[LETTERHEAD OF CADWALADER, WICKERSHAM & TAFT]
May 10, 2001
The Bear Stearns Companies Inc.
245 Park Avenue
New York, NY 10167
Re: Bear Stearns Capital Trust III
7.80% Trust Issued Preferred Securities
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Ladies and Gentlemen:
We have acted as U.S. federal income tax counsel to The Bear Stearns Companies
Inc., a Delaware corporation (the "Company"), and Bear Stearns Capital Trust
III, a Delaware business trust (the "Trust"), in connection with the preparation
and filing with the Securities and Exchange Commission (the "Commission") of the
Prospectus Supplement, dated May 3, 2001 (the "Prospectus Supplement"), to the
Prospectus, dated December 2, 1998 (the "Prospectus", and together with the
Prospectus Supplement, the "Final Prospectus"), relating to the issuance and
sale of 10,500,000 shares of 7.80% Trust Issued Preferred Securities
($262,500,000 aggregate liquidation amount) (the "Preferred Securities"). The
Preferred Securities will be issued in accordance with the provisions of the
Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of May
10, 2001, among the Company, as Depositor, The Chase Manhattan Bank, as Property
Trustee, Chase Manhattan Bank USA, National Association, as Delaware Trustee,
the Administrators named therein, and the several Holders (as defined therein).
The Final Prospectus is included in the Registration Statement on Form S-3
(Registration Nos. 333-66861 and 333-66861-01), as amended to the date hereof
(the "Registration Statement"), filed with the Commission under the Securities
Act of 1933, as amended, to which this opinion letter is an exhibit.
In rendering the opinion set forth below, we have examined and relied upon the
originals, copies, or specimens, certified or otherwise identified to our
satisfaction, of the following: (i) the Trust Agreement; (ii) the Registration
Statement, including the Final Prospectus constituting a part thereof, (iii) the
Underwriting Agreement, (iv) the Indenture, dated as of December 16, 1998, as
supplemented by the First Supplemental Indenture, dated as of December 16, 1998,
and the Second Supplemental Indenture, dated as of May 10, 2001, (v) the
Preferred Securities Guarantee Agreement, dated as of May 10, 2001, between the
Company and The Chase Manhattan Bank, as Guarantee Trustee, for the benefit of
the Holders (as defined therein) and (vi) the Common Securities Guarantee
The Bear Stearns Companies Inc. -2- May 10, 2001
Agreement, dated as of May 10, 2001, by the Company, for the benefit of the
Holders (as defined therein). We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such certificates,
corporate and public records, agreements and instruments and other documents,
including among other things, the documents delivered on the date hereof, as we
have deemed appropriate as a basis for the opinion set forth below. In such
examination we have assumed the genuineness of all signatures, the authenticity
of all documents, agreements and instruments submitted to us as originals, the
conformity to original documents, agreements and instruments of all documents,
agreements and instruments submitted to us as copies or specimens, the
authenticity of the originals of such documents, agreements and instruments
submitted to us as copies or specimens and the accuracy of the matters set forth
in the documents, agreements and instruments we reviewed. We have further
assumed that all statements, facts, representations and covenants made therein
are and remain true (without regard to any qualifications stated therein and
without undertaking to verify such statements, facts and representations by
independent investigation), that the respective parties thereto and all parties
referred to therein will act in all respects at all relevant times in conformity
with the requirements and provisions of such documents, and that none of the
terms and conditions contained therein has been or will be waived or modified in
any respect. As to any facts material to the opinion expressed below that were
not known to us, we have relied upon statements and representations of officers
and other representatives of the Company, the other parties, and of public
officials. Except as expressly set forth herein, we have not undertaken any
independent investigation (including, without limitation, conducting any review,
search or investigation of any public files, records or dockets) to determine
the existence or absence of the facts that are material to our opinions, and no
inference as to our knowledge concerning such facts should be drawn from our
reliance on the representations of the Company, the other parties, and of public
officials in connection with the preparation and delivery of this letter.
We have made such investigations of law as we have deemed appropriate as a basis
for the opinion expressed below.
We have also assumed that all documents, agreements and instruments have been
duly authorized, executed and delivered by all parties thereto, that all such
parties had the power and legal right to execute and deliver all such documents,
agreements and instruments, and that such documents, agreements and instruments
are valid, binding and enforceable obligations of such parties.
The following opinion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury regulations, and rulings and decisions
thereunder, each as in effect on the date hereof, and may be affected by
amendments to the Code or to Treasury regulations thereunder or by subsequent
judicial or administrative interpretations thereof. We express no opinion other
than as to the federal income tax laws of the United States of America.
The Bear Stearns Companies Inc. -3- May 10, 2001
Based upon and subject to the foregoing, we are of the opinion that the
statements contained in the Final Prospectus under the caption "Certain US
Federal Income Tax Considerations," to the extent that they constitute
statements of matters of law or legal conclusions with respect thereto, have
been prepared or reviewed by us and provide a fair summary of the U.S. federal
income tax consequences of the purchase, beneficial ownership and disposition of
the Preferred Securities based upon current law.
We assume no obligation to update or supplement this letter to reflect any
facts, circumstances, laws, rules or regulations, or any changes thereto, or any
court or other authority or body decisions or governmental or regulatory
authority determinations which may hereafter occur or come to our attention.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the reference to this Firm in the Prospectus
Supplement constituting a part of the Registration Statement under the captions
"Certain US Federal Income Tax Considerations" and "Legal Matters," without
admitting that we are "experts" within the meaning of the Securities Act or the
rules and regulations of the Commission issued thereunder with respect to any
part of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft