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PREFERRED SECURITIES GUARANTEE AGREEMENT
BEAR STEARNS CAPITAL TRUST __
Dated as of __________, ____
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CROSS-REFERENCE TABLE
Preferred
Trust Indenture Securities
Act Section Guarantee Section
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310 (a)...................................................... 4.1(a)
(b)...................................................... 4.1(c)
(c)...................................................... Not Applicable
311 (a)...................................................... 2.2(a)
(b)...................................................... 2.2(b)
(c)...................................................... Not Applicable
312 (a)...................................................... 2.2(a)
(b)...................................................... 2.2(b)
313 ......................................................... 2.3
314 (a)...................................................... 2.4
(b)...................................................... Not Applicable
(c)...................................................... 2.5
(d)...................................................... Not Applicable
(f)...................................................... Not Applicable
315 (a)...................................................... 3.1(b)
(b)...................................................... 2.7
(c)...................................................... 3.1(a)
(d)...................................................... 3.1(a)
316 (a)...................................................... 5.4(a), 2.6
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Preferred Securities Guarantee.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..................................5
SECTION 2.2 Lists of Holders of Securities....................................5
SECTION 2.3 Reports by the Guarantee Trustee..................................5
SECTION 2.4 Periodic Reports to Guarantee Trustee.............................5
SECTION 2.5 Evidence of Compliance with Conditions Precedent..................6
SECTION 2.6 Events of Default; Waiver.........................................6
SECTION 2.7 Events of Default; Notice.........................................6
SECTION 2.8 Conflicting Interests.............................................6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee........................7
SECTION 3.2 Certain Rights of Guarantee Trustee...............................8
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred
Securities Guarantee........................................10
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility...................................10
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee.....................................................11
ARTICLE V
GUARANTEE
SECTION 5.1 Preferred Securities Guarantee...................................12
SECTION 5.2 Waiver of Notice and Demand......................................12
SECTION 5.3 Obligations Not Affected.........................................12
SECTION 5.4 Rights of Holders................................................13
SECTION 5.5 Guarantee of Payment.............................................14
SECTION 5.6 Subrogation......................................................14
SECTION 5.7 Independent Obligations..........................................14
SECTION 5.8 Consolidation, Merger, Sale of Assets and Other
Transactions................................................14
ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking..........................................................15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination......................................................15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation......................................................16
SECTION 8.2 Indemnification..................................................16
SECTION 8.3 Compensation; Reimbursement of Expenses..........................16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns...........................................17
SECTION 9.2 Amendments.......................................................17
SECTION 9.3 Notices..........................................................17
SECTION 9.4 Benefit..........................................................18
SECTION 9.5 Governing Law....................................................18
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PREFERRED SECURITIES GUARANTEE AGREEMENT
PREFERRED SECURITIES GUARANTEE AGREEMENT, dated as of __________, ____,
(the "Preferred Securities Guarantee") is executed and delivered by The Bear
Stearns Companies Inc., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, a New York State banking corporation, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of Bear Stearns Capital Trust
__, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
__________, ____, (the "Trust Agreement") among the trustees named therein of
the Issuer, the administrators named therein, The Bear Stearns Companies Inc.,
as depositor, and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on the date hereof
securities, having an aggregate Liquidation Amount of up to $__________,
designated the Fixed/Adjustable Rate Preferred Securities (the "Preferred
Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guarantee, to pay to the Holders of
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a common securities
guarantee agreement (the "Common Securities Guarantee") in similar terms to this
Preferred Securities Guarantee for the benefit of the holders of the Common
Securities (as defined in the Trust Agreement) of the Issuer, except that if an
Event of Default (as defined in the Trust Agreement), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments under this
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee has the
same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;
(e) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee or in the Trust Indenture Act as the case
may be, have the same meanings when used in this Preferred Securities Guarantee,
unless otherwise defined in this Preferred Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Corporate Trust Office" means the office of the Guarantee Trustee at which
the corporate trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Preferred Securities Guarantee is located at 450 West 33rd Street, New York, New
York 10001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the junior subordinated debentures of The Bear Stearns
Companies Inc. designated the Fixed/Adjustable Rate Junior Subordinated
Deferrable Interest Debentures due __________, 20__ held by the Property Trustee
(as defined in the Trust Agreement) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.
"Existing Indenture" means the Indenture, dated as of January 29, 1997,
between the Guarantor and The Chase Manhattan Bank, as trustee, as amended or
supplemented from time to time.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Issuer: (i) any accumulated and unpaid Distributions (as defined in
the Trust Agreement) which are required to be paid on such Preferred Securities
to the extent the Issuer shall have
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funds available therefor, (ii) the redemption price, including all accumulated
and unpaid Distributions to the date of redemption (the "Redemption Price") to
the extent the Issuer has funds available therefor, with respect to any
Preferred Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Preferred Securities as provided in the Trust Agreement), the
lesser of (a) the aggregate of the Liquidation Amount and all accumulated and
unpaid Distributions on the Preferred Securities to the date of payment, to the
extent the Issuer shall have funds available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Guarantees" means the Common Securities Guarantee and this Preferred
Securities Guarantee, collectively.
"Guarantee Trustee" means The Chase Manhattan Bank, a New York State
banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.
"Indenture" means the Indenture dated as of ________ __, ____, between the
Guarantor and The Chase Manhattan Bank, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the Property Trustee of the Issuer.
"Liquidation Distribution" has the meaning set forth in the definition of
"Guarantee Payments" herein.
"Majority in Liquidation Amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate Liquidation Amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all Preferred Securities then outstanding.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board or any Vice Chairman of the Board or the President or any Executive Vice
President or Chief
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Operating Officer or Chief Financial Officer of the Depositor and by the
Treasurer or an Assistant Treasurer or Controller or the Secretary or an
Assistant Secretary of the Depositor and delivered to the Guarantee Trustee. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Preferred Securities Guarantee (other than
pursuant to Section 2.4) shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Other Guarantees" means all other guarantees (if any) to be issued by the
Company with respect to capital securities (if any) to be issued by other trusts
to be established by the Company (if any).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee, including
any vice president, any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer, any senior trust officer,
or other officer of the Corporate Trust Office of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Event of Default" means an "Event of Default" as defined in the
Trust Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Securities" means the Common Securities and the Preferred
Securities.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the provisions of the
Trust Indenture Act and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor shall provide the Guarantee Trustee (i) within five days
after each record date for payment of Distributions, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Preferred Securities ("List of Holders") as of such record date,
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Guarantee Trustee by the Guarantor, and (ii) at any
other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders, which List of Holders shall be as of a date no more than 14
days before such List of Holders is given to the Guarantee Trustee. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Sections
311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee.
Not later than January 15 of each year commencing January 15, ____, the
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports dated as of the immediately preceding November 15 as are required by
Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
The Guarantor will notify the Guarantee Trustee if and when any Preferred
Securities are listed on any exchange, interdealer quotation system or
self-regulatory organization.
SECTION 2.4 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders as applicable, such documents, reports and
information (if any) as required by Section 314 and the compliance certificate
required by Section 314(a)(4) of the Trust Indenture Act in the form, in the
manner and at the times required by Section 314
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of the Trust Indenture Act, such compliance certificate to be delivered annually
on or before September 15 of each year beginning in ____.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may
be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred Securities
may, voting or consenting as a class, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default and its consequences. Upon
such waiver, any such Event of Default shall cease to exist, and shall be deemed
to have been cured, for every purpose of this Preferred Securities Guarantee,
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.
SECTION 2.7 Events of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Preferred Securities, notices of all Events of Default actually known to
a Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, however, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
responsible officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Preferred
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
thereof from the Guarantor or a Holder, or a Responsible Officer of the
Guarantee Trustee charged with the administration of this Preferred Securities
Guarantee shall have obtained written notice thereof.
SECTION 2.8 Conflicting Interests.
The Indenture and the securities issued or to be issued thereunder; the
Trust Agreement and the Trust Securities issued or to be issued thereunder; any
Preferred Securities Guarantee Agreement relating to a Bear Stearns Trust (as
defined in the Indenture and the Existing Indenture) between the Guarantor and
The Chase Manhattan Bank, as guarantee trustee; any Amended and Restated Trust
Agreement relating to a Bear Stearns Trust among the Guarantor, as depositor,
The Chase Manhattan Bank, as property trustee, Chase Manhattan Bank Delaware, as
Delaware trustee, the administrators named therein and the several holders
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and the Trust Securities issued and to be issued thereunder; and the Existing
Indenture and the securities issued or to be issued thereunder, shall be deemed
to be specifically described in this Preferred Securities Guarantee for the
purposes of clause (i) of the proviso contained in Section 310(b)(l) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the Guarantee
Trustee for the benefit of the Holders of the Preferred Securities, and the
Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall
enforce this Preferred Securities Guarantee for the benefit of the Holders of
the Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Preferred Securities Guarantee, and no implied covenants shall be read into this
Preferred Securities Guarantee against the Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) and is actually known to a Responsible Officer of the Guarantee Trustee,
the Guarantee Trustee shall exercise such of the rights and powers vested in it
by this Preferred Securities Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Preferred
Securities
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Guarantee, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants
or obligations shall be read into this Preferred Securities Guarantee
against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Preferred Securities Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that such Responsible Officer of the
Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds is
not reasonably assured to it under the terms of this Preferred Securities
Guarantee or indemnity, reasonably satisfactory to the Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
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(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Guarantee Trustee may consult with counsel of its selection,
and the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee from any court
of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Guarantee
Trustee; provided, however, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Preferred Securities Guarantee.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents,
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nominees, custodians or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Whenever in the administration of this Preferred Securities
Guarantee the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request instructions
from the Holders of a Majority in Liquidation Amount of the Preferred
Securities, (B) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (C) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(x) The Guarantee Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred
Securities Guarantee.
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Guarantee Trustee does not
assume any responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of
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Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least fifty million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act, subject to the penultimate
paragraph thereof.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor except during an Event of
Default.
(b) The Guarantee Trustee shall not be removed in accordance with Section
4.2(a) until a Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor Guarantee
Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
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(e) No Guarantee Trustee shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee
under Sections 8.2 and 8.3 accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Preferred Securities Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. Such obligations will not be
discharged except by payment of the Guarantee Payments in full. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Guarantee Trustee, the Issuer or any other Person before proceeding against
the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment
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period on the Debentures or any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Guarantee Trustee in respect of
this Preferred Securities Guarantee or exercising any trust or power conferred
upon the Guarantee Trustee under this Preferred Securities Guarantee; provided
however, that (subject to Section 3.1) the Guarantee Trustee shall have the
right to decline to follow any such direction if the Guarantee Trustee shall
determine that the actions so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Guarantee Trustee being
advised by counsel determines that the action or proceedings directed may not
lawfully be taken or if the Guarantor Trustee in good faith by its board of
directors or trustees, executive committees or a trust committee of directors or
trustees and/or Responsible Officers shall determine that the action or
proceedings so directed would involve the Guarantee Trustee in personal
liability.
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Issuer, the Guarantee Trustee or any other Person. The Guarantor waives any
right or remedy to require that any such action be
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brought first against the Issuer or any other Person before so proceeding
directly against the Guarantor.
(c) The Guarantor expressly acknowledges that (i) this Preferred Securities
Guarantee will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders and (ii) the Guarantee Trustee has the right to enforce
this Preferred Securities Guarantee on behalf of the Holders.
SECTION 5.5 Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment and not
of collection. This Preferred Securities Guarantee will not be discharged except
by payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer) or upon distribution of Debentures to Holders as
provided in the Trust Agreement.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Preferred Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Preferred Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Preferred Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
SECTION 5.8 Consolidation, Merger, Sale of Assets and Other Transactions.
The Guarantor shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Guarantor
or convey, transfer or lease its properties and assets substantially as an
entirety to the Guarantor, unless (i) either the Guarantor shall be the
continuing corporation, or the successor shall be a Person organized under the
laws of the United States or any state or the District of Columbia, and such
successor Person expressly assumes the Guarantor's obligations under this
Preferred Securities Guarantee by written instrument in form satisfactory to the
Guarantee Trustee, (ii) immediately after
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giving effect thereto, no Event of Default under this Preferred Securities
Guarantee, and no event which, after notice or lapse of time or both, would
become an Event of Default under this Preferred Securities Guarantee, shall have
occurred and be continuing, and (iii) such consolidation, merger, conveyance,
transfer or lease shall be permitted under the Trust Agreement and the Indenture
and does not give rise to any breach or violation of the Trust Agreement or
Indenture.
ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking.
This Preferred Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness of the Company (as defined in the
Indenture). This Preferred Securities Guarantee will rank pari passu with all
Other Guarantees. By their acceptance thereof, each Holder of Preferred
Securities agrees to the foregoing provisions of this Preferred Securities
Guarantee and the other terms set forth herein.
If a Trust Event of Default has occurred and is continuing, the rights of
holders of the Common Securities of the Issuer to receive payments under the
Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Preferred Securities Guarantee shall terminate, subject to Sections
8.2 and 8.3, (i) upon full payment of the Redemption Price of all Preferred
Securities, (ii) upon the distribution of the Debentures to the Holders of all
of the Preferred Securities or (iii) upon full payment of the amounts payable in
accordance with the Trust Agreement upon dissolution of the Issuer.
Notwithstanding the foregoing, this Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Issuer or the Guarantor and upon such information,
opinions, reports or statements presented to the Trust or the Guarantor by any
Persons to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who, if selected by such
Indemnified Person, has been selected with reasonable care by such Indemnified
Person, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Guarantee
Trustee will not claim or exact any lien or charge on any Guarantee Payments as
a result of any amount due to it under this Preferred Securities Guarantee. The
obligation to indemnify as set forth in this Section 8.2 shall survive the
termination of this Preferred Securities Guarantee.
SECTION 8.3 Compensation; Reimbursement of Expenses.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and
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(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Preferred Securities Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 8.3 shall survive the termination of this
Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding. Except in connection with any
merger or consolidation of the Guarantor with or into another entity or any sale
or conveyance of the Guarantor's assets to another entity or of another entity's
assets to the Guarantor, in each case, to the extent permitted under Section 5.8
of this Preferred Securities Guarantee, the Guarantor may not assign its rights
or delegate its obligations under this Preferred Securities Guarantee without
the prior approval of the Holders of at least a Majority in Liquidation Amount
of the Preferred Securities.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the rights
of Holders of Preferred Securities in any material respect (in which case no
consent of Holders will be required), this Preferred Securities Guarantee may
only be amended with the prior approval of the Holders of a least a Majority in
Liquidation Amount of the Preferred Securities.
The provisions of the Trust Agreement with respect to amendments thereof
apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
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(a) If given to the Guarantee Trustee, at the Guarantee Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Preferred Securities):
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Corporate Trustee Administration Department
(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Preferred Securities and to the Guarantee Trustee):
The Bear Stearns Companies Inc.
245 Park Avenue
New York, NY 10167
Attention: Corporate Secretary
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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This Preferred Securities Guarantee is executed as of the day and year
first above written.
THE BEAR STEARNS COMPANIES INC.,
as Guarantor
By:
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Name:
Title:
THE CHASE MANHATTAN BANK,
as Guarantee Trustee
By:
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Name:
Title: