Certificate No. P-1                       No. of Preferred Securities 10,500,000

                                                             CUSIP NO. 07384T206

                             CERTIFICATE EVIDENCING
                     7.80% TRUST ISSUED PREFERRED SECURITIES
                                       OF
                         BEAR STEARNS CAPITAL TRUST III
                 (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO BEAR STEARNS
CAPITAL TRUST III OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

            Bear Stearns Capital Trust III, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Cede & Co. (the "Holder") is the registered owner of the number of Preferred
Securities of the Trust specified in Schedule A hereto representing an undivided
beneficial interest in the assets of the Trust and designated the 7.80% Trust
Issued Preferred Securities of Bear Stearns Capital Trust III liquidation amount
$25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 5.4 of the Trust
Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth in, and this certificate and the Preferred Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of May 10, 2001, as the same may be amended from time to time (the "Trust
Agreement"). The Holder is entitled to the benefits of the Preferred Securities
Guarantee Agreement entered into by The Bear Stearns Companies Inc., a Delaware
corporation, and The Chase Manhattan Bank as guarantee trustee, dated as of May
10, 2001, as the same may be amended from time to time (the "Guarantee
Agreement"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Trust at its principal place of business.

            Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>

            IN WITNESS WHEREOF, one of the administrators of the Trust has
executed this certificate this 10th day of May, 2001.

                                    By:   /s/  Jeffrey M. Lipman
                                          ------------------------------------
                                          Name: Jeffrey M. Lipman
                                          Title:  Administrator




<PAGE>




                               FORM OF ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers the within Preferred Security and all rights thereunder, unto



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                          Please insert Social Security
                    or other identifying number of assignee:



          ------------------------------------------------------------
               (Name and Address of Assignee, including Zip Code,
                         must be printed or typewritten)

and hereby irrevocably constitutes and appoints


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Attorney to transfer said Preferred Security on the Register of the Preferred
Securities, with full power of substitution in the premises.

Date:
                                    ------------------------------------
                                    Signature(s)


                                    Signature(s) must be guaranteed by a
                                    commercial bank or trust company or a member
                                    firm of a major stock exchange.


NOTICE:     The signature to this assignment must correspond with the name as it
            appears upon the face of the within Preferred Security in every
            particular, without alteration or enlargement or any change
            whatever.


<PAGE>

                                                                      SCHEDULE A



                    CHANGES TO NUMBER OF PREFERRED SECURITIES
                             IN BOOK-ENTRY SECURITY


The initial number of shares of Preferred Securities evidenced by this
Book-Entry Preferred Securities Certificate is 10,500,000.

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                 NUMBER OF PREFERRED
              SECURITIES BY WHICH THIS
              BOOK-ENTRY SECURITY IS TO    REMAINING AMOUNT OF
 DATE         BE REDUCED AND REASON FOR      THIS BOOK-ENTRY     NOTATION MADE
                      REDUCTION                 SECURITY               BY

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