN            -           as joint tenants with right of survivorship and
                              not as tenants in common

UNIF GIFT MIN ACT -           ___________________ Custodian ___________________
                                     (Cust)                       (Minor)
                                      Under Uniform Gifts to Minors Act

                                         ____________________________________
                                                      (State)

Additional abbreviations may also be used though not in the above list.

                      ------------------------------------


                            OPTION TO ELECT REPAYMENT

            The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion thereof specified below) pursuant to its
terms on ____________, 20___ (the "Optional Repayment Date") at a price equal to
the principal amount thereof, together with interest to the Optional Repayment
Date, to the undersigned at

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
        (Please print or typewrite name and address of the undersigned.)


            For this Note to be repaid the Trustee must receive at 4 New York
Plaza, New York, New York 10004, Attention: Debt Operations -- 15th Floor, or at
such other place or places of which the Company shall from time to time notify
the Holder of this Note, not more than 60 days nor less than 30 days prior to
the Optional Repayment Date, this Note with this "Option to Elect Repayment"
form duly completed.



<PAGE>




            If less than the entire principal amount of this Note is to be
repaid, specify the portion thereof (which shall be increments of $1,000) which
the Holder elects to have repaid: $_________________; and specify the
denomination or denominations (which shall be $1,000 or an integral multiple of
$1,000 in excess of $1,000) of the Notes to be issued to the Holder for the
portion of this Note that will be issued for the portion not being repaid):

Date:_________________                       ________________________________
                                             Note: The signature to this Option
                                             to Elect Repayment must correspond
                                             with the same as written upon the
                                             face of this Note in every
                                             particular without alteration or
                                             enlargement.

                      ------------------------------------

                                   ASSIGNMENT


                       FOR VALUE RECEIVED, the undersigned
                 hereby sell(s), assign(s) and transfer(s) unto

------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE



------------------------------------------------------------------------------

------------------------------------------------------------------------------

------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE


------------------------------------------------------------------------------

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

------------------------------------------------------------------------------

_____________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.

Dated:_______________________       __________________________________________



------------------------------------
            (Signature Guarantee)