JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN TERMS AND CONDITIONS OF JANUARY 20, 2009 STOCK APPRECIATION RIGHTS OPERATING COMMITTEE

These terms and conditions are made part of the Award Agreement dated as of January 20, 2009 (“Grant Date”) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (“Plan”). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.

This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.

Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.

JPMorgan Chase & Co. will be referred to throughout the Award Agreement as “JPMorgan Chase,” and together with its subsidiaries as the “Firm.”

Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax withholding obligations.

The purpose of this award is, in part, to motivate your future performance and to align your interests with those of the Firm and its shareholders.

Your award will become exercisable on the “Exercisable Dates” set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below, and subject to the following:

•    Although it is intended and expected that this award will become exercisable as scheduled, the award may be reduced or cancelled or Exercisable Dates may be deferred in the event that the Chief Executive Officer (“CEO”) of JPMorgan Chase determines, as part of JPMorgan Chase’s annual performance assessment process, based on the CEO’s assessment of your performance and the performance of the Firm (which may include more than one performance year), that you have not achieved satisfactory progress toward your priorities or that the Firm has not achieved satisfactory progress toward the Firm’s priorities for which you share responsibility as a member of the Operating Committee. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase.

•    JPMorgan Chase reserves the right to cancel, or require repayment of any gains you derived from the exercise of, all or any portion of this award to the extent provided under the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time.

•    JPMorgan Chase reserves the right to cancel, or require repayment of any gains you derived from exercise of, all or any portion of this award if JPMorgan Chase determines that this award was based on materially inaccurate performance metrics or on any misrepresentation by you.

•    If you are subject to Section 111 of the Emergency Economic Stabilization Act of 2008 and any regulations or interpretations promulgated thereunder, or any successor or other

applicable statute affecting your compensation (“EESA or Other Applicable Law”), then any payment of any kind provided for by this Award Agreement must comply with EESA or Other Applicable Law, and this Award Agreement shall be interpreted or reformed to so comply.

Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the “Expiration Date”) or the date the award is cancelled pursuant to this Award Agreement. No Stock Appreciation Right may be exercised after its Expiration Date.

Except as explicitly set forth below under “Job Elimination,” “Full Career Eligibility” and “Death or Total Disability,” any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.

•     Job Elimination:

In the event that the Director Human Resources of the Firm or nominee in their sole discretion determine that the Firm terminated your employment because your job was eliminated, and provided that you continue to provide services in a cooperative and professional manner as requested by the Firm until the date your employment terminates, then any Stock Appreciation Rights that were exercisable on your termination date will remain exercisable for the ninety-day period immediately following your termination date, but in no event beyond the Expiration Date.

You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable after the termination of your employment and you must certify compliance with the above requirements on a form provided by the Firm in connection with an exercise. If you fail to return the required release within the specified deadline, your outstanding Stock Appreciation Rights will be cancelled.

•     Full Career Eligibility:

Any Stock Appreciation Rights that were exercisable as of the date of your employment termination will remain exercisable for a two year period following your termination date but in no event beyond the Expiration Date in the event that:

•    you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and

•    the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and

•    you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and

•    for the two year period following your termination date, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a non-Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below).

After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firm’s discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements.

Additional advance notice requirements may apply in certain business units (or equivalent organizational unit or department). (See “Special Notice Period” below.)

You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award

remain exercisable after the termination of your employment and you must certify compliance with the above requirements on a form provided by the Firm in connection with an exercise. If you fail to return the required release within the specified deadline, your outstanding Stock Appreciation Rights will be cancelled

With respect to full career eligibility, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.

•     Death or Total Disability:

If you die while employed by the Firm, or in the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then any Stock Appreciation Rights that were exercisable as of the date of your termination will remain exercisable for a two year period following your termination date but in no event beyond the Expiration Date.

In the case of your total disability, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment.

In the case of death, your beneficiary is the designated beneficiary on file with the Human Resources Department, or if no beneficiary has been designated or survives you, then your estate.

Any Stock Appreciation Rights that are not exercised within the applicable two year period set forth above will be cancelled.

•     Termination for Cause:

In the event your employment is terminated for Cause (as defined below), or in the event that the Firm determines after the termination of your employment that your employment could have been terminated for Cause, any outstanding Stock Appreciation Rights as of your termination date will be cancelled and you may be required to return to the Firm the value of certain shares previously delivered to you. See “Remedies” for additional information.

If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death.

As consideration for the grant of this award, you agree to comply with and be bound by the following:

•     Non-Solicitation of Employees and Customers:

During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firm’s then current employees to leave the Firm or to apply for employment elsewhere; (ii) hire any employee or former employee who was em