Guaranty Agreement - JPMorgan Chase & Co. and Bear Stearns Companies Inc.
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is made effective as of the 16th
day of March, 2008, by JPMORGAN CHASE & CO. (the "Guarantor"), a Delaware
corporation headquartered in New York, New York.
WHEREAS, the Guarantor is a party to an Agreement and Plan of Merger
with an affiliate of Guarantor and The Bear Stearns Companies Inc. ("BSC"),
dated March 16, 2008 (the "Acquisition Agreement");
WHEREAS, as a condition precedent to entering into the Acquisition
Agreement, BSC has requested that the Guarantor enter into this Guaranty;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Guarantor agrees as follows:
1. The Guarantor hereby unconditionally guaranties the due and punctual
payment of all Covered Liabilities of the Covered BSC Entities on the terms set
forth herein.
2. As used in this Guaranty:
(a) The term "Covered BSC Entities" means BSC and the affiliates of BSC
listed on Schedule 1 hereto. For the avoidance of doubt, Covered BSC Entities
does not include (x) any successor, assign or transferee of BSC or the entities
listed on Schedule 1 or (y) any subsidiary, affiliate, fund, special purpose
entity, variable interest entity, investment vehicle or other entity owned
(directly or indirectly), affiliated with or organized, promoted, sponsored,
managed or otherwise administered in any manner by BSC or any BSC affiliate
listed on Schedule 1 or in which BSC or any such BSC affiliate has or has had a
legal or beneficial interest or to which BSC or any such affiliate has or has
had economic exposure, in each case unless such entity is listed on Schedule 1.
(b) The term "Covered Liabilities" means (1) all liabilities and
obligations of the Covered BSC Entities as borrower under revolving credit or
term loan facilities, whether secured or unsecured, and (2) all liabilities and
obligations (whether absolute or contingent) of the Covered BSC Entities that
are in existence as of the date hereof or that arise during the Guaranty Period,
to the extent (and only to the extent) that such liabilities or obligations
arise under the terms of: securities contracts (including but not limited to
contracts for the purchase, sale, loan or borrowing of a security or loan or a
group or index of securities or loans, or options with respect thereto or
interests therein), commodity contracts (including but not limited to contracts
for storage, capacity, transmission, freight, transportation and other ancillary
services and products), forward contracts, tolling agreements, energy management
agreements,
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repurchase or reverse repurchase agreements, swap agreements, options or other
derivatives, settlement or clearing contracts, margin loan agreements or other
contracts or transactions similar to any of the foregoing (all of the foregoing
collectively, whether exchange-traded or over-the-counter, whether physically
settled or financially settled, "Trading Contracts"); provided, however, that
Covered Liabilities shall not include (i) any liability or obligation of any
kind or nature arising after the expiration of the Guaranty Period, or (ii) any
liability or obligation of any kind or nature with respect to the Trading
Contracts other than the obligation to pay or perform, as applicable, the
express terms thereof, it being understood that liabilities in respect of
compliance or noncompliance with law or regulation, any actual or asserted
breach of duty and any claim relating in any way to asset allocation or
investment advice shall all be deemed not to have arisen under the express terms
of the applicable Trading Contract.
(c) The term "Guaranty Period" means the period commencing on the date
hereof and ending on the End Date.
(d) The term "End Date" means the first to occur of (1) the date of
termination of the Acquisition Agreement in accordance with its terms, and (2)
the Closing Date, as defined in the Acquisition Agreement.
3. Notwithstanding any other provision hereof, this Guaranty and the
obligations of the Guarantor hereunder shall terminate and be of no further
force or effect (and Guarantor shall have no further liability hereunder) on and
as of the first to occur of (1) the Closing Date and (2) the termination of the
Acquisition Agreement pursuant to Section 8.1(e)(i) thereof. For the avoidance
of doubt, the termination of the Acquisition Agreement, other than pursuant to
Section 8.1(e)(i), shall not affect or impair the effectiveness of the guaranty
provided herein with respect to the Covered Liabilities of the Covered BSC
Entities or the obligations of the Guarantor hereunder with respect thereto.
4. The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of (i) the enforceability of the Covered Liabilities
against the applicable Covered BSC Entity, (ii) the absence of any action to
enforce the Covered Liabilities against the applicable Covered BSC Entity, (iii)
any amendment, waiver or consent by the applicable Covered BSC Entity or the
holder of a Covered Liability with respect to any provision thereof, or (iv) any
other circumstance that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. The Guarantor hereby waives
promptness, diligence, presentment, demand of payment, filing of claims with any
court, any right to require a proceeding first against applicable Covered BSC
Entity, protest or notice with respect to the applicable Covered Liability and
all demands whatsoever, and covenants that this Guaranty will not be discharged
except by complete performance of the obligations contained in the applicable
Covered Liability and in this Guaranty in accordance with the terms thereof and
hereof, respectively.
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5. The Guarantor shall be subrogated to all rights against the applicable
Covered BSC Entity in respect of any amounts paid by the Guarantor pursuant to
the provisions of this Guaranty; provided, however, that the Guarantor shall not
be entitled to enforce, or to receive any payments arising out of, such right of
subrogation until the applicable Covered Liabilities shall have been paid in
full.
6. This Guaranty is a guaranty of payment when due and not of collection.
This Guaranty shall continue to be effective, or be reinstated, as the case may
be, in respect of any Covered Liabilities if at any time payment, or any part
thereof, of said Liabilities is rescinded or must otherwise be restored or
returned by the applicable Covered BSC Entity or any trustee for the applicable
Covered BSC Entity, all as though such payments had not been made.
7. The obligations of Guarantor hereunder shall not affect, impair or
limit any right of any Covered BSC Entity or any director, officer or employee
thereof under any insurance program, policy or contract, or release, limit the
liability of, or otherwise inure to the benefit of any insurer thereunder.
8. All notices and other communications provided for hereunder shall be in
writing and telecopied to the Guarantor at:
JPMorgan Chase Bank
270 Park Avenue
New York, New York 10017
212-270-0819 (fax)
Attention: Peter W. Smith
with a copy to:
JPMorgan Chase Bank
270 Park Avenue
New York, New York 10017
212-270-3261 (fax)
Attention: General Counsel
9. This Guaranty shall be governed by and construed in accordance with the
laws of the State of New York.
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IN WITNESS WHEREOF JPMorgan Chase & Co. has caused the execution hereof in
its corporate name by its duly authorized officers.
JPMORGAN CHASE & CO.
By: /s/ James Dimon
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James Dimon
Chief Executive Director
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Schedule 1 to Guaranty Agreement
Jurisdiction of
Subsidiary Incorporation / Organization
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The Bear Stearns Companies Inc. Delaware
Bear, Stearns & Co. Inc. Delaware
Bear, Stearns Securities Corp. Delaware
Bear, Stearns International Limited United Kingdom
Bear Stearns Bank plc Ireland
Bear Stearns Global Lending Limited Cayman Islands
Custodial Trust Company New Jersey
Bear Stearns Financial Products Inc. Delaware
Bear Stearns Capital Markets Inc. Delaware
Bear Stearns Credit Products Inc. Delaware
Bear Stearns Forex Inc. Delaware
EMC Mortgage Corporation Delaware
Bear Stearns Commercial Mortgage, Inc. New York
Bear Energy LP Delaware
Bear Stearns Investment Products Inc. New York
Bear Wagner
Bear Stearns Japan Ltd.
Bearn Stearns Singapore Pte.
Bear Stearns Asia Limited
Delta Power Corp.
Bear Stearns Asset Management Inc.
Bear Stearns Asset Management Ltd.
Other trading and operating entities to be
mutually agreed.